It  has been a rough 36 hours going in the weekend, as the S&P 500 lost 5.3% from Thursday’s high to Friday’s close. Breadth was turning around midweek, but they have completely turned negative. 

As has been the case, there was no place to run and no place to hide.

Heat Map - It’s easier to find signs of water on Mars than green last Friday.

I think the there is too much pessimism out there, including put-call ratio that goes back to March 19- the session before the market bottomed from Pandemic panicking.

Portfolio Approach

We closed a position in Consumer Discretionary in our Hotline Model Portfolio. 

Today's Session

Watch commodities and inflation proxies today. 

There is another issue for the market, and that is China’s continued clumsy handling of Covid-19 and the zero-tolerance policy, which has been ineffective in curbing spikes in large cities.

This week, we get a big turn, and while we would be range-bound, the upside is big enough to make big gains.

This is a short morning commentary because a ton of work was put into Payne’s Perspective, and I want to offer it to everyone.  In fact, I’m urging everyone to take advantage of the report.  To read the full report, click here.