The Fed went on a mortgage buying spree last week, but the story remains the same.

Liquidity and economic activity are trending in opposite directions and, despite the decades of high correlations, the technicals tell us the economic trends are winning.

The U.S. Dollar has rallied, which is consistent with market conditions, and has helped small-caps outperform and give a buy signal for the large caps.

Employment data picked up during the month of May - likely above consensus estimates - but that only supports the bearish case.

The Fed changed its pattern last week, but there is little evidence that it will continue this week as a bull flag forms above support and economic data continues to accelerate.

Chalk one up for positive fundamentals this coming week just as liquidity improves... at least temporarily.

Traders trade what they see, not what they believe, and the chart is showing building strength within a consolidating triangle of an uptrend just as the Fed's 'selling' is put on hold.

The surprise so far this earnings season is on the top line rather than the bottom, even with the tax cuts, but the higher revenue is going into hiring and that likely means good news is bad news this Friday.

The Fed's rope-a-dope is at risk of catching market participants looking in the wrong direction.

Is a sentiment swing with continued improving fundamentals enough to offset the real market test coming in the next two weeks?