2H2023 Technical Outlook

Click HERE to download the full report in PDF format.

Conclusions:

  • Gains of 10-15% more are likely in 2H 2023 for US Equities - Raising my technical target from 4500 to 4700 - Recent broadening out in market breadth has not yet been followed by an equal broadening out in bullish sentiment. 
  • Risk-on Sectors still preferred - Technology and Industrials are intermediate-term bullish, but likely require consolidation into fall of 2023. My other two 2023 picks for outperformance discussed in January, Energy and Healthcare, likely should make a comeback in 2H 2023.
  • Heightened chance of consolidation from late July into September, and also Mid-November-December this year, so gains likely won’t be uninterrupted. Important to keep a close eye out for negative momentum/breadth divergence, complacency/speculation, and sharp increase in Defensive, which tend to occur ahead of market corrections.
  • US Dollar index likely pulls back to new 2023 lows given less hawkish monetary policy than BOE and/or ECB, and/or possibility of FOMC hikes causing economic weakness
  • Commodities likely to have a much better Q3/Q4 than first half of the year.  Precious metals and Energy have a good chance of snapping back following a difficult first half 2023.
  • Emerging markets also should strengthen in 2H.  India leads the way, but expect a continued rebound out of Latin America, while China should also begin to rally.
  • Treasuries are likely to strengthen in the weeks/months to come.  Yields have reached resistance and a pullback to test Spring lows looks likely.  However, trends call for yields to rally  in 2024.
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