There seems to be more data available than ever as we head into the end of this decade. It's up to us to decide how we use it, or ignore it in many cases.
I have my process and everyone else has theirs. But one thing that is a common denominator among all of us is this current period of resetting before we begin a new year.
This week I asked Phil if this calendar thing was something we made up as humans or if this is something real that we should embrace. This was his response:
Rebirth is a universal theme. Dates are milestones adding rhythmic structure. Not "required" but common across cultures and eras."
I'm glad he said that because I enjoy this time of the year. I like thinking about the things we're thinking about.
We'll have a lot more charts and trade ideas this week, of course, as we approach our Monthly Conference Call Thursday (email me if you have not registered).
It's that time of the year again. They all keep calling and emailing me asking for my "predictions" for 2020.
What do you want me to say?
I have no way of knowing what's in store for next year, yet alone what to expect in December of 2020. And I think it's really important to reiterate that. This idea of the unknown unknowns gets lost in the shuffle.
Sure, we were fortunate to make some good calls this year. Our customers have only sent us positive feedback. But as Babe Ruth once said, "Yesterday's home runs don't win today's games".
As a result, we've been focusing on the stocks showing relative strength...making money on the long side by sticking with the names that continue to trend, and playing the short side when the reward/risk is ridiculously skewed in our favor.
Unfortunately, it looks like we're going to close out the year/decade with the same gameplan as charts like the one below are a symptom of the weak breadth problem India's had for two years.
In my opinion, the reason people have been so bearish towards stocks and fighting strong trends is because they're allowing other biases influence their decision making. Whether they don't agree with the Fed, or the Trump, the direction of the Economy, or whatever it is, they're choosing to give more weight to these "opinions" than they do to price itself.
Fortunately for us, we're 100% data driven. So we don't care who the president is. We ignore everything the fed says and does. We assume anything a journalists creates is gossip, whether it is or isn't. And we certainly don't have time to care what the economy is doing.
So because we are so trained to focus on actual data, it's a lot easier for us to ignore those whose job it is to distract us. It's not "easy", but it's definitely easier for us as technicians than it is for most of society. The fact is most people are unaware, or choose not to care, that they're consuming content produced by those with ulterior motives. They're just here to sell ads to their sponsors while we're only trying to make money in the market. It's a big difference, and it becomes a problem.
I was down Philly last week chatting with Wharton Professor Jeremy Siegel, WisdomTree's Jeremy Schwartz and Tim Hussar of WhartonHill. This was a lot of fun and I thought we had a great discussion about what to expect for stocks and bonds in 2020. PHD Liqian Ren was also there and asked some great questions about rotation into emerging markets and how we try to incorporate alternative data into our analysis.
This was my first time visiting the Wharton School and it did not disappoint.
Hopefully I wasn't too hard on Professor Siegel and Tim Hussar and they invite me back on sometime!
This episode was live on SiriusXM and will be replayed several times over the holidays, but here is the podcast version of it so you can give it a listen at your convenience:
I love how people still think we're in a 10-year bull market for stocks. This lack of understanding of basic reality is one of the many catalysts, I believe, that will take stocks much much higher.
The greatest trick the market ever pulled was convincing investors it's been in a decade long bull market.
The best part is that nothing could be further from the truth.
When we talk about "Stocks", we have to recognize that "Stocks" are an asset class. It doesn't just mean the S&P500 or Dow Jones Industrial Average. This is a global stock market, and becoming more of one with every day that passes. Those of you who have been reading our work for years know how valuable that information has been to us for so long. Today is no different.
Look at Europe doing nothing for 2 decades and now starting a new bull market:
Before we get in to stocks and charts, I just want to thank you for your support all these years. It really means a lot to me. Today I noticed I had 61.8K followers on Twitter! How about that? Leonardo Fibonacci would be proud!
This was my first week back living on the east coast. My 2-year plan to be in California turned into 4.5 beautiful years in Sonoma Valley. This was after spending 15 years total in the northeast between college in Fairfield, CT and over a decade in New York City.
I keep getting asked, "But JC why would you ever go back???" (this is happening at least several times each day).
As we head into year end there's a lot going on in markets, particularly on the macro and intermarket front.
With that being said, I gotta give the people what they want so today's Chart of The Week is going to focus on a trade setting up in one of 2019's most controversial stocks...Beyond Meat.
When we talk about Equities, we need to think about them holistically as an asset class as opposed to simply focusing on the individual stock or sector or index we're looking at.
How quickly people forget what a beast Amazon has been for years. All it took was an 18-month consolidation for investors to fall out of love with one of the greatest stocks in American history.
The bet the bears are making is that Amazon has been lagging and dragging down the Consumer Discretionary sector, considering it's 22% weighting in the index $XLY. So if you believe this is a big market top, I understand why you would think Discretionaries are setting up for a big fall. I totally get that.
