I'm Embarrassed

Jan 26, 2025

∙ Paid

Investors,

I’m embarrassed.

Not because of anything I’ve done or because of my analysis…

But because of how feeble investors have become.

I’m embarrassed for the collective state of affairs, but this is actually something that I’ve been feeling for quite some time — investors have become weak, scared, & fragile.

In turn, the fragility of the investor base causing a deterioration in their performance.

I’m watching fundamental investors (whatever that means) get outperformed.

I’m watching big brain macroeconomists continue to miss the plot.

I’m watching technicians find every excuse to doubt this market.

I’m watching new investors get chopped to bits.

I’m watching seasoned investors get misguided.

It’s a shit show, left and right…

Excuse my language, but this is a serious problem.

So who is actually winning and thriving in this market?

Great question, Caleb the Narrator!

The investors who aren’t doing anything.

The investors who are observe new data & market dynamics, but continue to sit tight.

Those who are embracing “less is more” are thriving, which is something that I’ve been highlighting for quite some time, even in November 2024:

Since that post, just 10 weeks ago, asset prices have performed well:

S&P 500 ($SPY): +1.65%
Nasdaq-100 ($QQQ): +3.0%
Bitcoin ($BTCUSD): +37.1%

While stock market returns could be viewed as “underwhelming”, there’s nothing shameful at all about the Nasdaq-100 generating +3.0% returns in 10 weeks! If we extrapolate these returns for a full year by annualizing the data, it’s the equivalent of +15.9% for a calendar year, decisively outperforming the index’s typical annual returns.

Even the S&P 500’s 10-week return of +1.65% is tracking towards an annualized return of +8.8%, which is almost exactly the average annual performance of the index since 1950.

Don’t even get me started on Bitcoin, up +37% in 10 weeks. You do the math.

Those who are doing nothing are doing just fine.

Not only are they performing well, but they’re preserving their mental capital, reducing their exposure to stress, and getting an opportunity to enjoy life!

Oddly enough, I’m not supposed to tell you this.

The incentive of a newsletter writer or an analyst is to increase the reader’s dependency on their work & to stress the importance of knowing what’s behind the paywall.

I’m doing the opposite by telling you that my analysis isn’t even necessary (right now) if you just stay invested and keep riding the wave.

In fact, my recent analysis over the past month can be summarized in just a few words: “stop overthinking everything”.

My recent newsletter titles have cumulatively pointed to this conclusion:

“Everything Is Oversold”, on December 23, 2024.
“Opportunity Is Knocking”, on December 30, 2024.
“Pain Is Good”, on January 6, 2025.
“Corrections Are Painful”, on January 12, 2025.
“Focusing On What Matters”, on January 18, 2025.
“Avoid These Narratives”, on January 19, 2025.

All of my work & analysis is there, explaining why I believed the market deserved (and continues to deserve) the benefit of the doubt.

And now the S&P 500 is at new all-time highs, just like that.

Two massive up weeks, erasing five weeks of a moderate & orderly consolidation.

In case you didn’t know, uptrends & bull markets typically make new highs.

If uptrends are just a series of higher highs and higher lows (they are), then the S&P 500 once again reaffirmed the validity of the ongoing bull market.

As a result of patience and simply doing nothing, my long-term equity portfolio is now trading at new all-time highs as well, which means I’ve quite literally never been wealthier than I am right now… all because I did nothing.

I practice what I preach and I preached the need for patience.

The results speak for themselves.

So where do we go from here?

That’s what this report will be dedicated to exploring.

I have one new S&P 500 study to share with you, in addition to an in-depth discussion and review of stock market dynamics & trends, and then a variety of crypto charts too.

In total, this report contains 19 never-before-seen charts, exclusive for the 960+ investors who are premium members of Cubic Analytics.

To each of the premium members who support my work and make it possible for me to be an independent analyst without the need for sponsors, advertisers, or affiliates, I’m extremely grateful for your continued interest & support for my work.

Let’s begin.

Investors,

I’m embarrassed.

Not because of anything I’ve done or because of my analysis…

But because of how feeble investors have become.

I’m embarrassed for the collective state of affairs, but this is actually something that I’ve been feeling for quite some time — investors have become weak, scared, & fragile.

In turn, the fragility of the investor base causing a deterioration in their performance.

I’m watching fundamental investors (whatever that means) get outperformed.

I’m watching big brain macroeconomists continue to miss the plot.

I’m watching technicians find every excuse to doubt this market.

I’m watching new investors get chopped to bits.

I’m watching seasoned investors get misguided.

It’s a shit show, left and right…

Excuse my language, but this is a serious problem.

So who is actually winning and thriving in this market?

Great question, Caleb the Narrator!

The investors who aren’t doing anything.

The investors who are observe new data & market dynamics, but continue to sit tight.

Those who are embracing “less is more” are thriving, which is something that I’ve been highlighting for quite some time, even in November 2024:

Since that post, just 10 weeks ago, asset prices have performed well:

S&P 500 ($SPY): +1.65%
Nasdaq-100 ($QQQ): +3.0%
Bitcoin ($BTCUSD): +37.1%

Even the S&P 500’s 10-week return of +1.65% is tracking towards an annualized return of +8.8%, which is almost exactly the average annual performance of the index since 1950.

Don’t even get me started on Bitcoin, up +37% in 10 weeks. You do the math.

Those who are doing nothing are doing just fine.

Not only are they performing well, but they’re preserving their mental capital, reducing their exposure to stress, and getting an opportunity to enjoy life!

Oddly enough, I’m not supposed to tell you this.

The incentive of a newsletter writer or an analyst is to increase the reader’s dependency on their work & to stress the importance of knowing what’s behind the paywall.

I’m doing the opposite by telling you that my analysis isn’t even necessary (right now) if you just stay invested and keep riding the wave.

In fact, my recent analysis over the past month can be summarized in just a few words: “stop overthinking everything”.

My recent newsletter titles have cumulatively pointed to this conclusion:

“Everything Is Oversold”, on December 23, 2024.
“Opportunity Is Knocking”, on December 30, 2024.
“Pain Is Good”, on January 6, 2025.
“Corrections Are Painful”, on January 12, 2025.
“Focusing On What Matters”, on January 18, 2025.
“Avoid These Narratives”, on January 19, 2025.

All of my work & analysis is there, explaining why I believed the market deserved (and continues to deserve) the benefit of the doubt.

And now the S&P 500 is at new all-time highs, just like that.

Two massive up weeks, erasing five weeks of a moderate & orderly consolidation.

In case you didn’t know, uptrends & bull markets typically make new highs.

If uptrends are just a series of higher highs and higher lows (they are), then the S&P 500 once again reaffirmed the validity of the ongoing bull market.

I practice what I preach and I preached the need for patience.

The results speak for themselves.

So where do we go from here?

That’s what this report will be dedicated to exploring.

I have one new S&P 500 study to share with you, in addition to an in-depth discussion and review of stock market dynamics & trends, and then a variety of crypto charts too.

In total, this report contains 19 never-before-seen charts, exclusive for the 960+ investors who are premium members of Cubic Analytics.

Let’s begin.

New Bullish Signal for the S&P 500:

Many of you might remember this post that I did on X recently, sharing a real-time bullish signal that was flashing for the S&P 500, using the 40-day Williams%R indicator.

Since the signal flashed, the S&P 500 has gained +5.6% in 9 trading days.

But guess what?

The same indicator is making another bullish signal… right now!

Specifically, the 40-day Williams%R indicator has completed a full oscillation from “oversold” (trading below the lower-bound) to “overbought” (trading above the upper-bound), which is happening for the first time since mid-August 2024.

In the chart below, I’ve highlighted each of the recent signals:

At face value, these look great!

But let’s zoom out even more, using the 8-week Williams%R Oscillator in order to achieve the same 2-month analysis:

Since the beginning of 2020, this signal has flashed 9 prior times, with the latest being the 10th signal.

The index was higher one year later in 6 of the past 7 cases where the market has one year of price history after the signal flashed (as the most recent three signals haven’t had enough time to reach the 1-year window).

Thankfully, I’ve actually shared this exact indicator and the S&P 500’s forward returns after the signal flashes before, so I have data going back to 2012 with all of the returns!

So what are some of the key takeaways here?

I’ve jotted down a few:

Returns in the first month are strong, up nearly 78% of the time with a +1.6% average return; however, returns in the second month (weeks 5-8) are weak and are actually negative (down roughly -0.4% in those 4 weeks).
The weakness in weeks 5-8 are buying opportunities, with results in month #3 being much stronger (gaining nearly +2% in weeks 9-12).
Typically, strength continues in months 4-6 and in months 6-12, generating strong total returns over a 6 and 12-month period with an excellent positivity rate.

It’s really that simple, which means that this most recent signal is yet another opportunity for us to have a bullish bias and to take advantage of any downside volatility that might arise in the short-term.

The short version of this story is that momentum thrusts, particularly during bull markets, are bullish signals that only happen when a flock of investors put their money where their mouth is and they buy everything in sight.

That’s exactly what’s taking place in this market environment.

“But Caleb, the market has been weak and people keep saying that stocks suck!”

Look at the YTD data for each sector & say that gain with a straight face:

The only sector with a negative YTD return is consumer staples, which investors typically don’t want to own during bull markets because they are defensive & risk-off. In other words, the weak performance from XLP is actually a sign that we’re in a risk-on environment, which is something that I’ve been highlighting lately (relative to consumer discretionary stocks).

S&P 500 Under-The-Hood Metrics:

In last week’s report, we saw significant improvements in the internal data.

This week, given that the index made new all-time highs on both Thursday & Friday (though it only achieved an all-time high daily close on Thursday), I expect that the internal data continued to improve, generally.

Let’s verify if this assumption is true or not:

While we saw some “deterioration”, we must recognize that this is inherently bullish data, just not as bullish as it was the prior week.

Notably, net new highs decreased on all three timeframes vs. the prior week; however, we’re still seeing overwhelming evidence that more stocks are rising than the amount of stocks that are falling on all three timeframes.

Inherently, the net new high data is bullish… it’s just not as bullish as the prior week.

Same with the amount of stocks that had a positive weekly return.

The figure fell from 441 to 353, roughly a 20% decrease… however, we still had ~70% of stocks in the index go up this week, so what’s bearish about that? Hint: nothing.

Let’s talk about what I’m the most enthusiastic about in this data:

The amount of stocks trading above their moving averages.

We saw significant improvements in all three, which were already in decent shape.

Let’s look at this same data, but in a different way, tracking the percentage of S&P 500 that are trading above their 3 SMAs over time:

🔵 % of S&P 500 stocks trading above their 20-day SMA
🔴 % of S&P 500 stocks trading above their 50-day SMA
🟢 % of S&P 500 stocks trading above their 200-day SMA

While the 50-day level is a bit underwhelming relative to the other two, it’s improving rapidly and I think this is “normal” given how the index has basically gone sideways for the past two months.

Think about it…

This is the trailing 2M return for:

The S&P 500 ($SPY): +2.1%
The equal-weight S&P 500 ($RSP): -1.8%

Also, what does this divergence tell us?

That mega-cap stocks, notably the technology ones, are a major source of alpha.

If you’ve been in equal-weight, the past two months have been hell.

If you’ve been in mega-caps, like me, the past two months have been totally fine.

It’s almost like the MVPs of the market are acting like MVPs.

I feel like I’ve heard that before…

As a final note on this, I’m not bearish on small caps or equal-weight allocations.

I’m just more bearish on mega-caps and a top-heavy allocation to the MVPs.

Still, take a look at this… the equal-weight S&P 500 ($RSP) has a massive bullish RSI divergence on daily candles, after reaching oversold.

The last time this happened was in October/November 2023.

That seems significant to me… and extremely bullish.

Thoughts On Crypto:

This is going to be a rapid-fire section, with brief comments on each chart.

Let’s go…

Bitcoin is trading above its 21, 55, and 200-day EMAs, which are all rising:

Bitcoin is trading above its 100/200-day EMA cloud, which is rising:

Bitcoin is trading above its 200-day moving average cloud, which is rising:

Bitcoin is trading above its daily supertrend indicator, which is bullish (green):

Bitcoin is trading above its Smart Trail indicator from LuxAlgo, with a bullish trend:

Bitcoin has a bullish Parabolic SAR (price > indicator) since January 16, 2025:

Bitcoin is using its daily Ichimoku Cloud as dynamic support:

Every single one of these charts is emblematic of bullish market dynamics, helping to confirm the fact that we’re in an uptrend from an indicator/statistical perspective. The indicators aren’t rolling over, they aren’t weakening, they aren’t bearish.

Full stop. Plain and simple.

Let’s talk about altcoins, on the aggregate:

Here’s OTHERS, which is total crypto market cap excluding the top 10 coins:

We’re trading on the March 2024 highs after a breakout, ranging in a regression channel.

Said differently, it’s a “breakout, retest, rebound” setup with a bull flag.

Of course, the implication here is that we need to wait for a breakout in order to confirm the bullishness of this price structure; however, I can’t look at this chart and say that it’s bearish.

It’s just not.

SOLETH continues to look bullish too.

Why is this important?

Because Solana has been a leader for the entirety of this crypto bull market, so if we’re going to stay in a bull market, then we’ll likely continue to see SOL outperform ETH.

Staying on the topic of Solana, it’s continuing to hold its ground vs. BTC too!

I still see a high probability of SOLBTC going to the blue zone (magnet area) during this bull market, which is one of the primary reasons why I’m only holding Solana alongside my BTC position.

Another interesting chart to keep an eye on is XRP vs. BTC:

It’s flagging above the prior multi-year highs, seemingly holding the breakout (so far).

It will be important to keep monitoring this chart in order to validate that this breakout continues to hold; however, this seems to be an encouraging sign for broader risk appetite, and certainly for XRP holders.

As I continue to think about broader altcoin dynamics, I think this chart of TOTAL3-USDT-USDC is also important, isolating the non-BTC+ETH+stablecoin dynamics of the crypto market.

Of course, this datapoint is heavily influenced by the performance of XRP & SOL; however, this is still something that I’m going to be monitoring closely, specifically with regards to its 55/100-day EMA cloud:

This dynamic range was perfect support in Q1’24 and a healthy barometer for “risk-on” vs. “risk-off” throughout the remainder of the year.

When TOTAL3-USDT-USDC is above the cloud, that’s good.

When TOTAL3-USDT-USDC is below the cloud, that’s bad.

Currently price continues to use this dynamic range as support and is now attempting to breakout of a descending trendline, shown in red.

Of course, we need to see evidence of the breakout and then confirm the extension, but this looks solid, at the very least.

All in all, I think there’s a clear divergence within the crypto market.

Bitcoin is dominating altcoins on the aggregate.

Within the altcoin market, XRP and SOL are dominating.

Additionally, both XRP and SOL are either keeping up with or outright outperforming BTC, which reaffirms my opinion that most altcoin capital should be focused on these two names.

Sure there are other attractive opportunities in the altcoin market (SUI, RNDR, BONK, HYPE, XLM, HBAR), but I think a “less is more” approach of BTC, SOL, and XRP makes the most sense, at least for me. And just to be clear, I don’t even own XRP right now. I’ve only traded it short-term several times over the past ~2 months, but I haven’t had a position for the past few weeks.

I think it’s necessary to continue to operate with a bullish bias, given that we are still firmly in a bull market environment and because uptrend behavior continues to exist.

Is this a tough market environment?

Sure, for some it is, particularly the investors who are in altcoins like SEI, AVAX, ARB, and any of the (many) altcoins that continue to underperform Bitcoin.

Thankfully, that isn’t my problem.

If you’ve followed my lead or agreed with any of the analysis that I’ve shared over the past year, then you’re likely in the same position as me, with a significant portion of your exposure in BTC and then a much smaller, but sizable, Solana position.

That portfolio continues to perform extremely well.

Just look at this chart of BTC.D + SOL.D to prove my point:

Firm uptrend behavior and back above its 100/200-day EMA cloud.

So long as the combined dominance of BTC + SOL stays above this cloud, I think it’s appropriate to remain overweight on these two holdings.

Best,

Caleb Franzen,
Founder of Cubic Analytics

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.