A trap door was released at the start of trading yesterday, and it felt like the market had fallen into the abyss.  But buyers emerged late in the session. Still, it was a horrific session.

Reasons for selling pressure:

• Tax loss harvesting continues
• Buyback blackout period removes some deep-pocketing buying
• Fewer traders are around and that means exaggerated moves

The market has been selling off all year long, and many sessions have found no shelter from the storm.

The Manic Stock Market

I realize there isn’t much to crow about, and many will consider it as looking for a needle in a burning haystack. But I’m impressed with the rebound in the market, which formed a great looking cup and handle chart formation.

The Calm Canary

I keep reading and hearing the Federal Reserve is angry with the impertinence of stock market traders for occasionally bidding up stocks, which in turns lowers the financial condition gauge they are trying to break.

But it’s the bond market that’s flinching, essentially calling Powell’s bluff on hiking to infinity. Interestingly, smart investors have always preached about the importance of listening to the bond market.  Instead, the canary is chirping, and nobody is listening.  I suspect that more investors will listen, but most will elect to panic first.  

Heat Map

The NASDAQ 100 (NDX) took it on the chin more than other major equity indices. The others were not off that much when the closing bell rang (if it was a boxing match, the corner would have thrown in the towel long time ago).

• S&P 500 (SPX) -1.45%
• Russell 200 (RUT) -1.29%
• Dow Jones Industrial Average (DJI) -1.05%
• Nasdaq 100 (NDX) -2.45%

Market Breadth	NYSE	NASDAQ
Advancers	566	1,350
Decliners	2,567	3,178
New Highs	43	89
New Lows	198	476
Up Volume	755.9 million	1.73 billion
Down Volume	2.42 billion	2.82 billion

The Heat Map was scorching yet again, and Tesla (TSLA) moved into the top ten decliners for 2022.  After the close, Musk got on a Twitter Space to declare no more stock sales until 2025 – and the stock will become the most valuable in the world.  The dude has a lot of moxie for losing more paper wealth than any human being in history.

Portfolio Approach

There are no changes to our Hotline Model Portfolio.

Today’s Session

Personal Incoming and Spending

• Income +0.4% against consensus of +0.3 and a month earlier +0.7%
• Spending +0.1% against consensus of +0.2% and month earlier +0.9%

These numbers should make the Fed happy. Some, however, were hoping for a miss on spending. There was a marked decline in both, and folks opted to save a little more.

Inflation Read

Core PCE came in a tick above year-to-year consensus, but it was down noticeably from the prior read. Moreover, core PCE is actually a tick below the Fed’s year-end forecast of 4.8%.

PCE Year to Year	Actual	Consensus	Prior
Headline	5.5%	5.5%	6.0%
Core	4.7%	4.6%	5.0%

 

PCE Month to Month	Actual	Consensus	Prior
Headline	0.1%	0.1%	0.3%
Core	0.2%	0.2%	0.2%

 

I think the data today would justify a move higher rather than lower, but the knee jerk response was bond yields up and equity indices lower.  There isn’t a sense of panic at the moment.

I know lots of folks are eager to jump in – I’m eager too!  Let’s have a little more patience, and when it’s time to pounce, be committed to making the move.

Merry Christmas

There will be no Afternoon Note, so I want to take this time to say Merry Christmas to all.  This year was a disaster, but this journey is not measured in calendar years, but in long-term results.  I’m extremely confidence there will be a monster bounce sometime in 2023.

Meanwhile, stay strong, enjoy life, and even keep your sense of humor.

God Bless.

CP

 

Comments

A muzzle for all the fed speak Michael D Thomas on 12/23/2022 8:09:28 AM

May you and yours have a very Merry Christmas. robert brush on 12/23/2022 9:50:07 AM

A bull market would be nice! Charles A Haselberger on 12/23/2022 9:51:03 AM

Yes, the market is down and my portfolio has declined somewhat in value. As a dedicated Growth Income Investor, the individual price action is pretty much irrelavent. If the market was up 20, 30, 50%....it means really very little to me (other than my ego) unless there were some LARGE, unforseen personal catastrophe that required the immediate need to raise a lot of cash. That being said, what is important to me is the cash flow of the holdings. I expect the dividend cash flow to increase quarter over quarter, year upon year to keep pace with the long run rate of inflation (for me, I consider the LRRof I as 3%). If you are able to reinvest the dividends, like me, so much the better. So, while 2022 was disappointing from the perspective of absolute value declining, it was another winner for me with respect to the goals my portfolio was and did achieve. I wish you all a Merry Christmas and a Healthy, Happy 2023. Charles A Haselberger on 12/23/2022 10:10:29 AM

Term Limits for every politician in America. That includes cities & Senators. Single line item bills for every bill in Congress & The Senate. Eliminate added in pork. Solving the border crisis. Jim Weaver on 12/23/2022 11:18:44 AM

Less government. Larry Leonard on 12/23/2022 11:35:45 AM

Prosperity...for a change. This is what I want for Christmas. An end to the insanity would be nice too. Erika on 12/23/2022 12:34:07 PM

Continued good health and exposing the corrupt government that got us here! Mitchell Schiff on 12/23/2022 2:31:43 PM

I can't deny that 5lbs of 100 dollar bills wouldn't put me in a better mood. Jim on 12/23/2022 3:29:36 PM

Merry Christmas to you & your precious loved ones, Charles! Thanks for making 2022 a bit more pleasant for my wife & I (in our late 60's) to grow our hard-earned money with your practical & greatly needed advice. KEEP IT UP! Gary C. on 12/24/2022 8:55:21 AM

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.