Yesterday’s bounce fizzled out, but to put it in perspective, the Fed Day rout was one for the record books.

Bias

The tide has turned, as short-term bias is now to the downside.

Capsized

The tide has turned, and the rally is upside down. New lows are beginning to mount up quickly, and considering all the new all-time highs this year, it is shocking that many names were under pressure.

Market Breadth	NYSE	NASDAQ
Advancers	991	1,936
Decliners	1,823	2,378
New Highs	14	49
New Lows	250	321
Up Volume	1.55 billion	3.43 billion
Down Volume	2.20 billion	3.61 billion

The S&P 500 saw two names close at all-time highs…just two!

Unsurprisingly, the strong start wasn't enough to seduce additional buyers. The market would have fallen off a cliff if the closing bell were 4:30 P.M. instead of 4:00 P.M.

Philly Fed

The manufacturing depression continues.

Current activity -16.4 from -5.5. The Street was expecting +2.8.

However, “prices paid” continue to climb as “prices received” continue to decline.

Lassoing these Broncos won’t be easy.

Thirty-eight Republican members of Congress voted against the stop-gap funding bill that received the approval of President-elect Trump.

This should not be a shock to the market, but it does speak to the enormous task of getting lawmakers to do the right thing.

Government Shutdown & Stock Market
Start	End	Duration	During	3-Months	6-Months
11/13/1995	11/19/1995	6	1%	8%	11%
12/15/1995	1/6/1996	22	0%	6%	7%
9/30/2013	10/17/2013	17	3%	7%	8%
1/19/2018	1/22/2018	3	1%	-5%	0%
12/21/2018	1/25/2019	35	10%	11%	14%

Today’s Session

This morning, there are many moving parts, including the kerfuffle on Capitol Hill, which could be resolved this morning.

Weaknesses ahead of the open is another example of how the stock market flexes its muscles against powerful entities, including central banks and Congress.

Breaking news – we interrupt these animal spirits to report that the Fear and Greed Index has slipped into the ‘extreme fear’ zone. Break out the champagne.

The market has stumbled this week, but both professional and retail investors are not running for the hills or seeking the nearest foxhole.

Inflation Update

PCE inflation edged higher but less than anticipated, so Wall Street sees it as a win.  There is a sigh of relief.

Personal Income & Spending

Personal income declined significantly (October was revised higher to 0.7), while spending was higher (October was revised higher).

Savings continue to drift lower.

I see the market's weakness this morning as an opportunity to buy stocks on your watch list.

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