In today's episode, Kip dives into the latest stock market action on a mixed day for the markets. The Dow and value stocks lead while tech and the semis are taking a pause, still, Kip sees positive signs for the future of tech. He also discusses the latest from the Federal Reserve and what to expect from tomorrow's J Powell speech after the FOMC meeting. Tune into today's podcast to learn more.

Don’t look back because the market is closed. Good Tuesday afternoon, everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today.

Mixed day in the markets today. We got a lot to talk about. Mixed day in the markets and Nasdaq and tech stocks down. Dow Jones is higher.Value stocks are higher. Small caps are higher. These are very good signs for the us economy, by the way. And did we get any signals from the Federal Reserve? They’ve waited too long. They waited too long to cut. We’ve said this now for some time. We, on the surface, it looks like we’ve been wrong, but I don’t think so. Look what’s happening in ten year yields.

Look what’s happening in commodities based outside of precious metals, especially gold, silver. And the miners have been red hot. And our gold is like $30 away from all time high. Again, at a very good day today. You’re getting signals now from the rate sensitive areas of the market that the Fed is behind the eight ball. They’ve waited too late to cut. Certainly see it in ten year yields. We cover all that today.

We got earnings just moments ago from Microsoft. Here we go again. Stock is down again. It’s not the news that matters. It’s the markets reaction to that news. As I look at it right now, Microsoft is down 7%. We’re going to drill down a little bit. I’m going to tell you why I think this is a buying opportunity.

Microsoft and the broad market, the semis as well. Nvidia broke through support today. Again, a lot to cover. Let’s talk about the markets first. Again, a good day for the Dow, up 203 points, up a half percent. Good day. Roast 2000 against small caps. Economically sensitive group up 410% to 1%.

Kip Herriage [00:01:36]:
But Nasdaq today down 223 points. We’re really getting yo yo action here. One day Dow’s up, next day Nasdaq’s up. I would be surprised to see a bounce back in Nasdaq tomorrow. Again, we are not concerned about this. What would you call this spotty action that we’ve seen so far in Nasdaq? Again, we seem essentially a, essentially a 10% correction. The semis fell as much as 12%. Right.

So, you know, in big bull markets, you get these shakeouts and they are one thing, they are buying opportunities. We think that’s what this is here. But again, Nasdaq today down 1.3%. Pretty, pretty healthy decline in Nasdaq with the semis leading the way lower. It’s really not what you want to see, but again, this is one day, but semis were down today, 2.8%. This is just technically, on its face, a bearish setup for today. But I’m going to, in a minute, we’ll talk about the internals, which did not confirm this bearish action. This is really, folks, if I can get right down to it, we, this is about Nvidia, right? Nvidia has been the darling.

It’s been not only the hottest chip stock, it’s been the big go to stock. The market leader has been Nvidia. And if you’ve been following the stock, you know what I’m about to tell you. The stock topped out at one, just right, at 141 a share. And that, that peak was kind of hard to believe this. That peak was June 20. So we’re just five weeks, five weeks past that peak at 141. And Nvidia, the must own stock, the stock that everybody said is going to, I don’t know, 1000, whatever stock is now 106.

[00:03:15]:
And it did break through support today. So all of these bulls, these Nvidia bulls that loved it, loved it, love it. We’re treating it as a classic momentum stock. You know, buy it as it goes higher, just buy more. It goes higher, buy it, buy more. That’s just not our style. But it’s worked. It’s worked with Nvidia for a long time, as it has with the semiconductors from the bear market lows of October 13, 2022, there’s been no hotter group, and now some of the air is coming out of the balloon.

This is healthy, folks. This is, know this, I’m not calling a bio today in Nvidia, although I think, frankly, we’re really close. I put out a piece today. We shared a chart. Nvidia’s. Yeah, it did break through. Short term support today may have a little further to go, but you start looking at the momentum oscillators, start looking at the moving averages and you start to see that this thing is really getting oversold. It’s essentially, now, Nvidia is essentially at the most oversold levels that we’ve seen it for the entirety of this year.

We’re just a stone’s throw away from that being literally the case. Certainly right there, the second most oversold it’s been. And as I shared again in our letter midday, this setup looks very, very similar. If you look at the chart, this setup right here in Nvidia looks very, very, almost exactly like the shakeout we had from the end of February to beginning of May. So, yeah, that shakeout took some time to work its way through, but once the lows were in, it was a near parabolic move higher. From 75 is the end of April, $75 a share to a high of 141 and very compressed, very much a parabolic move higher. But it happened on the heels of a shakeout, which, again, looks very similar to what we have now. I will be.

[00:05:01]:
I’ll be shocked. I will be shocked if this move lower in the semis continues for much longer. And I’ll be shocked if the move lower Nvidia continues for much longer. If it does, I think that we’ve got to reevaluate the story that we’re telling about, and we believe that to be the case in the semis, the story that we’ve been saying and believed to be the case in technology stocks. And we’re not changing that story. We’re in the early innings of the innovation revolution. This is far more than just AI. This is about a technology revolution that’s taking place here.

And these are not short term cycles. These are long term cycles. So I can tell you with what I remember from the.com melt up, which, by the way, we again repeat, this will be longer lasting and more powerful than the.com melt up of 95 to 2000 was as extraordinary as that was. It was obviously compressed over a short time frame, five years. It was also very focused. Right. It focused in.com and technology only. This bull market is already broadening, getting much, much.

The rotations have been very healthy. We did not have this in 95 to 2000. This is more of a structure, a class, classically structural bull market. And these are long lasting. And it comes on the heels of just everybody being so incredibly bearish. All it takes is a bit of a shakeout like this. And here come all the bears. And the perma bears, they love to tell you, when you have, I don’t know, a few down days, they love to tell you just how right they are.

[00:06:39]:
But then you ask them about the previous ten years, how many times you write then. Typically, they write a couple times a year, but they’re never right on direction. And their pessimism is just. It’s wrong headed. It just, it’s just wrong headed. Let me pull up the. See how the fear and greed index came into that. I didn’t check this yet.

Yeah, the fear and greed index today hit a. There we go. It’s. Yeah, back in fear territory. It’s a 42. So again, all it takes is a shakeout. Then we’re right back into fear territory. That’s just not the personality and the characteristics of a bull market.

When bull markets get long in the tooth then you start to see these sentiment indicators. They stay bullish much longer. That’s not happening here. We get a shakeout and boom, there go all the bulls right away. Very weak hands. A market of weekends is a market that is looking to find a bottom that just know that to be the case. So yeah, still feel very good about the market. Again, wrote that up today.

Also to close today we got earnings from Microsoft. I said a minute ago, mister Softy as I speak is down. Now back just down. No, I’m sorry. Down 6.8% on the day on the news. But you know when you dig a little bit and you, and you read the release and I, again, I haven’t gone through this with a fine tooth comb, but just check out these numbers. Okay. Microsoft, they beat on earnings.

[00:08:13]:
They beat on revenue. Even if there were slight beats, they did beat. Okay. So we’ll say, okay, maybe it’s a little disappointment that they didn’t beat my more but listen to these numbers. Their cloud business, that’s where the analysts are saying is disappointment came from. Microsoft grew in the quarter. In the quarter, grew their cloud business by 29%. Estimates for 30%.

They missed by 1%. They grew the cloud business called Azure by 29% in the quarter. And then revenue, excuse me, not revenue, total capital expenditures. This is another massive number. Microsoft just ramped up investments big time. And they had been over the last year, capital spending in the quarter jumped to 19 billion. That’s up from 14 billion in the third quarter. And it’s double the capital expenditure, the reinvestment in their company that they had a year ago.

So I can tell you based on this, everything Microsoft is doing is right. I believe that we don’t own this stock. But I can tell you again, I’m looking at a chart here. It’s a big red candle. It’s right now at the 200 day moving average, I probably would wait a little bit for the shakeout because when you get these big red candles like this, it’s almost like catching a falling knife. You want to find out where’s the bottom going to be. So I don’t try to catch these, and that’s not our style here. But I would watch this very closely because I think Microsoft is a great company to own.

[00:09:44]:
But it is also a $397 stock, but it’s a bellwether. Of course. We’ve had a good start to earnings estimate, earnings season so far. Q two has been beating estimates both top line and bottom line. And now, really, it’s just all about the expectation game. And of course, tech and semis leading the way. And again, those sectors are going lower now. So that does raise an eyebrow with us.

We know that semis lead in both directions. But again, we share this chart with you. Many times you look at the relative strength chart of the semis to the SP 500, and it’s flashing a major buy signal right at these levels for the semis. And when the semis bottom and turn up, the entire tech market will, and the broad market will follow as well. But again, this is the distinction. I think this is the most important distinction that I can make for you today. So hear me out on this. This is not a liquidity event.

This is not a panic sell off of any kind where we got to worry about the markets going to get hit hard. Not at all. This is rotational theme. This continues. And we know that because again, the Dow was up 200 points today. Small caps were up four tenths 1%. They’ve been a house on fire but outperforming their big cat brethren buy, which is a very rare thing to say because small caps, before this move higher, had been in the bear market for a couple of years. They were the last to come out.

And so they still got, what, eight, 9% to go to hit all time highs. That’s a gift in our opinion. But the key point is, if everything was going down, then that’s a liquidity event, right? That’s a broad market sell off. That could get a little scary. That just ain’t the case now. It’s just not even close to being the case. This is a rotational theme. This is classic broadening action.

[00:11:27]:
And maybe most importantly, because we do love tech here, this is setting up our next great buying opportunity in the semis. And Nvidia, we already own the semis. We own them aggressively here. And so we feel very good about, about these positions here that we have in tech. If anything, we’ll be looking to add even more on any greater fallback. But a fallout. But again, we are now reaching heavily oversold levels. No, we’re not an extreme oversolden in the semis are in tech.

I don’t think we’re going to get there because I think this is that bull market and we’re just never going to get to a classically, you know, capitulation led extreme overbought over extreme oversold sell off. We call it extreme oversold on steroids. We’re not going to get that, I don’t believe unless, you know, we get another surprise, like another assassination attempt. Again, elections through just over three months away now, of course, you know, it’s in front of everybody’s mind. If you watch the Senate hearing today with the, the new head of the Secret Service and the, the guy gets just below Bill Ray, FBI Director Chris Wright. I mean, just an embarrassment. I’ve not said this before now, but I don’t believe there’s any chance this was an accident. You don’t have this many coincidences that happen with the premier law enforcement and secret Service detail that we have, protective detail that we have.

[00:13:00]:
You just don’t see this many coincidences and this many mistakes unless something very fishy is happening here. So I believe, yeah, at some level, this is an intentional attempt on President Trump’s life. And that does make you worry about, are they done? Is, are they something else? Yeah, that’s on our mind without question. And that’s also, by the way, while we’re diversified. Okay. And we wrote that up today as well, because gold. I’ll get to that in a minute. Gold had a very good day.

We’re now like $32 away from all time highs. Again, the miners are ready to go and we’ve got position there. So we feel really good about the diversification. Of course, same with bitcoin. Again, I’ll get to that in a minute. I’ll get ahead of myself. But anyway, that’s our view on the broad market. Semis and video, looking for a bottom, and then tech will begin to lead the way higher again.

At the same time, this broadening action is incredibly healthy, underlying under the service action for our broad market. But again, I believe this anxiety that’s taking place in tech and growth stocks is a result of three things. Seasonality is not great. Now in a presidential election year, August is a perfectly great month. Okay? We have no problems with it. Other months. In a non election year, August is not a great month. But so there is some, some spottiness with respect to the analytics and the seasonality.

[00:14:26]:
Second, yeah, investors are nervous about another surprise event. You know, look what’s happening with Middle east. And now that war is spreading, apparently into a regional war. Obviously, we have Russia, Ukraine, and again, we’ve got an inside job. Those like to take down our president. Are they done? You know, that’s the question. So, yeah, that’s waiting on people. And I think the biggest driver of this anxiety, the feds waited too long.

Again, I said at the beginning of the podcast, the Fed’s wait. Tyler covered this in detail and yesterday’s podcast. Tomorrow we’re going to hear from the FOMC with their statement at 02:00 p.m. eastern. 02:30 p.m. eastern we’ll get Jay Powell’s pressure, which is always hit or miss, you know, but I think that, look, I’ll be shy, will be shocked. I think I’ve said that before. I’ll say it again twice in this podcast.

I will be shocked if Jay Powell is not dovish tomorrow. Tyler agrees with this again, he covered it in detail yesterday. I’ll be shocked because we’re seeing too many signs that point to a slowing economy and we’re seeing the interest rate sensitive groups really point to that. Look at what the action, look at the action taking place in copper, look at the recent action in oil. Look at what’s happening in ten year yield. So we’re seeing it across the interest rate spectrum that, yeah, the fed has waited too long to cut rates. Well, let’s hope it’s not too long. Let’s hope we don’t get into some kind of a soft recession.

[00:15:50]:
I do not see that. But, you know, the last thing you want to do if you’re J pal is when you is either cut rates before September. That’s where they’re expected to cut rates at their September meeting. Either cut rates then, which, by the way, you know, that’s, we’re only talking about six weeks from now, right. We’re at the end of July already or have to do it as an emergency cut sooner. I don’t foresee that. So, yeah, the odds are they’ll cut in September, which means tomorrow. Jay Powell should be very dovish.

Yeah, he’ll say the usual, you know, we’re, we’re data dependent. We’ll hear that a bunch. Of course, because that’s what he should be at all times instead of making these green deals, forecasts that they can’t control, which is why they make so many mistakes. But at the end of the day, if he’s not dovish tomorrow, again, I’ll be shocked by that because all the indicators point to it. And again on Friday, we’ll get the August, assuming the July jobs report, which again, I think we’re going to continue to see weakness there. Look, that is what the Fed wanted to do in order to kill inflation. They wanted to keep rates too restricted for too long. Well, guess what? Now they killed inflation.

We not only have disinflation, as the great Ed Gardini wrote last night. We now have, folks, deflation is building. This isn’t something else, again, that the bond market, seeing Jay Powell and his merry band of money printing bankers should see this for sure. Sometimes you question whether or not they’re on top of their game because they don’t seem to catch things that are obvious right in front of them. But I will say this. With a ten year yield today at 4.14%. Okay, a ten year yield is going in one direction straight down. With the Fed effective Fed funds rate at 5.33%, we’re looking at a spread of 1.2% between the Fed funds rate and the ten year yield.

[00:17:39]:
And that is telling you right now, the bond market ain’t buying what Jay Powell is selling because the Fed doesn’t lead, they follow. And now they’re going to be following rates lower with cuts. And again, if they have to cut by half a point, that’s not going to be viewed as a positive by the market. So let’s hope they’ve got this timed right. I’m going to be kind of surprised at this point whether or not that’s the case, but again, not trying to sound too concerned about it. We are the innovation revolution. We are the roaring 2020s. It is a very good economy, but it doesn’t mean you can’t have short term periods where things look bad, you know, and data turns and, you know, and then people start to freak out a little bit.

So I don’t expect that to be the case. But I do think Powell’s waited too long to cut rates. We’ll find out tomorrow. Again, we’re expecting a dovish presser from Jay Powell and a dovish statement from the FOMC as well. Again, Yardini grabbed some great work last night, pointing to clear signs of deflation taking place throughout the economy. You get retailers now, you know, Walmart reported, excuse me, McDonald’s reported they brought back their $5 meal because people aren’t buying. Now, we have the same thing almost word for word. Retailers announcing price cuts, major price cuts.

[00:19:01]:
Target, Walmart, Aldi, lowered prices on everything. Household staples, the lowered food prices, and Burger King, KFC just did the same thing, matching McDonald’s five dollar meal option. So. And then we see it from Amazon, Walgreens at Best Buy, they’re all announcing price cuts. That’s deflation. And I think that we’re going to see that pick up speed. We started talking about this because of the great work of. Oh, my God.

Not Ed Yardini. Ed Hyman. Excuse me, another Ed Hyman at Evercore, who said that China told us a year ago that China was in the process of exporting deflation, and it would come here because that’s the process. And sure enough, it’s now showing up again. More than anything, I think, you know, consumers will love lower prices. The question is, will the market? Because that’s a sign of an economy that may be slowing as well. So again, we have to hope that Jay Powell and his friends are all watching this data because it is time, it’s past time for the Fed to cut rates. All right, let’s take a look at the internals today.

First of all, put call ratio today. Check this out. First time in a while. Put call ratio is above one all day. Today. We closed it, I think a 1.041.04, which was the, well, again, one of the highest prints of the day above one all day. That’s good. Again now with the fear and greed index showing fear again.

[00:20:28]:
Now you’re getting the weekend selling. That’s how you get a dependable bottom. And so we think that’s what’s happening here. Of course, we’ve got a big week of tech earnings coming. Apple, my head is all over the place, as you can tell today, earnings this week. I actually wrote yesterday, yesterday’s letter. I said in videos reporting on Friday. No, they are not.

They’re reporting on August 28. Apologies for that this week. Of course, Microsoft, we got that today. And then we get meta tomorrow and we get Apple on Thursday. You see this censorship that Facebook is doing against Trump, even denying the assassination attempt took place. And now when you search him, all you get is information on Kamala Harris. It is. That’s Riga.

That’s. That’s an effort at rigging election by big tech. That should be, that should be punishable by something pretty serious, like jail time. That’s who’s doing this. Lock that person up, right? This is not legal. They did this in 20. It’s one of the ways they. And here we go again.

I guess we have to thank God for Twitter at this point, Elon Musk. Otherwise, my account would already be banned. Yours would probably as well. At least we have an outlet, free expression. Even though these other organizations are reverting right back to the way of getting election rigging. That’s what this is. Okay, back to the eternals. Now, yesterday, the eternals for Tyler, when these podcasts were horrible yesterday really were not good.

[00:22:03]:
Today, the market did worse and the internals were better. Go figure that right. NYSE today was positive advanced decline by 1.7 to one. It was a good day. Also, both NYSE and Nasdaq had positive beats on new 50 week highs and lows. Again, kind of interesting, with Nasdaq being down as much as it was the combined total, there was 398 stocks at new 50 week high to just 166. Hit a new 52 week low. Again, these internals have been good.

Even as the market is sold off. Tech, some tech is sold off. These internals have remained very good. That is a bullish sign. That’s a very bullish sign. Volume today, also very good. We had a 57% up volume day on NYsE. I mean, it’s not out of the world, out of the ballpark good, but Nasdaq could have been, this could have been an ugly day for Nasdaq because it was yesterday.

Today it was almost 50 50. It was 54% down. Volume day, not a big deal. Nasdaq advanced, declined today only slightly negative, by like 300, 400 issues. So, again, I gotta call this a victory for the bulls here. Without question, the internals are just, again, continue to be much better than ordinarily they would have been in a market that’s had a bit of a shakeout in our sector watch today. Okay, come on, refresh. Here we go.

[00:23:29]:
It was kind of a mixed bag here, but we had today, of our eleven SPF 100 sectors, actually fairly bullish. Seven finished higher, four finished lower, led to the upside by energy of 1.5%. Financials up 1.2%. Real estate up seven tenths 1%. Again, interest rates coming down very good for housing technology today. Again, leather way lower, down, 2.2. That’s really about it. Again, seven of eleven sectors finish high on the day.

Pretty much matches what we saw in the internals. And a commodity watch, again, I was looking forward to covering this because all the hallmarks are here, folks, of rate cuts and lower rates. And that means a lower us dollar as well, which, again, look at the chart. Look at. Look at a one year chart of the dollar. You’re going to see this is not a bullish setup for the dollar. It’s not a bullish setup for the dollar. It’s a series of lower highs and it’s formed a bit of a triangle, but it’s rolling over.

It’s clearly rolling over. So I think we’re going to see the dollar really start to smoke its way lower with crossing below the 200 day moving average. I’ll look for that to happen next. But again, the commodity watch today was very solid gold today. Dollar 30 an ounce at $24.56 an ounce. That puts it right at $30 from an all time high with great looking charts, great looking setups here. Silver today up a big 2.4%. Of course, silver has been hit harder than gold on this little shakeout.

[00:24:58]:
All. It was an extreme overbought shakeout. We are adding to our positions here. We’ll also be doing the same and parabolic options program. We’ll be adding some more GDX calls in the very near term. That’s our next target, by the way. Silver today, 28 52. Again up 2.3% on the day.

Copper, which has been hit very hard, again, slower global growth. Okay, this is, this is what the Fed should be looking at, doctor. Copper. Copper was just over $5 a pound. Now it’s $4 a pound. That’s a fairly steep 20% shakeout. In short order, copper right now, $4.09 a pound, just a fraction on the day. Crude oil today, which has been getting hit, of course, but again, energy stocks were higher today.

That’s a good sign. Today, crude oil down a half dollar a barrel at 75 25. And finally, the day bitcoin. Okay, you know the story, right? Trump just goes and presents at the Nashville bitcoin conference, is largest in the world. He says, first thing, we’re going to fire the SEC. Ahead of the SEC, your gensler. The crowd goes crazy. And then he says, we’re going to free roast Albrecht.

The crowd goes crazy, of course, founder of Silk Road, been in prison for far too long. The crowd goes crazy. And then the peaceful resistance. He talks about setting up a bitcoin, strategic bitcoin reserve like we have for oil, but for bitcoin, and taking the 200,000 coins or $2 billion worth of coins that are in there from Silk Road that were seized by the us government and making that right the basis of our structure of our strategic reserve. Boy, it took the Biden administration, Harris Biden. We took him. What a day to go. Middle finger to you, middle finger to all you bitcoiners.

[00:26:45]:
They just moved all those coins from the storage into their wallet, in other words, from their original blockchain into their wallet. Meaning the next step is probably that they’re going to sell Ross Ulbricht and Silk roads $2 billion worth of bitcoin that have been sitting there this whole time. This was. What a stupid move. Harris has been indicating that she wants to try to get the bitcoiners on her side. And then they do this just after the national conference. It’s idiocy, and they deserve to lose by a million percent, to tell you the truth. Of course, after the rig job, we’ll see how that actually winds up.

But bitcoin is sold off again. It was a 69,700 as the event was going out, as Trump was speaking, all eyes on 70,000. Then our new all time highs at 73 seven, and instead we had a shakeout right now trading at 66,200 again. We’re buyers on this because bitcoin is a one way ticket to higher prices. That’s the case for a very long time. So use all of these shakeouts as an opportunity, as your personal situation sees fit to add to your positions. We do it using monthly dollar cost averaging. All right, folks, that’s it for the day.

Hey, hope you had a great day, and you better night. We’ll be back in your march of close. Tyler’s got the podcast tomorrow. Going to be covering the Fed. Of course, he’s our, he’s our resident fed speaker here. So looking forward to seeing what his interpretation of the Fed meeting and J Pal’s pressure is tomorrow. And again, watching tech earnings continue to come in and watching all of our important VRA investing system screenshott to give us a really good idea of what this is. But again, this is not a panic.

This is only a rotational shakeout. It’s healthy in nature’s broadening action. That’s how we’re treating it. And we think you see this as a really good buying opportunity. All right, folks, again, thanks for listening. We’ll see you back here again tomorrow after the close.