New Year Market at a head!

January 9 2023

Weekly Column with The Contrarian

Hello New Year!

A lot has happened this first week of 2023. Markets got new data this week that caused equities to close up 2.5%.

• The Institute of Supply Management 's Service Index (ISM) reading came out under 50. Anything under 50 constitutes contraction.

• Non- Farm Payroll came out on Friday and showed an increase of 223,000, est. 200,000.

• Unemployment went down from 3.7% to 3.5%.

• Wage gains were lighter than expected. They came out at 4.5% the street was looking for 5%.

At first, the markets didn't really know how to interpret the news. The S&P traded down to the 3819 and held, and then staged a rally to cause a short term trend reversal. Closing the first week of the new year in the green is shown to be bullish for the year. That's what the charts and history says. Time will tell if that holds true and we won't know until December 31, 2023. There is a lot of trading to go before we know for sure. We could drop 25% from here and still close higher from last year's closing price of 3900.00.

I believe we will see the S&P trade up to 3988.00 to 4000.00 over the next month, but remember the Federal Reserve will meet on February 2nd and interest rates will go up. The Street is looking for a .25% hike. Others see .5%.

Corporate earnings start this week. Banks are expected to show nice earnings due to higher Interest rates. The rally from the October 13th lows last year lasted until December 6th. From December 6th till January 6th the markets sold off. One month down before that two months up.

Volatility will be increasing more and more as liquidity dries up. Inflation has been cooling off in some sections for a while, but others are heating up again with the opening of China. Inflation is here to stay in 2023, and 2024. The Federal Reserve will not be able to control food inflation, employment, or Geopolitical events, so stay tuned.

Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.