Markets are trading with little sense of direction at this time as we wait for the second quarter earnings that will begin with General Electric (GE) next Friday.

After showing some recent improvement in market breadth, the bias remains neutral. Trading volume continues to be lackluster due to the summer and apprehension to take new positions.

The markets have shown some oversold buying over the past eight days but the upside has not been sustainable.

Markets will not be able to sustain any upside break unless we see the technical metrics improve.

Market sentiment remains quite weak. Take a look at the new high-new low ratio (NHNL). On the NYSE, we have not seen a bullish 70% reading since back on June 2 and May 9. In the technology sector, there have only been two readings at above 70% since May 10. Unless sentiment improves, the near-term upside will be limited.

Given the recent 10% plus correction on the NASDAQ and Russell 2000, there have been some decent opportunities to trade stocks. But if you are the worrisome type, you should stay out. This market is not for heroes. You do not have to sacrifice capital.

Risk adverse investors or traders may want to sidestep this market for now until we see some strengthening in the technical metrics.

But if you don’t mind assuming some risk, I believe there are some decent risk-to-reward trades out there given that stocks have sold off to levels that are more attractive.

Over the next several weeks with the end of the second quarter approaching, the market will turn its attention to quarterly earnings. For this market to jumpstart itself, we need to see strong quarterly results. If not, stocks may continue to edge lower.