The reaction to both the election and the FOMC was overwhelmingly positive for risk assets across the board.
A long list of stock market indexes and individual issues just had their best day since the pandemic lows almost 5 years ago.
NYSE new highs just hit its highest reading in years, telling us the rally is supported by the broadest level of participation this cycle.
The election ended up being the catalyst to break out prolonged ranges in things like regional banks, biotechs, speculative growth, industrial metals, and even bitcoin.
These groups are finally joining the bull market party, and they are kicking it off in a big way.
So, what’s the big takeaway from all this?
The chart that illustrates it best is the Russell 2000 Micro-Cap Index $IWC:
I’ve annotated it to show the different stages of a market cycle.
IWC just had its best day since April 2020, printing a breakaway gap to new multi-year highs.
The completion of this rounding bottom pattern marks a textbook primary trend reversal, and it is happening in a decisive manner.
While large caps have been in a bull market for a while now, small cap stocks have been a trendless mess, trading sideways for the past several years.
This means that most stocks have actually not been in a bull market… until now.
With small and micro-cap indexes breaking out with authority this week, we can finally say the path of least resistance is higher for the broader market.
I think it’s time to move out on the risk-spectrum and down the cap scale and lean into the smaller and riskier corners of the market
That’s where the alpha is going to be for the remainder of this bull cycle.
It’s time to put our most aggressive offensive on the field.
One way I’m doing this is by increasing my allocation to cryptos and crypto-related equities. They make up almost 50% of my total invested dollars these days.
I’m all in on Bitcoin, Solana, and friends. Coinbase is the 2nd largest holding in my IRA.
They are going to break down the crypto bull market and discuss some of their favorite ideas. If you’re looking to add some extra risk-on exposure like I am, then this is for you.
