Market Call

The stock market has been rallying since June 16 on mounting expectations that the most widely expected recession of all times might be a no-show and that inflation is peaking. July's strong payroll employment report and peakish CPI and PPI readings suggest that the cat is out of the bag. That's confirmed by several technical  indicators:

(1) Breadth. On Friday, over 90% of the S&P 500 stock prices exceeded their 50-dmas, up from nearly zero in mid-June (chart). That's consistent with previous peak readings in this breadth indicator. On the other hand, only 46% are above their 200-dmas, and only 41% are showing positive y/y price comps.