A Market of "Have's" and "Have Not's"
The more I look around at this market, the more I think we simply grind higher into year end. The breadth stinks, with 65% of stocks closing lower Friday, but the "Have's" of this market continue to pump higher. When I refer to the "Have's," I'm referring to the market leaders that continue to pump higher no matter what the market throws at it. The first few that come to mind are TSLA, PLTR, RDDT & ALAB. The best names continue to move higher, but there is so much action under the hood that is troubling. My thinking is that if you're in the best names that are doing well and pumping higher, stick with them and keep adjusting those stops as they continue to rise. As far as new entries go, we want to be very selective as there are many more "Have not's" out there in this environment.
What makes me believe we continue to pump the best names higher is that we're not really seeing any cautionary tales from a broad market perspective other than breadth. Market breadth refers to the number of stocks advancing compared to those declining. Positive market breadth occurs when more stocks are advancing than declining and vice versa. Right now we're seeing drastically declining breadth, but the action in the best names remains a punishing move higher. I have seen too many markets where breadth sucks and you worry about it for months on end while the best names continue to gain. So if we're only trading the 10-20 best stocks anyway, I don't over-worry about breadth.
Further, the put/call is showing no signs of extreme bullishness closing the week at 0.84. The fear and greed index sits at a neutral 50. We have seen so many overly bullish backdrops this year where these indicators showed extreme green and overly bullish positioning, the fact that we're not seeing that has me thinking the market doesn't worry about all this until the new year begins, and we continue to climb the wall of worry.
As far as new entries go, I think it's best to be extremely selective. We're seeing less and less names give fresh breakouts as this market run continues.
There is another big Fed meeting Wednesday where they will decide whether or not they cut another 25 bps. Regarding our rate-cut Martin Zweig "Winning on Wall St" indicator, where back to back rate cuts unleashes the most bullish backdrop for the next 6 months, that would be reset with a fresh cut.
Last full week of 2024. 10.5 trading days left in the year. These next 3 weeks are historically the best performing weeks of any market cycle/period between election fund flow, year end chasers, Santa Claus rally and the first 5 days of January. Let's make them count, but also protect those 2024 gains.
Let's checkout some charts.
