1/4/2023 DOWNTREND. Market beaten down more with additional widespread selling.

January 3, 2023

1/4/2023   DOWNTREND.  Market beaten down more with additional widespread selling.

THE MARKET’s MESSAGE:  Market confirms it remains in DOWNTREND

(We'll start with 2023 returns tomorrow)


After the 3 day weekend, volume picked up on Tuesday, as many traders returned to work. With the market falling on Tuesday, the Nasdaq, S&P500 and DJIA added a distribution day to their action.


In case you missed it, here is the review of the last 3 years of the Pandemic – from the end of 2019 through the end of 2022 including the market action of the three major indexes and the Armchair Investor strategy (in case you missed it in Friday’s newsletter.)

 Summary of 2022: The indexes give back much of the prior 2 year run-up. (But the Armchair Investor strategy out-performed the indexes by simply stepping out of the market and waiting in cash while the indexes fell. I hope you followed us!)

·      The Nasdaq (black line on the chart below) lost more in 2022 than other indexes. Remember: The Nasdaq rose more than the other indexes during the pandemic which meant it ended the 3-year round trip very close to the other indexes.

·      The S&P500 (purple line on the chart below) holds 9.5% above its October 2022 low.

·      The DJIA (orange line below) continues to outperform other major indexes in 2022 (but only after under-performing in prior 2 years.)


THIS IS WHAT I FOUND ASTONISHING: Looking at the major indexes since the beginning of 2020 (the pandemic began in February 2019) the surprise to me was where they ended in 2022…..

Yes! The major indexes all ended in a nest – with very close total, 3-year gains.

--- What a surprise! I didn’t run into any source pointing out this 3-year result! What do you see?


A brief history of the pandemic: The 2020 crash,

·      A short, hard dip in February – March 2020

·      A year and a half rally to end of 2021, followed by

·      This year’s 2022 hard drop……


What did the major indexes produce over the pandemic(so far)? Almost the same result! At the end of the 3- year pandemic market ending in 2022:

·      The S&P500  +18.7%

·      The Nasdaq   +16.0%

·      The DJIA        +15.8%


All that research, analysis, trading and fretting…. made little difference in total return of the indexes!


BUT if you didn’t just sit in the market but worked to actively manage your account, you could have captured major gains:


The market’s future remains in limbo – Will DJIA continue to outperform the Nasdaq and S&P500?(That would be unusual.)


>>>> AN UPDATED 3 - YEAR LOOK BACK as the Nasdaq adds another 0.8%  drop on Tuesday.




>>> Although the 3 major indexes “round-tripped” (lost the gains from the first 2 years), everyone of those indexes underperformed the Armchair Investor strategy as noted on page 1 !  

You can see the growing weakness in the markets by noting the steep decline in the A + B rated stocks.


The Accumulation/Distribution table below shows the decline in the markets over the last 4 weeks. The sum of stocks with A or B ratings has fallen from 65% a month ago to 41% currently.


The severe number of days that closed at NEW LOWS over these 20 days. This is what a DOWNTREND looks like.

Note: The color of the Trend count column tells you what type of market we’re in:

·      Green = Uptrend

·      Yellow = Uptrend under pressure

·      Red    = Downtrend

Not surprising: The major indexes are well below their all-time highs of about a year ago as shown below.

Here is the schedule of stock market holidays for 2023. I suggest you copy it into a spreadsheet (such as Excel or Numbers) and save it for future reference.

Holiday Date (the WebFlow software will not let me use tabs or add more spaces to make this list more readable.

New Year’s Day . . . Monday, Jan. 2, 2023

Martin Luther King, Jr. Day  . . .  Monday, Jan. 16, 2023

President's Day  . . . Monday, Feb. 20, 2023

Good Friday   . . .   Friday,  . . .Apr. 7, 2023

Memorial Day Monday, May 29, 2023

Juneteenth   . . . Monday Jun. 19, 2023

Independence Day   . . . Tuesday, Jul. 4, 2023

Labor Day   . . . Monday, Sep. 4, 2023

Thanksgiving Day   . . . Thursday Nov. 23, 2023

Christmas   . . . Monday, Dec. 25, 2023

Additionally, stock markets will close at 1:00pmEST on:

·       Monday July 3rd, 2023 (prior to Independence Day)

·       Friday November 24th, 2023 (Black Friday)


STOCK WATCHING :  Send your suggestion on a stock to follow in this newsletter.  I am looking for just one stock at a time, for training purposes.


Wishing you and yours a happy and safe holiday season.

Charlotte Hudgin, The Armchair Investor,   (214)995-6702

www.ArmchairInvestor.com   (214)995-6702   editor@armchairinvestor.com



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