The Deep Dive

The 10 most important charts for 2023

Good morning,

This week’s Deep Dive is taking a little bit different approach. Today I’m highlighting 10 of the most important big-picture charts that tell key technical stories for 2023. Almost all of these you have seen before, and I expect you will see them all again, so I figured let’s compile them together and we’ll use this as a reference guide going forward.

Let’s dive in!

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What line wins out on the S&P 500 weekly chart?

On the weekly chart of the S&P 500, one of two lines is going to have to break. Either the downward-sloping trendline from 2022 or the 200-week moving average, which has a storied history of marking the difference between secular bull and secular bear markets.

Year 3 of the Presidential Cycle is the strongest

Do not sleep on Presidential Cycles. Presidents want to get reelected and they do everything at their disposal to make sure the economy isn’t a campaign problem. It is no coincidence that a recession has never started in Year 3 of the Presidential Cycle and S&P 500 returns are incredibly strong. The average return in Year 3 is 16%, more than double the average return for any other year of the cycle.

Breakaway Momentum (courtesy of Walter Deemer)

January 12, 2023, triggered Walter Deemer’s famous “Breakaway Momentum” indicator, which is when the 10-day average of NYSE advancers vs. decliners exceeds 2:1. The future stats are posted above, and are extremely bullish going forward, with the S&P 500 lower one year later only once. In addition, as Walter notes, declines following this breadth surge tend to be brief and shallow. “When the train leaves the station it doesn't back up to let late-comers get aboard”.