Strong start into 2023 is complete opposite to 2022. First two weeks of trading have presented a lot of bullish signals, almost all sectors are now above 50 RSI weekly which I consider as a major bullish development. Additionally we got a Breakaway momentum BAM (Walter Deemer) and Whaley Breadth thrust of Thursday 12th of January. Both of them have very good track record looking forward.
“Bear markets never end on good news”
Larry Williams
So let’s look at what my models have to say about current market.
Please note that my positioning is mid to long term, meaning weeks or months into the future. When I am bullish it does not mean that next few days cannot be red or vice versa when I am bearish. In majority of cases I adjust my portfolio on weekly bases trying to filter out the daily noise. Only rarely I adjust my positions based just on daily market moves.
General market analysis:
An indicator with which I track performance of sectors based on Weekly RSI levels. RSI Above 52 is bullish, below 48 bearish, between neutral – marked by candle colours. Red diamond – RSI crossed below 50; Green diamond crossed above 50 – can be used as buy/sell signals. Keep it simple.
Major change this week, almost all ETFs I track finished above 50 RSI weekly, those that are lagging ARKK and QQQ have made important moves last week. A lot of MACD and RSI weekly divergences are playing out. The strongest sectors at the moment are China FXI and KWEB, Europe EU50 or DAX, Metals XME and Gold GLD. Semiconductors SMH and XSD have made some improvement as well.
See charts for more explanations.
Longterm main models
Both longterm models are #bullish.
- Weekly Longterm model – model flashed accumulation signals based on putcall ratio in June, September and December. Another very reliable putcall buy signal was triggered in October. Data is available only since 2009 so I do not know if it is reliable in Bear markets, but in last 14 years it proved to be very reliable signal spotting bottoms almost perfectly.
- Daily Longterm model – #bullish accumulation signals – see chart.
To learn more about my models, check this link.
1. Weekly chart – Socha Investing Main model – positioning of the model is #bullish. 
1.1 Weekly chart – Socha Investing Main model – historically reliable buy signal issued in October 
2. Daily chart – Socha Investing Main model – accumulation signals based on putcall ratio issued in 9 consecutive days -#bullish 
2.1 Daily chart – accumulation signals based on putcall ratio since 2013.
Midterm main models
3. Daily midterm model – buy signal issued on October. Confirmed by Breakaway momentum BAM and Whaley Breadth trust on Thursday. BAM is very rare; one should check Walter’s website https://www.walterdeemer.com/bam.htm for more information.
Advance/decline and volume 10 day average oscillator issued a strong buy signal on Thursday (overbought short term).
Midterm daily model is #Bullish.
To learn more about Midterm model, follow this link.
4. SPX Daily – Midterm main model – issued a buy signal on 28th of October. Additional buy singals on Thursday confirming buy signal in October. 
4.1 SPX Daily – Lower panel – a battle between bulls and bears is ongoing since May 2022 with many 90 % down days and many 90 % up days or two consequent 80 % days. Last one was 90 % up day! Bulls are winning. 
4.2. Rare Breakaway momentum BAM signals since 2016 
4.3. Rare Breakaway momentum BAM signals in 2009
New Highs New lows model
Model flipped #Bullish
SPX – A buy signal was issued in October, which was followed by a sell signal in December. New Highs crossed above New Lows; it looks like new Bull market.
QQQ – New highs vs New lows still in favour of Bears but the gap is closing (1st panel from the top on QQQ chart)
See charts for more explanations.
Risk ON or OFF environment?
We are in RISK Neutral environment.
Number of All charts – 8; 6 charts are Risk Neutral, 2 Charts are Risk OFF.
Summary
- General market analysis – Major improvement in recent two weeks. I believe we are entering a new Bull market.
- Longterm model is #Bullish
- Midterm model is #Bullish
- New Highs New lows is #Bullish
- We are in Risk Neutral environment
It looks like market bottomed in October, there are some very good signals that confirm that. Some of major indices QQQ, SPX, are still below 50 sma weekly. In markets everything is possible but For now market favours the bulls.
Be cautious, stay healthy and good luck.
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