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VRA Investing Podcast: Market Gains Continue, Generals Leading, and VRA Remains Long and Strong – Kip Herriage – July 10, 2024

In today's podcast, Kip covers another solid day of performance from our favorite sectors and indices as we saw another round of all time highs. Kip also discusses the positive earnings expectations for Q2, the anticipated favorab ...

Posted On July 10, 2024Episode 1418
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About This Episode

In today's podcast, Kip covers another solid day of performance from our favorite sectors and indices as we saw another round of all time highs. Kip also discusses the positive earnings expectations for Q2, the anticipated favorable CPI data, and the continuing strength of the bull market. Tune into today's podcast to learn more.

Transcript

Don’t look back. The market is closed. Good Wednesday afternoon, everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. Thank you. By the way. Thank you all very much for your concerns and your emails and phone calls.

We, of course, are just outside of Houston in sugar land, Texas, and hurricane barrel surprisingly came in and hit us pretty hard. Weather experts expected it to hit much further south, and then it just came rolling in. Not a hard storm at all, but Centerpoint energy and really, our Texas government were not prepared for this at all. And unfortunately, we still have about a million and a half people in the Houston area that were without power. It’s 95 to 100 degrees out. You can imagine the elderly and the frail and those that can’t take care of themselves, what they’re going through. We got power back late last night. I can tell you this much.

If Ron DeSantis was governor of Texas, this would not be happening here. Greg Abbott happens to be abroad, but Lieutenant Governor Dan Patrick now is in a pissing match with the Biden administration, which is doing no one any good. The real issue is Centerpoint energy, and the changes are taking place in Texas, in Houston, the city of Houston. Working with Centerpoint energy is a complete mess. And we’re very fortunate to get back. But anyway, thank you again for your concern. I know this kind of thing happens all over the country. When it happens to you, it becomes more important.

[00:01:28]:
But, you know, look, our job is to get information to you so you can make money in the markets and build a retirement account, prepare for anything that may come our way. And so we’re not in pocket here. Believe me, it bothers me a lot. I do not like being in touch with the markets. Thank you again to Tyler for covering for me. We’re back now and ready to rock and roll. We came back to a good day today, Dow Jones, matter of fact, it was a good day across the board. Good day.

Great internals, every sector high on the day. Jay Powell today spoke for the second day before Congress and really more of the same. But the big thing is, he said we need to be mindful of where we are with the labor market. And that was what he said yesterday as Tyler covered his podcast, that the biggest mistake they may make, if they make one, is going to be being caught flat footed, not ready for an economy that’s slowing down. Frankly, we don’t think that’s a real concern. The bottom line, this has been our base case, our macro base case now for close to two years. That we are in the roaring 2020s, that we are in an innovation revolution, and this economy is on very firm footing. I believe that that’s what Jay Powell really knows because, and we’re going to find out more very soon, aren’t we? We’re going to get Q two earnings starting on Friday with the banks and airlines.

[00:02:49]:
Start reporting. We expect that this quarter, as we’ve been covering here a lot, we expect this quarter is going to be another very good quarter. Estimates for about 9% earnings growth we think is going to be better than that, maybe a lot better than that. We’ll wait and see. But, you know, today I got it, by the way, tomorrow, this is important, the last, last comment on the economy. And j pal, we’re going to get the CPI data tomorrow. Estimates are for a one 10th increase month over month and a 3.1% inflation rate year over year. The core CPA is higher.

Their estimate there is 3.4% year over year. So we’ll see what that is. I think that, look, here’s my hunch here. This administration leaks like a sieve. This is the worst leaking information of my career, and I’ve done this 39 years. I’ve never seen. This is criminal. This is criminal what they do.

They regularly leak financial, economic data night or two before it comes out. I think we saw that in the markets today. I think you got leaked today. The Dow Jones opened lower on the day, and all of a sudden, boom. Here we go. Right. By the way, we are, this is a textbook looking bull market, I got to say. Let’s talk about the markets when it comes to a few other things we’re going to cover today.

Dow Jones today finished right at the highs today, 429 points. That’s up 1.1%. Russ, 2000 also up 1.1%, as you have 100, a little bit less, but up 1% of the day, and Nasdaq up 1.1%. So all the indexes right there in a very tight band. But again, Dow Jones was lower earlier in the day and then caught fire. I believe that two things are happening here. I believe the inflation data is going to be friendly tomorrow, and I believe that again, when earnings start, specifically bank earnings start on Friday, they’re going to be good. I just was looking at the charts of the bureau investing system of the banks, and look, Tyler and I have avoided bank stocks forever.

[00:04:56]:
I don’t remember the last time we recommended a bank or financial stock. We may have done it in our parabolic options program, but that’s about it. Just because. How do you value these things with the commercial real estate issues that we have coming? We don’t think those are a big deal, by the way. But remember, these banks own real estate. They own, they own, they have banks all over the country that are barely needed anymore. This is one of the points that I’ve made for a long time, is everything’s going to online banking. How often do you go into your bank? Right? Maybe you go through a drive through every now and then.

Most people don’t go to their bank anymore. They bank online. And so again, they’re sitting on property that has now become a depreciating asset. These properties are not necessarily growing in value. There’s a lot of debt on these bank balance sheets, a lot of employees they don’t need, by the way. So I think it’s very tough to make money in bank stocks. However, the charts look good, both on the BKX, the bank index, and XLF, which is the bank ETF. I’m not recommending them, but I just, based on these charts and the way that this market feels to me, I think that.

I think we’re in good shape. As the bank start to report, I think it’s going to set a good tone, and then before we know it, we’ll get back into tech earnings, of course, semi earnings, Nvidia, etcetera. And look, I think it’s going to be a good quarter. And I think we got a glimpse of that. With this move higher. What are we now at? Let me make sure I get this right. Goodness gracious. We’ve now had 27 record highs for Nasdaq on the year and 37 record highs, the SB 500.

[00:06:35]:
And these do matter, by the way. These matter because this is a snowball effect. It’s a snowball effect. And what it’s doing is it’s telling people as they watch the news, as they read what’s happening that are out of the market. There are so, look, we’ve talked about this a lot. There are so many investors that have been out of this market because they’re fearful of what’s happening in Washington, DC. And how can you fault anybody for it? The entire time that we’ve been hyper bullish, we’ve also said we completely understand why investors want nothing to do with this market. We had three markets in five years starting in 2018.

We had the plandemic. We’ve had a big up year 2020, big down year 2020. I mean, it’s been very, it’s almost impossible to make money in this market. So I don’t fault anyone again with what’s happening in DC, especially now, you know, of course, look what’s happening geopolitically with Russia, Ukraine, et cetera, and now Israel, Gaza. I mean, it’s a mess. I don’t fault anyone for not wanting to do this market. However, our job is to, again, fund our retirement accounts. Our job is to build our wealth.

And the way to do it in inflationary times is you must own inflationary based assets, and that happens to include equities. And so that’s how we positioned it. That’s how we’ve looked at this really for, again, from two years now, from the time we wrote the big bribe and went aggressively long at the bear market lows of October 13, 2022. And we’ve stuck by that. It’s been the right call, and we think it will continue to be the right call. There will come a time, there will come a time when we take some profits. There will come a time when we’re actually taking more profits. There’ll come a time when we’re going to raise more cash.

[00:08:24]:
Seasonality for the markets stays strong through mid August. Right. Seasonality has held up very well over the last couple of years. Will we wait until the middle of August to start raising some cash? I don’t know the answer that yet. We’ll rely on the very investing system and we’ll see how things look as we come through. Q two earnings. I do think we’ve got as overbought as parts of this market are. And yeah, parts of this market.

Right. Look at the Nasdaq, look at SPF 100. They are not at our most overbought designation, which we call extreme overbought on steroids. But we’re very close. We’re definitely overbought, although we haven’t gotten there, as Tyler covered yesterday, on money flows. But we’re approaching the danger zone. This is not when we necessarily want to take profits, but it’s certainly when we start using discipline and we don’t invest in those things. Instead, we’ve been focused on the semiconductors and the Dow Jones and Dowie stocks, precious metals and miners because the charts of these look fantastic.

The setup on these is not extremely robot. Matter of fact, it’s got a long Runway before it even, even gets to overbought. So that’s how we’re positioned. And look, there’s a lot of cash coming into the market. There are a lot of people that they realize, okay, they’re getting Fomo fear missing out. The train is leaving the station and they realize they can’t keep $6.2 trillion in money market funds. And that money’s coming out and it’s going into equities. And we just had record levels of inflows in equities now for, I guess, over the last month, certainly in tech stocks.

[00:10:05]:
And again, we think that’s going to continue, that we’ll reach a time when it’ll be very hard to find a bear. But the great thing about this bull market, this is, this is an important point. When we, when we have our next shakeout and every bull market, every bull market has them. When we have our next shakeout, well, here’s what we’re going to be watching because it’s been detail, it’s been the, this has been detail for this bull market. So hear me, hear me carefully on this. The next time we have a shakeout and the market drops two, three, four, maybe 5%, something like that, nothing big, but a shakeout. Right. The next time we have that, if these sentiment surveys that we follow report to you here during greed index, AAI, several others, right.

Sentiment surveys and sentiment indicators that we follow, if those indicators start to get to lose their steam, right. And they go from extreme bullish to all of a sudden they, like fear and greed index, just did fear and greed index until what, a week ago was in fear territory. Okay? And so if we, next time we have a shakeout, if the sentiment surveys stay bullish, that would concern us. But as has been happening throughout this bull market now for close to two years on a sell off, again, a shakeout, if these sentiment surveys revert back to overtly bearish or even somewhat bearish and do it in short order, that’s a tell. That’s a tell. And that tells us that that’s hot money that gets cold real fast, right? These are people that are capitulating and becoming bullish at the very end of a move. Then they get, they throw their money in and at the first sign of danger, what do they do? They get out of the market. That is the tell.

[00:12:05]:
Know this, this is what I’ve just explained to you. This is the tell of this bull market because there will come a time, probably not for a few years, frankly, at the rate this is going, where we’ll have a shakeout. But these, these sentiment indicators won’t budge. People will start saying, oh, everybody’s buying the dip. Everybody won’t want to buy the dip because the market can’t go lower. We’re just not there yet. So again, you stay with us here, we’ll cover this with you as we move forward. But again, I think it’s a very, very important sentiment indicator to follow.

This is something my mentors talk to. Me, understanding investor sentiment, being a contrarian, understand how to read these things, is, I think, in this full market, is as important as anything else. And it’s one of the reasons we stayed so bullish, because people get bearish so incredibly quickly. You know, it’s interesting now, right, with, with Biden being in all kinds of trouble. The left is eating their own. How delicious is this, right? With Biden in trouble, and who knows if he’ll survive or not. Look what’s happening here. Bears are now waking up and realizing, oh, my God, it is going to be Trump.

[00:13:18]:
It’s going to be Trump. Now look what the market’s doing. We’ve talked about this for a long time, right? The single best discounting mechanism on the market are the investment on the planet are the investment markets. They discount moves anywhere from three to six months out. Well, the election is four months away, so this bull market is Ripp roaring now, is discounting, almost certainly discounting a Trump win? This is what more and more people are waking up to. Trump’s going to win. And, oh, by the way, guess what? The last time he won, the stock market and the economy were a house on fire. They did amazingly well again, until the pandemic happened.

That’s exactly what happened. We had 5% GDP growth. The stock market went up 30, 35% in Trump’s, no, 42% in Trump’s first year. So that’s what the markets are beginning to discount now. So while they say he’s dangerous for our democracy and all this other nonsense that they put out, complete bullshit, right, that they put out there. What we know for certain is Trump understands the concept of get out of the way, right? Remove, you know, bureaucratic red tape and regulations that simply should not be in place. That, of course, the left loves to put in to control us and to tax us. Trump removes those barriers so we can, as entrepreneurs, business owners, investors, we can grow our family, grow our business, right? That law is a fair attitude.

[00:14:48]:
Trump gets it, of course. Of course. He’s a businessman. Why wouldn’t he? So he gets out of the way and lets us do our thing. That’s when the markets and the economy does its best. That’s what’s happening now. That’s what’s being discounted in the market. And that likely means this move is not anywhere near being over.

And we saw it today. Again, I think CPI data should be friendly tomorrow. And I believe that more and more investors are going, okay, Biden’s toast. We can’t replace him. He won’t leave. What are we going to do? And then it’s just even people on the left are saying this could be a landslide investment, right, a landslide election. So that’s how we’re going to stay positioned. We’re aggressively long, and there’s no reason to change that at all.

Now, this is when everybody else is starting to catch up with us. This is a time to stay long and strong. But again, I will point out we are an extremely robot on Nasdaq SV 500. We’re nowhere near that. On the Dow Jones value stocks, again, areas we really like here. I think energy stocks represent phenomenal value. Precious metals and miners, again, we talk about this a lot because for this particular group, precious metals and miners, when the miners are leading higher, and we’ll cover commodities here in a little bit. When the, when, this is the go to chart of the precious metals industry for during my career, rebel strength chart.

[00:16:12]:
When the miners are leading gold, it doesn’t matter which direction they’re leading. Lower. You don’t want to own them. All right? You recognize they’re probably going to go lower, but when the miners are leading the way higher, lean gold higher. That’s the ultimate buy signal for this group. Happened again. So we shared that chart this morning in our very letter. It happened again today, by the way, today GDX and minor ETF up 2.6%.

Gold was only up three tenths of a percent. That’s significant outperformance. The miners are going parabolic versus gold. I think what that means is, again, the markets, as a discounting mechanism recognize what’s about to happen. The Fed is going to cut rates. That means the dollar is going to go lower. All of the bells and whistles that you could possibly send off that are going to be ultra bullish for precious metals and miners are happening now, again, discounting mechanism doing its thing. We think that continues.

Energy stocks, we know what Trump loves and we know what Trump feels about energy stock, and we know they’re going to be drill, baby, drill very soon. So a lot of reasons to like value, certainly the areas I just talked about, the Dow Jones, of course, is a lot of value. Bank stocks, airlines are about to report. That’s, again, another reason why we think that group is going to do very well. But, you know, again, there’s some areas where we’re just cautious on at this point. The semiconductors, by the way, oddly, are not in that group. Semiconductors today led the way higher, up 2.3% today. Again, when the semis are leading, you must be long the market, right? Semis lead Nasdaq.

[00:17:44]:
Nasdaq leads abroad market. That happened again today. Textbook bull market action. One point I’ll make because we, you know, we’ve talked a lot about Tesla here. Tesla Today had its 11th straight day. It’s been higher. I think we’re now of this eleven day run. Tesla’s up 44%.

Just an amazing run. Of course, we’ve been patting the table on Tesla now for some time. It’s one of our VRA ten baggers. This move is just starting. However, on the vrain investing system, Tesla is trading at extreme Overbought. On steroids. On steroids. It is glaringly overbought.

So, no, we’re not using this to take profits. That’s not our approach here. But we are pausing our buying because it’s just a time when shakeouts happen. Bad things tend to happen when you’re this overbought. But it doesn’t mean Tesla’s got to fall a lot. It may move sideways a bit, it may just keep going higher because the best investments on the planet, that’s what they do. They just keep going up, no matter how overbought they are. Look at Nvidia, right? That’s what it’s done the last year plus.

So we’ll have to see again. There’s a lot of excitement building in Tesla because we have the ultimate showman, Elon Musk, that is getting ready. He’s already starting to hype up the August 8 unveiling of the robo taxi, which is going to transform not just Tesla, but the auto industry and I believe the insurance industry as well. It is an incredible invention that’s about to hit. And Tesla really has no competition in this area. Completely autonomous vehicles that will essentially put Uber and lyft out of business, really, over time. So they better get their license, their fleet deals done really quickly. And I believe that’s what Musk has been busy working on.

[00:19:30]:
It’s one of the reasons the stock is going up. In addition, MuSk has started talking now ABout optiMus. They’re, of course, their humanoid robotic is also coming out. A lot of people think this is going to be worth five to $10 trillion alone. It’s just one of Tesla’s divisions, and he’s talking about new design issues that will now be made public in the very near future. He says by year end. So again, a lot of reasons to love Tesla trying to give you both sides here. Stock, medium to long term, absolutely still a buy.

Short term, it is extended. It is ever bought. All right, let’s talk about the internals now. Again, this is a very good day today. The internals, again, Tyler covered this in detail. Internals are getting better. There’s just no doubt about it. They’ve been bad.

A lot of people really bearish in the market because of it, but they don’t understand this rotational theme that we’ve had. We’ve been down this road before where only the magnificent seven last year were leading and everything else was in the dumper. Well, we kind of had that again, haven’t we? Mega cap tech stocks are soaring and the rest of the market had been playing like a dead dog. And so the internals reflected that. Right. It caused a lot of people to go bearish. We took a different approach. Our approach is that we’ve seen this move movie before and we’re seeing it again.

[00:20:53]:
But the internals, as we believed, would begin to improve, and that’s when the market broadens. That’s when the big spikes higher happen. We think we’re witnessing that right now. Here’s the evidence of that. Again, much better internals over the last week. If you’ve noticed all of those that were screaming about horrible internals and bad breath, they’ve gotten pretty quiet. And there’s a reason for that, because these numbers are improving big time, and they did today. Advanced decline for NYSE positive by three to one.

Nasdaq positive two to one. Up volume on NYse today was a 76%. That’s a good day. Nasdaq also solid up almost 71% up volume. And we had about 140 more stocks hitting a 52 week high than hitting a 52 week low. This is a win across the board. Positive internals happening again. This is becoming more of a repeating pattern.

That’s what this bull market needed. It was our biggest concern. The VR investing system is still at eleven to twelve screens bullish. We almost dropped to ten out of twelve bullish because of the internals. But now here we go again. So again, the very investing system is doing what it’s supposed to do. The markets are doing what they’re supposed to do. That’s a generational bull market.

We are in the roaring 2020s. We’re likely going to have Donald Trump as president again. That’s a powerful trifecta right there. Sector watch. Here we go again. Another phenomenal day. All eleven suf under sectors finished higher on the day, led to the upside by, you guessed it, technology up 1.6%, materials up 1.3, healthcare up 1%. A lot of sectors up in that range.

[00:22:30]:
Again, nothing lower on the day. A good day across the board in our commodity watch. 1 second here. Refresh. There we go. All right. Today, gold actually got up to a really good start. Was up over $20.

Announced today. Did finish up $10 an ounce, but again, that’s only a four tenths 1%. Again, the miners, we said earlier four times that amount today, more than that, even the miners again, just were up 2.7% today. So very good day for this group. Again, big buy signals there, finishing at 23 77 an ounce. What does that put it? About $70 an ounce below all time highs. We think that gets taken out soon. Silver today had a.

It was up again today. Again, not great gains, but it was higher by $0.03 an ounce at 3108. Copper today was up three tenths to 1% at 459 a pound. Crude oil was up 1% on the up 1.2% of the day. 82 41 a barrel. And finally, of the day, cryptocurrencies. Bitcoin again. With the Mount Gox distribution of their coins, we’re seeing selling pressure hit the market again.

It was a bankrupt cryptocurrency exchange. And now, after this bankruptcy took time. Those coins have now been distributed, and some are hitting the market, and that’s caused a bit of a supply demand imbalance, folks. That is a short term situation only. We think we’re seeing clear evidence of a bottoming process. Bitcoin is a buy here. We’re not that concerned about the short term. We want to own this for the medium to the long term.

Again, our minimum price target for the full year for 2024 remains 100,000 in bitcoin for this cycle. My target is 250,000 right now. Bitcoins at 57,500, down about three quarters of 1% on the day. All right, folks, that’s it for the day. I hope you had a great day and even better night. We’ll see you back here again tomorrow after the close.

Podcast Newsletter

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Time Stamps

00:00 Powell optimistic about economy, Q2 earnings awaited.
04:11 Dow Jones closes at high, expectations positive.
07:45 Inflation calls for owning inflationary assets, including equities.
10:58 Monitoring of sentiment indicators in market behavior.
13:55 Trump's policies led to economic growth.
17:06 Trump favors energy, banking, and airline stocks.
20:18 Market rotation triggering bearish sentiment, familiar scenario.
23:46 Bankrupt exchange distributing coins, creating supply imbalance.

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