I'm Not Surprised...

And you shouldn't be either!

Investors,

November has come to a close, with strong results across the board.

Not only did the S&P 500 ($SPX) gain +5.96% during the month, but the Russell 2000 ($RUT) jumped a whopping +11.07% and secured its highest monthly close ever.

In fact, each of the four major U.S. indices had their highest monthly close ever!

After the market closed on Friday, I took to X and shared a variety of different sectors, industry groups, and investment themes that achieved their ATH monthly close in November and was unsurprised by the takeaway: participation, breadth, and strength continue to increase in favor of bullish outcomes.

Why was I unsurprised by this conclusion?

Because it’s what I’ve been observing and sharing in real-time for 18+ months.

To name a few, we just saw value stocks, growth stocks, mega-cap stocks, mid-cap stocks, small-cap stocks, high dividend stocks, high dividend growth stocks, industrial stocks, financial stocks, technology stocks, consumer discretionary stocks, utility stocks, consumer staples stocks, bank stocks, aerospace & defense stocks, water resource stocks, software stocks, broker-dealer stocks, equal-weight consumer discretionary stocks, equal-weight communications stocks, growth at a reasonable price stocks, and many, many more achieve their highest monthly close of all-time.

Naturally, we must ask ourselves: do stocks across a variety of sectors, industries, market caps, and investment themes make new all-time highs during bull markets or bear markets?

The answer here is simple… new all-time highs certainly don’t happen in bear markets.

So, I’d dare to suggest that we have been in and are still in a raging bull market.

And if my memory serves me correctly, bull markets are characterized by uptrends.

And as investors, we have a choice between fighting trends and aligning with them.

In my short (but action-packed) 11-year career as an investor, I’ve learned a lot of things, but one of the most important is that it’s always better to align with trends rather than fight them, particularly if your goal is to make money as an investor.

When I started to sniff the sustained bullish dynamics in March & April 2023, observing the broad-based nature of asset prices trending higher, I was forced to recognize that we don’t know what the future holds but that asset prices were trying to tell us something. Maybe the early signs of an uptrend would fade in a few weeks, or maybe in a few months.

But I had to ask, “what if the uptrend last for a few quarter or even a few years?”

Naturally, the next question was, “am I going to be stubborn and stick to my recession prediction with a negative view on the market, or am I going to adapt, put my pride aside, acknowledge that the market is probably smarter than me, and align with this trend?”

The catchphrase that I began to repeat was, “when the music’s playing, you gotta dance.”

It may seem like hindsight is 20/20, but I think this is an extremely important lesson for all of us to understand, with a key conclusion that the market is the most efficient forward-looking pricing mechanism that we have available and that it’s often best to align with market trends rather than to fight them.

If I hadn’t accepted that price & trend are more important than narratives, my portfolio would’ve been left in the dust and I would’ve still been whining on X talking about the inevitable collapse of the labor market and the weakness of the consumer.

But here I am, in this superior alternative reality, making money hand over fist, using objective research to make data-driven conclusions and stay aligned with the uptrend.

Thankfully, I haven’t been alone in this superior alternative reality, as I’ve brought every single premium member of Cubic Analytics along the way with me, using the exclusive weekly reports & our weekly investor calls to succeed in this market.

Every week, premium members are notified about what I buy in my long-term portfolio so that they can see how I’m putting my analysis into action and putting my money where my mouth is. I’m not bullish for the sake of being bullish, the same way that I wasn’t bearish for the sake of being bearish in 2022. I’m here to make money, preserve money, and bring as many people along the way with me.

If that sounds like a worthwhile proposition to you, consider upgrading your membership and join with a monthly or annual plan using the link below:

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Macroeconomics:

There are three important macro datapoints and charts to have at your disposal:

1. Initial unemployment claims continue to trend lower and stay at muted levels: The latest result for initial claims came in at 213k vs. estimates of 215k and prior results of 215k. This now brings the 4-week moving average of initial claims down to 217k, the lowest levels since the first week of May 2024.

2. Consumer retail activity remains strong, according to the latest Redbook data: The Redbook Retail sales data is a weekly measurement of same-store retail sales. While the monthly retail sales data is more important, the Redbook data helps to provide a real-time pulse on consumer activity and help to contextualize retail health. The latest result showed YoY growth of +4.9% (nominal). Weekly results for YoY growth have largely fluctuated between +4.5% & +6.5% since March 2024, highlighting the resilient nature of the U.S. consumer.

3. The Atlanta Fed’s GDPNow forecast was revised, showing improved growth: Per their latest estimate, the Atlanta Federal Reserve is currently anticipating +2.7% real GDP growth in Q4’24, an estimate that will get revised and increasingly accurate as we move towards the end of the quarter and their model gets updated with more accurate data. This latest estimate marks a modest improvement vs. their prior estimate of +2.6%, driven primarily by strong results for the personal income and outlays release on Wednesday.

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Stock Market:

In my review of the monthly candlestick charts that are now completed for November, there was one individual industry group that caught my attention the most… banks.

Yes, banks.

The industry group that I generally deem as “uninvestable” for the long-term just secured its highest monthly close since before the Great Financial Crisis!

Read that again.

Actually, I’ll just repeat it…

U.S. bank stocks ($KBE) Lohad their highest monthly close since the GFC.

Look, I have no idea what bank stocks are going to do going forward, and I still have zero interest in owning them; however, I view this as important information that we must accept as bullish for the broader market.

I mean, think about it… is it bearish if bank stocks are going up? Probably not.

So even if I have zero interest in buying/owning them, I can at least interpret it as a bullish sign for the overall health of the broader market. At the end of the day, I’m not going to buy software stocks solely because bank stocks are going up; however, I will use this as a key component when analyzing the weight of the evidence to determine if equities are in a strong uptrend or if we’re seeing deterioration in the market.

Clearly, this price action indicates broad-based participation and strength.

It’s a piece of the puzzle… not the solution.

In this environment, I think it’s permissible to increase (and control) risk.

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Bitcoin:

As far as I’m concerned, there’s nothing that is currently signaling that the end of the Bitcoin bull market is over. On the contrary, it looks like it can continue for some time.

I have two charts to prove this.

1. Bitcoin monthly Supertrend (settings: ATR = 10, Factor = 2):

As we can see, Bitcoin bull markets are confirmed to be over when the Supertrend flips from bullish (green) to bearish (red). So far, this hasn’t happened, and price has actually used the Supertrend as dynamic support in the latest retest in August. Until this flips negative, the implication is that the bull market is still intact and that we should continue to align with Bitcoin’s uptrend rather than fight it.

2. Bitcoin monthly RSI is still not “overheated” (settings = default):

Bitcoin bull markets have historically peaked with the monthly RSI trading above 90, versus the current level of 75. Additionally, we’ve seen each bull market peak with a lower RSI, illustrated by the descending trend line. Given that momentum is not yet “overheated”, the implications is that more upside can be squeezed out of this uptrend in the months/quarters ahead.

Best,

Caleb Franzen,
Founder of Cubic Analytics

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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.

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