The VRA Investing Podcast is back with our first episode of 2024. Despite a less-than-ideal start to the year, with the Santa Claus rally evading us, there are still plenty of bullish signs for the market. Tune into today's podcast to hear our analysis of the day's market action, including stock performance, sector movements, and the state of commodities such as gold, silver, and bitcoin.

Tyler Herriage
Don’t look back because the market is closed. Good Wednesday afternoon, everyone. Tyler Herridge here with you for today’s VRA investing podcast. Well, first off here, folks, happy new Year to everyone out there. We haven’t been back with you since the start of the holidays, really. So we hope you all had a wonderful and very merry Christmas as well. And into the new Year’s holiday. We took a little time here off at the VRA.

Didn’t mean we weren’t working on our end, but we’ll be back full time now with our daily VRA investing podcast, and we are ready to be back in the swing of things here as we begin 2024. We look at to this to be another strong year for our markets like we saw in 2023. And regardless of what happens there, we’re going to make it a fantastic 2024. So thank you for being here with us. We’re looking forward to everything that’s going on this year again. We’re going to make it a great year here, although I will point out for our markets here, it hasn’t been a great first two sessions to the year, which causes now to miss the Santa Claus rally this year again. The Santa Claus rally is the last five trading sessions of the previous year and into the first two trading sessions of this year. Now, the last two sessions took us out of positive gains for the Santa Claus rally.

Tyler Herriage
The timing of that is less than ideal. You want to see a strong Santa Claus rally, but we just saw a phenomenal November and December to close out 2023. And from that, all of our major indexes had hit extreme overbought levels on the VRA investing system, which helps make a little more sense of the pullback to start this year. Which is why I say that the timing of an overbought pullback is a little less than ideal, as we don’t want to miss that Santa Claus rally. But because of that nine week rally that we just saw going into this year, we’ve also seen investor sentiment turn extremely optimistic. We’ve got the fear and greed index getting to extreme greed territory along with the AI Investors sentiment survey two weeks ago, got to roughly 53% of investors bullish. That was the second to last reading of 2023. It dipped a little bit below 50% for the very last reading of the year.

But that is, we’re seeing now a bit of excessive optimism, not the kind of optimism you would see at a market top, mind you. That’s not what we’re saying here at all, but the kind of optimism that you see, when we’re due for a little bit of a pullback, when this market has come a little bit too far, the rubber band has been stretched too far to the upside and now due for a little bit of a pause here. Although I will point out that today we’re starting to see that reverse a little bit, especially after the last two sessions where we’ve seen sell offs in our major indexes, especially in tech. But today, the put call ratio is elevating quickly above a one all day. Today, again, anything above a 0.7 is generally seen as a bearish reading, excessive bearishness when you’re over a one as well. Now, it’s a little early. We’ll keep an eye on this one. But if that remains the case, that means that the bears are getting more and more aggressive here.

Tyler Herriage
And since the market likes to fool as many people as possible, we have no problem with the bears getting a little aggressive here. Because all things considered, again, it was a phenomenal November and December 9, straight weeks of the market going higher. But remember, trees don’t grow to the sky overnight, so there’s always going to be pullbacks along the way. But we think for 2024, we remain very bullish as we go into the new year. So, yes, it’s less than ideal to miss the Santa Claus rally and be down the first two days of the year, but overall, we see that, as more unfortunate technicians might tell you a little bit otherwise. And so we’ll be paying attention to that here as well. But again, after nine straight weeks in a row and hitting extreme overbought levels, a bit of a pullback isn’t the worst thing in the world, and one that we still believe the theme for 2024 will remain, which was our theme for all of 2023. Remember, think back if you’ve been with us here for a while.

We started saying in October of 2022, after the October 13 lows of that year, that we were looking at a brand new bull market, one that we still believe that we’re in right now. And so with that, one of our biggest themes here is that we are just now in the second year of a new bull market. And going back to 1952, the second year of a bull market has been higher 100% of the time, with an average gain of roughly 14%. So we think that trend continues again here in 2024, and that pullbacks and dips need to continue to be bought. We think this is setting us up for a good buying opportunity here. If we do continue to see a bit of a pullback, but we’re going to see again what we’ll use as a buying opportunity to start off the year here. And don’t forget this as well, we still have record levels of cash on the sidelines here with roughly $7 trillion in money market accounts. As that money starts to realize, hey, we just missed out on a huge year.

Tyler Herriage
We’re going to continue to chase the market higher. That will be fuel to the fire for the next big move higher for our major indexes. So that said, let’s take a look at our market action on the day to day. Not a good day today. Again, back to back sessions here. Down to start off the year, small caps leading the way lower down 2.66% to 1959. Next up, the Nasdaq, which, remember, just came off a 40% plus kind of a year. So to see a little bit of a pullback again, no major concerns, but was down today 1.18% to 14,592.

After that, the S and P 500 down eight tenths of 1% to 4704. And finally here, the Dow Jones down just over three quarters of 1% to 37,430. So while that is ugly there, one benefit is that we are now out of the extreme overbought readings that we saw into last week, into the year end of 2023. So that’s very good. We think pullbacks are going to remain short and sweet here. And while the action in our major indexes was ugly, what was really interesting today was the action in the ten year yield, which opened this morning and briefly got back above 4% on the ten year yield. But after that rally into the open, the ten year began to drift lower, ultimately finishing down just about 1% on the day, finishing at a 3.9%. Actually making a bit of a bearish outside day here as we got above yesterday’s high and finished below yesterday’s low.

Tyler Herriage
We think that that is going to be a theme of 2024, as well as lower rates, similar again to 2023. And along with that, I’ll point out the US dollar did still finish positive on the day, but finished well off of its highs of the day. Today. We think that’s another theme that continues into 2024, is a lower dollar as well. That was a major theme, both of those for us in 2023. We think they’ll serve us here again in 2024. Next up here, taking a look at our internals on the day today. Not pretty numbers here, but about what you expect after two big down sessions like we just saw.

Declining stocks beating out, advancing stocks just under three to one negative on the NYSE. Also just under three to one negative for the Nasdaq. 52 week highs to lows coming in as our one bright spot here on the day, if you want to call it that, relatively light or flat on the day today, if you combine them, did come in positive overall. We had just 42 stocks hitting 52 week highs on the NYSE, but only ten stocks hitting 52 week lows. So that was positive there. Nasdaq also came in better here at the close after a final refresh, coming in with 61 stocks hitting a 52 week high. So slightly negative as we saw 76 hitting a 52 week low today. But not terrible, especially on a day like today where our back to back sessions of finishing lower.

Tyler Herriage
Lastly here, volume coming in just under three to one negative on the NYSE. Just roughly about the same, maybe three and a half to one negative on the Nasdaq today. Next up, looking at our sectors here, we finished with three out of our eleven s and P 500 sectors higher on the day. We were led by energy as oil began to rally later in the session today. Energy up one and a half percent. Next up there, utilities up four tenths of 1%. And then lastly, communication services, which is really, we call it a proxy for tech a lot here because Google and meta make up so much of this sector’s weighting and Google did manage to finish higher on the day to day. Then for our laggards, we saw real estate, consumer discretionary industrials and materials lower on the day today.

I will point out tech was just after that as well. And the semis did finish down 1.78% on the day today. Again, getting out of extreme overbought territory here, though, for the semis, which we needed a little bit of relief from the extreme overbought levels that we were at. So again, we don’t like the technical timing of missing the Santa Claus rally, but at the same time, if you take that out of the equation, this really has been a fairly normal pullback after a two month, nine week rally for our major indexes. So no real major concerns here just yet. Finally here for today, our VRA commodity watch. A good amount of red on the screen here as well. Gold down 1.15% now at $2,049 an ounce.

Tyler Herriage
Next up, silver down 3% on the day today to $23.20 an ounce. Copper, which working on a little bit of a piece here about this, CNBC came out with a story over the weekend yesterday about copper and where it’s headed over the next few years, especially as we do see more and more of the push for electric vehicles, the push for green energy. Copper is absolutely crucial to that story. Analysts out with a price target of copper hitting an all time high over the next two years. Copper today, though, again down two tenths of 1% to $3.87 a pound. And lastly here, oil, as I mentioned earlier, rallied a little bit into the close today. Still in the lower 70s here, but up 3.69% to $72.98 a barrel. And finally, for today, bitcoin, which had a phenomenal rally yesterday, hit a 52 week high yesterday, pulled back significantly this morning.

But just after the close, it was announced that sources close to these SEC proceedings that are going on right now in regards to the first bitcoin ETF, the spot ETF, they said. The SEC said that approval could be ready as soon as this Friday, with trading beginning as early as next week. Now, they didn’t confirm that they were going to be approved, but rather said that trading could begin as early as next week. Not sure if that’s a little bit of a tip there, but bitcoin pulled back today. Again, it rallied to a 52 week high yesterday, almost hitting $46,000 of bitcoin. Then this morning fell all the way down to $40,000 a bitcoin before rallying back a little bit today. Now at 42,895, a bitcoin that’s still down 4.89% on the day to day. This is another group that we like a lot, though, for 2024, as we get to see these spot etfs released.

Tyler Herriage
And what that does is it gives access to a number of different avenues of investors into bitcoin, especially wealthy individuals who can’t place this in their retirement account right now, can’t have, in many cases, depending on the structure, can’t have their asset managers providing crypto services as well. There’s a lot of workarounds for that. But this spot ETF allows for easy access for a whole nother group of people. Or whether it’s just people who don’t feel comfortable with the current crypto space, they don’t want to open an account. This gives them a more regulated aspect to get into this. We think that it’s ultimately going to be very bullish for the price of bitcoin. But, folks, that’s all we have time for here today. Please be sure to subscribe to receive our VRA podcasts every day at the market close.

You can find them@vraletter.com we are still working on the sign up form there. So if you want to sign up to receive them every day in your inbox, you can still find that form@vrainsider.com podcast but you won’t find the latest podcast there. You can find our transcripts and links all@vraletter.com our new website, so go and check it out. Thank you for all of your feedback so far. It’s been phenomenal. And here’s to a wonderful 2024. We hope you all had a great end to 2023. Let’s make this year even better.

Tyler Herriage
So thanks again for tuning in. Until next time. We’ll see you back here tomorrow for the close. Bye.