Much ado was made of China’s surprise 3% devaluation of their currency last week. But keep in mind, the yuan is pegged to the dollar, and with the dollar so strong, every major floating currency and commodity is down a lot more than that. Deflation is now a real threat. Then, there is the suddenly resolved issue of Greece’s debt (along with the worry of a domino-like fall of the entire Eurozone).

As a rather uninspiring earnings season starts to wind down, bullish investors eager for a significant catalyst from company reports instead have been left a bit flat-footed and disheartened. With consumer sentiment and retail sales flagging in key overseas markets like Europe and China, global capital continues to flow into the safety of U.S. Treasuries, driving down bond yields despite a supposedly imminent fed funds rate hike.

Even with many of the global issues pushed off the front page, eager bulls found yet another reason to keep the troops in the barracks. The only newsworthy items are related to corporate earnings reports, which have been mixed at best, interspersed with the occasional spectacular report -- primarily from mega-caps like Google (GOOGL), Facebook (FB), or Amazon (AMZN). Some of the bulls have taken their chips off the table until after Labor Day, while others have merely scaled back to scalping some trades. Either way, stocks appear destined to thrash about for the rest of the summer.

We all know the big news stories that have kept both corporate leaders and investors in a semi-state of paralysis. They involve the future of Greece in the Eurozone, China’s growth and stock market stability, and the Federal Reserve’s plan for gradually normalizing the fed funds rate. I noted in my article last week that the technical picture appeared to be firming up for the bulls as the 200-day moving average kicked in with solid support and traders seemed to be doing an orderly retreat-and-retrench rather than panic-selling.

Of course, all eyes have been on Greece in an ongoing saga that, although critical to the Greeks, is mostly just an annoying distraction for global investors -- partly because it has been going on for so many years, with the proverbial can of inevitability continually being kicked down the road, and partly because there can be no winners in this intractable situation.

Two weeks ago, bulls seemed ready to push stocks higher as long-standing support reliably kicked in. But with just one full week to go before the Independence Day holiday week arrives, we will see if bulls can muster some reinforcements and make another run at the May highs. Small caps and NASDAQ are already there, but it is questionable whether those segments can drag along the broader market. To be sure, there is plenty of potential fuel floating around in the form of a friendly Fed and abundant global liquidity seeking the safety and strength of US stocks and bonds.

After a brief pullback to retest support levels, it appears that bulls may be preparing to take the market higher. Although retail investors are still hesitant, risk-taking among institutions is apparent. Cheap cash from abundant global liquidity is hungry for higher returns. Margin debt is high. Credit spreads are low. Subprime loans are back in vogue. Small caps and the banking sector in particular look ready to resume a leadership role.

Early last week, stocks broke out, with the S&P 500 setting a new high with blue skies overhead. But then the market basically flat-lined for the rest of the week as bulls just couldn’t gather the fuel and conviction to take prices higher. In fact, the technical picture now has turned a bit defensive, at least for the short term, thus joining what has been a neutral-to-defensive tilt to our fundamentals-based Outlook rankings.

Stocks closed last week on a strong note, with the S&P 500 notching a new high, despite lackluster economic data and growth. I have been suggesting in previous articles that stocks appeared to be coiling for a significant move but that the ingredients were not yet in place for either a major breakout or a corrective selloff. However, bulls appear to be losing patience awaiting their next definitive catalyst, and the higher-likelihood upside move may now be underway. Yet despite the bullish technical picture, this week’s fundamentals-based Outlook rankings look even more defensive.

After posting record highs the previous week, stocks closed last week slightly down overall. But the major indexes held their psychological levels, including Dow at 18,000, S&P 500 at 2100, NASDAQ at 5,000, and Russell 2000 at 1200. Although the bulls continue to find reliable support levels nearby, strong overhead technical resistance and neutral-to-defensive rankings in our SectorCast fundamentals-based quant model continue to suggest that a major upside breakout is not quite imminent, although a selloff doesn’t seem to be in the cards, either.