1. Moving the markets

Despite a green opening, the bulls lost control in a hurry, as the bears took over and dominated the rest of the session as if to add insult to injury to a year that is shaping up to be the worst since 2008. The S&P is now on track to close 2022 with a loss of over 20%.

Powerhouse Apple fell another 3% and dropped through a key support level to a 52-week low. Energy was big laggard with Crude Oil now below $80, and Southwest Airlines continued its slide by another 5% amid an additional surge of flight cancellations.

Traders are now simply wishing that due to bullish momentum appearing to have been exhausted, with the much hoped for technical rally fast disappearing in the rear-view mirror, that Friday afternoon arrives without much more carnage.

Ok, but what are we looking at once the first trading day of 2023 arrives next week? China, Covid, energy issues, a weakening economy (lower earnings?), Ukraine, and hawkish Central Banks do not paint a picture of calmness or balance conducive for the bulls.

With my Trend Tracking Indicators (TTIs-section 3) having hugged their trend lines in the recent past, but now are showing a southerly tendency, I would not be surprised to see a “Sell” signal in the near future, which could be as soon as next week.

1. Moving the markets

Rising bond yields took center stage today and kept equities in a tight trading range, as the first of the last 4 days of trading in 2022 provided no ammunition for the bulls to try to end a brutal year on a positive.

China’s loosening of Covid restrictions helped their stock market, but domestically no upside driver emerged, as Tesla dropped another 8% due to an extended production pause, with the stock now being on target for its worst year ever. Ouch! Southwest Airlines lost around 5%, as thousands of flights had to be cancelled.

Even powerhouse Apple has now come off its recent highs by 29% and is testing its June 2022 lows. A reduction in production and consumption lies at the forefront of its malaise. But top billing for worst performance goes to Meta, which is down 70% from its highs.

Concerns about next year’s economic outlook preoccupied traders’ minds, as the latest Dallas Manufacturing Survey showed a September plunge to -18.8 (vs. -14.4 expected), a number that did nothing to soothe the sour mood on Wall Street.

On the positive, the US Trade Deficit shrank significantly, as ZeroHedge pointed out, which should have been good news, but wasn’t, when considering that the Fed’s “higher for longer” rate narrative may now not be crushed, which might have been the case had the deficit worsened.

The US Dollar went nowhere, but gold was a top performer for the day by gaining 1% and solidifying its position above the $1,800 level.

1. Moving the markets

Upbeat earnings and robust consumer confidence data combined forces to pull the markets out of their doldrums and gave traders an excuse to push equities higher. Nike started things out by beating quarterly earnings and revenue expectations, as did FedEx with the company also announcing cost cutting plans.

Consumer Confidence surged in December (to 108.3 vs. 101 expected), as ZeroHedge posted, while inflation expectations tumbled to its lowest since August 2021. That put the bulls back in charge with nothing being able to stop today’s Ramp-A-Thon.

Not even horrific US Existing Home Sales, displaying their worst annual drop since 2008, could offset the bullish mood. However, the US Macro Surprise index showed the economy continuing to sink and the index has now reached its lowest point since early September.

Bond yields dropped early on, rebounded, and slipped into the close ending the session just about unchanged. The US Dollar continued yesterday’s sideways pattern and held steady, as did gold with the precious metal remaining above its $1,800 level.

With only a few trading days left in 2022, the major indexes look to be snapping a 3-year win streak to post their worst year since 2008. As MarketWatch pointed out, the Dow is down 8.2% for the year and 3.6% for this month, while the S&P 500 shed 18.6% and 5%, respectively. The Nasdaq plummeted 31.5% in 2022 and 6.6% in December.

It was not a good year for the Buy-and-Hold crowd.