Last Friday’s session seemed like an innocuous bounce, but this market was poised to come under significant pressure if the Consumer Price Index (CPI) report came in ‘hot.’ There were lots of “experts” predicting a 3.0% increase, even though the consensus was a 2.5% increase from the year before. It was still a defensive session for the S&P 500 (SPX), as growth struggled and safe-havens led. Lots of action in small-caps.

Although Bitcoin (BTC) continues to struggle, both Coinbase (COIN) and Strategy Inc. (MSTR) enjoyed strong bounces. Other stocks bouncing from hard declines: Robinhood Markets (HOOD), Molina Healthcare (MOH), and Applovin Corp (APP).

Bitcoin might be building a base, as it's no longer extremely overbought (RSI), but I’m still not sure what triggers an old-fashioned rebound/rally.

Yields

The 10-Year Yield is poised to slip below 4.0%. It moved higher on the jobs report, but the opening print was the highest of that session. It moved lower on the CPI report.

Tight Trading Range

It's going to be tough for the S&P 500 to break out and maintain upward momentum with the amount of pressure on growth names, but once that subsides, we could see a monster move higher.

The new wildcard is that the Fed is back in play, and could cut rates in the first half of the year.

Today’s Session

AI fears continue to dominate the conversation, although a “bubble” is seen as less of a tail risk than in recent surveys of global fund managers.

Ironically, this is the exact opposite of irrational exuberance, and these stocks have behaved the exact opposite of the “manias” of the past.

But momentum is power and creates a self-enforcing cycle with the narrative that is pushing it in the first place.