Industrial Production is expected to remain strong but the real story is liquidity and the resulting volatility, which are combining to give us a potentially familiar setup around earnings.

Volatility has become modestly overbought, which has been a trading opportunity in the past and likely will be for the short-term now; but evidence suggests the trade has shifted from being sellers of volatility spikes to buyers of low volatility.

Suddenly some macro data looks to be softening, as does the earnings surprises, and the technicals give a mixed signal even as support holds.

The fundamental data this week should support stock prices at new highs, but the recent technical divergences have continued to weaken.

The Fed's liquidity contraction is giving its first true signal for potential market weakness, but the trend remains positive for now even though last week's strength primarily consisted of stocks of companies with the weakest earnings.

The cooler-than-average temperatures for much of the U.S. in August could weigh on Industrial Production numbers on Friday, but production remains strong and gives fundamental support for stocks... but the price action is a potential warning sign.

While the strength may be fading, the jobs report on Friday should remain strong... and new money continues to come into the stock market.

The fundamental data, underlying technicals, earnings, and money flows all suggest the push to new highs for the S&P 500 should have follow-through.

Once again, the fundamental data is expected be supportive of higher stock prices this week and - perhaps surprisingly - market liquidity has continued higher.

Macroeconomic data continues to support stock prices and, despite the Fed's actions this year, liquidity in the stock market continues to rise. Meanwhile, the strength in the market has been in the stocks with the strongest earnings and vice-versa - a positive sign going forward.