Yesterday was a wobbly session out of the gate, but still with some hope that buying could spread beyond Technology (XLK), Communication Services (XLC), and Energy (XLE).  There was a tremendous amount of red on the screen.

The S&P 500 must hold the 50-day moving average and, by the same token, find a way to retest 4,600.

A five-month winning streak ended in August, but if history repeats, near-term bumpiness will give way to a move higher.

Bond Yields The two-day spike in the ten-year bond yield underscores the risk and unique circumstances of the market and economy. I continue to openly voice my concern that the bond market could be at the start of a very long ‘bear’ move. Also, we are watching the CBOE Volatility Index (VIX) closer this week - I want to see 15.0 hold as resistance.

Portfolio Approach

There are no sector weighting changes in the Hotline Model Portfolio this morning.

Today’s Session

This morning United Airlines (UAL) and Southwest (luv) upped their forecast for fuel costs. This underscores how higher energy cost will seep into the conversation.

We could see a test of $85.00 as support - if it holds and turns higher, oil could move to $95 a barrel.

Meanwhile, we await the FOMC minutes out at 2PM.