While it may have seemed like a slow day on the surface, we continue to see good action under the hood of this market. Tune into today's podcast as we discuss the market action from the day, including the addition of Amazon and Uber to the Dow 30 index. We also analyze the upcoming economic data, bond yields, and global market strength.

Don’t look back because the market is closed. Good Monday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great start to your week out there. Hope you had a great weekend as well. It was a bit of a Monday for sure for our major indexes. Kind of a slow day. That didn’t mean there still wasn’t some excitement out there and a few big events.

But overall, kind of just sideways action on the day, meandering a little bit here. We didn’t finish near the highs of the day or get the smart money hour rally that we’ve liked to seen as of late from our major indexes. But we did finish off of the lows of the day. And smallcats actually did rally quite a bit today, managing to finish near their highs of the day. So again, it wasn’t all bad out there today, just a little bit of a slow day. But let’s take a look at a few of the big events from today. First off here, one that doesn’t happen very often. The Dow now has a couple of new members here.

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The Dow 30, right. The 30 stocks that make up the Dow is always interesting when you see a shake up here because there’s only 30 of them versus the Nasdaq where you have thousands of names, or the s and P 500, 500 names. Right. So today, this is the first change, I believe, since 2020. But today, Amazon will now trade as part of the Dow 30, replacing Walgreens Boot alliance here. It was in the Dow for less than ten years there. And the announcement was made last week with the Dow saying that reflecting the evolving nature of the american economy, this change will increase consumer retail exposure as well as other business areas in the DJIA. I think this move makes a lot of sense here.

Amazon, Kip talked about this on one of his podcasts last week, that where it was in the 90s, where it’s just an online bookseller, that was all they did. Not a whole lot of people could have looked at that and said they’re going to revolutionize the way you shop entirely, not just for books, but for everything you buy. I mean, they’re in every category now, from home goods, obviously, still books and everything from audiobooks and Kindle books as well to, again, home appliances, your groceries, you name it, they’ll probably ship it to you. And with that, they’ve become one of the largest shippers in the United States as well. So it fits in well with the Dow Jones industrials, really transportation here. Amazon is as much a transportation company as it is a tech company. Right. But just like with know we said a lot of people from the beginning underestimated that story.

A lot of people look at Tesla as a car company. It’s a tech company. Amazon has done kind of in the reverse way. A lot of people already looked at them as a tech company. But then you look at the amount of stuff that they ship from there, and it really is remarkable the way that they’ve done that. I would probably trust Amazon to ship me anything over usps, right? They’ve really changed the game there in a big way. Now, after the open, Amazon did hit a 52 week high, probably not off that news since it was announced last week. It did pull back to finish down slightly on the day.

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And similar story here with Uber was the other name that will now be trading in the Dow 30 as well, taking over JetBlue’s place here. Uber did manage to finish up fractionally on the day by two tenths of 1%. But here is an interesting note. If you followed the Dow closely for quite a while here through the last ten changes that the Dow Jones has made, the stocks that left the Dow actually have performed far better than the companies who are then put into the Dow Jones. For example, here, the median gain of the last ten changes, their median gain over the next year is 23.3%. Those are for the companies that have left the Dow. Now for new Dow members gained on average just 2.4% over the next year. So a bit of a buy the rumor, sell the news kind of event, at least for the last ten times.

For companies that have been added to the Dow again, most recently was when Salesforce took over Exxon spy. That was in 2020, roughly. I think it was August of 2020. Exxon. And it wasn’t just Exxon really. Energy stocks took off from there, but Exxon participated in that as well, went on a big tear while Salesforce really moved sideways to lower for some time from there, it’s now back in the swing of things, hitting a 52 week high today as well here. It’s still in the Dow Jones. So where will these two companies go from here? We used to own Uber here in the VRA portfolio.

We sold it with some nice gains. Only time will tell from here for these two. If you got any thoughts on it, let us know. We’d love hearing your questions or comments. Always at support@vrainsider.com. We’d love to hear from you, so feel free to reach out anytime there. All right, next up for the week. This week, we do have some important economic data coming out as well.

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The main one, the biggie here will be Thursday’s inflation data. This is going to be the PCE print, the personal consumption expenditures. This is the big one because it’s often cited as the Fed’s favored gauge of inflation. Sure. All right. That’s what they say. But so it’ll be really especially watched here because we had CPI and PPI coming in hotter than expected and in January. So we’ll be watching bond yields here ahead of this for the market’s reaction, I’ll point out bonds were up slightly on the day to day, really a little more than slightly.

The tenure was up nine tenths of 1%, still below 4.3, just barely at a 4.29. Still well below its recent highs, though. By recent, I mean the end of last year, where we nearly hit a 5%. Right. So a lot of people watching this year. But, you know, our view, bond yields at these levels don’t concern us. We think medium to long term yields have no choice but to continue heading lower, especially as the Fed is already talking about ending quantitative tightening in March as well. A lot of people were looking for a rate cut.

The quantitative tightening, ending that aspect of it should be a big deal bigger than it’s been reported on, the Fed’s restrictive stance here. But bond yields in a 4% range, that doesn’t concern us here. And you know the big reasons why. If you’re not a longtime listener, I’ll break it down for you here. You remember the 1995 to 2000 dot melt up that everybody talks about, right? The Nasdaq rallied 575%. For some reason, everyone likes to focus on the bust, right? That’s where all the attention gets spent. But there was massive amount of money to be made during that time. I’d much rather be a part of that than talking about the bus.

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Right? Well, during that time, when tech rallied 575%, bond yields averaged much higher than rates right now. The average yield during that time period was above 5%. It’s been a lot of the time in the six to 7% range. So no, yields in a 4% range don’t concern us here. If we started to see yields break out from that high of the end of last year just below 5%, then, yes, we would take another look and see where yields are going to go that would maybe stop this rally. But this market has been so strong, despite the Fed’s best efforts. Right? So in the 4% range, we don’t see that as the kind of yields that would be restricted enough to stop this market or stop this economy here. On the other hand, a higher us dollar would be a headwind for stocks, but we did not see that today with the US dollar closing fractionally lower.

Now, it was only slightly lower, but I’ve got to point out here it’s now finished down in eight of the last nine sessions, and it’s not at oversold levels here yet. So we would like to see that continue to head a bit lower. But in terms of yields, back to yields here, I will point out that globally we are seeing yields start to look like they’re peaking out the ten year boond, that’s the german boond is showing signs of weakness as well. And on that note, just what you want to see is global strength. We’re a global economy now more than ever. So we look broadly at the major indexes across the world to see how they’re doing. Right. A lot of places we tend to follow after or they follow us from there.

Well, we just saw the DAx ETF, which is DAX, the ETF for the german major index just hit a 52 week high today. And you can’t forget you’ve probably heard a lot about this as well. The Nike in Japan hadn’t hit an all time high in 34 years. Well, it just hit another all time high here today for the first time in decades. We look at that as bullish for the global economy. Another economy that we’ve seen do really well over the last couple of years as well is India’s nifty 50 is the major index there. The nifty just hit an all time high within the last week as well. So that’s the global strength that we look for here.

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And we look for that as a good sign for what we can expect to see here in the US as well. All right. So that being said, let’s take a look at us markets on the day to day as we begin to wrap up February. We’re in the last week of the month now, which we can expect towards the end of this week. A little bit of front running of what we always talk about here. The end of month fund flows ahead of the beginning of a new month sees fund flows from all kinds of different places, not quite as big as the end of the quarter, but the beginning of the month fund flows tend to help stocks rally there as well. But February is now looking like it will make four positive months in a row for the Dow, the S. P, and the Nasdaq here.

That’s some serious strength. Four positive months in a row. You can see how some people might see that and say, well, we’re due for a little bit of a pullback, right? Well, the only problem is that we’ve had a little bit of under the surface corrections here and some days that have been read that have pulled us out of extreme overbought territory. Right now, none of our major indexes are at extreme overbought levels, despite being right at 52 week highs and all time highs here. So, you know our view, over the medium to long term, we remain extremely bullish. And these multimonth rallies confirm that for us here as well. Take a look at this. In the last 25 times that we’ve seen a positive December, January and February, the future returns are higher 100% of the time.

Twelve months later. That’s some really good statistics right there. 25 for 25 with an average gain of 16%. Again, now, in the short run, doesn’t mean that there won’t be pullbacks along the way. In 2011, there was a 10% correction in that year, but our view would remain unchanged even if we were to get a 10% correction like that. We would use it as a buying opportunity here, because again, in 2011, the market still finished higher. Twelve months later after this indicator. Now that’s just one indicator in there.

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We have a whole list of reasons why we remain long and strong here. But the point of this at the end of the day is that we see the smart money move here continues to be to buy the dip. Nothing has changed in that view at all. So let’s take a look here at our major indexes. We had one of our four major indexes finish higher on the day today. That was the Russell 2000, which just saw its largest weekly inflow since June of 2022, saw 5.1 billion going into small caps last week. Small caps up six tenths of 1% on the day to 2228. And based off of IWM, the small cap ETF is nearing a 52 week high as well.

As we say here, often new highs are not a bearish occurrence. New highs beget new highs after that. Here we had the Nasdaq down just over one 10th of 1%, zero point 13% to 15,976. But I will point out here one factor we love to see. We want to see tech leading the market and semis leading tech. And the semis led today, finishing up eight tenths of 1%, just below their all time high there. After that, the Dow Jones down 00:16 percent to 39,069 and finally here for today, the S and P 500 down zero point 38% to 5069. So again, kind of a meandering day.

No big losses on the day. So, hey, we’ll take it here. Certainly not a very bad day at all. Then, when we look under the surface, we actually got some pretty impressive numbers from our internals on the day. With the Nasdaq lower, we saw higher numbers across the board here in the internals. So let’s take a look. Advancing stocks beating out declining stocks on the Nasdaq, not by a whole lot, but still a win there. We did finish lower, more declining stocks than advancing stocks on the NYSE, but here, not by a lot either.

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52 week highs. The lows were our bright spot from the internals coming in over five to one positive on the NYSE and over two to one positive on the Nasdaq as well. Lastly here, volume, similar story, slightly negative on the NYSE, but good readings. Just shy of two to one positive on the Nasdaq. So good day overall from the internals. Again, higher across the board on the Nasdaq. We’ll take that as a win on today when you’re seeing our major index lower there. Next up here, let’s take a look at our sectors on the day today, where we finished with just three out of our eleven sectors higher on the day today.

We’re led by energy, followed there by consumer discretionary, which just hit a 52 week high today. Again, not a bearish occurrence. And then we had tech actually did manage to finish higher on the day today. Let me run one more chart here, make sure I got this right. Yes. So the industrials were right there, flat on the day, but they did hit an all time high before finishing lower on the day today. And one other factor here that I want to point out, not one of our leading sectors on the day, but as we talk about here often, the real estate sector and the S P is primarily made up of reits. So it doesn’t really give you the housing perspective here.

This does much better for the home builders. XHB is the ETF we like to follow there. Just hit an all time high today as well. That’s really good to see. We also had the housing index finishing just below its all time high, and might even have been just shy, just shy of an all time closing high, though, from HGX, the housing index there. So again, we really like to see that one of our leading economic indicators there, housing, the home builders, finishing at an all time high today. Then, for our laggards. Utilities led the way lower makes sense.

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When yields are up, utilities are usually lower, followed there by communication services, real estate and materials. Again, just three out of our eleven sectors finishing higher on the day today. All right, finally here for today, our VRA commodity watch. Gold now lower on the day by four tenths of 1% to $2,041 an ounce. Silver down bigger nearly 2% on the day to $22.73 an ounce. Copper down as well, 1.6% to $3.83 a pound. Oil catching a bit of a bid today, up one and a half percent to $77.61 a barrel. And finally here for today, bitcoin.

Really showing some life here. We’ve talked about this ad nauseam lately with the bitcoin having coming up. This is a very interesting time to be long bitcoin in a group that we do remain long and strong here in the VRA portfolio. But another 52 week high today from bitcoin, up five and a half percent. Now, if I’m not mistaken, that should be right at the highs of the day today at 54,645. Let’s take a look here at the bitcoin chart. Oh, man. Sorry, 1 second here.

I want to see when the last time we’re at these levels here for you. The last time, November of 2021. So that is a multi year high from bitcoin, a move that we do expect to continue here, folks. That is all that we have time for here today. Please be sure to subscribe to receive our VRA podcasts every day at the market close. You can sign up@vraletter.com click the podcast link at the top. You can check out all of our transcripts there as well, and notes from the podcast. So take a look.

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Sign up to receive it every day in your inbox at the market close as well. So thanks again for tuning in with us here. Until next time, we’ll see you back here tomorrow for the close.