Q1 2023 is in the books and we saw mixed results for all three major stock indexes compared to where they ended in 2022. The S&P increased from 3,839 to 4,109, about +7%. The Dow went from 33,147to 33,274, a mere +0.3%. The NASDAQ increased the most from 10,466 to 12,221, a whopping +16.7%.
In my previous post on the 2022 year end review which you can read here, I concluded the following:
"Overall, investors should be well positioned in the NASDAQ or the Dow headed into 2023. I would be wary of the S&P since it still appears overvalued and could decline further."
Through Q1 2023, my assessment is looking good for the NASDAQ, but the Dow and S&P are not yet conforming. The updated S&P LN Trend chart shows the following for 2022-2023:
As a reminder, you can see how this trend chart was derived in this post. The red line shows the long term "fair market value" of the S&P and we can see the S&P is bouncing above the trendline. If this continues throughout 2023 we should see the S&P end at 3,998 for the year.
Here is the updated Dow LN Trend chart for 2022-2023:
As a reminder, you can see how this trend chart was derived in this post. The Dow remains undervalued and if it corrects to the trend line we should see a 2023 year end value of 39,440. This is a substantial gain and would easily hit new all time highs.
Finally, let's look at the updated NASDAQ trend chart:
As a reminder, you can see how this trend chart was derived in this post. After starting out severely overvalued in 2022 and falling below it's fair value, we see the NASDAQ has recovered to slightly above fair value. If it continues to bounce around the trend line, the NASDAQ should end 2023 at 12,733.
Overall conclusion through Q1 2023 is that the Dow has the most upside potential for the balance of the year. The other two indexes could trade slightly higher to sideways.
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