Last week, bond yields surged to year-to-date highs, then stopped short of breaking out. The economy’s been better than expected, but still slowing from a year ago. The Nothing-Can-Stop-This AI rally has stopped, but it’s not rolling over. The S&P 500’s been stuck in a roughly hundred-point range for almost a month. Bitcoin’s glued to $30,000. Welcome to Market Purgatory. It’s certainly better than the alternative, but not great. 

Six months ago, the big question was not whether the economy would fall off a cliff – that was consensus – the question was how high that cliff would be, and how bad the damage after the tumble. Now, the question is if the economy is strong enough to warrant a more aggressive Federal Reserve than what’s already been baked in. 

Stocks don’t offer much of an answer right now. It’s been three weeks since the last record for Nvidia, which seems like a long time ago considering the ferocity with which it was rallying. Since then, the market’s tried to rotate into other sectors, but not with much conviction. The small-cap Russell 2000 is getting close, but the year-long chart still mostly looks sideways.

The U.S. dollar and crude oil bear watching.

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