Resilience of the S&P has to be supplemented by endurance of small-cap rebounds, and that has to lead to 'dynamism' for the economy overall. I see the market continuity as adequate, and anticipate more upside with some jockeying next week.

Note the inflation chart below. Pretty clear how more powerful computers or EV/ICE horsepower is treated by Government statisticians to give an illusion of lower prices. We've mentioned this a long time ago; both parties allow this to continue; otherwise the significant of serious inflation would be clearer from a statistical sense; as it is apparent to everyone in the course of daily life.

This report will be brief and I expect / hope to be in good shape within days (very dizzy yesterday).

A period of higher volatility has been called for regularly by technicians or those just looking at S&P multiples, for some time.  And so far their warnings are not heeded, though obvious somewhere during the 'dog days of August', a shakeout at-minimum will likely be on the docket.

Short-term we got affirmation of our preferred pattern of winding-down what in a sense was frothy almost orgasmic behavior among certain mega-caps; and transfer some of that energy to the long-suppressed smaller-caps, at least the few in the right (AI software) realms, or under-appreciated hardware players. It is notable that overall breadth was very satisfactory Thursday and Friday.

Certainly I've focused on a couple speculative issues more than others; and 1 is a hair stronger; the other shot to a leadership role among small-cap gainers this week. Those of course are BBAI, which might benefit from a new 'space' fund established by its single controlling shareholder AE Industrial Partners (over 1.3 billion), and the other being SoundHound, where SOUN is up 50% or so this past week; and even stronger on the Pacific after Friday's finish.

We envision both higher; although BBAI needs some news catalyst to really get it in gear; and it would probably fly higher, possibly in rather stellar fashion as we really it able from a long time ago. It really depends on what AE lets a management team talk about I suspect; as recent press releases give more hints of what they might be involved with and in the project pipelines as noted.

Market X-ray: diversification developed in this first half of July as desired; but boy it took some time. Nobody can definitively say if the 'switch was flipped' to continue and expand on small-cap gains; but I suspect that's the case now.

It is helpful that bears are still out there calling for market plunges or the Fed's propensity to hike rather than cut; and they are incorrect in my view and that's been the case all year despite the lethargy for most of the market until now.

I'll have more next week, and hopefully more recovered from Covid round 2.

More By This Author:

Market Briefing For Thursday July 11
Market Briefing For Wednesday July 10
Market Briefing For Tuesday July 9