Equities rebounded again on Wednesday gaining about 2.0% at the height of the session. The move was driven by better than expected data on the labor front as well as some less-hawkish than expected comments from Jerome Powell. On the labor front, the ADP employment report showed the addition of more than 1.0 million new jobs to the economy when adjusted for revisions. The data is more than double the expectations and points to even tighter labor market conditions than previously thought. The NFP is due out on Friday and could reveal the same information. The risk with the NFP is that wage gains are expected to top 6.0% on a YOY basis and drive consumer-level inflation this year.

Elsewhere in the markets, the price of West Texas Intermediate surged more than 3.0% on Wednesday to above $113 per barrel. This is the highest level for WTI in over a decade and prices are expected to keep rising. Based on the technical outlook, the price of WTI will move above $120 very soon and will be another driving force of inflation this year.

Equities plummetted again on Tuesday following another escalation of fighting in Ukraine. A convoy of Russian military equipment is bearing down on Kyiv and threatens to topple the embattled country. The news helped to send the price of West Texas Intermediate up by 10% and to a new high, breaking the price action out of a bullish pattern and putting it on track to set a new all-time high within a matter of weeks. The S&P 500 shed nearly 2.0% on the news and is threatening to fall back below the important 4,300 level once again.

Trading today will be impacted by geopolitical news as well as economic data. The ADP report is due out and could alter the tone of the market. Last month, the ADP came in well below expectations and pointed to topping if not contraction within the economy. If that story is repeated with this month's data it will be another weight for the market to bear and the market is already buckling.

Equities rebounded on Monday in a volatile session. The growing conflict in Ukraine and the threat of global fallout, on top of the threat of accelerating inflation and FOMC interest rate hikes, has the market wondering which way to go next. The market has backed off on its expectations for interest rate hikes but is still expecting at least one 25 basis point increase in March. Based on the last read of the PCE Price Index, market participants should expect aggressively rate hikes this year even if the first is only 25 basis points. The CME's Fedwatch Tool is pricing in at least at least 4 hikes by June and there is yet to be any sign that inflation is taming.

Also on tap this week? Another report on job creation and this month could be a real market mover. The consensus is for gains in the range of 440,000 following last month's stronger than expected numbers. The risk this month is that job creation will be weaker than expected as indicated by the tepid jobless claims reports.

The major indices fell to new lows last week but buyers stepped in on Thursday and Friday to buy the dip. The S&P 500 ended the week well off of its lows and above the key 4,300 level. The move confirms support at the bottom of a trading range and may lead to higher prices this week but there is still risk ahead. Not only is the threat of war in Russia still present but the earnings outlook is dimming and there is the NFP report on Friday to think about.

If the S&P 500 can continue to rally this week it will need to get above the short-term 30-day moving average which is near 4,450 to be in the clear. Even so, there is the risk of resistance at the December lows near 4,500 so it is no time for investors to be complacent. If the market can not get above the combined resistance of the short-term moving average and the 4,500 level investors should brace for a retest of the recent lows.

Equities tumbled in the wake of what has become an official Russian invasion of Ukraine. The S&P 500 fell more than 2.0% at the low of the day but closed well off of those lows. While there are signs the sell-off is overextending the real test for the market comes Today with the PCE price index. The trouble in Europe is the news that sparked the selloff but it is inflation that set the stage. If the PCE comes in hot as it is expected to do it should seal the deal on whether or not the FOMC hikes rates by 50 basis points or 25 basis points at its next meeting.

Next week's market action may be just as volatile due to geopolitical events and the release of important economic data. Next week will bring the 1st of March and the monthly NFP read on Friday. The data is expected to be strong but could give further evidence of peaking within the economy.

The major indices fell for a fourth day on Wednesday setting new lows in the process. The S&P 500 closed near the low of the session with a decline of 1.84% and below the key 4,300 level. With the index at this new low, the odds of a much deeper decline have risen. The next key line in the sand is at the low of Wednesday's session and, if broken, investors can look forward to another 200 point decline in the broad market.

The next key test for the market will come on Friday with the release of the PCE price index. The index is the Fed's favored tool for measuring consumer-level inflation and it is expected to be hot. The takeaway here is the fundamental conditions on which the market rally is based are about to be changed at a more aggressive rate than anyone thought possible. The risk for the market is tremendous.

Equities began the week with a retreat driven by rising tensions between Russia and Ukraine. Russia is slowly encroaching on Ukrainian territory and has Europe on the brink of war. The S&P 500 shed about 2.0% at the low of the session and may move lower by the end of the week. The key level for investors to watch is 4,300, a break of this level could send the index down another 10% or more.

Trading this week will be driven by the PCE price index more than anything else. The PCE price index is due out on Friday and is expected to show an acceleration of consumer-level inflation to new multi-decade highs. With the FOMC already set to raise rates in March, a hot number will only increase the odds of a 50 basis point hike to start the cycle. The CME's Fedwatch tool shows the market is pricing in only a 36% chance of 50 basis points in March so there is risk in the data.

The markets face a tough challenge this week that could set the tone of trading for the remainder of the year. The S&P 500 is facing a test of the key support level at 4,300 and buying may not be strong enough to keep the market above that level. If so, the door will be opened for a decline to 4,000 or lower. In that event, value and dividends will become even more important than ever.

On tap for the market this week? The monthly read of core consumer inflation in the form of the PCE price index. The one thing evident in the forecast is that analysts are slow to make predictions given the pace of increase seen in the January CPI. As it stands, consumer-level inflation is close to the 10% range and could easily top that in the coming months. The takeaway for the market is to expect aggressive interest rate increases from the Fed and for S&P 500 margins to continue to compress.

Equities retreat for another week last week bringing the major indices down to multi-month low levels. The S&P 500, specifically, is now trading just above a key support level that could lead the index to another 10% decline if broken. At face value, it is the tensions in Russia and Ukraine that are driving the market lower but there is a deeper story. The unexpected acceleration of inflation and the growing expectation for aggressive FOMC rate hikes is what's really driving the market. The Fed is expected to hike rates at least 4 times by June and there is a real chance the committee could surprise with a 50 basis point hike at the March meeting. The Fed will continue to be in focus this week with the PCE price index due out on Friday. The PCE index is the Fed's favored tool for measuring consumer-level inflation and it is going to be another hot one.

Also on tap this week, are earnings from the retail sector led by a report from Home Depot. Home Depot is expected to show sustained YOY growth and there is upside risk in the top-line figure. The risk for the market is that inflation and supply chain headwinds will cut into the bottom line and dampen the outlook for Q1 and Q2 results.

Equities reversed course again on Thursday as geopolitical tensions came back to a simmer. The crisis in Ukraine is at the heart of events and it could boil over at any time. Conflicting reports have each side shooting at the other and nothing confirmed. The takeaway for the market is that this crisis is not going away and that it will likely impact market action over the next week if not longer.

In economic news, jobless claims rose more than expected and counter to seasonal expectations while on the housing front, permits and starts were a mixed bag showing the impact of high demand and tight supply. Friday's market action will likely be driven by the index of leading indicators which is expected to show cooling from the previous month. The S&P 500 is down about 8.3% from its all-time high and within striking distance of setting a new low. If the index falls below 4,300 it could easily shed another 500 points within days.