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VRA Investing Podcast: Key Earnings Reports and Market Trends to Watch This Week – Tyler Herriage – October 28, 2024

In today's episode, we'll be breaking down the latest market movements and gearing up for a crucial week of earnings reports, with nearly 42% of the S&P 500's market cap set to report. We'll also touch on the upcoming US Election, ...

Posted On October 28, 20241488
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About This Episode

In today's episode, we'll be breaking down the latest market movements and gearing up for a crucial week of earnings reports, with nearly 42% of the S&P 500's market cap set to report. We'll also touch on the upcoming US Election, the anticipated jobs report, and how these events are likely to impact the market. In addition, we'll review key performances in various sectors, including tech giants like Alphabet, Microsoft, Meta, Amazon, and Apple, and discuss the bullish trends we're observing in small caps and commodities.

Transcript

Don’t look back because the market is closed. Good Monday afternoon everyone. Tyler Heritage here with you for today’s VRA Investing podcast. Hope you all had a great weekend out there and a great start to your week as well. We got a good start to the week for our major indexes today in what is certain to be another eventful week here for our markets. We’ve got earnings continuing to heat up here and then of course we’re now just one week away from the US Election here. So it certainly is going to be an eventful week. Again, a solid start to the week this week.

Let’s take a quick look here at what we can expect from this week’s market action as we will be wrapping up the month of October this week. October ends on Thursday with the first day of November on Friday, which means we’ll get a jobs report on Friday here as well. But the most anticipated events of this week continue to be earning season which we’ve got just an incredible number of companies reporting this week. Roughly 42% of the S P 500’s market cap will be reporting this week. So you see that it is an essential week for the market here, one that we do expect companies to beat expectations by and large this week coming up. But what’s incredible about that 42% of the S P 500 reporting is that just five of those companies combined to equate to 23% of the total weight of the S P 500. Those are Alphabet which reports tomorrow after the close. We’ve got Microsoft and Meta on Wednesday and then Amazon and Apple on Thursday as well.

[00:02:05]:
Now that’s just the headlines, right? Those are just the five largest names coming out this week. We’ve still got the non tech players as well. Tomorrow we’ll get SoFi McDonald’s. After the close we’ll get AMD as well. You know, another major semiconductor player here where the semis have been lagging a little bit, still have not been able to get back to their all time highs that we saw from earlier this year and did experience a bear market from the July to August pullback and still have yet to reclaim their all time highs. We look at this as a potential catalyst for that kind of an event here. If you tuned in to Making Money with Charles Payne, you saw that Kip was on there today. A fantastic interview.

If you haven’t taken a look at it already, it’ll it’s already up on our website vra letter.com we’ve got the full video there for you as well, so listen to Kip’s breakdown of what we’ve seen from the semis so far and what we expect from the semis going forward. I’ll give you a little hint. It’s a group that we do remain extremely bullish on here. All right, so back to earnings then Wednesday we’ll also have Caterpillar. So again not the major tech players but big names important to the market movements here as we have, you know, the industrials and materials, those sectors both right in the range of all time highs here. And after the close on Wednesday, as I mentioned, we’ll get Microsoft and Meta after the close but you’ve also got Coinbase coming out, Robin Hood as well, which I’m no fan of Robin Hood here, a little bit bigger of a fan of Coinbase compared to Robin Hood that is. But with the recent action in bitcoin, which I’ll get to here later as well, could be a pretty good quarter for Coinbase there. Then Thursday ahead of the open we’ll also have Uber coming out, another major tech name there.

[00:04:01]:
But the fanfare will certainly be for Thursday after the close with Amazon and Apple. So stay tuned. We’ll be reporting on all of those here this week and already we think we’re seeing some front running of what we do expect to be some pretty strong earnings here. Now I will say the other two remaining of the MAG 7 Tesla has already reported as we know they crushed earnings last week and then we’ll get Nvidia in November. They always report late. So all in those seven tech stocks alone make up more than 35% of the S P 500. So it really is an essential week here this week. Again the five names reporting this week, all except for Microsoft, finish up nicely on the day to day as well.

I believe three out of the five were up over 1% on the day today. I’d have to run the charts again just to check just Microsoft finished lower on the day and even then just fractionally. But again, stay tuned. We will be reporting on those here as well. Now shifting gears here a little bit to the overall market. You know we’ve said for a long time we expect a strong Q4 from our major indexes. Well, we’re just about to enter the best period of the year for the markets here. We talk about it here often.

[00:05:30]:
There’s always the sell in May and go away time frame from May to October and then from November to April is the best time hands down to be in the market. This time period has the highest winning Percentage of the year with the market is higher 77% of the time in the November to April time frame. And it also has the highest average gains of any six month period, up on average by 7.1%. But it gets even better from here because this year we really didn’t see that kind of summer slump that sell in May and go away right from this. This year the S P is currently up, roughly not including today’s gains, 15.4% from the sell in May and go away time period. That is one of the best returns we’ve seen over this period. So what happens next? Right, Ryan Dietrich puts out some phenomenal work on analytics from the market here, and this is one that he shared today. When The S P500 is up over 10% in the sell in May and go away time period, the next six months is up 10 out of 11 times.

[00:06:45]:
So even better than the 77% target that this time frame usually has. Again, when we’re up more than 10% on the S P from May to October, we’re up 10 out of the next or 10 out of 11 times. We’ve been higher by the end of April with average gains even better at 13.2%. So yes, we do remain extremely bullish here. And now the C seasonality kicking in makes us even more bullish to go with it. Now start discounting in a Trump second term and it gets even better. You know, we’ve heard a lot of people already saying that, oh, the market’s already discounted the fact that Trump is going to be in office in January. We don’t think that’s, we don’t even see that as the case at all.

There are still so many people that are very fearful and rightfully so after what we saw in the election of 2020. There’s a lot of fear out there. People don’t want anything to do. We hear it on a daily basis. They don’t want anything to do with this market until the election has been decided. Right. And I totally understand that sentiment, don’t get me wrong. But we think that now is the time to be positioned because once Trump gets into office, that’s when things really start to run from.

[00:08:08]:
Remember in 2016 when Trump was elected, over the next year and a quarter. Kip talked about this on Charles Payne today as well. Over the next year and a quarter from when Trump was elected, the S p was up 29%. The Nasdaq was up 39% during that time period. So yes, you do want to be positioned ahead of the election. You know, I totally understand though, again, if you want to wait until after, especially with what we saw in 2020, I wouldn’t blame you at all. But we do think this market is still just getting going. We really haven’t even gotten close to the melt up kind of market that we’ve been looking for.

As we’ve talked about here often as well, we have just completed year two of this bull market, bull markets on on average last over five years. We’ve equated this time period the roaring 2000s, right. The innovation revolution most closely with the 1995-2000.com melt up where the NASDAQ rallied 575%. We’re nowhere near those kinds of gains right now. And we do see this bull market running through 2030. If you think that sounds like a long bull market, it wouldn’t even be the longest in history, which we just wrapped up in 2020. Covid derailed the longest bull market in history which ran for 10 years. This is that kind of bull market that we’re looking at here once again.

[00:09:37]:
All right, all that being said, let’s take a look now at our major indexes on the day today. We did finish higher across the board. So a good day here. But I be, I do need to point out here that we did finish off the highs of the day for both the Nasdaq and the S P500, both of those finishing near their lows of the day today. So that is less than ideal. Right? But tough to complain about gains on the day especially which you’ll see here in just a minute when we have strong internals like we did today. So I’ll get to that here more in a minute. But I will point out the semis did finish lower on the day today, down 0.69%.

But again, no concerns that it is a group that we do remain extremely bullish on here. Now another group that we like a lot are the small caps. So good to see them leading the way today. And very different from the Nasdaq and the S p. The Russell 2000 actually finished near its highs of the day today, up 1.63% to 2244. On the Russell 2000. The Dow Jones also managed to finish well off the lows of the day today. Not quite at the highs, but a solid finish and another good sign from this group.

[00:10:58]:
You know we want to see semis leading tech, right? We also want to see the transports leading the Dow, which is what we got today. Transports up 1.15% almost double the performance of the Dow. The dow was up 0.65% on the day today or 273 points to 42,387. Next up there, the S P 500 up 0.27% to 5,823. You know, not too far away at all from all time highs there. Then finally the Nasdaq up a quarter of 1% to 18,567 which if I’m not mistaken is an all time closing high for the Nasdaq. We were just shy today of the all time intraday high. But that is a new closing high.

So hey we’ll take it. New highs beget new highs and a closing high is still, well not quite an all time high. It’s still a new high. So yes, we will take it. Now it certainly didn’t help tech stocks on the day to day that yields hit another highest level since July today. The 10 year yield was up 1% did finish off the highs but during the day today got up to a 4.3%. Now that’s not a very high yield but it is enough to concern investors and tech stocks are susceptible to yield risk. Right.

[00:12:31]:
But as we talk about here often these are nowhere near high yields. I mean the period that I just talked about from 1995 to 2000, the 10 year average between 5 and 6% with some of that period over 6% as well. So no yields just cracking above a 4. Right. A 4.3 at the highs don’t concern us here. Keep in mind, yields are at extreme overbought levels here. Doesn’t mean they can’t go a little bit higher. But again not a major factor that we are concerned about here.

We think that the trend in yields that’s been in place for the last 40 years, 40 years plus now of lower highs and lower lows. Yes, some discrepancies in there but we think that trend continues and ultimately yields will continue to move lower as well. We also did see the dollar higher making a multi month high here as well. Again similar to yields. No major concerns for us there. Now on to a bright spot of today which was the internals. We got some very good readings back here. We’ve had a little bit of lackluster internals as of late.

[00:13:41]:
This seems to break that pattern a little bit. Very good readings here. We had more advancing socks than declining socks on both the NYSE and the nasdaq, both of which coming in either right at or above 2 to 1 positive on the day today. That’s a good reading there. Next up here, 52 week highs and lows. Not quite as strong but we’ve had a little bit of a pullback from the names, right? Maybe not as much in our major indexes but we came in roughly 3 to 1 positive on the NYSE and we did come in positive on the NASDAQ here as well. Finally here volume I wanted to got our last second refresh here. I do want to check something that’s a pretty good day of volume on the NYSE.

72% upside volume on the day today. That’s a pretty Good reading here. 72 and a half percent on the NASDAQ as well. Those are strong volume readings. Yes, we really like to see the bullish breath thrust kind of numbers here where you get above 80% upside volume. But hey, after the internals we’ve seen over the last couple weeks, these are absolutely a win here. Good internals on the day today. Next up here, looking at our sectors on the day today.

[00:14:57]:
We finished with nine out of our 11s P500 sectors higher on the day today. We were led by the financials on the day and I do want to run one more chart here as well. So a chart we do talk about here often. I won’t spend too much time on it here today is kre, the regional banking ETF which outperformed the financials as a whole today. But when you’re you’re hearing so much fear about recession, although that has taken a backseat as of lately. But when you have the regional banks performing well, it’s a green flag for the economy, not a red flag. Now if carry was not holding up well and even if our major indexes were near highs, you know that’s a little bit of a yellow or red flag. That’s just not what we’re seeing here.

All right. After the financials we had materials and utilities higher on the day to day. I will point out communication services which is will be heavily impacted this week as most of that sector is made up of Meta and Google unless they’ve rebalanced it in the last few weeks which we have seen some with Q4. Meta and Google make up roughly 40% of this sector. So big week for the sector day. That is an all time closing high today from the communication services sector. We also saw an all time high today from Consumer Discretionary as well. Then our laggards on the day Energy, which oil did get hit hard today.

[00:16:29]:
I’ll get to that here. More in a second, still not big losses though in the energy sector, 610 of 1%. Compare that with the losses you’ll see here in a second with oil. Then tech did finish lower on the day to day fractionally though, you know, we had the Nasdaq higher at least. So really, you know, no big concerns there, although we would have liked to see tech leading. Right. All right. Finally here for today, our VRA commodity watch.

Gold essentially flat on the day today to $2,754 an ounce. Silver now up 2/10 of 1% to $33.84 an ounce. Copper essentially flat on the day down 1/10 of 1% at $4.36 a pound. Then oil as I mentioned earlier, getting crushed today, back below $70 a barrel, down five and a quarter percent now. It was down more earlier in the day. You know, seeing some headlines out about this here that, you know, given that Israel flirted with the idea of attacking Iranian energy supply, whether it’s nuclear facilities or oil facilities, they opted not to do that. That has sent some of the oil market lower. That’s the headline story at least.

You think a big part, you got to think a big part of it as well is now the market is starting. It hasn’t fully but it is starting to price in a Trump presidency, which should mean lower oil and gas prices. Now that doesn’t mean that we’re bearish on energy stocks. Right. Because if these companies are able to get a more friendly, more pro oil and gas environment, then they’ll be working on more projects. Right. They can make money at a lower price point in natural gas, a lower price point in oil when they aren’t having to jump through all of this government red tape. And not to mention the fact that these companies are well positioned for growth right now.

[00:18:29]:
Good looking balance sheets in the energy sector. So no concerns for the energy sector, although we could see lower oil and gas prices. I don’t think a whole lot of American consumers would be complaining about that here. Finally here for today, bitcoin getting back to multi month highs here. Trying to crack above $70,000 of Bitcoin here again up 2.87% just off the highs of the day at 69 $687 a Bitcoin. This is a group we remain extremely bullish on here and even more bullish once we get past next week as well. The election, I mean after the election, bitcoin, historically I don’t have the numbers right in front of me, but it has performed very well after the election cycle, especially when you get someone like Trump, a pro crypto president, in there. It’s going to be good things for bitcoin folks.

That is all that we have time for here today. Please be sure to subscribe to receive our VRA podcast every day at the market close. You can sign up@vra letter.com click the podcast link at the top and we’d love to have you with us. Thanks again for tuning in. Until next time, we’ll see you back here tomorrow for the close.

Podcast Newsletter

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Time Stamps

00:00 Visit vra letter.com for Kip's semis breakdown.
05:30 November-April market best time frame historically.
09:37 Major indexes up, Nasdaq and S&P near lows.
13:41 Positive market trends: NYSE and NASDAQ advance.
14:49 Financials led rise; regional banks performed well.
18:29 Energy steady; Bitcoin bullish post-election optimism.

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