Market analysis for the week of January 30, 2023. Major market indexes, ETFs, commodities, and forex. This report includes 15 charts and tables. Access to the full report requires a Premium Articles or an All-in-One subscription.
Report contents
- Weekly Summary.
- Chart of the Week.
- Market Performance Recap.
- Major Market Indexes.
- Commodity ETFs and ETNs.
- Strategy ETFs.
- Spot Currency Pairs.
- Strategic Allocations.
1. Weekly Summary (January 23 – January 27, 2023)
- Stocks gained, with higher-risk securities leading the advance.
- Bond prices and yields ended the week unchanged.
- Commodities were mixed, with energy prices falling.
- The US dollar fell against most major currencies.
Large-cap stocks ($SPX) ended a volatile week with a gain of 2.5%. The S&P 500 gained 1.2% on Monday, fell slightly on Tuesday, then dropped as much as 1.7% on Wednesday but rebounded from the lows of the day to close unchanged. The rally resumed on Thursday due to expectations of a pause in rate hikes going forward, and the index ended the week with a gain of 2.5%.
The Dow Jones Industrial Average ($DJI) gained 1.8%. Small caps ($RUT) added 2.4%. Most of the buying action was in higher-risk securities: tech stocks ($NDX) and the S&P 500 high beta index ($SP5HBI) surged 4.7%. The S&P 500 low volatility index ($SP5LVI) was up only 0.5% due to risk-on.
US Treasury Bonds ($SPBDUSBT) were unchanged from the previous week. The 10-year note yield closed at 3.52%. The spot price of crude oil (@WTI) fell 1.9% due to forecasts of a recession later this year. Spot gold (@GC) was slightly down for the week. The CRB index ($CRB) fell 0.3%, primarily due to losses in energy. The US dollar index’s ($USDX) downtrend continued with a small loss of 0.1% for the week.
Year-to-date, the S&P 500 high beta index ($SP5HBI) is up 16%, tech stocks ($NDX) are gaining 11.2%, and small caps ($RUT) have risen 8.5%. The US dollar index ($USDX) is down 1.5%, and the S&P 500 low volatility index ($SP5LVI) is down 0.9%.
Year-to-date Top NASDAQ-100 Winners
Year-to-date, 25 stocks in the NASDAQ-100 have gained more than 15%. However, 21 of these stocks are still more than 20% below their all-time highs, and nine stocks are more than 50% below their all-time highs. The top two gainers are 78% and 81% below the all-time highs. More importantly, only seven stocks are within 5% of their all-time highs, and only one stock, VRTX, made new all-time highs last week. Therefore, there is still no clear indication of whether this is a relief rally or a rally after a bear market bottom. Investors are increasing risk in the hope the bottom is already in place since by the time everything is clear, the reward/risk decreases significantly.
The ensemble of our six systematic strategies is nearly flat year-to-date, compared to a 6% gain for the S&P 500 index and a gain of 4.9% for the 60/40 portfolio with SPY and AGG ETFs. Our PSI5TF trend-following strategy with 23 futures contracts (long and short) is down 1.9% after gains of about 24% last year. Trend-following had a slow start this year after a good run last year. For example, the KMLM ETF is down 3.8% year to date (see Section 6 of the report).
2. Chart Of The Week
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Specific disclaimer: This report includes charts that may reference price target levels determined by technical and/or quantitative analysis. No charts will be updated if market condition changes affect the charts’ levels and/or any analysis based on them. All charts in this report are for informational purposes only. See the disclaimer for more information.
Disclaimer: No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.
Charting and backtesting program: Amibroker. Data provider: Norgate Data
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