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Morning Commentary


By Charles Payne, CEO & Principal Analyst
6/24/2022 9:43 AM

NASDAQ Composite

There were 2,862 advancers, 1,733 decliners, 3.73 billion up volume, and 1.45 billion down volume on the Nasdaq yesterday. It almost closed a gap. But it has a much larger gap ahead, which coincides with a big test of resistance.

S&P 500

The defensive nature of the market and tepidness of investors’ herded buyers into Utilities (XLU), Health Care (XLV), Real Estate (XLRE), and Consumer Staples (XLP). So, I’m somewhat perplexed over the action in Industrials (XLI) and Materials (XLB). 

Once again, the glaring decline in oil stocks, offset by strength in mega-cap stocks, suggests fast money investors are leaking back into the names that made them rich.                                  

Key Charts & Trends

S&P 500

Like the NASDAQ Composite, the chart reflects cautious hope and stealth efforts to gain traction. There are two large gaps to fill (usually, after gaps are filled, there is a reversal, so these are de facto big-time resistance points).

There is a fair amount of resistance at 3,900, but the big test is 4,200. It seems a million miles away in an atmosphere where most of the experts on the Street are calling for the S&P 500 to hit 3,000. In fact, those only looking for a move to 3,200 are considered raging bulls.

It’s too early for such talk, but upon clearing 4,200, the index probably races to 4,600+.

Turn Signals

The Invesco DB Commodity Index Trading Fund (DBC) has been a juggernaut, but suddenly, they look mortal. The good news is the corresponding moves in stocks and bonds is encouraging, if not very premature, to break out the pom-poms.

The 10-year is yield edging lower. However, under 3.00% will get the attention of stock buyers on the sidelines.

Portfolio Approach

This morning, we added a new technology position.

Today’s Session

The market edging higher today on hopes for a better future beginning in 2023.   Five-year breakeven are coming down fast and five-year forward breakeven are in the two percent range the Fed desires.

In addition, positive comments from FedEx on their earnings call for fiscal 2023 (which began this quarter) and strong guidance $22.50 to $24.50 with midpoint $23.50 significantly higher than Wall Street consensus of $22.21.

And there is a feeling the Fed will pause or pivot early next year.

"Hope springs eternal in the human breast." One day does not a trend make. Alas, trends must begin somewhere. The "market" is, of course, a forward looking discounting mechanism. The only real question is.....How forward looking is it. I, for one, believe that it is forward looking in the 6-12 month range. That being said, it is reasonable to expect a "pause" in early "23." Assuming, of course, that the Fed hikes that are already priced into the market for 2022 come to pass. The bad news.....by that time the damage will have been done and we will be in recession.

Charles Haselberger on 6/24/2022 10:17:07 AM

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