Market pros are feeling so happy about stocks right now, you have to wonder if they’re too bullish

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There’s an old saw about how if you lay all the world’s economists end to end, they still won’t point in any one direction or reach a conclusion.

There’s no such adage about market technicians, but in the past six weeks it appears that the diehard group of technical analysts have all reached the same eventuality, one involving mostly good times ahead.

Technicians are so happy that it highlights the big schism between the market’s fundamentals and the technical indicators. Fundamentals tend to look out longer term, while technical benchmarks tell a story lasting typically no more than six months, so it’s possible for both to be correct at the same time.

But after the U.S. market’s dismal performance in 2022, it is the sudden giddiness of the technicians that is the surprise. Throughout the down year, any upswing or turn was viewed as a “bear-market rally.” No positive day seemed to be strong enough to provide confirmation that a new trend was in place; technicians were quick to find the black cloud in every silver lining.  

Now, every indicator seems to be flashing green.

Nigam Arora, editor of The Arora Report, said this week in an interview on my podcast, Money Life with Chuck Jaffe, that he looks at economic data from 24 countries every day, plus corporate earnings and more. He draws the broad conclusion that “you have to be bearish,” while in the same breath noting that “all of the technicals are turning bullish.”  He’s putting more money into short-term investments now to take advantage of volatility and the positive technical indicators, and he’s not alone.

Meanwhile, Jeffrey Hirsch, editor of the Stock Trader’s Almanac, said on my show this week that the technicals are clearly moving towards an “all-systems-go” environment.

Hirsch was in the news this week because the U.S. stock market hit the “January Trifecta,” a measure he created using the following factors: a “Santa Claus rally” running from Christmas through the first two trading days of the new year, a positive market move in the first five trading days of January, and a plus reading of the “January Barometer,” in which performance for the first month of the year supposedly bodes well for the year as a whole. (This is not to be confused with the “January effect,” which is the hypothesis that market prices tend to rise more in January than in any other month.)

“When you get all three up, it’s pretty bullish,” Hirsch said on my show this week, “Up 28 of 31 years, 17.5% for the full year and for the last 11 months – so not including January – up 27 {of those years].” Hirsch notes that when there’s a bear market in the year prior to hitting the Trifecta, every single year has been up with double-digit gains.

Every investor is hoping that trend continues in 2023. You can come up with reasons to doubt the January Trifecta, as my MarketWatch colleague Mark Hulbert did this week, but there are plenty of other supportive benchmarks to consider.

For example, some look at the breadth-thrust indicator, or contrary indicators like put-call ratios showing market strength, plus many indexes moving above their 200-day moving average, with the Dow Jones Industrial Average achieving a “golden cross” — where the shorter-term 50-day moving average goes above the 200-day — with the Standard & Poor’s 500 about to get there too.

Just two weeks ago, David Keller, chief market strategist at, was reminding me that “nothing good happens below the 200-day moving average,” noting that “the proof is in the price.” Since then, the market prices have, indeed, been proving the bullish case.

More Chuck Jaffe: ‘Don’t just sit there, do something.’ The stock market is telling you to make some hard decisions with your money now.

In an interview airing on Friday’s show, technician Lawrence McMillan of McMillan Analysis and a MarketWatch contributor, says: “The real solidifying point is that we have now closed above the 200-day moving average, we closed above the downtrend line of the bear market and we closed above that triple resistance at 4,100 [Wednesday], so there really isn’t anything standing in the way of a further advance, at least to go up to the August highs [of 4,300 on the S&P 500].”

No, the technicians haven’t gone hog wild. Mark Newton, global head of technical strategy at Fundstrat Global Advisors, said recently that he expects the S&P 500 to end the year up more than 15%; but while he said the worst was over and declared the market bottom in October of last year, Newton acknowledged that there will be significant volatility.

That’s not a surprise since the S&P 500 is now closer to his year-end target than it it’s launch point to the year.   If the sharp swing from bearish sentiment eight weeks ago to strongly bullish now were driven by individual investors, the talk on the street would be of irrational exuberance and the perils of running with the crowd.   No one seems to have that concern when the market technicians start acting like a herd, though McMillan acknowledges “it’s not a good idea when everybody is bullish.”

Investors would be wise to consider that caution, because fundamentals remain filled with red flags, and intangibles like war in Ukraine, trade with China, the debt ceiling and any misstep by the Federal Reserve.

If technicals are the short-term outlook, with fundamentals painting the long-term picture, then the analytics suggest that the market will spend the early part of the year in what amounts to a bear-market rally, a ray of hope that is doomed to being snuffed out — or at least significantly blunted — under the weight of harsh economic news.

McMillan notes that while there is plenty of good news for technicians to look at, things change quickly. By the time March gets here, the good feelings created by January could be gone.  For now, however, enjoy the feeling, but let the fundamentals keep you humble and cautious.

More: The S&P 500 is flashing signs that the bear market finally could be over

Plus: Cash is no longer trash, says Dalio, who calls it more attractive than stocks and bonds

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