There was lots of scratching and clawing yesterday that saw major indices essentially close flat (the Dow was up, and the NASDAQ Composite was down slightly). Market breadth was neutral, but the bullish winds might be stalling.

Market Breadth	NYSE	NASDAQ
Advancers	1,478	2,123
Decliners	1,595	2,476
New Highs	96	115
New Lows	25	35
Up Volume	1.35 billion	3.04 billion
Down Volume	1.93 billion	2.72 billion

The Advance – Decline Line Index is well above key moving averages but still at a lower high than the prior rally effort. Yet, Relative Strength (RS) and the Moving Average Convergence/Divergence (MACD) are at about the same levels hinting at potential exhaustion.

Tape Reading

Although it took the biggest hit, Communication Services (XLC) is blistering this year, riding the coattails of Meta (META), which continues to exhibit spunk even on down days.

Heat Map

Six of eleven S&P 500 sectors were higher, led by industrials (XLI). Within that sector, it was all about capital goods +1.28%. Best performing industries in the XLI:

• Aerospace & Defense +1.76%
• Machinery +1.67%
• Construction and engineering +1.31%

Mega-cap stumbled with oil yesterday.

Mega Reports

After the close, Microsoft (MSFT) posted its financials, which were not great, but the stock popped 4% on certain trends. However, that move evaporated after the conference call, which was more cautious than expected.

The NASDAQ Composite has been killing it, but the moment(s) of truth is upon us as the big players post their financial results.

Meanwhile, the NASDAQ-100 (NDX), which has been even hotter, is nearing a precarious position -the secular rally that began in 2009 is being threatened.

Make no mistake. These mega-cap names were oversold but are still vulnerable and must find ways to take a stand.

Portfolio Approach

We are suspending our Current Buy List in our Hotline Model Portfolio this morning.

Today’s Session

All eyes on Tesla after the bell.  But this morning, the market is being roiled by sobering guidance from Microsoft, which posted results after the close.  Initially, shares of Microsoft surged to $253 before the conference call as investors forgave so-so results.

But there was no denying issues haunting the company won’t be going away anytime soon. 

The market is under a fair amount of pressure this morning in large part to the developments at Microsoft ,but I think geopolitical developments are also weighing on the averages.

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