MARTIN SLANEY<br /><strong>HEAD OF DERIVATIVES, GFT</strong><br />AS WE head into the third quarter and market volatility continues to fade, it&rsquo;s tempting to think we have a tranquil summer ahead, and that the current range-bound trading patterns are to be entrenched for the holiday season. Some of us may even be scouring the Ashes schedule and hoping the quieter markets can at least present us with the chance to cheer on the boys.<br /><br />But there are signs that we may be about to see a summer surge in volatility. As more economic data comes in below expectations, we&rsquo;ll be hearing a lot more about false dawns and a double-dip recession.<br /><br />Many of the optimistic investors are clinging on to their long CFD positions, whether they be in indices, equities, gold or oil, but the bullish mood is about to be put under severe strain. The coming weeks are going to be a crucial test for the US as we enter the second-quarter earnings season which kicks off tomorrow with Alcoa. With American house prices still falling and unemployment there showing no sign of improving, I expect to see some major jitters as we discover just how bleak American corporate earnings and &ndash; most importantly &ndash; their outlooks are.<br /><br />The markets can&rsquo;t swallow much more of the same old &ldquo;the-numbers-are-bad-but-less-bad-than-we-thought&rdquo; spin. We need to see evidence of something much more positive, some signs that bottom lines are heading in the right direction. Merely beating overly-pessimistic expectations is not going to cut the mustard. This is going to be one ultra-sensitive market as the results pan out.<br /><br />Since the beginning of May, volatility has been waning but we are starting to see spikes in volatility &ndash; such as after the non-farms last Thursday &ndash; which suggest this trend may be about to turn. We saw similar calm-before-the storm patterns before the pandemonium which struck last September. Strauss et al may not be the only ones batting on a sticky wicket for the next few months.