VRA Investment Update: Textbook Bull Market Meets Overbought. Buy the Rumor, Sell the News?
/Good Friday morning.
Heads up: Please join Kip tomorrow at Noon EST on Wayne Allyn Roots red-hot new show on Real America’s Voice TV (on many/most cable networks or stream online at https://americasvoice.news).
Wayne is blowing up with multiple shows on TV and radio and on tomorrows show we’ll be talking about this bizarre time in our country, as Team Biden continues to attack the American people, while at the same time we’ve entered a new bull market that looks to be just getting started.
Hope you can join us tomorrow on RAV at Noon!
VRA Market Update
It hasn’t been straight up from the 10/13 bear market lows but in (most) ways this has been a textbook bull market move higher. From the overwhelming level of fear from 3 bear markets in 4 years to last years August — October waterfall mini-meltdown that culminated in the 10/13 bear market capitulation, from those lows the move higher has checked all of the “new bull market” boxes.
Textbook Bull Market Identifiers
- The generals have “soared” higher from the 10/13 lows, with the 10 largest stocks in America posting average gains of close to 70% in just 7 months. Holy bull-market batman. When co’s worth 100’s of billions of dollars to more than $2 trillion are growing by 70% in just 7 months, you’d have to be a court jester to call it a bear market rally.
- The semis, our ultimate tell, have been a rocket ship from the 10/13 lows. SMH (Semi ETF) is up 61% in 7 months with VRA Buy Rec SOXL (3 x Semi ETF) up 185%.
- Housing, our most important leading economic indicator in the VRA Investing System is up 62% from the lows of last year with VRA Buy Rec NAIL (3 x Housing ETF) up 205%.
- Nasdaq 100, the largest 100 tech stocks in America, is up 31% in 2023 alone.
When our biggest and most important leadership groups and market tells are surging higher like this….strike that, FLYING higher…there’s one thing you can be sure of; you’re in a bull market.
I’ve done this just long enough that I sometimes find myself laughing out loud at pundits on tv/radio/print media. Even with the hardcore bull market facts laid out above, the permabears are still calling this a “bear market rally”.
You’ve heard my warnings often enough over the years about permabears. They are not investors. If they were they would be broke many times over, from following their own advice. The vast majority are list builders that prey on the fears of investors. They are in fact predators. Know that.
VRA Bottom Line: From abject fear…to a rising tide lifts all boats…to the train is leaving the station (where we are now)…to the next phase of this bull market, “FOMO”. Again, this has been a textbook (early) bull market.
More Data Pointing to a Bull Market
Yesterday Nasdaq 100 made a new 52-wk high for the first time in nearly 18 months. The previous 14 times it went more than 6 months w/o new highs and then finally made a new high?
A year later Nasdaq 100 was higher (14 of 14 times) with avg gains of 15%.
H/t Carson Research
Heads Up; We Are Hitting Extreme Overbought. Buy the Rumor, Sell the News?
As much as we like this new bull market, trees don’t grow to the sky overnight. We are hitting extreme overbought on VRA System in 3 of our leading groups; Housing, Semis and tech.
This is not a sell signal. We likely have more room to run before hitting extreme overbought on steroids (our most overbought designation), but it’s likely that we may get a “buy the rumor, sell the news” event on next weeks debt relief agreement between Biden and R’s.
As you’ll see below, while each has broken out to new 52 week highs we’re now beginning to hit extreme OB on housing, semis and tech (using RSI, Stochastics, MACD and MFI).
Again, not a reason to sell….but it is a reason to stop buying broad market positions. We’ll alert if/when we are selling.
Note: we’re also setting up for a great buying opp on the miners, which have sold off with precious metals as the fear of debt default has dissipated. We’ll give you an exact heads up next week, but on the news of a deal we’d expect the markets to sell off, while the miners would resume their bull market.
VRA Bottom Line: we are in a new bull market. Bull markets love climbing a wall of worry. We remain long and strong as we continue into the best year on record (pre-election years are hugely bullish). As always, we’re keying off of the semis, housing, transports and the generals. We have been aggressively long from the 10/13 bear market lows and will likely remain long, relying on the VRA Investing System to tell us when to take profits and/or add to/reduce positions.
Important: We use monthly dollar cost averaging to add to our VRA 10-baggers and market weakness to add to our buy-recommended ETF’s.
New Developments: we’ve had a target in mind for potentially taking profits on some of our ETF positions. It rhymed with “sell in May and go away”. May is not a great month for stocks, historically, however May has been higher 9 of the last 10 years. And there’s this:
Over the last 50 years, the S&P 500 has gained an average of 4.8% between November and April, and just 1.2% between May and October. However, this pattern fades over a shorter time frame.
- Over the last 20 years, the outperformance of November-April (over May-October) narrows to just 1%.
- Over 10 years, November-April has underperformed May-October by 1 percentage point and over the last five years, it’s underperformed by 3 percentage points.
** Based on readings of the VRA Investing System, with 8/12 screens bullish and the remarkable leadership of the generals, we are removing our plan on taking profits this month. We’ll advise if/when things change. We remain long and strong.
Until next time, thanks again for reading.
Kip
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