The Morning Hammer: Weak Oil Means Nothing to This Bull

I've been out since last Thursday to get my eyeballs upgraded but not much has changed.

When I'm not working, I make a point of not looking at the market or reading anything related to it.

But I didn't miss a thing.

Crude oil is still deteriorating, yet SPX cracked yet another all-time high.

The index has been consolidating in a remarkably tight range between 2160ish and 2180ish.

I've been predicting that the market would head into a snoozefest like the one in April-May, and we've been getting it thus far.

Futures are down slightly on weak earnings from Germany's Commerzbank and a smaller-than-expected spending package from Japan which is sending the yen up.

As you probably know, a strong yen means risk-off, though US markets have been yawning at everything including the kitchen sink.

Sentiment is cooling off just a smidge.

The ISE Sentimenmt Index fell to 72 yesterday and hasn't been over 100 since July 18. That means call option demand is waning a bit, a good sign for the bulls because it means we're still digesting and doubt is building.

Pfizer (PFE) beat analysts' expectations but is trading off slightly. We're also seeing good numbers out of CVS (CVS), Procter & Gamble (PG), and Shire Plc. Watch closely to see how the pharma/biotech complex reacts.

We've got some  big economic data points on tap today, with Personal Income/Spending and the PCE Deflator (the Fed's preferred inflation measure) on the way.

As of late, US economic data has been generally strong relative to expectations, though Friday's GDP report was lousy.

Check out the chart below of the Citi US Economic Surprise Index:

I added the UK index just for the fun of it so you can see that the Brexit impact hasn't been that bad so far:

Now, what's interesting is that the weak GDP numbers turned traders a little more dovish.

Fed Funds futures now imply a 36% probability of a December rate hike, down from 48% last week.

Strong economic data this morning could flip it back.

As I've been emphasizing, perceptions of the Fed's forward path are EXTREMELY volatile. Remember, after the Brexit, traders priced in a 9% chance of a December rate hike. And in less than a month, that number was up to 50%.

So if you're trading bonds, golds, forex, or anything else that's rate-sensitive, you may be in for quite a ride.

Good luck friends.