It was the year’s best week, and all the arrows pointed higher last week.

And yet the CNN Fear & Greed Index remains firmly lodged in the ‘fear’ zone.

I know it seems weird to think the market is fearful, but there are many unanswered questions and, for my part, concerns the Fed is already late. The Fed will likely approach the rate-cutting cycles with the same mistakes as the hiking cycles.

Yes, the ‘fear index,’ aka the Volatility Index (VIX), has settled down at a record-breaking pace, but historically, moves back after big spikes haven’t been a good harbinger for the stock market.

On Friday, the value was the biggest mover in each market size. In addition to bottom fishing, valuations will be scrutinized more closely.

Stocks deemed expensive by traditional metrics will be more vulnerable to disappointments.

Here Comes Jay Powell

The Federal Reserve gathering at Jackson Hole will move markets. Right now, the Street is expecting the signal for rate cuts to commence at the September meeting.

Note: If there are no surprises, we could get a brief “sell on the news” reaction shortly after because this has been seriously telegraphed.

Remember, while the media cheered last week’s economic data, the Gross Domestic Product (GDP) models lurched into freefall.

Don’t overlook the slew of retailers posting results. When the media says the consumer is “resilient,” I want to scream. Americans love to spend money, so there will be winners, even during a difficult period for most consumers

I’m especially closely watching Estee Lauder (EL). This juggernaut has been losing market share and is ripe for new management or activist involvement.

What A Strong Consumer Looks Like?

Consumers are not strong and are not spending on Consumer Discretionary (XLY) items as they had been.

Today’s Session

It’s a quiet morning.  The biggest development is Advanced Micro Devices, Inc. (AMD), which is making a $5.0 billion acquisition of a database equipment company to better compete in cloud and AI.

There is a sweeping downgrade of fast causal restaurants at Piper, based on the lack of pricing power in this economy. 

Conservative Buying

Institutional buyers including hedge funds continue to focus on defensive sectors (Utilities (XLU), Real Estate (XLRE), and Energy (XLE)) while selling Industrial (XLI), Consumer Discretionary (XLY) , Financial (XLF), and Materials (XLB) names.

It's been a heck of a rally with the S&P 500 recouping $3.0 trillion.

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