It's Still A Bull Market

Yes, this is one of the worst seasonal periods for stocks in the entire 4-year cycle. But what does that mean for someone who has a 5-10 year time horizon? Or longer?

Probably nothing.

Also, if you're a day trader, or even a short-term swing trader, what does this 3-4 month stretch of weakness actually mean to you?

Probably nothing.

A couple weeks ago we talked about the Rug Pull getting postponed. But even if it comes this week, or next month, it all still falls within the context of an ongoing bull market.

One has little to do with the other.

Nothing goes straight up, and corrections are a feature of a bull market, not a bug.

Go back and look at every bull market in history. You'll see.

Now, as a feature of this ongoing bull market, I would like to remind everyone of the "Fab 5" charts that, in my opinion, really help define this current cycle.

The mantra remains, if these 5 charts are above their prior cycles highs, it's hard to be too bearish on this market.

Any correction, either a swift one through price, or a sideways one through time, still falls within the context of a bull market, if all of these are above their prior cycle's highs.

Here's the first one, starting with what I think are the Generals for this market:

Industrials historically have the highest correlation with the S&P500 of all the S&P Sectors.

If Industrials are above their former cycle's highs, how bad could things be? That's how we've looked at it.

Same with Homebuilders, one of the most important components of the Consumer Discretionary sector:

If the homies are above their prior cycle's highs, it's hard not to call this a bull market.

You can make the exact same argument about Technology, which represents over 30% of the S&P500 and 50% of the Nasdaq100:

If Tech is above those former highs, it's hard for the overall market to fall too deep into a correction, mathematically.

Any selloffs, or corrections through time, still fall within the context of an ongoing bull market.

And you can put the NYSE Broker Dealers Index into that same category. With the US Financials Index (XLF) running into its former highs, all eyes are on the leader in the space: Broker Dealers.

If BDs are above their former highs, it's hard to be too bearish on this market:

And finally Semiconductors.

I purposely include both Semiconductors and "Technology" in our Fab 5 because "Technology" is really represented by Apple and Microsoft, while Semiconductors are just that, and don't include Apple or Microsoft.

Here are semis also holding those former highs:

These are the Fab 5.

To be clear, this is still a Bull Market if these 5 groups are above their former highs.

And so far, there are no signs of these breaking.

This is one of the great benefits of Monthly Candlesticks, that force us to zoom out and identify the direction of primary trends.

We'll be discussing all of this Monday night @ 6PM ET during our LIVE Monthly Charts Strategy Session.

We do this at the beginning of every month for Premium Members of ASC.

Make sure to Register Here, if you haven't already.

Now to be clear, just because this is a Bull Market, doesn't mean stocks can't go down.

In fact, I initiated new short positions on Friday. And will likely initiate new shorts this week, in the right setups.

It's all about time horizons.

99% of arguments on Twitter would end immediately if both parties just recognized that they're talking about two different time horizons.

A good example is the simple fact that this February was one of the most profitable months of my entire life.

Yes, did I own put options in SPY and QQQ. Did I have some other bearish positions on? Yes. I still do.

But I own Millions of dollars worth of stocks and Crypto assets. Those short-term trades I put on, although they may have not worked as well as I would have liked, the rest of my assets did incredibly well.

It's because those assets are intended for a much different time horizon than a few options positions that expire in a month or two.

See the difference?

I have a blog post I'll be publishing soon that details what my larger personal portfolio looks like. Real wealth diversification includes having multiple strategies.

Plus, I think it's important to understand the perspective of the person writing and commenting on the markets.

If you're consuming content about public markets, ask yourself, "Why is this person saying the things they are saying? What is their motivation? Why are they sharing their perspective?"

So look for that in the coming days.

But the bottom line is: Know your time horizon. Define it.

Understand that different investors trade with completely different objectives, time horizons and risk tolerance.

We'll discuss this all tomorrow.

I'll see you at 6PM ET Monday night.

If you have any questions on accessing this Monthly Strategy Session, just email Mary here or call her directly: 323-421-7991.

JC