Is the market just sitting around waiting for what Fed Chair Jerome Powell has to say on Wednesday? And if the market doesn't like what he has to say, heck, it can wait for the Core Personal Consumption Expenditure Price Index on Thursday. And if that doesn't go its way, there is always the jobs number on Friday.
And heck, if those are not to the markets -- or your -- liking, there is always the consumer price index and the Fed meeting next week. This is like the Roseanne Rosannadanna market: It's always something.
But let's consider this. We are now at year end and that means folks on Wall Street are working hard at their 2023 year-end targets and their market views. I have never thought year-end targets are worth the paper they are written on, but I do think it gives us some insight into exactly how bullish or bearish these strategists are in general.
From what I can tell, folks who were bearish this year are a tiny bit more optimistic about next year. Most think the Fed will finally begin cutting rates by midyear 2023. That probably means that unless the S&P cracks under the October lows we have probably seen peak bearishness.
Someone will surely ask me if I think we've seen the lows and I will respond as I always do: I won't know until months after the fact. But let's take a look at the chart of CrowdStrike (CRWD) , because I think it is instructive.
After the bell on Tuesday, the stock is trading around $112, so that is a lower-low than the $120 it saw a few weeks ago. But look at this chart and notice it has come down in layers. The first part of 2022 saw a rally that petered out in April, plunged to a lower low and recovered a decent amount of that plunge in the summer rally.
But now look at the action since October. It hasn't even participated.
Now contrast Crowdstrike with Merck (MRK) . It's like the two stocks don't even know each other. I think Merck is a bit overdone up here -- it is a Dow Jones stock after all! But the point is that we have been in a market of stocks in 2022. It's still in some sense an either/or market, but in 2022, there have been a lot more to choose from on the upside, especially since September. In 2021 it was a handful of stocks that went up and almost everything else went down or sideways.
If you are waiting for the market to go back to what we had before 2022 --you know, where growth and tech stocks were all you needed to know about -- then I think you will be disappointed. I have said before that the unwinding of the mega-cap tech stocks is in many ways bullish for other stocks as it frees up money to go into them whereas the mega-caps sucked up all the energy in the market.
In the meantime I still think we're once again heading toward more volatility, not less.
