Equities rebounded on Wednesday despite signals the Fed will act more aggressively than the market is pricing in. The minutes indicate the FOMC is prepared to go beyond "tightening" to "restrictive" policy in order to tame inflation but is worried about risks to the system. The S&P 500 moved up to the highest level in over a week on the news and may move higher on Thursday but the index is not out of the woods. The market is still trading well below a key resistance target and there is a very important data point due out on Friday.

The PCE price index is due out tomorrow and could shock the market. The market is expecting signs of cooling and peaking but there is risk in that outlook. The bulk of CEOs reported rising inflation in their earnings reports this cycle and that does not suggest peaking or cooling for the consumer. A hot number will seal the deal on a "restrictive" policy change and heighten the risk of recession.

Equities resumed their decline on Tuesday after results from Snap and the New Home Sales data amplified fears of a recession. Snap, a fast-growing social media company, shocked the market with its results and weak outlook while the New Home Sales shows a sharp contraction in housing activity. The contraction in housing activity is directly related to skyrocketing prices and rising interest rates that have many would-be homeowners sitting on the sidelines if not already priced out of the market. If this month's data turns into a trend it could mean a recession is already happening.

Today's big news will be the FOMC minutes. The minutes are expected to shed light on the Fed's stance on inflation and it is hawkish. Inflation is rising at record rates and the Fed's job is taming it. The next data comes out on Friday and may put added pressure on the Fed. If, however, the PCE shows signs of peaking or receding the equity market will probably rally in response.

Equities began the week on solid footing with the S&P 500 rising more than 1.85% at the high of the day. Investors are warned not to read too much into the move, however, because there are at least two major catalysts this week that could drive the market lower. The first is the release of the FOMC minutes on Wednesday, minutes that could reveal a very hawkish Federal Reserve, and the second is the PCE price index on Friday.

The PCE price index is not expected to subside substantially from the previous month and could even come in hotter than expected. A hot figure will seal the deal on a series of 50 basis point rate hikes and could even lead to a 75 basis point hike at the June meeting. The takeaway for investors is that there are many risks on the horizon and that selling in May and going away until the fall could be the best strategy for the summer.

Equities fell for an 8th week last week and are heading lower. The S&P 500 confirmed a major reversal in price action when it dropped below 4,100 and then moved on to set a new low at the end of the week. The next catalyst for index movement will come on Wednesday with the release of the FOMC minutes which are expected to reveal a very hawkish Fed. Later in the week, the PCE price index will come into focus and we expect it to be a hot one. Based on the latest comments from Fed chief Jerome Powell, we think the number could increase the odds of a larger 75 basis point interest rate hike at the June meeting.

With the index in freefall, it seems the market has taken the adage "sell in May and go away" to heart. This means the summer season could be volatile and any movements should be viewed with skepticism, especially upward movements. The next major signal for the market won't likely come until the end of the summer when the institutional money and professional traders come back from vacation.

Equities slipped again on Thursday and are in danger of falling further. While the S&P 500 was able to claw its way upward from a freshly set low, the index is still below what is now a key resistance target. The 4,100 level was confirmed as resistance this week and will be a major hurdle for the index going forward. the longer it takes for the market to get back above that level, the harder it will be to cross above it and we are not hopeful of a rebound next week.

Next week will be a critical time for the broad market. The technical picture is lending strength to the argument "sell in May and go away" and there are no catalysts for buying on the horizon. The catalyst that is on the horizon is the PCE Price index and we do not expect it to be a pleasing figure. If the market falls to a new low, a low below 3,860, the S&P 500 is likely to fall another 100 points or more before finding the next level of price support.

Equity markets resumed their selling on Wednesday after comments from Fed chief Jerome Powell and weak earnings from the retail sector put the fear of recession back into the market. Jerome Powell says the FOMC will continue to raise rates until inflation subsides, a stance the committee has not held for many, many years. What this means for investors is that 50 basis point interest rate hikes should be expected through the end of the year and it should be no surprise if inflation lingers into 2023.

Next week, the market may get another shock with the monthly PCE Price Index. The index is the Fed's favored tool for measuring consumer inflation and it is expected to be hot. Regardless of the number, it would take a sustained period of declining and low inflation to get the Fed off the hook in regards to rate hikes.

Equities rebounded for a fourth day as investors scoop up newly found bargains. The move may gain momentum now that retail sales data and earnings from the major retailers is in, but investors should be cautious in the near term. While bullish, the action of late is driven in large part by short selling and short-covering so should not be viewed as true buying. The S&P 500 may continue to move upward in the near term but there is a chance for resistance at the 4,100 to 4,200 range. If resistance is present at that range the index could fall back to the newly set low and possibly lower.

The next big hurdle for the week will come next Friday in the form of the PCE price index. The PCE price index is the Fed's favored tool for measuring consumer-level inflation and it has been running very hot over the past year. Another month of record-level inflation with no sign of it relenting could seal the fate of the Fed's ability to provide a soft landing in regard to the economy. With inflation running rampant, the FOMC may have no choice but to intentionally induce a recession.

Equities wobbled at the start of the week as traders prepare for a round of important data and earnings reports. Data in the form of Retail Sales will dominate the news on Tuesday and is expected to show the impacts of inflation. The economists are expecting retail sales to accelerate on a sequential basis but at a tepid 1.1% rate. At this pace, the volume of sales is falling quickly on a YOY basis and price increases are only barely keeping up. Eventually, the balance will tip and retail activity will enter a recession.

On the earnings front, reports from a number of retailers like Walmart, Target, Home Depot, and Lowes are on deck and could alter the market outlook. These are the four horsemen of pandemic spending and have been market leaders up to now. If their results show weakness or a weakened outlook the broader market is likely to fall along with them.

Equities closed below a key level last week despite a strong rebound on Friday. The move was driven by the belief the FOMC has lost control of the economy and that inflation will continue to run rampant. The S&P 500 broke through the 4,100 level in anticipation of the CPI and PPI data and then accelerated to below the 4,000 mark in their wake. If the market is not able to regain support at that level this week, the odds of a much deeper decline in equity prices will grow.

This week could be a tough one for the markets with earnings reports from a number of important retailers including Walmart, Target, Home Depot, and Lowes. Together, they are the market leaders in regard to consumer spending and will be a telling indication of the state of the consumer. If they give poor reports or worse, poor guidance, the market selloff is sure to worsen.

Equities wobbled on Thursday after opening at a new low. The action was driven by a hot PPI report that shows producer level inflation is still on the rise and accelerating on a YOY basis. The takeaway for investors is that, with producer prices still on the rise, consumer prices are going to rise as well and that is bad news for the economy. Inflation has been above the Fed's 2.0% target for over a year now and accelerating which is a situation that will force them to act and possibly more aggressively than they've been indicating. Because there is still more than a month before the next meeting and a full round of economic data, we think the market is in for more volatility if nothing else.

Next week, the market will have little to move it other than economic data. The earnings season is all but over and what's left is mostly consumer and retail names. The risk for the market is that consumer spending may flag in the face of rising prices and send the market into an earnings recession.