CAPIS recently held its January research briefing, featuring J.C. Parets, Founder of AllStarCharts.com, a Pennsylvania-based technical analysis publication for hedge funds, mutual funds, financial advisors, family offices, and other investors.
Click here for a video of the research call
Paret’s presentation addressed the following topics:
What Bear Market? The Bull is Back! (5:49)
- JC Parets opened and pointed out that stocks have made more fresh highs since July 2022. Pointing to data that shows equities are less than 6% from their all-time highs, he says we are in the 8th month of a bull market. Despite some weakness in growth stocks, fewer stocks are making fresh lows. (6:31)
- Stocks in general are all heading up, whether one gauges strength either by index, stock ticker, sector, or country. To prove his point, J.C. reported that since June 2022 Consumer Discretionary Stocks are up 24%, Industrials up 23%, and technology up 13%. (8:40)
- Seasonality favors the bull – as Q4 performance was solid and Q1 portends to be the same. Also, when looking at the last 4 year Presidential cycle, the bullish/upward trend for stocks is intact and should continue.” The fourth quarter was great! Everything is going up.” (9:45)
- The SPX and NYSE are at or near their respective highs – 4 year for the former and 200-day moving average. This comes as the U.S. dollar holds as one of the few safe haven investments when compared to Treasury bonds or crypto. (11:18)
What are the Hot Spots? (12:02)
- Parets says Consumer Discretionary stocks, indicative of a healthy consumer, are at or near their 8-month highs. He adjusts for the heavy weightings of Amazon and Tesla to get an equally weighted basis for this grouping and analysis. Also, large-cap value looks attractive versus large-cap growth. (17:30)
- Consumer Staples and Tech are underperforming. (18:35)
- He is watching Caterpillar (CAT), which to him is indicative of a strong market, making all-time highs. “This (CAT strength) is not indicative of a bear market to me.” (19:42)
- He also points to a new group of stocks dubbed the “Young Aristocrats” that are posting between 5 to 9 years of dividend increases – indicating to him there is a bull market in equities. He compared them to a grouping of stocks dubbed the “Dividend Aristocrats” – stocks such as Coca-Cola, Proctor & Gamble, etc. that have paid increasing dividends for 25 years that historically perform the best. (20:01)
- Precious Metals, such as gold and silver are doing well. Gold’s recent weakness versus the US dollar should reverse and match the commodity’s stellar performance compared to other currencies. Silver too, trading its 6-month highs, could test the psychologically important $50 per ounce level and if it does, $80 is the next resistance level. “We’re seeing rotation into these.” (21:00)
- Energy stocks are trending higher and should continue to do so, including crude oil which has seen a 40% correction in futures. He sees resilience here despite crude oil’s slump. (24:32)
Financials and Housing Hit Pre-Financial Crisis Levels (24:55)
- Broker-dealers have undergone a bearish to bullish reversal. He buys strength here in several names by value investors. (26:03)
- Looking back to pre-financial crisis levels, both housing and broker-dealers were at their highs before collapsing in 2007/8. Fast forward to today, both sectors are strong and re-testing these highs, indicating a bull market. (27:39)
- Ignore tech stock weakness, buy value stocks (like financials/broker-dealers) and energy as they present value. “Who needs tech?” (29:00)
- Bitcoin, Ethereum, and global indexes are all pointing to strength and bull markets, Parets concluded, showing charts illustrating the uptrend in the DJIA, CAC DAX, FTSE 100, and Europe STOXX 600. (29:48)
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For questions or to learn more about J.C. Parets and AllStarCharts.com, please click here.