Volatility risk remains high - so will continue to be sensitive to 'events', from the Fed of course, to earnings surprises (good or bad), to geopolitics. One of the factors encouraging us in the last couple weeks was the benign response of the S&P to a couple concerning news items, as well as liquidity removed in the marketplace (by the Fed), which has been emboldened to be active. While risk is there and shorts are scrambling, I'm pleased that we edged back in last month and were especially emphatic about the CHIP aspects for EV vehicles.

 Pixabay

At the same time the market priced-in a lot of that, so we got our rebound and slightly better inflationary data, although it's not really a 'Goldilocks' syndrome. I'd be surprised if this advance didn't run out of gas short-term, but definitely is a potential help further out, as we approach the 'doggiest days of Summer'.

Speaking of 'gas', my comments yesterday and 'both' increased and 'reduced' supplies from Russia to the EU might well have been correct (different source for each consecutive report). The idea being none or less to one customer as well as a reduced transmission of general supplies to others.

Two things:

Russia is holding out for more 'valve parts' that were inhibited by sanctions (maintenance next week it seems in another portion of a pipeline, a turbine still in Canada is what is claimed needed as they already got valves), but also Russia showing it's leverage over the EU's desperate needs for fuel, which is why I opposed Germany pushing this from the start years ago.

So an estimated 20% resumption of Natural Gas flows tomorrow, if it occurs, is a sign of how pathetic the situation is, as well as does argue for Europe not to get too carried away with assumptions about what this fight is indirectly just focused on (energy). Ukraine is in the right, testing modern weapons upon the battlefield, and Russia isn't exactly on the ropes, but also time isn't on Putin's side to extents he thinks it is, other than the energy leverage especially later.

In-sum:

 'If' some sped-up resumption of ceasefire talks occur, the market will have been prospects of holding together in this higher S&P range, without the need or propensity to retest the lows. Opening grain shipments from Odesa would be a positive that behind the scenes the antagonists are working on it.

Conversely a ramping-up of Russian aggression would not be well-received, nor would any further provocations by China against Taiwan at this time. It's a sensitive time of year, and corporate behavior is better than some estimate, at least so far. Housing of course remains a risk, both in China and the USA.

For now S&P is pressing resistance, the Fed is trying to soften demand, and a lack of serious spending disruptions so far actually encourage hawkish Fed at the same time a ceasefire or further dip in Oil would de-fang the Fed just a bit although for the moment Natural Gas 'to' Europe is really a market influence.

Fourth consecutive upward session, relatively calm upward consolidation day. You'll recall my admonition last week about bearish pundits not able to really lean on the market, which meant stocks were ignoring that with absorption.

Now you have the crowd missing the lows (especially of late June) chasing. It is fine and helpful as that coincides with short-covering and so on. However it is still tenuous and one shouldn't get carried away with optimism, which likely is actually helping. However S&P is above some important resistance slightly.

S&P is slightly more than a 'relief' rally so far, but some Fed hawkishness was already 'priced-in' as I'd noted, so the sky isn't falling but we're not rocketing to the Moon either. However we might 'orbit' a bit, which is essentially my view of being 'pinned to a range'.

Thursday could alternate swings for S&P, but try to hold together, with much depending on the degree of resumption of Russian Natural Gas transmission.

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