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VRA Investing Podcast: Bull Market Breakout in the Semis, and Financial Strength – Kip Herriage – January 22, 2025

In today's episode, Kip is here to provide you with a comprehensive market update. It's been a remarkable day for the market bulls, with continued momentum in this major melt-up bull market. Kip also discusses the strength and und ...

Posted On January 22, 20251537
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About This Episode

In today's episode, Kip is here to provide you with a comprehensive market update. It's been a remarkable day for the market bulls, with continued momentum in this major melt-up bull market. Kip also discusses the strength and underlying confidence in the long-term prospects of this market. Tune into today's podcast to learn more.

Transcript

Don’t look back. The market is closed. Good Wednesday afternoon everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. If you are a bull, if you’re long the market, you had a pretty good day today. It just continues. This is a major melt up bull market.

This is something that’s been a theme of our some time. There’s really been the smartest strategy, been buying the dip. You just go back and look at the birth of this bull market and it’s always hard to do, you know, even for someone like me that’s done this for forever, it’s hard, it’s not easy buying depths because you think, oh, this may be the one, this is the one where the market’s going to drop 10%, 15%, right? But if you go back and look at the, at the history so far of this very young, very young bull market and it is very young, got a long way to go, your folks that I think that’s going to be the overriding theme that’s going to be most important is having confidence that in the long term, medium, long term, this market’s going a lot higher. That’s what, that’s what I view as. Tyler said this yesterday on his podcast. I have to say I wrote it up morning. I agree to them 100%. Our targets of Dow Jones, 100,000, NASDAQ 40,000 are going to be too low.

[00:01:04]:
Look, anything can go wrong. You know, we all, look, we all know the ifs, ands and buts, but you know, without, we don’t like to waffle. So we don’t, we don’t do that here. We’re telling you that we think our initial targets from over almost two and a half years ago in August 2022 are too low and that this market’s going a hell of a lot higher past 2030, into the 2000 and 30s. Because this is, it’s set, it’s set up to do that. The structure of this bull market is so incredibly strong that all the pieces are in place. The only thing surprises me is that more people don’t see it and they’re starting to come around. But most don’t see this and I don’t.

It seems like it’s, it’s staring you right in the face. I mean, these are facts that you, you can’t dispute. You can’t dispute that the, the America that matters most to the markets. First, second America, right? The, the America matters most in the markets has never been this strong financially. Corporate America clearly has never been this strong before. Debt levels are really low, both for corporations and individuals. So the ability for the economy to lever up is unprecedented. These are all unprecedented numbers we’re talking about here.

But at the same time, if so many continue to be bearish again, that’s one of the things we’ve been focusing here as well, is that there are so many people that are bearish that flip so quickly. You know, they go from bull to bear in a couple of days. Are people really day trading their accounts like that? Like, I see a piece of bad news and the market opens down to come a couple hundred points. Are they just selling? I think that’s still happening. We see it again, the sentiment surveys, they’re all, they’re all reflecting that even though we’ve had this big move higher over the last, what, week, week and a half, people, people are still bearish. Still. I don’t know, what are they concerned about? Please tell me, what are you concerned about? Are you concerned about high interest rates? Because I’ve got a lot of comebacks on that one. We’re not.

[00:02:59]:
Are you concerned about Trump’s tariffs? What is his policy? Anyone know that? No, we know he uses as a negotiating tool. But, you know, I think that what we know is that Trump loves watching the stock market go up. He’s going to keep doing things to make that happen because he knows what that means for the wealth effect. He knows that means for the broader economy. He knows it’s a reflection of how the underlying economy is doing. And then I think the biggest thing is he’s got a very good relationship with corporate America. They know this guy, they know that he wants to move the country forward and he wants 5% GDP growth. These are the things he wants instead of punishing America and Americans.

Right. So again, we’ve got a complete, you know, upside down relationship when we have with Biden administration. And I think, I guess, I think it’s just taking people time to really start to trust the process and to believe it. There’s still a lot of people that don’t trust Trump and don’t think he’s going to be able to pull these things off. I think, I think the market is telling us clearly the market believes that he is going to be able to. So again, we’ve got some good news to talk about today as well. Netflix, of course, had earnings after the close yesterday, just destroyed it, by the way. It’s the last time they’re going to include their, their, their viewership numbers, which I, or assume Me, they’re, they’re on a quarterly basis their number of subscribers.

That’s the last time, but it’s a great report. Stock finished up 10 today, so got us some good start this morning. But remember, right now we’re seeing a pattern here, aren’t we? The big banks reported earnings last week. They absolutely crushed, you know, stock. These shares were up 5, 6, 7, 8, 9% on the week. You know, again, big banks typically don’t run that much and now Netflix. So we also have a couple of big things that just happened. And so we’re writing this up in tomorrow, tomorrow’s letter.

[00:04:52]:
We actually included in this morning’s letter we finally got the breakout that we’ve been looking for in the semiconductors. And if you’re, unless you’re very new here, you know that we’ve tracked the semiconductors and the chip stocks. There’s no more important group when it comes to the market. There’s just not and there hasn’t been since the birth of quantitative easing in 2008. This is the group that matters most. The markets follow the semiconductors in both directions. And so for the last four or five months, they go nowhere. They’ve been in a tight range, I call it a coil spring where they bounced against the resistance.

They’ve moved higher from support levels, but they’ve never broken out either way up to the upside or downside. And so it got a little hairy there because they bounced off the 200 day, you know, to the downside here a couple of times. And you know, it could have gone the other way, but it didn’t and we didn’t believe it was going to because again, the underlying confidence we have in our macro theme, innovation revolution now Trump Economic Miracle 2.0. Just so many things. Again, the strength of the underlying economy, housing, et cetera, all points to one thing and that’s upside. So that’s the directional bet that we made with the semiconductors was higher and now we have that. We had a clear breakout yesterday and the semiconductors through 262 on SMH and again, crystal clear breakout. Now they’re up again big today, up another 1.8% today.

This is a breakout. Then today we got the same breakout in the NASDAQ 100, in this case, a bull flag formation that also had been building for several months. And so that was the clear breakout today. Again, NASDAQ finishing up today 1.3%. So this is textbook bull market. Under know this, this is textbook bull market action. Semis lead NASDAQ NASDAQ leads the broad market and now we’ve got these big breakouts and these important technical formations. I think it’s all, it’s all telling us one thing.

[00:06:52]:
This market’s going higher. This is a multiple market and a dips dip should be continue to be bought. This is not a nor. I wrote this this morning. This is not a normal bull market. This is not, it’s nothing like a normal bull market. We have trends, they’re converging at the same time. Now, you know our megatrends from the big bribe, right? We’ve covered these a lot over the years.

Now we have these two innovation revolution, which is of course part of our, one of our megatrends. But now we have Trump 2.0 back in place and it’s just, it’s going to drive US economy and housing markets again well into the 2000-30s, we believe. And the fact that we had the most pro business administration in history, that’s not even up for debate. This really should have investors salivating, but they’re not yet. They’ll come around. But again we like the fact that investors are staying bearish. That that means we’ve got a very productive and long term Runway in front of us for bulls. The news yesterday on Trump with his AI deal, $500 billion deal called Stargate, right.

I had some questions about it when I saw it because you know, OpenAI is part of it. I don’t really hear a lot of good things about them. I know Elon Musk doesn’t care for this group so I was surprised to see that Trump likes big numbers though. So, you know, a hundred million, A hundred billion from SoftBank CEO in Japan, plus I guess another 400 billion coming from this, from this, this, this consortium of big tech companies. But if you remember, the same guy, the same SoftBank guy said that he was going to invest 100 billion in Trump’s first term. That really never came to fruition. So you know, today Musk was out really shit talking the deal and he doesn’t care for AI. He’s called it a scam, the way that they’re building it, the way they’re funding it.

[00:08:46]:
And so I think it was a little surprising. But again, Trump likes to announce big deals so we’ll see how it plays out. Wasn’t wild about nuts coming out and disagreeing with Trump on something this big early on. And I’ll just make a point that Tom and I just talked about. When Musk said this, Tesla was at the high of the day like 427, 428, that was, that marked the top. And Tesla started falling. It felt it closed at 416. So again we don’t want to see any wedges driven between Trump and Elon.

So we hope that’s kind of a one off. But again, I think the big news of the day is this breakout in NASDAQ 100 matches the breakout yesterday in the semis. Again, this is extraordinarily textbook and very, very bullish. We just see the, the market lose some of its gains today. Tyler Kips keeps pointing out this great point about these rotations that are taking place. It’s just been, again it’s been, it’s, it’s, it’s, it’s elevated the markets over the last couple, three, couple of years and it’s really underpinned the markets because you know, once you get a group or sector that is too weak because what it’s time to, and then the ones that are bought, it’s time for them to take a break. And so you don’t see the market moving in unison. That’s when markets get in trouble, is when everything is moving up at the same time.

That’s not really healthy. That’s typically a sign of a short term top. So we don’t want to see that. So it was good though. Yesterday Nasdaq was pretty weak, but Dow Jones is up almost 540 points. All right. And then today we saw kind of the opposite of that. Dow Jones went negative this morning.

[00:10:24]:
It did finish up 130 points, up only three tenths of 1%. The NASDAQ up 1.3%. Again, semi is up 1.8%. So it’s just this, this rotational theme that almost happens day to day and sometimes that is, is continuing to extend and support this bull market. It’s very, very bullish. Again, textbook behavior. Russ 2000 today was our loan index. It was down, down 6, 10 1%.

Yesterday was up big like 1.8%. SB 500 was up 6/10 of 1% as well. So again, it was a good day here with the semis lead Nasdaq, NASDAQ lead the broad market. That is exactly what we want to see in our under the hood today. Let’s see internals. These, this, these are not good readings. We had strong internals when the market opened this morning. And I just had this right in front of me.

Where’d my internals go? All right, let’s do that again. But the internals this morning, like I checked like an hour into trading and they were garlic strong like yesterday was very strong. And I said okay, here we go. We’re finally going to get these really strong back to back days. And it turns out we didn’t. But. But the breath has been improving dramatically for the market. So all those saying eternals are terrible breaths, awful.

[00:11:41]:
They can’t say that now. We’ve had seven straight days of really strong breath. That is a record for the NYSE and it was broken today I will say. But again no real damage done here at all. Just an observation that that’s kind of why the market petered out today. The internals begin to reverse. NASDAQ today advanced decline was negative by about 700 issues. NYSE was 2 to 1 negative in advanced decline.

Volume today was a positive for NASDAQ by about a billion dollars. For the trading 4.1 billion to 3.1 billion down. And volume today negative 2 to 1 negative for NYSE. We had a good run here though. We did have a big, a big positive today. And new 52 highs. The lows we had 2 to 1. Yeah, better than.

Better than 2 to 1. Almost 3 to 1 positive for advanced. Excuse me. New 50 week highs to new 52 week lows in our sector. Watch today again not great here either. Today we had only two sectors finished higher, nine finished lower. Again we’ve had a pretty good run here. Technology up two and a half percent today.

[00:12:50]:
Communication services up 1.1 on the Netflix news. To the downside, utilities down 2%. No clue why that was the case. They trade as their own group and they are their own beast. Real estate today also down 1.8%. Rates were a bit higher today but Nothing really over 4.59% on the 10 year. But interest rate central groups did take a bit of a breather today. Of course they also have been very very hot.

That’s really it. To the downside, energy gave up 1.8% today. But again the energy stocks have been on a pretty good run as well. And our commodity watch today, some strength but not a lot of it. Gold although getting very very close to another all time high. What are we now 60 bucks away from an all time high goal today up $7 announced at 27.66. Love this group. We’re on records beginning this year saying go would be up again at least 20% this year was up 26% last year.

But the miners are going where the action really going to be. Looking for big gains in this group because last year they underperformed gold this year they will outperform gold. That’s where the value is, certainly where the leverage is. Silver day was down slightly, down 10 cents an ounce at 31.39. Copper today also down, down 1% at 429 a pound. Crude oil today again gave back some gains, down 40 cents a barrel at 75, 41. And finally on the day, bitcoin. Very interesting.

[00:14:16]:
So many interesting things happening with bitcoin. We’re all waiting to hear, of course, about the creation of the Cyber Wealth Fund, or, excuse me, a strategic reserve fund for bitcoin, of course, is another one of Trump’s campaign promises that’s going to happen. My guess is they’re going through structural issues right now, but a little bit of just back and forth, not a lot happening right now. Bitcoin just below 104,000. That’s down about 2.8% over the last 24 hours. The news of the day, I think that was most interesting was the interview that BlackRock CEO Larry Fink did. I think it was on CNBC where he relayed a very interesting conversation he had with the sovereign wealth fund that said we’re trying to decide between 2% and a 5% allocation to Bitcoin. And Fink said, if that’s the normal conversation happening out there among sovereign wealth funds, Bitcoin is going to 5000-006000-00700,000.

And of course, he’s right. So we went and did a little research on this. Guess what? We can’t find a single sovereign wealth fund that has filed any paperwork saying they own Bitcoin. Now, several have talked about possibly doing it, but no one has actually done it. Now there, the Norway Norwegian sovereign wealth fund is the largest in the planet. They do have a position in microstrategy. Okay, of course, you know, the, the big, if you will, the, the bitcoin hedge fund, if you will, but they don’t. They’ve never filed having any ownership.

So there’s not been one sovereign wealth fund that’s done this when, when that, when that hammer drops. And Cyber wealth funds, as Larry Finke relayed today, they’re seriously looking at doing it when that happens. Katie, bar the door. This is going to be crazy. Just like, you know, we still have the vast majority of investment firms, money management firms that do not let their advisors, do not let their clients even invest in bitcoin through them. You know, they’re all saying it’s a, they gotta go through due diligence. Right. Gotta pass the smell test.

[00:16:18]:
I don’t know what they’re waiting for. Let’s see the most successful and popular ETFs ever were approved by the SEC a year ago. Right. They brought in levels of money that no ETF has ever come close to doing before. So it’s SEC approved. Yet money management firms aren’t letting their client, their advisors recommend or their clients buy bitcoin. I don’t understand that to you but again when, when this when when these doors finally open and these become an eventuality folks the, the momentum behind bitcoin moving higher is going to be extraordinary. Again our our target year end is 200,000 but we’ve raised our now our our cycle high target to 350 thousand had been 250 thousand so we think we’ve got a long Runway in front of us and if anything I think we’re going to miss to the downside Keep buying bitcoin.

Pullbacks are a gift. All right folks, that’s it for today. Hope you had a great day. Maybe a better night. We’ll see back here again tomorrow after the close.

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Time Stamps

00:00 "Confidence in the Bull Market"
05:28 Semiconductors Breakout Amid Economic Confidence
09:18 NASDAQ 100 Breakout Signals Bullish Trend
11:14 "Market Internals Improving: A Review"
14:16 Bitcoin, Trump, and Wealth Funds
16:18 Bitcoin's Potential Surge and Resistance

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