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Navigating the week ahead: December 12th, 2022

Good morning, friends! I hope you had a great weekend. We have a very busy week ahead of us, and I think it could lead to some big moves in the market as we get ready to close the year. Let's dig in!

The week that was ...

The price of WTIC oil collapsed down over 10% last week, as we saw weakness in energy markets increase as recessionary fears grow. The NASDAQ fell 4%, bringing it back to a near 30% loss year-to-date. The S&P 500 fell 3.4%, giving back a fair amount of the gains made since the mid-October bottom when this latest bear market rally began. Bonds were relatively sanguine about the situation, barely budging down 0.4%.

S&P 500 internals had mixed performance last week, with noteworthy weakness in big tech, much of finance, and energy. We saw pockets of strength in more defensive parts of the market, such as healthcare, utilities, and consumer defensives.

The rotation into more defensive components was also visible in the delta between low volatility and high beta large caps, with the former outperforming the latter by 2.94% over the last week. A rotational trend that resumed in mid-November.

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