Stock Market Outlook 2023: What Our Hosts are Thinking
Stock Market Outlook 2023: What Our Hosts are Thinking
By:Mike Butler
The stock market in 2022 was a wild ride – we saw household-name tech stocks plummet from their highs and energy markets rip to the upside. So we decided to poll tastylive hosts for their takes on 2023:
Check out their answers below and be sure to tune in to tastylive in 2023, every day the market is open!
General Stock Market Outlook for 2023:
I believe the market volatility will come down to a lower level, and the overall equity prices will rise. I will keep focusing on bond products and liquid stocks in the tech sector.
I believe we'll have a choppy, more neutral 2023 so I will be placing more neutral trades - I'll be focusing more on the energy sector and precious metals compared to equities and tech stocks.
For 2023, I see an even bumpier road on the horizon. While the Fed does appear to be slowing down its pace of rate hikes, interest rates are still headed higher, and generally speaking, financial assets drop in value when interest rates rise. EOY 2023 SPY Prediction: $325
The traders’ market continues – I expect realized volatility to be higher than implied in the short term in both directions, ultimately leading to a flat-ish year with those in the green making money on short term trading opportunities.
Who cares about my opinion, instead use the price of the next December S&P 500 options to determine where prices are expected to fall. With the S&P 500 currently around 3850, there is a 20% probability that the market will rise above 4600, and a 20% probability that prices will fall below 3000. Double those probabilities to roughly 40% probability that prices will “touch” either 4600 or 3000 at any time up to the end of next year.
2023: the year of more of the same? This year, I think we’ll continue to see the chop we saw in 2022, and I plan to set myself up accordingly with more small futures trades capitalizing on short term extremes and more options trades if volatility remained heightened. I plan to keep a close eye on short term interest rates, the Dollar, Gold, and some individual tech names.
The crypto market and tech sector have experienced serious deflation in 2022. To name some examples, the prices of Bitcoin (/BTC) and Meta (META) declined by more than 60%, Telsa (TSLA) by nearly 70% and Amazon (AMZN) by 50%. Conversely, the energy sector (XLE) has grown by over 50% and the oil and gas exploration sector (XOP) by over 30%. Many of these trends appeared to be the result of events that shocked markets specific to 2022, namely the multiple crypto controversies beginning with the crash of Luna/UST, the turbulent rebound from economies fully reopening, and the onset of the war in Ukraine. My outlook, which should be taken with a very large grain of salt, is that many of these trends will begin to reverse in 2023 when markets have had more time to adjust.
Most Bullish Stance for 2023:
I am slightly bullish on both equities and bond products. Liquid tech companies like AMZN, GOOGL, U, and NVDA are at the top of my list.
I am bullish on the precious metals space in 2023 - specifically gold and silver products, with continued inflation and elevated interest rates on the horizon.
I am most bullish on the consumer staples sector. Anything considered “safe” and a necessity. Boring stocks. COST, TGT, DG, PG, WMT.
I think the “value” idea is far past played out – I’d much rather play the asymmetrical upside of a highly volatile underlying like TSLA or bitcoin vs collecting dividends.
While I'm not a crazy fan of picking direction long term, I’d like to see a bounce in some of the beat-up major tech names like AAPL, AMZN, and GOOG. And given the inverse relationship between bonds and rates, I am hoping to see a bit of a bounce in the treasury futures as well.
Most bullish stance for 2023 is definitely bonds - as I feel the correlation between stocks and bonds will indeed break, and bonds will resume their more traditional risk-off classification
I have a cautiously bullish outlook for the crypto and tech sectors (and tech-heavy markets like QQQ).
Most Bearish Stance for 2023:
With the sell-off we realized in 2022, I will be very cautious about selling anything, even if the market keeps going down.
While I'm not too bearish on any particular product, I will still focus on hedging my portfolio with bearish positions in the ETF space using products like SPY and QQQ.
I’m most bearish on meme stocks, fashion stocks, Chinese stocks, and other international stocks.
Most bearish stance for 2023 is probably oil - if the economy falters next year, we do head into any kind of a recession, even if only mild, demand for oil could easily drop, as there is far less need for oil, given drop in demand from recessionary pressures.
Anything alternative energy – yeah, we need it in the long run but if you think a recession is on the way, lower gas prices, less money splashing around and with a consumer squeezed by inflation – there is no way tech/energy stocks like ENPH or FSLR continue this run.
I'm with Kai. I’m not looking to add a ton of short delta to my portfolio for the long haul, but if I had to choose, I’d be interested in selling some Crude if it gets above $90/barrel and Gold above $1,950.
I have a bearish outlook across the energy sector (XLE/XOP).
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.