Turnaround efforts were mounted repeatedly and resisted repeatedly too. I have made a point that whether or not we got a reprieve ahead of Labor Day, the concerns about the now-starting September-October timeframe prevail. 

Pixabay

While this too-and-fro may merely prolong what seems to be the inevitable, its arrival could be stymied by only a few developments, including Oil breakdown really proceeding (not too likely), or by Russia and Ukraine making 'peace'. In other words allow for bounces, but there needs to be something behind them.

This is the heart of the 'don't fight the Fed', and that tone definitely dominates. It also means the S&P has been able to work to a daily oversold condition, but the awareness of continuing risks, lower liquidity and global tension relating a lot more to climate change and energy as well as 'electricity' costs (Europe) in addition to the central bankers hellbent on breaking inflation.

As they do that, it also breaks some struggling societies. So I can't say that's merely 'incidental collateral damage' as they see it. It's rather plainly evident now, so the argument for the Fed threading the needle is compromised. While they don't have material downward 'earnings estimates' (and lower valuations that result) 'yet', they likely will have those forthcoming for big-caps. 

In-sum: credit spreads haven't blown-out (yet, and 'if' that's forthcoming), but in the process heavy burdens to be borne by people (the Fed focusing not on investors but general society) ... the burdens might be so bad that the Fed will back off and in which case the market would snap-back rapidly. 

How could that happen? A serious Housing break. Home values are key/core to family perceptions of Net Worth, often more so than any other asset class. I realize more peoplejust laterally swap if they moved, but it is perception. So if the Fed (due to that, or basic economic crumbling) finds itself cutting rates in the next year, you get into another rapid advance. Until then rallies would tend to be more limited, or simply sporadic, but it's pretty clear so many managers missed the move from the June lows, so they will hop on the next one 'sooner rather than later'.

And yes that's also why they talk down Semiconductors or a few areas where fundamentals are intact, since they want share prices lower. However late today there was a move to prohibit Nvidia (NVDA) from selling chips to China, and that will likely press the SOX (Semiconductor Index) sympathetically  lower for others  in the space, at least in the morning. 

It's month-end, hard to say if early September brings a seasonally-frequent (at least temporary) rebound, but with nothing particularly improved structurally or fundamentally at the moment, we have to presume rebounds are within what's an ongoing overall declining evolution going into a typically-tough time of year which could surprise, but so far nobody has much reason for excess optimism (and maybe that's the core of contrary opinion, but it's insufficient if war, high energy and fuel, and other 'real-world' heaviness continues to predominate). 

The Fed itself can't really get much more hawkish than they are, or can they? I suggest 'yes they can', the Fed could go all the way to getting the Funds rate above the Inflation Rate, and that could entail significant persistence many of the institutional analysts don't envision them having the mettle to stay with it. 

I fear they do due to linear thinking. They kept rates low too long, so how can we say they won't keep rates high for too long (behind 'yet another' curve). Of course we can't say, but clues may be forthcoming in the weeks ahead, lesser or greater QT levels, perhaps more important than regional Fed-head rhetoric.

S&P and other market segments have had minimal success if at ally with rebounds, though on this day S&P saw lots of swings.

These alternating 'shuffles' hint at some sort of rebound in the wings, even as S&P closed on the day's low (the last half hour rebound efforts failed just as it hit the Bell), and futures are down this evening. Just keep in mind the shorter term trends are all down and negativity is nearly unanimous again. 'Flutters' of rebounds are likely after probably yet-another sell-off to kick-off Thursday. 

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