Technically Speaking – January

February 3, 2023

Technically Speaking:

Long Term Resistance: SP500  4200-4300  then 4375

Long Term Support:  SP500  4000-3900 then 3800 -3700

Markets performed well in January with the beaten down high quality growth stocks leading the way up. Remember, there is a lot of new money that enters 401k and 403b accounts at the beginning of the year. With a new influx of money into mutual funds the managers must put it to work and buy. The SP500 broke above the 4000 resistance level and then 4100, giving way to a move higher with technical resistance now around 4200. We may have some back and forth, but the money flow into the markets may allow resistance at 4200 be broken. If that happens the markets will attempt to move to the August high that is just over 4300.  I don’t believe there is enough new money to make the markets move much higher. The Fed is in control, and they are not stimulating the economy. They are fighting inflation, but the administration and Congress keep adding fuel to the fire with multiple new spending bills. The spending must stop!  Support for the SP500 lies 3900 – 4000 and I believe later in the year the Fed tightening will hurt corporate earnings enough that we will see some kind of recession.  The Fed wants to see job losses not job creation and appear to be focused on making that happen. The problem is we have a shortage of quality employees and another 11 million able body people just not wanting to work.  Work ethic continues to vanish in the face of more free handouts. Invest cautiously and be nimble, keep your core position, hedge if you know how, and be patient.  Use market rallies to reduce risk as we wait for a good buying opportunity.