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What are you most thankful for this Thanksgiving?

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Morning Commentary

CALM BEFORE THE NEXT BIG MOVE?

By Charles Payne, CEO & Principal Analyst
11/22/2022 9:13 AM

The market limped along from start to finish yesterday, but four sectors eked out gains. It’s still a very cautious market, led by Consumer Staples (XLP), Real Estate (XLRE), and Utilities (XLU), while “growth” took it on the chin – again.

Cautious Coiled Spring

While the market has been spinning its wheels, market internals are getting better, as more than half the  shares are changing hands above their 200-day moving average. This is the highest number since March, surpassing the level during the June rally.

Yesterday was the seventh consecutive session where the market didn’t move 1% (up or down) after going a week without such a move. Historically, this has been a precursor to monster moves in the preceding week.

I keep mentioning the ten-year yield, but also keep an eye out on the U.S. Dollar (USDXY), which closed below the trend line on November 8, and it has been mostly under pressure since then.

Another leg lower would be hugely positive for equities.

USDXY

Europe’s Woes

The dollar’s strength is just as much the story of European economic weakness, which is reflected in the Euro and Pound.

In fact, the European Union (EU) is grappling with the combination of recession and inflation quandary more challenging than in the United States.

The Spring

If the coiled spring release looks for the S&P 500 to clear a major resistance range that starts with the 200-day moving average of 4064, then the major swing point would be 4,100.

I’m unsure what triggers the spring, but it’s coiled and ready to go.

Portfolio Approach

There are no sector weighting changes this morning in our Hotline Model Portfolio.

Today's Session

Lots of retailers’ posted results this morning and just about everyone came in better than expected.

Late-Stage Bearishness

There is an ongoing debate over what stage the economy is in right now. Most economists think its late cycle, or stage, but some see it as early stages as well.  When I see the daily update on brokerage stock ratings, I think its late-stage bearishness. 

The market has been down all year long, and now, the downgrades overwhelm the upgrades, and even half of the latter see share price targets that are actually lower than before the upgrade.  Go figure?

The market has been edging higher all morning – as I said, this is a coiled spring and maybe demand sparks demand.  Let’s see.


Comments
“Most”. Easy. My two magnificent sons.
After most, well living in the USA, able to live prosperously, speak freely, and all the other thins our great Country affords us.

George Zoubul on 11/22/2022 9:25:36 AM
I'm most grateful for the kindness and love of young people I randomly encounter. They give me hope for our future.

Patricia Flynn on 11/22/2022 11:53:44 AM
I am grateful for more time. Another Thankful Holiday and time spent with loved ones = More time with what matters most to me.

Colette WIest on 11/25/2022 10:35:23 AM
 

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