Day Traders Diary

12/22/22

The major averages resumed their sell off following bearish comments from billionaire, David Tepper. The Dow Jones Industrial Average fell 348 points, or 1.04%, after falling as much as 803 points earlier in the session. The S&P 500 declined 56 points or 1.44%, while the Nasdaq Composite slide 233 points or 2.18%.

This decline follows a 526-point rally in the Dow on Wednesday after better-than-expected earnings from Nike and FedEx, as well as strong consumer sentiment data for December. The S&P 500 and Nasdaq Composite surged 1.49% and 1.54%, respectively, Wednesday.

However, the selling returned Thursday as investors remained concerned that further monetary tightening from central banks around the world will push the economy into a recession. Tech shares led the losses, with semiconductor companies such as Lam Research and Advanced Micro Devices

 down nearly 8.7% and 5.6%, respectively. "I'm leaning short on the equity markets," David Tepper, founder of Appaloosa Management, said in an interview with CNBC's "Squawk Box" Thursday. "The upside/downside just doesn't make sense to me when I have so many … central banks telling me what they are going to do."

Stock futures fell to their lows following the comments from the influential hedge fund manager. So far in December, the Dow is down 4.52%, while the S&P 500 and Nasdaq have tumbled 6.32% and 8.65%, respectively. All three major averages are slated to break a 3-year win streak and post their worst yearly performance since 2008. Tesla shares dropped more than 8% after the automaker began to offer $7,500 discounts on some of its vehicles, adding to investor concerns of slowing demand at the company.

CarMax shares dropped more than 5% after the used car retailer missed profit and revenue expectations. Micron Technology shares slipped nearly 5% on disappointing quarterly results, dragging down other chip stocks. One-time meme stock darling AMC dropped 13% after announcing a capital raise.

Given the "murky" outlook on consumer spending, Piper Sandler analyst Peter Keith said he's leaning toward "recession-resilient growth stocks" that have company-specific situations to serve as a catalyst for a stock move. He's named five picks for the coming year.

One favorite is Yeti. Keith expects the company to benefit from a drop in ocean freight costs, which will boost its profitability. His $57 price target implies nearly 37% upside from where shares closed Wednesday, and it is more than 7% higher than the average target on Wall Street, according to FactSet.

As consumers trade down to cheaper goods in a weak economy, Keith expects Dollar General to benefit, calling it a "steady/strong operator." Its price target moves to $288 from $273. The stock is up more than 3% in 2023. Keith's call means it could rise nearly 18% from here.

Planet Fitness' price target was lifted to $93 from $79, or about 18% above its current level.

Piper Sandler's surveys show consumers are talking about hitting the gym in the new year. Keith expects fiscal 2023 same-store sales to rise more than 10.5%, which is above consensus.