Have you noticed that the worst stocks on the planet stopped going down?

Chinese Internet bottomed in March. We're in August.

Cathie Wood's ARKK Fund is making new 3-month highs. Biotech is making new 4-month highs.

And now here comes Software!

If there is one intermarket relationship that every stock market investor should be following, it's got to be the Discretionary vs Staples ratio.

Consumer Discretionary stocks represent those areas where "Consumers" spend their "Discretionary" income. These include Autos, Retailers and Homebuilders, among other things.

Consumer Staples are the stuff consumers are going to buy and use regardless of how bad the economy might get. These are things like Laundry Detergent, Toothpaste, Beer, Chips and Soda.

When Discretionary stocks are outperforming Staples, that historically happens when stocks in general are doing well and the S&P500 is moving towards the upper right of the chart.

When stocks in general are under pressure, Staples tend to outperform, holding up better than most other stocks, especially Consumer Discretionaries.

It's probably the most important correlation for US Stock Market investors to be aware of.

Here is that chart today making new 3-month highs:

When the worst stocks on the planet can't go down any more, that's usually good information.

We saw a lot of Small-cap Growth, Arkk Funds, Biotech, Chinese Internet and many of those other "Growthy" areas bottom out this Spring, and some of the last ones in June.

At the Mega-cap level, nothing caused more shareholder wealth destruction than Facebook, down 60% from its highs less than a year ago.

But look where prices stopped falling:

Here's your chart of the day.

How can it not be?

It's the answer to the question: "What's it going to take for Bitcoin and Crypto to start doing well again?"

You see this inverse correlation?

A funny thing happened this Spring.

Inflation expectations peaked. Our equally-weighted Commodities Index peaked. And then the Copper/Gold ratio collapsed.

All of these point to lower Interest Rates.

And so here we are with the US 10yr Yield struggling with those 2018 highs.

This to me is the big one.

The chart below is the one I'm watching the closest.

You guys have been hearing me pound the table about the US Dollar and what a hard time stocks and crypto will (continue to) have in a stronger Dollar environment.

So here you have it. This is the Emerging Markets ETF $CEW back to the same level where it bottomed out the only 2 other times it was ever down here:

I remember 2010-2011 like it was yesterday.

Precious metals were all the rage.

Silver miners were the meme stocks of their day.

There was so much money being made in Silver.

And then all that changed.

No one has heard from those silver surfers ever again.

And now here we are watching the Silver ETF $SLV close the week at its lowest price in history relative to the S&P500:

There are many examples of important Indexes and Sector ETFs that are retesting key former highs, the 2018 peak in particular.

You can see it in Small-caps, Financials, European Indices, Bitcoin/Ethereum and many others. We discussed all of these on this week's live Premium Conference Call, and also in our Q3 Playbook to Profit.

But you can also see these important retests in the bellwethers.

Here are two of the most important on the planet, one representing Industrials and the other Financials - 2 key sectors in America.

Shares of Apple stock just went out at the highest levels in history relative to the S&P500.

This is what we refer to as "Relative Strength".

Apple had originally peaked relative to the market almost 2 years ago towards the end of the summer of 2020.

That's when the Apple's underperformance first began.

And now here we are making new all-time highs once again:

Over the weekend we saw the price of Ethereum jump to new 30 day highs.

Looking a little deeper, you'll find that both Binance and Avalanche also hit new 30 day highs.

Some of you trade cryptos and others don't. But that's not really my point here.

As you've heard me say a million times by now, these crypto assets are just growth stocks (probably software stocks if you want to be more specific).

And the correlations prove it. They've never been higher, in fact.

If you've been following along over the years, you've heard me mention plenty of times that breadth thrusts tend to cluster together early on in market uptrends.

Well, a funny thing happened yesterday - we had our first 9-to-1 up volume day on the NYSE since May.

To quote Willie, "Stringing 2 of these together without an intervening 9-to-1 down day would be a very positive development".

Here's what that looks like:

You can't overstate what a bully the Dollar has been towards stocks in the U.S. and around the world.

We've talked about new 20 year lows for Japanese Yen, and the recent parity with the Euro, of course.

But now take a look the Emerging Markets Currencies ETF breaking down to new all-time lows: