![]() This is a much better measure of the stock market than the plain price-to-earnings (P/E) ratio. This Ratio Suggests Stock Market Is Extremely Overvaluedįor stock valuations, take a look at the cyclically adjusted price-to-earnings ratio (CAPE) ratio. This says buyers are embedded, the trend is intact, and the stock market could go higher.Īll in all, the charts are saying stock investors are in for a solid year. Meanwhile, the S&P 500’s moving average convergence/divergence (MACD), which is a momentum indicator, has been trending upward and has started to enter positive territory. With this, investors must ask whether the pattern will repeat itself and the stock market will jump by another 15% or so in 2023. It’s currently not too far from that moving average, only 15% higher. In October 2022, the S&P 500 dropped to its 200-week moving average and bounced. If you had bought shares of an index fund that tracks the S&P 500 the last two times the S&P 500 fell to its 200-week moving average-and held those shares for one year-your returns would be more than 30%. ![]() For years, this moving average has acted as a strong support level for the S&P 500. Now the question is whether the S&P 500 will keep going up and test the 4,800 level this year.Īlso, pay close attention in the above chart to the 200-week moving average, which is a trend indicator. Whenever a major trend breaks, the move in the opposite direction tends to be massive. Then, in early 2023, the downtrend was broken, which is a bullish sign. However, in late 2022, buyers started to come in. ![]() This trend was consistent throughout last year. In early 2022, a downtrend began on the S&P 500 chart the index consistently reached lower lows and lower highs. It plots the weekly performance of the S&P 500. For some perspective, look at the chart below. The charts currently say the stock market has huge upside, with possible double-digit returns in 2023. Stock Chart Indicators Suggest Stocks Could Rise The fundamentals suggest that the stock market could crash in 2023. In contrast, the fundamental analysis paints a dire picture for the stock market. The technical analysis says the stock market is setting up for big gains this year. ![]() Right now, if you were to try to predict the stock market’s direction, you might get confused. ![]()
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