Last week, the markets went out with a whimper. Investors are now bracing for serious economic data and perhaps the last chance to cling to hopes of rate cuts this year.

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Less Fear, More Caution

It's been hard to imagine the stretch the market has spent in the ‘fear zone,’ but now it's neutral, as the market is in the shadow of its all-time high.

Investors are shifting from the safe haven of bonds into stocks but are still focused on safety.

Tiptoeing

This cautiousness is reflected in market breadth.

The New York Stock Exchange (NYSE) outperformed the NASDAQ Composite last week, although both stumbled on Friday.  However, there continues to be significantly more new highs than lows on the NYSE.

Market Breadth	NYSE	NASDAQ
Advancers	1,292	1,611
Decliners	1,497	2,565
New Highs	216	168
New Lows	24	100
Up Volume	1.40 billion	1.66 billion
Down Volume	2.14 billion	2.71 billion

Valuations

The Forward Price-to-Earnings (F P/E) ratio was sky-high, even for Utilities (XLU). Energy (XLE) and Financials (XLF), including big banks, are below 20.0 and highly favored on Wall Street.

There will be much tiptoeing until we get the Consumer Price Index (CPI) and possibly the Retail Sales report.

Today’s Session

The S&P 500 is nearing a monumental technical test.  I’d like to see it close above 5,270 on stronger -than-average volume.   All the pieces are in place for the bandwagon to fill up quickly and spark a strong summer rally.

Tons of economic data and Fed speakers will play a greater role than earnings this week.

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