E Market Briefing For Monday, May 17

Technical analysis here - isn't like weather satellites overlooking hurricanes. It is not yet possible to ascertain if this move (impressive on the surface and a part of the reflex rebound we've looked for) is the eye of a hurricane or storms have already passed. The bias is slightly for an extension; a retracement and then higher seasonally as we've already outlined. What's impossibly for now is to ascertain odds of going below S&P's 50 DMA which we bounced off of.

While 'money and liquidity' argue that money managers have the ability to get this higher (and will for the moment); inflation data isn't going away; so now of course we get a segment of players who will argue it doesn't matter; just look at how the market roared back. Ah were it so simple; it's not and it matters.

If and as you start getting an inflationary spiral, especially as it encompasses a wider swatch of the economy, you do get relative safe havens (tech stocks less than dividend plays); the argument falls apart if the interest rate uptrend continues. It's not just 2% 'red line' on the 10 year; but the FOMC meeting as well as how policy will be perceived. Markets will watch in advance.

Sure, some tech stocks will do fairly well regardless (Apple may be one); at the same time those that rebounded today 'because' crypto rebounded'; might actually be less enthused. That affects the perception of semiconductors and the real association between crypto-mining servers and graphic chip demand.

Most important this past week of course was the CDC lifting restrictions from a moderate viewpoint. The VIX destroyed anyone that chased the decline; at the same time so far you have a successful rebound off the 50-Day Moving Average for the S&P; plus you have small-caps and even Oil participating. In the coming news-sensitive week; you almost have the last chance to exhaust the rebound and have it back-and-fill, prior to our expected seasonal rally.

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William K. 3 weeks ago Member's comment

No matter what some say, inflation is here and it is reducing the purchasing power of those folks on fixed incomes, which is those not part of the finance elite. So hang on folks, the excitement is just beginning to start. (NOTE that excitement is not at all the same as "fun".)