2023 Stock Market Outlook
Plus Key Near Term Charts
As we wrap up a highly stressful and monstrous 2022 for many, my attention is now shifting focus to 2023.
I’m told my work has been of the highest possible standard this year so hopefully my timely (and accurate) market calls in this very letter have served you well in 2022.
My final letter of the year will NOT get into the embarrassing S&P500 predictions like the major investment banks like to make every year…. (hint: they always add 8% to current price).
I prefer to keep things simple and communicate the charts and data instead of making up numbers.
There are a few themes I think are shaping up, so lets dig into this weeks letter.
Growth vs Value
I’ve been screaming it from the rooftops all year. Buy Value.
It’s still weird to me because deep down I know that nobody wants to hear Value stocks are out-performing Growth stocks because most are hanging onto hope the growth tech glory years are coming back.
It’s not just the IWD/IWF Ratio, we’re seeing it everywhere.
The chart above is pretty clear, it tells us Value stocks are out performing Growth stocks and it’s been that way all year…. and I hate to break it to the growth tech crowd, I still believe it’s potentially setting up for multi-year out-performance.
The Year of Gold?
We’ve been bullish Gold since it put in a failed break down 6 weeks ago and it hasn’t really looked back.
As I’ve mentioned in recent posts, if Gold can’t shine in THIS macro environment, when is it ever going to shine?
The Gold bugs have been waiting many years for out performance, the time might finally have arrived.
It’s worth mentioning it’s also slightly positive on the year and it’s absolutely destroying Bitcoin too.
Gold vs Bitcoin
That said, in the near term, I still believe absolutely EVERYONE needs to watch the US Dollar.
Look at the chart, and then look at it again.
It’s on the brink of another leg lower. If it does break (and it’s still an IF), how is that likely to impact stocks?
The level for me is a confirmed break down below $103, below that level, I think stocks are likely to rip higher.
Above that level, it continues to be choppy at best.
US Dollar Index
Over the last few weeks, we’ve put some amazing short ideas to our clients/members and they’ve worked very well (GME, PBW, XLY, ARKK, COIN, ROKU, TSN, PYPL and XLY).
Like most shorts, you can’t really stay short for long due to the face ripping rallies.
But it’s not all short ideas around here, I’m very open to all possibilities.
To give you an idea, we’ve also been bullish stocks like CROX the last 6 weeks.
CROX Chart
Our premium work last week also shifted focus toward bullish charts in anticipation of a possible rally in stocks. (I have a few charts that lead to a possible rally).
To clarify, I’m not using the S&P500 chart to make predictions here, I’m not even using any of the major averages to make broader market calls because they met our upside objectives a few weeks ago.
The S&P500 is too heavily weighted toward mega cap tech, so it’s pointless using it as a proxy for the average stock.
The current market environment requires the hard yards are put in, which means looking at the TOTAL market of 1000s of stocks to identify opportunity, and not just 10 mega cap names.
We cover stocks, commodities, currencies and ETF’s.
I also laid out a bunch of those charts last weekend ICYMI.
In Conclusion
There’s something for everyone just now.
I’m bullish on some tech names and I’m bearish on others… I still prefer value over growth for longer term structural trends, but I know we’ll get face ripping bear market rallies in growth / consumer discretionary along the road and I know technology names will bottom too.
Like everyone, I’d love a rally to start the year, but the US Dollar levels highlighted above will be my signal.
What’s your signal?