This week the S&P 500 performed a ‘false break’ of its previous 4100 high. Technicians see this as a reliable reversal signal. However, on the other hand, there are bullish arguments we can make. The mix of bullish and bearish technical signals make shorter-term ‘tactical’ trading very difficult (that’s not my game). Here’s how I’m thinking about it…
Market Refuses to Believe the Fed
The S&P 500 is optimistic on three things (a) avoiding a recession; (b) rapidly falling inflation; and (c) two rate cuts before the end of the year. And the market could be right. However, I think it’s optimistic. What’s more, they are choosing to fight the Fed.
It’s Earnings Season – Will They Meet Expectations?
Earnings seasons starts this week (Friday) with the banks. Across all sectors – analysts expect earnings to expand by 4% in 2023 – or around $230 per share for the S&P 500. If we don’t experience a recession – this feels probable. However, that’s the question – are we likely to experience a contraction? If so, it’s most unlikely we will see expansion – which implies the S&P 500 feels expensive around 4100.
Foolish Forecasts and Questions Worth Asking
It’s the last trading day for 2022 – which means it’s time for some ‘foolish forecasts’. The S&P 500 booked a 19.4% loss this year… its 4th worst since 1945. My foolish forecast is the lows are not yet in… however 2023 will represent opportunity.
For a full list of posts from 2017…