In today's episode, Kip dives into the latest market trends and speculation surrounding some of the big names in the investing world. We'll dissect GameStop's financial health and explore Kip's bold strategy moving forward. Kip also touches on the booming performance of semiconductors and discuss the market's internals, insights on energy stocks, and crude oil.

Don’t look back because the market is closed. Good Friday afternoon everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a great day today. Hope your week is fantastic as well. Going to keep this a little short today on a Friday afternoon and let you get off to your weekend. Got a lot here happening at the Herriage household. I hope you have a great weekend, too.

First of all, this is a very interesting market. We are seeing things that only happen, that only happen in big bull markets. So stay with me on this. First of all, let’s get the markets out of the way. Dow Jones again, another day like yesterday, we had big opening losses in Dow Jones. Nasdaq, of course, held in semis, continue to power higher. Tyler just told me this is for the week. This is for the week.

[00:00:47]:
The semis, meaning SMH, the semiconductor ETF, was up on the week, 6.2% sox hole, a three time leveraged long ETF for the semis, up 15% on the week. On the week. So yeah, the semis continue to lead. When the semis are leading, there’s one thing, look, this is, you hate to say it guarantees since the birth of quantitative easing, there’s been no better market tell than the semis. It’s not debatable. The semis are your tell. And the one thing we know is that when the semis are leading, and it doesn’t matter what direction, but when the semi so leading higher, you want to be low in the market. That’s just the way this works.

And again, until that pattern is a repeating pattern of size and scope, as repeating pattern is held up for better than 15 years, it is remarkable. So until and unless that changes, we’re going to. That’s our go to. Why wouldn’t it be? Right? That’s more to talk about it. Always surprised that this isn’t something that’s almost on every broadcast. I guess when that happens, it’ll stop working, right? When everyone recognizes. Maybe we should just be quiet about it and start talking about, except in our own little community here. But when the semis are leading again, want to be long, that’s our tell.

So what’s happened, though, in this market? Let’s talk about what happened with the Fed presser. Look, when Jay Powell started talking, the Dow Jones was up close to 350 points. And then this guy goes off script again and starts talking about, well, inflation is going in the right direction, but employment, what do you mean but employment? Tyler covered this in detail in this podcast on Wednesday afternoon, the Fed’s job is to make sure we have full employment, not to start trying to destroy employment. And so the market heard this. And it’s not that an individual heard it and hit a sell signal, a sell button. No, these are algorithms, right? These are tightly controlled algorithms that key off buzzwords. And they picked this up, and many of them are programmed the same way. And these high frequency trading programs picked this up.

[00:02:56]:
And here came the sell programs for value stocks. That’s in Dow Jones. Here came the sell programs for bank stocks. Here came the sell programs for the transports. And we have all the evidence that this is exactly what took place. So the point being, again today, the Dow rallied back big time, was down over 300 points as it was yesterday, said he, finishing down at 57 points. That’s just a 10th of a percent. The S 500 was only down two points on the day.

I just missed another all time high, which, of course, hit it yesterday, was 2000. That’s, that’s, you know, the chart. Is, is the chart still constructive? Believe it or not, but it’s just a pain trade. And again, this feels like 95 to 2000. And, folks, 95 to 2000. It was tech, tech, tech, tech, tech. And this feels like that. It just does.

But this market is going to be different. It is broadening in a different way. And I believe because this economy is so strong, I think we’re going to see a different outcome. But that is what’s been happening today. Rose 2000 down 1.6%. Finally, Nasdaq all time highs again today, up 21 points. That’s up one 10th, 1%. But back to my point about Jay Powell.

[00:04:07]:
So when Jay Powell starts going off script and talking about now we’re concerned about employment, okay, that was, that was going to be one of the, one of the poor outcomes of the Fed being so restrictive. Right. And now it’s not just a poor outcome, it’s being targeted. No, no, that’s Jay Powell tinkering. He’s either tinkering or he’s just going off script. And the end result is that value stocks have been in the toilet since then, and they were really recovering. And again, we had a rotational theme. This entire bull market has featured rotational themes, and that’s what’s prevented us from having any big downdrafts.

One group gets hot, one sector gets hot, one index gets hot, another takes a breather, and then they just kind of keep playing catch up with each other. All time high. All time high. That had been happening until all of a sudden, Jay Powell comes out and again lowers the boom. About for some reason talking about employment. So bottom line is we have strong economy inflation. We saw it in the CPI this week, saw it in PPI. Data is certainly, disinflation clearly is taking place.

It’s going the right direction. We believe that’s going to continue to happen. And you see it also in the ten year yields, don’t you? Ten year yields now down to four point, just over 4.2%. What happened to all the folks just a couple months ago saying we’re going to have rate hikes? No, we’re not going to have rate hikes. We still believe, as our forecast, beginning at the beginning of the year, we’ll have two to three rate cuts this year. We’re standing by that. We think that’s going to be, we think that’s exactly where they’re going to come in. Two or three rate cuts this year because the economy is weakening around the edges.

[00:05:50]:
Again, the transports, okay, the transports now it just hit another low for 2024, well below the 200 day moving average. All right, Jay Powell, if he’s not watching this, he certainly should be Kre, the other index, and frankly, the one he should probably watch more than anything else because KRe, of course, they regulate banks. The Fed does. So they’re obviously aware of what’s happening. They should be. Although they missed Silicon Valley bank, they missed the spring from hell, spring of 2023, when we had the regional banking crisis, they missed it entirely, both from a regulatory point of view and a financial health point of view. Tre the regional bank ETF again today. Now right back at 2024 lows, also below the 200 day moving average.

So these are the things that shouldn’t be happening in a strong bull market with a strong economy. Yet here we are. So look, at the end of the day, this is going to get resolved. This is just something we have to put up. Maybe it’s the Fed’s way of trying to make sure they put the final, you know, final nail in the coffin of inflation. Maybe this is what they’re trying to do. They don’t want to run away. Stock market, because again, that in itself is inflationary.

We just saw, learned from Ed Hyman this week, the great economist, 50 years plus at Evercore. We learned this week that according to their work, the consumer net worth is up over 10% so far this year. So it’s extraordinary growth. And again, you can say, well, it’s the 1%. Even that’s not accurate. We’ve covered this ad nauseam. 67% of americans own at least one home. All the all time highs we talk about all the time across so many different financial areas is a very strong economy.

[00:07:40]:
Yes. We have two americas. I don’t know that apologizing for that is going to help us make money in the stock market. I don’t have the power to control it. Maybe you two j pal should. Absolutely. Some power. Even they can’t do it.

But the bottom line is we’re in the roaring 2020s. We are in. I’m going to share something with you next. It’s really going to make this point very clear just how unique this bull market is and how we know with almost absolute certainty, with almost absolute certainty that we are in the early innings, if not the first inning of this bull market. We think it’s going to go on for a very long time. It’s a structural bull market of size and scope. This is incredible. Here we are at all time highs again, semis, Nasdaq, SF 100 every day.

Every day this week. But today, all time highs. Right? Dow Jones is still 3.7% away. Again, that gets back to the point earlier about value stocks and what they’re, what the Fed is apparently missing. But just getting over the final bit of these allergies here, the fear and greed index is at 38. That’s fear territory. We’re at all time highs, and these sentiment surveys are either fear or rambling towards fear territory. This does not happen.

[00:09:01]:
All right? This does not happen at the end of a great bull market run. This is exactly what happens when you’re early in a bull market because the skepticism is still so prevalent. Right. The negative sentiment is still out there, folks. When we get anywhere near a top that matters, and I don’t mean a two, three, four, 5% pause or shakeout. I mean a real top something. We got to go. Okay.

Yeah. You know what? This market may drop ten to 15. This may be a really big shakeout, like 1015, possibly 19% just before we get to bear market territory, 20%. But we’ll know that that could be approaching when we’re hitting the market starting to fall. But the sentiment surveys don’t move lower. I’ve been through many of these bull markets and you’re like, man, look at this. Markets down already down six, 7%. But look at these sentiment surveys are really hanging in there and they’re the last to go.

That’s the sign. I don’t know that there’s a better sign. We’ll make sure we continue having this conversation as this bull market evolves. But I think the takeaway at least for me and Tyler for this. The takeaway is you can continue to invest confidently, especially when you have a market with the internals that we’ve had this week. These internals this week had been pathetic. They’ve been pathetic. And they were again today.

[00:10:23]:
Okay. We had one day this week with good internals, and that was yesterday, I believe day. Wednesday. It was Wednesday. Every other day this week, the internals have been bad as the markets hitting all time highs. So that, that may sound like a sell signal. Here’s why it’s not. When you’re, when you had these kind of internals, and by the way, we had eight of eleven sectors finished lower today as well.

I’ll cover the market internals in a moment. But when you see these kind of ugly internals, but the market keeps hitting all time highs, that tells you, right? That’s the tell. That’s the tell. Because if the best the Bears can do, if the best they can do is cause the dow to get on 57 points and SBF 100 drop two points with these kind of internals, then they’re in trouble. Then they’re in real trouble. And I think they know that. The old saying, it’s never short a dull market. This is, this is that deal.

This is exactly that feeling. Other thing I’ll point out again, we’re so far away now for being anywhere, anywhere near sniffing oversold. Check this out again. Good stuff from Tyler here. The percent of the SP 500 above the 50 day Mme average is down to 46.6%. You get over 90%, you start to get worried again. The bears can hit this market even with these ugly ratings. Also, the percent of the 200 day moving average is down to 67%.

[00:11:46]:
That’s a new low for 2024. So again, that just kind of proves the point we’re making here, that when this, this market is now catching its wind, this market is rotating. It’s, they’re having little bitty dispersions beneath the surface, you know, but, but above the surface, everything’s fine. And that just, that’s a testament to the strength of both the market and the economy. I believe. The other point is that, guess where you are. It was today. Today’s June 14.

What’s going to happen in two weeks? In two weeks, we’re at the end of another quarter. At the beginning of the third quarter. Can you believe how fast these years are going by? So what do you think is going to happen? We always know at the beginning of the month we have front running of fund flows. That we come into the market. So that means we’re going to be gearing up for second quarter earnings, which are going to be great again, maybe even better than first quarter. And we’re also going to be anticipating the fund flows that are coming in, which, of course, you know, again, supply and demand drives the markets a lot. A lot of demand will be coming into the market. And that doesn’t start next week, but it starts the week after.

So we’re really a week away. We’re like a week away from the next, in my opinion, for the next big move higher. And what a perfect setup. Fear and greed index is in fear territory with the markets, right? At all time highs. Are you kidding me? So it’s a great setup. That’s how we’re approaching it. We are looking to add to positions again. The semis, as we told you this week, have hit extreme overbought levels.

[00:13:16]:
So we’ve laid off buying those, but again, they are all time highs. We’re definitely not selling here, but we’re looking to add other positions today. For example, Tyler covered this yesterday. We’ve been talking a little bit about the GameStop. We added that as an official portfolio position this week. Today, again, it’s just a, you know, this is another meme stock. We’ve done very well in these. We’re counterpunchers.

And so, you know, we in AMC, I would never, ever, ever have bought AMC theater chain. I would never have bought that on the fundamentals. Not, not, not your wildest dreams, right? But as a trade, it made a lot of sense because, again, supply and demand, the charts told us. And it was a, these meme stocks were working. We all remember that, right? We made over 350 combined stock and options in AMC. Then we did it in Trump media. We made 100% profits there. So now we’re back to this next one, which is GameStop.

We didn’t play this the first time around, but we are this time, I believe, fundamentally, believe me or believe it or not, this is a fundamentally sound company. They have four and a half, approximately four and a half billion dollars in cash. The total market cap is 12 billion or so, but the float is only ten. So as a percentage of float, they have 35, maybe 40% of the shares in the float that are cash. Right. That’s interesting. Right? Just, just on that basis, what are they going to do with that cash? That’s where the fun part starts. We think there’s something big in the works here.

[00:14:55]:
Again, they have very little debt. Again, as potential market cap, we’re not buying it for the fundamental reasons. But the point being, this is a fundamentally sound ish company as opposed to what we have with AMC, not fundamentally sound as opposed to what we have with Trump Media. Again, Trump media doesn’t have debt, but they also have very little revenue. And so we’re not seeing why did Devin, what’s Devin nudist doing over there? That’s been my question. What is he doing? This company should have multiple divisions up and running now, and maybe that’s in the works. But the stocks being pounded, and again, we sold at 65, it’s 37 right now. If that stock gets down to technical buy levels for us, that would be back into the teens.

Then we’d probably look to play that again. But the point being, this is that bull market. We’re in an era of financial engineering. If you understand what’s happening from that theme, and this is one of our five big bride megatrends, was financial engineering. If you understand the scope of what’s happening with financial engineering, how it’s just getting started, there’s just a world of liquidity out there and it’s opening the markets up to strategies like this. Maybe they’re all using artificial intelligence. Maybe there are new algorithms that are giving us new investment strategies. Maybe they’re taking the investment strategy of Warren Buffett and putting that on steroids, because I believe that’s what’s happening.

We’re going to cover this more next week. But of the two strategies that would make most sense for GameStop, number one is being talked about. Beginning on Wednesday, this became a rumor. And I like this idea that GameStop would initiate their own. Michael Saylor, who’s the CEO, and I think he’s founder of MSTR Micro strategy. Of course, they use bitcoin, they issue convertible debt, and then they, they use that to buy bitcoin and they pyramid it up and, boy, has that ever worked, right? I mean, it’s incredible story. Great. And everyone doubted at first, and now no one doubts it.

[00:17:02]:
It’s working. What if, what if GameStop were to use some of their $4.5 billion, approximately four and a half billion dollars in cash, and again, they have 2 billion in revenue a year. Again, this is, this is, this is not a, this is not a nothing company. This is a real company. Huge brand recognition, right? Everyone knows GameStop even more so now. This has become part of the meme wars. But what if they were to initiate a similar strategy to what Michael Saylor is doing with microstrategy.com dot, right what would happen? So their shareholder meeting is on Monday. There’s a lot of exciting that also happens, by the way.

Monday is national take your cat to work day. Roaring kitty. Everyone get the connection there? Of course you do. This is just. It’s a compelling story. What, you know, the CEO, Ryan Cohen, is a sharp cookie. And I believe that they recognize they got the shorts by the short ones. And if there are.

In fact, we know there’s at least 30% of the shears outstanding sold short. What if that number is 60, 70, 80? What if it’s over 100? Because there’s so many Boca shares that have been used out there, almost like a printing press. This does happen. Illegal short sales. We’re talking about. If they were to catch these guys truly short, then, yeah, there are forecasts out there. This stock goes to 1000. Okay? It’s just under 29 now.

[00:18:29]:
Okay? We’re not getting carried away. But I do think, and I know Todd agrees with me, I do think this stock goes back to the highs of the year, which. 64 minimum, I think. And then from there, if it breaks through, then it’s another technical buy signal. So we’ll take it one step at a time. But the other strategy that I think would make a lot of sense is that they just continue to use the cult following. They have to propel the shares higher as they short squeeze it. And every big pump higher, they issue more stock.

That sounds horrible, right? Normally, to an investor, you don’t want companies issuing a lot of stock because you want the move to keep going. But what if that’s their strategy? What if that’s their strategy? Just to continue moving the stock up? So next time they do it, they raise another $3 billion. Now, you see their cash base now goes to seven and a half billion. Then the stock goes to 100. They do another issuance. Now they have $10 billion in cash. It’s a self perpetuating money machine. Financial engineering.

This is. You don’t have to love it. It may sound like the worst thing you ever heard of, but just because you don’t understand something doesn’t make it bad. And so I think this is an era to be open minded. It really is. And again, I’m an older guy. I’m not really. I’m 62.

[00:19:50]:
But, you know, that sounds old to me. I never thought I would be past 50, but being honest. But being open minded to these things because these are the things that are happening. This is the era that we’re in. Anyway, I’ll leave that there. But I think there are a couple of strategies they could use here. It’s a fascinating story. And again, I’ll say one more time, this is the air that we are in the roaring 2020s.

We’re going to see a lot more of this. I think the sooner we open our minds and start to really investigate and look into these stories, these are going to keep happening. We’ve already dealt with AMC and Trump media. Now we’re doing with GameStop. I’m very confident it’s going to work. I think the downside here is supremely limited. We’ll keep stops in, right. If you’re wrong, we’re wrong.

We’ll get out. I don’t think that’s gonna happen. Got a good feel for this one. And I think behind it there’ll be another five, six, 7819 companies we’ll be able to do it with. Why not? I mean, why not, right? This is, again, this is that market. It just is. All right? It’s 95 to 2000 steroids, folks. This is, this is where we are.

[00:20:50]:
This is just where we are. And that’s why we’re staying locked in. I know you are, too. We know from your feedback, your emails and phone calls that you are, too. Appreciate you. Love you guys so much. Thank you for listening and great feedback. Really do appreciate it.

Means the world to us. All right, let’s get to the internals. Let’s get you going for the weekend. Internals again, not good to da. I’ll keep it short and sweet. Three to one, negative on NAS again. They can’t hit this market with these internals. Nasdaq three to one, negative on advanced decline.

NYSE also three to one again. This is not a good day. How the Nasdaq finish at 21, right? How the hell. SF Hunter finished down two points, right? Just off an all time high. This is, this is the tell volume today. This is not good either. NYSE 76% down volume day Nasdaq 57%. And then we had about 100 stocks.

[00:21:37]:
Hundred more stocks hit a 52 week low than hitting a 52 week high. Not a good week for the internals. I know the bears are all going to be complaining about it, but, man, this is, this is just not that market. You want to be short. I don’t believe it is. And what else today? Let’s get to our commodity watch again. It’s a rotational theme. Look, we’ve had a very good move in commodities.

We’ve had a very good move in miners from February. Miners are up 44% in two and a half months. And now they’re giving some of that back, but they didn’t. Today, I believe this rotational theme. And as people realize that the Fed is going to cut, we’re going to get right back to the theme of interest rate sensitive plays will be hot. Follow the ten year. It’s singing loudly, right? I think the gold market woke up to that today. Gold today at 1.3% of $30 at 23 48, we’re $100 away from all time highs in gold.

So this has not been a painful shakeout. It just happened. When they happen, they tend to be very compressed and it feels a lot more painful than it really is. And the miners, of course, really got smoked one day. GDX was down 7%. That hurts. And that’s. Thank you again, Jay Powell.

[00:22:47]:
Silver down 1.9%. Up 1.9% today to 29.62 again. These got red hot and now the airs come out of them. It’s a, it’s a, it’s a perfect, it’s really is a textbook consolidation. And now the next move will be back to all time highs for copper to copper now back below 450 a pound, although it was up a bit today. Now, right now, 449, if I remember, copper at $5 at all time highs. Crude oil today down fourteen cents a barrel at 7850. We put out a piece today for our parabolic options program subscribers.

We’re going to share this in our VRA letter on Monday on the VRA investing system, you don’t get. It’s very hard to get a stronger buy signal than we’re getting in energy stocks right now. Look at XLE, the chart again. We’ll share it with our VRA members on Monday. But look at the chart on XLE number one. You’ve got a very perfectly, it is perfectly formed channel that we’re right back to the bottom of. XLE now hitting the 200 day moving average, also hitting extreme oversold levels. This is setting up for a great, fantastic opportunity to either initiate a position or add to.

That’s what we’ll be doing next week again. Values going to get hot again. We want to be long, this group. So there you go. There’s your heads up for the, for the first trading week. Next week’s going to be a busy week. It’s going to be busy week. It’ll be the last week to start getting all your ducks in a row for the end of the quarter.

[00:24:20]:
Front running. Move higher. Remember that is, that’s. I think we’re going to have a very big move higher into the end of this month as they anticipate July and bitcoin. I’ll just share this. Everyone’s so disappointed. Obviously, I’d be lying. I wasn’t too.

With what bitcoin has done now, 65,890. We were just at what, 71 and change a week, a week ago. And all this buying coming in, we all know the good news. The SEC approval, all the buyers have come in, the blackrocks of the world, et cetera, gobbling it up. There’s only one, there’s only one thing here happening that makes sense to me. And Tom and I just had this conversation. Here’s what it is. Look, 70% to 80% of all the trading in bitcoin is in the futures market.

We’ve talked about this for a long time, but that’s mostly hedging, short term trading by leveraged traders. However, what if, what if what’s happening is that we’ve got major investment firms, Blackrock to the world, right? Goldman Sachs, that are shorting bitcoin for their client. Their client is the buyer. So what if we have. I’m just going to throw out an example, because I actually think this is going to happen. What if the, one of the world’s largest sovereign wealth funds, I think it would either be Norway or Saudi Arabia, because both have shown interest in bitcoin and they’re massive, right? Norway is the largest in the world. Saudi Arabia’s top five, six. What if one of those went to black, say, Blackrock, and said, look, we want to put on a billion dollar initial position in bitcoin, but we don’t want to announce it in advance.

[00:26:09]:
If we announce it in advance, then everyone’s going to front run us and we’ll never get filled, right? So Blackrock goes into the open market, shorts bitcoin for them. Shorts a billion dollars, 2 billion, maybe there are ten companies, ten different funds doing this, right? The same strategy, because they want to be able to deliver the final position to their client without moving the market. This has act to dampen the market, because everyone’s wondering, where is all this going, right? So at the end of the day, if I’m right, we will see an announcement that, okay, all of a sudden, the saudi arabian sovereign wealth fund has got another name. But that’s what it is. They now have a billion dollar position in bitcoin. When you go, how the hell they do that? This is how they would do it. This is how they would do it. It’d be delivered to them from their investment firm.

Obviously, in this instance, if there’s upside risk, Saudi Arabia would have to take it. Norwegian wealth fund would have to assume that risk, and they’d hedge that, too, by the way. They want to pay interest on it, almost like margin interest for the trade, and there’s a cost to that, of course. But it’s much better than forcing them to buy bitcoin at 100,000 or 110, if word were to get out that they’re buying. I think that’s what’s happening. I think it does make sense. And again, all this is an opportunity. I said this today on our members podcast.

There are a couple of investments that I buy religiously. When I get some extra cash in, maybe I sell a position or have a check comes in, whatever, and I’m looking to deploy some cash. There are two positions I do this with that I feel very confident and sleep very well with. Those two positions are Tesla and bitcoin. Very, very confident in these. I’ve said this for a long time. I think the marketer giving me a gift. I think that’s the way to view it.

[00:28:12]:
When Gretzky said, you always want to skate to where the puck’s going, not where it is. I think we know where the puck’s going with these companies. I certainly believe. I know that for Tesla. You probably saw Elon Musk and Tyler covered this yesterday. Musk is out saying, this could be a $30 trillion company on robotics. Kathy Wood saying the same thing about the robotaxi line. And we have even talked about Ev’s.

We’re not even talking about battery storage and all the work they’re doing there. I mean, this is just an unbelievable. This should be five or six separate companies. Boy, wouldn’t that be an idea. Send these suckers out. I mean, you really want stock to go crazy? Start announcing you’re going to spin these out. Okay, that then all of a sudden, Tesla is the play. And, you know, that’s.

I don’t want to see them do that, but that. That would drive the stock higher. But it won’t matter, because, again, this is going to be that big of a company. Kathy woods, right, is the stocks going to 20? I think her targets 2600 on the low side by 2030 ish, five years from now, we just call it a ten bagger, which means it only has to go to $1,800 a share from here. But her targets up to $3,000 a share. If Musk is right about OPtimus, the robotics line, and robo taxis, then that’s half the size of the entire market cap of the stock exchange. But that’s the potential for TEsla. So for TEsla and bitcoin, I want to keep piling in.

[00:29:35]:
I want a dollar cost average. And again, that takes the emotion out of it. You do it regularly, every couple weeks or a month whenever you choose to do it. And you just want to keep building that position so that when it does happen and we look back in five or ten years, you’re just like, man, that’s how you build real wealth. That’s how you build real wealth right there. Instead of doing with real estate, we’re doing the stock market. It’s no DiFferent being approached at Warren Buffett. Others have used again forever.

Peter lynch, one of my Investing heroes, this was his. He invested for 510 years out, and he wanted to build positions, wanted to build stakes in these companies. Right? Unless something changed. Why would you change? Just keep buying. And it’s cheap. It’s a gift, and that’s how we’re looking at it. Okay, folks, that’s it for the day. Hope you had a great week and have a better weekend.

See you back here again Monday after the close.