This is the daily notebook of Mike Santoli, CNBC’s senior markets commentator, with ideas about trends, stocks and market statistics. There are plenty of reminders of unresolved/unwelcome issues (weak housing/services data, European energy stress), yet the lack of downside follow-through in most stocks today is worth noting. Slight dips in U.S. dollar and Treasury yields lifts some pressure off equities, with the weak PMI Services index driving a flurry of bond buying. It’s hard to get excited about weak economic readings dropping the 10-year slightly back under 3% briefly, but here we are. The S & P 500 is in a hazy zone, a 4% to 5% pullback after a 17% ramp is not a serious reversal, but the tape and trading psychology is fragile. Any decline into the high 3,900s would still be pretty routine but might not feel that way. Still think the force of the rally off the June lows offers a decent cushion in the absence of significant further macro shocks. Yes, the index stopped at its 200-day average almost to the tick. It also coincided with a move back above 18x forward 12-month earnings. This was something of a ceiling for valuation pre-pandemic and seems to be an area where macro/index investors have lower appetites to buy. Though as noted before, the huge-cap growth stocks atop the index ( AAPL , MSFT , AMZN , TSLA ) continue to inflate the benchmark’s P/E to a hefty premium above both the equal-weighted S & P and small caps. Plenty of disagreement over whether Federal Reserve Chair Jerome Powell will make a clear effort in Jackson Hole on Friday to talk down “dovish pivot” hopes with a tough-love message of unceasing aggression toward inflation. It seems likely he’ll simply reiterate the existing framework (need to see clear evidence of declining inflation trend but much tightening is in the pipeline, some hikes have been front-loaded and we’re already around neutral policy). The poor flash services PMI (showing month-over-month contraction) and sharp drop in home sales feed into the notion that much of the Fed’s intended work is already done. A softish landing is far from a forgone conclusion, of course, but neither are the markets fully assuming that it is one. Mentioned fragile sentiment: There hasn’t been clear buy-in to the “new bull market” thesis. Put/call ratios have popped higher in the past two days on the modest pullback. Large speculative funds are just about record net short the S & P 500 (not a perfect contrarian indicator – from late 2015, there were still months of downside chop ahead), but it shows the hedged/bearish positioning has become pretty entrenched. The commodity trade has some life, with crude up 3%+ and threatening to break the little downtrend in place since June. Natural gas firm near the highs, and metals bouncing. They are still plenty below their highs but need to be watched. Market breadth is decent, 60% upside volume on NYSE, but like most other indicators is in-between/inconclusive. Credit is OK. The VIX holding Monday’s pop, probably going to be a bit slower to drop ahead of Jackson Hole and September looming.