Monthly Analysis: Financials

2023-02-01T10:39:27-06:00February 1st, 2023|Monthly|

The S&P 500 ($INX) remains in a major (long-term) 5-wave uptrend as the index tested resistance at its previous 4-month high of 4,119.28 (September 2022) with a January high of 4,094.21. The new 4-month high is the December mark of 4,100.96. It’s difficult to tell what wave the index is in at this point, with the debate being December’s selloff as Wave 2 or not. Theoretical Positions: Long from the October close of 3,871.98 with a stop below the October low of 3,491.58.

The Dow Jones Industrial Average ($DOWI) also remains in a major 5-wave uptrend, though consolidated within December’s range during January. Resistance for February is at the previous 4-month high of 34,712.28 from December. Theoretical Positions: Long from at least the October settlement of 32,732.95 if not the breakout of the September high at 32,504.04.

The Nasdaq ($NASX) extended its major uptrend to a high of 11,691.89 during January, setting the previous 4-month high for February. The December selloff now looks clearly to be Wave 2 of the major 5-wave pattern with Wave 3 confirmed by the index taking out the Wave 1 peak of 11,567.47, also from December. Theoretical Positions: Long from the October close of 10,988.15 with a stop below the October low of 10,092.94.

The US 10-year T-note (ZN) still looks to be in the process of confirming a major 5-wave uptrend. January saw the nearby futures contract extend the recent rally to a high of 116-080, just short of its previous 4-month mark of 116-140 from September 2022. The January high is now the 4-month resistance for February. If the ZN starts to sell off, it would be considered Wave 2 of a 5-wave pattern unless it takes out the October low of 108-265. Theoretical Positions: It’s possible longs might’ve been established at the November close of 113-070 based on monthly stochastics and a possible 2-month reversal. If so, stops would be placed below the October low of 108.265.

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