The Relentless Market of Stocks and The Unavoidable Bear Market

For all the talk of ETF’s …the right individual stocks sure have been working well.

I asked Ivan to share this week’s market update from our paid service so here it is. Ivan titled it the relentless market of stocks.

What has worked in 2017?

So far 2017 has been the year of large caps crushing small caps, foreign markets outperforming U.S. markets, tech stocks shining while energy and retailers are near 52-week lows, and the U.S. Dollar losing ground.

Some people say that the phrase “market of stocks” is a cliche, but nothing else describes better the price action in 2017. The technology large cap index, Nasdaq 100 is up 19.2% year-to-date while the small-cap index, Russell 2000 is up less than 2%. The Nasdaq 100 is market cap weighted. Five stocks account for 40% of the index: Apple, Google, Microsoft, Amazon, and Facebook. The components in Russell 2000 are relatively more evenly distributed. Its biggest holding is Advanced Micro Devices and it represents 0.44% of the index.

I am seeing so many setups that look buyable. Ivan shares a bunch in the link above. He notes semiconductors which I hate owning in general but have owned the index through $SMH.

The megatrend continues to be ecommerce.

Amazon, Shopify, Wix, Square, Paypal, Visa, Mastercard have been the purest ways to own this trend (long all of them other than Wix and Square). But, even the railroqds, airlines, logistic and shipping companies are working as the less volatile ways to ride the trend. My fried Jon Markman shared this chart that will make any American that spends shake their head and say I coulda, shoulda:

Have you noticed credit card stocks are behaving like Amazon $MA $v AMZN

— Jon Markman (@jdmarkman) May. 24 at 02:40 AM

My 2017 predictions are working well…though Amazon has not yet bought Twitter.

What are the bears pitching?

My go to read to see how smart people that can’t or won’t read the tape is Mr. Hussman.

Here are his weekly newsletter headlines dating back 15 years. He has never gotten on board with this boom that started in March 2009.

The market is a humbling place. You can work millions of hours reading and writing about the markets and be beat by a kid that loves the chips that power his gaming computer (NVidia and AMD) or mom that loves Amazon and Facebook.

As for the inevitable, unavoidable bear market, I leave you with this great post from Michael Harris.