Bears Can't Catch a Break

For the past year, naysayers have been warning about a big stock market crash.

They said stocks would tank because of high inflation… a supposedly weak economy… and steep interest rates.

But the market hasn’t just shrugged off these concerns. It’s ripped higher. 

And if you’ve been following our calls, we’ve been “Macro Bearish but Technically Bullish”.

Why? Well… Just read the charts… as well as sentiment.

Everyone and their grandmother is talking to you about a recession. When the charts are bullish and the sentiment is max bearish after a significant correctional 2022, that means the probabilities favor a lot more upside to flip retail and CNBC TV talking heads onto the “the Fed achieved a soft landing” camp.

So, where are we today?

Last week, both the S&P 500 and Nasdaq closed at new highs. The world’s important indices are now up 20% and 27% on the year, respectively.

There’s little reason to think this doesn’t continue. Just consider what some of the most important stock market groups are doing… 

Last week, the Technology Select Sector SPDR ETF (XLK) closed at new highs. This is the most important sector in the entire market. It makes up 30% of the S&P 500, and 51% of the Nasdaq. 

The SPDR Homebuilders ETF (XHB) also ended the week at new all-time highs. That’s also a huge deal. Housing makes up about 15% of the U.S. economy.

If these stocks are doing well, it’s difficult to be bearish on the market at this time.

We’ll explain why in this issue we think things continue into a blow off top for 2024, as we’ve been suggesting for months.

But we want to first welcome you to The Discount Weekly. Each week, we examine the biggest issues facing traders and investors… and explain what they mean for your wealth.

Today, we’re going to once again explain why we’re bullish on stocks in the near and intermediate term.

Let’s jump right into things… 

Keep an Eye on Semis… 

For much of this year, semis have led the charge. 

Nvidia (NVDA), the world’s largest semiconductor company, was the hottest stock for almost all of 2023. 

It rallied more than 250% between January and August…vastly outperforming the major indices. 

But NVDA has been quiet the past several months. That had some investors concerned that the market might be stalling out. 

But NVDA is starting to wake up. Take a look…

As you can see, Nvidia closed last week up 1.6%. If this continues higher, NVDA will break out of a consolidation pattern that it’s been in since the summer. 

That would be extremely bullish for the market at large. 

You see, semis are “bellwether” stocks. They power everything from smart phones to automobiles. They’re the brains of the modern, “digital” economy.

In short, a breakout in semis would further confirm that we’re in a “risk on” environment for stocks. And there’s a very good chance that happens.

We say this because other semi stocks are already creeping higher. Take a look at Advanced Micro Devices (AMD).

Like Nvidia, AMD is a major player in artificial intelligence (AI). Last week, the company announced that it’s developing an AI chip that will compute Nvidia. 

The market loved the news. AMD rallied 6.2% last week, and closed at its highest level since January 2022. 

This is a major deal. We believe AMD is emerging as a new leader within the semi/AI field… and a huge potential winner going forward. 

Of course, semis aren’t the only way to cash in on the AI revolution… 

It’s Time to Take Big Data Stocks Seriously

Chip makers are one of the surest ways to profit off AI. They design and sell the hardware that makes this revolutionary technology possible. 

But, to truly maximize AI’s immense potential, companies need to tap into big data. According to a recent report, the big data market could grow to nearly $400 billion by 2030. That translates to an annual growth rate of almost 14% per year, which is far faster than the broader economy is expected to grow. 

Investors and traders can’t afford to ignore this opportunity. 

Within this space, UiPath (PATH), Snowflake (SNOW) and DataDog (DOG), and Palantir (PLTR) are under-the-radar names to watch closely.

And unlike many high-flying semi names, these stocks haven’t gone on major runs yet. They could offer even more upside than the wildly popular AI stocks like Nvidia.

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See You Next Sunday!