There’s an old saying about the rug being pulled out from under someone or something.  An abrupt move that thwarts momentum while sending the target into a swift fall.  That was the case on Friday when a run of the mill session finished with sharp spike in ten-year bond yields, which sent stocks tumbling. 

Market breadth was overwhelmingly bearish.

Market Breadth	NYSE	NASDAQ
Advancers	926	1,655
Decliners	2,218	2,863
New Highs	43	68
New Lows	63	248
Up Volume	1.37 billion	1.65 billion
Down Volume	2.44 billion	2.58 billion

And all major indices moved lower – especially the NASDAQ and Russell 2000.

Heat Map

The late swoon took every sector with it save Communications Services – which really needs a break.

There were intriguing green spots, including Tesla (TSLA) and Disney (DIS).  Some Financial names caught our attention as well, including Morgan Stanley (MS). 

In the Technology space Broadcom (AVGO) continues to ‘act’ good – like something is brewing.

Internals are weakening, as the tables turn.  Energy names are really compelling – it wasn’t long ago when the entire sectors was changing hands above its respective 50-day moving averages.

It’s all about news this week with CPI the most important release and Powell’s comments Wednesday.

CPI

The Cleveland Fed sees lower CPI on a month to month and year to year basis.  Smaller prints would spark big upside moves in the market- the same is true on the downside.

For the record, the Cleveland Fed is better at guessing the CPI than the Atlanta Fed is with GDP.1

 

Portfolio Approach

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

Today’s Session

Merger Monday is back

• Thomas Bravo for Coupa Software (COUP)
• Amgen (AMGN) for Horizon Therapeutics (HZNP)
• Weber (WEBR) going private

Other than merger news, there is no reason to jump on a start in the plus column.

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