First Santa Claus showed up for his rally.
Now the “First 5 Days” of the year were up (+1.37%).
That’s 2 for 2 so far in the January Trifecta.
So now what’s next?
The January Barometer is the last leg of the early year triple crown.
“As January goes, so goes the rest of the year”. According to my handy Stock Trader’s Almanac, the S&P500 has an 83.3% hit rate for the full year when January is in the green.
So with more and more positive signs for stocks, it really shouldn’t be a surprise to anyone.
The trend for most stocks has been up and to the right. That was a strong back half of 2022 and a very strong 4th quarter.
And not just in the U.S., but we’re seeing breadth expansion internationally.
The weaker Dollar has certainly helped.
And while our Neutral approach for the S&P500 remains intact, underneath the surface things look so much better.
Here’s the S&P500 still stuck below overhead supply, hence the neutral outlook that we’ve had.
But when you look at individual sectors and you look at stocks on their own, almost all of them are well off their lows, with most sectors up double digits and above their 200 day moving averages.
The S&P500 has an irresponsible amount of Tech and Growth exposure. That’s great when those sectors are working, but that’s obviously no longer been the case.
In fact, it’s all the other stocks EXCEPT those that have been working.
A great example can be seen in Consumer Discretionary, one of the most important groups of stocks, in both the U.S. and the world.
On an equally-weighted basis, no sector has performed better since the market bottomed last June.
But take a look at the difference, and more importantly, why.
While the Equally-weighted Consumer Discretionary Sector up almost 20%, the Market cap-weighted version is flat. That’s because its largest 2 holdings have lost investors more capital than almost any other stocks in the world during this period.
Amazon represents a whopping 22.5% of the Discretionary Index while Tesla still comes in at a fat 14.25%.
With both of these stocks getting clobbered, while almost every other stock is up during this period, it puts a lot of pressure on traditional Consumer Discretionaries gauges
That’s why you need to look underneath the surface to see what’s actually going on.
Most stocks are going up.
These are just a few of the ones that aren’t.
But who’s problem is that?
Premium Members make sure to get caught up on our LIVE Monthly Charts Strategy Session where we go over all of the most important sectors we want to own, and the best stocks and ETFs to take advantage of the current environment.
This is one you cannot miss.
We’re off the a great start to 2023.
The first 5 days of the year were positive, and this was after Santa showed up for his annual rally.
We’re making money from the long side.
And the most important part is that these uptrends are not anything new. Most have been in place already for over 6 months.
These are ‘ongoing’ uptrends, not new ones.
Check out the full video and download the slides here.
And if you don’t have access for whatever reason, just shoot me an email and we’ll fix that right away.
Also feel free to give me a call: +1 (323) 421-7910
See you in there!