US Stock Market Outlook

Uncertainty   #sp500 #ndx #nasdaq #stickyinflation  

This is a collection of predictions , opinions on the outlook of US stock market mainly #SP500.

Events between Feb 2023 and late March 2023, this uncertainty has resolved based on the following facts

• After hitting 3764.49 bottom around the end of December 2022, #SP500 rallied and hit 4195.44 peak on Feb 2nd, 2023.
• #SP500 then dropped to 3808.86 bottom on March 13th, major driver of this drop was Regional Bank crisis marked by collapse of Silicon Valley Bank.
• #SP500 and US stocks have been rallying since March 13th bottom mostly driven by technology stocks. One interesting fact is that March 13th is the date when both #NDX (Nasdaq 100) and #NASDAQ indexes falls to the point of golden cross of bullish 50 day moving average crossing above 200 day moving average line.

Breakdown on 20230221 of #SP500 and DOW and NASDAQ confirmed end of bull leg since early January and start of a bear leg down at least until mid-March. The breakdown is driven by sharp rise of 10-year Treasury Yield (rose 3%+ on 2/21), which proved correctness of prediction of #StickyInflation.

Prediction on 20230204: expect this round of bull run of #SP500 to peak at around 4250-4300 level around mid or end of Feb.

Outlook of #SP500 for Full Year 2023

Update on 20230131: As I think about how long will the current bull market of #SP500 will last before it peaks and starts to drop due to start of earning recession that is predicted by inverted yield curve, the bullish trifecta signal of #SP500 this year leads me to predict one of these 2 scenarios will play out, both scenarios assumes #SP500 will end this year at about 20% higher than YE 2022:

• earning recession starts pretty soon (within 3 months), but it is shallow and short-lived, #SP500 peaks in 3 months, drops to 3000-3600 level in summer this year, then climb back to 4200+ level by year end.
• earning recession starts about 1 year later, #SP500 bull market will run for entire year 2022 before it peaks early next year.

Prediction as of 20230124: In the year of 2022, US stock market was driven by inflation data and major market turns happened in the range of 10-20th days of months, because government CPI data is released around that time every month. It is expected that inflation data and ensuing Feds rate decision to still be major forces that will move US stock market in the year of 2023, so we need to watch market actions around CPI release dates closely in next couple of months.

Outlook of #SP500 after high in 202212

Bearish case: #SP500 and other major US indexes will make a new low like what happened in June and October.

Bullish case: #SP500 and other major US indexes has hit bear market bottom in October 2022 and will resume bull trend without making a new low.

Resolution: Bullish case was confirmed by bullish breakout on Jan 6th, 2023.

20221013 fact of #SP500: US stock market index #SP500 staged a dramatic turnaround on 10/13 reacting bullishly to a negative CPI report, which marked the bottom of ~2-month down-leg since mid-August.