This Doesn’t Happen In A Bear Market
Investors,
On Friday, all of the following indexes/ETFs hit new all-time highs:
The S&P 500
The Nasdaq-100
The Russell 3000
Semiconductor stocks ($SMH)
Technology stocks ($XLK)
Industrial stocks ($XLI)
Value stocks ($VTV)
Growth stocks ($VUG)
Should I continue? Yeah, I think I will… these also hit new ATH’s:
High-beta stocks ($SPHB)
Cash cow stocks ($COWZ)
Homebuilder stocks ($ITB)
Water resource stocks ($PHO)
High dividend stocks ($VYM)
Dividend growth stocks ($DGRO)
Russell 1000 growth stocks ($IWF)
Aerospace & defense stocks ($PPA)
Building & construction stocks ($PKB)
The S&P 500 Top 100 ETF ($OEF)
The S&P 500 Top 50 ETF ($XLG)
U.S. infrastructure stocks ($IFA)
I think you get the picture: we are (and have been in) a bull market.
If we weren’t in a long-standing bull market, the list above would be non-existent!
In other words, this doesn’t happen in a bear market.
The irony is that bears, who can’t say that stocks are going down, have shifted their rhetoric and are instead complaining that not enough stocks are making new ATH’s.
Essentially, the people who have been bearish for 18 months have found a new lens to justify their bearish stance & argue that the market is weak.
Something tells me that they’ll be wrong, once again.
If they were right in the first place, there wouldn’t be any stocks, industries, sectors, or themes making new ATH’s!
Therefore, their argument is both fallacious and also factually incorrect, especially when we consider that the equal-weight versions of the two most important stock market indices are literally inches away from making new all-time highs themselves:
The equal-weight version of the S&P 500 ($RSP) hit new 2-year highs on Friday, only +0.6% away from making new all-time highs.
The equal-weight version of the Nasdaq-100 ($QQQE) is on the verge of making new all-time highs and traded at the highest level since November 22, 2021.
So even if the bears have the audacity to stoke fear about “not enough” stocks making new all-time highs, the merits of this complaint will evaporate once these two equal-weight ETFs make new highs in the coming days/weeks.
Think about it this way… here’s the comparison of the S&P 500 & the equal-weight:
The market-cap weighted version of the S&P 500 has been stronger than RSP during the bull market, but the structure is nearly identical (with a lag). Given that the regular version of the index broke out of the same base and has extended higher, couldn’t that foreshadow what’s about to happen to the equal-weight version?
I think so.
To be clear, I don’t believe that RSP will outperform SPX, but rather that it will continue to exhibit bullish price dynamics in synchrony with the S&P 500 itself.
In the remainder of this report, I’ll cover the following topics:
An in-depth analysis of stock market internals in order to diagnose the strength of the current market trend.
How I’m planning to manage my position in GOOGL 0.00%↑ and answering the question of whether or not it’s time to sell now.
Intermarket analysis, ranging from stocks to Treasuries to crypto in order to understand how risk appetite is evolving and to confirm whether or not we remain in a market environment where offense is beating defense.
A full breakdown, including screenshots, of my long-term portfolio activity. After a 3-week hiatus from buying or selling any securities in my long-term portfolio, I made big portfolio changes this week, adding to 8 existing positions and buying 1 new stock.
In total, this report contains 14 charts and an abundance of data in order to provide in-depth analysis of current market conditions and plan for high probability outcomes.
Without further ado, let’s begin!
S&P 500 Under-The-Hood Metrics:
As always, we start with the most important data that we track.
Despite having a bearish outlook as we entered 2023, this internal market data was one of the primary reasons for my bullish tone in Q1 2023 because the data was simply reflecting bull market behavior. While I still had doubts about the sustainability of the data, it continued to persist & officially led me to fully adopt a bullish stance in April & May 2023. Since then, it’s reflected strong market dynamics aside from August - November 2023, at which point it became overwhelmingly strong once more.
While many folks started to get spooked about the market environment in December & January, these under-the-hood metrics forced me to recognize that bullish dynamics were still occurring in the data — so I continued to stay in a bullish stance.
As always, I’ll continue to adapt with evolving market conditions, but this data continues to tell me to remain in a bullish stance.
Here is the data & the top takeaways: