It's a new year with new leaders emerging in the market. So what better time to drop in and chat with our friends over on Fox Business about what's going on.
Charles likes my Ratio charts so we took a look at some of those.
But I think the bigger point here is that Gold doesn't have to be this 'End of the world' trade that some make it out to be.
History has proven time and time again that Gold prices can rise, even during bull markets for stocks. And to be clear, Gold prices can also fall along with stocks.
They are not mutually exclusive.
Check out the full clip and let me know what you think!
We held our January Monthly Strategy Session Tuesday night. Premium Members can access and rewatch it here.
Non-members can get a quick recap of the call simply by reading this post each month.
By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.
With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.
Benchmark rates in Germany, France, Spain, and Portugal hit fresh multi-year highs last week. Interestingly, the US 10-year yield did not. And neither did the two-, 5-, or 30-year yields.
I’m not claiming US yields have put in a lower high. It’s far too early to assume that. A downside resolution below last month’s pivot lows needs to materialize before making that claim.
Nevertheless, the lack of confirmation from US interest rates is intriguing, especially as European yields turn lower this week.
Check out the triple-pane chart of Developed European 10-year yields (Germany, France, and Spain):
Another Santa Claus Rally is officially in the books.
This year the S&P500 rallied 0.80% during the period, which is more than 3 times the historical returns for all the other 7 day periods throughout the year.
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.
This morning, our analyst team was bouncing ideas around when I posed the group this question:
"It's the beginning of a new year. Do we want to continue buying strength (as we have been)? Or do we want to buy some well-selected dips on stocks in sectors we like?"
In other words, what's our appetite?
The prevailing sentiment that won out was that we have been buying strength -- and that has worked well in some areas, particularly homebuilders, Chinese stocks, and metals stocks. But the reward-to-risk opportunities right now may be more favorable in the "buy-the-dip" camp.
So with this in mind, let's take a look at a stock in the semiconductors sector that has our attention.
Doing some basic math, the odds continue to favor a strong year for stocks in 2023.
There are some people out there who think the Nasdaq is the stock market. There are others who "only buy growth stocks".
I don't know what kind of masochist you need to be to think that way, but both of those are very foolish approaches to life.
The Nasdaq is full of growth stocks. And growth stocks historically underperform and make little progress when interest rates are rising. I'm not sure if you heard, but interest rates have been rising!
Since the Stock Market bottomed in June, the majority of stocks and sectors are up and to the right. It's only the biggest losers that are down, and there aren't that many of them. It's really just those nasdaq / growthy stocks that the masochists are focused on.
From a seasonal perspective, Pre-election years are historically some of the most bullish years we have in the market. Here's what the 4-year cycle looks like as we head into 2023:
