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The indices ended the year with a weak performance in the last week, finishing down on the SPX & NDX for 3 of the last 4 sessions, with the worst annual performance since 2008! Final results show the Dow Jones Industrial Average: -8.8%, S&P 500: -19.4%, Russell 2000: -21.6%, and Nasdaq Composite: -33.1%.

What is worse, the patterns that formed over the last 2 weeks appear to be BEARISH continuation patterns and do not augur well for a strong start to the new year. In addition, the McClellan Oscillator finished near neutral at -6.37 and certainly NOT OVERSOLD by any means. The percentage of stocks that remain BELOW their 40-day moving average remains at 62.5%

Mega cap stocks and former market leaders, Nasdaq Generals, continue to show bearish patterns with many of them finishing the year at or near KEY technical support levels, even though some of the same mega cap names that drove the downside moves ended up closing with gains because of a very late rally back to close out the year.

Apple (AAPL 129.93, +0.32, +0.3%), Tesla (TSLA 123.18, +1.36, +1.1%), and Meta Platforms (META 120.34, +0.08, +0.1%) were among the winning standouts for the group. Notwithstanding the positive finish for these names, they still lost 26.8%, 65.0%, and 64.2%, respectively, in 2022. Combined individual violations of their close support levels could result in a nasty start to 2023 unless we get an almost immediate sharp rally off the current levels.

The first 10 days of the year often indicate how the year might go by historical standards but based on their earlier November rally and lack of a year-end “Santa Claus” rally, there is no telling whether the early action in 2023 will be an indicator this coming year.

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