In today's episode, Kip covers a day of mixed results after yesterday's all-time highs from our major indexes. He also covers the market's recent overbought conditions and what the current internals reveal about future opportunities. We also touch on the macroeconomic themes shaping our outlook, including the impact of Trump's presidency and some striking statistics about American financial health. Tune into today's podcast to learn more.

Don’t look back because the market is closed. Good Thursday afternoon everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. Where the market gives and the market takes. We had a very good day yesterday for NASDAQ, up almost 2% yesterday, led by the likes of Tesla, which just continues to be a parabolic move higher. And then today was much, much different. Today the Dow Jones was down a half percent, down 234 points.

Pretty much closed at the lows of the day. S & P 500 hundred down a half percent. Russell 2000 down 1.4%. But there’s an opportunity approaching here on the charts. Looks very interesting here. Again, remember the just a week ago, over a week ago, as we told you in this podcast in our letters, the market started hitting extreme overbought levels. But we didn’t take profits then because that’s our other indicators. Did not tell us that it was time to take profits.

[00:00:55]:
Just said is it time to pause your buying. Over this course of the last week, what’s happened is the internals have been ugly. I was on Charles Payne’s show today on Fox Business and we talked about this. The internals over the last seven, eight days have not been good. Not hideous, but they’ve not been good. Even as the market has been trying to work its way higher. But underneath the surface, the internals have not been good. Brezza’s been poor, certainly for nyse, nasdaq, not quite as much.

And I think it’s a combination of things. We’ve had a hell of a run since Trump was elected, frankly, even before that, before he got elected. The move started in anticipation of a Trump win. The markets knew once again and also seasonality. Look, we are in the best three months of the year, but this particular stretch here, the first two weeks of December are not typically very good. But that sets the stage for the end of year rally, the Santa Claus rally as they call it. And again, this is still this general period is extraordinarily bullish. This is December is the best month of the year in both presidential election years and non presidential election year.

So again, they can’t all be fantastic days, right? As much as we wish they could. What else happened today? Again, I was on Charles Payne show today and we talked about our macro themes and I wrote this up this morning. You know, two years ago we went, as you probably know, we talk about it a fair amount. We’re in aggressively bullish. And we said the reason was is that this is a structural Bull market. This structural markets are very different from just a secular bull market, if you will, because structural bull markets are going up because they should be going up. Because the, the fundamentals dictate that that should be the reality. And that doesn’t always happen that way.

[00:02:40]:
Sometimes the fundamentals are great, technicals are. We had both a great setup with investors being extraordinarily bearish out of the market. Remember, cash levels reached all time record highs a couple years ago. Bottom line is though, the structural side of this and this is what’s going to continue to carry this market. And I think next year is going to be extraordinarily good year again. We talk about it all the time for our new listeners. It is extraordinary. 40% of Americans own their home without a mortgage on it.

Net equity in homes all time high. Credit scores all time high. Consumer net worth all time high. The percentage of corporate America corporate market cap to debt for corporations is at a 50 year low. So they both the consumer and the American company are in extraordinary shape financially. The best shape in decades I think ever. And I know that sounds as weird for some people to hear that because we’re told so often how bad things are, they just aren’t. Because the fact of the matter is, and I don’t know if there’s a good way to say this, but the fact of the matter is the markets move based on supply and demand and that comes from your first America.

The second America matters less to the markets now than it ever has. And that’s always generally speaking been the case. But it’s really the case now. And so this liquidity that is again record levels of liquidity, $7 trillion of money market accounts and the return of animal spirits, which again, remember we just had the election just over a month ago, it feels longer, doesn’t it? But investors did not want to be in this market with the risk and the fear that Joe Biden was going to win. So I can tell you this is the case with our own audience here and our subscribers. As bullish as we’ve been, as right as we’ve been to be as bullish as we’ve been, people are still very hesitant to go aggressively long the market. So I think all of that’s adding up to still a very, from a contrarian point of view, still a great time to be an investor. Again with the animal spirits just now returning, I think this is an underestimated point to a very, very large degree because now not only are investors going to continue to come back in the market the 7 trillion going to continue to continue to come out of money markets, into the market.

[00:05:01]:
But from a corporate point of view, American business owners now see the caliber and the type of people that Trump has put into these cabinet positions. Frankly, most of them are billionaires and they got that way because they believe in free market capitalism. And that’s what’s really returning with animal spirits, the knowledge that the government is no longer going to be your enemy, but they’re going to be your friend. They’re going to get out of the way. That’s all we need, the government to get out of our way. We don’t need your help. We got this. We’re going back into that environment now.

We gotta get there first. You know, Trump doesn’t take office now for what, six weeks, right? So we, we gotta survive that long. You hear these crazy stories, of course, the geopolitical craziness with the Biden administration, things happening with Russia. Everyone’s talking about these drones in New Jersey. All right. I think they surely know what these are. But again, the point is there is some trepidation because Trump has not beenaurated yet. And yeah, so that’s, that’s, that accounts I think for some of the nervousness now.

Plus of course again last week we were extremely robot. So what we’re seeing now is a natural kind of a, is a rotational action and natural working off of the overbought levels and then setting us up for that great year end rally that we believe is going to carry over into next year again I think next year, I think next year could be a 40% up year. I think it should be extraordinary because it’s going to be all systems engaged and that’s the way we’re going to keep playing this tech will continue to lead value. Stocks will do just fine as well. The broadening action will continue to grow and it’s not been that way over the last week or so. Been a very thin market, but we saw broadening action throughout the course of this year in a major way. I think Tyler just told me the advanced decline line for NYC just hit an all time high a few days ago. So again, I don’t know we can read too much into the action over the last week.

[00:07:03]:
I don’t think it really matters if I’m being honest. This market wants to go higher. Liquidity will drive it. The markets are driven by supply and demand. Demand will swamp supply again next year. Let’s take a look under the hood today. Again not a great day. Internals were pretty bad Today NYSE was a negative advanced decline by 1 1/2 to 1.

NYSE volume was negative by close to 3 to 1. That’s the worst ring we’ve seen there in a while. Nasdaq better but still not good. NASDAQ was events declined negative almost 3 to 1. But volume was just barely negative by what is this $10 million worth of trading. So that, that that’s encouraging there. We did have more stocks to do 52 week low than high but only about 40 issues. Not allowed to read into that there either in our sector watch today.

Now this is where it gets pretty ugly. No huge losses but a 10 of 11 sectors finished lower. But again the downside, only one sector was down big. Two actually consumer discretionary and healthcare both down 810 of 1%. Again not even one sector that was down more than 1%. The only winner of the day is very fractional gain was in consumer staples and a commodity watch. This is where it gets a little bit uglier. You know gold has been on a really solid run.

[00:08:21]:
Well thank gave some of that back today. Gold today down $51 an ounce at 2705. Rates have started spiking a little bit. We’re back to a 4.32% on the 10 year. But if you’ve been reading our work and listening to our podcast, you know that it’s really the last thing we’re worried about is inflation or rising interest rates. This is not that setup. It’s just not that setup. And we’ve walked you through those reasons why.

But the bottom line is when the US 10 year yield is 4.3% and Germany’s 10 year is it just over 2%. Japan’s 10 year is just over 1%. You see where I’m going with this. It’s the global demand for higher US rates. We also happen to be had the world’s reserve currency. So you get the safety and security plus almost double or more yield from buying our 10 year again is that demand that will continue to move rates lower. And again we still continue to believe that we’re going into an era of stark disinflation that within three years could well be pure deflation. And that’s just not a setup for higher yields.

It’s not a setup for frankly a market that wants to go lower. This again, structurally speaking, a very, very sound and very good looking setup as we head into 2025, especially with Trump as president. What else today? You know I’m looking at my notes. I think that’s I Think we’ll keep this a little short today. Still like the same big names. Tesla down right now $8 on the day at 416. What a run that’s had up of course about 4 or 5% yesterday. We like to buy these dips on Charles show today.

[00:10:06]:
He asked me about Tesla, he asked me about GameStop. That’s another position we have that we like. And the nuclear power company SMR we like, we talked about that. And the semis I’ll leave on this note, the semis today were down at 8/10 of 1%. That, that’s not great but they opened down 2 1/2 percent. You look at the charts of the semis SMH I’m talking about the semi ETF tagging the 200 day moving average, trending with it. This is going to be a support level that matters. We think it’s going to hold.

We think for the second half of December we get a big rally in the market with the rotation coming back. The semis, Semis lead the market in both directions. That will be very good news for the markets if, if however, if the semi sort of break down from here and trade below the 200 moving average we have to have a different kind of conversation and that means the semis are probably going to lead the market lower. But again these are, these are, these are short term situations, not medium long term. As a reminder during the dot com melt up we had five corrections of 10 to 20% over that five year period and then we had a full on bear market of 31% that took place just 18 months before the final melt up. It was truly parabolic melt up in that in the late 1999 that took place. So corrections and shakeouts are just part of the game. But I’ll leave you with this.

The smartest of smart money strategies from the birth of this bull market has been buying the dip. That’s what we will look to continue to do finally of the day. Bitcoin, right Just trading just over, just under 100,000. Long last trade now 99,988 but just under 100k. You know again I’ve said this now for what a week or so. The more that Bitcoin trades around 100,000, so 100,000 starts becoming the support level, the more positive this is. These, you know, we wouldn’t want to see a huge shakeout down to 80, 85,000. And I think if the market were to get away from us to the upside here, you know it would be more susceptible to a break back below 100.

[00:12:13]:
The longer we stay around here, the longer it becomes the case that 100,000 and change in this area is now at the new support level. The easier it will be for the next big bull market to start with fresh buyers and fresh energy, taking us to 150,000 on Bitcoin, which. That’s our next. That’s our next level. All right, folks, that’s it for today. Hope you had a great day and even better night. We’ll see you back here again tomorrow after the close.