The market put in some of the most somnolent trading of the year this week and tightest ranges, but the path of least resistance remained to the upside. The cliché, “Never short a dull market” comes to mind.

It was “All Quiet on the European Front”, as much of Europe, and Wall Street, remained on vacation. Ms. Merkel, however, did return to the scene and had some prominent proclamations in support of the ECB on a trip to Canada. Oil prices were in focus and there was some talk of a release from the Strategic Petroleum Reserves.

For the week the Dow was +0.5%, the SPX +0.9%, and the Nasdaq +1.8%, helped in no small way by AAPL’s new all-time high.

Despite the gleeful press reports of European politicians being absent from duty, that was not quite the case and there were a few notable developments, with many comments emerging this weekend, especially regarding Greece:

“I will report on our political will to overcome the euro crisis and on our determination in Europe to band together for a common currency.” --German Chancellor Angela Merkel prior to a meeting with Canada’s PM Stephen Harper, and later praised Canada for “not living on borrowed money”. (SF Chronicle)

“We can’t yet again devise a new rescue package," German Finance Minister Wolfgang Schäuble told Der Spiegel on Saturday. His warning was reiterated by the parliamentary head of Chancellor Angela Merkel's CDU party. "The Greeks have to stick to what they have promised,” Volker Kauder said. “There is no room for maneuver, either in terms of time or substance. That would be yet another agreement broken. That's exactly what led us to this crisis." (The Local Europe).

"There can be no limit set or at least (the ECB) can't say how much they will use or for how long," Spain's economy minister Luis de Guindos also said Saturday. De Guindos also added that the Spanish government will have to study the details of the ECB's debt-buying program, which are likely to be outlined before the Eurogroup meeting mid-September, before making a decision on applying for more European aid. (Reuters)

But let’s move on from Europe and see what else was out there this week.

“As Apple's stock rises, it is approaching another milestone. If shares reach $663.68, Apple will become the most valuable company of all time, eclipsing the record Microsoft set in late 1999.” -- Howard Silverblatt, S&P's senior index analyst. (CNNMoneyTech) AAPL shares made a new all-time high this week at $648.19, fueled by speculation on a September 12 announcement of a new iPhone and smaller iPad, but perhaps more importantly a gangbuster upcoming Holiday selling season. The post-earnings drop of a few months ago now seems to be ancient history and AAPL’s action was helped by a Jefferies target upgrade to $900/share.

But Apple retail alum Ron Johnson, now CEO of JCPenney is not faring so well, catching flak from all quarters, with the latest being a headline from the NY Post Business section saying, “Ex-CEO gives a (harsh) Penney for his thoughts.” Well respected former JCP CEO Allen Questrom, who has also been at Macy’s, Nieman Marcus and Barney’s, slammed Johnson for merchandising, his everyday pricing plan, cutting sales and coupons and now the idea of creating higher-end in-store boutiques without a testing program. When Questrom left JCP in 2004 the stock was at$54 and traded Friday near $24.

"They're going to put y'all back in chains." --VP Joe Biden in the political firestorm of the week, supposedly referring to a Republican administration’s intentions to “unshackle Wall Street from regulations.” The comment caught flak from all quarters for its ‘playing the race card’, in front of a partial minority audience, although Pres. Obama supported Biden. It also ratcheted up talk once again of whether or not there was a graceful way to dump Biden from the ticket and see if Hilary Clinton would jump on board, which the Clinton camp forcefully denies. (Huffington Post).

Romney responded, “Mr. President, take your campaign of division and anger and hate back to Chicago.” Former NYC Mayor Rudy Giuliani was a bit more blunt, saying on CNBC’s Kudlow, in effect, that “Joe Biden is just not bright and there’s a real fear if, God forbid, he ever had to be entrusted with the presidency.”

“Is Facebook's Zuckerberg in over his hoodie?” --headline from the Los Angeles Times, which is pretty self-explanatory as FB stock made another all-time low this week and Mr. Zuckerberg commented to employees in effect on the stock’s plunge, “This could be painful to watch.” The WSJ and Business Insider reporting that “Zuckerberg and other executives have now addressed Facebook employees on multiple occasions this month to acknowledge the stock slump, but also to put it in context by emphasizing the company's vision for the future”.

“When the VIX is low, go slow, when the VIX is high, buy.” --CNBC interview at the NYSE floor with a veteran trader, referring to the ultra-low levels in the VIX recently and how that has often forewarned of market tops in the past. However, there was no shortage of bullish calls on the market as the 1408 level on the SPX was breached, with at least a test of yearly highs assumed, and then others with intermediate targets of 1450 and then 1475 on the S&P. Barron’s this weekend echoed the VIX comments in its Streetwise column, “When it becomes cheap to insulate a portfolio against the unknowable, it merits strong consideration.” (referring to the ultra-low costs of put insurance right now.)

“I am net short, but the valuations on the S&P are right in my fair value range.” --Seabreeze’s Doug Kass on Larry Kudlow’s Saturday radio show, taking about the recent trading range and his concerns Europe is about to heat up again, with risk outweighing reward for longs in the market.

“We have the conditions and capabilities, and will be sure to fulfill this year’s economic and social development targets…there is growing room for monetary policy operation.” --Chinese Premier Wen Jiabao this week. Bloomberg also quoted Qinwei Wang, an economist at Capital Economics Ltd. in London and former employee of the People’s Bank of China, “Policy makers have made clear in recent weeks that supporting economic growth is their central concern. We continue to think that more policy support will be announced soon, including a further cut to the required reserve ratio, and that more infrastructure projects proposed by local governments will be given the go-ahead.”

Two headlines we posted this week were of some amusement value, for very different reasons, “Can Shatner Re-Engage Priceline's Warp Drive?” and “Would You Invest In Corzine's New Hedge Fund? The former referred to Shatner’s surprise “rematerializing” in PCLN’s commercials and the latter on reports by the NY Times that former MFGlobal head Jon Corzine was considering a new hedge fund (unconfirmed).

“Q2 earnings season came to unofficial end this week.” --StreetAccount, saying that “while earnings reports were not as bad as some feared, there was a sharp deterioration in the revenue beat rate. The Street is currently looking for S&P 500 EPS to decline 2.9% y/y in Q3, down from expectations for 1.7% growth previously.”

Let’s leave it there for now, with a couple of parting sports-related comments.

Although the London Olympics ended this past Sunday, it was overwhelmingly viewed as a huge success for athletic performances and viewer interest, although some griping over NBC’s coverage and the usual logistics mishaps of any Olympics. The NY Daily News headlined, “Farewell, Big Ben. Hello, Brazilian beaches. Rio de Janeiro is now four years away from its debut as the first South American city to host the Olympics.”

And as avid NY Yankee fans, we cannot let the week go by without mentioning the latest achievement of perennial All-Star shortstop Derek Jeter, who joined Hank Aaron as the only players to have at least 150 base hits in 17 consecutive seasons.

Good Trading!
David W. (aka The Underground Trader)

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