A New Year Means New Opportunities
Editor's note: It's time to start fresh...
Rampant inflation and the Russia-Ukraine conflict weighed on the markets, making 2022 a dreadful year for investors. But the chaos can't last forever. And Ten Stock Trader editor Greg Diamond believes the new year could give investors opportunities to make money in several important sectors.
That's why Greg says it's crucial for investors to start preparing their portfolios right now instead of dwelling on the pain we experienced last year...
In today's Masters Series, which originally ran in the January 3 Weekly Market Outlook, Greg explains why this year could present a slew of buying opportunities for investors... examines recent price divergence in the precious metals sector... and details why it's critical to remain patient as we continue to navigate this bear market...
A New Year Means New Opportunities
I hope everyone had a great holiday break and was able to spend it with family members.
I certainly did... and I'm grateful I could enjoy that time with them.
But now, it's time to get back to work.
It's a new year and that means a fresh start for everyone... especially investors.
In my December 15 update, I mentioned that, although Ten Stock Trader subscribers had a successful 2022, we must now forget about it.
Remember, success is not final, and failure is not fatal.
This means 2022 is now meaningless. We have to focus on 2023 and our new 12-month trading window. That's what matters right now.
And 2023 will present incredible trading opportunities, based on the various cycles I've discussed. These opportunities are obviously taking shape in the stock market. But we'll also see opportunities in both bonds and precious metals.
Today, I want to start with the precious metals sector...
In the October 24, 2022 Weekly Market Outlook, I stated that, as long as the October 13 low held in certain stocks, we would likely see major price divergence into early 2023. That, in turn, would set up a big inflection point. (In that scenario, some stocks would make new lows, while others would not. More on that below.)
Well, here we are.
In that October issue, I also explained that certain technology stocks would likely make new lows. Construction-equipment giant Caterpillar (CAT) and bank-related stocks, like JPMorgan Chase (JPM), could hold those October 13 lows rather than make new lows.
Over the past few weeks, I've found that precious metals have started to diverge as well.
The chart below shows the relationship between gold and the Nasdaq 100 Index...
I labeled gold in black and the Nasdaq 100 in blue.
You can see the price divergence between gold and the Nasdaq 100 in early 2022. Russia's invasion of Ukraine took markets by surprise in that period, causing investors to pile into gold as a hedge against volatility.
But ultimately, and as this chart implies, high inflation rates and a stronger U.S. dollar pushed stock and precious metals trades into a tight correlation for the rest of the year.
That is, until recently...
Note the two red arrows above, which mark recent divergence... The Nasdaq 100 is trending lower while gold is showing signs of strength.
OK, so what does this mean?
From my perspective as a technical analyst, it means we're seeing price divergence across asset classes (not just sectors within the stock market) that once traded in a tight correlation.
The price divergence between gold and the Nasdaq 100, combined with the divergence between other major market sectors, strengthens my conviction that 2023 is setting up for major tradable inflection points.
Now, it's important to highlight that price divergence takes time to develop. And the key to acting on these setups is understanding the "when" – as in when to trade.
Trust me when I say that I'll provide an abundance of information explaining the "when."
I'm certain we'll see more volatility in January. But right now, patience is key.
In summary, I've highlighted the precious metals sector for two reasons...
One, it bolsters evidence of price divergence and a tradable inflection point across both stocks and precious metals.
And two, when precious metals start trending in that manner, it signals incredible trading opportunities. As longtime Ten Stock Trader subscribers know, our two best trades have come from this sector.
I'm looking for similar trading victories in 2023.
So Happy New Year, my friends! Let's get ready to pocket more wins this year.
Best,
Greg Diamond
Editor's note: Greg not only sees the new year as a fresh start, but he predicts that we're on the verge of a massive turning point. And if you don't start preparing now, you could be one of the millions of people who gets left behind. But for those who take steps to prepare, it could be the biggest moneymaking opportunity in 20 years...
That's why Greg is coming forward on Thursday, January 12 to host a free online presentation to reveal how an upcoming rare market event could help you double your money 10 different times... Plus, if you reserve your spot now, you'll get the ticker symbol of his No. 1 investment for 2023. Click here to learn more...