Yesterday was a whipsaw session that looked ugly at one point.  It was the perfect session for the market to reverse into the close, which was a tall order, considering the drubbing the market took throughout the day.  Yet, buyers emerged and all the major indices were able to climb off the lows and finish in the green.

The Nasdaq was hit the hardest before turning around, closing slightly positive. The key was it held above its 50-day.  This may silence calls for another test of the January and February lows, at least for a minute.  The next step is a close about the 200-day.

The S&P 500

When all was said and done, the S&P 500 closed up .43% to 4500.21, just a tad below the intraday high.  The key breakout point for the S&P500 is above 4600.

Seven  of the 11 S&P 500 sectors were in the green.  Healthcare was the top performer, while investors rotated out of more safe haven sectors like Real Estate (which has been the perfect space in this period of confusion), Utilities and Financials.  Communication Services was also among the laggards.    

Breadth was still negative and there were significantly more new 52 week lows than highs.

Portfolio Approach

We added a new idea to Consumer Staples yesterday in our Hotline Model Portfolio.  Our cash remains elevated at 40%, as we are actively looking to deploy it.

Today’s Session

The futures had been slightly in the green all morning, but the Nasdaq has now gone negative, and is at a key support, as Treasuries rise. Investors continue to mull over the potential of an overly aggressive Fed.  The 10-year hit a 3-year high and is currently around 2.7%.  Seems like each day, we are looking at some form of inversion. This morning the 5-year yield was higher than both the 10 and 30-year. The recession debate rages on, as the bond market signals a recession, but the stock market and investors are not on board. 

Headed in the trading today, the Nasdaq is down 2.6% for the week, the S&P -1%, and the Dow -0.7% as Technology and Consumer Discretionary have lagged. 

WTI  is up this morning, but it remains below $100 per barrel. Natural gas, however, hit a 13-year high yesterday, with U.S. inventories 17% lower than the 5-year average, and 20% lower in Europe. The rise in coal prices has caused the demand along with the pricing for natural gas to surge.

We know this is the period to "play in traffic" taking advantage of the weakness, but we don't have to be heroic and guess bottoms. The good news is, each session, more good stocks become even more attractive. If you are not a current subscriber to our premium Hotline service, email Info@wstreet.com to get started today.