What happened to the best performing industry & Santa Claus Rally in 2022?

In the final week of the year, there was mixed performance by the major US indices: USA500 closed a tad lower at 3,863; USA100 recorded a 3-week losing streak, closed at 11,038; USA30 was the best performer, ended higher at 33,309. In the last trading week of 2022 and in general in December no ‘Santa Claus Rally’ happened. A research study revealed that a Santa rally would result in the USA500 showing average gains of 10.9% in the year, otherwise there would be an average gain of 4.1% in a ‘non-Santa’ year and tend to imply a potential bearish year.

In 2022 the USA500 showed a loss of 18%, while in December it showed a 5% loss.

Fig.1: Top 10 Industries With Best Performance. Source: Trading View

In general, the Marine Shipping industry led the competition with YTD gains at 76.01%. Nearly 90% of globally traded goods are carried over the waves. According to the United Nations Conference on Trade and Development (UNCTAD), the world maritime trade bounced back by +7% (y/y) in 2021 compared to -3.8% recorded in 2020, boosted by a surge in demand for containerized cargo. However, considering recent economic uncertainties, UNCTAD projected the near-term global maritime trade growth losing steam, at 1.4% in 2022, and an average 2.1% for the next five years – slower than the average record for the past 30 years at 3.3%.

Matson, Inc. is a US marine shipping company  founded in 1882. Its services include providing a vital lifeline to the economies of Hawaii, Guam, Alaska and the South Pacific and premium expedited service from China to Southern California; Providing container maintenance, stevedoring and other terminal services; Offering customers throughout North America domestic and international rail intermodal service, long haul and regional highway brokerage, supply chain services and less-than-truck-load (LTL) transportation services, as well as other third-party logistic services.

Fig.2: Reported Sales of Matson versus Analyst Forecast. Source: CNN Business

Matson reported its sales for the latest quarter at $1.1B, in line with consensus estimates. However, following increased uncertainties, market participants expect the company to be adversely affected, with sales in the coming quarter (to be announced on 21st February 2023) projected to be at $909M, down -21% (q/q) from the previous quarter and down -43% (y/y) from the same period last year. This would bring the overall sales in 2022 to $4.5B, still up over +15% from those in 2021.

Fig.3: Reported EPS of Matson versus Analyst Forecast. Source: CNN Business

EPS in the latest quarter was reported at $6.89, slightly missing expectation at $7.07. Consensus estimates for EPS in Q4 remains pessimistic, at $3.37. All in all, 2022 EPS is expected to hit $28.22, up over +31% from a year prior.

Technical Analysis:

The #Matson share price has been trending downward since Q1 2022. It last closed above the support zone $57-$62. The 100-day SMA at $70 serves as the nearest dynamic resistance, followed by $74 (FR 50.0% which extended from the lows seen in May 2020 to the highs seen in March 2022), and $86 (FR 38.2%).

Otherwise, a break below the support zone $57-$62 would encourage more bearish pressure, towards the next support at $45 and $35.

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Larince Zhang

Market Analyst

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