Equities continue to hover in the range of 4,100 to 4,200 and below a key resistance target. The market is having a hard time gaining traction following the previous week's rally and the risk is to the downside. The S&P 500 is well into a major reversal that could easily take it back to the 3,000 level or lower. The reversal is caused by the rapid end to over a decade of easy money policy that was capped off by trillions in COVID-related stimulus that has inflation running at record levels. With inflation at record levels, stimulus no longer juicing the economy, and aggressive FOMC rate hikes on the table, the S&P 500 are in for a tough haul over the next few quarters to two years.

If the real estate market is a leading indicator of the economy it gave the market another reason to fret on Tuesday. Applications for mortgages fell to the lowest level in 22 years and point to a contraction in the housing market. The bad news is that this will amplify the negative effects of higher rates and inflation, the good news is the real estate market should normalize during the correction as homebuilders increase inventory.

Equities steadied on Tuesday but don't read too much into the news. The S&P 500 gained about 1% at the high of the day but is still trading below an important resistance target. The move is just another in a series of lackluster movements that suggest a wait-and-see attitude in the market. The wait-and-see attitude is due to an expected economic release and the FOMC, either of which could send the market reeling. The economic release is the CPI data on Friday which is the last inflation report before the FOMC meeting next week. The data is expected to be hot and will most likely intensify the expectation for FOMC action.

In other news, Target warned the market about record-high inventory levels and the need for aggressive actions of its own. The news should come as a warning for the entire S&P 500 because they've all been working hard to alleviate supply chain disruptions this year and that could result in oversupply at all levels.

Equity markets tried to claw their way higher on Monday but the gains didn't hold. The S&P 500 closed the day up slightly but well off of the highs and once again confirmed the presence of resistance near the 4,100 level. This resistance may cap gains for the foreseeable future given the amount of uncertainty in the market and there is downside risk as well. The PCE Price index is due out on Friday and may send the market into another tailspin. While headline inflation is expected to accelerate under the forces of higher energy prices, core inflation is expected to moderate but both are forecast to be very high on a YOY basis.

The takeaway is that inflation is running more than double the Fed's target rate and has been for a year. At this pace, prices are rising at a double-digit clip in the two-year comparison and eroding consumer spending power every minute. The FOMC has promised to act, albeit late, and will raise interest rates by at least 50 basis points at their meeting next week.

Equities finished a volatile week on a down note last week with the S&P 500 down more than 1.5% at the low of the Friday session. The move was small but no less important because it confirms the presence of resistance at a key level between 4,100 and 4,200 on the S&P 500. If the market can not get back above that level this week it most likely won't until later in the summer.

This week, the market will be focusing on the CPI data due on Friday and it could be a hot number. Not only are commodity prices still firm but oil and wages are still on the rise. The best-case scenario is that consumer-level inflation moderated slightly on a month-to-month basis but at that level is still very high. The risk for the market is a hotter than expected figure and increased expectation for aggressive FOMC actions this year.

Wild swings continued on Wall Street on Thursday. TheS&P 500 reversed an early loss to gain more than 1.85% at the high of the day. The move came despite a round of mixed economic data that suggest weaker than expected job creation on the heels of the largest increase in wage inflation ever recorded in the US. US wages rose 12.6% in Q1 to drive a similarly large contraction in productivity. The takeaway from the data is that economic activity is contracting due to the rise in inflation, specifically wage inflation, and the data will most likely get worse before it gets better.

Next week, the market will be on high alert for the Consumer Price Index. The index is expected to make a sharp slowdown from previous months due to the overlap with last year's data. The risk for the market is that inflation will not cool appreciably and add pressure on the Fed. This will be the last inflation data before the next FOMC meeting, the FOMC is expected to hike rates by 50 basis points with a near 100% certainty.

Equities reversed course to fall about 0.75% on the first trading day of June. The move was driven by a rising fear of economic catastrophe that was brought into sharp focus by JPMorgan Chase CEO Jamie Dimon. Dimon says the US should get ready for an economic hurricane caused by the Fed and fallout from the Russian invasion of Ukraine. In his view, oil could hit $150 per barrel and drive inflation to new heights.

The chart of the S&P 500 is beginning to show signs of weakness in the rebound. The index hit resistance at the key 4,100 level and right now that resistance is confirmed. If the market can not get over this level the least of what we expect is a retest of support at the 3,900 level. If price action moves below there, and there is no reason now why it won't, we think the broad market could fall another 5% to 10% before hitting the next support zone.

Equities started the holiday-shortened week on shaky footing hovering around break-even for most of the day. The move is a sign of a cautious market and one that is waiting for the next shoe to drop. This week, that shoe may come in the form of economic data and specifically the nonfarm payroll report. The report is expected to show another month of robust job gains and wage increases and the risk in the data is to the upside. With the summer season, fast approaching employers are scrambling to fill positions. The takeaway for the market is that stagflationary conditions will remain in force for the summer despite the Fed's promise to raise interest rates.

It's two weeks until the next FOMC meeting and the expectations for aggressive action are easing. The FOMC is still expected to hike rates by 50 basis points but the odds of 75 are falling toward zero. The risk in this outlook is the data, there are still two major releases of inflation data that could shift sentiment before the next meeting.

Equities began to rebound last week but we wouldn't call it a rally just yet. The S&P 500 moved up off of the recent low and closed above the 4,100 level but there is still risk ahead. The takeaway for the market is that, with a cloudy outlook for Q2 and 2nd half earnings and the summer season fast approaching, the adage of Sell In May and go away may be the best advice for investors. Any upswing in prices will most likely be met by selling that will cap gains and keep the S&P 500 range-bound until the fall.

The hurdle for the market next week will be the economic data. There is a raft of data including PMI, ISM, Factory Orders, and the Fed's Beige Book on top of the monthly labor data. As a whole, the data should indicate slowing and sluggish economic activity in the face of tight labor markets and rising inflation, otherwise known as stagflation.

Equities began to rebound last week but we wouldn't call it a rally just yet. The S&P 500 moved up off of the recent low and closed above the 4,100 level but there is still risk ahead. The takeaway for the market is that, with a cloudy outlook for Q2 and 2nd half earnings and the summer season fast approaching, the adage of Sell In May and go away may be the best advice for investors. Any upswing in prices will most likely be met by selling that will cap gains and keep the S&P 500 range-bound until the fall.

The hurdle for the market next week will be the economic data. There is a raft of data including PMI, ISM, Factory Orders, and the Fed's Beige Book on top of the monthly labor data. As a whole, the data should indicate slowing and sluggish economic activity in the face of tight labor markets and rising inflation, otherwise known as stagflation.

The rebound in equities gained momentum on Thursday after a series of better than expected earnings from some key retailers. The news highlights the differences in company operations more so than a divide in customer habits as those with resonating brands and omnichannel business models have been outperforming the rest of the retail sector. The caveat for investors is that the news from the retail sector highlights a trend within the broader market as well, that of rotation. The FOMC is on track to raise rates to restrictive levels and that is driving rotation from underperforming names into those well-positioned for the new operating environment.

The risk for the market today is the PCE price index. If the market can get past that we may see a test of resistance at the 4,100 level. If the S&P 500 can get above that level a move back up and into the 4,300 to 4,500 should follow. Next week, the market will be on the lookout for another round of key economic data including the Fed's Beige Book, construction spending, and nonfarm payrolls.