U.S. stock market is on track to hit the ‘January Indicator Trifecta,’ but can the rally last for the rest of 2023?

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The U.S. stock market is doing exactly what investors hoped it would to start the new year, but analysts have questioned whether the first month of the year...

As the month draws to a close, the stock market is finishing the first month of 2023 with healthy gains despite widespread concern that the economy might be on the brink of a recession.

The stock market is on pace to hit the “January Indicator Trifecta,” which means all three seasonal indicators — the Santa Claus rally, the First Five Days Early Warning Systemand the January Barometer — will be logging S&P 500 SPX gains after the closing bell on Tuesday. “The trifecta accomplished this month has historically led to some very strong returns,” wrote Adam Turnquist, chief technical strategist, and Jeffrey Buchbinder, chief equity strategist of LPL Financial, in a Monday note. “The S&P 500 has on average added 12.3% to a 4.6% January gain between February and December, bringing the average gain for these years to over 17%.”

The 20% slump for the S&P 500 in 2022 means that the January rally will not get the market back to the 2022 high set on January 3. And while the seasonality message is clear, the market still needs catalysts to climb higher. “[We] believe the end of the Fed’s monetary policy tightening will be a key driver for stocks this year,” said Turnquist and Buchbinder.

 

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