Tension on the tape  has not eased at all, as a 'gunfight at the OK Corral' seems stalled just shy of .. high noon. By that I'm referring of course to the S&P 200-Day Moving Average, which is essentially where the Index is now.

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A lot of chatter about the Fed trying to get to 'goals' (by creating mass misery but knowing they can't and don't want to do it for too long), breaking economic 'thriving', and then prepared to rescue it later (glue together what they break).

Short-term T-Bills are at the highest rates (for 6-month paper) in 15 years, a level last correlates with a 'real estate bubble' leading in to our 'epic debacle' back in 2007-'08. But as with most things in life, 'correlation isn't causation' of course', but it can be. In this case it sort of is for money managers, who while bemoaning their lack of performance last month, can argue for some return whilst they await what they perceive to be a more draconian market decline.

In a sense I wouldn't mind if the S&P 200-Day finally gives way, comparable levels already have in some Indexes, while others just muddle along. Once it does crumble, we will finally reach oversold by a few technical measures and a higher confidence pattern should evolve for subsequent Spring recoveries.

In-sum: 

Discretion has been the better part of valor in February, which was a month we forecast to be mostly defensive with roller-coaster correction from the projected 'January Effect' run-up. Downside (if we get the 200-DMA break soon) should conclude and perhaps turn higher by 'The Ides of March'.

I'm underwhelmed to a degree with attitudes the Street has (mostly confused), their excuse of tension with China (at the same time it definitely is an ongoing issue), a focus on the Fed (valid but I believe at some point Fed should look also at prices in France and much of Europe. What they see -here too as folks struggle- is inflation that stems from more than 'looser monetary policies' of the past, and of course the lack of understanding that the Fed really shouldn't desire to cramp living standards particularly in quasi-wartime.

And yes, wartime. De-risking and/or decoupling from China are buzzwords of the moment. The intertwined economic relationships are far more vast than in Russia leading-up to Putin's invasion of Ukraine. In key areas is underway as we all know, and has been for about a year. Whether Apple or semiconductor major companies, a lot of production heads elsewhere. Major beneficiaries at this point seem to be Vietnam, perhaps the Philippines, India and Mexico.

In any case President Biden, in his ABC interview, more than inferred China can receive similar treatment as Russia (sanctions and withdrawing business) if they provide certain levels of weaponry to Russia. If the Fed is truly worried about consumer prices, imagine what happens if economic separation really was attempted 'so soon' (aside from hi-tech) with China. Matters to both sides and maybe that's the leverage to attempt to heal matters between them, while remaining faithful to our allies and supporting democracy not autocracy.

Bottom-line: 

The so-called 'closet Index' crowd is fiddling around likely waiting for S&P's 200-Day Moving Average to succumb to algorithmic-driven trading which acts like it was controlled by Ai. Let's hope that money mangers are still awake enough to recognize a washout if we get one and know that the idea is still to buy low and sell higher, not the inverse as some did late last month.

Again we're well along in the expected setback, but aside a very few stocks in a different frame of reference than the market, it's been risk-averse pro-T-Bill time, and this isn't fun, but also not unexpected. Same for the ensuring relief in the Spring, as surely as light follows darkness, barring expanded war..ah so that's the main concern, lack of discounting and action related to geopolitics. 

More By This Author:

Market Briefing For Tuesday, Feb. 28
Market Briefing For Monday, Feb. 27
Market Briefing For Thursday, Feb. 23