SPX is set to revisit 2022 market lows in 2023

3 janv. 2023

For most of the last year, we held a bearish bias on the U.S. stock market. Starting in 2023, we maintain this stance and expect the market to dive deeper into a recession, dragging the price of SPX much lower from the current level. In fact, before the third quarter 2022 earning season, we outlined that the corporate earnings would reflect the worsening economic situation, with companies underperforming and slashing their outlooks.

In 2023, we expect this trend to be even more prevalent, confirming the progression of a bear market toward its third stage, which is characteristic of distress selling. Therefore, we will pay close attention to the upcoming earnings season and look for clues of further deterioration on the corporate side of the market.

In addition to that, we expect the persistence of elevated interest rates in the United States to weigh heavily on the global economy and debt servicing, paving a road for more trouble in the stock market. In accordance with that, we stick to our price target of 3 400$ for SPX.

Illustration 1.01

Illustration 1.01 shows the daily chart of SPX. The yellow arrow points to the impending bearish crossover between 20-day SMA and 50-day SMA.

Technical analysis
Daily time frame = Slightly bearish
Weekly time frame = Bearish

Illustration 1.02

Interestingly, the new year begins with the opening gap in S&P 500 volatility index.

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.