Equity markets started the week strong, but the gains quickly faded under rising inflation, interest rate expectations, and a dwindling outlook for earnings. The latest news from Factset is that estimates for all quarters of 2023 are trending lower and the 1st half will see growth decline by more than 4.0%. In this light, it is incredible the S&P 500 has been able to rebound as it has.

This week brings reports from retailers including Target, Lowe's, and Kroger. So far, the takeaway is that volume sales continue to fade while inflation makes up the difference. Regarding the S&P 500, Monday's candle confirms resistance at the short-term EMA and has the index set up for a more significant decline. The target now is 3,900 with a chance of moving below that level to 3,800.