Jeff Macke is the person I go to when it comes to all things Retail and Consumer Brands. He's been doing this longer and better than anyone else I can think of.
As this bull market continues, we want to be monitoring the participation and rotation happening underneath the surface.
Remember, the only reason we were so early in profiting off this bull market was because we were monitoring the participation and rotation happening underneath the surface!
"Dance with the date who brung ya", is how I learned it!
Remember when Maria Bartiromo thought I was crazy in October of 2022 when I told her it was a bull market and that's why we were buying stocks so aggressively?
She wasn't counting.
Most people weren't either.
We were.
Counting helps. Counting is the cheat code.
It's simple. And yet, many of the smartest people on the planet choose NOT to count, in favor of some weird fetishes about economics and earnings estimates.
It's creepy...
So what do you say we do some counting?
Here is the S&P500 making new all-time highs last month with the percentage of stocks above their 200 day moving average continuing to roll over.
There's nothing magical about the 200 day moving average. But as a simple guideline, if a stock is above its 200 day, then it's probably not in a downtrend.
You can use the 199 day moving average or the 207 day moving average, and you'll get the same data.
Here's that divergence:
Also, another thing to keep in mind is the fact that we're using the list of stocks on the New York Stock Exchange as our chosen universe.
The reason is because NYSE stocks give us a much more diversified look at the market. You have ADRs from foreign companies that trade on the NYSE as well as stocks down the cap scale, including small-caps and mid-caps.
The S&P500 only consists of American large-cap stocks.
The NYSE is the better universe for breadth analysis. But like many things we do around here, we use both.
A break to new lows and a completion of a top on the % of NYSE > 200 day mov avg would be a tough break for this bull market.
Meanwhile, the ratio between High Beta stocks and Low Volatility continues to diverge as well.
Notice the new highs in S&Ps with lower highs in the High Beta / Low Vol ratio:
In healthy market environments, we tend to see the high beta stocks outperforming.
47% of the S&P500 High Beta Index is Technology. Another 17% is Consumer Discretionary.
When you look back at all the bull markets throughout history, these are the types of stocks that are the leaders.
The S&P500 Low Volatility Index consists of a lot more Consumer Staples and Utilities, with a lot less Tech and Discretionary.
That's why this ratio above is so important.
But here's the good news for the bulls: It's not all bad.
When investors are being rewarded for owning stocks, these lines below tend to fall. Historically, when investors are being rewarded for selling their stocks, these lines below tend to go up and to the right.
They are currently falling and making new lows:
Consumer Staples are stocks of companies where consumers will spend money regardless of economic conditions.
No matter how bad things get, consumers are still going to buy toilet paper, cigarettes, beer and toothpaste.
Those are the Consumer Staples - and they tend to outperform when the stock market is under pressure.
We have simply not seen that at all.
So if you're bearish equities here, look for these staples lines to start to move higher.
They have not.
We'll be talking about all of this Monday night during our LIVE Monthly Charts Strategy Session for Premium Members of ASC Research.
Premium Members of ASC Research get 24/7 access to all our Trade Ideas and LIVE alerts, daily premium research and content, and the confidence to approach the market every day knowing you have a whole team of professional traders and analysts by your side.
I know I personally wouldn't have the confidence I have without knowing I've got the best team in the business with me every day.
It opened up about 6%, and promptly spent the next two hours flirting with $200 where, for now, it has failed.
This was precisely what Jeff Macke keyed in on during our Amazon Earnings Reaction stream. His initial take was that Amazon's numbers were good, but not good enough to juice the stock above $200.
And that's exactly what happened. I wasn't blowing smoke when I said this guy knows what he's talking about.
P.S. Because Jeff is my go-to guy for retail and consumer goods companies, I just had to talk to him about the recent Peloton trade in Breakout Multiplier. This was the best trade we put on all year - literally 10x'd on Thursday!
