Prediction: Where the $SPX Goes in 2023

2023年1月5日

Hey traders, see our prediction of where the SPX goes this year with the orange line on the chart.

We see the bear market continuing and it hasn't bottomed yet, as historically the stock market has never bottomed before a recession and without the VIX going north of 40 in some type of capitulation.

Since we had a yield curve inversion late last year and they have always preceded a recession the odds that we see one this year are almost certain. We see new lows being made sometime in Q1 or Q2 with a retest back to the mother of all trendlines that's been intact since we made a top this time last year.

Then sometime in Q3 around Sep/Oct when stocks are historically weak we think there will be capitulation with the VIX shooting above 40 and a strong and sharp bounce to follow. Our final bear market low target on the S&P 500 Index is 2,750 which would be 43% below the high early last year of 4,818 and an approximate bear market length of 1.75 years, a little longer than the average bear market. We have an year-end target of 3,450 which is 11% lower than where we started the year at 3,850.

Since there was so much excess leverage and valuation built up in the market overall due to historically prolonged and low rates, we believe that a larger than normal bear market decline of 40% is likely to have the required "wash out" and create fertile grounds for new growth. We often see symmetry in markets, what goes up hard, often eventually comes down hard.

Starting 2024 we believe prices and valuations will stabilize and go into a range bound "kangaroo" type market for several years whilst markets still adjust to the new normal of higher rates and inflation instead of going straight back into a easy low rates fueled straight up bull market like we're all use too. As always, this is just our speculation and we're willing to be completely wrong in our analysis and adapt to underlying conditions as they prevail.

Good luck to all in 2023, stay safe out there!