Shares fell 20% last year on fears of a looming drop in earnings for 2023. But January is a different story: The S&P 500 is up 4%. Consider: 1) half of the S&P 500 stocks are above their 200-day moving average; 2) Major industrial names such as Caterpillar, General Electric, Snap-On, Cummins, United Rental and Deere are at or near new highs, indicating that the global economy is improving; 3) Other indicators of global demand – semiconductors and metal inventories – are also up more than 10% this year. That’s not a bull market yet, but it’s coming. The skeptics abound During the long weekend, much of Wall Street tried to dampen the enthusiasm. “While we see the weight of the evidence shifting to the positive, we must be careful not to fall for the impatience of the mob, who seem all too happy to sacrifice their capital,” said Lowry, the oldest technical analysis service in the industry. USA. For Jonathan Krinsky at BTIG, the problem is that the first two weeks are not necessarily a good indicator, especially after a rough year. “While this may be an early sign of a sustained new uptrend, this kind of move in the first two weeks after a bad year is not atypical,” he said in a note to clients. “The third week of the year following -10% year, however, things get tougher,” Krinsky added. “The week 3 average after years of -10% is -0.63%, and when the first two weeks are positive as they are now, the week 3 average return is -1.03% and 7 times out of 10. .. Our view remains that this is a counter-trend rally, but the next two weeks should tell more about the true duration of this move.” What would it take for a true bull market to show? It depends who you ask. For technicians like Frank Gretz at Wellington Shields, it’s about breadth: more stocks are breaking out, especially above a broad indicator like the 200-day moving average. As noted above, about half of the S&P is above that level, but it takes more to get really bullish: “The rule is, so to speak, 60% is a good market, 70% a bull market,” said Gretz in note to customers on Friday. Lowry also wants to see a broader rally. Their measure: The key supporting indicators should hit their August highs (the S&P closed at 4,305 on Aug. 16, about 8% above where it is today). For more fundamental types, like CNBC senior analyst Ron Insana of Contrast Capital Partners, you need the Fed to change course. “You don’t get a secular bull market in stocks until the wind is at your back,” he said on “Power Lunch” Friday. “And by that I mean a friendly Fed, right? A Fed that actually lets go or shuts down.” One thing is certain: everyone is very suspicious of earnings. They are suspicious because: 1) no one knows for sure what kind of “soft” or “hard” landing we will have, and 2) by the time the analysts have figured out from the fair profit situation, the market will have bottomed long before. That last point is crucial to understand: there is a connection between earnings and stock trends, but it’s tricky. “In down market trends like this, prices are typically falling about 10 months before a bottom in earnings,” Gretz explains. In other words, wait for the bottom of earnings and you’re about 10 months late for another bull market. Emphasizing earnings in the late stages of a bear market seems like the wrong exercise. Earnings and the rest of the news will always be bad at market lows.”