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SP500 - 2023 Outlook

Updated: Apr 13, 2023

In this second article of the new year, I share my personal perspective for 2023, making use of the purely technical kit I rely on in my analysis routine on various financial instruments.

I will therefore not take into account geopolitical and/or governmental agendas that could impact the trend of the global market in the medium-long term. So interpret what I write purely from a technical analysis standpoint.


Analysis based on CPR, pivot points and volumetric nodes:


The central pivot range (CPR) of 2023 falls below that of 2022. The closure of 2022 is below the CPR of 2023. These are the first two data useful for setting my bias which is in fact bearish for next year.

The relationship between the Camarilla H3/L3 pivot point ranges also confirms the bias.


The first level to monitor is the VPOC of 2022 (3960) in confluence with the CPR area.

Here we could see a first bearish defense with the aim of returning prices to value/acceptance areas such as the Value Area Low (VAL) of 2022 (3630)


The next area, among the most important to observe this year, will be the one between the 2022 midpoint and the 2021 midpoint (4155 - 4226).

Camarilla H3 (4220) and the Value Area High (VAH) of 2022 (4235) in confluence with the mid of 2021 (4226) greatly strengthen this area which will see sellers waiting to execute their orders. If the bearish defense were to be successful we would probably see a retest first of VPOC at 3630 and then of the lows of 2022 in the 3500 area.


If the reactions in these areas are strongly supported by the bulls, then we could send the bears back to the confluent H4/R1 levels (4580 - 4612).


The last call for the bears would then be the highs of 2022 (4808).

A breakout of the highs would substantially change the bias from bearish to bullish and we would be faced with important implications for the equity asset.


Looking at the picture from the perspective of the bulls, I could expect a low volume composite node defense at 3530 points which also matches last year's lows (3502).

Falling a bit further, we could see bullish reactions at the 25% bearish extension of the 2022 range (3175), confluence with Camarilla L4 (3143) and a low volume composite node (3120)



Bullish/bearish extensions:

The ES future opens 2023 at 3895 points. Assuming this to be the high or low of the year, we could expect prices to extend to a high of 4545 and 3245 respectively, calculated on the 10-year historical range average.



Key Levels 2023:

Finally, I summarize all the levels discussed in the table in order to highlight the potential areas of both bullish and bearish reversal. Looking forward to updating you at the end of the first quarter of 2023!


​BEARISH REVERSAL AREA

PRICE

BULLISH REVERSAL AREA

PRICE

VPOC 2022

3960

MID of last BULLISH IMPULSE MOVE

3840

MID 2022

4155

CLVN

3530

CAM H3 + VAH + MID 2021

4230

LOW 2022

3502

H4 + R1

4600

-25% RNG EXT + CAM L4 + CLVN

3140

HIGH 2022

4808


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