Market analysis for the week of January 9, 2023. Major market indexes, ETFs, commodities, and forex. This report includes 16 charts and tables. Access to the full report requires a Premium Articles or an All-in-One subscription.
- 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 3 – January 6, 2023)
- Stocks gained in the first week of the year due to optimism about lower inflation and a soft landing.
- Bonds surged and yields plunged after economic data showed slower wage growth.
- Commodities were down due to heavy losses in energy, grains, and softs.
- The US dollar finished the week slightly higher against most major currencies.
The losers of the first week of the year were commodities, and especially the energy sector, due to expectations of an economic soft landing. Equity markets gained, with riskier assets rallying on expectations of lower inflation and higher economic growth. Bonds surged and yields fell.
Large-cap stocks ($SPX) ended the week up 1.4% after falling intraday by 1.2% on the first day of the year. The Dow Jones Industrial Average ($DJI) gained 1.5% amid rising volatility. Small-cap stocks ($RUT) rose 1.8%. Tech stocks ($NDX) were up 0.9% for the week after losses of 2.2% by the low of Thursday, followed by a 2.8% gain on Friday. The S&P 500 high beta index ($SP5HBI) surged 3.9%. The S&P 500 low volatility index ($SP5LVI) gained 1.6%. Investors showed a preference for higher-risk stocks with profit potential in the event of an economic rebound.
US Treasury Bonds ($SPBDUSBT) surged 1.7% due to economic data suggesting slower wage growth and a higher probability of a soft landing. The 10-Year note yield plunged 31 basis points to 3.57%. The spot price of crude oil (@WTI) fell 8%. Spot gold (@GC) gained 2.2%. The CRB index ($CRB) plunged 4.7%, mainly due to losses in energy, grains, and softs. The US dollar index ($USDX) rose 0.1% amid rising volatility in the forex markets.
Total return equity indices
All total-return equity indices were up for the week except for the S&P 500 growth index ($SPXGTR). The S&P 500 high beta index ($SP5HBIT) gained the most (3.7%). There are no overbought or oversold total return indices.
Tech stocks ($NDXTR) are down 32.8% from all-time highs. Value stocks ($SPXVTR) are down the least from all-time highs with a loss of 4%. Large caps ($SPXTR) are down 17.4% from all-time highs, while the equal-weight counterpart ($SPXEWTR) is down 9.8%.
The ensemble of our six systematic strategies had a flat performance in the first week of the year, as compared to a 1.4% gain for the S&P 500 index and a gain of 1.8% for the 60/40 portfolio with SPY and AGG ETFs. Our PSI5TF trend-following strategy with 23 futures contracts (long and short) fell 0.5% in the first week of the year.
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