Equities remain overpriced, even compared to the dot-com bubble. But you can still find good choices in these 2 sectors.

TECHNOLOGY
featured image

After stocks rallied to their best gains in three weeks following strong consumer sentiment data, Thursday looks less buoyant with stocks in the red as we head into the long Christmas weekend.

Investors should be used to the kind of here-today-already-tomorrow trading action they’ve suffered this year, as the best sessions seem to be outweighed by the not-so-good ones. This is reflected in the 18% drop we saw for the S&P 500 SPX
so far in 2022, and Wall Street strategists continually tearing up their maps.

To read: Wall Street’s stock market predictions for 2022 have fallen by the widest margin since 2008: will next year be any different?

For all this market’s downfall, it still isn’t that cheap, as Michael O’Rourke, chief strategist at JonesTrading, reminds us. He notes that the S&P 500 SPX
market cap-to-GDP has shrunk to 129% from 180% nearly a year ago, thanks to the technology-led pullback.

“That’s a notable correction, but it’s also a 6.7% premium to the 2000 bubble and a 50% premium to the three-decade average,” said the strategist, who suggests investors remain vigilant to assess the market price.

JonesTrading/Bloomberg

So investors are heading into 2023 at corrected valuations, but not in a super-cheap market. In short, risk appetite remains low and “managers are looking to weather the storm rather than capitalize on real alpha potential,” notes Mark Ritchie II, chief investment officer at RTM Capital Advisors and son of the legendary investor of the same name. 🇧🇷

But for those investors who aren’t afraid to at least look where the extra gains in this market can come from, Ritchie offers some sectors and investment ideas to watch in our call of the dayfrom an interview he gave to Real Vision earlier this week.

The first is solar, a small, niche part of the market that he says has stayed well in line with energy prices. “If you look at the top names in that group, there are some that have real earnings and sales, those could continue to be explosive,” Richie said.

He also has an eye on biotechs, although he notes that stocks are more selective as some parts of the sector are not trading very well. “But there are some specific stocks that are trading really well. I think you want to be looking there potentially,” he said.

While both of these areas pose risks, Ritchie said he would dive into them again if they continue to hold relative to the market. “And if you look specifically at the biotechnologies that are doing well, they’ve all hit bottom,” he said.

On this he says that instead of taking ETFs such as the SPDR S&P Biotech ETF XBI🇧🇷
investors should look for companies with larger capitalization that have held up well — Biogen BIIB🇧🇷
Regeneron REGN🇧🇷
gilead GILD
and Eli Lilly LLY🇧🇷
to name a few.

“But I would just say, look at one of the biotechs that has the greatest relative strength, i.e. relative to the overall market, or one that is potentially hitting or trading near the 52-week highs,” Ritchie said.

In the solar group, First Solar FSLR
and Emphasis ENPH
two companies he watches have also held up well.

the markets

market watch

DJIA Shares

SPX

COMP
are dropping postage data, with bond yields BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
mixed and the dollar DXY
higher. CL oil prices

BRN00
have reduced earnings. The Hang Seng HK:HSI
charged higher, taking advantage of Wall Street’s positive session.

For more market updates, plus actionable trading ideas for stocks, options and cryptocurrencies, subscribe to Investor’s Business Daily’s MarketDiem.

the buzz

Third-quarter GDP was revised to a stronger-than-expected 3.2%, while weekly jobless claims came in lower than expected at 216,000. Still to come key indicators at 10:00 AM

AMC Entertainment AMC Stock
it fell 20.6% toward 22-month lows after the theater operator announced a $110 million capital increase and plans a 1-for-10 split of its common stock.

CarMax stock KMX
is falling after the used vehicle dealer reported disappointing results, saying inflation and higher interest rates had led to “vehicle affordability challenges”.

Lexicon Pharmaceuticals LXRX Stock
are falling after a disappointing Phase 2 treatment trial for herpes zoster complications.

Micron Technology shares MU
fell after the memory chip maker announced plans to cut jobs and expenses after reporting a loss and weak demand.

Two former FTX and Alameda Research executives pleaded guilty to fraud on Wednesday, the same day FTX co-founder and former CEO Sam Bankman-Fried was being extradited back to the US to face charges .

Delta DAL🇧🇷
American AAL🇧🇷
United UAL
and other airlines continue to cancel flights as a “bomb cyclone” winter storm wreaks havoc across the US

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Just three crops provide 50% of the world’s calories. When the shocks come, they hurt.

the chart

The chart of the day comes from Jesse Felder, founder of Felder Investment Research and blogger for The Felder Report, who explores whether a “greater regime change is underway” as the 60/40 portfolio took it seriously this year.

A 30-year history of the Sprott Physical Gold and Silver Trust CEF
for Vanguard Balanced Index Fund VBINX🇧🇷
“It shows that there are times to own precious metals and then there are times to own stocks and bonds,” writes Felder.

The Felder Report

He said the ratio is back above the 36-month average, as well as breaking a decade-long downward trend. “If this is indeed indicative of another major regime change, then we should expect precious metals to outperform stocks and bonds for an extended period of time, perhaps the next decade or so,” Felder said.

the tickers

These were the most searched tickers on MarketWatcha as of 6 am:

ticker

security name

TSLA

tesla

GME

GameStop

AMC

AMC Entertainment holdings

MULN

Mullen Automotive

NO

NO

AAPL

Litter

AMZN

amazon.com

MONKEY

AMC Entertainment Holdings Preferred Stock

DWAC

Acquisition of the digital world

COSM

cosmos health

random readings

California dog missing for over a year returned home for Christmas after turning up alive and well in Kansas.

Rock band Journey fighting over gigs for former US President Donald Trump.

It’s time for Spain’s annual “El Gordo” lottery draw, with $2.7 billion up for grabs

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Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.

🇧🇷

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