Rug Pull Postponed?
That's our friend Bhargav on the right. He's doing really cool things with the company he founded Pricing Culture, that prices out all kinds of collectables and tracks the data. It's great.
Bhargav was one of many friends that it was great to see last night.
Ryan Detrick was in town from Cincinnati.
We managed to get Joe Fahmy back in Manhattan.
My wife (busy mother of 3) came out to party.
I even got Phil Pearlman to eat rice at the sushi restaurant.
(He said it was ok because he ran 8 miles in the morning lol)
But my point here is that it was definitely a bull market party.
And this confirms, once again, that yes, bull markets are more fun than bear markets.
Look at Germany hitting new all-time highs.
No bear market there.
You also got new all-time highs this week in the S&P500, Dow Jones Industrial Average and Nasdaq100.
Not a characteristic of bear markets.
Once again, however, fewer and fewer stocks were able to make new highs.
The Small-cap Russell2000 is down 1% this week. The Micro-cap Index is down 3% this week.
In bull markets, there are periods where the majority of stocks don't go up.
That's normal.
We've been in one of those periods.
Remember, in December we saw the most amount of stocks making new highs that we had seen in years. Mathematically, more stocks can't go up, if all of them are already going up.
That's basically what's happened here.
And so with each new high in the large-cap indexes, fewer and fewer stocks are going up:
This has been the case all year at the individual stock level.
You also see it as you go down the cap scale.
Not a single small-cap sector is above its late December highs. In fact, Financials, the ones that needed to see the rotation the most, are actually the worst performers.
Here's what all the small-cap sectors look like since the day the US Dollar and US 10yr Yield bottomed on December 27th:
The past 2 months has consisted of a market where it has paid to be both a buyer and a seller of equities.
The 2 months prior to that, only buyers were being rewarded.
You see the difference?
We're seeing massive swings in stocks this month, in both directions.
We did not see that before.
You noticing?
It's a different environment that the one were in late last year.
It doesn't mean that it's not a bull market.
It doesn't mean that some bubble needs to pop.
It doesn't mean that we need to go into a bear market. We just had 2 of those over the past few years.
Bear markets are infrequent.
But I do believe, based on the weight of the evidence, that this period where some stocks are going up, but most are not, will turn into an environment where most stocks are going down and some are not.
When though?
That's the key.
Because a market that is "less good" is very different than a market that is "getting worse".
For me, the big one is still whenever we start to see stocks going down.
I know that might sound too simple for some people.
But it's true.
You see, here's the great thing about math.
No matter what you think the market is going to do, go up or down, we can all agree that mathematically you cannot have a correction of any kind without stocks going down in price. That hasn't happened. At all.
Without an expansion in stocks making new lows, you cannot have a material correction of any kind.
Even when you look as short-term as the 10-day, 1-month and 3-month lows lists above, there has yet to be any meaningful expansion.
When you see those lists popping off, that would be the next logical step in a corrective phase, mathematically speaking.
Another good one worth watching right here is the bond market.
Junk bonds held in there this week, exactly where they had to.
Can Treasuries now recover too?
All this breadth deterioration started when bonds peaked late last year.
Bonds have been falling all year, and so has the number of stocks going up.
I don't believe that's a coincidence.
The bond market not crashing would be a big step in perhaps seeing breadth expansion to the upside, vs the deterioration we've seen instead.
It's a market of stocks.
There have been names going up.
Just not many.
And fewer and fewer if you go and count them.
We bought some stocks this week and shorted some others.
If things get better, maybe we'll focus more on buying stocks. If things get worse, then we'll focus more on selling stocks.
This afternoon at 3PM ET is our LIVE Video Conference Call for Premium Members of All Star Charts.
In this video that we do twice a month, I'll break down the whole market, US and foreign countries. Which sectors look best and which ones look the worst.
And, of course, we'll go over specific trade ideas we like right now, both long and short.
If you caught this week's Technical Analysis Bootcamp, you get complimentary access to this afternoon's event.
It was also be recorded and archived with all our other LIVE Conference Calls since 2015.
If you would like to join us today's Premium Event, you can access the Technical Analysis Bootcamp here, and that will give you access to today's Premium Conference Call, including the recording and slides.
You will also have complete access to all of our Trade Ideas.
This is going to be a good one.
See you in there!
JC