Falling bond yields ironically fueled the equity rebound; capped by what I'd seen as key to extending the overall move: passage of the 'CHIPS Act'; now achieved. We'll see more 'recession affirming' data with next week's Jobs and JOLTS data; but the complexities of this market are overcome by the rally.

More tech earnings on-tap; starting with our long-time favored AMD (from 17 and portions sold well over 100; eventually 200 but not now). But of course it's the Pelosi trip to Asia, with a still-possible stop in Taipei, that gets attention. If China interferes or uses the visit as a pretext to launch artillery fire on the tiny islands (like Quemoi and Matsu closer to the Mainland than Formosa Island), well of course that's a concern.

Of course most will be looking at the Jobs numbers; a technically-extended S&P and so on; as well as movement of the Oil and Dollar next week too.

(At the moment bears look at the Ratio-Adjusted A/D and are encouraged about an upcoming retrenchment. Absent 'war' risks; it can be just pullback.)

While nobody should envision a 'hot' conflict between the U.S. and China, the bounceback in the S&P is more than typical bear-market rebounds; even as a slew of technicians and analysts are not buying the rally. Um.. I agree not now as it's long-in-the-tooth short-term; however a lot was accomplished by this.

Sure, I looked for the S&P move from June into early-mid July; then clearly I'd resisted the temptation to call an end to it because of the pending 'Chips Act', and its importance. I thought it meant more than the obvious Fed rate hike. At the same time the Fed Chairman did play it adroitly; as we've indicated.

The semantics of 'technical recession' are silly; as Powell doesn't have power sufficient to curtail inflation; which extended largely on the back of war and Oil as you know. Also Grain is just starting to move from Ukraine; so that may do the same to fight inflation as Oil spiking and pulling back did; temporarily or a bit more. It depends; and largely on factors neither the Fed nor politics control for now (although there are political aspects, especially as relates to the war).

Many are more comfortable with the market now, which probably coincides at least temporarily with greater risk brewing; and just off-stage. However, if war can be contained, and the S&P retreats within a reasonable proportion (not a full re-test of the June lows, but a partial retracement), odds of our June low being an intermediate low as previously postulated, will be enhanced.

In sum: so consumer staple names are likely past or at their maximum prices, and that matters. Same for retail gasoline. And probably the same for 'rentals' that have priced the half the Nation that rents out of the market. Inflation won't be dropping prices to old days; but there will be improvement (less tense times).

We know the Fed and Government officials had to lie... sorry... shade truth a bit. Because they can't say 'we're going to hike interest rates into the face of a Recession, and you should thank us in Washington for doing it'. Hence all the spin of the last couple days from the Fed, analysts, Yellen, apologists or the President. I wish they'd explained it clearly; but that's not politically correct of course. So you got masterful denial of economics most knew for weeks.

In many ways, the 'death of easy money', whether in markets, crypto, home lending or other aspects is what we're presiding over; and that's healthier for the longer-term, with certainly some short-term irregularities unavoidable; so the Fed, and actually the market too, are dealing pretty well, considering.

Most view just shades of optimism out there; and are clueless about how the bulk of stocks bottomed oh, months ago, or even last year. Troops retreated; as Generals stayed out-front; and then all retreated. That's why you can't 'crash' the market again; although you can scare buyers away with mega-cap shakes of course. And you can (and will) have more bouts of alternating turbulence.

That's why this week's market ended July with big-cap relief rallies and absent awful news; we'll likely see limited additional upside before stocks take a rest. Remember; back in May the small-caps 'stopped going down' while S&P and Nasdaq were still declining. We saw that as a harbinger of a low (Generals were just piling on-top of the Troops) and it set up our June turnaround.

Investors (and even more so consumers) have other worries: like Housing. It should be noted that the younger Generation will probably correlate a drop in House values with Recession and lower stock prices. Correct on both counts to an extent; but again the S&P and broad market anticipated that well before recent action. So yes, the Housing decline will help moderate excess pricing in rentals too; and see some money flee the segment (and shares).

However history will suggest that will help bust inflation to some degree, and it will play into stocks retreating from excess short-term levels; but not disasters. So, too much too quickly will be the applicable term; but it's not 2007-'08 and I don't envision that kind of Housing slide or debacle. I do see things softer, and that's a reason down-the-line for a calmer Fed; whether their data-dependent (flexible?) thinking is premature or not.

Bottom line: 'tech' led the upside so several indicators are now back to a sort of declining tops pattern; or have that pending as upside energy is expended; at least for now. We are 'not' jammed overbought; so this can persist or horse around a bit; but mostly we've had the move; with turbulence to then follow.

From a technical standpoint the market is not hugely expensive; but pressing it as far as short-term moves. Since Intel is a fiasco; people will watch AMD; but they will probably not disappoint; although not expecting anything grand. I know people are trying to 'bear' AMD and I think that was doable months ago (I even encouraged partial sales up toward 150/share) but certainly not now. If by chance it does drop; that's a buy not sell. If anything the woes of others are tailwinds for AMD, which ultimately goes up if China doesn't bomb Taiwan. (!)

So far the Fed threaded a needle; balanced the rhetoric and even Grain now's shipping from Ukraine. Hint of peace and stabilization? Hope so but can't say that's the case; but we do know that actual military and (most) political leaders know better behind-the-scenes the horror of war and that it's not inevitable as relates to the U.S. and China (and presumably Biden & Xi agreed on that).

So we'll see; all I can say is that this is not time to press the short-term upside for the big-caps that already ran; and to be prepared for 'dog days of Summer' that normally should ensue. But that doesn't mean a ferocious collapse unless there's truly an existential event that nobody can control. Preferably turbulent.

More By This Author:

Market Briefing For Thursday, July 28
Market Briefing For Wednesday, July 27
Market Briefing For Tuesday, July 26