Stocks Rangebound After Hot Start to 2023

Good evening:

"When things go badly, people become cautious. Then their caution causes things to go well, and when things go well, they become incautious. I think that's a forever cycle."- Howard Marks

Though the S&P 500 has traded sideways lately, it closed early in the week at 4,147, above its 200-day moving average for the 18th straight session. Since 1950, no prior bear market has made a new low after making 18 consecutive closes above its 200-day moving average. Of the 11 prior instances since 1950, the S&P 500 has never been lower three, six, or 12 months later. It’s further evidence that this is a new bull market, confirming Tom Lee’s constructive views on markets this year. (The Nasdaq has moved higher in six of the past seven weeks.)

Ken Xuan, Head of Data Science, said this week’s CPI doesn’t alter his view. “I don’t really see much of a change to the story,” Xuan said Thursday during our firm-wide meeting. “CPI is still on a downward track. Novembers and Decembers are always low, January is always high – even when you adjust for seasonality. So this week’s CPI was OK.”