This is CNBC Senior Markets Commentator Mike Santoli’s daily notebook of insights on trends, stocks and market statistics. The market plunged to a crucial level last week and month. He is stopping there to survey the scene. The worst first half in a half-century follows a +9% month in the S&P 500, allowing die-hard bears to dismiss the action as a mere bounce from an oversold bear market, while sending some signals to bulls that the highest impulse. was broad enough to have positive implications for stock returns over the next 6 to 12 months. The first hurdle was cleared: a decisive break from the April-July downtrend and the 50-day moving average, putting the S&P 500 right at its 100-day moving average and at the top of a range of about three months. There is plenty of obvious resistance above (4,230 is the midpoint of the entire decline since the January peak), but the market has done enough to suggest that mid-June was a plausible low. Touches will point to some “breadth push” signals that were triggered by the recovery, such as a large majority of stocks hitting 20- and 30-day highs and a resurgence of the anticipated decline. Useful indicators, but not by themselves insulating against backsliding. Technical strategists are generally wary of saying a new uptrend has begun, but honest ones admit that historically, when the weight of technical evidence says there is a bottom, the S&P has risen an average of 17% to 18% % compared to its low. The market has burned off a lot of skepticism, although hedge fund positioning remains quite defensive/short, creating an interesting contrast (yet) with retail investors who haven’t fully liquidated and appear to have been buyers energetic nets last month. The market’s ability to absorb some messy earnings reports and continued cuts to earnings estimates for future quarters suggest that valuation compression since the start of the year set many stocks up for tougher results. That’s not the same as saying that all possible recessionary profit falls come at a “price,” but it does mean that corporate operators are feeding off healthy growth in nominal gross domestic product and are managing to beat tepid expectations for now . That said, overall market valuations are more accurately described as fair rather than cheap, with the S&P 500 returning above 17.5 times forward consensus earnings. Much of that is the residual strength of the premium for large-cap growth stocks, which have outperformed this quarter. Futures price gains for the equal-weighted S&P 500 look a bit more modest, both in absolute and relative terms: The cost of capital has generally declined, another way of saying that financial conditions have eased . From Fidelity’s Jurrien Timmer: This raises the question of whether this loosening of financial conditions and the coinciding revival of risk appetite will be frowned upon by Federal Reserve policymakers who still wish to convey a steely determination to quell inflation. Former New York Fed President Bill Dudley, in an op-ed, says as much, suggesting the market is misreading the policy outlook by pricing in a short-term rate high in a few months and cuts to rate during the first half of next year. That may be right, but Chairman Jerome Powell acknowledged that the economy has yet to feel the full impact of the tightening already underway, calling the hikes a “front-loading” type of maneuver and admitting that the growth has marked. Given how dramatically the path of Fed rates has changed over the past six months, it’s probably best to be humble about declaring the market right or wrong over the next six months. Cuts could come next year the easy way (soft landing, Fed pivot) or the harder way (unequivocally recessionary data), or not at all. But rates are in neutral, the next meeting isn’t for another seven weeks, so we’re in a waiting window, which stocks seem to be fine with for now. Market breadth is mixed to negative, showing some digestion of recent gains. Narrow and summer range. VIX is up a bit, partly the “Monday effect” and likely some blocking of the index’s recent gains through coverage and headline sensitivity over the possible trip of US House Speaker Nancy Pelosi on Taiwan giving traders another macro/geopolitical. item to worry about.