Yesterday’s second upside moonshot in a row has now evened the score in terms of how many days the Dow has made triple-digit advances in either direction lately and the scorecard now reads as follows – 6 higher days of this magnitude and 6 lower days, and this is astounding in and of itself that there have been 12 such movements in the past 16 days. And just to show how volatile and directionless the market has become lately, the past 6 days have seen triple-digit Dow movements on every one of them and the score here is 3 on the upside and 3 on the downside.

And for that we have Fed Chairman Bernanke to thank because of his now infamous May 22 performance where the prepared statement and the answers to questions in front of a House panel were completely contradictory, with the answer being that the Fed might consider tapering the stimulus “in the next few meetings” the one that sort of bent everyone out of shape, so to speak. And the reason it was so controversial is that the prepared statement made no mention of this possibility.

After Monday’s upside moonshot the Dow began with a 40 point gain yesterday and then began to push steadily and choppily higher to reach its best level at 3:30pm with a 161 point advance before finally closing 138 points ahead. Breadth numbers were good at a 21/10 upside ratio and once again the VIX declined by much less than it should have relative to the extent of the Dow gains as it ended with a small loss of .19 down to 16.61. This is astounding because for the first two days of the week the Dow has risen by a total of 248 points while the VIX has declined by only .54, which is one-fifth of what it should have gone down.

The explanation is obviously that the nervous nelly crowd is keeping this VIX higher than it should be because of the feeling, not without justification, that the market invariably declines whenever Chairman Bernanke puts out a statement or holds a press conference, and if the market does get whacked to the downside as it usually does on days like this, then the VIX should rise accordingly by a large amount. This is why today’s 2pm -4pm time frame will be one of extreme volatility, to say the least.

For instance, on May 22, the last public performance from Bernanke, the Dow made an intraday decline of as much as an astounding 277 points from its best earlier in the day levels after he made that contradictory comment as described above. In fact, these 15,500 and 1689 levels on the Dow and S&P respectively that were attained before Bernanke’s second comment are the ones that the market has not been able to overcome since that time, and will serve as resistance for the time being, or even for longer depending on what goes on today.

Bond yields sort of stayed the same, awaiting today’s developments as well at 3.34% and 2.18% respectively for the 30 and 10-year maturities and the Japanese yen continued to weaken against the dollar, up to 95.33, which then justified the so-called “carry trade” that various market experts espouse as the reason for higher stocks on any given day here.

Crude oil is in its own upside world, advancing to a nine-month high and one can set their calendar to this phenomena as the summer driving season always allows the oil companies to extort as much profit as they can from the consuming public as prices reached the close to dangerous levels of $98.50 on “Middle East tensions” that of have been there for the past two years if Syria is the ostensible reasons for those tensions.

As mentioned yesterday, despite its loyal believers, playing the upside of the VIX is fraught with dangers, as yesterday’s close and today’s opening below 17 left 1.63 million June VIX calls hung out to dry with no value, but on the other hand, there are ETF’s and futures on this item that keep going, as well as the July series also, so this story is by no means over.

Yesterday’s economic reports were so-so, as the May C.P.I. showed that food prices declined for the first time in almost four years, which could help the Fed extend its bond buying program longer than some observers think it will. May housing starts rose by a bit less than expected while building permits, an indicator of future activity, declined by 3.1%

Talking about a real downer, how about the shares of the stock named after a fruit? They had the nerve to end lower on a day when the Nasdaq was 30 points higher and the S&P put in a double-digit strong gain. It ended with a nominal loss of .20 cents but this is really a failure because if it does not go higher on a day like yesterday, what will happen on a lower day like we are seeing so far, and it is declining by almost 5 points which is really sort of pathetic.

The calm before the proverbial storm is that the market is just drifting so far in a slightly lower pattern, as the Dow is currently down 20 as this is being written, and the other major indexes are slightly lower as well, and it is certain that these figures will change dramatically one way or the other at 2pm when the F.O.M.C. announcement is made, followed by the 2:30pm news conference (ugh), and how is this going to help?

Breadth numbers are negative at a 1 to 2 downside ratio and the VIX is actually lower as well, with a small loss of .26 to 16.35 after having been higher earlier, up to 17.18 and whether or not the settlement price for the June expired options series was above or below 17, there were still around 1.5 to 1.6 million worthless calls.

Bond yields are also just around unchanged at 3.33% and 2.19% respectively for the 30 and 10-year maturities and this will change as well after all of the Fed news has been released and interpreted by various market experts.

There was some good news on the earnings front today as two major companies, ADBE and FDX, both beat their projections, which hopefully will be a harbinger of better things to come as the second-quarter earnings reporting period begins next month.

The price of crude oil is not going higher for a change, but it refuses to go much lower either for reasons that I have mentioned often in recent days, and gold is finding a bit of support above the $1,350 level which has been holding for the past two months.

The only economic release so far was that mortgage applications declined by 3.3% in the week ending June 14, no surprise given the recent sharp up move in rates. So now all eyes turn to the upcoming events this afternoon and they will be discussed in more detail in tomorrow’s daily market notes.

Economic reports this week will include – later today – the huge one, namely the F.O.M.C. statement and Bernanke press conference; Thursday – weekly jobless claims, June Philadelphia Fed Manufacturing Survey, May existing home sales and May L.E.I.

First quarter earnings for 2013 rose by 5% and the projection at the present time for the second quarter is for earnings to be just around flat, and then we will ostensibly see earnings advances of 4.6% for the third-quarter and 5.7% in the fourth-quarter.

The S&P trades at 15 times the projected 2013 earnings of $111. Earnings were $85 in 2010, $92 in 2011 and $102 in 2012. The estimate for 2013 is $111, a gain of 9%. The average P/E multiple for the S&P going back to 1954 has been 16.4 and it has been 14.4 for the last 10 year’s average.

After four consecutive quarters of negative G.D.P. growth, we have had 15 consecutive quarters of positive growth, starting with the third-quarter of 2009, every quarter in 2010, every quarter in 2011, and every quarter in 2012. G.D.P. rose by 2.2% in 2012, and is projected to increase by 2% in 2013, according to various surveys, with 2.5% in the first-quarter and then in the low 1’s for the second and third-quarters before a fourth-quarter acceleration to over 4%.

Donald M. Selkin

Don Selkin is the Chief Market Strategist at National Securities Corporation, member FINRA/SIPC, (NSC) and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: {Bloomberg Financial, Reuters, Associated Press}.