Welcome To The Beta Chase

JC Parets
January 29, 2023

What do bull markets look like?

Well obviously, more stocks are going up than going down.

More sectors are participating to the upside, while fewer are falling.

And you also see an expansion in breadth across the globe, with more and more countries joining in on the uptrends.

Those are bull markets.

And do you know what you also see?

High Beta stocks outperform Low Volatility. This is a consistent characteristic among the strongest uptrends.

Earlier this month we pointed to Low Volatility stocks breaking down relative to the rest of the market.

But now, High Beta stocks are breaking out! And that's why it's the Chart of the Day!

Look at the ratio between High Beta and Low Vol compared with the S&P500. Both are coming out of long-term downtrends:

You'll also notice how Bitcoin looks very similar to High Beta / Low Vol.

This is also something we've been talking about for a long time.

But when it comes to, "Risk On", is this what they mean?

Well by my work, it certainly isn't "Risk Off".

That's something completely different.

In strong downtrends, or bear markets as they call them, we normally see Low Volatility stocks leading the way. We see more and more stocks, sectors and countries going down and making new lows.

By my work, we're not seeing any of those things.

Quite the opposite really.

What are you seeing?

Am I missing something?

Let me know!

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Cheers,

JC

PS: Wanna talk about it? Give us a call at 323-421-7991 and we’ll answer all your Paid to Play questions!

 

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