You notice how the world's worst investors keep pointing to small-cap underperformance as a justification for missing this entire bull market?

Even with the S&P500, Nasdaq100 and Dow Jones Industrial Avg all hitting new all-time highs this week, they'll tell you it doesn't count because the Russell2000 can't keep up.

These groups of individuals fall into 2 camps: They are either really really bad at this counting thing. OR, and more commonly seen, is that they're just lying to you.

This note is for the latter group.

The way I see it, if you're going to be a good liar, there are some simple rules to follow.

Last night was one of the most important LIVE Conference Calls that we've had in a long time.

The beginning of the year shenanigans are behind us, the market has settled into 2024, and this all allows us to focus on the most important trends.

US Treasury Bonds continue to be one of the best ways to underperform during bull markets.

Yesterday the Nasdaq100 closed at new ALL-TIME highs relative to US Treasuries.

In bull markets, the best stocks not only do well on an absolute basis, but they also outperform their alternatives.

Treasury Bonds are a good alternative to stocks, of course. Just not during raging bull markets:

The NYSE new 52-week high list peaked on December 14th. That puts us almost a month into some kind of correction underneath the surface.

And this sort of behavior is fine in bull markets. Go back and look over the past 100 years. It's actually perfectly normal.

Last week we discussed what a bigger correction might look like, and what the market would have to do to hold on to its ongoing uptrend.

Let's remember, the Dow Jones Industrial Avg rallied 5000 points in 2 months. Give it a break.

See: New Year & New Trends

Among the most important groups of stocks comes Financials, of course.

Here is arguably the most important component in the U.S. Financials Index going out at new all-time highs:

Santa didn't show up this year for his annual Santa Claus Rally.

Historically, that usually precedes some underwhelming years for the S&P500.

This is the first leg of the January Trifecta, which also includes "The First 5 Days" and the "January Barometer".

Does the S&P500 put in a positive First 5 days of the year?

As January goes, so goes the rest of the year, is how I learned it.

We'll continue to monitor the rest of the Trifecta as the data comes in.

But first, let's reiterate that the S&P500 did NOT rally during a seasonally strong period known as the Santa Claus Rally.

And while this "indicator" is normally reserved for the S&P500, I wanted to widen it out to other equities to get a broader look:

It's a new year. But does that mean we need to see new trends?

Well I think we're definitely going to see new trends emerging. But I have a strong suspicion that a lot of the old trends will remain in place as well.

If you recall, back in July we were looking at a bunch of the leading groups running into their former highs from late 2021.

These groups included Industrials, Semiconductors, Homebuilders and Mega-cap Technology.

2023 turned out to be a great year for investors.

It was really hard not to make a lot of money last year.

And while the trends for stocks and many other risk assets are certainly up, we want to be identifying what the market will have to do for us to position ourselves much more defensively into the new year.

The first warning of a non-so-great market environment would be a breakdown in the Nasdaq100 and Small-cap Russell2000.

Look at those former highs in QQQ from late 2021. If the Nasdaq100 ETF is below 400, that would put it back below those former highs, increasing the vulnerability for further downside, or even a grind sideways.

I just want to take a moment to thank everyone for all the kind words throughout the year.

Your support and this community you helped build is inspiring to us all.

I'm incredibly grateful.

Thank you.

Now let's get into it.

The bull market continues as stocks keep making making new highs.

This is what happens in bull markets, stocks regularly go up.

The Dow Jones Industrial Average is making new all-time highs every day. The S&P500 and Nasdaq are right there too.

And the list of stocks on the NYSE hitting new highs is the longest its been in over 30 months.

But what's driving these stock prices?

It's not earnings. It's not the Fed. It's not the biden.

It's the Dollar. It was always the Dollar.

When the Dollar is weak, stocks go up. It's that simple. And when the Dollar is strong, stocks have a hard time making any progress:

The old saying from our friend Jeff Hirsch goes, "Buy in October and Get yourself Sober".

Did you listen?

And it's not so much about literally buying blindly in October, and more about the fact that stocks tend to end their seasonal corrections around that time, before going on to rally into the end of the year.

And that's exactly what we've seen.

Here is the 4-year seasonal cycle, which of course, suggested strength in equities since mid-term elections last year. And we certainly saw it.

Then the Q3 correction came and went, again all perfectly normal.

And finally that year end strength, which of course we're seeing:

During bull markets, the leading stocks tend to remain leaders longer than most investors can fathom.

That's just how markets work.

This cycle Nvidia has been a big winner. It was one of the first to break out to new all-time highs. And it's been one of the best performers, despite its massive $1.2 Trillion market cap.

That's the exact definition of a market leader. And our bet is that it continues to hold that title:

As we always like to say around here, it's a market of stocks.

When we refer to "the stock market", let's remember that there are 500, or so, stocks in the S&P500. There are 3000 stocks in the Russell3000.

It's a market of stocks.

That's how we knew the market started to improve 18 months ago, because the list of stocks making new lows peaked in June 2022.

Even in the most recent correction in Q3 this year, the new lows list peaked on October 3rd.

On the other side of that formula is the list of stocks making new highs.

The list of stocks on the NYSE making new highs is the longest its been in over 30 months.

The list of stocks making new highs keeps getting longer. The list of sectors and industry groups making new highs keeps getting longer. The list of countries around the world making new highs keeps getting longer.

It's almost as if the market is getting stronger, not weaker.

And when you zoom out, you can see that this structural bull market remains intact.