More Bull Market Behavior

We're in the 3rd year of a bull market and sector rotation continues to be a dominant theme that's driving stock prices higher, and probably more importantly, not allowing them to go lower.

Stocks making new lows is a big deal, and it's a prerequisite in order to have a bear market or a downtrend of any kind. As we discussed this week, the current market lacks this key characteristic - that is new lows. You can't have a market correction without them. It's just math.

Also during corrections, you regularly see rotation into the more defensive stocks, like Consumer Staples. You don't have that either. In fact, Consumer Staples just closed at new all-time lows relative to the S&P500.

As you saw yesterday, we're seeing the relative weakness continue in Staples, both on a market-cap weighted AND on an equally-weighted basis. 

There are things you see in bull markets and things you see in bear markets.

When you study all them, you'll quickly notice some of these key differences.

Here's another one. This week you saw over 60 basis points of alpha out of High Beta stocks relative to Low Volatility.

You see this sort of thing quite often during bull markets.

Keep in mind that High Beta is largely driven by Technology stocks, along with a solid dose of Consumer Discretionary.

And remember that the Consumer Discretionary sector has been the best performing group since the August volatility spike. Discretionary has been the biggest winner on both a market-cap weighted and equally-weighted basis. 

Financials are the 2nd best performer, also a group of stocks you tend to see outperforming in bull markets.

Now here's the thing. I've gone back and looked. As it turns out, during bull markets, it pays much better to be a buyer of stocks than it does to be a seller. Go back and count for yourself, if you don't believe me and you'll see.

During this bull market, we are incredibly fortunate that have a guy like Jeff Macke around, who's been tracking these moves very closely. In fact, he's even put together a report for us that digs deep into what’s driving these Consumer stocks. 

Jeff breaks down the companies that are poised for big things, and those that might not weather the storm. From the post-COVID bounce to the latest shifts in consumer behavior, this is the intel you need to confidently navigate the consumer space.

Consumer Discretionary stocks are like a window into the heart of the American economy. And understanding these patterns gives you a serious edge in the market.

Gain a fresh perspective on retail stocks — click here to grab Jeff Macke’s Free Retail Stock Report and uncover the opportunities others are missing.

Give it a read and then let me know what you think!

JC