Market Forecast: Bound and Bumpy

Then there is the long tail of the European debt crisis. Though, to some, 2012 doesn't feel as bad as 2011, Spain's woes likely represent the greatest systemic challenge to the eurozone since the contagion began, and it is hard to see the market making much headway until there is some meaningful resolution. (The next data point for Spain is Tuesday morning's remarks by Mario Draghi, in which we might receive hints regarding ECB policy options involving more LTROs or even an activation of the SMP.)

The consensus is that Spain muddles through with an ECB firewall. We'll see.

Over there, the first round of the French elections takes place this Sunday. François Hollande continues as a favorite over Nicolas Sarkozy, which would be an unfriendly development for the French economy and could even upset policy aimed at firewalling the debt problem.

Finally, China's landing (soft or hard?) remains in doubt and is still subject to interpretation.

Reflecting the growing ambiguity of the domestic economic recovery's trajectory and some of the other concerns (above), the S&P 500 is now off by nearly 4% from its high of 1422, but it is still up 9% year-to-date. The market indices have dropped for two consecutive weeks, something that hasn't happened since February as investors have grown skittish. Volatility appears to be on the ascent, with 1% daily moves in the S&P 500 last Monday, Tuesday, Thursday and Friday indicative of a lack of overall conviction on the part of market participants.

In summary, growing uncertainties point to a trendless market contained in a range between 1300 and 1430 on the S&P 500, with plenty of volatility and opportunities for traders but with more limited fortune likely presented to longer-term investors.

The skies are still not clear and will likely remain cloudy as incertitude remains on the front burner.