First of all, Merry Christmas and a Happy & Prosperous New Year to my loyal band of subscribers. I wish you every success and thank you for some lovely messages I have received.
Table of Contents
I am becoming seriously hopeful for 2024. I have picked one key indicator above, an ETF which tracks the Nasdaq Composite index. We have just had the biggest correction since the 2008-09 meltdown and shares have already recovered close to all-time peaks even before short-term interest rates have started falling.
Technology Boom is Like a Multi-Stage Rocket
The fundamentals look phenomenally exciting. The technology boom, which got seriously underway in the early 1980s with the desktop computing revolution, is like a multi-stage rocket with new blasters being delivered by the Internet, the Cloud and now AI in its various iterations.
The chart above is compatible with a new upward leg in the stock market. Based on the 6m candlesticks, which I think are telling the story of what is happening best at the moment, we have an important new golden cross buy signal.
As you would expect we are seeing similar important buy signals from a growing range of individual shares. I believe subscribers should be aggressive in positioning themselves to take advantage of what might be coming.
No Need to Wait for Moses
It won’t be a straight line; it never is and stock markets famously climb a wall of worry but if we don’t start to get aggressive now what are we waiting for, Moses to come down from the mountain? Just as an aside my belief is that a wise man would spend his life breaking many of those Commandments; that is if he is interested in having a good time. Life is for living, not to be spent in preparation for the doubtful possibility of a life of endless boredom in the heavenly spheres.
If you are religious, I apologise for being so forthright and obviously you won’t worry about what I think. What do I know so let us get back to the stock market.
HubSpot: Great Fundamentals and a Great Chart
Let me pick a stock somewhat at random to show what is happening. Hubspot has got a powerful chart (the stock is 3G, great chart, great growth, great story, which goes without saying if it is to be featured in an alert) and we have a new golden cross buy signal.
Like so many of these great US technology businesses, the shares may bounce around but the trading performance delivers relentlessly growing sales, and for those which are profitable, climbing profits.
We had another quarter of solid execution with revenue growing 24pc year over year in constant currency.
We delivered another exceptional quarter of operating margin growth with 700 basis points of margin expansion year over year, driving our operating margin to 16pc. Total customers grew by 22pc to over 194,000 customers globally, driven by over 9,100 net customer additions in the quarter. I’m pleased with our team’s focused execution and the progress we are making to become the No. 1 customer platform for scaling companies.Yamini Rangan, CEO, Hubspot, Q3 2023, 8 November 2023
Hubspot is a seriously innovative business.
Another highlight was the launch of HubSpot AI.
We believe that every scaling organisation deserves an AI-powered customer platform. And that is why we are deeply embedding AI across all of our hubs and our entire platform. We announced a number of features across AI assistance, AI agents, AI insights, and ChatSpot. While I’m certainly excited about our pace of innovation, what we are really focused on is driving usage and value for customers.
40pc of enterprise customers have already used HubSpot AI features, along with 20pc of pro customers. About two-thirds of AI users are leveraging AI assistance to craft marketing emails and blogs. Social publishing is proving out to be a sticky use case, drawing in engaged users. In short, when we embed AI into the flow of work it works.
I’m pleased to see usage beginning to grow, and we know we’re still in the early stages of a major technology shift.Yamini Rangan, CEO, Hubspot, Q3 2023, 8 November 2023
There is ample scope for the trading environment to improve.
Overall, we continue to operate in a choppy and challenging environment. Sales cycles remain lumpy, budgets are still under scrutiny, and buying urgency remains low. It is clear based on my conversations with customers that they still need approvals from multiple decision makers and are continuing to optimize spend. Despite these headwinds, HubSpot’s connected value proposition continues to resonate with customers looking to optimise spend and boost productivity.Yamini Rangan, CEO, Hubspot, Q3 2023, 8 November 2023
Strategy: It’s a Good Time to be Buying Shares
I think we are seeing one of those ‘what are you waiting for’ moments in the stock market with so many shares giving powerful buy signals on long-term charts (6m candlesticks). These are the longest-term charts I have consistently used. Back in the days when I was a Bloomberg subscriber, I regularly used 3m candlestick charts but I think I prefer the 6m signals. They are rare which makes them important and they seem to overlap with Coppock buy signals, which makes them even more powerful.
Do they always work? Of course not, but they are very likely to work in a rising stock market such as we see with the key US indices. Below is a chart of the S&P 500 with more recent golden cross buy signals marked with a yellow smiley. It is clear that they work well.
What we don’t have is a massive period of consolidation such as occurred between 1965 and 1982 and between 2000 and 2013 let alone the one between 1929 and 1950, covering the great depression and the second world war. But tighter consolidations such as the one we have now between 2021 and 2023 can produce surprisingly powerful results.
If Cuba or North Korea had a stock market it would be interesting to see how they would have performed since the end of WW2, not too great I suspect. And now it is the UK and European stock markets which have made minimal progress since 2000 while US stock markets have been racing ahead.
I think the message is sinking in and we could see a dramatic change in the political economy in Europe which could send share markets exploding higher; I live in hope but it hasn’t happened yet.
Hubspot HUBS. Buy @ $579.7
Fidelity Nasdaq Composite ETF ONEQ. Buy @ $59.14