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VRA Investing Podcast: All-Time Highs For July 4th, Tech Leads, and Economic Data Highlights – Tyler Herriage – July 03, 2024

In today's special July 4th episode, Tyler covers an exciting, shortened holiday trading day that saw incredible moves in the market, including all-time highs for the S&P 500 and the Nasdaq, marking their 23rd and 33rd records of ...

Posted On July 03, 2024Episode 1416
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About This Episode

In today's special July 4th episode, Tyler covers an exciting, shortened holiday trading day that saw incredible moves in the market, including all-time highs for the S&P 500 and the Nasdaq, marking their 23rd and 33rd records of the year. He also dives into the latest economic data and what we expect next from the Federal Reserve. Tune into today's VRA podcast to learn more!

Transcript

Dont look back because the market is closed. Good Wednesday afternoon everyone. Tyler Herriage here with you for Todays VRA investing podcast. And yes, this is correct. The market is closed today early for the July 4 holiday. The market for July 3 today closed at 01:00 p.m. eastern time. We’ll have tomorrow off in celebration of the July 4 holiday.

So happy 4 July to everyone out there. Thank you for being here with us on July 4 Eve. I know that you’re probably eager to get off to the long weekend, but hey, remember, it may have only been a half day today and tomorrow is off, but there is still a full day of trading to come this week on Friday. So we won’t have a VRA podcast this Friday, but we might have a brief vRa update out Friday morning as I’ll get to this here more in a second. But there’s a big jobs report set to come out on Friday. And again, it is a full day of trading there. So if you want to stay tuned and stay up to date during this holiday week, come and join us. We’ve got a full 14 day free trial going on right now, and I’ll throw a little teaser out there as well.

[00:01:24]:
Not for the 14 day free trial, but we will be running a July 4 special for all of our VRA readers and anyone who follows us on social media as well. So look beyond the lookout for that link. If you’re receiving this podcast in the email format, then you will see that promotion tomorrow. And if you follow us on social, you’ll see that link there as well. So come and join us. Got a great July 4 offer here for anybody interested for joining the VRA for the first time. All right, that being said, the timing really couldn’t be better because we had another good day for our markets today and really a good day for the podcast, which Kip and I joke about a lot. After yesterday’s getting all time highs, which Kip usually does, we were a little surprised that the market wasn’t lower today because it is my podcast day and Kib always gets the all time highs and I get the down days.

Well, today I got a big day of all time highs. We saw both the S P and the Nasdaq hitting all time highs day that’s now the 23rd all time high from the Nasdaq on the year this year and and the 33rd all time high from the S and P 500. Now, as we say here, often new highs begets new highs. We’ve seen it 23 and 33 times this year. So there’s the proof for you there. And going forward, a large number of all time highs like this, even in one year, does bode well for the markets and specifically our major indexes. All time highs are simply not a bearish occurrence. And we can’t forget here that July is the most bullish month of the year for tech and specifically the QS.

And so far it’s already looking like it’s going to be a phenomenal month. The QS also, which is the Nasdaq 100, also hit an all time high today with a phenomenal start to the month here. So let’s have some fun on this podcast today. On this half day, I’ll be running a few charts during the podcast as well. So stay bear with me here. We’re going to have a little fun today and we’ll go through all of our market action, the economic data yet to come, and that came out today as well as the latest from the Fed. We got the Fed minutes out at 01:00 p.m. today.

[00:03:51]:
And the ten year is pulling back here again. So it’s going to be a fun cast today. Thanks again for being here with us on the eve of July 4 here. So I’ll get to the rest of our market action. Like I said, Q’s all time high, most bullish month of the year for tech. I will get to that action here in a minute. But first, this morning we got out more economic data and we learned that hiring fell for the third straight month here for the ADP jobs report. Unemployment claims right at here, a one year high.

And we see this as what should be a wake up call for the Fed. Now, of course, all eyes are on the jobs data coming out Friday. That’s the big one. But we’ve seen time and time again over the last year, every single jobs report has been revised lower. So don’t just look for the top line numbers, it could look like a great jobs number and the yields could jump. And everyone’s going to talk about, oh, the Fed needs to hike rates. Pay more attention to what they do to the previous month’s numbers, because in the last twelve months, they’ve revised jobs numbers lower from the initial report by some. It’s over 700,000 jobs.

That’s a huge miss. How is that your job? Right. The Bureau of Labor Statistics and every single report gets revised lower. Something fishy is happening there. The Biden administration or financial expert, somebody figured out how to get to these people and get the inside track on how they manipulate this data, I can’t tell you what exactly the end goal of that would be, but we’ve seen the slowdown in the labor market. More people now than the last year that are either unemployed or underemployed as well. As we talk about here often with these jobs numbers, how many times have we seen it where no increase, in fact, a net loss in full time jobs, but we get a positive jobs number. How does that even work? Well, it works from one person, right, just on a very small scale for one person who loses their job, and now they have to go find two jobs, two part time jobs, in some cases two full time jobs, in order to meet their same level of wage expectations for the year.

[00:06:16]:
So what does the BLS do and other reporting services on jobs, they count that as a net, one job created for the month, despite the fact you lost a full time job and had to take on two part time jobs. They have that as a net, one job created, which is just unbelievable and incredibly deceptive on their part. So we, we’re never rooting for a bad jobs number here. We don’t ever like betting against the american economy. That means that people are getting hurt, right? People are losing their homes, cannot afford to feed their families. That’s never something that we wish for as patriots here at the VRA. But we have to look at the reality of the situation as well, and that is that employment has been slowing, not contracting again, just like we’ve seen economic data. These aren’t contractionary, quite level readings on the whole.

Right. Losing full time jobs is, of course, a contractionary reading, but on the whole, we’re not seeing the signs of a recession just around the corner here. But this, again, this should be a wake up call to the Fed that they have remained strictive long enough. And as we see it, maybe a little too long. And we don’t want to see the Fed have to get reactionary here. That’s what Kip talked about on his podcast yesterday, and is such an important point that rate cuts in a controlled, telegraphed environment like we’ve seen so far, that the Fed plans on you one to two this year. Jay Powell has stayed pretty consistent over the last few months about saying that those kind of rate cuts don’t freak the market out. What freaks the market out is if we get one month, a really bad jobs report, or in this case, maybe a really low, even deflationary looking inflation numbers, then you see the Fed panic and pivot on a dime, and then all of a sudden you have the next rate cut comes at the next meeting or the worst case scenario, a between meeting rate cut, a surprise rate cut.

Those are the actions that freak the market out and you don’t want to see in a rate cutting cycle. As long as we can stay true to this controlled and telegraph rate cut cycle, it should be absolutely no problem for our market. That being said, the CME’s Fedwatch tool saw another increase of the first likelihood of a rate cut being in September. It was up nearly 5% on the day to day for the probability of the first rate cut being in September now at a 68.1% probability. And another aspect here is if you go out and take a look at the full year, it’s now the majority view by the market has been for a little while, but it’s making more room to the upside here of the probability of two rate cuts, the second coming at the latest in December. Now, I don’t want to put too much weight into the CME’s Fed watch tool, right? One speech from Jay Powell can really change the probabilities here, but it is interesting to see that the market, which is usually right of what they’re predicting right now, despite the fact that J pal has been insistent that there will only be one rate cut this year. And usually when the Fed is really convinced of something, they get it wrong. Right? We remember this, whether it’s the 2018 December from hell where they hiked rates too far, or what they did during COVID telling the government they can print unlimited amounts of money, right? Remember Jay Powell? 60 minutes interview? And then shortly after that saying, oh, inflation doesn’t exist.

[00:10:15]:
And then, oh well, it’s here, but it’s not a problem. And then, oh no, it’s transitory. Okay, then after that, they finally acknowledge that inflation was an issue and started raising rates. You can tell when they speak with conviction. It’s not a very good sign for what they have to say. And just like that, the reaction today, even after, well, yields are the bond markets closed now, so we won’t be able to see the reaction to the Fed minutes, which came out just before I started this podcast. But the reason why I didn’t wait for those minutes to come out is that coming from what Jay Powell said yesterday after his dovish comments yesterday, that should make these minutes irrelevant today. We’ll see when the bond market opens again on Friday whether or not that’s the case.

But yields today appeared to be calling the Fed’s bluff here. Once again, we got that pop higher on Monday, which got us up to a 4.49. Everyone was talking about getting back to the four and a half level like it was some big deal. If you’ve been tuning to our podcast, you know, we don’t look at anything above or below 5% as a big deal that this market can’t handle. But since Monday, it’s already fallen rapidly down another percent and a half today, now at a 4.36. And our review may remains unchanged here that there will be pops like this along the way, but they’ll be in a series of lower highs and lower lows and ultimately over the medium to long term, the yields that this move lower in yields will continue. All right, changing gears here a little bit, getting off of a little bit of what some people consider a boring topic with the Fed. We love it here.

We think it’s fascinating to track, you know, that the smart money is paying attention. As the old adage goes, don’t fight the tape, don’t fight the Fed. So it certainly is important. And if the Fed is moving towards a less restrictive stance and potentially an easing stance, which we know they can’t wait to get back to, we want to be long this market. One of the other things that’s been so fascinating about this trading action, like I mentioned earlier, 23rd and 33rd all time highs this year for the Nasdaq and the S and P 500. Meanwhile, the fear and greed index fell back into fear territory today. We wrote it up to members this morning that it fell down to a 50, which is neutral, right. And right now, as of the close today, back into fear mode at a 44.

[00:12:59]:
That’s not extreme fear, right? Just barely out of neutral, folks. We just hit another round of all time highs, though. Absolutely unbelievable that we’re still in fear mode. And it’s another reason that as contrarians here, this is the kind of stuff that makes us really want to own stocks and get even more aggressively long than we are right now. We are. We have to be some of the biggest bulls on Wall street again. Our price target by 2030 is Nasdaq 40,000, Dow Jones 100,000, and we could even be on the low end of that. Certainly possible.

Now, this week, I don’t know exactly when the AAII survey is going to come out. We saw a 6% increase in bears last week, still a little bit elevated number of bulls there in from that particular survey. We’ll see what comes out, if it still comes out tomorrow. Even though it’s a holiday, I bet it will. So stay tuned. Everything interesting comes up in that survey. We’ll be sure to report on it here. All right, next up, taking a look at our market action on the day to day.

As you might expect, we were led by tech. Nasdaq leading the way up 0.88% all time high, 18,188. Lots of eights in there today. It’s my favorite number here, so love to see it. But even what you love to see more is the semis. Leading tech SMH was up 1.64% on the day to day. It’s just shy of an all time high here. But we are nowhere near overbought levels.

[00:14:41]:
Nowhere near overbought levels in the semis here. Tech is now reaching extreme overbought levels, but we still could have some more room to run. Their money flow is certainly not overbought at these levels. Excuse me. No, that’s correct. Money flow is not at all overbought here. So we are not at extreme overbought on steroids. Next up, the s and P 500.

Also putting in an all time high today, putting in some work above the 5500 level, which it closed above for the first time ever yesterday. Now today, up another half percent at 5537 here. Next up, small caps also finishing positive on the day, up 0.14% to 2036. Lastly, the Dow was our one laggard on the day, really pretty much flat, down just 23 points, or 0.06% to 39,308. So still not a huge way off from those all time highs. And I will point out today the Dow transports were able to finish higher on the day to day. They’ve really been one of our lagging major averages out there. The Dow transports have been, and if you’re a fan of Dow theory, you don’t love to see that.

You want to see the transports leading the way most of the time, or at least following the Dow into the range of all time highs. We have not seen that yet, but we are able to finish higher on the day. And again, we’ll look at that, a bright spot. And that is a multi month high from the transports as well. Still a little bit of a series of lower highs and lower lows here from the group. That’s not what you want to see. We want to see a breakout from that downtrend. Next up here, taking a look at our internals on the day to day.

[00:16:35]:
Another good day of internals here. A little light for the holiday shortened trading day, but overall, good numbers advancing. Stocks beating out declining stocks for both the NYSE and the Nasdaq. And this does make two days in a row of just about two to one positive readings from the NYSE. So good to see again, right? Just below two to one positive there and a little bit closer to even. Still solidly positive for the Nasdaq. 52 week highs, lows came in a strong five to one positive on the NYSE and just barely managing to come in positive here for the Nasdaq as well. We want to see some improvement from the internals.

This looks like it could be a good starting point here for that improvement. Next up. And lastly, volume coming in well over two to one positive on the NYSE. And it looks like we had a little refresher here. So let’s run one of these charts. Last I ran this, we had 71% upside volume on the NYSE. You know, still shy of a bullish breath thrust, but it’s good to see we did close a little bit below there. About a 67% upside volume, but still over two to one positive.

We’ll take it as a win on the day. And next up, Nasdaq. Just shy of two to one positive on the day. Next up here, looking at our VRA sector watch, we finished with seven out of our eleven s and P 500 sectors higher on the day to day, led by none other than the tech sector, which also hit an all time high here today. After that, we had materials, utilities and energy stocks on the day. And one other leader, I’ll point out, consumer discretionary, hitting an all time high today as well. Of course, it helps when the second largest holding is Tesla in that group. In Tesla, what an impressive start to the month.

[00:18:32]:
You’re up 22% in just the month of July. That’s two and a Half trading days. We were up 22% in Tesla. One of our VRA ten baggers here. It looks like it’s ready to go on a real tear and potentially reclaim that trillion dollar market cap that it has gotten to before. And I mean, just what a great run, really. And since the June lows, up 45% here, that is going parabolic there. Our laggards on the day for our sectors, mostly defensive, so no concerns here.

Healthcare, consumer staples, financials and real estate. And we wrote to our members this morning, the real estate sector, specifically the home builders, we are looking at an eye opportunities here, especially as it does appear the tide is turning a little bearish on the housing market right now. As contrarians, we look for signs like that. We want to see the bearish sentiment really ramp up there. And then we’ll get to a back of the truck kind of moment. All right, finally here for today, our VRA commodity watch. Gold having another impressive session here today. Back within, let’s see, right at $100 an ounce, away from an all time high today.

Up 1.39% to 23 65. The all time high 24 64. And just what you want to see from the group though, the gold miners rallying in a big way today. Up 4%. So that is over with three to one outperformance, GDX to gold. There is exactly what you want to see from this group. Just like you want to see semi’s leading tech and the transports leading as well. Next up, silver up on the day as well.

[00:20:25]:
Back above $30 an ounce at up 3.84% to $30.79 an ounce. Copper up two and a half percent to $4.52 a pound. Crude oil up 1.2% now to $83.83 a barrel, which would be just below its highest level since April as well. The energy sector is another one that we do remain bullish on here. Finally for today, bitcoin, after a little bit of a bounce earlier in this week, back down to the $60,000 level which has provided a nice base here. You know, always good to see basing at a higher low. So no concerns here from us, the group. Any pullbacks we see as buying opportunities now down 2.77% on the day at $60,394 a bitcoin.

Lastly for today, I’ll point out I haven’t talked as much about individual company names, but the all time highs continue here as well. Apple, all time high today. Microsoft, all time high today is the race for the first $4 trillion us market cap is underway here and we expect it to be an exciting one that takes our major indexes to more and more all time highs as well. Folks, that’s all that we have time for here today. Please be sure to subscribe to receive our VrA podcast every day at the market close. You can sign up@vraletter.com click the podcast link at the top and we’d love to have you with us. Thanks again for tuning in. Until next time, we’ll see you back here on Friday.

Hope you have a great July 4 weekend out there. And we’ll actually see you back here on Monday of next week for the close.

Podcast Newsletter

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Time Stamps

00:00 July 4 special offer for VRA readers.
05:07 Concerns about labor statistics revisions and market impact.
08:27 Market predicts two potential rate cuts. Fedwatch tool shows increasing probability for September.
10:42 Yields drop as Fed's bluff is called.
15:06 Stock market hits all-time high, Dow lags.
17:49 Stock market: positive day, tech sector leads.
21:23 Stock market reaching new highs, subscribe now.

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