The underperformance out of U.S. Large-cap Growth indexes continues.

It's not the stock market's fault that the S&P500 has way too much exposure to large-cap growth.

And when we talk about "the stock market", there are countries outside of the United States that continue to shine.

Today's Chart of the Day shows the S&P500 hitting new 52-week lows relative to Developed Countries outside of North America:

This is a question I've been getting a lot.

"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.

Back in the late 1800s Charles H. Dow wrote down all of his Tenets about the market in the Wall Street Journal.

These articles ultimately became known as Dow Theory.

One of the basic tenets that many are familiar with is the confirmation of the Dow Jones Industrial Average and the Dow Jones Transportation Average (which was simply known as the Railroad Average when Charlie was around).

If one of the two indexes is making new highs and the other is rolling over, something is wrong, and the trend is likely changing.

Now, if one of the two indexes is making new lows within an ongoing downtrend, and the other is already putting in higher lows, that bullish divergence is evidence of a change in trend.

It seems like everyone is making money in the market these days.

US Stock market investors are crushing it.

Investors in foreign stocks are doing even better!

Heck, even the Gold bugs are getting paid.

I mean, who isn't?

First Santa Claus showed up for his rally.

Now the "First 5 Days" of the year were up (+1.37%).

That's 2 for 2 so far in the January Trifecta.

So now what's next?

The January Barometer is the last leg of the early year triple crown.

"As January goes, so goes the rest of the year". According to my handy Stock Trader's Almanac, the S&P500 has an 83.3% hit rate for the full year when January is in the green.

So with more and more positive signs for stocks, it really shouldn't be a surprise to anyone.

The trend for most stocks has been up and to the right. That was a strong back half of 2022 and a very strong 4th quarter.

And not just in the U.S., but we're seeing breadth expansion internationally.

The weaker Dollar has certainly helped.

If you're not making money in this environment, it's not because it's a "bear market".

Don't be one of those investors left holding the bag in the few remaining stocks that are not working, while almost everything else is.

On an equally-weighted basis, every single sector is up since the bear market ended last June.

Here's the performance of each of the Sectors since the new lows list on the NYSE peaked in Q2. Notice how Consumer Discretionary is the best performer. How can consumer discretionary stocks doing so well possibly be a bad thing?

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:

For over a decade, stocks in the United States outperformed Commodities by a long shot.

In fact, Commodities underperformed for so long, that many investors even forgot that they were an asset class.

"Stocks and Bonds JC!", they would tell me.

And I would say, "No kids, it's Stocks, Bonds AND Commodities".

Did you get through our entire Gold Report?

What did you think?

Shoot me a note and let us know!

Today I want to talk about relative outperformance.

You see, in bull markets, assets not only do well on an absolute basis, but they also tend to outperform their alternatives.

I don't know if you noticed, but Gold just went out for the year at its highest levels ever relative to U.S. Treasury Bonds.

Gold is also making new 6-month highs relative to U.S. Stocks:

Was 2022 such a hard year in the market like the media keeps telling you?

Or was it just a normal year that was hard, because every year is hard?

I think about this a lot.

One thing I know about this time of the year is that whipsaws thrive.

We call it Whipsaw Hunting Season.

The lack of liquidity, and lack of interest due to other life priorities, creates over-extended and exaggerated moves that otherwise would not be allowed to occur under normal supply and demand conditions.

But since the b-squads are on the desks, you regularly get failed moves this time of the year that result in very fast moves in the opposite direction.

For some great examples see $GDX in December 2016 and check out $TLT in December 2013, among many others.

These were nasty failed moves that ripped the short sellers' faces off into the new year.

We see these sorts of moves born around this time every single season. It's perfectly normal market (human) behavior.

So as we go hunting this year, Tesla really stands out as a potentially great candidate.

You go on the twitter and all you see are people complaining about what a bad year this is for stocks, how bad the stock market is, recessions, bear markets, the Fed, blah blah blah.

I don't understand. What's everyone so angry about?

Stocks continue to do well. In fact, the back half of this year has been one of the better ones that we've ever seen.

Look how well most sectors have done since the market bottomed in June: