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Morning Commentary


By Charles Payne, CEO & Principal Analyst
8/15/2022 9:37 AM

The total stock market is on the move, finishing at the high of the week and extending the winning streak to four weeks. However, there are big hurdles ahead that, if cleared, will spark serious panic buying.  Meanwhile, growth continues to reclaim the leadership role.  

Chase or Ride the Wave

Every sector sees a majority of its components above their 50-day moving average, but interestingly, the sharp retreat in Energy (XLE) makes it the sector with the fewest names. Ironically, XLE still has a fair number of names above their 200-day moving average. 

Defensive sectors dominate that 200-day moving average list, but the question right now is whether to rotate out of those names into growth, which are still very much underwater from their all-time highs. We have added more growth; by the same token, have been scalping them for huge gains a lot sooner than we usually close ideas in the model portfolio.

Heat Map

On Friday, all sectors participated in that monster rally amid political turmoil and into a summer weekend. It was really a marvel to behold.

Small-caps and mid-caps continue to sport enticing forward price-to-earnings (F/PE) ratios. So, I think you have to have exposure.


Friday was amazing with a speck of red.


For the week, Nvidia (NVDA*) stands out along with payment giants Visa (V) and Mastercard (MA).

*Even with that big hit to NVDA, semiconductor stocks act great. 

Overall, the market breadth continues to improve dramatically – it’s a great sign for the bear bounce that wants to mark the bottom.


Portfolio Approach

We added a new Technology position on Friday.

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Today’s Session

The Empire Fed Manufacturing Report is out and it’s Ugly (see excerpts).  The market was already under some pressure before the release.  Interestingly after an initial knee jerk reaction, futures moved a little higher.  Perhaps, this is a further sign the inflation has shifted into the recession battle.  As odd as this may seem, it means the Fed could be closer to pivoting. Although, nobody on Wall Street would say as much.

Headline Index Plunges Manufacturing activity declined significantly in New York State, according to the August survey.

The general business conditions index plunged forty-two points to -31.3, the second largest monthly decline in the index on record, and among the lowest levels in the survey’s history.

Twelve percent of respondents reported that conditions had improved over the month, and forty-four percent reported that conditions had worsened. The new orders index dropped thirty-six points to -29.6, and the shipments index plummeted nearly fifty points to -24.1, indicating a sharp decline in both orders and shipments.

So . . . . Today’s closing, On a YTD basis, the SP500 and Russell 2000 exited ‘Correction’ territory.

Tom Holcomb on 8/15/2022 4:27:02 PM

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