Extended military 'exercises' by China around Taiwan were something we noted before the weekend, and as you've likely heard, they continue and are not 'targeted' to end on any particular date. While Indo-Pacific countries are it seems proud to 'not take the bait' from Beijing, there is risk of escalation.

And since we all know about the stock market's faltered rally on legislation as rallied S&P early Monday, we just want to emphasize possibility that seriously isn't in the market, 'in-case' President Xi is reckless rather than logical, and he goes forward with the 'rehearsal' leading to an actual assault.

Lumpiness of economic prospects, variable inconsistencies in guidance (the Nvidia is an example, although we warned about it at nearly twice the price as some pundits named their dog after it or other absurdities 'after' a run-up, our response to that was to embrace AMD which did far better over some time), the geopolitical concerns in Asia-Pacific, Europe and even the Middle East (all of which are underestimated by markets until or unless something happens).

Then of course a domestic political picture, which hasn't much impact for now beyond the investment tax credits, EV credits and corporate tax matters. But it does exert some effect on polices that have drained capital and know-how out of the United States for decades, and that's very important to semiconductors.

In-sum: 

The global energy challenge isn't resolved, war continues in Ukraine, China encircles Taiwan and hasn't ended the so-called 'drills', Oil prices are stabilizing in the high 80's-low 90's, as desired, and we have legislation that's definitely helpful to an overall growth matrix for many sectors, especially EV's.

So we had a 'serious bill' passed in Washington, a notable S&P extension that was sold into (in fairly classic for an early Monday upside start), and we retain optimism for an intraweek rally, sort of a Tuesday turnaround perhaps, with of course a proviso that we don't have a new overnight 'crisis' (such as China).

The Nvidia (NVDA) so-called bombshell doesn't surprise us at all, that company very clearly focused on gamers and crypto-mining, whereas others like AMD (AMD) were more focused on the data-center enterprise computing. Crypto crashed and gaming was at its height (for console sales) during the pandemic, then softer.

The backbone of this market remains Oil & Financials, both of which moved into 'ranges' rather than defined new major trends, while Semiconductor or EV stocks are helped by the new 'legislation', with a majority of recent rallying preceding the vote. Selectively some of these should rally more this week.

We'd continue to watch domestic-centric stocks (especially tech) and retain a good concern beyond inflation, to realize that a strong Dollar I embraced for so long, and inflation even as it comes down, does dampen revenues for most of the multinational companies that rely on majority income from overseas. It's likely helpful that there's no FOMC meeting this month, so we can just watch a few reports that come forth about the economy, and note commodity drops.

Bottom-line: 

It's not smooth-sailing, and we share the concern of the crowd that entirely missed the move from mid-June forward, however we're not quite fighting it like they do, and are open to surprises or simply seasonal choppier activity. The economy is 'not' slowing too quickly, and remains strong in some areas of the country, although it's not uniform. And there's the drought as well as geopolitical issues, which can bring forth a return of S&P 'turbulence' (SPX).

For the moment barring news, we'd look for an intraweek turn back up, with a modicum of resistance at the S&P 4200 level. CPI remains the most important data event of the week, which should be Wednesday.

More By This Author:

Market Briefing For Monday, Aug. 8
Market Briefing For Thursday, Aug. 4
Market Briefing For Wednesday, Aug. 3