Final Week Of Trading In What Has Been A Brutal Year For Stocks

Can the markets close out the year on a positive note heading into 2023

Author

Mark Roussin
December 27, 2022

Hello Everyone,

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Market Talk ⏪

Looking at the stock market futures, it appears that stocks will open in the green, bouncing back after a mixed week with the S&P 500, the Nasdaq, and the Russell 2000 all down last week, with the Dow Jones Industrial squeaking out a small gain last week.

We enter the final week of trading for what has been a rough year for stocks, so we will have to see if the Santa Claus rally can end things on a positive not.

This week is light on both economic data and earnings, so there will be no major catalysts for investors to lean on, but we will see some tax loss harvesting and portfolio repositioning that could take place during the week. Overall, volume will be low.

We did get some weak home sales data last week showing a decline of 7% during the month of November, which was the 10th consecutive monthly decline. Average period for homes on the market rose from 18 days to 24 days, which is another negative for the real estate sector.

Housing is in a rough spot as mortgage applications continue to decline and with rates continuing to go higher, the near-term does not look promising for the sector. Another angle that is not being talked about is the decreasing affordability. Housing prices have come down, but potential homebuyers are seeing their savings be swept away with high inflation.

Turning back to stocks, if you do have losses you want to recognize for tax purposes, this is the week to recognize those and then wait at least 30 days before you buy back that particular security, in order to avoid wash sale rules.

Going into 2023, the game plan remains:

  1. Do NOT fight the Fed

  2. Have dry powder available to put to work in 1H 2023 when earnings estimates are revised lower

I still believe we test the October lows and maybe even lower, as such, I am trying to remain patient with my purchases. However, I am not sitting stagnant, and those of you that are premium subscribers will see all the purchases I have made in recent weeks.

From an international perspective, it was reported on Monday that further loosening of the strict zero COVID policy over in China is expected to take place, which could provide a boost to stocks to start the week. China announced that starting Jan. 8, 2023, travelers will no longer need to quarantine upon arrival on the mainland.

Portfolio Update 📰

This week marks the close of the December and the 2022 trading period, so be on the lookout for my Monthly Portfolio Update. These portfolio updates, which cover my current portfolio and any activity I had within the portfolio for the month, are only available to premium subscribers.

You can become a Premium Subscriber today for ONLY $1 PER DAY on a monthly plan or even LESS on the annual plan. In addition to my monthly portfolio update, premium subscribers also receive (2) individual stock Deep Divers per month and Earnings Recaps on notable stocks.

If there is a specific stock you would like me to consider for a future Deep Dive, then send me an email at [email protected] and I would be happy to consider it.

US Markets 🇺🇸

Here is a performance summary for US Equities:

Here is a look at US Treasuries:

The Fear & Greed Index measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.

When it comes to the Fear and Greed Index, we have seen a fast move from a reading of ‘Extreme Greed” just three weeks ago to now having a reading of Fear once again. The past week however remained mostly unchanged. Currently, the index has a reading of 39, which is not much change from the prior week reading of 42.

Earnings on Deck 💰

No notable earnings releases this week!

Notable Analyst Updates 📝

  • Morgan Stanley makes Microsoft their TOP PICK of 2023

  • Needham increases PT for Nvidia to $230

  • Jeffries upgrades Moderna to BUY and increasing PT to $275

  • Evercore ISI upgrades Union Pacific to BUY and increases PT to $232

  • Evercore ISI downgrades Norfolk Southern to hold

  • Barclays increase PT for Merck to $128

  • Stiffel cuts PT on Target to $175

  • Piper Sandler makes Dollar General their TOP PICK for 2023 and increase PT to $288

This Week 📆

Monday

  • Market closed

Tuesday

  • November wholesale inventories

  • October S&P/Case-Shiller home prices

  • October FHFA home price index

  • December Dallas Fed index

Wednesday

  • November pending home sales

  • Richmond Fed index

Thursday

  • Weekly initial jobless claims

Friday

  • December Chicago PMI

Other Resources 📺

If you have not done so yet, definitely check out my growing YouTube community where I publish weekly videos on Dividend Stocks I am looking at.

Here is a look at my latest video in which I discussed one of my favorite REITs which is Realty Income (O):

I also recently published my Top 10 Dividend Stocks for 2023:

Here are a few others of my latest videos:

If you enjoyed the newsletter, leave a LIKE and COMMENT down below. Also, if there is someone that could benefit from this newsletter, consider sharing it.

Have questions? You can email me directly at [email protected].

Have a Happy Holidays!

Mark

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