A ‘tight trading range’ – dominated Monday’s S&P action, while participation remains high, breadth is pretty good, and a flush-out coming is.. debatable. It is late cycle, economic prospects are ‘middling’ at best, and data very mixed. depositphotos They S&P is not pricing in a degree of risk, but the market aside mega-caps is not extremely extended, contrary to those who try to define the entire market in a monolith, which it is not. So, if we’re going to have a deceleration, it’s fairly soon, and remember it’s an election year.  Mid-cap stocks are not doing bad, things are slowing down, but is it enough to divert thinking from ‘staglfation’ to simply a cooling before speeding up. I’m not going to bring politics into this, but part of the argument about early vs. middle cycle recovery, probably varies somewhat with political backdrop prospects.So, you’ve got high short-interest in several leading mega-cap stocks, even in some battered small caps. As you’re even seeing relative strength in regional banks, you might wonder if the commercial mortgage delinquencies are not a continuing problem. They are. In fact I had a call from a San Francisco friend who contends their commercial property concerns are not unique but part of a broader narrative. I agree (Amazon helped kill retail), but there’s more. Almost nobody is will do drive (or even dare walk?) in or around major retail areas or doubly so at night. It’s really sad, particularly for parts of California and clearly for New York (with unprovoked physical assaults even), but it’s not unique and is particularly notable in the ‘most expensive’ high-end areas. Market X-ray: Market is basically range-trading on-hold ahead of key CPI this Wednesday and then we’ll see. Be prepared for a boomerang kind of day on Wednesday, especially is data shows inflation declining and a spike which is sold into. VIX might be ‘scalpable’ in the scenario. We’ll see.If CPI is capable of igniting a spike, that would take S&P to a ‘record high’. At the same time sustaining that is going to be challenging. The argument that’s trying to justify higher levels is supposedly higher ‘margins’ of profitability. I’m not surprised given how inflation has bolstered revenues likely most than cost levels for many big-caps that dominate the movement of the S&P Index itself.Here’s my morning (pre-opening bell) ‘X’ post (tweet), as fairly well captured my stance towards this market as this week began: “More upside for S&P to start. It’s extended and I don’t disagree that indicators of financial stress have risen. VIX low concurrently. Valuations of some financial assets like mega-cap stocks and (especially) coastal real estate are stretched (the latter -Florida & Gulf- ahead of a likely rough hurricane season).While this could increase risk of a sharp correction ahead that could generate system-wide stresses (commercial property delinquencies in-mind) it’s still an election year, multiple wars ongoing, and the Fed could step-up and soften the possible impact. It’s not right this minute, just pointing out where we are aside the AI parade and broadening by small caps. So far that persists, but ‘en guarde’ especially if we get a friendlier CPI Wednesday.”  Bottom-line: Market high-level hold preceding CPI on Wednesday. A swing or boomerang day is possible then. Monday’s biggest reveal is how defeatist the Kremlin must be, as they’re reeling from a miserable fight they launched again with Western weapons doing a good job of helping Ukraine stop them.More By This Author:Market Briefing For Monday, May 13, 2024Market Briefing For Thursday, May 9Market Briefing For Wednesday, May 8