A 'Banner Week' for stocks yielded a skeptical crowd viewing the closing 'Triple record highs' made by the Dow Industrial Average, S&P, and notably by Nasdaq; while what is driving that market particularly is large-cap tech. Add that sector to some Financials, Oils, and a few household or consumer names, and you summarize what gave the cyclical lift needed to fuel not just an extension of our forecast rally over the last six week; but this juggernaut of a market, on the surface.  

This matters, given that much of the upside we'd anticipated likely from the late-May lows into early-mid July is achieved; so one reason we indicated a caution not about S&P moving over 3000 (which we expected); but rather a suspicion that the upside participation would broaden-out sufficiently to hold things together. It's been a light-volume rally amidst minimal technical trend enthusiasm; and that's why it was likely they could nudge prices yet higher. It won't be a given that it extends much further; but the skepticism helps. The rate market is another story; as equities really needed Treasuries to fade a bit Friday afternoon; after a couple days of rates 'backing-up' amid Auctions that were sloppy to say the least (especially important 30-year duration's).  

I noted the other day that it's a risky market when everyone is counting on a friendly Fed (which we thought they'd find from Chairman Powell's Hearings testimony); because it's based on 'data-dependency' which affirms sluggish economic activity; irrespective of the Fed's failure to identify this last year (a point I made related not just to the Fed, but to the probable breakdown and washout/capitulation into weakness late last December); or whether Trump (along with the Fed) both lean for lower rates, although for different agendas of course. The Fed 'spun' it to help unload the Fed Balance Sheet last year; while the President 'spun' it 'as if stronger' for political purposes.  

Stocks running-up into the widely-expected sloppy earnings season for Q2 reports, tends to move money into areas that are perceived as high quality; although some of those have more multinational exposure than appreciated (which is fine 'if' the purported progress towards a 'China deal' materializes into an actual Agreement with Beijing on trade). Some transports warned a bit about how important this is; however some of those benefited from a lift in inventory building by those companies (not the shippers) fearful of tariffs. Notably BASF Chemical's warning; and today's shutdown by a truck freight carrier in the U.S., are indicative of problems if trade isn't sorted-out soon.

Now, we have the market debating what sectors are worthy of buying (few if any; and there it's selective but mostly in under-the-radar corrected stocks, that are laggards or non-participants, or notably might benefit speculators if there's a China deal sooner rather than later). Generally you already have air-pocket if fundamental news strikes, or earnings are missed, by stocks in higher price areas. That also suggests questionable underlying support for such stocks; part of which is seasonal with limited fresh money coming-in, aside perhaps hedge managers that totally missed this year's upside as I've pointed-out (that makes them high-risk buyers now chasing strength).

In sum: most of the big names have run a long way; and while we correctly called the move, it's risky to chase prices now; with the last good buy point being the essentially-nailed S&P 2750 +/- washout lows at May's end. The only fairly safe Index-buying areas were the capitulation in late December and again the low areas for the projected May decline. Now may be time to either take a little off the table, hedge slightly; or be prepared for volatility.  

Volatility often appears when most dismiss it and seem complacent; such as increasingly is the mood out there; even when mixed with skepticism. Much of that relates to insecurity (justified) about what kind of deal will be coming with China (we think it's essential and so far nothing much has gelled even as the hints of this being a 'quiet time' in negotiations dominates rumors).  

Our view continues to be this move edging higher but increasingly sensitive to news (geopolitical surprises, not just trade); and individually responding in reporting sequence to earnings. Sell the news may be the operative tactics on solid earnings reports; for at least partial positions (unless in stocks that are seriously solid players for a potential post-trade environment).  

There's no change in our general anticipation of rolling corrections going forward this Summer; but technicals say become wary while not necessarily positioning for any imminent breakdown, barring exogenous news or a new failure in China trade talks.