Not Everything Goes According To Plan

If you've been around the stock market for a long period of time, then I'm sure you can agree with this.

Nearly a year ago, I made a really good call, expecting significant challenges in 2022, and even suggesting that we could see a low on the S&P 500 in the 3500-3800 range - on a worst case basis. Well, after moving slightly below 3500 in October, interest rates began to drop rapidly, falling from 4.33% on the 10-year treasury yield ($TNX) to 3.41%. That was another solid call. But my calls weren't perfect. With this drop in the TNX, I was expecting a big market rally led by growth stocks. Yet here we are, on December 21st with just ten days remaining in 2022, and I'm still waiting for growth stocks to truly launch - especially the large cap growth names. Check this chart out:

Enter S&P 500 Large Cap Index ($SPX):

During the summer, we saw the TNX declining and growth stocks did EXACTLY what I thought they were going to do - outperform. But then the Fed decided to dig their heels in even deeper in terms of their hawkishness, with Fed Chief Powell suggesting "more pain ahead" back during his Jackson Hole speech in late August 2022. Since that time, even with the TNX topping and rolling over significantly, we're simply not seeing growth stocks perform the way they should. It reminded me of listening to Rory McIlroy, the world's #1 ranked golfer, who said, and I'm paraphrasing, "I don't think I'll ever figure this game out". Yet he practices and practices and practices in an attempt to do just that. I believe the stock market is similar. While I'm not claiming to be the best market analyst in the world, I've been doing this a long, long time and I think I'm pretty good at it. I practice, practice, and practice (more like research, research, and research), yet here I am, wondering why rapidly falling treasury yields are having little positive impact on growth stocks.

My strive for perfection will continue at MarketVision 2023. I hope to see you there!

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.