In today's episode, Tyler breaks down the latest in stock market action. Highlighting the outperformance today from the semiconductors and analyzing what that means going forward for the market. We'll also discuss the current overbought levels on our VRA momentum oscillators and what it means for your portfolio. Tune into today's podcast to learn more

Don’t look back because the market is closed. Good Wednesday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great day out there today. If you’re watching the markets today, you could probably guess who is doing today’s podcast. If you’re a new listener, we have a bit of a running joke here that Kip always gets the all time high days, and I inevitably get the down days. Now, it wasn’t a bad down day today, but we did start off the session with another all time high here today from the S and P 500. It’s 42nd high of the year this year, so that’s the kind of year that it has been.

Despite all of the gloom and doom, all of the negativity that you hear so much about every day. It really has been an incredible year for the market, and we expect a strong end to the year here for the market as well. So we’ll cover that in today’s podcast. We’ll also discuss what we expect in the short term here from the market as we have now hit extreme overbought levels. Well, I say heavily overbought levels, approaching extreme levels as well. We’ll also discuss the new highs that we’ve seen in precious metals as well, and what we expect from that group going forward. And overall, interesting action that we’ve seen from earnings, which continued into today as well. But I’m going to circle back here to one of my first topics, which is the negativity that we see out here.

[00:01:43]:
I was just talking to a good friend of mine who works at a university and what he’s hearing from students, you know, just on a surface level here, I won’t dive too deep into that today. But again, back to the negativity. And we hear this so much from our clients, from friends and family. You know, how can you be. How can kip and Tyler, how can y’all be so bullish on the market right now with everything that we’re seeing? You know, yes, inflation has come down, still remains extremely elevated. Look who’s in office right now and all of the things that are happening throughout our country. Well, that’s why we like to focus on the positives here. Just got another upward revision here to start off with, a few of the stats about the strength of the consumer, which may surprise a lot of people.

One factor we’re now up to 40% of Americans now own their homes outright. And I don’t think that point can be overstated enough. How massive of a deal, that is and what it means as rates continue to head lower as well. We’re going to get more homebuyers out there. The number of factors that are so positive, that fly under the radar of so many people, credit scores at all time highs on the corporate level. Corporations have reduced their debt holdings significantly as well. And the consumer has done the same. We hear it so often.

[00:03:15]:
You know, we’re, you know, this is 2008 all over again, and it just couldn’t be further from the truth, especially when you have 40% of Americans who own their home outright here, it’s just about an impossibility to get that kind of a scenario to take place again here now, no two recessions, no two crises of financial, on the financial side of things are the same. So, I mean, there’s always the risk of a black swan out there. Don’t get us wrong. But from what we’ve seen, there’s just none of the telltale signs that we’re looking at right now that say that this bull market is about to come to a close. You know, you look at the number, the record level of cash sitting on the sidelines right now in money market flows funds. You know, that’s something we’ve talked about here as well. With yields coming down, those money market funds aren’t going to be able to return the same levels. Those that cash on the sidelines is going to be looking for a higher return.

We think that that adds fuel to the fire for the stock market and increased liquidity as well for the stock market. And we’ve already seen it out of China. You’re there looking to bring back liquidity into or bring more liquidity to their market as well. As Kib and Charles discussed on their, on Charles Payne’s show, making money today, you know, it may not be the exact bazooka that everyone’s talking about, but this is the direction that we’re going to continue to head, and we see it continuing for some time. Remember, we are only not even yet to year two of this bull market. On average, bull markets last four to six years. Our most recent bull market following the financial crisis lasted over ten years. It was only derailed by Covid.

[00:05:15]:
Imagine where we’d be today. We might be in a similar place today because if you’re looking at trying to do a study on v shaped recoveries, 2020 is the one you’ve got to go to. Look at the sell off we got from the all time highs in February of 2020 into the bottom of March, and we were back to all time highs by late June, early July. Right. That is such a quick, short and sweet bear market there. It’s just incredible. So you could really say this is a continuation of that bull market. And we do continue to see this bull market running into 2030, ultimately taking the Dow Jones to 100,000, Nasdaq to 40,000, and we think we might even be on the low side there.

You’re going back to our big bribe mega trends that we talk so much here about. I won’t dive into all of them here today, but all of them remain in place. And the main one overall, continuing to be the innovation revolution, which I’ll get to here more in a second. But again, if you tuned into Kip’s podcast yesterday or his show on Charles Payne today, you know that a little bit of a pause here would not surprise us. Now, that does not mean that we’re saying that we’re selling our positions here at the VRA, but now is the time to use discipline based off of the VRA investing system. You know, this is what we do to remove the emotion from our investing. We still remain at ten out of twelve screens bullish right now, that can change a little bit, but it’s still overwhelmingly bullish here. But in the short term, we have hit overbought readings for our major indexes.

[00:07:03]:
So this is about when you would expect a pause. And so this is when we pause our monthly dollar cost averaging programs. Now, we’re big believers here. Monthly dollar cost averaging for everybody think it’s a smart money move for your portfolio, but this is the time you, again, putting a pause on those purchases, not a sell signal, but a short term pause until we can work off these overbought readings here. And the reason why we don’t use it as, at least at these levels here as a sell signal, is there’s also nothing more bullish than a market that gets to overbought levels and continues higher in face of that. So you don’t want to miss out on kind of the massive parabolic move higher at the end of some of these moves. But again, this is when we pause our monthly dollar cost averaging. So again, just kind of get that out of the way now, not selling positions, but pausing.

This is the time to be disciplined, and we’ll wait for the next dip to be bought. But there are certainly some opportunities out there right now. Again, I’ll get to this here more in just a second. As you can tell, I’m champing at the bit to get to this because it is so interesting, based off where our other major indexes are right now. But the other factor here that does have us a little bit in pause mode is investor sentiment. You know, we’ve exited fear mode, which we were at for a good part of the month of August, but now we are back to greed mode on the fear and greed index, hitting a 67 here today. So not extremely elevated, not extreme greed levels, but leaning that way. And tomorrow we’ll get back the latest look at the AAIII investor sentiment survey.

That’s one that we voted in here for a long time now, and we have seen a big increase over the last few weeks in bullish sentiment. You just two weeks ago we got down to below 40% bulls. Now one week later we’re back above 50% here. That’s a big swing. And investors sent to me, we’ve also seen a big swing lower in the number of bears. So again, not a sell signal, but this is when we would expect to get a little bit of a shakeout, you know, get some of that fast, some of that dumb money out of the market, as they, as they call it. Now, I know we’ve got a lot of smart money listeners here, but this is when the emotional investors who got in late now start to see a little bit of selling pressure and they just want nothing to do with the market. Right.

[00:09:38]:
So that’s, this is about those levels where we expect to get that shakeout here. Now, one other factor that has us so bullish I was excited to talk about here is one that we wrote about in the big bribe, and it is the earnings expansion that we’re now getting and really seeing more and more examples from. We’re now just three trading sessions away from entering Q four, which means we’ll get another round of earnings here. But a quick walk down memory lane of where we’ve been now, remember, after the v shaped recovery in 2020, we had a good 2021. And then we did have a bear market in 2022, wrapping up the year. Economists were extremely bearish on the economy. You know, everyone was looking for a recession. The stock market had fallen into the October 13 lows.

So by the end of the year, we had just recovered from those lows. And a lot of people were saying the lows were not in yet. We still have lower to go. That was the general consensus, not just from economists, but a lot of market watchers as well. Now, we know that that recession never came to pass there, but the forward looking earnings per share estimates for the S and P were $225 per share again, everyone was looking for a massive recession. Here we are two years later, and we were raising the earnings per share outlook in a big way. Now, I’m missing my note here. Ryan Dietrich put this out earlier today.

[00:11:19]:
Here we go. Yes. So the forward twelve month earnings per share has now gone from $225 per share at the start of 2023. Again, when everyone was calling for a recession, it’s now up to $267 per share. That is a big number there. And speaking of earnings, we just got back microns earnings after the close today, beating on both the top and bottom line. But it’s the forward guidance that has everyone excited here. Last I saw, Micron was up over 10% and after hours trading.

Tyler Herriage [00:11:56]:
Let’s get a quick refresh on that screen and see where we are now. 1 second here. Micron now up nearly 14% in after hours trading. So the group that I’m most excited to talk about here has been a bit of a laggard here, which we love to see. Tech leading, which we got today. The Nasdaq was our only major index to finish higher, but the semis led the way today. The semis up nearly nine tenths of 1%. That is big outperformance from the semis.

And the best part here is that we are nowhere near extreme overbought levels here on our short term VRA momentum oscillators. We are a little bit overbought there, but we still have a long way to run on our medium to long term oscillators now that we have the semis not at overbought levels, even if we have the S and P and the DAO at heavily overbought levels here. This gives us an opportunity for a bit of a return to the mean, if you will, where the Dow and the S and P can take a little bit of a pause and tech semis and the Nasdaq can continue their leadership higher from here. That thing, this is a great setup for that kind of environment here. It’s why we remain so bullish on the semis here. So that’s it. I was excited to talk about that here today. We do remain extremely bullish on the semis going forward.

[00:13:29]:
Now, let’s take a look here at our market action on the day. As I mentioned earlier, only one major index finishing higher on the day today. The Nasdaq up 0.04%. So just a fractional move higher, but to 18,082. After that, we had the S P down just under two tenths of 1% to 5722. And the next up, Dow Jones down seven tenths of 1% at 41,914. No concerns for us here. Remember, we are right in the ballpark of all time highs here.

It’s, yeah, tough to be bearish when you’re hitting all time highs. Lastly, the Russell 2000, which has been on an incredible run, was our lagger today down 1.19% at 21 97. Next up here, looking at our internals on the day to day this morning, much like our major indexes were slightly positive, but much like our markets did finish lower to mixed on the day to day, we did have more declining stocks than advancing stocks on both the NYSE and the Nasdaq. Roughly two to one negative there. 52 week highs and lows were our bright spot on the day. Bit of a lagging indicator, but hey, we’ll take it. Coming in positive for both the NYSE and the Nasdaq. Lastly here, volume coming in just under two and a half to one.

[00:14:56]:
Negative on the NYSE, but much better on the Nasdaq. So, yes, less than ideal kind of session from our internals here. But again, it’s been a strong run in what is seasonally the weakest time period of the year. And now that we have just three trading sessions left in the month of December, you know, we continue to look for this move to run higher from here. You know, if we work off again a little bit of these overbought readings, we’re ready to rock. So no concerns for us from the internals just yet. Next up, looking at our sectors on the day today, we did finish with just two out of our eleven sectors higher on the day to day. We were led higher, interestingly, by utilities.

I say interesting because they’re very sensitive to bond yields and yields were up 1.2% on the day to day. The ten year, nothing to write home about at a 3.78. But the utilities hitting an all time high today. And we take that as another tell. Much like the semis not being overbought here. And leading the way today is a tell that we think semis and tech are going to lead from here. Utilities hitting an all time high today. We look at that as a tell of the direction where yields are going from here.

Remember, the stock market is a forward looking mechanism. So utilities hitting an all time high today tells us that investors are expecting lower yields going forward. And last point here on bonds, we had hit extreme oversold level on bond yields. So a little bit of a bounce here doesn’t surprise us at all. No worries here for us. And we do expect the trend lower for bond yields to continue now. Our other positive sector on the day was exactly what you want to see. Tech.

[00:16:50]:
Our laggards on the day were energy. Oil prices got hit hard today, followed by healthcare, financials and materials. Finally here for today, our VRA commodity watch. Let me get a quick refresh of my screens here. 1 second. Gold now positive on the day to day, did hit an all time high again here. I mean, we blew through 2600 on this move and now we’re already looking at 2700 at the highs of the day, 26. $94 an ounce again, we have pulled back a little bit since then.

Still up 0.15% on the day to 26 81. Next up here, silver lower on the day by about 1% at $32.12 an ounce. At the highs of the day, though, it was only $0.15 an ounce away from its highest level since December of 2012. Nearly a twelve year high from silver again, a group that we remain extremely bullish on. As well, precious metals and of course the miners, which have been on an incredible run as well, are at overbought readings, but did hit a 52 week high, you know, a multi year high really, I should say earlier in the session today before pulling back. Next up, copper pretty much flat on the day now down 0.08% at $4.48 a pound. And oil, as I mentioned earlier, getting hit hard today down nearly 2.5%, back below $70 a barrel at $69.82 a barrel. And finally here for today, bitcoin now lower on the day as well, but hit its highest level for the month of September.

[00:18:38]:
Earlier in the session today at 64,788. Again, we have pulled back now down just over 1% at $63,503. A bitcoin here. And one last point here that I’ll make. You know, some of this move in crypto might have a little bit to do with the Fed here, where the odds of another 50 basis point cut continue to increase here. Now, some of the Fed speakers out this week with a dovish tone does help this here a lot, but we are now at 60 40 in favor of another 50 basis point. Excuse me, 50 basis point cut here. And as we know, the Fed doesn’t lead, they only follow.

So we’ll see if we can get another 50 basis point cut again, fueled to the fire for this market to continue moving higher. And on that note too, mortgage rates just hit their lowest level in nearly two years today as well. So again, we see yields heading lower, folks, that is all 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 tomorrow for the close.