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Weekly Economic and Stock Market Commentary – December 12, 2022


December 12

As for the stock market specifically: The markets were hit with a bit of December cold last week that moved the major market averages down a substantial amount. The news reports I saw on television told me the reason for the market going down was the Federal Reserve may not slow down the interest rate increases.

Astute readers already know my next sentence.

The same reporters told us the market was up the prior week because the Federal Reserve would slow down the rate of interest rate increases. I think it would be unlikely that the answers would be different if I watched a different news station.

In my opinion, the reason the market declined last week was the fact that there were more sellers than buyers.

We don’t know why these investors decided they wanted cash instead of stocks, but that is the fact of the matter.

The research indicators I use fell a large amount last week. In fact, we are down more than 6% from last week’s numbers on 2 of the bullish percents, but the way the charts are built means we did not change direction. You can call me for a refresher on chart construction. Despite being on the edge, we still are in WEALTH ACCUMULATION mode.

Remember, X’s mean OFFENSE or wealth accumulation, while O’s mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of December 9, 2022 (Courtesy Dorsey, Wright, and Associates).

December 12, 2022

On a general note:

The Department of Labor provided the only economic report worth mentioning. The Producer Price Index for November showed an inflation rate of 7.4% compared to November 2021. November prices were 0.3% higher than October 2022, but was higher than the consensus estimate of economists. Prices for food, services, and merchandise pushed prices higher despite the decline in gas prices.

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