Terrorist Scare Did Not Really Pull Us Down Much, If At All

For the seventh day in a row, the S&P 500 closed nearly flat. We haven't had a move of more than 0.3% since Oct. 20. Whether that is a positive or a negative depends on your bias.

The bulls will tell you that it is very positive that we are holding up and that this is just healthy consolidation which will serve as a foundation for another leg higher. The bears will tell us that momentum is dying and that the market is churning before it finally rolls over. Moreover, the bears are convinced that we have a picture-perfect "sell the news" setup next week with the election results, monthly jobs data and the FOMC interest rate decision. The bulls' rebuttal is that the "sell the news" setup is just too perfect to work.

The battle lines are drawn, and I suspect that the market beast is going to keep things difficult for both bulls and bears and deliver a dose of volatility. Everyone is looking for a break one way or the other out of this tight trading range, so what could be more frustrating than a couple of quick whipsaws that shake out both bulls and bears?

Even with the flat action, there has been some good trading action under the surface. It has actually been somewhat of a stock-picker's market lately, which is a nice change from everything dancing around to the macroeconomic tune. We've even been a little less sensitive to the dollar this week after moving in lockstep with it for nearly two months.

The stage is set for some fireworks next week.