Yesterday, the Conference Board said its index of leading economic indicators rose modestly in July. That’s a step forward! At the same time, the Philadelphia Fed said manufacturing fell in the mid-Atlantic region to the lowest level in a year. Even worse, the weekly unemployment claims rose unexpectedly to a nine month high. That’s two steps backward! Naturally, the Dow fell 144 points.

It is a safe prediction that markets consistently over-react to whatever news is available!

But, note only one piece of yesterday’s data released was leading. The other two were looking in the rear-view miror.

This is consistent with my expectation that the Dow will trade in a band between 1050to 1150 but slowly start trending bullish in the fourth quarter. No economic recovery has ever been a straight line!