Welcome to the first Mid-Week Market Update of 2023.
The theme of the year so far (for the three trading days we’ve had) is congestion. The question on everyone’s mind is, “Will 2023 be better than 2022?”
I think this chart from Brian Shannon illustrates very well the idea that “nobody knows.”
Brian, as mentioned here many times, is an excellent technical analyst, CMT, author, and a pioneer of the anchored volume-weighted average price (AVWAP) indicator. He even has a new book on the subject coming out early this year.
Briefly, AVWAP is the average price of all shares traded for a specific timespan, weighted by the number of shares traded at each price. In the chart above, he has added the AVWAP to several significant points in time in recent months and years. He adds to the comment above, showing the Covid low AVWAP as well.
I have recreated his chart to show all of the AVWAPs together. Notice the convergence of the purple lines.
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SPX - S&P 500 Index
click to enlarge
What this shows is that the range from $3850-$3900 carries a lot of weight.
In the simplest terms, bulls will want to see prices get above $3900, and stay there. This would just be a first step. There are still plenty more tests (not shown: downtrend line, 50 and 200-day moving averages, $4100 potential resistance) above before a real bullish trend could be declared.
Prices below $3850 could entice the bears and likely be a signal of more downside to come. Many traders and analysts are of the opinion that this year will see a retest of last year’s low prices.
Before either of those things can occur, we’ll have to get past this range. Until that happens, there really isn’t much to do as far as swing trading goes.
As for a potential catalyst, the Federal Reserve minutes will be released shortly, at 2:00 PM.
Note: Due to a time constraint this was written and submitted before the 2:00 PM announcements. It has been updated to show the end-of-day chart. Today’s inside-day, spinning top candle, and lower-than-average volume show indecision, signaling that the announcement was not a catalyst for significant price movement.
***This is NOT financial advice. NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”) a SEC registered broker/dealer and member of FINRA/SIPC. All trades placed by Mr. Moss are done through T3TG.
Statements in this article represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.
It is possible that Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual or it may reflect some other consideration. Readers of this article should take this into account when evaluating the information provided or the opinions being expressed.
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January 4, 2023 1:00 PM
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike
Nice-I did not know Brian created that- then again I didn’t realise I was following you here and twitter at the same time. I never said I was bright. Nice post - here’s to 23