Micro-Caps are breaking out to their highest levels in more than three years.
More and more charts are resolving higher, sector participation is broadening, and leadership is coming from exactly where you’d expect in a healthy bull market.
One of the best ways to confirm this risk-on environment is by looking at Consumer Discretionary versus Consumer Staples.
Discretionary stocks include cars, retailers, and homebuilders — the kinds of things people buy when they feel confident. The risk-on stuff.
Staples, on the other hand, are the everyday essentials like food, toothpaste, and cigarettes that people buy no matter what. Risk-off things.
We like to view this relationship using the equally weighted ETFs, just to avoid any single big stock from skewing the picture.
What we’re seeing is a major secular breakout in this trend.
The chart is screaming risk-on right now.
New highs in this ratio means investors are playing offense and embracing risk. It’s that simple.
As long as this breakout sticks, the bull market is in good shape and we want to press the gas on risk assets.
That’s exactly what Strazza has been doing with Breakout Multiplier trades over the past few days.
And he plans to put on even more this week. We’re back in rally mode and looking to buy some calls in banks, space stocks, and even energy.
