The Prior Cycle's Highs
If Financials are above those former highs, why wouldn't we want to err from the long side?
And taking a step back, how does a strong Financial Sector impact the stock market? Is that historically bearish or bullish for stocks as an asset class?
We can make the same argument about Home Construction going back to the highs before the real estate bubble burst and collapsed.
In this case, the launch of the Home Construction Index fund was the top lol:
Again, like Financials, we saw a couple of unsuccessful attempts to break out in 2018 and 2020, and then after ultimately breaking out, last summer Home Construction was able to successfully retest those former highs.
Home Construction is a major component of the Consumer Discretionary Sector. Are these stocks doing well historically bullish or bearish for stocks in America?
These 2 groups performing well is a positive for the overall stock market, not a negative. If they're above those former highs, they remain innocent until proven guilty.
We can apply those same principles to Bitcoin.
Look at its prior cycle's highs. In this case we're referencing the late 2017 peak. I see a successful retest, at least for now, in the price of Bitcoin:
If Bitcoin is above the 2017 highs, how do we not give the longs the benefit of the doubt?
And if Bitcoin prices are going up, what does that say about the overall Crypto markets, and traditional markets for that matter?
We can keep this party going with Ethereum doing the exact same thing. Look at ETH successfully retesting its prior cycle's highs:
If Ethereum is above its 2017-2018 highs, we have to place our bets from the long side right?
And what do higher Ethereum prices mean for Crypto in general? What about NFTs and other Crypto assets?
It's probably not a negative. And if Ethereum is going up, how are stocks doing?
Probably not terrible....
And finally, I'll leave you with this one.
Gold still has NOT broken out above its prior cycles highs. But the idea is exactly the same as the others.
If Gold is above its prior cycles highs, we have to be long:
Gold still has some work to do, but it's certainly doing it.
Maybe some day soon we will be talking about Gold breaking out above its prior cycles highs. We might even be talking about a retest.
We will see.
But I do think it's interesting that all of these assets are behaving in a similar way. It's supply and demand at work.
This is the dance of the market.
It's up to us to take note and set ourselves up for success.
I think all 5 of these charts are really important ones to focus on at the moment for the reasons discussed above.
This week was our first LIVE Mid-Month Conference Call of the year. We went over each of these charts, and the best stocks and other vehicles to profit from these trends.
If you have not watched the replay you can catch it here and download the 150+ slides that we discussed.
If you do not have access, for whatever the reason, just email Mary and she'll fixed that right away.
Some people prefer to call in.
That's cool. Give us a ring: (323) 421-7910
Give it a watch and then let me know what you think!
Am I on the right track?
Or is there something I missed?
- JC