Yesterday, the market didn’t send any messages other than is holding on right now, but it is still vulnerable. 

Market Breadth	NYSE	NASDAQ
Advancers	1,662	2,217
Decliners	1,526	2,348
New Highs	33	38
New Lows	183	271
Up Volume	2.21 billion	3.03 billion
Down Volume	2.00 billion	1.75 billion

The wild swings are remarkable, with extreme reversals in the up to down volume, reflecting the fact that investors are reacting more than positioning.

At the Close

• S&P 500 (SPX) +0.34%
• Russell 2000 (RUT) +0.39%
• Nasdaq-100 (NDX) +0.84%
• Dow Jones Industrial Average (DJI) +0.10%
• West Texas Intermediate (WTI) +1.37%
• U.S. Dollar (USDXY) 0.33%

Fed Alert

Jay Powell told everyone to watch the three months against the ten-year yields. And now that they are rapidly moving toward an inversion, it will spark debate about a recession, which is what Wall Street would rather debate than runaway inflation. Truth be told, I think Powell & Co cannot wait for the focus to be on recession because that moves them closer to what they want to do most.-

Feed the beast.

Undoubtedly, the Fed will turn accommodative as soon as they can, which might encourage more aggressive actions. Powell & Co have Wall Street’s blessing to be tough, which means officially abandoning dreams of engineering social change.

Let’s call it a late trickle over the finish line to lift all major indices into the plus column. Energy (XLE) is coming on strong against the S&P 500, and it is on the verge of a technical breakout, while Utilities (XLU) maintain momentum.

Rail Strike

Good morning, America

How are you?

Say don't you know me? I'm your native son

I'm the train they call the city of New Orleans

And I'll be gone five hundred miles when the day is done -Steve Goodman

Let’s keep our fingers crossed a rail strike can be averted, as the damage would be mind-boggling at a time when the economy is already stumbling. For now, a tentative deal has been reached.

Portfolio Approach

There are no sector weighting changes to our Hotline Model Portfolio.

Today’s Session

There was an avalanche of data out this morning, and we are still combing through it. But the overall notion that the news is too good for the Fed might be the wrong knee-jerk response.

Retail sales for August came in better, but there was a monster revision for July to -0.4 from initial report of 0.0.

 

 

Initial jobless claims continue to decline, and for many, this is the main reason the Fed must keep the pedal to the metal.

Philly Fed

-9.9 consensus +2.8

New York Fed

-1.5 consensus -13.0

Silver Lining

There were dramatic declines in prices paid components in the New York (Empire) and Philadelphia (Philly) Fed Manufacturing Surveys.

This is huge.  At some point, this will be reflected in inflation numbers. But it does bolster the argument inflation has peaked.

I’m becoming very anxious to get more aggressive.  One last hurdle is the tomorrow’s sentiment read. If you are not a current subscriber to our Hotline Service, email Info@wstreet.com to get started today.

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