Your Leaders are Leading

JC Parets
January 9, 2024

The NYSE new 52-week high list peaked on December 14th. That puts us almost a month into some kind of correction underneath the surface.

And this sort of behavior is fine in bull markets. Go back and look over the past 100 years. It's actually perfectly normal.

Last week we discussed what a bigger correction might look like, and what the market would have to do to hold on to its ongoing uptrend.

Let's remember, the Dow Jones Industrial Avg rallied 5000 points in 2 months. Give it a break.

See: New Year & New Trends

Among the most important groups of stocks comes Financials, of course.

Here is arguably the most important component in the U.S. Financials Index going out at new all-time highs:

I bring this up because if the most important component of one of the most important groups of stocks is making new highs, what does that say about the health of the overall market?

Now move to Semiconductors. Again, one of the most important groups of stocks, outlined in last week's note.

Here is Nvidia breaking out to new all-time highs, representing almost 20% of the Semiconductors Index:

You can see how well the market has respected these Fibonacci Extension levels.

See: Fibonacci Explained if you're interested in learning more about this calculation.

But regardless of these levels, the new all-time highs in Nvidia, the most important component in Semiconductors, is evidence of risk appetite.

Leaders are leading.

Notice the relative strength in Nvidia over time. This is NOT just an AI "Boom".

Nvidia has been a leader for a long time.

This is Nvidia relative to the S&P500. Especially over the past decade, the relative strength goes from the lower left to the upper right:

Leaders are leading.

We're focused on 5 groups:

Industrials

Semiconductors

Homebuilders

Technology

Broker Dealers

We discussed this all on last week's LIVE Conference Call.

If you haven't had a chance to give it a watch, check it out here, and then let me know what you think.

I was also a guest on TCAF podcast where we discussed this topic as well. You can check that out here.

But if you're interested in the actual trade ideas, go back and watch the Conference Call or go straight to the Trade Ideas page.

JC

 

 

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