In today's episode, Tyler dissects the "Turnaround Tuesday" effect we experienced today in our markets. We'll revisit our stance on the current bull market, which, according to historical trends, still has plenty of room to grow. Tune in as we analyze the key components driving the market, including recent moves in yields, the Federal Reserve's latest stance, and how these factors are impacting investor sentiment.

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. Hope you had a great, long Memorial Day weekend as well. And to second, Kip’s sentiments from yesterday, thank you all to our military families out there, and thank you all to those who paid the ultimate price to preserve freedom in this wonderful country that we live in here. So hope you all had a great, long weekend and a great start to your week this week. And this week just seems to be going by really fast already, doesn’t it? Of course, with Monday off, it’s always going to seem like, like it’s going to buy a little fast.

But it felt like a Tuesday just about all day today, including in the market as well. As we got a turnaround Tuesday today as the second day of the week, we’ll still call it a turnaround Tuesday. All right, turn around Wednesday. But if you listen to Kip’s podcast yesterday, you know, you might have seen this one coming, as Kip and I, we joke about this all the time, that tip, Kip typically gets the all time highs, high days. Yesterday, the Nasdaq just hit an all time high, and then I invariably always get the pullback days. Of course, we are in a brand new raging bull market right now, one that we’ve called going back to the October 2022 lows, when we told our members to begin backing up the truck to buy then. So I’ve gotten a good share of, or at least my fair share of good days in there as well. And the good news is that we’re just in year two of this new bull market, year and a half in, really.

[00:02:01]:
I guess we’re 20 months in now. That sounds about right. October of 2022. So, yeah, about 20 months in now. And the average lifespan of a bull market is at least four years. The previous bull market going back before coronavirus insanity, was one of the longest running bull markets of all time. So, you know, they can go much further than just four years. But based off of that metric alone, we know that there are a lot of all time highs still yet to come here, as we aren’t even halfway to the average for a bull market.

And I’ll point out here, if you’re, if you’re bearish in the short term, remember this, that for every bull market going back to World War two that has lasted at least one year, one full year has gone on to last at least two years as well, 100% of the time going back to World War two. So, yes, you know, there’s a lot going on right now, really for the last few months, but this market just continues to shake it off and continue getting back to all time highs. That view here for us has not changed at all. Although, you know, if you see Kip doing a podcast on a day of all time highs, then it’s probably a good idea to buy some puts at the close of that day. I joke about that here, but we do talk about this a lot because it seems like it happens too often not to, you know, throw a little bit of money at this as a little bit of a just for fun kind of strategy. And all jokes aside, if you put the proper risk parameters in, you know, stop losses and profit taking mechanisms as well, this strategy might actually work, because it really seems time and time again, we have seen this. So that being said, though, let’s get on with our day into what matters here, and that is our market action on the day today. So, as you may have surmised by now, yes, we did finish lower across the board today for our major indexes and towards the close.

They didn’t really act like they want to go higher tomorrow either, although we did see a few signs of what may end up being early capitulation events that we’re witnessing right now. I’ll cover some of those in the podcast today. But my point here is specifically is that we had a poor smart money hour today. Now, the Nasdaq didn’t finish its lows of the day. The semis didn’t finish at their lows of the day. So those are the two, you know, big winners that you want to see. Kind of the relative, you want to see the relative strength of these compared to the rest of the market where we had the Dow finishing close to its lows of the day, the S and P, just a little bit off of the lows of the day, and similar for the small caps as well. And if you look at the financial mainstream media, you’ll see that yields were a big part of this today.

[00:05:09]:
They were up 1.8%, now back to a 4.64.62, to be precise. You know, still some room to go here before we take out the highs of late April. For the ten year yield, that was a 4.73. But I got to point out here that we are already hitting overbought on our short term vRA momentum oscillators for yields here. So we’d love to see this make another lower high going back to the peak in October of last year, where we almost got to 5% in the short term, going back to just the beginning of this year, we’ve seen higher highs and higher lows. We’d like to see that trend in here. And what we’ve seen is. Well, from this group is once we get back to overbought readings, that marks about the top of the move.

So not necessarily calling it right here at a 4.62, but our call remains over the medium to long term that the direction of yields will be lower. Now, it is interesting that the CME’s FedWatch tool now has shifted once again from two rate cuts this year to now predicting just one, and that one would be in November after the presidential election. It’s funny how fast sentiment can change in this market is just a week ago, one week ago, September was the majority view for the first rate cut, with a 49.4% chance of the first rate cut being in September. Now it has gone to November, and the majority view there is still for a rate cut. We remain unchanged, still looking for two to three this year. But the feds got to talk a big game. They’ve got to jawbone this market lower and yields higher. Of course, it will be interesting to continue to follow this treasury auction story, which a lot of people have covered.

We might take some time to cover it here more in depth, but essentially what you need to know is some of these treasury auctions have been going very poorly. You know, it’s almost like the bond market saying you’re going to keep printing money like that, then why are we buying bonds? Yeah, you go buy them, you do something instead. You know, almost just get me out of here kind of feel to it, at least over, you know, the last month or so for yields. And the developing treasury story here really is taking place over the last few sessions as well. So yields on the rise, especially coming up on important inflation data this Friday, will concern a lot of people. We’ll look at it more from. All right, our markets going into this report are nowhere near, or at least have pulled back from extreme overbought levels. So we like that.

[00:08:02]:
And yields are hitting extreme overbought levels going into this report. Both of these are when you typically get reversals. And in a strong bull market, major indexes don’t have to get all the way back to extreme oversold or even oversold levels before the next move higher, especially in a young bull market like we have right now. But back to the Fed here, because they really haven’t done the market any favors recently, which, no problem. We were really hoping for a second half of this year where you could forget about the Federal Reserve. But now that rate cuts have come so much back into focus, a lot of stock is being put into what these Fed speakers have to say, which a lot of the time is just noise. And here’s a very specific scenario of that you might have seen yesterday, Neel Kashkari’s comments. Neel Kashkari is the president of the Minnesota federal, or, sorry, Minneapolis Federal Reserve.

And yesterday he said he wants to see more positive inflation before a rate cut. First off, this guy has missed so many calls that it’s hard to keep count of them. Right? He just goes out there and says whatever. He’s made so many bad calls, but that even isn’t even the most important part. People are making a big deal out of his statements, like he’s got some serious sway at the Fed. You know, if you’re just watching interviews, you might think that. But what’s so interesting here is that Kashkari is not even a voting member for the FOMC in 2024. He was last year.

It changes, though, and so he won’t get another vote unless he’s still the president of the Minneapolis fed in 2026. So, you know, not, don’t put too much weight into this guy’s comments, first of all. And second of all, he doesn’t even have a vote. So why are we still talking about this? Of course, you know, it’s important. He does know what’s going on to the Fed, what their conversations are. So I get the reasons why people, you know, he has a certain level of credibility there. But again, let’s go back to the fact he doesn’t vote and has missed calls like this time and time again, chances are he’s out there to jawbone the market lower here. And that’s what we take it as.

[00:10:24]:
So again, all eyes are now on Friday’s PCE inflation data. It’s always been called, or at least has been called, maybe not always, the Fed’s favorite gauge of inflation. The setup here looks to be for a recipe for a move higher. Really, we’d love to see the market go up on bad news. Of course we want to get lower inflation data, but if the market heads higher in the face of that, it’s bullish there as well. And then if we get lower inflation data again, the setup on the technicals are for a move higher here. After we’ve worked off some of these overbought readings, which really all setting up pretty well looking into Friday. But to go quickly back to sentiment here, it’s really interesting how short lived the bullish sentiment has been on this recent move higher.

Despite the Dow S and P and Nasdaq all hitting all time highs very recently, we’re still seeing a decline in the, excuse me, in the fear and greed index now falling closer to fear territory today. Getting down to a 47, just barely got back to greed territory for about a week. And now it’s all the way back down to neutral and on the edge of fear levels here. All of that despite another amazing month here for the market. All of our major indexes are higher for the month. I’m just going to run one quick chart here before I get into that. So yes, we had it down April following those five straight months of gains. And now we are up in a big way in the month of May.

Right? Okay, so how really fast, back to sentiment. Think about how quickly sentiment fell from last week, from greed levels almost all the way back down to fear now. And part of that makes sense, the Dow is down just over 1600 points from its recent all time highs. But, folks, it’s still up 1.65% on the month of May. And just what you want to see, leading the way higher tech. The Nasdaq is up 8% for the month of May still, and even better. Semis leading tech. Exactly what you want to see, tech, leading semis, leading tech.

[00:12:54]:
The semis are up 14.74% so far in the month of May. The S and P and even the small caps are higher on the month here as well. But the Dow is our laggard still up 1.65% on the month. So it’s tough to complain about a month and get really bearish when you’re seeing these kinds of gains and all time highs. As we say here, often new highs beget new highs in the short term, you know. Yeah, we’re a little bit more cautious here. A few weeks back, we took some profits. We set some stop losses today as well, just to protect gains, not because we don’t remain ultra bullish going forward, but, you know, like Kip said yesterday, you never go broke taking profits.

And when you’ve got 50% gains in a very short order, you want to protect those gains. And then we’ll look back for an opportunity to get long this market again. I’ll even throw a little Easter egg in here for anyone listening that we said when we went 150% long the semis, that our other option was in housing. Now if you want to get the specific buy recommendation, go visit vra letter.com. you sign up there for a 14 day free trial. Check out all of our previous positions and you’ll get our daily updates as well and our current VRA portfolio. If you’re a client of ours currently, you’ll likely know which housing ETF I’m talking about that we like to trade here, but for charting purposes, we use XHB, which is the S and P, home builders ETF. We use a couple of other ones as well.

I won’t dive too deep into it today, you know, but if you’re just looking at sectors, you might think of housing being the XLRE sector, which is one of the eleven S and P 500 sectors is primarily made up of reits, though. So we don’t look at it as much. We rather look at the home builders than that. That being said, home builders are down on the month and are reaching extreme oversold levels as well. We said when we bought our semiconductor position that it was between that and the home builders. And so now we’re looking at an even better opportunity here to pick those up again. Again, if you want to see our favorite buy Rex, go visit us@vraletter.com. all right, so back to our markets here on the day.

[00:15:21]:
Let’s take a look. All four of our major indexes did finish lower on the day. Nasdaq led the way, if you want to call it that, down 0.58% to 16,920. After that, the S and P 500 down just about three quarters of 1% to 5266. After that, the Dow Jones down 1.06% to 38,441. And I want to pause here briefly because while we’re wrapping up the end here of Q one earnings season, there are still more reports coming in. Today was a pretty big one. Salesforce, I mean, roughly 100 and 5250 billion dollars company.

I’m going to be embarrassed if I got that wrong. So I got to double check now. Bear with me. All right. CRM, the ticker symbol for Salesforce market cap 263 so I was close on my second attempt there, but they reported earnings today. The stock is now down over 16% in after hours trading despite beating on earnings per share and just a slight revenue miss. But the market has been punishing revenue misses for certain companies at least. Now the Dow is down and at least it was down an additional 200 points in after hours trading, making its current losses on the day of 600 points.

Still would have gains for the month of May if we opened at these levels tomorrow. But what was most interesting here was the transports, which have broken down below their recent low, which is not what you want to see. Their low from the end of April. Transports are now below that level. Now, we’d like to see a rally above this tomorrow to kind of give us a bit of a head fake here. But if you’re a fan of dow theory, if you follow Dow theory, the transports breaking down does not bode well. So again, we’d like to see the transports begin to rally here. And when you look at the chart, you see big sell side volume on the day to day.

[00:17:32]:
The biggest candle for volume going back to, you know, roughly two years ago there. So when you see big volumes, levels like this on a big down day like we’ve seen, you know, it can sometimes be the signs of a capitulation esque event. You know, we’d like that to be the case here, but stay tuned. We’ll be continue to report on this here. And again, the main point for us continues to be that the semis are leading and tech is leading as well. Lastly here for our major indexes, the small caps down one and a half percent on the day to 2036. Next up, looking at our internals on the day, we did get some not great readings here. Negative across the board today.

Declining stocks beating out advancing stocks. Roughly five to one negative for the NYSE. Just under three to one negative for the Nasdaq. Actually, I’m sorry, just under, I believe that was two to one. No, forgive me, that’s volume, roughly three. Just under three to one negative for the Nasdaq. 52 week highs, lows, as you may expect, came in negative but fairly light readings here. And lastly, volume, not what you want to see.

80% downside volume today on the NYSE. That makes a couple of readings in the 80% range in the last week or so. Again here, you’d like to see that be a short term blip on the radar. And then volume on the Nasdaq was better, though, coming in better than two to one negative on the day today. Looking at our sectors on the day, not pretty here. A lot of red on the screen. All eleven sectors finishing lower on the day. We were led by tech, followed by communication services and consumer discretionary after that, excuse me.

[00:19:25]:
For our laggards, energy actually led the way lower today, followed by materials and industrials. And lastly here for today, our VRA commodity watch, where some more red on the screen here as well. Really no flight to safety trade today except for the traditional flight to safety trades. If, you know, if you are a regular listener, that comment might make some sense to you. As on the down days it was everything must go recently where even yields were lower, the US dollar was lower, and our major indexes and stocks were lower as well. Today, that was not the case. As I mentioned earlier, the ten year was up 1.8% on the day in the US dollar higher as well. So maybe just a little short term flight to safety, little hesitation ahead of inflation data, you know.

Again, stay tuned. We will continue to report on all of these things here. All right, so for our commodity watch today, gold now down over eight tenths of 1% to $2,336 an ounce. Silver now slightly higher on the day, just under one 10th of 1% higher to $32.16 an ounce. Copper down 1.6% at $4.77 a a pound and oil down as well, roughly 710 of 1% to $79.28 a barrel. Finally here for today, bitcoin taking on the chin a little bit today. Down one and a quarter to $67,453 of bitcoin. Folks, that’s all that we have time for here today.

Please be sure to subscribe to receive our VRA podcasts every day at the market. Close can sign up@vraletter.com click the podcast link at the top there and we’d love to have you with us. You’ll find our transcripts and comments there as well. So thanks again for tuning in. Until next time, we’ll see you back here tomorrow for the close.