Weekly Briefing 12/5/21 - The Forecast

Weekly Briefing 12/5/21

Weekly Briefing 12/5/21

Indexes are bottoming as fear reaches levels not seen in a long time. Buying near market bottoms is rarely easy, as human nature makes chasing a rising asset far easier than buying while it drops. Our bias is up into the Fed meeting which will occur in the middle of the month.
2018 and 2020 timed peaks near late January/early February and 2022 is  expected to follow suit. We have many corroborating signals from our system indicating a multi-month peak in Q1 2022. The narrative from the financial press for the correction will likely be slower growth, rising interest rates, and runaway inflation.
Market recap:

Omicron covid fears and an accelerated taper schedule disclosed by Fed Chairman Powell during his testimony to Congress this past week put downside pressure on risk assets across the board. Not much is known about the new variant other than it contains elements of the common cold and no one has yet to die from it according to the CDC. The lead South African scientist who made its discovery has indicated its symptoms are mild and less severe than the original COVID-19 virus. The markets had a tremendous move from early October and profit-taking events are normal.  There is always a narrative attached to every drop.

The S&P 500, the Dow, and the Nasdaq all closed the week below their 50-day moving averages, but apart from the Dow, the benchmarks are still well clear of their 200-day moving averages. The VIX also spiked above 35 – its highest reading since January of 2021.

Economic data from this past week:

 Non-farm Payrolls (NFP): Missed

ISM Manufacturing and Services: Beat

PMI’s: Beat

ADP payrolls: Beat

Consumer Confidence: Missed

Upcoming data this week:

 Trade Balance report on Tuesday

Jolts Job Openings on Wednesday

CPI and Consumer Sentiment on Friday