Fairly neutral weariness wrapped up this choppy defensive week; as long anticipated exhaustion set into the Senior Averages, albeit with a real twist.

That twist of course is the NDX 're-balancing', coinciding with July Expiration, which should be a minimal event (turned-out it sort of was); given influences of both of these Friday events and a bit of apprehension ahead of the FOMC. or confounded strategist mindsets. Oddly ways it unfolded 'isn't negative, yet.

This situation sort of occurs amidst a confounded strategist mindset; where a lot of bulls or optimists concur with the ideas surrounding 'signs of recession; with many calling for a market top, with which I concur for S&P given absence of broadening-out. But with breadth continuing favorable, the market actually might have pockets that are more interesting.

In a sense, while I have already said you could get a couple hundred points of S&P correction (more or less); that causes pondering as to whether increased short-selling might be a factor short-term; as in rally mode briefly, depending on what stance the FOMC takes on Wednesday.

Earnings are certainly on analysts' minds; and while some disappointment is a bias on Wall Street, I still think the money managers are primarily interested in buying dips more than selling rallies. Maybe the Banks have run too far; Oils a bit; while S&P having clawed-back last year's losses can consolidate.

S&P reminds everyone that the Index is high of course; and just the degree of stability we saw on what could have been a chaotic Expiration / Re-balancing day (and it was much calmer) implies they're not as negative as often stating. It isn't something we can really assess more deeply given the Fed coming up in a few days; but is does reinforce the idea of longer-term want gains from an upward drift of holdings, not a calamity or anything beyond 'pause to refresh'.

In sum: The Fed might due the Quarter Point hike next week; so show their resolve as some say; although I think that's nuts since neither business nor consumers need higher rates; and some (like commercial properties) might be pushed over the edge more easily with even harder challenge such as a desire to refinance; which becomes less doable on every rate tick higher.

Broad mediocrity reasonable describes a lot of stocks and the economy; plus of course the living conditions in much of the world dealing with heat waves. I mention this because the heat-related issues are inflationary; do frustrate for the most part everyone, and probably mitigates any hope for lower food costs.

The Ukraine War and Russian's threatened 'blockade' of grain-carrying ships, isn't normally something we'd even consider with regard to the stock market's prospects, but yes indirectly as it's necessary for the Fed to 'grasp' this issue, instead of the fiction that conventional monetary policy shifts will fight inflation triggered by events that are not even in the Nation or world's control (not that I'd blame Russia's Putin for a market decline; but he is affecting food costs as a supplemental problem on-top of poor crops everyone from the actual 'heat'.

This is part of why I think the Fed should do nothing next week; and even be a bit bold and acknowledge their limitations; while continuing to work-off reserve or Balance Sheet issues, which typically do support 'a quasi-recession' bias.

The new week is a big week; the majority of Industrial company earnings will be forthcoming; and that matters to the Senior Index and S&P more than NDX so it can be interesting. Of course one can argue that timing trades will be lots more daunting, with the Fed decision tossed into the mix. Many Industrials are too expensive even as technical patterns remain favorable. So while there's a lot of shorts in techs and specialty stocks, that's less so in Industrials. Ideally it will contribute to setting up a shakeout; but so far the big stocks hold together pretty well. And while we got our upside near-term conclusion, I'm not averse to higher individual stocks; just continue to suspect it has to be outside major big-cap leaders (or Industrials); because the longer-term argument is bullish.

Bottom line: this wary market isn't a surprise; as the macro trend is still alive if extended. But the broad market is not so overbought as the leadership even adjusted for the re-balancing (though we need to see how next week absorbs not just the news, but the factors influencing indicators and hence valuation or other metrics as relates to the macro 'assumptions' about an overbought S&P.

The new week features many big earnings reports and the Fed of course; but I wouldn't be surprised to see some stability or rebound after an early dip. Of course after that, typically bids become slim before the FOMC decision.

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