The market went full circle last week but finished the week in ‘extreme fear mode.’  Nonetheless, the way markets closed the week was very impressive, even if it was under the pretense that 7,000 fewer Initial Jobless Claims were an adequate “all-clear” signal.

This is a dangerous game between cat and mouse.

Powell & Co. are supposed to wait for data they know is lagging and assume it's growing at a predictable pace that they can contain at the exact moment before it tilts too far to avoid a recession.

My frustration is how data is observed: the bottom 75% of households are out of savings, and many are forced to use credit cards, refinancing, or home equity loans to make ends meet. While inflationary forces are still out there, Americans are being punished the most are not the culprits.

(Sure, some will spend every nickel no matter the prices now and costs later, but they are not enough to move the needle.)

Inflationary forces are coming from three places:

• Government spending
• Wealthy Americans
• Shipping containers and the cost of geopolitical events

The question is, should the Fed wait for all these sources to run aground? Heck, their high rates are lining the pockets of wealthy Americans, and this administration isn’t going to stop spending ahead of the election. Global risks are growing by the minute.

 I think the Fed should have cut already. I’m unsure if they are too late or if a 50-basis (bps) cut would be a salve to keep the financial woes at bay, but I do not share the same confidence as Wall Street economists. This thing is coming in for a smooth landing.

Impressive Rebound

Friday saw positive movement across the factor spectrum, with only small-cap value moving lower. I suspect that is primarily due to the election, in which several polls now place former President Trump behind.

Midcaps were also a yawner.

Once again, large-cap growth was the safe haven.

Sectors Climb

Ten of eleven S&P 500 sectors were higher in the session.

More stocks were changing hands above their 50-day moving average at the end of the week than on Monday.

Market Breadth

Investors moved into safer New York Stock Exchange (NYSE) names, but overall, the up volume was more significant than the down volume for the NYSE and the NASDAQ Composite. Note: There were more 52-week decliners and advancers on both exchanges. When that turns around, it could be a sign that the coast is clear.

This week, the earnings calendar is thin, with only nine S&P 500 companies reporting.

But there will be an avalanche of economic data. Be ready to be dazzled by all the financial media spin.

Today’s Session

It's all quiet for now, but we are bracing for fireworks. Meanwhile, we're watching big banks today after the Bank of Nova Scotia (BNS) took a stake in Keycorp (KEY). Big banks took it on the chin recently and are still trading at the 2022 level.

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