The Bellwether To Watch in Q1

It's a new year and the market is looking forward. 

It doesn't matter what happened last year, as far as our decisions are concerned. But let's not forget that humans are irrational, and they will certainly let the past year or two impact their decision making.

They can't help themselves. So it's up to us as traders and investors to extract those dollars for our own selfish reasons. 

We're here to make money. Period. Taking advantage of human flaws is a great way to do that, as I've been showing you here every day for over a decade. 

Yesterday we discussed the irrational behavior we're seeing from investors in the middle of a bull market. They're running scared, just as market breadth is improving to the upside, across multiple timeframes.

What better combination can you ask for?

Part of what these irrational humans are missing is the rotation back into Consumer Discretionary that continues to drive this bull market.

Front and center in this rotation is Tesla, the biggest winner from the back half of 2024. 

Yesterday we just saw the 4th week in a row where Tesla shares closed above its prior cycle's peak from 2021:

This is a stock that alone represents 17.5% of the entire Consumer Discretionary Index - the second largest weighting (behind AMZN). 

Meanwhile, Tesla represents 4% of the Nasdaq100 QQQs, 3.3% of the Russell1000 Growth Index (7th largest weighting), 1.8% of the S&P500 (7th largest weighting) and 1.6% of the S&P500 High Beta Index (4th largest weighting).

When you talk about a market bellwether - this is the exact definition of one. 

And it's continuing to soar higher, despite the historic gains it just saw last year.

With sentiment as bearish as its gotten, in both what investors are saying and what investors are actually doing, one might wonder what would be the catalyst to unwind all that pessimism and send all the major indexes to new all-time highs again.

For me, it's definitely the U.S. Dollar. 

You have the dumb money betting that the Dollar is ready to break out and rip through Q1 - which I believe would add pressure to stocks (so do they apparently).

Then you have the smart money taking the opposite bet, that the Dollar is going to roll over.

We've already been talking about it this week as a major catalyst. 

But now we're seeing the U.S. Dollar Index running into the 61.8% retracement of the entire decline from its 2022 highs down to the 2023 lows.

This would be a perfectly logical area for the sell-off in the Dollar to begin:

So if that was the end of the move, and the smart money is right, then I believe the Dollar weakness will act as a tailwind for equities throughout the first quarter.

This is it. We're watching the bellwethers and we're watching the catalyst 

You already know this will be a major topic of conversation during our first LIVE Conference Call of the new year.

We have a lot to talk about on Monday. But keep in mind that these LIVE video conference calls are exclusively for Premium Member of ASC Research.

We're laying out the plan for January and Q1 during this call with very specific trade ideas that are actionable right now.

You can Sign Up Here with a RISK FREE trial or you can email Mary and see if you have any credits in your account that you can use towards your new membership.

This is one event you won't want to miss.

Join ASC Research today RISK FREE

See you in there!

JC