We could not have been more Bullish on this rally. in the S&P 500. Furthermore, our upside target of 2924.50 may not have been perfectly achieved for those who are greedy but hitting within 7 points is a win in our book. Yesterday’s PCE data showed that inflation stabilized back at 2.0% for the month of July.

We’ve reached the stretch run for the dog days of August. Once again there is a mixed market. Just an hour into the new week the Dow Jones Industrial Average is up 109 points and the Nasdaq is down about 10.

Yesterday’s weakness opened the door to a buying opportunity for those who were patiently cautious. Our narrative all week long has been cautiously optimistic; get out of the forest to see the trees, this market is in a strong uptrend. However, we emphasized yesterday the high probability of a washout. Today the S&P and NQ are up, let's call it, 0.5%.

This morning brings a reprieve from turmoil; the Turkish Lira has bounced back as much as 8% before settling in. The story will continue to develop and an agreement to release the American pastor will certainly be favorable for the global risk appetite. While the damage to the world’s currency market has been done, we maintain that it is important to not get stuck in the forest so that you can see the trees; there can be a lot of noise in the headlines, especially during slower summer months.

The global risk appetite is again shrinking but it’s easy to get caught in the forest and miss the trees; despite the headlines, the U.S stock market remains in a strong bull market. Listen, we are certainly not ignoring the Turkey-related risks as the Lira plunged once again and hit a record low against the U.S Dollar before paring losses.

In this more or less quiet week, concerns that the worsening situation in Turkey could have a contagion effect on the Eurozone, particularly lenders, and other parts of the world grabbed precedent during the last 24 hours. We believe that low volume this week has exacerbated moves in currencies and equity markets.

The S&P 500 and Nasdaq held ground well yesterday after four strong sessions. This was exactly what we discussed needing to see; a healthy consolidation that kept each index within 1% of a record high. Globally, there was a bit more volatility overnight with Europe and Japan in the red while China and Hong Kong have notched solid sessions in the green.

U.S. benchmarks are steady this morning and the S&P is within 1% of its all-time high. Our outright Bullish stance has paid off, but key technical resistance sits overhead (discussed in the ‘Technical’ section below). The Nasdaq is also within 1% of its record high and both levels should be watched closely, we have called for these to be achieved before the end of the week.

After minor overnight volatility, U.S, European, Japanese and Hong Kong benchmarks are near unchanged but those from China are deeply in the red. The German DAX took a sweeping hit after a big miss on Factory Orders this morning but has regained positive; Euro weakness is supportive. In an editorial in its state-run newspaper to start the week, China directed sharp comments at President Trump, doubling up on calling him a bully and saying that it is in their best interest to sacrifice the short-term term economics for the larger and longer-term picture.

Despite keeping a more Neutralized Bullish Bias yesterday, we gave the spot to buy in both the ES (2803.25-2806) and NQ (7175-7200). To recap, the market incurred profit taking on Friday as there was little to no value at elevated levels ahead of the weekend and a pivotal week. That selling lasted through Monday.