To The Moon

Public Holidays

25 Dec 2022 - Christmas (Singapore, America, Hong Kong)

26 Dec 2022 - Hong Kong

Economic Calendar

Some observations about the coming economic calendar:

• Some of the exchanges would be closed as they celebrate Christmas holiday.
• Pending Home Sales - This will provide a glimpse into the real estate and how it is coping with the interest rate hikes.
• Initial Jobless claims - this will be an important data point for the Fed’s consideration as they look into interest rate hike
• Crude Oil Inventories - This is one of the forward indicators of market consumption. If the draw down is lesser than expected, this would imply a less than bullish sentiment. Like most data, one data point does not make a trend. Thus, it is more needful for us to look at this from a wider time horizon.

Earnings

There are not many exciting earnings in the coming week but a new earnings season will start after this week. Will the earnings lift the market or do they affirm that market downturn?

News and my muse

• As inflation surges with energy & food challenges, Europe & America would need to choose between their citizens and bullets for Ukraine.
• <CNBC> Renters are most behind on payments in these 10 states. Some 15% of American households, around 6 million, are behind on rent this fall, according to a recent report.(07Oct2022)
• <Freightwaves> Three key drivers shaped ocean shipping markets in 2022: the end of the container boom, Russia’s invasion of Ukraine and China’s worsening economic and geopolitical situation.
• <Reuters> At the end of 21Dec22, The S&P 500 posted 5 new 52-week highs & 3 new lows; the Nasdaq Composite recorded 69 new highs & 268 new lows. On U.S. exchanges 9.81 billion shares changed hands, compared with the 11.16 billion average for the last 20 sessions
• <Business Insider> Goodbye to the good life: The cushy perks of tech work are rapidly disappearing
• <Reuters> Ghana to default on most external debt as economic crisis worsens
• The illusion of knowledge is amplified during the bull market and the disillusion will be amplified during the bear.
• <Forbes> Tech Layoffs: Cisco Announces Mass Layoffs - 4,100 Employees Cut
• Investing lesson of 2022 Geopolitics is a factor in the price but not the value. Macro has her short-term say. The margin of safety remains one of the keys.
• Optimism is good but objectivity can be more needful during such times. Some great companies are priced attractively but I am concerned that the macro should worsen over the coming months. Prudence is ever needful during this season.

Market Outlook (S&P500 and Nasdaq)

Legend:

MA ~ moving average

EMA ~ exponential moving average

S&P500 1D chart as of 24Dec22

Technical Analysis of S&P500:

• MA50 is on an uptrend (mid-term). If this continues, we can anticipate the formation of a golden cross (usually a bullish signal). It will depend on the coming weeks’ results.
• MA200 is on a downtrend (long-term)
• Candles are under both MA50 & MA200 lines. This implies that the current market is currently in a bearish zone for both the mid and long-term.
• EMA lines are starting to converge but still point downward (downtrend).
• The stochastic indicator points to an uptrend.
• The MACD indicator points to a downtrend.

From the above, most of the indicators point to a downtrend. Will we see a Santa Claus rally for yearend in 2022?

Technical Analysis of NASDAQ:

• MA50 line is on a downtrend (mid-term)
• MA200 line is on a downtrend (long-term)
• Candles are under both MA50 & MA200 lines. This implies that the market is in a bearish zone for both the mid and long-term
• EMA lines are on a downtrend. These are spreading and are not converging yet. Thus, it seems that the reversal is still some time away.
• The stochastic indicator is on an uptrend but it looks to be going down to form another crossover.
• The MACD indicator is on a downtrend.

Most of the indicators point to a downtrend for both the mid and long-term.

My investing muse

Tesla & Twitter

Tesla has been falling since Elon’s Twitter takeover. While Twitter has been delisted, Elon has not been able to stay away from the news. This led to an aggressive fall. Elon came out to Twitter Space session and spoke about a coming recession and pricing strategy to combat the recession. Some mentioned that Tesla is the most profitable shorted stock in 2022 involving USD$14 billion. With the recent Twitter files, it is hard for Elon not to be polarizing. His unveiling of censorship involving Twitter and Democrats have inevitably put Tesla into a certain political corner. Coming to politics, it can be divisive and Tesla may be paying the price from such Twitter uncoverings. There could be more along the way.

Mother Nature’s Christmas gifts

Northern California was hit by a 6.3 magnitude earthquake during the week. This has led to property damages and loss of power in some areas. Mother Nature has also hit 205 million with a cold snap over the Christmas weekend. On the other hand, the northeast has been hit by flooding. This led to thousands of flight cancellations and delays. This would also affect the supply chain. FedEx and UPS have advised that some of the Christmas gifts may not reach on time due to the weather and traffic condition. On top of this, let us also monitor the power grid usage as thousands have lost power. Some of the repairs could not start till the weather extremities have passed. There are also some concerns about agriculture. The extent of impact could only be known after the cold has passed.

Fuel and Energy

While many have cheered the drop of fuel prices to pre-Covid levels. It is still unknown if it is caused by a strong supply or a declining demand. If it is the latter, it will not be a good sign for the economy. The cold has also placed greater demands on the power grid. Winter has started and it would be crucial to monitor.

US to pass USD$1.7 trillion bill

The Senate has approved the passing of a USD$1.7 trillion bill to avoid a government shutdown. Default would be almost impossible to swallow but this will just push the costs to future generations.

CNN has reported the following:

The massive spending bill for fiscal year 2023, known on Capitol Hill as an omnibus, provides $772.5 billion for non-defense, domestic programs and $858 billion in defense funding. It includes roughly $45 billion in emergency assistance to Ukraine and NATO allies and roughly $40 billion to respond to natural disasters like hurricanes, wildfires and flooding.

Source: https://edition.cnn.com/2022/12/23/politics/house-vote-spending-bill/index.html

Several have raised their concerns. The US has several urgent challenges on hand apart from the weather extremities mentioned above. They continue to stand in solidarity with Ukraine and NATO, with promises of funding and unwavering support. On the medical front, they are fighting the trio of RSV, flu and Covid19. This is expected to worsen due to the holiday travels over Christmas. They are also facing challenges at their Southern border. The temporal extension of Title 42 has brought some relief as their borders continue to be overwhelmed. Local authorities have raised their concerns about how drug cartels exploit the border, bringing drugs & crimes into America.

Concluding thoughts

With the falling market and various challenges, 2022 looks to end in decline as challenges mount up for 2023. With the end of 2022, it is a good time to review our expenditure and investing portfolios. The winter can be challenging and the European allies could be in for a tough time. It is probably a good time to consider saving up. The market should provide more discounts as macro factors continue to taunt and tease. It is a good time to be prudent. While several are lamenting the bearish results, great companies will be made available at good discounts. Weak companies will go under and stronger ones will emerge. The market will bare her fangs and sometimes, it is good to be on the sidelines as the bear takes over.

@TigerStars

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