The year 2022 will be one of the few stock market years in which both stocks and bonds suffered sharp price losses.
With a view to 2023, the overall situation points to a better vintage, but there are no indications that it will be a "top vintage".
The geopolitical challenge with the war between Russia and Ukraine is both a risk – in the event of an escalation – and an opportunity – in the event of a ceasefire and negotiations.
In addition, a slight easing of inflation rates in the G-7 countries and therefore at least a pause in interest rate hikes can be expected.
However, the financial markets should adjust to a reduced supply of liquidity, keyword: reduction of the central bank balance sheet.
On the positive side, there will be slightly better economic data for the USA and China in the second half of 2023.
In the course of 2023, the S&P 500 should abandon its still intact bear trend, which is currently at 4200 points.
However, there are no indications of relative strength in the index comparison.
In the Nikkei 225, the relative weakness of 2022, which also reflects the weakness of the yen, should come to an end.
The technical situation indicates an increase towards 30,000 points.
The Euro Stoxx 50 should maintain its moderate climb in 2023 after exiting its bearish trend.
For the S&P 500, the technical boom cycle that began after the 2008/2009 financial crisis ended at the turn of the year 2021/2022 with an all-time high of 4819 points.
Take-profit signals such as exiting the previous bull trend and overarching sell signals, namely the top-down cutting of the 200-day moving average in early 2022 sent the index on a bumpy road.
Further trading sell signals and the interplay of downward thrusts and upward rallies (classic "bear market rallies") ensured that a bearish movement was established.
This led the index to 3492 points in September and thus to the old, medium-term support zone of 3400 to 3600. This was thereby confirmed and consolidated.
All signs point to improvement
On the one hand, the (previous) bear market loss of minus 27.5 percent was below average in historical comparison.
On the other hand, the index is now given a "mental" backup stop at 3380 points, below this tiered support zone.
Because if the index falls below this level in 2023, the bearish movement would resume.
In that case, again, a technical defensive stance would be appropriate.
However, the overall technical situation indicates an overall improvement for 2023.
The S&P 500 should manage to break above the currently falling 200-day moving average (currently at 4050) over the course of the new year.
It would then exit the bear trend that started at the all-time high and currently stands at 4150 points.
However, the S&P 500 is missing, which based on company earnings estimates for 2023 currently has a price-earnings ratio (P/E) in the range of 15 and is therefore not "expensive" in historical comparison and with a view to the current interest rate level, but not "cheap" either “ is assessed, the indications of a new, pronounced bull movement.
Rather, a friendly undertone is on the technical agenda, albeit fluctuating, with the index likely to “work its way” towards 4300.