Market at a Glance - 2/23/2023
By: Christopher Mistal
February 23, 2023
Please take a moment and register for our member’s only webinar, March 2023 Outlook and Update on Wednesday March 1, 2023, at 2:00 PM EDT here:
Please join us for an Almanac Investor Member’s Only discussion of recent market action with time for Q & A at the end. Jeff and Chris will cover their outlook for March, review the Tactical Seasonal Switching Strategy ETF, Sector Rotation ETF, and Stock Portfolio holdings and trades. We will also share our assessments of the Fed, inflation, recession prospects, as well as relevant updates to seasonals now in play.
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Market at a Glance
2/23/2023: Dow 33153.91 | S&P 4012.32 | NASDAQ 11590.40 | Russell 2K 1908.09 | NYSE 15584.92 | Value Line Arith 9286.65
Seasonal: Bullish. March has been a solid performer, ranking #5 for DJIA and S&P 500 since 1950. In pre-election years March has been even stronger ranking #4 for DJIA, S&P 500 and NASDAQ. Average pre-election year gains range from 1.8% by DJIA to 3.1% from NASDAQ. Week after quarterly options expiration and last three or four trading days have been the weak parts of the month.
Fundamental: Mixed. Previously better than expected Q4 GDP was revised down to 2.7% from 2.9%. Inflation’s trend lower appears to have slowed in January with CPI dipping less than anticipated. January’s PPI was also hotter than forecast. Meanwhile, weekly initial claims remain low and 517k net new jobs were added in January. Estimates for Q1 and Q2 corporate earnings are negative and slipping lower but are expected to recover in the second half of the year.
Technical: Testing Support. DJIA, S&P 500 and NASDAQ are testing support. DJIA has retreated into the space between its 50- and 200-day moving averages and is bouncing around its January lows right around 33000. Just below is DJIA’s December closing low at 32757.54. A close below this level in Q1 would put additional pressure on DJIA. S&P 500 is treading just above its 50-day moving average at 3980. NASDAQ is just above its 200-day moving average around 11,400. Support is anticipated to hold however if it does not the next key levels to watch will be around DJIA 32,500, S&P 500 3,930 and NASDAQ 11,200.
Monetary: 4.50 – 4.75%. Recent economic data is pushing the Fed toward making good on its suggestion that rates may need to go even higher and stay higher for a longer period. According to CME Group’s FedWatch Tool, as of February 23, there is a 100% chance of another Fed rate increase in March. The only question is whether it will be 0.25% or 0.50%. Odds for the larger increase are 27.0%. Odds of the Fed overtightening appear to be rising as well, but economic data still does not suggest a recession is imminent.
Sentiment: Neutral. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 44.4%. Correction advisors are at 29.2% while Bearish advisors numbered 26.4% as of their February 22 release. Compared to a month ago, bulls and bears are modestly lower, those looking for a correction are slightly higher. With the number of advisors (bears plus correction) expecting weakness outnumbering the bulls this reading could be a sign that current weakness is nearing its end.