Markets Stuck in Summer Holding Pattern

Markets have been uncharacteristically quiet over the past couple of weeks, as the summer slowdown seems to have stopped the latest rally in its tracks.After a big jump higher following the June Brexit vote in which U.K. citizens chose to leave the European Union, stocks have largely stalled albeit near their all-time highs.

Now we have to ask ourselves what is going to send stocks higher, and what can possibly send stocks lower?The first thought is that we still have a lot of second-quarter earnings reports ahead. Although this earnings season has seen some big winners (Facebook and Google), it also has seen some strugglers (McDonalds and Verizon).

In order for this market to get another good bounce higher, we are going to have to get some more good news on the earnings front.This week, the market didnt react much to the Feds announcement that it would keep interest rates unchanged. That decision wast a surprise. But what was a surprise was the rather hawkish commentary on improved economic conditions.

And speaking of the election, the conventions are in the books, and now the real fireworks are about to begin. If this election season fosters more market uncertainty, we could be stuck in the muck well into the fall.

As you can see, emerging markets are at the forefront here, with Peru, Brazil and Indonesia in the top tier.