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A pre-Thanksgiving holiday dip for stocks, as some predicted, could be shaping up as Wall Street looks past some initial euphoria or relief over the reappointment of Federal Reserve Chairman Jerome Powell and toward prospects for higher interest rates and a faster tapering of the central bank's bond purchases.

The stock market has been the last to figure the latter out, notes Michael Kramer, founder of Mott Capital Management in a blog post. And he said stocks have also been slow to comprehend other concerns.

"You know, like a high valuation, slowing EPS growth, slowing global growth, a strengthening dollar, and tightening financial conditions," said Kramer.

So interest rates going up? Here's a chart from asset manager Lord Abbett, which lays out how some assets have reacted over time, with growth stocks and value not faring terribly:

Onto our call of the day, from Charles Schwab's chief global investment strategist, Jeffrey Kleintop, who lays out the good and the bad that they see ahead in 2022. On the upside, he sees a still favorable backdrop for stocks as economies continue to grow, supporting a solid earnings outlook.

And while some are worried about equity valuations, Kleintop tells clients in a note that those in the U.S. are above average, but not overly hot:

But then Kleintop admits admits it's not all smooth sailing ahead. "In 2022, the favorable backdrop for global stocks may be accompanied by rising volatility as central banks begin to slowly hike rates," said Kleintop.

Here are his four themes he says investors should bear in mind in the year ahead:

• Consider international stocks, which tend to outperform when global growth is above average as they are often more economically sensitive.
• Go green, with alternative energy and related green stocks like to benefit from related legislation from the U.S., Europe and China, so electric vehicles, renewable power generation, home energy efficiency and eco-friendly infrastructure. (Also read about EVs and ‘Made in America’ tax credits.) But Kleintop said also look in traditional utilities — semiconductors, electrical equipment, etc. — and from around the world, such as Spain, Denmark, Canada, Israel and Brazil.
• Buybacks were good for stocks in 2021, and they’re likely to help in 2022, he said. “In general, buybacks are seen by investors as a sign that a company has good cash flow and a strong balance sheet,” he said. Of course, the buyback theme could be short-lived, but “following the 2008-09 global recession, buybacks were a strong market theme for five years, outperforming the broad market during 2010-2014 in both the U.S. and Europe,” he said.
• Watch out for potential supply gluts. While shortages can cut into growth opportunities for companies, gluts can hurt expectations for growth as demand and prices drop. “Keeping an eye on inventories can be crucial to determining when and where gluts may form,” said Kleintop.

The chart

Doug Kass, president of hedge fund Seabreeze Partners Management, has been voicing concerns over problems with market internals these days:

"Rarely in my investment career have I seen such a bifurcated market in which a handful of stocks (FAANG + Microsoft M$(SFT)$ $(MSFT)$ + Nvidia N(VDA) $(NVDA)$ -- let's call them the Generals -- are so materially outperforming the average stock (the soldiers)," said Kass, in an email to clients.

He uses this chart from Charlie Bilello, founder and CEO of Compound Capital Advisors, showing the ratio of tech to the S&P 500 at its highest since 2000:

He also highlighs another chart from Bilello, showing that even some of those Nasdaq "soldiers" -- growth/tech/IPO/SPAC favorite -- taking it on the chin:

As some on Twitter responded to that chart, maybe the market correction has already happened and everyone should stop looking for it to happen in the major indexes.