Looking at each sector’s performance today, investors are seeing different themes.

• Energy is the worst performer reflecting weak economic data out of Germany and China and increased worry of a recession in the United States.
• Financials reflected the inverted yield curve and the inability to make money when you borrow at higher rates than you can lend.
• Communication Services, to a degree, these stocks are victims of their own success, as some sellers are taking profits on the biggest winners in their portfolio.  Interestingly, the biggest losers in the sector are media companies that are too small to compete in the shifting world of media (CBS, Viacom and Activision).
• Technology chip names are weighing the sector down.
• Consumer Discretionary is getting hit after the Macy’s (M) miss (the most heavily shorted stocks in the market are largely brick and mortar retail, especially small operators and department stores).

Investors are rotating into Consumer Staples (stuff we need versus stuff we want) and Real Estate (great growth potential and great yields).

Trading Range & Fed Reaction

Over the last two weeks, there have been prodigious broad market rebounds. I couldn’t get excited because none took out key resistance points that were established at the close on August 2, 2019.  Conversely, on the downside, key support points have been created, and must be tested, and they must hold to generate increased buying.

Of course, as the market tumbles toward those levels, selling begets more selling, which makes them an even bigger challenge. 

At this point a large percentage of this action is a direct message to Jay Powell.  At the time he coined the phrase “mid-cycle adjustment,” I knew it was a mistake, and so did the market.  But the question and answer period made things even worse, as it hinted at personal animosity driving Fed decisions.

The flub was not unlike the October 3, 2018, comment about “long ways” to go with rate hikes to get to neutral.  At this point, the market will begin to demand Fed action before the scheduled FOMC gathering next week.

These emotional moves are going to give us amazing chances to make a lot of money, but it will require some ice water in the veins, and you get that by knowing history and current facts and fundamentals.

I will continue to share these with you, and at the same time try to understand the various short-term variables.