The underperformance out of U.S. Large-cap Growth indexes continues.

It's not the stock market's fault that the S&P500 has way too much exposure to large-cap growth.

And when we talk about "the stock market", there are countries outside of the United States that continue to shine.

Today's Chart of the Day shows the S&P500 hitting new 52-week lows relative to Developed Countries outside of North America:

It's the weekly currency edition of What the FICC?

The US dollar index $DXY registered a "death cross" last week, confirming a bearish trend reversal.

But it's not the confirmation of the dollar downtrend that has my attention. It's what the signal suggests for stocks in the coming months and quarters.

Check it out!

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!

One way we're doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn't just end there.

We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at some point during their journey...

From the Desk of Kimmy Sokoloff

The market took a breather today. $SPY hit 400 and backed off again.

We broke below the 200-day moving average and the eight-day moving average at 393.10. 

From the desk of Willie Delwiche.

Dynamic Portfolio Update: With new highs outpacing new lows every day so far this year, our net new high A/D line has turned higher and moved our "Fear or Strength" tactical model into its bullish zone. We are following the model and increasing risk exposure in the Tactical Opportunity portfolio.

From the desk of Willie Delwiche.

The Investors Intelligence measure of advisory services sentiment shows Bulls rising to their highest level in over a year. Bears have not (yet) undercut their summer lows and the Bull-Bear spread is still just below its August peak.    

Why It Matters: We need bulls to have a bull market. This flies in the face of a desire to only see sentiment from a contrarian perspective. The way I learned it, it pays to go with the crowd until it  reverses at an extreme. After the persistent and excessive pessimism of 2022 (which was certainly present in word if not deed), the best prospects for a sustained rally at this juncture is for investors to shift their attitudes and embrace stocks. A failure for investors to turn more optimistic at this juncture could hasten a longer-term positioning re-balance. We have gotten hints of that in recent weeks as ETF flows show investors eschewing US equities in favor of international equities and fixed income ETFs.  

In this week’s Sentiment Report we...

This is the video recording of our January 18, 2023, Inside Scoop Weekly Strategy Session.

I'm about to show you what a healthy chart off the bear market lows looks like. One of the beautiful things about this chart is it's not heavily reliant on any one company.

This is a sector ETF for a corner of the stock market we believe should continue to do well for the foreseeable future. There will be winners and losers within the sector, and we don't know which ones will ultimately be the leaders, so why not just trade 'em all?

Additionally, trading the sector ETF significantly lessens any earnings-related or product announcement or FDA-approval-driven gap risk.

We've adjusted a position in the Paid-to-Play portfolio today:

This is a question I've been getting a lot.

"JC, how could you say we're already in the 8th Month of a new bull market???"

The things people call me over email or on twitter are not something I would repeat in front of my mother, or daughter, and certainly not in front of any of you guys.

But I'm a big boy. I spent a lot of time on trading floors, dugouts and locker rooms. I've heard way worse.

It is interesting, however, to observe the feedback I get from just some basic arithmetic.

This isn't like some random opinion I have about the economy, or Fed policy or earnings. This is just 3rd grade math.

Are more stocks going up? Are more stocks making new highs? Or are more stocks going down and making new lows?

Since June, the answer has been up and certainly not...

We did it.

We've flipped the book long.

With Bitcoin $BTC and Ethereum $ETH reclaiming their prior-cycle highs, we even went as far as arguing that this recent move represents a structural regime shift for the asset class.

In our view, both the short and intermediate-term trends have now definitively shifted higher.

This comes within the context of a slew of risk-on developments in traditional markets.

From the Desk of Kimmy Sokoloff

We're hovering around the $SPX 4,000 level, and we consolidated nicely yesterday.

Time will tell if this market needs a rest or we continue higher sooner versus later.

Alabama Sen. Tommy Tuberville filed his first Periodic Transaction Report of the year.

Sen. Tuberville disclosed the purchase of Barrick Gold Corporation $GOLD for an amount between $15,000 and $50,000.

This week we're looking at stock from Technology Products and Services sector.

We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

This is the video recording of the January 2023 Mid-month Conference Call.

From the Desk of Kimmy Sokoloff

The market consolidated most of the day.

$SPY tested its 200-day moving average a few times down at 396.90 and managed to hold. 

From the Desk of Ian Culley @IanCulley

Perhaps you’ve noticed that I don’t use moving averages.

For starters, I don’t like the way they look.

They muddy the pristine waters of price. And if I can't pick up on the underlying trend by looking at price action, then god help me.

Regardless, I do my best to stay open-minded. Everyone has their own process. Mine works for me, but that doesn’t make it superior by any stretch.

So, when Grant @GrantHawkridge dropped a US Dollar Index $DXY moving average crossover study in our analyst Slack chat last weekend, I couldn’t resist.

It wasn’t because it highlighted the “death cross” (when a 50-day moving average falls below a longer-term 200-day average), which always stirs a great deal of excitement.

Nor was it what his study suggests for the dollar in the coming weeks and quarters. 

Rather, it’s what it implies for US stocks.

Check out the chart of the DXY with a 50-day (blue line) and a 200-day simple moving average (red line):

...

Look, I get it.

Maybe you have some long-term holdings showing significant gains that you don’t want to pay taxes on. But you want to squeeze some additional income out of these positions because either you’re greedy (fine) or you want to practice responsible risk management (a better reason).

That’s fine. Go ahead and continue selling covered calls from your yacht. You do you.

This post is aimed at the rest of you knuckleheads who seem to think entering covered call trades as tactical short-term plays is a productive use of your time and capital.

Yes, you! You know who you are.

Let me show you two pictures.

The shorter-term risk indicators have teased the possibility in recent weeks, but now for the first time in a year, our longer-term Risk Indicator has moved into Risk On territory.

More Context: This risk indicator is made up of 20 (intermarket and intramarket) ratios that pair various risk on and risk off assets. It ebbed and flowed over the course of 2022 but remained in Risk Off territory all of last year. Paired with the turn higher in our net new high advance/decline line, this is evidence of an improving backdrop for risk assets. These are not discrete signals (like so many breadth and momentum thrusts) but are continuous indicators of the environment in which we, as investors, are operating. 

I have long leaned on breadth thrust signals in my work. But with more and more of them popping up all the time, it is now a case of thrust but verify. In contrast to what we saw last year, our risk indicators and the new high vs new low data are providing important confirmation of market strength (as...