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They lied to you

October 12, 2024

The worst humans on the planet have been promising you for years that this was just a "bear market rally".

They warned you every day about some made up catastrophic event that was going to occur at any moment.

But these people are not that dumb.

They were just lying to you.

Are you noticing?

Here is the S&P500 hitting new all-time highs along with the equally-weighted version of the S&P500 ALSO hitting the highest levels in history.

 

These are only things you see in healthy market environments.

The S&P500 on both a market-cap weighted and equally-weighted basis making new all-time highs every week is NOT something you see in bear markets.

But how long will this bull market last?

Does it still have more room to run?

Well, the Dow Jones Industrial Average - the world's most important stock market index - looks to be starting a new leg higher after breaking through its first target:

 

After seeing all of this above, are you willing to make the bet that this bull market ends before these monster bases shown below complete to the upside?

Look at the Dow Transports and S&P600 Small-cap...

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Materials Stocks Are Making New Highs

October 11, 2024

It has been two-years since the S&P 500 bottomed in October 2022 and stocks began a new bull market. 

During this time, many sectors and industry groups have enjoyed tremendous uptrends while materials stocks have gone sideways.

But materials stocks are starting to look interesting...

The SPDR Materials Sector ETF $XLB is making new all-time highs:

 

As you can see, the prior cycle high coincides with a major Fibonacci extension level going back to the Great Financial Crisis, which adds to the significance of this breakout.

This market-capitalization weighted fund has a large exposure to Linde $LIN amongst several other bellwether materials stocks.

We want to be long XLB if it's above 93, with a target of 139.

The Materials Sector holds a lot of the same stocks as the S&P Chemicals Index:

 

The S&P Chemicals Index is consolidating below a major Fibonacci extension level going back to the Great Financial Crisis and we're betting it will breakout to new all-time highs like XLB.

If CEX is above 985, the path of least resistance is higher toward 1,500.

Representing over 17% of the Materials Sector...

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Buying Bonds in an Inflationary Environment

October 11, 2024

Whether markets are full of chop or trending higher, bonds offer a versatile haven for our portfolios.

Take a look at inflation-protected securities, commonly known as TIPS. 

In inflationary environments, these outperform the government bond market.

We think it’s happening now and our intermarket analysis is telling us to buy TIPS.

If you take a look at the chart of the TIP ETF against the 10-year bond ETF, you’ll see consolidation above long-term support. One thing we know about these kinds of consolidations is that they tend to follow through in the direction of the primary trend. 

 

The trend for TIPS relative to treasuries is higher. 

Historical perspectives, like those found in Jack Schwager’s classic Market Wizards, can offer essential guidance on how to navigate through inflationary periods. I think this is where things are headed.

One effective way to thrive through inflationary periods is by diversifying your portfolio with assets like TIPS (Treasury Inflation-...

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International Hall of Famers (10-11-2024)

October 11, 2024

From the desk of Steve Strazza @Sstrazza

Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs.

We've also sprinkled in some of the largest ADRs from countries that did not make the market cap cut. 

These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.

It's got all the big names and more–but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.

The beauty of these scans is really in their simplicity.

We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.

Based on the market environment, we can also flip the scan on its head and filter for weakness.

Let's dive in and take a look at some of the most important stocks from...

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2 to 100 Club (10-09-2024)

October 9, 2024

From the Desk of Steve Strazza @Sstrazza

Welcome to The 2 to 100 Club.

In this scan, we look to identify the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn't just end there.

We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at some point during their journey to becoming the market behemoths they are today.

When you look at the stocks in our table, you'll notice we're only focused on Technology and Growth industry groups such as Software, Semiconductors, Online...

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ASC Mastermind

ASC Mastermind Lab: Dan Russo's Momentum Strategy

October 9, 2024

Below is the 5th ASC Mastermind Lab Course. These are special videos that will be made available throughout the duration of the 12-week course featuring conversations with professionals from across Wall Street discussing topics in their expertise. 

In our last Mastermind Lab, I spoke with Steve Strazza about momentum thrusts. This time, I wanted to talk with a portfolio manager who uses momentum as part of his strategy. Enter Dan Russo, Portfolio Manager at Potomac Fund. 

Dan broke down for us a simple way of implementing momentum into your portfolio management, how he protects against drawdowns while using momentum, and what he sees as the biggest challenges of using momentum. 

Enjoy my conversation with Dan Russo.

 

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I am not Satoshi Nakamoto

October 9, 2024

Bitcoin Dominance just hit new multi-year highs this week.

In other words, the market-cap of bitcoin as a percentage of total crypto market-cap is the highest it's been in years.

What this means is that the value of Bitcoin today (~ $1.2 Trillion) represents 58% of the value of all the Cryptocurrencies in the world (~ $2.1 Trillion).

And the trend here of Bitcoin continuing to eat into market share continues to move up and to the right:

 

Meanwhile, Microstrategy is hitting new highs relative to Bitcoin since it first started buying Bitcoin back in the Fall of 2020.

Microstrategy is the 5th largest owner of Bitcoin, holding about 1/4 of the position of Bitcoin's creator Satoshi Nakamoto. 

Just to clear up any confusion, I am absolutely NOT Satoshi. I know it would be a lot cooler if I was. But I am not. Sorry to disappoint. 

Now, what I love most about the Microstrategy $MSTR hitting new highs relative to BTC, and also hitting new All-time highs on an absolute basis, is that the "fundamental" guys can't wrap their heads around the premium that $MSTR trades relative to its total ownership of BTC.

People tell me that...

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The Short Report (10-08-2024)

October 8, 2024

From the Desk of Steve Strazza @Sstrazza

When investing in the stock market, we always want to approach it as "a market of stocks."

Regardless of the environment, there are always stocks showing leadership and trending higher.

We may have to look harder to identify them depending on current market conditions. But there are always stocks that are going up.

The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too. 

We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club.

We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics. 

...
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HarryPotterObamaSonic10Inu (ERC-20)

October 8, 2024

Setups that will turn into 5x, 10x, and 20x winners during earnings season are forming right now.

You're seeing that normal directionless consolidation that develops before explosive moves.

Our proprietary Breakout Multiplier System is specially designed to identify these stocks before volatility begins to expand.

The time to enter is now.

...

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We're Buying Junior Silver Miners

October 7, 2024

A couple of weeks ago, we talked about Silver futures attempting to emerge from a multi-year accumulation pattern and potentially retesting the former all-time high.

Last week,  Silver made a new multi-decade high in absolute terms and broke a multi-year downtrend line relative to Gold. 

And if the 47th element is about to blast off, we should look closer at the Junior Silver Miners.

But first, check out this chart of the Silver/Gold ratio:

 

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ASC Mastermind

ASC Mastermind Lab: Understanding Momentum Thrusts with Steve Strazza

October 7, 2024

Below is the 4th ASC Mastermind Lab Course. These are special videos that will be made available throughout the duration of the 12-week course featuring conversations with professionals from across Wall Street discussing topics in their expertise. 

The theme of ASC Mastermind Week 2 is momentum trading, and why it works. So naturally it made sense for me to talk to All Star Charts Director of Research Steve Strazza. Steve uses momentum as much in his day-to-day as I do. 

The main concept Steve wanted to hammer home is momentum thrusts, what they are, when they happen, the different types with examples, and how to analyze them. 

Enjoy this Mastermind Lab Course on momentum.