November 28, 2022
Good morning,
I hope you all had a nice Thanksgiving. It’s back to normal this week following the holiday and markets are being greeted by a stiff global headwind amid growing unrest in China over Covid restrictions. Futures are off about -.75% pre-market on supply-side risk concerns. Most markets around the world are down a similar percentage today with technology leading the decline.
The week ahead has month-end rebalancing, more words from Fed Chair Powell, and fresh employment numbers on Friday. With the market beginning to show signs of being slightly over-bought on a short-term basis, it would not be a huge shock to see a bit of profit-taking this week, particularly if China remains a significant source of uncertainty and concern.
All that said, the market remains in rally mode. It continues to make breadth improvements and is starting to turn intermediate-term signals positive. The current rally has differentiated itself from the earlier rallies this year that failed. The continuing global breadth improvement has been reducing the downside risk and increasing the upside potential. However, it is still too early to conclude that the current rally will continue well into 2023.
Be well,
Mike