Equity markets continue to tread water as investors and traders wait on the next FOMC policy statement. The FOMC is not expected to hike rates next week, but it will remain hawkish and may surprise the market with its rhetoric. The takeaway is that interest rates will most likely remain high for an indefinite amount of time, which will have a bearing on stocks. With rates on treasuries above the S&P 500 dividend average, they pose a headwind to equity prices.

The market may remain in a holding pattern for the summer. If the S&P 500 can not get above the 4,300 level next week, it will be the top of a trading range that could dominate price action for several years. In that scenario, investors must be vigilant and use market dips to build positions in high-quality stocks.