December 29, 2022, 10:14 pm EST
Last Trading Days for 2022
This week is the last trading week of the year 2022. There is no change in the market direction regardless of today’s advance and yesterday’s retreat. Both days came in light volume that were typical behaviors for the holiday season.
Three different YTD performances of the major indexes made it difficult to categorize the market conditions:
- Dow Jones: -9%
- S&P 500: -20%
- Nasdaq: -33%
Basically, the stock market switched from aggressive growth to passive value mode when comparing the past two years 2020-2021. Inflation, rising rates, wars, and post COVID-19 are the main themes for 2022. Although COVID-19 became a less severe threat for the US and most countries, China’s widespread cases and coming opening policy on January 8, 2023 may challenge the whole world again. It is a big unknown factor whether COVID-23 is coming at this moment.
Otherwise, we consider other conditions to continue to get worse for the first half of 2023 (inflation, rates, wars). We can monitor the job markets and housing markets to evaluate how they will hit the US economy into recession for the second half of 2023.
However, if the wars are over and inflation is under control, then it could change the picture completely. In our opinion, it is the low probability case.
Overall investment strategy should gear on conservative and defensive style. We still prefer commodity areas (energy, material), defense industry, and healthcare sector.
Tomorrow is the last trading day for 2022. Let’s say “Happy New Year” to you all.
