Blunt instruments, like Fed rate hikes, aren't impacting inflation or markets in ways many bears and economists anticipate; though it definitely is calming.

Freepik

In fact it's so calm that many may ignore the 'tension on the tape' as stocks for the most part are 'hovering' around the 50-Day & 200 Day Moving Averages.

There's an ongoing debate about value and/or active investing versus passive and certainly the recent tone shows how the mood of large-caps tends to filter down to investor or speculator interest in even the most interesting new areas of disruptive and innovative technology, creating a disequilibrium of sorts.

For sure there's nothing any of us can do about the roller-coaster tendencies of volatility and rebounds, without definitive resolution, though that's pending. Our view, and we might be incorrect or correct, is that 'if' we get a solid break below the S&P's 200-Day Moving Average, it will be temporary and precede a rebound probably later this month and continuing into April.

There are problems with that anticipation, but also knowledge that speculative positions added at attractive price levels gradually carry risk, but less than in the case of stocks where pending news needs to be seen, and then buyers do try to press the upside after a run. It's probably possibly less risk more often if one can jump-on in the wake of news, presupposing initial rallies on news isn't the only advance, so if not already aboard waiting for a period of consolidation which sometimes goes all the way back down, and sometimes just partially. It isn't always related to a stocks actual merit, but prevailing backdrop moods.

I should note we've seen a bit of both in the last few weeks, and everywhere a tone of lack of confidence (hence low 'traction') prevails. Almost everywhere, a reflection of the belief the Fed's fight (against Congress/infrastructure and even The White House spending programs) .. that fight isn't completed yet. It tempers enthusiasm, and makes rallies less 'sticky', again almost broadly.

Meanwhile the crowd is focusing on going into Treasuries versus equities and sure, money managers or even advisors are sufficiently frustrated by markets and perhaps their clients, that they relish the allure of 'risk-free' assets. That's of course workable for the short-term, but concedes missing an upcoming low (with the proviso that there actually has to be that short-term low forthcoming).

In-sum: 

we're actually surprised that 'aggressive neutrality' we advocated has endured this long without a failing rally and breakdown, but that's the case. It's essentially hinting that this goes on and is pending a resolution. Almost 'as if' a money manager doesn't want to make a decision, so awaits Ai to do it sort of automatically (Algo-trading alone). That's rough, but can create temporary or unsustainable declines if certain guidelines are solidly broken (200-DMA), and that often leads to 'automatic rallies' (rebounds) regardless of later action.

Momentum is 'missing in action' as technical approaches appear suspended, as a slow descent down for S&P basically seems to be 'waiting for Godot', or some sort of Fed pivot, which isn't yet on the menu barring exogenous shock.

It's all about 10 year yields testing 4% while 2 year's are around 5% and that's a reasonable competitive position for Treasuries versus equity investment. So we hear about 'stagflation' again (higher prices and stagnant economics), sort of a tug-of-war that we discussed many months ago and in a sense endures. I can't make a market (or global economics), and reflecting on this is fatiguing. I do suspect that we'll get Spring rebounds, but in what content will be pending.

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