Our February 2023 stock and ETF watchlist with entry points, sector analysis, and market outlook.
Market Overview
Welcome back to The Wealth Catchers' watchlist. For the month of January the stock market was on fire. All the major indices were up impressively and plenty of key stocks performed well. Now there is speculation that this is a bear market rally or a dead cat bounce. Overall the market is still down a good amount from it's all time highs but this recent rally has stirred some optimism amongst investors. Also the belief that the Federal Reserve can secure a soft landing is growing due to recent information. The Fed raised interest rates only by a quarter of a percent (25 basis points) at the recent Fed meeting and the jobs report for January saw non-farm payroll jobs increase by 517,000 versus an expected 185,000. Also unemployment is at an historic 53-year low of 3.4%. The strong jobs report and low unemployment rate is encouraging to investors that wish to avoid a recession. A soft landing is achieved when inflation is able to get to the Fed's target without sending the economy into a recession. As of late the only layoffs we hear about are from large tech companies that many analysts and investors believe grew their staffs too large and too fast. The trickle down affect hasn't been realized by other industries as much as it has been in tech.
Fed & Monetary Policy
With the quarter rate hike investors are viewing this as the Fed taking their foot off the gas. Remember in order to conquer inflation there needs to be pain in the labor market, i.e. higher unemployment, so you would think. The way things have been going lately with the strong jobs report and low unemployment this isn't working in the Fed's favor. For the next Fed meeting in March it's already priced in that the Fed will only raise rates by a quarter of a percent. For the meeting in May there's a 44% probability that rates won't be raised. My belief is that if rates aren't raised at this May meeting the market could spark and push dramatically higher. Not raising rates would signal that the Fed is pausing rate hikes and that is bullish for the market. If it's just a quarter percent then not much will happen, that's in line with what was set before. What could cause a spiral downward would be if rates are increased by 50 basis points or more. It would be perceived that something went wrong and the Fed doesn't know what they're doing. Now the Fed projected to raise rates over 5% by the end of 2023 before they even think about putting a stop to rising rates but it seems like the market has forgotten that. This could be a setup for a selloff, remember the Fed operates off of lagging indicators. They can only act on the data they receive. They are reactive and not proactive. With the bullish rise we have seen to start the year it's apparent that many investors and institutions believe that the bottom has been reached or that we have reached a prime buying opportunity. This highlights the importance of averaging down on names you love and/or being patience and sticking to your entry points based off your research. Now we will see FOMO start to kick in and see every talking head and analyst and someone's grandma talking about stocks that we never heard of all because the market is running. Never forget, you want to purchase assets when NO ONE wants them or is talking about them. Then sell those assets to the ones that are chasing them when you're ready to
Monthly Performance
At the close of month all the indexes were up. The Dow Jones (2.87%), S&P 500 (6.60%), NASDAQ (11.53%), Russell 2000 (10.35%). At the close of the month of January the VIX was at 19.40. At the close of the month the "Fear and Greed" index was at 71 indicating greed in the market. *As you may know the market has been extremely bullish as of late. Plenty of stocks are above all the moving averages. The majority of these price points listed will be looking for price to return to some key moving averages. During the selloff with the prior watchlists the market was already under all moving averages and I was using levels of support and resistance to chart entries. Just providing some insight on how I come up with these prices.
Index Performance
| Index | Performance |
|---|---|
| Dow Jones (Jan 2023) | +2.87% |
| S&P 500 (Jan 2023) | +6.60% |
| NASDAQ (Jan 2023) | +11.53% |
| Russell 2000 (Jan 2023) | +10.35% |
| VIX | 19.40 |
| Fear & Greed | 71 (Greed) |
Top Sectors
Bottom Sectors
Stock Entry Points
| Ticker | Daily Entry | Weekly Entry |
|---|---|---|
| NKE | $110–$115 | $109 |
| ABNB | $103–$110 | $100 |
| MSFT | $241–$254 | $226 |
| AAPL | $139–$143 | $135–$140 |
| Z | $34–$36 | $30 |
| SQ | $65–$72 | $60–$80 |
| PYPL | $72–$88 | $72–$82 |
| MCD | $255–$263 | $249 |
| WMT | $138–$142 | $124–$139 |
| TSLA | $153–$210 | $137–$169 |
| SBUX | $88–$97 | $83–$93 |
| V | $205–$216 | $203–$208 |
| PG | $141–$144 | $124–$137 |
| WM | $149–$154 | $133–$139 |
| CHPT | $11–$14 | $12–$14 |
| IIPR | $89–$102 | $89–$116 |
| SHOP | $36–$40 | $31–$40 |
| ADBE | $325–$346 | $324 |
| AMZN | $93–$112 | $92–$119 |
| CRWD | $101–$110 | $94–$125 |
| NVDA | $151–$162 | $121–$139 |
| COST | $488–$499 | $478 |
ETF Entry Points
| Ticker | Daily Entry | Weekly Entry |
|---|---|---|
| ARKK | $37 | $34–$40 |
| VUG | $221–$233 | $214–$231 |
| VGT | $330–$343 | $340 |
| VOO | $356–$363 | $328–$359 |
| SMH | $209–$218 | $199–$225 |
Key Takeaways
- →January 2023: S&P +6.60%, NASDAQ +11.53% — strongest January performance in years.
- →"The time to buy is when there's blood in the streets." — Baron Rothschild.
- →Non-farm payrolls: 517K vs 185K expected; unemployment at 53-year low of 3.4%.
- →Fed only raised 25bps vs. 75bps in 2022 — rate hike cycle nearing its end.
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