{"id":15013,"date":"2025-02-16T00:02:09","date_gmt":"2025-02-16T00:02:09","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2025\/02\/16\/this-is-how-i-crush-the-benchmark-sp-500-in-any-market\/"},"modified":"2025-02-16T00:02:09","modified_gmt":"2025-02-16T00:02:09","slug":"this-is-how-i-crush-the-benchmark-sp-500-in-any-market","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2025\/02\/16\/this-is-how-i-crush-the-benchmark-sp-500-in-any-market\/","title":{"rendered":"This Is How I Crush The Benchmark S&P 500 In Any Market"},"content":{"rendered":"
\n

It was another mildly bullish week as our major indices climbed very close to new, fresh all-time highs. We also saw a return to growth stocks as we approached breakout levels, which is a good signal as far as rally sustainability goes. Despite this, there remain reasons to be cautious and I\u2019ll point out a couple of those reasons below.<\/p>\n

Negative Divergences<\/h2>\n

The S&P 500 ($SPX) and NASDAQ 100 ($NDX) both seem to be losing bullish price momentum on their respective weekly charts, which can be seen below:<\/p>\n

$SPX<\/strong><\/p>\n

$NDX<\/strong><\/p>\n<\/p>\n

The price momentum on both indices is slowing and eerily similar to late 2021, just before the cyclical bear market of 2022. Let me be clear that I do NOT believe we\u2019re heading into a cyclical bear market. I don\u2019t see that extent of potential weakness ahead. I do see increased risks of a 5-10% drop, however, and that\u2019s why I\u2019m cautious.<\/p>\n

Is This Current Rally Truly Sustainable?<\/h2>\n

Sometimes a little common sense and perspective goes a very long way. Over the last 75 years, the S&P 500 has averaged gaining 9% per year. So when you go through short-term periods that show gains well in excess of that 9% average, you should at least be thinking there\u2019s the risk that the S&P 500 will fall back and \u201creversion to the mean\u201d, which is a mathematical concept that describes the tendency of extreme results to move closer to the average. We\u2019ve seen a tremendous rally since the summer correction of 2023. Let\u2019s look at the last 68 weeks (since the correction low in late-October 2023) of return on both the S&P 500 and NASDAQ 100 and compare it to the history of 68-week rates of change (ROC) to gain a sense of this current rally and its sustainability:<\/p>\n

$SPX<\/strong><\/p>\n<\/p>\n

$NDX<\/strong><\/p>\n<\/p>\n

You can look at these two charts and make your own judgement and draw your own conclusions, but, outside of the late-1990s, 68-week ROCs above 50% on the S&P 500 and 60% on the NASDAQ 100 suggest a short-term pullback is more likely, not guaranteed.<\/p>\n

Now The Good News<\/h2>\n

While bullish price action and momentum may seem to be slowing, the long-term monthly PPO on both of these indices is definitely on the rise, which, in my view, limits any short-term downside to the 20-month EMA. I\u2019ll just show the S&P 500 monthly chart, but this will highlight the likelihood that any future selling, if it occurs (no guarantee), holds 20-month EMA support:<\/p>\n

$SPX<\/strong><\/p>\n<\/p>\n

This chart takes us back 25 years to the turn of the century. The yellow areas highlight poor (below zero) or declining PPOs. During these periods, I\u2019d ignore 20-month EMA support and be cautious. However, the blank periods highlight a rising monthly PPO, during which we rarely see price fall below the rising 20-month EMA. This is where we currently stand. Most pullbacks over the last 25 years, when the monthly PPO is above zero and rising, have fallen short of actual 20-month EMA tests. In other words, we should view a 20-month EMA test as a \u201cworst case\u201d scenario.<\/p>\n

The next market decline should be viewed as an OUTSTANDING opportunity to enter this secular bull market.<\/p>\n

Stick With Strength<\/h2>\n

Since we began rolling out our Portfolios quarterly, we\u2019ve had to overcome cyclical bear markets in Q4 2018 (trade war), March 2020 (pandemic), and the first 9-10 months of 2022 (rising inflation and rising interest rates), and a 3-month correction during the summer of 2023. We\u2019ve remained fully invested and have CRUSHED the S&P 500. In fact, below is a graph that highlights our Model Portfolio performance since its inception in November 2018 (in the middle of the trade war!) through the end of January 2025:<\/p>\n<\/p>\n

We\u2019ve demonstrated the best way to beat the S&P 500, which is to invest in leading relative strength stocks. It\u2019s the only proven method that\u2019s worked for us at EarningsBeats.com. We \u201cdraft\u201d our 10 favorite relative strength stocks in various sectors and industry groups and hold them for one entire earnings cycle, then rinse and repeat. Our last quarter\u2019s \u201cdraft\u201d picks have annihilated the S&P 500, +15.15% vs. 3.34%. <\/p>\n

You can check out our Model Portfolio holdings for the last 3 months below:<\/p>\n<\/p>\n

8 of our 10 Model Portfolio stocks outperformed the S&P 500, a few by a very wide margin. Owning relative strength stocks like PLTR, CLS, and TPR will completely carry a portfolio and lead to outstanding returns.<\/p>\n

Our \u201cquarterly\u201d results are calculated over the following periods:<\/p>\n

February 19 \u2013 May 19
\nMay 19 \u2013 August 19
\nAugust 19 \u2013 November 19
\nNovember 19 \u2013 February 19<\/p>\n

The reason we calculate our quarterly returns using the above time periods is that we select our stocks each quarter on February 19, May 19, August 19, and November 19. By the time we reach these dates, most key market-moving companies have reported their quarterly results and fundamental data like earnings is factored into our portfolio selections just as much as technical considerations. That fundamental\/technical combination is one factor that separates us from others and we do this because my background is public accounting. I don\u2019t stray far from my core beliefs. I believe management\u2019s execution of their business strategies\/plan and beating revenue and EPS estimates is a huge component of its stock\u2019s upside potential.<\/p>\n

On Monday, February 17th, we\u2019re holding our next DRAFT. We will be announcing the 10-equal weighted stocks in each of our portfolios designed to beat the S&P 500 over the next 3-month period. You\u2019re quite welcome to join us. It might change your way of investing and improve your results immediately. CLICK HERE<\/a> for more information and to register!<\/p>\n

Happy trading!<\/p>\n

Tom<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

It was another mildly bullish week as our major indices climbed very close to new, fresh all-time highs. We also saw a return to growth stocks as we approached breakout levels, which is a good signal as far as rally sustainability goes. Despite this, there remain reasons to be cautious and I\u2019ll point out a […]<\/p>\n","protected":false},"author":0,"featured_media":15014,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-15013","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/15013","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=15013"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/15013\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/15014"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=15013"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=15013"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=15013"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}