It was a wild ride that saw markets slump yesterday, save for oil and other commodities, ahead of President Biden making sanctions against Russia’s oil official. But it was a speech shortly thereafter that stirred the souls of its audience. And as a result, the House of Commons rose to its feet to give Ukraine’s President Zelensky a rousing standing ovation.

When the speech was being delivered, a news agency reported Zelensky was ready to make concessions on his nation becoming a member of the North Atlantic Treaty Organization (NATO). Initially, I thought he said it during the speech as I had only caught the tail end. It turns out the “news” was from the night before in an interview with ABC.

The rally fizzled, but then buyers reemerged again between 2 and 3 PM, and it looked as if more were poised to come off the sidelines. That didn’t happen, and stocks returned to their tailspin. The good news is we got a glimpse of where money might go when there is a general sense of the coast being clear.

The bad news is nobody knows when the coast will be clear. Still, the green on the screen points to the appeal over oversold names like Facebook (FB) and Nvidia (NVDA), Financial (XLF) as yields should go back up and Consumer Discretionary (XLY), which is completely counterintuitive considering inflation issues.

Market Breadth was ugly but note the strong up volume – a sign of greater conviction.

Market Breadth	NYSE	NASDAQ
Advancers	1,702	2,464
Decliners	1,607	2,260
New Highs	108	52
New Lows	500	792
Up Volume	4.57 billion	3.89 billion
Down Volume	2.60 billion	2.59 billion

Eclectic Leadership Board

Energy (XLE) names dotted the top performance list, but renewable energy got a boost as well and those airlines took off (pun intended) as the U.S. Global JETS ETF (JETS) came off  a new 52-week low. I never thought I’d see the JETS ETF fare worse than the N.Y. Jets.

It was interesting to see havens like Consumer Staples (XLP) and Utilities (XLU) take it on the chin. I think it’s clear a lot of folks are in those sectors simply hanging out, and the first sign there is money to be made, they will leap at the opportunity.

That means serious bottom-fishing in sectors like Communication Services (XLC) and Consumer Discretionary (XLY).

Inflation Expectations Soaring

The five and ten-year breakeven continue to surge and break records. I’m  on pins and needles for the Consumer Price Index (CPI) report.

COVID-19 Fog

COVID-19 Fog is making big news this week as a study shows it impacts a wide swath of people no matter how much the actual infection affected their health. Harvard (Health) Medical School offered some ways to combat brain fog:

• Perform aerobic exercise. You may need to start slow, perhaps just two to three minutes a few times a day. While there is no established “dose” of exercise to improve brain health, it’s generally recommended you work toward 30 minutes a day, five days a week.
• Eat Mediterranean-style meals. A healthy diet including olive oil, fruits and vegetables, nuts and beans, and whole grains has been proven to improve thinking, memory. and brain health.
• Avoid alcohol and drugs. Give your brain the best chance to heal by avoiding substances which can adversely affect it.
• Sleep well. Sleep is a time when the brain and body can clear out toxins and work toward healing. Make sure you give your body the sleep it needs.
• Participate in social activities. We are social animals. Not only do social activities benefit our moods, but they help our thinking and memory as well.
• Pursue other beneficial activities, including engaging in novel, cognitively stimulating activities; listening to music; practicing mindfulness; and keeping a positive mental attitude.

Portfolio Approach

Yesterday, we added a new position in Financials and this morning we are adding a new one in Industrials in our Hotline Model Portfolio.

Today’s Session

Equity futures have been strong all morning long. It feels like one of those sessions where investors believe they know all the risks, and much is built into the market.  I think this is right.

Technical View

The S&P 500 is at a short-term double bottom, and it has a country mile of room on the upside, and it would still be in a downtrend.

With that in mind, I see the first upside test at 4,380 to 4,400.  From there, those key moving averages would come into play.  Remember 4,200 was supposed to hold, and while closing slightly below for one session isn’t the official breakdown, but obviously, the market has to make a stand now.

The CPI & Fed

We get the CPI report tomorrow, and while there are whispers of an “eight handle,” the street sees the Fed only hiking five times this year, which is down from eight (some firms are modeling nine or more in a row).

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