What Comes After 30 Record Highs

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30 total days of record highs in 2024… Here’s what historically comes next… Stocks just broke above a multi-year range, and that’s bullish… Bitcoin’s recent dump is a big buying opportunity… And how to access an exclusive analytics dashboard…

The stock market has closed at a record high 30 separate times in 2024. And we can view this as a near guarantee that stocks will close the year in the green.

This chart from Carson Investment Research, shared by Ryan Detrick on X, shows the number of new highs in stocks per year going back to 1957.

Now, we’ve not only surpassed 2023’s total of 29… but, at the pace we’re going, we’re likely to see twice as many record highs this year as last:

Since 1957, we’ve seen this number of record-high closes 20 other times. The average return during those years was nearly 20%… which means that if it happens this time, we’ll see back-to-back years of gains that double the long-term average return in stocks.

Could we see another record-setting year in 2024?

It seems almost crazy to ask it, because normally I’d say no way.

In fact, since 2007, stocks have had a habit of taking a year off every so often – ending flat or deeply negative after a couple of hot years. Just look at the table below of the S&P 500’s annual returns:

2008, 2011, 2015, 2018, and 2022 were all down or flat. Two or three green shoots have always preceded a breather in the past, and right now we’re at two.

❖ But this time, we’re working with a massive breakout from a multi-year range…

Take a look at this chart below. Last year, the S&P 500 broke out of a four-year trading range that began in late 2020:

For most of those four years, stocks went nowhere. But they weren’t doing nothing.

When asset prices trade in a range for a long time, they build up energy for the next move – it could be higher or lower, but it’s usually higher.

As they chop around, traders eventually find agreement on where asset prices should be given the current economy and technology. That sets a kind of “floor” on prices… so, the most likely direction from there is up.

We can see this in effect back in the late ’90s and throughout the aughts. Stock prices went nowhere from the top of the dot-com bubble all the way through to 2011. Because of this, the 2000s were a lost decade, when investors came to terms with the internet revolution and how to unlock its true value.

When the 2010s came around – marked by social media, apps, smartphones, and novel uses of all three like Airbnb and Uber – stocks finally started to break out.

And it’s happening again today, though for different reasons.

Stocks stagnated from 2020 through 2023 because of monetary policy – the Federal Reserve was overly generous with liquidity in the financial system, causing a bubble that burst and inflation that got much worse before it got better.

All this is to say, we’re finally breaking out of that rut. You can argue that’s because of AI… and that certainly has a lot to do with it. But I think it’s just as much due to a collective recognition that the pandemic created a time of temporary imbalances, which are now behind us.

The short version is simple: Be bullish on stocks, but also be nimble in your trading.

After the last breakout of a lost decade, the following years were positive but volatile. We’ve seen that trend only amplify in the years since, especially with so much more money in the system.

Also, watch out for breakouts like these in individual stocks. As we pointed out on Monday, we just saw another big breakout in Apple (AAPL), which was stuck in a side trend for nearly a year. When stocks create big “bases” like these and break out of them, it’s a strong sign that a sustained up move is coming.

❖ Bitcoin’s post-halving gains haven’t materialized, but don’t count it out yet…

For all the drum-beating we’ve done about bitcoin since October, it hasn’t done too much since its new high in March. Instead, it’s spent all its time chopping up and down in a tightening sideways triangle pattern:

These patterns can break either to the upside or downside. And where we’re at in the pattern suggests we’ll get our answer before the end of July – possibly sooner.

You’ll also notice that right now, as I write, bitcoin’s price is plumbing the bottom of the pattern around $65,000.

If you ask me, this is a good spot to buy. And here’s why…

In addition to everything we’ve said in the past about the halving, history shows that holding bitcoin over the next few months puts the odds on your side.

By buying on June 19 and holding for the next 63 trading days, you’d have seen a win rate 66.7% of the time since 2012. The average gain was over 41%… and the largest drawdown through this period was just 13%.

Add onto this the fact that bitcoin historically moves in clear up and down cycles – with the recent new highs indicating we’re in an up cycle – and it seems to us that the odds overwhelmingly favor higher prices over the summer.

If you haven’t already, buy some bitcoin or one of the new ETFs and hang onto it for the likely bullish move that’s in store.

❖ Speaking of price patterns…

If you’re a technical trader who loves to use price patterns in your analysis, you’ll want to check out what our friends at Gulfport Analytics are up to.

Headed up by chief investment analyst Tom Gentile, the Gulfport team specializes in price patterns and other technical indicators.

Tom’s personal claim to fortune comes from teaching himself technical analysis and building his own trading education company. There he learned and taught traders how to effectively use Fibonacci retracements, seasonal patterns, implied volatility, unique moving average configurations depending on the asset studied, and a lot more.

It’s the kind of trading that delves deep into the price charts, agnostic of what the assets behind them are worth, and tries to capture profits from their moves. And Tom has also created a few key technical indicators of his own – particularly the Money Calendar and the Power Meter.

Gulfport just started publishing a free newsletter called Patterns & Profits, where you can learn about these tools and a whole lot more. To kick things off, Tom shared his top-tracked tickers and technical tools that every trader should know about.

You can find some of that in the most recent issue, right here. And if you’d like to sign up to receive the letter in your inbox every weekday, go here.

❖ Want to trade earnings the right way?

Then you have to start following Jonathan Rose’s unique earnings approach.

Jonathan, whose name you’re likely familiar with as a regular TradeSmith Daily reader, has over a quarter century’s worth of market experience. In that time, he came to understand how unpredictable company earnings reports are.

Most would recognize this fact and simply resolve not to trade earnings. Or, to accept that the odds are often not much better than a coin flip.

But Jonathan recognized that there are some key knowable factors ahead of earnings, which can inform profitable strategies. The trick is not to try to guess the move a company will make… and instead focus only on the companies set to make big moves one way or another.

Starting today, Jonathan’s publishing a series of videos all about his unique earnings strategies. True to his reputation as an educator, he’s making the videos 100% free. Sign up for his free Masters in Trading Live video calls here.

❖To close, here’s a quick look at a Platinum-exclusive feature we don’t share often…

Today, I’d like to highlight the TradeSmith Analytics dashboard.

This is a hub for all the most important market information a trader could want. And it’s one of the perks that you get by upgrading to TradeSmith Platinum.

When you do, your dashboard will include all TradeSmith tools and publications (including any new ones we launch), plus exclusive features like this. Whenever I visit TradeSmith Analytics, I leave with a new trade idea to research.

For starters, there’s the list of the most overbought and oversold stocks based on the Relative Strength Index (RSI).

Looking through these tickers, you can easily find sectors to target for reversals. Gold stocks, utilities, and oil & gas stocks, for example, are all pretty oversold right now, while tech and semiconductor stocks are unsurprisingly overbought.

And there’s plenty more on the Analytics dashboard. Check out the most recent insider buying activity we’ve tracked:

As you can see, Berkshire Hathaway has been busy continuing to buy up Occidental Petroleum (OXY)… and its own stock. Some other company CEOs, like Marcus Lemonis, CEO of Camping World Holdings, also made the list by purchasing thousands of shares of a select few stocks in the last few weeks.

These are just two of more than a dozen distinct modules designed to help you find great investing and trading ideas. And of course, that’s on top of the dozens more tools and indicators available to TradeSmithmembers. That way, you can pick your favorites and experiment with new approaches when it’s time for a fresh perspective.

Building and sharing these tools is core to what we do every day at TradeSmith. Our mission is to empower investors to chart their own path to market-beating returns on their hard-earned money.

To see the difference this can make in the lives of everyday investors, look to this Friday’s TradeSmith Daily from CEO Keith Kaplan. There you’ll see just what kind of impact TradeSmith has had by putting simple but powerful software in the hands of regular people – chipping away at Wall Street’s unfair advantage in the markets.

To your health and wealth,

Michael Salvatore
Editor, TradeSmith