Markets Remain Solvent
The irrational investors were adding to short positions throughout the back half of last year, particularly in those beat up growth stocks that had already fallen by so much.
Rather than cover their shorts and take the profits late last year, they decided to add to their short exposure.
This has sparked an epic short squeeze in Technology, Communications and other growth stocks throughout 2023.
But believe it or not, it's been the International Equities outside the United States who have been leading the way.
Even with this epic squeeze in Tech and Growth this year, overall the U.S. is still the underperformer this cycle.
And that's ok.
Contrary to popular belief, stocks traded before 2011. They even traded in the 1900s. They had yield curve inversions and everything back then.
In many bull markets of the past, the U.S. stock market underperformed. It actually used to happen quite regularly.
And this cycle appears to be no different.
So to me, it only makes sense to pay extra attention to the leading stocks outside the U.S.
Notice how many Healthcare names are near the top.
The rotation into Healthcare has gotten going the past couple of weeks in the U.S.
But we've already seen leadership there from other countries, especially in Europe.
Notice how the outperformance from foreign stocks really got going in Q4 last year, once the U.S. Dollar started to weaken.
In fact, so many assets have done well with a falling U.S. Dollar - including Precious Metals and Crypto Currencies.
It's been a kumbaya moment for Stock Investors, Gold Bugs and Crypto Crazies all with a falling Dollar.
So what would put a wrench in these uptrends?
To me, it's quite obvious that it's a stronger dollar.
Look how the All Country World Index of stocks has moved in the exact opposite direction of the Dollar:
Once the Dollar peaked last Fall, stocks all over the world started to rip.
The stronger areas bottomed in the summer. The last ones bottomed in October.
And then coming into February, the strong Dollar put some pressure on stocks, even if only temporary.
And now more recently as the Dollar has rolled over again, stocks are on fire.
So now that the US Dollar Index is back down to its February lows, what impact will it have on equities if the Dollar catches a bid?
We will be discussing all of this and what we're doing about it on Monday night during our LIVE Conference Call.
Premium Members make sure to register here, if you haven't already. We'll get going LIVE @ 6PM Monday night April 17th.
JC