Dynamic Portfolio Update: With new highs outpacing new lows every day so far this year, our net new high A/D line has turned higher and moved our "Fear or Strength" tactical model into its bullish zone. We are following the model and increasing risk exposure in the Tactical Opportunity portfolio.
The Investors Intelligence measure of advisory services sentiment shows Bulls rising to their highest level in over a year. Bears have not (yet) undercut their summer lows and the Bull-Bear spread is still just below its August peak.
I'm about to show you what a healthy chart off the bear market lows looks like. One of the beautiful things about this chart is it's not heavily reliant on any one company.
This is a sector ETF for a corner of the stock market we believe should continue to do well for the foreseeable future. There will be winners and losers within the sector, and we don't know which ones will ultimately be the leaders, so why not just trade 'em all?
Additionally, trading the sector ETF significantly lessens any earnings-related or product announcement or FDA-approval-driven gap risk.
"JC, how could you say we're already in the 8th Month of a new bull market???"
The things people call me over email or on twitter are not something I would repeat in front of my mother, or daughter, and certainly not in front of any of you guys.
But I'm a big boy. I spent a lot of time on trading floors, dugouts and locker rooms. I've heard way worse.
It is interesting, however, to observe the feedback I get from just some basic arithmetic.
This isn't like some random opinion I have about the economy, or Fed policy or earnings. This is just 3rd grade math.
Are more stocks going up? Are more stocks making new highs? Or are more stocks going down and making new lows?
Since June, the answer has been up and certainly not down.
Notice how the new lows list peaked in Q2. Even though some of the large-cap growth-heavy indexes made new lows later in the year, even for just a hot second, by that point there were almost no stocks left that were going down.
With Bitcoin $BTC and Ethereum $ETH reclaiming their prior-cycle highs, we even went as far as arguing that this recent move represents a structural regime shift for the asset class.
In our view, both the short and intermediate-term trends have now definitively shifted higher.
This comes within the context of a slew of risk-on developments in traditional markets.
We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.
This is that post, so let's jump into this week's edition.
