Hedging their bets is what analysts seem to be doing. Lots of discussion of topics and issues we've already reviewed, and it comes down to a difficult economy, a probable softening of policies from the Federal Reserve, while of course the tensions regarding both geopolitical 'theaters' remain active. While all that's debated, S&P managed to fill the upper gap we've been targeting.

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We still lean towards the Fed cutting rates in September, even though they're already a bit too late. But again depends which part of the economy you look at. In that respect I appreciate the Fed's ambiguity given economic bifurcation and of course a cautious (data-dependent) Fed ahead of a raucous election.

The inflation risk is not lower than the unemployment risk as some think. The loss of 'buffers' (like personal savings and citizen credit card balances being lower rather than higher) is a concern. Part is Government's fault for enabling excess spending towards and after the peak of the pandemic, or engendering votes (or thinking so) by all the spending and 'free' money at the time. All that set-up the overheating, and not it's very difficult to chill things 'reasonably'.

I really don't see a need to explore this again, there are variables, the S&P is in a zone...from which it can go any direction. Much of the favorable CPI for tomorrow is probably 'in' the market, which means more risk if by-chance it's more inflationary than the Street is expecting. On the other hand, should the economy appear like it's sliding into recession, any rally on CPI could be sold rather quickly, and we resume roller-coaster behavior expected for August.

Market X-ray: 

We can say growth is slowing, rotation started, pauses and will beckon again, but much is meandering with lots of seasonal and monetary uncertainty, and all that is within the range of our expectations for August.

The market will be disappointed if we don't get a rate cut in September, while for the moment just awaiting the CPI keeps everything were it was, essentially on 'tenterhooks' as observed for days. And a mild intraweek S&P rally effort. I would not be optimistic about how far any upside gets for now.. actually risky.

In my early days, I noted a problematic pattern once in IBM (IBM) and another time in Microsoft (MSFT). In both cases the shares meandered and then plummeted very sharply, but temporarily. Perhaps something is setting-up similarly near-term?

I'm referring to Google (GOOGL). After today's Close, Bloomberg carried a story that the US is 'considering' a push to break-up Google after a ruling found that the Company monopolized the online search market. They just figured this out? haha.. Of course we already mentioned this, and how it could impact Apple (AAPL), which is paid a lot (billions) for allowing Google as the default search choice.

And by the way as to specifics, sometimes the 'sum of the parts' is worth lots more than the whole, so 'how' a breakup of any big company occurs matters. I can think of another. Next year 'if' Amazon spins-off say AWS, (AMZN) that's hot and it probably makes total shareholder worth considerably higher and won't need a push from Washington to have such an event occur. Likely key 2025 event.

Bottom-line: 

Well S&P (SPX) is barely over 5430, so we filled the breakaway gap I'd pointed out as likely for this intraweek rally. That fulfills the ideal S&P rebound expectation, and we can do more 'if' CPI cooperates in the morning.

But that's not to say it doesn't precede revived S&P selling, probably not from financial news. It could come from specific moves against Alphabet/Google, or it could be a major Hezbollah/Iran attack on Israel, or if not that we merely meander further.

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