As Predicted, The Melt-Up Continues

The bull market marches on… 

Last week, the S&P 500 climbed a respectable 0.8%... and had its highest weekly close since January 2022. 

The Nasdaq also continued its hot streak. 

It ended higher for the fifth week in a row. It’s now also trading at its highest level since early 2022. 

 What’s even more impressive is that a handful of stocks are no longer carrying the market. Many stocks are climbing. 

The Dow Jones Industrial Average led the charge last week. It closed the week up 2.4%. That’s more than 3 times what the S&P 500 returned. 

Today, we’ll explain why stocks should head even higher between now and the end of the year. But we want to first welcome you to The Discount Weekly. Every Sunday, we examine the biggest issues facing traders and investors… and explain what they mean for your wealth.

Today, our focus is once again the stock market… and why we see zero reason to be bearish in the near term. 

Let’s get into it… 

Forgotten Stocks Are Now Rallying

For much of this story, it’s been all about tech stocks.

The leaders were giant tech corporations like Microsoft (MSFT) and Nvidia (NVDA). That’s because these stocks are at the forefront of the artificial intelligence (AI) revolution.

And these stocks have continued to perform well lately. But the best opportunities have come from other stocks… particularly areas of the market that many investors are ignoring. 

Take small caps… 

This past week, the iShares Russell 2000 ETF (IWM), a fund that invests in small cap stocks, rallied an impressive 3.1%. It far outperformed all three of the major indices. 

Few investors saw this coming. In fact, one of the biggest concerns was that IWM would roll over soon. But it’s done the exact opposite. 

Last month, IWM spiked 9.20%. And it looks like December will be even more bullish for small caps.

On Friday, IWM kicked off the new month by soaring 2.9% on huge volume. 

A big reason for the rebound by the strength in regional banks. 

You can see what we’re talking about below. It shows the performance of the SPDR S&P Regional Banking ETF (KRE), which invests in a basket of regional banking stocks.  

On Friday, KRE jumped a whopping 5%. It ended the week up nearly 7%. 

This is a HUGE deal. Financials make up 14% of IWM. Also, it wasn’t long ago that many traders thought we were on the verge of a full-blown regional banking crisis. 

Now, these hated stocks are leading the market. If that’s not bullish, we don’t know what is…

We’ve also seen a massive reversal in speculative growth stocks.

The chart below says it all. Here, we’re looking at the performance of the ARK Innovation ETF (ARKK). This is Cathie Wood’s flagship fund. It invests in a basket of growth stocks, including Coinbase (COIN), Roku (ROKU), and Tesla (TSLA).

Last year, ARKK was the laughingstock of the investing world after it fell 67% in 2022! Many folks thought it would keep falling, and that Cathie Wood would ultimately go out of business.

But ARKK has made fools of the bears. It stopped falling in January, and is now up 55% on the year. That’s more than what the Nasdaq has returned in 2023. 

And it looks like it’s headed even higher. You see, ARKK hasn’t even broken out yet! It’s just starting to emerge out of a base that it’s been building since May of last year.

At this stage, we believe it’s only a matter of time before ARKK breaks out of this base. If that happens, expect a strong rally in speculative growth stocks over the next six to twelve months. 

But that’s not the only area of the market to be watching closely…

Gold Has Woken Up in a Major Way

Last week, gold quietly rallied 3.5%, and had its highest weekly close ever.

And like growth, gold appears to be just getting warmed up. To understand why, let’s look at the long-term chart of gold.  

Regular Discount readers and FREE Telegram Channel followers will recognize this chart. We’ve shared it a few times over the past few months.

We can see that gold is just starting to emerge from a cup and handle pattern that it’s been building since 2011. 

This is a MASSIVE bullish pattern. It suggests that gold is likely headed much higher in the coming years.

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See You Next Sunday!