In this post, I want to lay out why I believe conditions are starting to look extremely bullish for the stock market. First, let's take a look at the Nasdaq Composite and the S&P 500. While these have both rallied sharply since the 2022 low, when we look at a weekly chart, we can notice that most of that rally came off the lows. This long-term weekly view lets us clearly see that the S&P 500 has just started to make new highs, and the Nasdaq Composite hasn't even taken out its' 2021 high yet. In addition, we are starting to see participation in growth names and smaller stocks. The Russell 2000 has just started a stage two uptrend, and the IWO and FFTY are both starting to wake up after long periods of decline.
What's most exciting to me is that individual stocks are starting to act so well. NVDA has broken out with authority and SMCI was up over 35% on Friday alone. But that's not all. MNDY, ZS, AFRM, and PLTR are all showing signs of accumulation and are setting up well for potential breakouts. This is a great sign as it indicates that funds and institutions are starting to venture out to riskier names, rather than strictly sticking to familiar favorites like TSLA, MSFT, META, AMZN, and AAPL. When I did my stock screening this weekend, I saw more constructive setups than I have seen in literally years. This is an excellent sign that the bull market is in full swing, and there is strength building beneath the surface.
It is also important to note that the average person does not care about any of this at all. They continue to chase high-rate savings accounts and CDs at their local bank. While they may be happy to lock in their money now, they may begin to regret their decision as they start to see more and more stocks blast higher like NVDA and SMCI did this week. Margin debt is currently at levels that indicate an extremely large amount of money is currently on the sidelines. As we can see on the chart below, these type of readings usually occur at times when there is enormous opportunity in the stock market.
All of this continues to lead me to believe the bulls are in control and that 2024 is likely to be a very strong year for the stock market. As for crypto, I still believe 2024 will be the year of Bitcoin. However, periods of basing are normal, and Bitcoin just looks like it may need to digest some of its' gains before it begins another run higher. We may just be beginning "The Roaring 2020s."
Risk right. Sit tight.
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