Bears, Don't Open This...

Investors,

For the 4th straight week, the S&P 500 achieved its highest weekly close of all-time.

In fact, the index has made new all-time highs in 23 of the 41 weeks so far in 2024.

On a 1-year basis, the index is up +33.5% (not including dividends).

On a 2-year basis, the index is up +60.9% (not including dividends).

Does that sound bearish to you?

Remember when bears kept trying to convince us that only 7 stocks were going up or that the equal-weight version of the S&P 500 was weak and foreshadowing a decline for U.S. stocks?

Well, the equal-weight S&P 500 ($RSP) continues to make all-time highs as well.

It’s almost like we’re in a bull market! I don’t know about you, but I was taught that bull markets are when investors make money.

The reason why I continue to linger on past narratives is for a few reasons:

1. First of all, objective reality is debunking those narratives in real-time.

2. Secondly, because those narratives have been disproven, I’m trying to arm you with the tools and knowledge so that you can ignore erroneous narratives when they arise again in the future.

3. Thirdly, if an “analyst” warned you about weak breadth or predicted that the uptrend in asset prices wasn’t going to last, they’ve shown you that their capabilities are insufficient. They’ve shown you that they don’t know what they’re talking about. They’ve shown you that they don’t deserve your attention. They’re analysis doesn’t work and they don’t know what they’re talking about. So you have a choice: you can keep listening to them and let them influence your views on the market, or you can listen to the analysts who keep nailing this market.

You must protect your intellectual capital and preserve your ability to be objective.

The market will have ebbs and flows, as we’ve already seen in this 2-year bull market; however, the fundamental data from a macro & corporate earnings perspective is sufficient to support the uptrend. Until those fundamentals change, the music will keep playing… so that means I’m going to keep dancing.

Before diving into the remainder of this report, I have to give a huge shoutout to everyone who’s been along the journey with me in MicroStrategy $MSTR.

The stock is now up +236% YTD and just made new cycle highs on Friday.

The team at REX Shares couldn’t have had better timing in terms of launching their MicroStrategy-related funds on September 18th, as MSTU has gained +146% since it initially traded less than one month ago.

Maybe you think this run continues… you should read more about $MSTU.

Maybe you think this run is about to end… you should read more about $MSTZ.

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Macroeconomics:

The most important macro chart of the week comes from the September CPI data.

Specifically, Headline ex-Shelter inflation, which came in at +1.13% YoY.

While this was a marginal increase vs. the prior result of +1.07%, it’s too insignificant of an increase for me to feel any degree of concern around this inflation data.

And guess what?

The market doesn’t care either, which is why stocks are trading at all-time highs.

The fact of the matter is that non-Shelter CPI components are experiencing an inflation rate of +1.1%, which is basically 50% below the Fed’s 2% inflation target.

Given the fact that Shelter is both the largest and the laggiest component of CPI (33% weighting for headline & 41% weighting for core, while lagging 8-12 months behind private market rental/housing data), this datapoint allows us to concisely measure the aggregate inflation for all other components.

Despite this “hot” inflation print (which did come in above estimates), the Fed is unconcerned about this latest round of data given the weight of the evidence for where inflation is and where it’s trending.

To make one final point on this, just look at Services inflation, which continues to experience disinflationary tailwinds:

While this +4.7% YoY reading is still far too high, it’s unequivocally decelerating.

In fact, this was the lowest reading since January 2022, nearly three years ago.

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Stock Market:

While bears & macro Doomers continue to scream about weak manufacturing data, U.S. industrial stocks ($XLI) continue to make new all-time highs.

This is a trend that I’ve been highlighting since the middle of last year when they first made new all-time highs & were exhibiting a tremendous amount of relative strength.

Today, that relative strength continues to produce great results.

However, I think more great results are just around the corner.

Look back at what I said about XLI in June 2024:

The ETF is up more than +16% since then and it continues to track towards my measured move target of $150/share.

So who should we listen to?

The corporate earnings of manufacturing companies and the capital being invested into them, or the armchair economists on X who have been wrong for two years?

I think that’s an easy answer…

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Bitcoin:

I have three rapid-fire Bitcoin charts for you, all presented without any commentary:

1. Bitcoin vs. its 200-day moving average cloud (🔵 200-day EMA 🔴 200-day SMA):

2. Bitcoin vs. its daily Smart Trail support cloud from LuxAlgo:

3. Bitcoin vs. its daily Supertrend indicator:

None of these dynamics look bearish.

Best,

Caleb Franzen,
Founder of Cubic Analytics

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This was a free edition of Cubic Analytics, a publication that I write independently and send out to 11,000 investors every Saturday. Feel free to share this post!

To support my work as an independent analyst and access even more exclusive & in-depth research on the markets, consider upgrading to a premium membership with either a monthly or annual plan using the link below:

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SPONSOR:

This edition was made possible by the support of REX Shares, a financial services and investment company that creates an array of unique investment products and ETNs.

I first collaborated with the REX Shares team in 2023 because I’ve been using their products as trading vehicles since 2022 and it was an organic & seamless fit. They have a unique product-suite, ranging from leveraged products, to inverse products, and income-generating products.

They recently listed their brand new and unique funds, providing directional leveraged exposure to Microstrategy. Whether you’re a bull or a bear on BTC or MSTR, these funds could provide significant opportunities, especially because there’s nothing like it in the rest of the market.

Please follow their X/Twitter and check out their website to learn more about their services and the different products that they offer. The REX Shares team did not have any say about the specific language, analysis, or commentary contained in this report

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DISCLAIMER:

This report expresses the views of the author as of the date it was published, and are subject to change without notice. The author believes that the information, data, and charts contained within this report are accurate, but cannot guarantee the accuracy of such information.

The investment thesis, security analysis, risk appetite, and time frames expressed above are strictly those of the author and are not intended to be interpreted as financial advice. As such, market views covered in this publication are not to be considered investment advice and should be regarded as information only. The mention, discussion, and/or analysis of individual securities is not a solicitation or recommendation to buy, sell, or hold said security.

Each investor is responsible to conduct their own due diligence and to understand the risks associated with any information that is reviewed. The information contained herein does not constitute and shouldn’t be construed as a solicitation of advisory services. Consult a registered financial advisor and/or certified financial planner before making any investment decisions.

Please be advised that this report contains a third party paid advertisement and links to third party websites. The advertisement contained herein did not influence the market views, analysis, or commentary expressed above and Cubic Analytics maintains its independence and full control over all ideas, thoughts, and expressions above. The mention, discussion, and/or analysis of individual securities is not a solicitation or recommendation to buy, sell, or hold said security. All investments carry risks and past performance is not necessarily indicative of future results/returns.

Each investor is responsible to understand the investment risks of the market & individual securities, which is subjective and will also vary in terms of magnitude and duration.