Find out the potential plays for January and the market trends to watch
- 2022 losers surged 26% in January
- Former Wall Street veteran recommends tax losers for the new year
- Window dressing and tax loss selling influence markets between November and January
- Seven potential plays for January include solar stocks, fertilizers, Fannie Mae and Freddie Mac shares, Walt Disney, retailers and apparel companies, lithium producers, and cannabis plays
- Market futures tilted lower, gold futures higher, and oil futures continued to slide
- Major Treasury bond auctions and new-home sales data set for release
- Black Friday spending online rose 7.5% to a new record
- Amazon now the top delivery business in the U.S.
The stock market is looking bloated, like that feeling after a calvary of Thanksgiving dishes. Investors will hope it doesn’t turn into the Thursday performance the Washington Commanders served up. Speaking of losers, Lawrence McDonald’s Bear Traps Report serves up a helping of potential losers to feast on early next year. The former Wall Street veteran points out that this year will be a good one for investors to find tax losers given the big dispersion in performance, with Magnificent Seven stocks soaring while the S&P 493 warble behind, and small caps largely losing ground. "There are two forces that have a significant influence over markets between November and January: Window dressing by mutual fund managers and tax loss selling by individual investors," says McDonald. The first factor — funds loading up on this year’s winners to make it look like they’ve been invested the whole time — should provide a tail wind for the companies that have done well this year, i.e. the likes of Nvidia NVDA, -1.93% and Meta Platforms META, -0.95%, through December. But January will make a change in fortunes for the companies that have struggled. These are companies where investors will have to sell in 2023 to get the tax benefit from the capital loss, and then have to wait 30 days before buying again. Last year’s tax-loss selling basket, which included Tesla, Alibaba and the ARK Innovation ETF, saw an average gain of 26% in January. This year he highlights seven plays. The first is buying solar, and specifically Enphase Energy ENPH, +0.02% and SolarEdge Technologies SEDG, -0.76%. "A decline in interest rates, something the rates market is anticipating for 2024, would give a boost to the beleaguered solar stocks. In addition, we should get an update on the solar subsidies from the Inflation Reduction Act, which could help sentiment on these stocks," says McDonald. The second idea is to buy fertilzer and crop protection, after a rough year which has seen FMC Corp. FMC, -0.06%, for instance, drop 60% from its peak last December. An interesting call from McDonald is to buy the over-the-counter shares of Fannie Mae FNMA, -0.10% and Freddie Mac FMCC, +0.55%. Hedge funds crowded into this trade, unsuccessfully, after challenging the government’s ability to sweep profits to the U.S. Treasury. McDonald points out that it’s basically a coin flip on whether President Donald Trump will return to office next year, and after the 2016 election those stocks soared on hopes of privatization. "If we believe that a Trump victory could once again trigger speculation over a privatization, then the fair value of FNMA and FMCC is worth $1.8 and 1.72 per share and not 70 cents," he says. A fourth idea is to buy beleaguered Walt Disney DIS, +1.04%, which McDonald says is no longer expensive, as 12 times EV to EBITDA. There are a number of upcoming catalysts, such as the Comcast/Hulu deal, NBA renewal and potential asset sales, and the next step is to return to revenue growth. Other ideas including buying beaten-down retailers and apparel companies including Nike NKE, -0.26% and Target TGT, +0.74%, lithium producers such as Albemarle ALB, +1.80% and Quimica SQM, +0.24%, and cannabis plays through the AdvisorShares Pure US Cannabis ETF MSOS. Just remember — don’t buy until January. The market Stock futures ES00, -0.19% NQ00, -0.15% were tilted lower. Gold futures GC00, 0.52% were higher and near their best levels since May. Oil futures CL00, -1.31% continued to slide ahead of this week’s delayed OPEC+ decision. The buzz There are two major Treasury bond auctions — a $54 billion auction of 2-year notes and then a $55 billion auction of 5-year notes. New-home sales data is set for release at 10 a.m. Eastern, in a week heavy with housing market data. Black Friday spending online rose 7.5% to a new record, according to Adobe Analytics, while MasterCard’s tracker that includes both online and in-person sales rose a more modest 2.5%. There is a mix of retail and tech results this week from companies including Salesforce, Temu owner Pinduoduo , Farfetch, Foot Locker and Dell Technologies. Best of the web ICBC’s entree onto Wall Street looked like a bargain, until a hack. Richest 1% account for more carbon emissions than poorest 66%. Amazon AMZN, +0.02% is now the top delivery business in the U.S., besting UPS UPS, +0.85% and FedEx FDX, +0.45%. Top tickers Here were the top stock-market tickers as of 6 a.m. Eastern. Tickers Security name TSLA, +0.53% Tesla NVDA, -1.93% Nvidia AMC, -1.29% AMC Entertainment AAPL, -0.70% Apple NIO, -0.94% Nio AMZN, +0.02% Amazon.com GME, -0.73% GameStop MSFT, -0.11% Microsoft PLTR, -2.49% Palantir Technologies BABA, -0.60% Alibaba Random reads The science of stopping birds from crashing into windows. Meet the rock-star lobster, named after David Bowie and a mixture of colors and gender. This club, since its inception in 1951, is sparked by a love of matchbooks. Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern..
Public Companies: Nvidia (NVDA), Meta Platforms (META), Tesla (TSLA), Alibaba (BABA), ARK Innovation ETF (ARKK), Enphase Energy (ENPH), SolarEdge Technologies (SEDG), FMC Corp. (FMC), Fannie Mae (FNMA), Freddie Mac (FMCC), Walt Disney (DIS), Nike (NKE), Target (TGT), Albemarle (ALB), Quimica (SQM), AdvisorShares Pure US Cannabis ETF (MSOS), Amazon (AMZN), UPS (UPS), FedEx (FDX), Apple (AAPL), Nio (NIO), AMC Entertainment (AMC), Microsoft (MSFT), Palantir Technologies (PLTR)
Private Companies:
Key People: Lawrence McDonald (Former Wall Street veteran), Donald Trump (President)
Factuality Level: 3
Justification: The article contains irrelevant information, tangential details, and unnecessary background information. It also includes biased statements and personal opinions presented as facts. The article lacks in-depth research and accurate reporting.
Noise Level: 3
Justification: The article contains a lot of irrelevant and filler content, including unrelated stock market news and random reads. It also lacks scientific rigor and intellectual honesty.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses potential investment opportunities and strategies for investors in the stock market.
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article primarily focuses on investment strategies and does not mention any extreme events or their impact.
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