I think it's the best thing we do at All Star Charts.
Even the prep work is a great exercise for the whole team. It forces us to step back and focus on what's most important— how to position for the biggest primary trends.
In bull markets, you want to ride the leaders. You want to lean into the things that have been working. They tend to keep working.
You want to make the most of these times. And to do that, you have to own the best stocks.
Right now, the best ones are the riskiest ones. The names the experts said would never see these valuations again. The ones that have been working.
Here is the ARK flagship fund relative to the broader market:
I think this relationship is as important as anything we could discuss on tonight’s call. It’s the whole risk-on story in one chart.
While risk appetite has been moving in the right direction and improving for several years, it was coming off a structural low. 2022 was a serious bear market, especially for growth stocks.
The past few years have marked an accumulation phase for these stocks, both in absolute and relative terms. And while they’ve made little progress, they appear to have bottomed. That means a new bull market is just beginning for speculative growth.
This chart tells that story.
The rounding bottom in the riskiest stocks relative to the S&P 500 reflects the death and rebirth of animal spirits.
They were absolutely wiped out after the 2020 run. I’m talking 70%, 80%, even 90% drawdowns.
But now they’re back. Risk appetite is alive and well.
Heavily shorted stocks. Quantum computing stocks. Space and Mars stocks. These are your market leaders.
Just look at something like BBAI. Not exactly a buy-and-hold forever kind of story. But these environments have nothing to do with that.
Some textbook intermarket analysis, combined with our volatility indicator— and we knew this short squeeze was ready to rock.
A few weeks later, and we’re up almost 10x on our calls. Two different contracts, too— because we like to double down on the best setups.
