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Morning Commentary

ONE DAY DOWN…FOREVER TO GO

By Charles Payne, CEO & Principal Analyst
1/4/2022 9:33 AM

Okay, one day in, and so far, so good. All major equity indices were higher as Apple (AAPL) tickled $3-trillion,  Tesla (TSLA) erupted, and investors bailed out of defensive positions, which served as their December bunkers.

S&P 500 Map

Volume was light but better, and there were more new highs than lows on the NASDAQ Composite as advancers led decliners by a ratio of 2:1.

Market Breadth

NYSE

NASDAQ

Advancing

1,901

3,272

Declining

1,514

1,510

52 Week High

96

97

52 Week Low

27

84

Up Volume

2.13B

2.87B

Down Volume

913.88M

9828.8M

Long-Term Trends & Short-Term Optimism

It’s just one day, and in many ways, it’s kind of silly, but the correlation between the first day of trading and the rest of the year is very impressive (see the table from Ryan Detrick of LPL Financial). What’s more important to this market rally isn’t the last 24-hours, but what’s happened since March 2009 when this current secular rally began. 

A big part of the move has been all the money created out of thin air by central banks worldwide. Don’t get me wrong, a lot of stocks have been losers, and it still takes special execution and potential to get outsized gains, but there is no doubt money printing has been ambrosia to equity markets.

However, the money printing is going to slow down and at some point, go in reverse. Perhaps that was the message of the bond market yesterday where yields took off like shares of Tesla on strong delivery news. 

That spike didn’t derail the biggest tech names, but those already under pressure were slammed. But, of course, all this is ahead of the big jobs report on Friday when everyone will be back at work and bracing for the news.

Image

Gaining Confidence

After dipping deep into the red, the Fear & Greed Index is moving back toward greed. Ironically, according to the Street,  is a bad thing, as this is yet another contrarian indicator. I think it’s better to see the gauge as a real-time barometer until it reaches extremes on either end.

With that in mind, the move is healthy.

Portfolio Approach

There is no sector change this morning to our Hotline Model Portfolio.

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Today’s Session

I’m eagerly waiting for the latest JOLTs report, which is expected to reveal more than 12 million job openings.   That’s an amazing number and approaching a ratio of two job openings for each unemployed person.

The focus will be on quits.  This has become a socioeconomic issue and reflection of years of efforts to dissuade work and promote greater dependence on the government (which has been a dream from more than a century).

I’m digging the early action.  Keep watching the ten-year yield - 1.75-1.80 is the key resistance point where Wall Street could go into a panic, not selling per se, but with that value bandwagon filling up even more.

 


Comments
Charles, I watch your show every day. Please, please, stop lumping in Semiconductors with "big tech" - they act differently, and definitely perform differently...up over 60% year over year last 3 years. Gary K has been beating the desk about them, but I wish you'd give them distinct attention and focus apart from FANGs / NASDAQ IT companies.

Chris Langsenkamp on 1/4/2022 1:41:09 PM
Thanks for watching Chis I bring up chips a lot but think they are part of the greater tech ecosystem similar to picks and shovels as part of the gold rush - while some miners crapped out they still bought picks and shovels.  Really, thanks for your loyal viewing.  CP

Charles Payne on 1/4/2022 1:46:43 PM
 

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