Up And To The Right

November 8, 2021

Uptrends are a pattern in the market that every investor should be able to recognize.

When prices are making higher highs and higher lows, and the line goes from the lower left to the upper right, we call those uptrends.

Learn it. Know it. Live it.

In Bull Markets, you get a majority of stocks doing just that - going higher.

In Bear Markets, most stocks are NOT doing that.

In February, things really changed. After that, most stocks stopped going up.

But that's now reversed. The bull market is back baby!

Look at that expansion in new highs:

In bull markets, investors are generally rewarded for owning stocks.

We've gone back and done the work.

I encourage you to do the same.

You'll find that when stocks are in bull markets, owning stocks is a much better idea than shorting them, or owning things like gold or treasury bonds.

When you see those defensive assets doing well, particularly on a relative basis, then maybe you're not in a bull market for stocks.

For now, stocks are still outperforming these alternatives. That's historically consistent with bull markets. When these lines are not going up and to the right, then we'll have to reevaluate that thesis:

And at this point in the cycle, how do we not look further into small-caps?

Remember, this had been one of the biggest tells that things changed for the worse in Q1.

But look what happened last week:

We know from studying markets going back hundreds of years that new all-time highs are, in fact, NOT a characteristic of downtrends.

This is the sort of environment where speculating on small-cap stocks can be very rewarding.

Check out this $1B Regional Bank - Homestreet $HMST. If prices are above 49, we want to be long with a target up near 70:

Here's a $3B Asset Manager - Main Street Capital $MAIN.

That's a huge base. If prices are above 46 we want to be long with a target up near 65:

Here's another nice base - Enova International.

Some might even call this a "Cup & Handle" pattern. I'm not big on naming price patterns. I'm more interested in the implications. And I see a huge base here:

If $ENVA is above 39 I like this one long with a target up near 58.

And if you want to go bigger, check out this $17B Aerospace & Defense stock $TXT.

With Industrials also breaking out, this is a sector we want to be paying attention to.

If $TXT is above 75 I like this one long with a target near 118.

In Crypto, did you see Helium double in price last week?

Not only have we been buying this one, but I'm also mining Helium. Over the next few weeks I'll have around 20 live hotspots mining 24/7. So my original intent was to mine these $20 coins. Now with the same effort I'm mining $40 coins. I'm no accountant, but that sounds like good math.