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"Just when you thought it was over, it was really only just beginning," -Unknown Technology Renaissance: Bulls have been conditioned over the last year that each time they think the bear is over it swiftly reared its ugly head again. Can the scarcity of true market believers this time around, lathered in recency bias, actually be a good thing? The MONTHLY chart of the Nasdaq below is turning from a negative to a positive (of course there is one more session this coming Monday). I was a skeptic as I felt it was lingering too long riding its 50-day SMA, with now 8 months in close contact with the line, unlike the springboard it served as 3 times since early 2016. Last Friday on its daily chart it CLOSED above its 200-day SMA for the first time in over a year, and next week will be a true test for this nascent turnaround when AAPL REPORTS Thursday after the CLOSE (AMD META and GOOG also release numbers next week). The largest company on Earth, and the only $2T market cap has CLOSED at the top of the WEEKLY range the last FIVE weeks. And although volume was somewhat tepid, which is normal in an incipient rally as cynics abound, the volume will come later as bears are forcefully converted into bulls.

Resiliency: One has to admire the tenacity of the S&P 500 which has now CLOSED above its 200-day SMA to end the week for the fourth time since November 30th. Sure Friday CLOSED less than 4 handles above the downward-sloping secular line, but bears may be wondering if their time is limited. I still think you have to play this market on a tactical basis until we are decisively above that 200-day, but the technical landscape is improving. The burden of proof is still on the bulls, but the bears in the back of their mind must be playing with the thought that the longer the market refuses to go down the less bearish it is, almost like a time stop. And another positive is how the Nasdaq on a relative basis has been outperforming as seen on the ratio chart below. That does not mean both can not act well on an absolute basis, but perhaps tech will begin to broaden out the rally. In the last 2 weeks the Nasdaq was stronger up .5% last week as the S&P 500 fell .7%, and the week prior the Nasdaq was up 4.8% while the S&P 500 rose 2.7%. The bulls are gaining steam but must keep their eye on the ball.

Size Matters: In life, many like to root for the underdog. Often that role is filled by someone short in stature. The small-cap space is showing why many are becoming a bit excited about this nascent run in markets. This area is often seen as a leading indicator and a barometer for "risk on". With 2023 now two weeks in the Russell 2000 is showing the way. For a second consecutive week, it has outperformed the "big" three major indexes. Last week the IWM added a very healthy 5.3% while the Nasdaq, S&P 500, and Dow rose by 4.8, 2.7, and 2% respectively. The week prior it advanced by 1.8%, with the others gaining between 1-1.5%. A theme could be developing here and a big move was likely imminent with the extraordinarily taut WEEKLY CLOSES the 3 weeks ending between 12/16-30/22 which all finished within just 3 pennies of each other, not a typo. A move through 190 would negate the series of lower highs for the IWM dating back to the week ending 11/12/21. Risk appetite is growing.

"Everything has beauty, but not everyone sees it." Confucius Beauty Is In The Eye Of The Beholder: One man's trash is another's treasure. Is junk back in vogue? The PRICE chart below shows how the JNK is leading the S&P 500 and it may be a good sign. It could be market participants are expressing they are willing to take on a bit more risk. Last week the ETF recaptured its 200-day SMA and has now advanced 5 of the last 6 sessions. The fund rose 2.7% last week nearly doubling the rise in the S&P 500 and over the last month's period the JNK has added 1.3%, while the S&P 500 has declined 1.2%. It is also now back above the WEEKLY CLOSE ending 10/28 that rose 3% in the second-best WEEKLY volume dating back to the COVID lows of early 2020. For investors that can stomach the risk, the JNK is paying a dividend yield of almost 6%. It is still way too early to tell if the downtrend is over and quite frankly we will not know until hindsight, but some little positives are beginning to add up.

Monthly Blues: At the end of each month, it is a pleasure to be able to look at the longer-term PRICE frames, and the end of the year puts an even more special emphasis on it. Below we see how 3 of the last 4 months the Nasdaq has now CLOSED below its MONTHLY 50-day SMA. We have spoken about the inability of the tech-heavy index to thrust off the line as it has in February 2016, January 2019, and March of 2020. Just the fact that it is stalling here should be a concern, even after the 6000 handle decline from the November 2021 MONTHLY gravestone doji candle. Remember trends in motion tend to stay that way more likely than they are to reverse. And when they do change course there will often be a technical footprint as in a bottoming candlestick pattern, thus avoiding the proverbial "catching a falling knife." This is a good time to start building a watchlist, focusing on those names that are shrugging off the overall weakness. They will often be the first ones out of the gate once the market can catch an uptrend. Patience will certainly be required.