In October, the Bureau of Economic Statics released the preliminary Q3 GDP estimate, which revealed strong growth…
- 2.6% annualized
- In November, they revised that figure upward to 2.9%
- Yesterday they revealed their final estimate for Q3 … 3.2%!
A recession is becoming less likely by the day… But the market tanks on the news. Intraday, major indexes fell as much as 3%.
In the end, all four indexes settled deep in the red but well off their lows and within the previously-established weekly range.
- Dow Jones -1.0%
- Nasdaq -2.2%
- S&P 500 -1.4%
- Russell 2000 -1.3%
Why the selling?
The better the economy, the less likely the Fed is to pivot from its rate hikes.
Given the Fed has already forecast its next moves…
- Their hiking to 5%
- The current rate is 4.25%
- That means we can expect another 0.5% hike in February 2023
- And 0.25% in March
Your take-home—Yesterday’s new figure shocked the market. We don’t believe it changed the outlook.
Sector Round Up
All 11 sectors ended Thursday lower.
Falling the hardest…
- Consumer Discretionary (XLY) -2.6%
- Technology (XLK) -2.5%
- Energy (XLE) -2.3%
The best performers…
- Healthcare (XLV) -0.1%
- Consumer Staples (XLP) -0.2%
- Real Estate (XLRE) -0.5%
Shares of Tesla (TSLA^) fell 9% on Thursday. The decline dragged the Nasdaq and Consumer Discretionary sector lower.
- CEO Elon Musk promised not to sell more stock for 2 years
- The company announced deep discounts on its EVs
- The stock is trading at its lowest level in more than two years
- Musk also floated the idea of stock buybacks in 2023
What does consolidation look like? Look at what’s circled…
At each market bottom this year, the Dow Jones has consolidated for several days before breaking out to the high side.
We’ve marked false starts and false breakdowns with the arrows.
Yesterday’s selloff did not change our outlook.
- The VIX is holding on to relatively low levels
- RSI levels are all neutral
- The Put-to-Call Ratio is very oversold
2023 is now 5 trading days away.
The “Santa Rally” begins today.
*APCX on watch
*ACER support at $3.50
*EVER on watch
*MDGL on watch
*NINE support at $11
CABA support at $7
SMMT resistance at $4.50
TERN support at $8, resistance at $9
ORMP support at $10
PBYI resistance at $5
YQ support at $2
ETNB support at $10
CLDX support at $45
ZYME support at $8.50
VRNA on watch
^CROX support at $100
^PRQR on watch
VKTX on watch
WVE support at $5, resistance at $6.50
HUYA support at $3.50
CPRX support at $18
Secondary watchlist, float 100 million & up…
MOMO support at $8, resistance at $9
ARDX support at $2
GOTU on watch
TAL on watch