Our November 2022 stock and ETF watchlist with entry points, sector analysis, and market outlook.
Market Overview
Welcome back to The Wealth Catchers' watchlist. The month of October was a bright one for some investors. We saw all the major indexes have a positive move to the upside. We also saw the completion of the purchase of Twitter by Elon Musk. Elon shook things up by firing C level executives right away and dissolving the board of directors. This definitely caused a stir in the social media space and we can't fully gauge the impact of this but so far it's looking like a negative one.
Fed & Monetary Policy
Now onto the Fed. At the time of this writing the Federal Reserve have decided to raise interest rates again by another 75 basis points. If you checked out the FedWatch Tool you would've seen that this move was expected. The market did react negatively to this news, not because of the size of the rate hike but because of what this might mean for the future. The Fed is committed to taming inflation and getting it back to a more manageable number which is generally about 2%. According to the latest CPI report, inflation came in at 8.2%. We obviously still have a long way to go to meet the Fed's goal. Keep in mind rising interest rates and the battle to bring down inflation comes with some bad side effects. The growth of our economy needs to slow, the cost to borrow money needs to keep rising, an increase in unemployment is necessary and assets need to lose value. We are slowly seeing all these things happen in real time. It's a necessary evil needed in this balancing act between supply and demand and saving the economy. It's a harsh reality to face. These are real people being laid off, real people having their net worth decrease dramatically real people fighting and losing the battle against inflation. These past few months and potentially until 2024 we all have and will be "weathering the storm". Prior to this we had 10+ years of low interest rates and quantitative easing since the Great Recession of 2008. It's impossible to fight the Fed, they will do whatever is needed to reach their goal. Getting there will be a painful process. The focus of many investors right now is figuring out how to lose the least amount of money. Others are viewing this as an opportunity and are buying assets at extremely low prices. Meanwhile the everyday consumer is just trying to make ends meet. There is light at the end of the tunnel, but the tunnel is deep. In other news we saw big tech get beat up some more after these latest earnings reports. Two that stuck out were Meta (-73% YTD), formerly known as Facebook, and Amazon( -46% YTD). Meta's stock price went crashing when it revealed how its pivot to the metaverse is panning out. They revealed that they are expected to lose more money as they continue to pour more resources into their metaverse bet. Meta has lost $650 billion in market cap and has lost $9 billion in the past 3 quarters. Keep in mind that the advertisement business was Meta's cash cow before this pivot. Apple drastically affected Meta's ability to generate revenue when they gave consumers the power to block tracking and being targeted by advertisements on Apple devices. Meta is trying to conquer a new frontier but the growing pains may be too much to overcome. Amazon saw a massive dip in its share price when it provided investors with weak future guidance. They essentially believe the road down the line will be much rougher than they anticipated. When we see earnings and reports like this from some of the top companies in the world this sends fear across the market. Even though the overall market was up in October these reports show us that things may not change anytime soon. Some important dates coming up:November 4th: October Jobs Report(Stronger than expected; U.S. payrolls increased by 261,000. Unemployment rose to 3.7%. Looks like a mixed message) December 13th-14th: Fed Meeting (50 basis point move expected)
Monthly Performance
At the close of month all the indexes were up. The Dow Jones (10.99%), S&P 500 (5.26%), NASDAQ (1.60%), Russell 2000 (8.08%). At the close of the month of October the VIX was at 25.88. At the close of the month the "Fear and Greed" index was at 58 indicating greed in the market.
Index Performance
| Index | Performance |
|---|---|
| Dow Jones (Oct 2022) | +10.99% |
| S&P 500 (Oct 2022) | +5.26% |
| NASDAQ (Oct 2022) | +1.60% |
| Russell 2000 (Oct 2022) | +8.08% |
Top Sectors
Bottom Sectors
Stock Entry Points
| Ticker | Daily Entry | Weekly Entry |
|---|---|---|
| NKE | $87 | $83–$99 |
| ABNB | $87–$97 | $87–$117 |
| MSFT | $217–$227 | $201–$238 |
| AAPL | $135–$143 | $131–$155 |
| Z | $29–$35 | $21–$40 |
| SQ | $57–$68 | $55–$71 |
| PYPL | $69–$86 | $73–$87 |
| MCD | $250 | $231 |
| WMT | $131 | $118–$149 |
| TSLA | $199–$234 | $181–$238 |
| SBUX | $83–$93 | $71–$93 |
| V | $175 | $175–$206 |
| PG | $127 | $124–$137 |
| WM | $154–$160 | $140–$160 |
| CHPT | $12–$14 | $12–$14 |
| IIPR | $89–$107 | $89–$116 |
| SHOP | $31–$42 | $31–$49 |
| ADBE | $275 | $256–$390 |
| AMZN | $87–$109 | $87–$115 |
| CRWD | $127–$154 | $119–$167 |
| NVDA | $135–$155 | $117–$145 |
| COST | $449–$497 | $465 |
ETF Entry Points
| Ticker | Daily Entry | Weekly Entry |
|---|---|---|
| ARKK | $37–$39 | $34–$40 |
| VUG | $215–$226 | $214–$234 |
| VGT | $297–$319 | $295–$345 |
| VOO | $320–$349 | $335–$359 |
| SMH | $185–$195 | $168–$196 |
Key Takeaways
- →October 2022: Dow best month since 1976 (+10.99%) — technical bear market rally.
- →META, GOOGL, MSFT all missed earnings; Communication and IT sectors still lagged.
- →Fed November 2 meeting expected to deliver another 75bps; rally is not fundamental.
- →ADBE trapped in Mother Bar; needs break above $396.39 to escape range.
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