Market at a Glance - 11/22/2022

By: Christopher Mistal

November 22, 2022

Seasonal: Bullish. December is the #3 month of the year for DJIA and S&P 500 since 1950, #4 NASDAQ month (since 1971). Small-cap outperformance historically begins around mid-December. Wall Street’s only “Free Lunch” will be served before the market opens on December 19. Watch for the Santa Claus Rally to begin when the market opens on December 22.

Fundamental: Improving? Retail earnings have been better than anticipated, suggesting the consumer is still on reasonably firm ground and breathes life into the hope that holiday sales could also be better than expected. Unemployment remains low with another month of solid payroll gains. Energy prices have eased slightly which is likely giving a modest bump to consumer confidence. Corporate earnings are forecast to slow, but not retreat. Midterm elections are over and gridlock in Washington has historically been favorable for the market.

Technical: New Bull Market? Confirmation remains elusive. Bullishly DJIA has reclaimed its 50- and 200-day moving averages and is less than 60 points from its August closing high of 34152.01. S&P 500 and NASDAQ have reclaimed their respective 50-day moving averages but continue to lag. Both NASDAQ and tech-heavy S&P 500 could continue to lag until the Fed becomes a bit clearer with rates. Nonetheless, all three indexes remain in uptrends and the Q4 rally is intact.

Monetary: 3.75 – 4.00%. The Fed has yet to signal when at and what level rates may ultimately climb to, but they did appear to take a softer stance at their November meeting by acknowledging the cumulative and lagging effects of monetary policy changes. Softer than expected CPI and PPI have lifted hopes that the Fed’s pace of increases will slow in December. When that meeting arrives, there will be new CPI and PPI figures for the Fed to consider. Based upon most recently available projections, the Fed is getting close to the end of hikes. The sooner the end arrives, the happier the market is likely to be.

Sentiment: Neutral. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 38.6%. Correction advisors are at 28.6% while Bearish advisors numbered 32.8% as of their November 16 release. This is the first time since mid-September that bulls outnumber bears. The margin is slim which suggests plenty of skepticism remains. This is not surprising considering how many market observers called a new bull market in early August only to be greatly disappointed with lower lows in September and October. The market appears to be slowing climbing the proverbial “wall of worry.”