Day Traders Diary

1/20/23

The major averages rallied to finish the week after losing some of the early January rally momentum the last few days. The Dow Jones Industrial Average added 330 points, or 1%, to close at 33,375, while the S&P 500 advanced 73 points or 1.89% to 3,972. Both indexes snapped a three-day losing streak. Meanwhile, the Nasdaq Composite rose 2.66%, with help from Netflix and Alphabet, to end the day at 11,140.43.

The Nasdaq was also the outperformer for the week, posting a 0.55% gain and its third positive week in a row. The Dow finished the week lower by 2.70%, and the S&P posted a 0.66% loss, both breaking two-week win streaks. All of the major averages are now back in the green for the year.

"We're having a more emotional reaction that expected," said Jeff Kilburg, founder and CEO of KKM Financial. "A lot of people got so pessimistic, and we saw parabolic moves to kick off the year. Now, as expected, the markets aren't going in a straight line."

"We are finding a way to continue to move and have higher lows," he added. "The higher lows put a little bit of confidence in the bulls. However, the technicals are still favoring the bears and selling rallies."

Investors continued to monitor earnings reports and mega cap tech shares led the market higher. Netflix gained about 8.5% after posting more subscribers than expected even though its quarterly earnings missed analysts' estimates. Alphabet rose more than 5% after the company announced it will lay off 12,000 employees.

Cryptocurrencies rose this week even as U.S. equities briefly retreated from their new year rally.

Bitcoin was last higher by about 12% for the week, according to Coin Metrics, while ether has risen 14%. shortened for the Martin Luther King holiday.

"While equities digested this latest test of resistance Wednesday and yesterday, the divergence of bitcoin to the upside, along with healthy action on semis, suggests to me that risk appetites are percolating beneath the surface," said Wolfe Research's Rob Ginsburg. "I have always found bitcoin to be a sign of investor appetite for risk, so this bullish divergence was definitely noteworthy."