'Tightening 'psychology' is how I view Friday's upward consolidation which continues; but Friday was almost exclusively about big-caps, not value stocks which many analysts concur are the preferred candidates for 2022 gains. It's psychological because traders focused action on holding up market / indexes ahead of a week on pins & needles; even if prospects are likely known. 

Friday NYSE Breadth was actually 'slightly' negative, which reinforces overall neutrality as a view for the session; while Oil(s) and Semiconductors tended to be firm; as recent 'chip wars' (or threats) increased. As the United States considers restricting the sale of components for processors to China the plot thickens; and China accuses us of inhibiting normal trade/manufacturing.

We as the free-world leader learned a supply-chain lesson during the Covid pandemic of course, and leaders have been very clear (both sides of the aisle and Silicon Valley too) about the need to 'in-source' more of our crown jewels not only in terms of IP, but physical manufacturing. China's response probably relates to their heightened threats against Taiwan as they contemplate ways to seize the Island somehow without destroying the huge semiconductor and related plants. (Yes they likely care more about the factories than humans. It seems like that lesson has also been learned during the pandemic.)

(Higher production levels are 'now'; larger concern in outlying years ahead as drilling already ebbed and secondary / tertiary recovery only yields so much).

The big debate is whether we're at 'peak inflation'; and the answer is probably not. The Fed is way behind the curve; but probably isn't going to race forward in hiking; so you get some steepening of the Curve; but the Fed knows what's at risk if they go too fast and too hard.

Next year either way will see a shift into 'value' stocks; hawkish Fed or not. A 'thing' I sort of like about the market now; is that so many technicians persist in calling for a 'meltdown', especially among the mega-caps. I called for them to correct and shakeout; but I've avoided doctrinaire bearishness for awhile; and that has been good judgement with so many fighting the Fed for 2 years.

Now that sort of changes as the tapering commences; but there are mitigating factors that 'may' restrain a full-out monetary attack that is reflected in shifting bond/stock allocations so many expect. It might be more modest; restricting or limiting the mega-cap upside prospects; but enhance those of smaller-caps. I should add especially if they are in new-technology or health areas where rate pressures are secondary to (often) progressive or disruptive new technology.

In-sum: little change in an upward consolidation session. The FOMC meeting is the big event next week; and we can sort of script-it-out now; knowing the Fed won't give us the same kind of stimulus of the past; wants to slow growth to the extent it is too frothy (which I don't think it really is); and if some analyst calls for inflation to peak turn-out right; the Fed will still adhere to their 'plan'.

Percolating in my head is the idea of a Russian/Chinese axis and geopolitical risks of twin conflicts almost coordinated to throw us off-guard and stretch our capabilities to respond. Russia is more a financial issue; as they need sales of Oil & Gas to Europe; China doesn't want to disrupt a trade relationship more than it already has distorted it; but is very serious about encroaching Taiwan's freedom. The concern will be if they do that; the Philippines will be next.

Asia could be this current era's version of 'domino effects' so lets hope calm with logical appreciation of global growth (interdependence not subservience to China) prevails. Otherwise you're looking at a variation of the 1930's both in Asia and potentially Europe. However while I'm not an eternal optimist, it's so hard to envision China (especially) destroying the global economy and taking their own population back to the Mao days. So perhaps they're in a daze from the pandemic they triggered (presumably inadvertently); and the focus stays aimed at robust post-pandemic growth, as would be the ideal for 2022-'23.

Ultimately the Fed will succeed; with the greatest pain being if inflation really is super-high on a truly persistent basis; although my own call is for enduring inflation in 2022; but obviously it can be impacted by events. We're not ending the overall inflation levels anytime soon; while the pace may finally stabilize.

Among the events are geopolitics. If you find armed conflict with Iran, that's a more direct impact on Oil prices than even a fight over Taiwan. And pressure to take a stance in Asia is increasing. I have reservations that will be eased.

Two moves by the SEC impressed me and I believe are worthwhile. One is a statement regarding regulations and shareholder-candor from all future SPAC offers so that individual investors are not at a bigger disadvantage to insiders aware of a lot of other factors. They 'say' they support the concept done right.

Of course I've been skeptical of SPACs, and even when they get cut-in-half (frequently), it's not easy to get extended rallies going, because the crowd that structured the SPAC(s) typically gets-out quick, and retail buyers just sit and watched decline. We bought a couple such half-price SPAC stocks, and are pretty optimistic about their prospects in 2022. But at the moment they're often still coping with trying to offset tax-selling from over-eager initial buyers.

The other SEC action is a long-time coming. That's investigation of so-called research firms or even hedge funds, engaged in short-selling and/or collusion to spread negative information on a company (whether the info is accurate or not is secondary to whether there was collusion intent on manipulating price).

This SEC investigation is out of their Los Angeles office; which suggests they are (probably) focused on technology or biotech stocks heavily manipulated by hedge funds (or others) as suspected; or they had lots of communications from disgruntled shareholders. A price decline of a stock (if deserved) is fine; suppression by manipulation (dark pools or otherwise) is not; so this will be a very interesting process of cleaning-up that activity; perhaps. I wonder if this puts fear into the (typically arrogant) players who dominate the short scene.

It also gives a sign that this SEC is finally trying to be responsive to investors.