When we talk about a lot of the common characteristics we find in bull markets, investors who are new to my work tend to refer to me as a permabull.
It’s funny, because during bear markets, those same kinds of people call me a permabear.
The truth is, I’m not a “perma” anything. I just follow trends.
And the reason I do that is simple: Asset prices trend.
We know this. We have the data.
Market returns aren’t random — even if they might look that way to people who haven’t studied how markets actually work.
Breadth Expansion – More Stocks Going Up
On Friday, we saw new all-time high weekly closes in the Equally-Weighted Dow Jones Industrial Average, Equally-Weighted S&P 500, and Equally-Weighted Nasdaq 100.
It’s not that I’m a permabull. It’s that stocks are in a bull market.
I’ve done the work. Historically, it’s far more profitable to be long stocks during a bull market than sitting in cash or trying to short them. (This is “opportunity cost”.)
Here’s a look at all the equally-weighted indexes breaking out to new highs:
Throughout this bull market, we’ve constantly heard the same tired rumor — that “only a handful of stocks” are driving the gains, so the whole thing must be about to fall apart.
“It’s a house of cards!” they shout.
But people like that either never bothered to count… or they did and decided to lie about it.
Because it’s never been five stocks. It’s never been seven. Not even 20.
Breadth has been expanding the entire time — more and more stocks participating, even as pessimism grows louder.
That’s how healthy bull markets work: a broad base of strength rising while most investors fight the trend.
By the time they finally give up, throw in the towel, and admit it’s a bull market, that’s when we’ll be selling to them.
We call those folks bagholders. And believe me — the market needs bagholders.
Pro tip: Don’t be one.
Small-Caps Too!
It’s not just the large-caps making new all-time highs — now the small-caps are joining the party.
Here’s the Russell 2000 Small-Cap Index closing out Friday at its highest weekly close in history:
That’s not deterioration — that’s broadening participation.
Under the surface, we’re also seeing the Small-Cap Technology Index and the Small-Cap Industrials Index hit new all-time highs.
More stocks are going up. Not fewer.
That doesn’t make me a permabull. It just means I’m paying attention.
See the difference?
Stay sharp,
JC Parets, CMT
Founder, TrendLabs