Staggering sector-by-sector for some period, stocks as well as many pundits continue to muddle along as if a bar announced Last Call but they’re not happy, writes Gene Inger.

They are more than inebriated with the joyful spirits of serious libations already enjoyed (in this case dramatically over a year and a half of post-election gains). The revelers want at least one more drink.

The irony is they mostly focus on the purposely-deft monetary policy, with an interpretation that ignores the contrasting aspects of growth and rising debt, versus funding all the increased spending. Or how that could even press rates higher in a time of sluggish economic activity. That of course is presumed by many to clearly be a risk depending on how the midterms go later this year.  

S&P erases losses Wednesday following release of Fed minutes: Reuters.

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Aside caution, there’s not yet enough evidence to presume the outcome of that, nor whether even a mix of politicians would seriously abrogate the majority of what has been accomplished with regulatory and tax reform. It is close enough for the market, as a discounting mechanism, to increase its vision of that as the Summer approaches.  

This market has phenomenally staggered all Spring as I suggested way back during January’s unsustainable parabola. That to me was a key for the beginning of rotational selling-on-spikes of at least portions of huge gains many made in what loosely get called FANG+ or now MANA stocks. They were generally realizing a small universe of issues got the market to the higher levels.  

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More significantly, the desperate Hail Mary of the past two weeks clearly reinforces my view of the significance of the repeated attacks (as well as a single brief penetration) on the S&P 500 (SPX) 200-day moving average.

While for the moment there’s plenty of cushion above that level, things can change a lot quickly. So, for now it’s the inability of the market to seriously advance that is more notable that the wider proximity to that key technical level.  

Reuters: Most Fed policymakers say interest rate increase needed soon.

National security is a very serious issue and so is trade. Monday’s view of Secretary Mnuchin’s comment on trade deal on-hold was correct. By that I mean the market celebrated it based on the status-quo we already noted. I thought it also meant on-hold means no-deal, at least as of yet. We suspect part Tuesday’s market hesitancy relates to that second glance at the comment and realization that the status quo is not the end-game.  

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Bottom-line: The market is acting like a tipsy partygoer after Last Call. To a degree they want an after party even past the Fed's monetary snugger approach. And they ignore the highest yield on the 2-year in a decade.  

I expect another (but minor) snap-back effort; but be wary as longevity is unlikely to be its hallmark.  

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