Have you taken a look at the new 52-week high list lately?

You're going to find a bunch of materials starting to pop up.

Here are 3 monsters who are helping to lead the way:

The average stock on the Nasdaq bounced over 40% off it's lows this summer.

That's a serious squeeze.

But let's remember that a lot of that stuff is junky and had gotten crushed, so of course they'll have strong bounces.

Over on the NYSE, the average bounce has been less pronounced but still got into the high 20s in percentage terms.

So today let's take a look at how each of the S&P Sectors have performed since the list of NYSE new lows peaked 2 months ago:

Gas prices are going up?

Good.

That means our Energy stocks are probably doing well.

You see, we don't have any control over the cost of Energy. I don't work for the government. I'm not in the Energy business.

I don't know the first thing about drilling for Oil or Gas.

I'm just a random dude with a computer and some smart drinking buddies.

So for me, I have 2 choices:

The market has set the stage.

From a seasonal perspective, the back half of the year should be strong.

When you consider the bearish sentiment readings we're coming off of this summer, a massive shift in sentiment into year end makes perfect sense.

We've seen the breadth improvement, as we get more and more stocks making new short-term highs, and now sector rotation has started to kick in.

SO WHAT'S THE CATALYST?

We never actually know that we've been in a bull market until well after the bottom.

It's easy to look back and pinpoint the March 2020 low or the March 2009 low, for example, and say, "That's when the bear market ended and a new bull market started".

But in real time, when we're going through that transition, how can we possibly know?

Well, classic signs of the end of the bear markets are things like historically bearish sentiment extremes and washout breadth levels.

We obviously had both of those as our sentiment readings this summer were the most pessimistic since the Great Financial Crisis, and only 14% of stocks on the NYSE were in uptrends (compared to almost 90% entering 2021).

Those are the things you see just before the market turns.

Now, what are the things you see just after a market turn, around the 2nd inning or so?

Momentum thrusts.

Relentless buying pressure coming off historic selling. And that's precisely what we've been seeing over the past month.

If it walks like a duck and quacks like duck, then it's probably not a chicken.

That's how I look at what is potentially year 3 of a new bull market.

Look at all the most important cycle bottoms in stock market history.

You'll notice the powerful thrust in year 1, followed by a messy digestion of those gains in year 2. And then all those bull markets resumed in year 3:

This summer is the most ideal time to be buying stocks, according to the 4-year cycle.

Q3 of the Mid-term Election years. That's the sweet spot.

Do we see new all-time highs for the S&P500 before the end of the year?

The seasonal tailwinds certainly support that:

Today's Chart of the Day was a unanimous decision internally.

How can it not be this one???

Every single week in 2022 we've seen more stocks hitting new lows than stocks hitting new highs.

In bull markets we see the exact opposite of that.

Well, this week the bulls finally got it done. For the first time all year we saw more stocks hitting new highs than new lows.

It wasn't by much. But they pulled it off.

The title of yesterday's post was: "You can't be short".

I encourage you to give that a read.

And while that's happening over in the S&P500 and Ethereum, here's a good look at what's been happening in Growth:

Was this just a bear market rally?

Or did we just see the initial thrust off the lows before a more sustainable move progresses into the end of the year?

That's a good question to be asking.

And while we don't ever actually know until after the fact anyway, we've set these 2 levels as clear lines in the sand for arguably two of the most important assets on the planet: The S&P500 and Ethereum.

The bottom line is this: If the S&P500 is above 4200 and Ethereum is above 1800 - YOU CANNOT BE SHORT.

Are you seeing Small-caps breaking out to new 4-month highs relative to Large-caps?

This underperformance in Small-caps began in Q1 2021 which, among other things, sparked the beginning of the bear market.

This week would mark the 18-month point, if a bear market is even something we're still in.

This kind of outperformance from Small-caps is not something we've seen over the past 18-months.

Why do people use the 200 day moving average?

The real answer is because a lot of charting software packages the past few decades have set it as a default.

But you also hear guys like Paul Tudor Jones talk about how below a 200 day moving average, you get out. In other words, bad things happen below the 200 day.

For me, I have reasons for doing everything. And while I understand that there are more like 252 trading days in a year, not 200, I still believe that if a stock is below its 200 day simple moving average, it's probably not in an uptrend.

This is specifically for my personal definition of an intermediate-term timeframe. I like to look out weeks and months, not years, and certainly not hours or days.

200 days is a good number for me. And while it's not perfect (hint: nothing is) looking at the percentage of stocks above their 200 day has historically given us some great washout signals.