It was a tough day yesterday, which wasn’t surprising as the slow-moving, formerly stealth train wreck had become fast-moving and very loud heading into the week. Additionally, market breadth was a disaster.

Market Breadth	NYSE	NASDAQ
Advancing	1,007	1,394
Declining	2,378	3,344
52 Week High	92	81
52 Week Low	205	738
Up Volume	1.20B	1.93B
Down Volume	2.56B	2.75B

Off the Canvas

Only two sectors finished the day in the plus column. Health Care (XLV) was up more than 1%, and Technology (XLK) eked out a gain on a very impressive intraday reversal.

The NASDAQ-100 (NDX) violated the bottom of the trading channel but closed above it. There are a number of metrics from the channel to the 150-day moving average to support that was formerly the resistance point that presents the near-term challenge that makes or breaks the index.

Compelling Charts

Homebuilders look superb as XHB continues to hold at a very pivotal support point.

Software continued to get shellacked, but several individual names staged strong rebounds.

Consumer Expectations & Inflation

The New York Fed Consumer Expectations Survey had good news and not-so-good news. Household incomes are expected to rise a record 3.4% over the next year.

But inflation is still expected to be 6.0% over the next year and 4.0% over the next three years.

Here Comes the Fed

Today, we hear from several Federal Reserve officials, including Jerome Powell. This is a day after Vice Chair Clarida moved up his departure date to January 14^th, just as Sen. Elizabeth Warren was publicly demanding even more information on trading and investing among Fed officials.

It was an impressive session, but there has to be a series of sessions where the market makes a stand, and the internals must begin to turn around.

Portfolio Approach

There are no weighting changes this morning to our Hotline Model Portfolio.

Today’s Session

Let’s watch, as the market tries to regain equilibrium.  Jay Powell is on Capitol Hill, so there will be fireworks. 

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