December 2022 Update
Ashley Nichols - Dec 14, 2022
Money is a tool. It's something that supports your life!
Did you even think we'd be back to give you these beautiful blogs? Well, fear not! We have returned just in time for Santa to get the low-down on market conditions before loading up his sleigh for the good little girls and boys this season!
This month Stephen returns strong with is "Interesting Charts" and his "Technical Comments". He shares a great article from Lance Roberts regarding "Lessons from the Nifty Fifty" and we of course, share our portfolio performance.
Ashley takes a backseat this month for the Millennial Minute, however, she leaves us with something to look forward to in 2023! So, you may want to at least skim to the bottom of this month's blog to read her note - it may be of interest to you!
And finally, from everyone here at the Biddle Johnston Wealth Management Team, we want to wish everyone a safe and happy holiday season! No matter what you're celebrating, where you're celebrating, or who you're celebrating with, we wish all the best over the holidays and into the start of 2023!
Interesting Charts
1) Sometimes the answers to our questions aren't always what we like to hear, and it can be hard to disseminate what's truth and what's fallacy. Fact check your facts and trust in the accredited experts to help guide you through the questionable times.
2) That dreaded "R" word continues to be on the horizon. Be sure to stay tuned to our upcoming podcasts and updates to hear our thoughts and predictions.
Source: Twitter, December 4 2022
3) Many investment strategies get made months in advance of fundamental events in the market. It takes a keen eye on the market conditions and an ear on world news to sort through the noise and make sound investment choices.
Source: Twitter, November 15 2022
4) This tweet could also read more as "decades". The gains since the last financial crisis really seem to be taken out of "future" earnings. We know the P/E ratio for many companies is hyper inflated and we could see a large correction on the horizon - taking many investors years (or decades) to regain what can be potentially lost. Active money management with professionals will help to weather the storm.
Source: Twitter, December 5 2022
Technical Comments
Source: https://www.brookstradingcourse.com/price-action-trading-blog/
- The November monthly candlestick was a bull bar closing near the high with a long tail below.
- Last month, we said that odds slightly the S&P 500 to retest October high in the first half of November.
- The S&P 500 traded higher in the first half, followed by sideways and spiked up to close near the high on the last day of the month.
- The bulls see the current selloff from January as a wedge bull flag (Feb. 24, Jun, 17 and Oct. 13).
- They got a follow-through bull bar in November which increases the odds that the S&P 500 will trade at least a little higher.
- The S&P 500 also closed back above the 20-month exponential moving average.
- The bulls will need to create another follow-through bull bar breaking far above the major bear trend line to increase the odds of higher prices.
- The move down since January has a lot of overlapping bars. The bears are not as strong as they hope to be.
- The bears got a 3rd leg down in October, but it reversed into a bull bar.
- They hope that the current move is simply forming a pullback and want a retest of the October low.
- They then want a breakout followed by a measured move down to 3450 or the 3400 Big Round Number which is also the 2020 high.
- Because November was a bull bar closing near the high, it is a weak sell signal bar for December.
- The last 2 candlesticks are consecutive bull bars closing near their highs with long tails below. That reflects strong bulls.
- We said that if November closes as a consecutive bull bar, the 2-legged sideways to up pullback may likely be underway. This remains true.
- December is the last month of the year. Its close will affect the yearly candlestick. Bulls want a close above the middle of the bar around 4150 while bears want a close below it.
- 4150 may become a magnet by the end of the month.
The Portfolios
*A new episode of the Market Commentary will be availble in January*
In November, we began to put more of our cash to work into the markets. We are not at 50% of our target allocation for equities.
We sold Middleby and Toromont and replaced them with Ferguson, Stelco and Barrick Gold.
In early November, we trimmed our energy positions.
All of our positions pay dividends.
Returns on our 60/40, 70/30, and 80/20 portfolios before fees
What's Happening
Stephen shares an interesting article from Lance Roberts - Chief Portfolio Strategist/Economist for RIA Advisors.
Today, we are seeing many market parallels. Investors are buying a handful of industry-leading
stocks amid high inflation and an aggressive rate-hiking campaign by the Federal Reserve.
During the 70s, the Federal Reserve was entrenched in an inflation fight. The end of the Bretton
Woods and the failure of wage/price controls combined with an oil embargo sent inflation surging.
That surge sent markets crumbling under the weight of rising interest rates. Ongoing oil price
shocks, spiking food costs, wages, and budgetary pressures led to stagflation through the end of
that decade.
