TradeSmith Digest: What Gold and Bitcoin Are Both Saying for 2024
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A November to remember… New highs in shiny yellow metal… A strong trend in bitcoin… Growth stocks at the forefront… Swimming in the dark pools with Jason Bodner… Use his dataset to invest right now…
There’s always a bull market somewhere. And these days, you can hardly walk ten steps without tripping over one.
Stocks just capped off one of the best November performances in the past century, with the S&P 500 up 8% and the tech-heavy Nasdaq 100 just ahead, at 9%.
The bullishness is thick in the air like an inexplicably humid December day in South Florida. Traders and investors are all but certain we’ve seen a peak in interest rates and a trough in asset prices. As yields fall, they’re set to clear out their money market accounts and short-term Treasurys and get long risk in a big way.
Will that play out as most seem to hope?
As ever, we don’t have a crystal ball in TradeSmith Daily. (Nor do we need or care for one. We’re armed with more than enough industry-leading tools to make money in escalator-up and free-falling-elevator-down markets alike.)
But it’s worth noting two major asset classes — one a bona fide hedge against risk, the other that acts more the opposite despite best intentions — are diverging right now. We’ll examine both closely.
First up, though, the metal that just set a new record.
• Gold just hit a new intraday high…
The shiny yellow metal made a new intraday high as futures opened on Sunday night. Take a look:
Gold traded as high as $2,148/oz before reversing and heading lower this week. As I write it’s at about $2,024/oz.
I’ve liked the technical picture on gold for a little while now, pointing out last week that the Gold Miners ETF (GDX) looked due for a jump.
The near-immediate retrace in gold stocks might make it seem like that was everything left in the tank, but there’s a fair chance these prices will look cheap in a few months’ time.
Take a look at the 200-day moving average (the blue line) and the 50-day moving average (yellow) in the chart above. The 50-day just crossed above the 200-day for the first time since Jan. 11, 2023.
When that happened, gold surged, pulled back, then eventually found its footing and rallied as high as 11%. That rally set the previous all-time high.
If we’re looking at a similar setup today, that could take gold prices as much as 11% higher from Sunday’s close, sitting around $2,250.
Gold has had a nasty habit of disappointing after new record highs, so this is one to watch and trade carefully. For my money, you should treat it as you ought to treat a barbarous relic with little utility and no dividend — as a small part of your portfolio… or a quick, in-and-out trade.
• “Digital gold” is ripping too…
Meanwhile, gold’s digital cousin bitcoin has left it choking on dust…Just look at the difference in performance on the 1-hour chart since gold set its new high (bitcoin in blue, gold in orange). Note bitcoin’s 24-hour nature here, as opposed to the gap in gold prices:
And on the daily chart, we can see it’s pushing well past its 200- and 50-day moving averages:
Like it or not, bitcoin’s 163% jump so far this year makes it one of 2023’s best trades. And that might be because of, and not in spite of, its behavior as a risk asset.
Many have pitched bitcoin as “digital gold,” as an inflation shelter, as a place to truly own your money, keeping it safe from the grubby fingers of central banks and world governments.
But unlike gold, bitcoin has traditionally acted as a kind of risk asset on steroids. Look no further than its 2017 run, where it rose as high as 1,800%, and its 2020-2021 run, where it posted 1,250% gains, for proof. These were also great stock market years, different as they were.
The gains in bitcoin this year, paired with the hesitancy in the chart of gold, should give us a clue that next year may be tilted to the upside for bitcoin and other risk assets.
Bitcoin is one way to make good money in an up market. But it’s far from the only way and, let’s face it, it’s stymied by a whole lot more risk than what you’ll find in the stock market.
That’s why Jason Bodner has a different focus entirely.
• Jason’s a growth-stock expert who insists on quality…
And according to the TradeSmith Research Lab survey results — which I’ll cover more in depth this Sunday, as promised — a focus on quality, growing, dividend payers is exactly what you’re looking for.
Growth stocks had an ever-so-slight edge over dividend stocks on average, and both of them were far and away your most-requested areas of focus.
I can only take this neck-and-neck response to mean that TradeSmith Daily readers want to see market-beating stock performance, but with the added dash of safety and stability that quality dividend-paying names tend to provide.
To that, I respond with exciting news for our Platinum subscribers.
On Thursday, we released an update for anyone with access to Quantum Edge Pro that gives you direct access to Jason’s Quantum Score for any stock he tracks — all within the TradeSmith Finance platform you’re already using.
Just go to your homepage, scroll down, and find the new tool just below the Market Health section. Here’s what it looks like.
Type in any ticker, and the tool will automatically return the overall Quantum Score as well as the Fundamental and Technical scores that make it up. If it’s in the green area where Jason recommends buying stocks, it’ll also flash a buy signal.
As a refresher, here’s how to read the scores:
- If anything you hold has less than a 70 Quantum Score, I strongly urge you to reconsider your position.
- If you own a stock with a Quantum Score between 70 and 85 — Jason’s sweet spot to maximize gains — you might want to buy even more.
- And anything above that range is one you might want to take profits on.
I’ve known Jason for quite a long time, and he’s built his career on keeping it smart and simple. He buys stocks of companies in growth mode, but only the ones with a strong fundamental picture of health, strong technical uptrends, and most importantly a ton of institutional backing.
That’s how his proprietary analysis spotted a 684% gain in Tesla (TSLA) in less than one year in 2020…
495% on Fiverr International (FVRR) the same year, and in even less time…
And last year, it spotted a little-known energy play called Scorpio Tankers (STNG) for 310% gains.
Jason’s approach to stock-picking is so consistent at finding winners like these in part because of his Wall Street experience.
His time managing the central trading desk at Cantor Fitzgerald gave him an inside view into what big institutions are trading. He learned what clues to look for to know that a billionaire is loading up the truck on one stock or another.
The only difference now is, he can filter these signals through the strict criteria of his Quantum Score — which you have unlimited access to as a TradeSmith Platinum subscriber.
And speaking of exclusives, make sure you check in with TradeSmith Daily tomorrow afternoon at 1 p.m.
There, I’ll debut a video interview with the man himself, where I’ll grill him a bit on his approach and attempt to spill a few secrets.
Talk soon,
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Editor, TradeSmith Daily