As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach.
It's really been working for us!
One way we're doing this is by identifying 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.
The only real safe haven out there continues to be the US Dollar.
That's it.
When money flows into the Dollar, stocks are under pressure. You may not always see it at the index level, but you can certainly see it when you count and go one by one across the stock market.
The US Dollar bottomed on December 27th. That was also the day that the Advance-Decline line on the NYSE put in its top. It was also the day that the Russell2000 Small-cap Index peaked.
Crypto markets continue stair stepping higher, as Bitcoin decisively moves into the 50,000s.
Stocks see selling pressure return, with the Russell 2000 Small-Cap index $IWM recording its worst single day performance since the bear market low in June 2022.
Bitcoin shows a surprising amount of relative strength as risk markets weakened in the backdrop of strong spot ETF flows.
FEATURED CHART
In the lead-up to the Bitcoin spot ETF, traditional finance managers were expressing their confidence in the futures market to take advantage of the Bitcoin repricing rally. But as attention turns to a Ethereum spot ETF, it appears that investors aren't showing much conviction in Ethereum, with CME open interest declining YTD.
In Monday’s letter, we made the case that the market has successfully resolved higher from the post-ETF consolidation. This came after a number of data sets suggested we had seen a reset in the consensus bullish sentiment and positioning in the lead-up to the ETF approval. With the market pressing higher, we want to position ourselves to take advantage of this reaccelerating trend.
Bitcoin continues to rally higher, hitting 50,000 for the first time since March 2022.
New York expands fraud case against DCG to $3B.
Binance is losing dominance against other crypto venues, with spot volume dominance falling from 60% to 40% throughout 2023. This has been accelerated with CME open interest overtaking Binance in recent months.
FEATURED CHART
Here is Bitcoin dominance YTD; this is calculated by dividing Bitcoin's market capitalization by the total market capitalization of the asset class. As Bitcoin market-cap dominance rises, it suggests that Bitcoin is outperforming most of the asset class.
Following the approval of the Bitcoin spot ETFs, Bitcoin dominance sharply fell but has now quickly recovered as crypto markets have stair-stepped higher. This points to Bitcoin's outperformance relative to smaller market-cap altcoins.
