Mixed takeaways should persist after Monday's strong Dow thrust. Why in the world was anyone surprised that Treasury Secretary Mnuchin said on Sunday's FOX news talk, that 'Trade War' risk with China was on-hold for now? Of course it was; in fact it was never more than negotiations. Or it may be that we were in the minority believing there was no such threat yet and that the sparring (including limited tariffs) was part of 'making a deal'.  

Interestingly, there is no 'deal' yet and Mnuchin actually said they're rather persistently working on that. Now, since the Vice Premier of China was in Washington for these talks, one could interpret his remarks as failure to be able to actually announce a deal; but since not a single media source will point that out, Heaven forbid I should mention the trade or tariff dynamics remain in-play.  

Clearly the market needed an excuse to extend a market that was sloppy at the tail-end of last week; and no it didn't follow the pattern expected due to his Sunday comments; however yet we did think it would try the upside. Because it did so dramatically (and instantaneously) it's not terribly strong now; and didn't have much follow-through later in the day (it did follow our intraday guideline, believing it had enough traction to hold together). 

While the on-hold statement obviously provided impetus for essentially a higher rebound high, it's notable that most indicators varied little; and that the key stories of the day (or the conflicts) between high rate views and of course sluggish (or even recession) concerns, seemed incongruous.  

In sum: the contradictions actually are not. Either you have very rapid growth or a US Debt picture (and servicing that Debt) becomes a serious challenge as higher rates have to be paid to attract money since the Fed is letting lots of holdings roll-off the Balance Sheet. And if you have a 'real' slowdown as a few indicators alternatively suggesting, then valuations are beyond high. If you get a period of stagnant economic activity with higher rates to attract funds; well, you know where that leaves the markets.  

Technically, this market remains extended; but saved itself of necessity as I outlined over a week ago (the break of the 200-Day Moving Average had required a 'Hail Mary' run-up try; and now they got more to hold onto, for the moment). So yes you have plenty of 'cushion' above that key support; and yet you have a market (on which we were bullish from the Election of Trump with this year's concerns starting with the 'unsustainable parabolic' move of the S&P into late January)... a market that can surprise anytime.

Bottom line: the irony of this market is clear; the effort to divert investors' focus on extreme valuation (yes even stocks they argue are not expensive generally are, especially without an Infrastructure Bill to contend with) has contributed to not just a 'Fight the Fed' mentality; but 'Greater Fool Theory' too. So now we're in the midst of that battle; stay tuned.