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The Price Action Lab Report-Week of February 27, 2023 [Premium Articles]

Photo by Burak The Weekender

Market analysis for the week of February 27, 2023. Major market indexes, ETFs, commodities, and forex. This report includes 16 charts and tables. Free access to weekly summary. Access to the full report requires a Premium Articles or an All-in-One subscription.

Report contents

  1. Weekly Summary.
  2. Chart of the Week.
  3. Market Performance Recap.
  4. Major Market Indexes.
  5. Commodity ETFs and ETNs.
  6. Strategy ETFs.
  7. Spot Currency Pairs.
  8. Strategic Allocations.

1. Weekly Summary (February 21 – February 24, 2023)

  • Stocks fell after strong economic data.
  • Bond prices were lower and yields rose.
  • Commodities came under pressure.
  • The US dollar’s rebound accelerated.

In response to the surprisingly robust economic reports from the previous and prior week, equities and bonds declined, with commodities and precious metals following suit and the US currency appreciating.

Stocks ($SPX) fell 2.7% but ended the holiday-shortened week off the lows of Friday, which were three points above the 200-day moving average level.

The Dow Jones Industrial Average (DJI) lost 3%. Small-cap stocks ($RUT) fell 2.9% but finished the week above lows. Tech stocks ($NDX) ended the week down 3.1%. The S&P 500 high-beta index ($SP5HBI) plunged 4.1%. The S&P 500 low volatility index (SP5LVI) lost 1.7% due to a broad market sell-off of low and high-risk stocks.

The theme in financial social media was “higher for longer” interest rates, with the US Treasury Bond total return index ($SPBDUSBT) losing 0.6%. The 10-year note yield increased by 12 basis points to 3.95%. The spot price of crude oil (@WTI) fell as much as 3.1% in the first two days of the holiday-shortened week but closed with a 0.2% loss due to strong demand expectations. Gold in the spot market (@GC) was down 1.3% as the US dollar rally gained momentum. Commodities ($CRB) ended the week down 0.2%. The US dollar index ($USDX) rose 1.3%, extending the rally for the fourth week in a row.

The S&P 500 high beta index ($SP5HBI) is up 12.6% year-to-date, while tech stocks ($NDX) are up 9.4% and small caps ($RUT) are up 7.3%. Crude oil (@WTI) is down 5%, commodities ($CRB) are losing 3.8%, and the S&P 500 low volatility index ($SP5LVI) has fallen 2.5%. Gold (@GC) is also down year-to-date, with a loss of 0.1%.

There is no solid evidence that the stock market decline in the past three weeks was caused by a faltering relief rally or profit-taking. Read Section 4 below for further information.

The ensemble of our six systematic strategies is slightly down year-to-date, compared to a 3.4% gain for the S&P 500 index and a gain of 2.3% for the 60/40 portfolio with SPY and AGG ETFs. Our PSI5TF trend-following strategy with 23 futures contracts (long and short) is down 1.3% after gains of about 24% last year. The DBMF ETF (managed futures) is down 2.1% 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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