After June kicked off with the best week of the year for the market, the indices spent the past week consolidating gains.
There were minor gains for all the indices, but nothing over 1 percent. It was exactly the sort of action that you want to see after a big run. It allows short-term flippers to take profits and stronger, more conservative, buyers to put some cash to work.
What was most positive about the week was how things stayed sticky to the upside. The bears were unable to dig their claws into the market, despite a "sell the news" setup on a Mexican tariff deal, some weak economic numbers, an attack on oil tankers, and bad news in the semiconductor sector.
There was some very strong action in IPOs, stock-picking worked better, and there were some pockets of momentum. All those things indicate an appetite for speculation, and that doesn't tend to happen in a market that is worried and embracing a negative narrative.
Next week the Federal Reserve meets and will issue its interest rate decision on Wednesday. This will be particularly important, as much of the current market optimism is based on a dovish Fed. If there is any shift in the likelihood of rate cuts before the end of the year, it is going to cause some impact.
In addition, the G20 meeting in Japan is fast approaching and the market will be looking for any signs of progress. Currently, expectations appear to be quite low, but if there is any substantive change in the situation, the market will see a major reaction.
Overall, technical conditions look good. A clear trading range has developed in the 2875 to 2910 area of the S&P 500. A move through either area will trigger stops and bring in trend followers looking for a move to gain momentum. It should make for good trading, and with the news flow on tap, there will be some catalysts as well.
Have a great weekend. I'll see you on Monday.