2023 So Far...

So far this year growth sectors such as technology have outperformed last year's leaders. The Nasdaq put in its 5th up week in a row. A strong jobs report on Friday (2/3) had investors concerned that the FED may raise interest rates more than is anticipated this year. The 2-year Treasury yield has traded below the Federal funds rate since mid-December and historically this has signaled that the Fed’s monetary policy is tight enough. Traders are pricing in a ¼% increase at the March meeting followed with a pause.

The S&P 500 and the Nasdaq continue to look like they want to go up. There is more money on the sidelines today than in 2008-2009. When that money finds its way back into stocks and bonds watch out on the upside.

If we can consolidate these moves in a healthy fashion, we are likely to see more upside. What we don’t want to see is what we experienced too many times throughout 2022. We want the S&P 500 and the Nasdaq to stay above their respective trend lines. Unlike last year, we are seeing more companies breakout of long bases. The upside participation of recent breakouts is broad-based and that is a good sign for the overall market. The environment for stocks is much improved from where we started the year. Volatility is here to stay in 2023. We prefer more up volatility to down.

Best,

Matt

The views expressed are not necessarily the opinion of Cadaret Grant, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Investing is subject to risks including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.