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Process/Philosophy: Why Technical Analysis Matters: "Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go." Ben Graham

"These expressions of emotion have within them the seeds of destruction."  Victor Neiderhoffer Silver Lining: Can the PRICE of silver be a good sign for the stock market? Although it is thought of as a precious metal, more than half of its use comes from "industrial purposes" which show a possible positive development for the global economy (silver will be found in semiconductors of all things which I did not realize). Gold which is seen as more of a store of value, has been acting a bit better than silver with the GLD off by 3% YTD and the SLV is down by 9% in 2023 so far. Looking at the chart below of the SLV shows some distribution as it is on a current 5 week losing streak with the week ending 2/3 off more than 5%. It has been under pressure as the greenback tries to steady itself above the very round par number. But the dollar recorded a shooting star candle after a doji candle Thursday after a $4 jump in February so silver may not be facing as stiff a headwind going forward. Like the GLD, the SLV recorded a bullish engulfing candle Friday and perhaps that may be equities in a glittery light, pun intended. 

Size Matters: As many focus on the muscle of the small caps, and deservedly so, the mid-caps have been quietly leading the way. The chart below of the MDY shows its vigor and it's the only one of the major indexes that have not come back to test the highs previously made last September, November, and December. That relative strength must be applauded and respected. From a pure PRICE distance from where it is trading from its most recent 52-week high at just 5%, that compares very favorably with the IWM at 10%, the S&P 500 at 12%, and Nasdaq at 20% from their own annual peaks. Its WEEKLY chart looked similar to the classic flat base breakout of the IWM back in late 2021, but the MDY actually broke above that same pattern the week ending 10/22/21, two weeks before the IWM. A couple of individual names in the mid-cap arena that should be paid close attention to are FLS which Friday blasted above a bull flag pivot of 35 on Friday, and NEWR, a software name attempting to recapture best-in-breed status, jumping 18.5% on 2/8 recording a breakaway gap after its third straight meaningful earnings reaction.

“There are always two parties, the establishment, and the movement.” Ralph Waldo Emerson Round Number Abundance: Consider the bears as the establishment and the bulls as the movement. In 2023 technology bulls have taken the baton and it is crucial that they do not fumble it. The round numbers were popping up ubiquitously last week. In some of the bigger names META and TSLA were stopped at the very round 200 number, as were some other less followed plays like JBHT and FIVE. Others in tech include GOOGL which may look to fill the gap near par next week. Below is the chart of the QQQ and it may look to retrace back toward 300 next week before another possible leg up, as a breakout above an ascending triangle just below the round figure may provide some comfort. Keep in mind most breakouts are retested, but bulls do not want breakouts to linger back near the pivot point as that would be a red flag. An undercut of that 295 area would be considered a bear trap and a very sinister development, but for the first time in a while, it feels like the burden of proof is on the bears. Inside technology AAPL being a component in the PRICE-weighted DOW may have contributed to its holding up better than the Nasdaq until the start of 2023 as it comprised just 3% index (interesting that MSFT is now the top holding in the QQQ barely edging out AAPL at almost 12%, nearly 4 times the influence that it has on the Dow).

Industrial Purpose: As the industrial group treads water to begin 2023 up 2%, making it just the seventh-best major S&P sector out of 11, perhaps it is just taking a well-deserved breather before its next leg up. The chart of the XLI below shows just sticky the very round par number has been dating back to Q2 '21. Airlines and transportation services continue to be the best actors with the JETS now recording 3 straight WEEKLY CLOSES above the very round 20 number and they each CLOSED very tautly, all within just .13 of each other and we know breakouts from that type of tight consolidation can be very powerful. DAL is my favorite name there with a bull flag that aligns with the round 40 number. Lagging groups continue to be defense and railroads. The Canadian rails in CNI and CP are acting better than our domestic ones in UNP and CSX. One exception in the defense space is AXON which Monday attempted to break above a cup base pivot of 193.95 but reversed near the very round 200 number.