The market started out great today, opening up nearly 1% on a weaker-than-expected jobs report, but all of those gains have evaporated. Despite a bet that the NFP data will ensure a Fed pause on Tuesday (I still think the odds they raise are higher than the futures markets are implying), stocks feel like they are topping out again here in the high 1200's on the S&P.

Honestly, we really should not be all that surprised that a Fed pause is already priced into equities. I mean, how many times have we had a huge "Fed is Done!" rally in recent weeks? On at least a couple of occasions we saw big triple digits gains on the Dow following dovish Bernanke comments or economic data. The real story isn't what Bernanke does on Tuesday, but rather, what is next for the U.S. economy? The market doesn't like uncertainty.

Without much confidence about what the next catalyst could be to get us back over S&P 1,300 and toward the old highs, stocks likely continue in their 1,225-1,280 trading range. Essentially, we need a lot of things to go right for the rally to gain steam. After the Fed pauses we need inflation to stabilize and GDP to remain in the 2-3% range, avoiding a recession.

Since rising costs are leading to company price hikes as a method of expense pass-through (which causes core inflation rates to rise), we also need commodity prices to stabilize or perhaps drop a bit. A slowing international economy would certainly curtail demand, and therefore allow for cost input prices to come down, but we would be walking a fine line between a global recession and merely more tepid growth. Until we see evidence that most of this scenario could play out, a "soft landing" so-to-speak, I can't get excited about near-term stock market returns.