(Premium) U.S & China Bi-Weekly Investment Strategy: U.S. Markets Defy Bears (for now). China Macro is becoming stronger.
Preview Included: November 2nd Half Investment Strategy (11.16 - 11.30) How much further does the U.S. and China rally have to go?
Note to my Friends here: This investment research note is simultaneously provided on Substack and inside our Patreon Investment Community. At the beginning and mid-point of the month, I publish my formal Bi-Weekly investment strategy updates inside Patreon. Going forward, my Community will have a choice of whether to receive the content through Patreon or through Substack.
The content is exactly the same from my Patreon Community, but with previews so that public friends can get a sense of my research style.
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If you would like to join our Community on Substack, here is a link to do so. If you’re on our public list, enjoy the premium preview where I give a glimpse of this Bi-Weekly report. I’m very happy to be able to provide my public friends a preview going forward. Substack Members will be able to see the entire report below. Things have been going well, and I intend to keep our Community on the right directional bias.
Premium Strategy Report - November 2nd Half Strategy Report
Date: (11.15.22-11.30.22)
Title & Thesis: The S&P 500 (SPX) may be supported in the immediate near-term as the U.S. Consumer remains extremely resilient on paper, but trouble looms ahead for consumer spending. I believe SPX will be met with longer-term sellers in the 4100-4200 region (if it gets there). I will personally be reducing risk in that region assuming U.S. Macro stays unchanged. I view any pricing level between 3800 and 4000 to be a Strong Hold. On China, the long-term outlook has brightened. The near-term pricing of Chinese stocks has consumed upside, so shy away from new entries without a pullback.
Dear Members & Friends,
In my latest Bi-Weekly Report for 1st Half of November and 2nd Half of October report, I wrote about the strong potential that we could see a market rally that could catch Bears by surprise. Since then, we have seen the S&P 500 skyrocket from 3600 to 4000, placing intensive stress on market participants who had overly bearish positioning.
Whether the rally is temporary or sustainable is the subject of this Bi-Weekly note, but hey - the good news is that we discussed this while most market participants were still very bearish in Mid-October/early November. See below what I wrote from November 1st report.
Excerpt from November 1st Report.
You see - the composition of the S&P 500 (SPX) changing and shifting its weights away from the FAAMG stocks and general technology and towards sectors such as Health Care, Energy, and Staples.
I discussed the implications behind this being that the SPX is now a different index than it was earlier this year. One of the clearest examples is that Meta was formerly a #7 Component, whereas now it is #24 in the index.
Specifically, I talked about Bears likely getting caught of guard if the market perceives Fed Funds Rates to maintain the 2023 target of 4.5%-5%, which the market is now pricing in after October’s 7.7% CPI reading.
The SPX index is now much more resilient than it was earlier this year and the composition has adjusted to match the survivors of this environment: high inflation, defensive consumer behavior, and geopolitical worries on energy.
It seems that Bloomberg shares very similar conclusions from my research approximately 2-3 weeks after I publish.
I hope my research kept you in your positions while fear was at its peak in Mid-October. Keep reading for further analysis for U.S. & China investment strategy. I’ve included PDF versions for you inside if you would prefer to read via PDF at the very bottom of this email.
