The market responded well today to good economic news and to the positive and somewhat surprising response to the election of a moderate Iranian President.  Some moderation in Turkey didn’t hurt either, and overnight positive markets in Asia and Europe gave bullish investors enough encouragement to buy equities broadly. We think it likely that this week the market will challenge highs that were set in late May.

Stock investors are protecting gains and holding off on deploying cash as concerns abound about central banks, including the Federal Reserve, tapering off on their stimulus programs, i.e., money printing. Low-interest policies and quantitative easing have been the driving force for economic recovery while pushing return-hungry investors into equities by default.

Despite today’s roller-coaster market, the market ended up essentially flat. But questions abound. Will interest rates start rising now in a meaningful way? Will the European courts find yet another way to derail the country bail-outs? Will Asian issues result in something positive for our markets, or will Asia continue to vacillate on most matters? Those questions remain to be answered. In the meantime, we’ve found four stocks that may be right for this market, one in the Technology Sector, one in Financials, and two in Consumer Cyclicals. 

Here in Santa Barbara, we refer to the annual summer ritual of heavy marine layer engulfing the coastline for much of the day as the “June gloom.” It can be frustrating to beach-going visitors since there are otherwise no clouds, and the inland areas are brilliantly sunny.

The week started sluggishly with a little positive kick at today’s closing. All three major indices closed in slightly positive territory, despite spending most of the day in the red. Volume was decent for this time of the year.

We think it is significant that the markets closed up, since two of today’s economic reports were both below expectations. The ISM manufacturing index fell below the sacrosanct 50 level, compared to last month’s 50.7, and construction spending was up from last month’s weak -0.8%.  Auto and truck sales numbers, coming in this afternoon before the market closed, were better than expected, with 15.3M vehicles versus last month’ s 15.2M and an expected 15.25M.

Central banks reiterated their commitment to supporting the global economy, and US investors showed their approval. The central banks are clearly prepared to keep the liquidity flowing for now, austerity be damned. Such statements are music to investors’ ears.

Surprise!  The market roared ahead this morning with all three major domestic indices up at least 1.5%. The move was triggered by a weekend with little negative economic news domestically and globally.  Then this morning, an impressive increase in Consumer Confidence to 76.2, which was not only well above last month’s 68.1 and the projected 72.5 but also a 5-year high, provided investors something to cheer about.

The market went through some gyrations on Wednesday in reaction to Fed Chairman Bernanke’s testimony before the Joint Economic Committee. He first defended continued quant easing by warning, “A premature tightening of monetary policy could lead interest rates to rise temporarily but also would carry a substantial risk of slowing or ending the economic recovery.” Stocks dutifully rallied and all major indexes hit new intraday highs.

So, what did the market want today?  Nothing it appears.  It traded on weak volume and had very little movement.  This morning the market hated commodities especially silver, but by days end, the market liked silver, gold and even oil but not the dollar.  Why?

It seems that every Tuesday in 2013 since January 8 has been positive on the Dow. And this past Tuesday was no exception. Now that sounds like a trend to put money on -- buy the SPDR Dow Jones Industrial Average ETF (DIA) at the close each Monday and close out the position late on Tuesday.