| Dear Kings, Wondering how the stock market will close 2022? Well, aren’t we all!
We’d all love for some magic mega rally to turn the S&P 500 green for the year…
We’d love for the recent lows to be the end of the bear market…
And we’d love for inflation to stop eating away at our spending power…
But we must remember the stock market isn’t required to have holiday spirit.
As traders, we have to look at the truths of this market objectively, and understand that we are solely responsible for what happens to our trading accounts in any circumstance.
Today, I want to take a look at the tailwinds and the headwinds the market faces right now, and give you an idea of how I plan to trade December.
Don’t reserve your place at Ian King’s “Crisis Investment Summit.”
Don’t find out what Ian King — whose hedge fund turned a 261% profit during the worst year of the financial crisis — believes is the best thing you can do with your money right now.
And don’t reserve your spot to attend before the deadline.
The Tailwinds: Seasonal Strength The main tailwind behind a strong 2022 close is the simple fact that December is historically one of the best months to own stocks. The S&P 500 has gained an average of 1.6% during December, more than double the average overall return on a monthly basis.
Part of this is the “Santa Claus rally,” a phenomenon where stocks rise in the final five days of the year and through January 2. This has happened 75% of the time since 1945, and these rallies alone have raised the S&P 500 1.3% on average for the last half-century.
With stats like this, it’s hard to be pessimistic. But this is, ultimately, a bear market year. The bias is toward shedding risk and selling assets, not buying them, as we likely head into recession.
Time will tell if we get the Santa Claus rally… and the performance in the first half of December should give us a strong clue.
With that in mind, let’s take a look at the various headwinds that may make Santa skip Wall Street this year. The Headwinds: Double Whammy There are two key headwinds facing stocks right now. One minor, which we’re facing right now, and one major, which we’ll face on December 13.
Tax-loss harvesting season is upon us, which means traders are locking in losses now so that they can write them off for the 2022 tax year. That always puts some sell pressure on stocks, and it could be part of the reason we’re selling off to start this week.
But we have a much bigger headwind to consider in December — the Federal Reserve/inflation double-whammy on December 13.
On that date, both the Consumer Price Index (CPI) numbers and the next Fed rate hike decision will come out on the same day. That’s likely to cause enormous volatility in the market, both to the upside and downside, depending on how the data releases.
We could have lower inflation than expected and a dovish Fed that issues a smaller rate hike – that will likely seal the deal on a Santa Claus rally.
Or we could have higher-than-expected inflation and a hawkish Fed with another 75-basis point hike — which could have the opposite effect.
Or even some combination of the two…
These events are important to consider in the coming weeks. But they’re not everything…
My approach has always been to look at individual stocks, not the entire market. And some stocks are positioned to crush it even if the bear market continues.
On November 29, Wall Street legend Ian King — whose hedge fund turned a 261% profit during the worst year of the financial crisis — will show you how to not only weather this financial storm … but potentially come out the other side as much as 8X wealthier.
Full details here.
A Can’t-Miss Investment Summit to Cap off ’22 My colleague Ian King has a knack for unearthing the big winners of tomorrow, no matter what kind of market he finds them in.
He spotted gains of 137% in seven months on Inspire Medical Systems…
365% in 19 months on BioLife Solutions…
And 781% on the first half of a recommendation on SunPower — in just seven months.
Each of them came from following a simple pattern which made triple-digit gains after every single market crash of the last 30 years.
And Ian King is set to reveal this pattern in a special broadcast at 1 p.m. ET tomorrow. If you want to learn about the stocks he believes will emerge from this bear market stronger than ever, you’ll make a point to be there.
Sign up right here, and watch along with me at 1 p.m. ET tomorrow.
Regards,
Andrew Keene
Editor, Kings Corner
Like what you’re reading? Have some feedback for us? Send your thoughts to KingsCorner@BanyanHill.com.
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