Strategy Note /

The Old Wall St Two Step

  • Will the Wall St two step take the SPY down two years in a row? Will history be a better guide in 2023 than in 2022?

  • The two step is not limited to the US - the music's pace has picked up in Asia, from China's Zero Covid to Japan's YCC.

  • The key global AA move for 2023 is for non US equity to continue its recent OP - a flattish S&P & a weak $ both help.

Jay Pelosky
Jay Pelosky

TPW Founder & Global Strategist

TPW Advisory
23 December 2022
Published byTPW Advisory

The two step feels like a good analogy for the last Musings of the year – a year with multiple two month periods of both big downs & big ups, today’s dance between an ahistorical set up and Wall St history (December statistically the best month for positive returns) and even this week’s back & forth between solid growth data and Fed fears counterbalanced by weak data and recession fears (Q3 GDP/LEI).


All in all its been a meat grinder of a year with few places to hide culminating in the worst year for the balanced  60-40 portfolio on record. So will Wall St’s two step take the SPY down two years in a row? It rarely happens according to history but will history be a better guide in 2023 than it was in 2022? If our outlook for gradual stability to emerge as the year progresses proves right then perhaps it will.


What about the famed Santa Claus rally (almost titled this piece – Here comes Santa Claus, Here comes Santa Claus) will it materialize this year? According to All Star charts the formal Santa Claus rally commences today and extends for seven trading days so through Jan 4th. In true two step fashion the real issue is if Santa does NOT come to town as that usually signals a weak year for Wall St.