BOB LANG: Good morning, Action Alert PLUS subscribers. It's November 3, 2022. Time for our rundown, let's get to it. We have a lot to cover. So as markets are off a little bit this morning, down about 1% or so, we're seeing some follow through from yesterday's sell off. And that's important to see because if we do continue to down today, or we have a much lower close through some support levels, which we saw yesterday about 3,750 and go below that level, we could be heading towards those October lows, which hit up about the middle of the month of October.

Call it about 3,495 or so on the S&P 500. So it's a bit of a ways off, but certainly we know how bear markets work. We know markets don't go up forever. They don't go up down every single day. But still when the momentum is strong going in one direction or the other, we could certainly see markets fall down to those levels. So I was also paying attention today earlier from head to a Fed funds futures.

Yeah, Fed funds futures moved sharply yesterday on the word from Chairman Powell that the committee plans to hike rates even higher than they had planned before. So if we look at the Fed funds futures out into 2023, we see that the markets are expecting about a 5 and a 1/4 to 5 and 1/2 rate by May. And. Actually out into June there are some people looking for 6% on the Fed funds futures so that that's quite a bit of ways above where the dot plot was in September.

Of course, now December meeting, we'll have another dot plot and another series of projections on the economy from the Fed. But yesterday's meeting really Chairman Powell made the case for stronger rate hikes and to stay high for a much longer period of time. So there's nothing really to argue there the fact that the Fed is not going to pivot here. They're not looking seeing peak inflation. In fact, inflation numbers coming out next week looking to be pretty hot about 9% increase on an annualized basis for the month over month number in October.

 So everything is pretty much showing a hot number. Now tomorrow, we have a jobs number that's going to be coming out. And some of the indications that have come out earlier in the week, like the JOLTS report, the ADP report, and today's jobless claims seem to point that this is going to be a hot jobs number, something that the Fed doesn't want to see if they're thinking about possibly pausing on interest rate hikes.

Now of course, yesterday, Fed Chair Powell did say explicitly we are not even thinking about pausing. And several Fed governors more recently have said we are not thinking about cutting interest rates at all in 2023 and more likely not even in 2024. So that's the message that we have to pay attention to. And we have to manage the portfolio. And we all have to manage our money around those expectations. 

So yesterday was called a candlestick pattern called an outside day. And what is that? So it means we had a higher high and a lower low on the trading day. So we reached up and had a higher level than Tuesday we can close down. So that would be a bearish reversal, a bearish outside day. We closed near the lows of the day. We had a lower level than the prior day as well too. 

So if we follow through again today to the downside and we continue to see more pressure on the market, that is setting up for a move back down to those October lows. Let's call it about 3,500, roughly a little bit lower than that 3,495. And if that happens, when we do have some lower levels below that 3,393, which is the high actually pre-COVID high February of 2020, that's been an area that I've been looking forward to tag. As we get oversold over there, we might want to start picking up some stocks.

Now speaking of oversold, you would think that after yesterday's 3% move down from the high to the low that we would have reached some sort of oversold condition. Absolutely not because we were very overbought coming into yesterday's meeting. And we continue to go higher even after Monday and Tuesday markets were down. So yesterday the oscillator closed at about 140 to 160, which still represents a mild overbought condition again, even after the markets were hammered.

Now, if we close below say, 3,750 day on the close, that's going to set up a condition where the markets are going to test lower levels. 3,700 and 3,650 is actually the area that I have my eye on right there first up and before we make a run towards those October lows. So finally, we saw results this morning from Vulcan Materials, which is the name that we have in the Action Alerts Plus portfolio.

And they were strong and provided some good solid guidance. Revenues were good. And this comes off from the heels of Martin Marietta Materials, MLM, which reported their numbers yesterday. Now these two companies are basically similar. The charts are almost nearly identical. But we did see Vulcan Materials move up yesterday sharply away from Marietta Materials, which actually pointed downward.

 So we do like the name here at Vulcan Materials. It's one of the newer names that we have in the portfolio. We're looking for a little bit of a pullback so we can add some more to this name. But this is one of those names that's going to get a lot of money from the infrastructure bill that came out last year. And they're a leader in cement and other products as well, too. So we like the opportunity here in Vulcan Materials has pulled back a little bit.

We're looking for a little bit more of a pullback before we add some more shares to the portfolio. So that's going to be it. Have a great day, everyone. And I hope you enjoyed the monthly call which we had yesterday. It Was a lot of fun. And if you have a chance to listen to that more time, please do. And that's going to wrap it up for today. And we will see you tomorrow on Friday.