What a disheartening week.  After picking up on the amazing Jobs Day reversal the market also put on a brave face in the aftermath of the Hamas terror attack.

That moxie was turning into real momentum when the wheels came off.

First inflation expectations surged last Thursday. Then bond auctions were back-to-back bust.

We begin a new week cautiously optimistic that earnings can lead the way.  Moreover, the rate of change is still higher for the past two weeks.  So many names are trading below their 50 and 200-day moving averages, and that is a contrarian buy signal.  But this will not be a smooth ride.

Moving Average Hurdles

Most Energy names are trading above their 200-day moving average.  Conversely, Utilities and Consumer Staples are trailing big time.

The good news is the 200-day is such a huge hurdle, there is often enough momentum to rally up to the 50-day.

Note: this is not the same as clearing the 50-day and holding as a new support point, but often the rallies to that test are large enough for trading opportunities.

Leadership

Defensive sectors took the lead in a rare week of strength.  Defense contractors dominated the biggest gainers on the week and Energy was by far the strongest sector.

Private clients of Bank of America are still not enamored with defensive sectors as everyone continues to pile into Energy, which was a favored sector before the War on Israel.

Market breadth for Friday and the week was downright atrocious.  New lows are mounting faster and faster.

Market Breadth	NYSE	NASDAQ
Advancers	1,096	1,591
Decliners	1,788	2,671
New Highs	27	30
New Lows	162	347
Up Volume	1.50 billion	1.54 billion
Down Volume	2.02 billion	2.60 billion

Earnings Calendar

Fed Parade: Release the Krakens

Portfolio Approach

We are adding a new position to Consumer Staples in the Hotline Model Portfolio this morning. If you are not a current subscriber to our Premium Hotline service, contact your account representative, or email Info@wstreet.com to join today. 

 

 

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