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Morning Commentary

WONíT RUIN ANOTHER CHRISTMAS

By Charles Payne, CEO & Principal Analyst
12/1/2022 9:30 AM

Although it wasn’t the ‘Triple Lindy’, he pulled it off and the Street loved it. Jay Powell was able to reiterate the same things he said in the recent past and not spook the market. Sure, he was calm, and it was clear nothing was bugging him like being forced to read a statement that acknowledged the lags from Fed actions to its economic impact. Every sector gained in November, but only one is higher for 2022.

Market Breadth

It really was a monster session:

Market breadth was overwhelmingly bullish, especially volume. The up volume was almost 1000% higher than the down volume on the New York Stock Exchange (NYSE), which also saw more 52-week new highs than lows. For the second straight month, 85% of the S&P 500 stocks advanced higher.

Market Breadth

NYSE

NASDAQ

Advancers

2,731

3,617

Decliners

456

1,129

New Highs

82

134

New Lows

66

218

Up Volume

5.94 billion

4.98 billion

Down Volume

645.58 million

1.71 billion

This wide net of stocks moving higher adds more credibility to the rally.

Christmas lesson learned in 2018...even the Grinch was like "damn, homie hiking rates again?"

Four rate hikes wrecked 2018 and ruined Christmas:

The Beige Book was lost in the avalanche of data releases yesterday, but it was intriguing. Some regions are more ‘woke’ than others, with informative community comments. It paints a picture of pain the Fed never admits is happening in the economy.

Economic Data

There were big misses in the ADP and the Chicago Purchasing Managers’ Index (PMI), which flopped to 37.2 against the consensus of 47.0. This chart is the proverbial snowball-to-boulder slide. Midwest industries, including the auto sector, might be deteriorating faster than other data suggests.

Pending home sales came in better than the consensus of -5.5% but -4.6% isn’t good news.

Breaking the 200-Day Moving Average

We are at the crossroads again, with the S&P 500 finishing the session above its 200-day moving average. From here, a close above 4,100 would be huge and perhaps spark the next leg higher to 4,300.

The CBOE Volatility Index (VIX) filled a huge gap a week ago, and now that is key support (just above 20) – we don’t want the market to become too sanguine.

Portfolio Approach

There are no changes to our Hotline Model Portfolio sector weightings this morning.

Today’s Session

Personal income came in much higher than expected at +0.7% against consensus of +0.4%, while spending was in-line at a whopping +0.8%.

The result was a about decline in savings rate to 2.3%, which is the second lowest since 2005.

Initial Jobless Claims

Initial jobless claims for the week were 225,000 and the street was looking for 235,000.  But the move above 1.6 million continued claims caught our attention.

Bond Yields

Just keep watching that ten-year bond yield, which is drifting to a keep test of support.

Dollar

The DXY index is at a critical support point and failure to hold would be a boon for stocks.

Lots going on that is very enticing, but remember, these are also pivotal points designed as tests, and failure brings quick reprisal. 


 

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