CHRIS VERSACE: Good morning, Action Alerts Plus members. Let's start with a note of caution ahead of tomorrow's all-important November jobs report. As you may have seen in your latest alert, and you know, it's something we've been expecting, the stock market has moved into overbought territory. It's also moved into a place of complacency. Something we can see between where the VIX is currently trading and the CNN fear greed index is back-- yes, back firmly-- in greed territory.

Typically, when we see that combination, we want to be cautious because it means the market is back to a position that we've seen several times over the last few years. It's once again walking a data tightrope, trading day-to-day based on what the latest data point has to say. Let's remember, members, it's rare that any one data point has all the answers, which is why we favor more context so as to get a clearer picture rather than move in a knee jerk fashion. This means seeing the larger picture as we examine the next several pieces of data.

Now, we're going to get quite a bit of important data in the next few days. So let's review what that is. And if this incoming data, which includes tomorrow's November employment report, next week's CPI report, and the November PPI report, if they are all ahead of expectations, the Goldilocks narrative may be called into question. However, if the data is much weaker than expected, it will raise concerns about the speed of the economy, and we would expect the market to come around to something that we've been discussing with you. It will question how realistic 2024 earnings expectations are especially for the S&P 500.

Let's remember, that consensus forecast, again, for the S&P 500, the market barometer, still calls for more than 11% earnings growth next year. Quite lofty, in our view. Now, let's step back.

It has been a great market rally. And yes, we've certainly benefited. But once again, the market is arguably priced to perfection. When we've seen that with the market before, as well as from time-to-time with individual stocks, we know that a lot has to go right. And oftentimes, it doesn't.

In fact, it doesn't take much for it not to go right at all. That means, members, it's time to be cautious and step carefully. For us, that means owning our inverse ETFs and the protection that they offer us.

Now, some are probably wondering, has this changed our view that we're looking forward to some froth coming out of the market? No, not at all. In fact, it's something we've been getting ready for. You've seen what we've done with the bullpen over the last few weeks. And we know our buying levels. We're prepared and we're ready.

With that, let's shift over and talk about some individual stocks. As you've probably seen by now, yesterday we went ahead with an exit of three-rated Chipotle using a portion of that 40% gain to call Morgan Stanley's shares up from the bullpen, as well as add to our existing positions in PepsiCo and Marvell. Now, no question, Chipotle was simply a fantastic position for the portfolio, up more than 40%. But it was not only bumping up against our price target, but also the Wall Street consensus price target as well.

And as we pointed out in our alert, the shares were extended, suggesting more downside in an overbought and potentially complacent stock market. Our thinking was, it's been a great ride, but that technical setup at that valuation and facing the potential for Wall Street downgrades and more sober comments about its business, we're better to book that win with the rest of that three-rated position. And again, we used some of those gains to call Morgan Stanley up from the bullpen.

We may be a bit early in doing so, but with prospects for lower interest rates next year and the IPO backlog continuing to build, the outlook for Morgan Stanley's Wealth Management and Banking business looks far better in 2024 than it did this year. Especially if the Goldilocks and soft landing narratives continue to play out.

As for Pepsi and Marvell, Marvell traded off approaching levels. We've discussed adding them before. And that trade was reinforced by comments made yesterday from AMD, where it actually significantly increased its AI chip demand forecast. Nearly double what it said back in August.

As far as PepsiCo goes, we're seeing more questions about the effectiveness and side effects of obesity drugs, while other new data shows consumers are eating more at home as they look to keep control over their budgets. Those are positives for this snack and beverage company during what is its seasonally strongest quarter of the year. This dividend king is also a great place to be should a more nervous market emerge.

That's our rundown for today, members. JD will be back tomorrow with a look at gold, oil, and much more with Carley Garner. Thanks for watching.