A collapse in tightening expectations - is the key takeaway that matters to the stock market, from July's consumer price index decline. It's insufficient to trigger a 'Fed Pivot' yet, but is helpful to reduce tension about later prospects.

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The net percentages of inflation categories that held high prices is high, but it broke in some most-visible areas, especially food and fuel (areas key to most consumers). So, stocks generally held traction through the session, and that was helpful. All to the good for now, with S&P still at relatively high levels. Of course the star performer of this run-up has been our pick of the year: AEHR, with optimism that it won't do what it did months ago, and that is retreat quite so far on pullbacks, although nothing is assured to go up without pauses too.

The Fed has more to go, but the markets are adjusting even with underlying inflationary trends remaining prominent. Crude Oil is rebounding a little, as it seems to have found a short-term low where we expected in the upper 80's, as it came down from excessive bullishness as it pressed the 120's earlier. 

The big rally in Index prices leans against what the Fed is saying about 'pivot' ideas, and so far there's not (instead) a mea culpa from the Fed simply saying 'great' and taking credit for what really relates to lower global Oil demand than to a runway for the Fed to be or not be more hawkish for longer. China ending (it seems) the Taiwan blockade and trials might actually increase Oil demand, and hence a rebound in Crude prices, also if COVID calms on the Mainland. 

The Fed does want financial conditions a bit tighter and restored to 'normalcy' beyond simply unwinding the absolute lower rates during COVID's emergency, that doesn't exist now. Again this is toward a 'business' normal rate range, not one that will please consumers or those looking for easy money spending. 

Next year will be interesting, and will be past the monetary tightening (even if the basic rate hawkishness prevails into 2023, which is likely). Buying stocks, starting with the June low (especially in value-based growth speculation and a few entries in some bigger-cap techs like a Ford or GM or Texas Instruments or a couple others, but not heavily) made sense. Chasing big stocks upward at this point ahead of the Summer's Dog Days, well, it's increasingly risky. But holding low priced stocks from June (or a handful now of speculations on-top of the larger core holdings) is acceptable with an eye on 2023, not near-term. 

In-sum: 

The S&P is rangebound (for the moment) at a higher level, and also achieved our 4100-4200 goal, which was viewed 'as about enough' for now. Of course if the market likes the morning PPI number, well 200-DMA in view, intersecting just over the 4300 level. 

The long-end of the Yield Curve is coming down, tighter monetary policy has a ways-to-go before the Fed is 'comfy', while the Dollar's decline and general expectations for forward pace of Fed rate hikes, supports constructive views.

By the way there's a crowd (the same technicians on Wall Street formerly with the 200-300 / bbl Oil targets I thought quite absurd) .. now call for 60 /bbl Oil. I also think that's also absurd, at least for now. Rather Oil's rebound short-term is likely, even with a forthcoming S&P pullback, then you might see lower Oil for awhile but ironically it could be with more inflation unwinding that softens Fed 'zeal' for higher rates. Part of this likely saga is for late this year or next. 

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