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VRA Investing Podcast: Market Volatility, Visionary Technologies, and Contrarian Views – Tyler Herriage – April 17, 2024

In today's episode, Tyler covers various topics, from the innovation revolution to the recent moves in the bond market. Despite our major indexes finishing lower across the board we continue to look for buying opportunities in thi ...

Posted On April 17, 2024Episode 1366
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About This Episode

In today's episode, Tyler covers various topics, from the innovation revolution to the recent moves in the bond market. Despite our major indexes finishing lower across the board we continue to look for buying opportunities in this market pullback. Tyler wraps the podcast with the latest commodities market action, highlighting gold mining stocks' outperformance today.

Transcript

Don’t look back because the market is closed. Good Wednesday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great day out there today. Getting a little bit of a late start on the podcast here today. We were tuning in to an interview today from ARK, chief futurist officer, that is his new title there, an interview that he did on Twitter, spaces or X Spaces, whatever it’s called, with stocktwits. It was a really interesting interview covering a lot of the themes that we cover here, just more in depth and what we also see going forward through this innovation revolution. So I’m not going to cover too much of what he covered there is very interesting, though, a lot of the bullish factors like we’ve talked about, you know, what we’re going to see with autonomous vehicles and robo taxis.

And today, right on cue, Boston Dynamics unveiled their new robotic robotics platform. I guess, is what it is that they will be building off of now as well. So right on cue, there you start to see the impacts from different areas of the space. We’ve got autonomous vehicles, robotics, 3d printing innovations, nuclear battery storage, all of these things. And what really the takeaway point here is that these aren’t happening independently of one another. A lot of these different spaces, whether it’s autonomous driving to robotics, they share a lot of the same thinking principles. To get the job done that these robots need to get done right, these AI systems need to get done. So they’re all learning from one another here.

[00:02:00]:
And as they continue to learn, their learning time increases. It becomes rapidly accelerated in a short period of time. So what he was talking about there, I thought this was really most interesting in regards to robotics, is that if you get a robot that can do factory work first with skills and stuff, that it learns there, translates over into the point where you have robotics that come into your home, doing your chores, cleaning your house, making your meals, you know, working around the clock to keep your place spotless, and then in turn can take those skills and apply them to different areas as well. So again, this is all accelerating. It’s happening quickly. You know, Tesla is supposed to be rolling out their, their robo taxis here soon as well. I mean, it’s going to be interesting, interesting times, and we think for the better here as well. So, yeah, that said, that’s why we’re running a little late today.

But overall, you didn’t miss much in the markets today. Anyway, this now does make three days in a row here that, that we’ve had our major indexes open either positive, maybe even mixed to positive, but that marking at or near the highs of the day and finishing at or near the lows of the day today, which is what we got again here today. But we continue to talk about, you know, I’ll cover a lot of this here in a minute, but we continue to talk about this is a new bull market and pullbacks like this are part of that as well and provide fantastic buying opportunities. So I’ll get into that here. But first, some big catalysts are still coming up around the corner here that we think will provide fuel to the fire to the upside for this market, namely earnings, which we had one this morning. ASML ship producer actually missed on expectations this morning. New bookings came in below expectations and the stock sold off hard today. The company, on the other hand, came out and said that they expect q two to be much better.

And so that got a lot of people worried here. I believe ASML, they supply a lot of the manufacturing processes to these chip manufacturers like Nvidia. If I’m Misquote, quoting any of those, you know, reach out and let me know. But the fear there is that this is just the beginning. The rest of the semis are going to follow. We don’t expect that to be the case. This could likely be a one off here. Don’t forget, tomorrow morning we’ll also get back Taiwan semiconductor earnings as well.

[00:04:45]:
Now will be the real tell here. ASML is a massive company, no doubt about it, $350 billion company. But Taiwan semi is more than double that size. Right? Nvidia is a $2 trillion company in comparison there. So those are the names that really matter here. And we’ll start to get into some of them next week, namely the big tech names, not even just the semi names. With the big tech names as Kip covered here yesterday, we don’t even kick into high gear of earnings season until next week and then don’t look back from there. Tuesday we’ve got Tesla Meta on Wednesday, and on Thursday we get a bunch Alphabet, Amazon, intel, and Microsoft all set to report there as well.

And then in the following weeks, we’ll have Apple, the other mega cap names, Nvidia, those as well. So we continue to see this here as a great setup going forward. So going back to what I was talking about just a minute ago, this setup, we’ve just had a pullback. We’re right in the range of all time highs. Still 5% or so away for most of our major indexes, geopolitical intentions here have investors on edge, no doubt about it. I’ll cover that some later in the podcast. And the one that’s been on everybody’s mind this week, really eating away, has been yields on the rise hitting multi month highs this week. They did pull back today, but we just heard continuous comments so far this week from Federal Reserve speakers.

I think there were like twelve different headlines from different Fed speakers, all their different opinions out there and what the Fed should do. And then Jay Powell speaking yesterday as well. You’re getting these continuous comments here of this higher for longer theme. This has a lot of people not only worried about yields increasing, but why they’re increasing. Right? This has many people worried about the return of inflation after a few months of slightly hotter numbers, a lot of which can be explained to a few factors that are either seasonal or just kind of one offs that happen from time to time. So you know our view, we think we’re still in a deflate disinflationary environment here. There’s, it was never going to be straight down to 2%. This is one of those bumps along the roads.

[00:07:14]:
But as China continues to export deflation to the United States, we think disinflation continues. But back to the point. There’s all of these competing narratives out there really taking away from bullish sentiment. And as contrarians, we love to see it. So, right on cue with a pullback, fear and greed has now dropped below a 40 here. Let’s see if it dropped anymore. Since I last refreshed here, it has now at a 35. That is fear mode and approaching extreme fear.

A week ago we were at neutral. A month ago we were at basically extreme green. That is bullish sentiment being sucked out of the room quickly there, then overnight, and in the morning we’ll get the latest look at the AAiII investor sentiment survey. That one will be interesting. It’s been somewhat elevated towards the bulls for the last really few months, and so it’ll be interesting to see what happens there. And also today, the put call ratio really hasn’t been elevated in previous sessions, but we finished the day at a 1.28. That is a heavily bearish number. Remember, the average here for the put call ratio is a 0.7, meaning people are typically buying more calls than puts the market.

That’s just the way the average for the put call ratio. Anything above a one is seen as bearish. A 1.28 is heavily bearish again as contrarians. Another little notch there that we like to see. And one more note on sentiment here. Barron’s just ran a headline today. Just today, remember, we are 5% from all time highs, but it said, and I quote, why the stock market drop is far from over. These are just not the headlines that you see at a market top, right? If you’re at a market top, you’re seeing a correction like this of 5%, and everybody’s saying, why you got to be buying this dip, right? The stocks don’t go lower.

Like we talk very often. You’re getting stock tips from your Uber driver, your taxi driver. You’re getting stock tips from the baggers of the grocery store. We aren’t there yet. And as contrarians, again, we love to see this bullish sentiment leaving the room and shaking out some of the weaker hands here, giving us an opportunity to add to positions, to put on new positions. And really, let me get a quick sip of water here. So, overall, really, what we’ve seen hasn’t been anything outside of textbook bull market action. Early bull market action at that.

[00:10:19]:
Remember, trees don’t grow to the sky overnight. So in times like this is when we want to remember, you know, we’re just in year two of a bull market. Every bull market that has lasted at least one year going back to World War two, has gone on for a second year. That’s how early we are in this bull market. On average, they run between four and six years. And we think this has the potential to be an incredible bull market. Just remember what I mentioned at the beginning of this podcast about the innovation revolution. So don’t forget that this is the time you want to hold the positions you like the most, and you want to start keeping some powder dry to start, either adding to positions, putting on new positions to buy weakness.

We may not be there yet. Not a terrible time just to start, though, either. Here. Kip and I were just talking about it before the podcast. You know, it could be something in Q one earnings next week that really sends this market back off to the races. There could be one final flush out of the weekends, who knows? On some big piece of news. It could be an Iran Israel conflict deal, but it could be one of those two things here, kind of that whoosh, sell off, and then it’s back off to the races. Or you.

We get a good bullish catalyst, and it’s right back off to the races. Think about Nvidia’s earnings after Q one from 2023. We just had the banking crisis, then Nvidia reported, and we’ve been off to the races ever since. So it could be one of those kinds of events. Either way, we remain long and strong here and by the dip continues to be the smart money move. Looking at our markets on the day to day, another session here, as I mentioned earlier, three days in a row where the bulls just didn’t show up after the open, where we had a higher open, and we finished near the lows of the day today. And before I get to the numbers really quick here, let me point out that we are now reaching oversold levels here and heavily oversold in some categories, at least on our short term view. VrA momentum oscillators just about across the board.

[00:12:36]:
The dow, which led the way today, still finished lower, but fractionally down just over one 10th of 1%. And it is right now at extreme oversold. Well, just shy of extreme oversold, excuse me, but oversold across the board, short term and long term. VrA momentum oscillators, again, not quite extreme, but, you know, in these bull markets, sometimes you never get to those extreme levels. But these are starting to approach levels here where, you know, we’re getting to a backup the truck kind of moment. I don’t know if we’re there yet, but we’re getting close to it. So the Dow finished the day, 37,753. After that, the S and P 500 down 0.58% to 5022, also hitting heavily oversold here.

Those are probably our most two oversold indexes, the Dow and the S and P. After that, the Nasdaq led the way lower today, down 1.15% to 15,683. And lastly here, the small caps up a little bit more than the Nasdaq, down, though 1.06%. That is for Iwm, the small cap ETF. I do want to point out here today, as I was just talking about yields a minute ago, the ten year was lower on the day. So everyone take a deep breath. It’s going to be all right. Yields are still in the 4% range.

There isn’t a whole lot of resistance until we get to 5%. We said this, though. It doesn’t have to get back to those levels. And even at that level, we don’t see it as a potential to derail this market here. We can’t say it enough. In the period of 1995 to 2000 for the Nasdaq, when it had that 575% rally, yields averaged about a 6% at the time. So, yes, it can be done. And so, no, at these levels, at four and a half percent, 4.58.

[00:14:41]:
You know, we don’t see that as a major issue. And we just found out today from bar chart posting this. Fund managers are actively selling bonds right now. Right now, this is at the fastest pace in more than two decades. We just saw the biggest monthly drop in fund manager bond allocation since July of 2003. I don’t know about you, but to us that sounds like the signs of a top in yields when you get a bounce not even back to previous highs. And the fund managers are running for the exit here. That is really interesting.

We’ll see if anything comes from that. We’ll see if it continues. You know, we’ll keep you posted on it here. But for now, bond yields were lower on the day today. All right, next up here, taking a look at our internals on the day today. You know, not fantastic numbers here, but I got to say, compared to the last two sessions, these were good numbers. You’re not just pretty good. Compared to the last two sessions were really good.

It does look like I got a bit of a refresh downwards after the close. It always takes a few minutes to settle. So we’ll see here, I’ll run it with my numbers, we’ll compare side by side. Even at first glance here, still an improvement. So not nothing like a positive across the board day, but earlier in the day, really until the close, we had more advancing stocks, then declining stocks on the NYSE. We finished just barely negative there. A little bit more, but no two to one beats on the Nasdaq. Lower again under a two to one beat.

[00:16:29]:
And what’s good to see here was on Monday. Remember the NYSE, it was a five to one beat, declining to advancing stocks and a three to one beat on the Nasdaq. So much improved from there. 52 week highs, lows, negative again today, as you would expect after a sell off like we’ve seen, because the sell offs under the surface are always worse than what you see in the major indexes, which is why this is such a great buying opportunity as well. So they were negative, but again, an improvement from what we saw earlier in this week as well. So we’re seeing fewer stocks hitting 52 week lows to split despite our major indexes finishing lower again here on the day. Lastly, volume. This was our bright spot on the day today.

Just barely coming in positive on the NYSE. And gosh, this is a bummer because it was positive on the Nasdaq at the close today, but you get those refreshes in there. Did finish just barely negative today. But after a week where we’ve seen roughly 70% to 80% downside volume, days on both the NYC and the Nasdaq. An even day like today when the Nasdaq’s down 1.15%, you have the semis again, ASML was down big on the day, down 8% at the lows. The semiconductor ETF SMH finished down 3.08% on the day to day, yet volume was just barely negative. So, you know, a little bit of signs of divergence there. You know, again, looking for kind of that whoosh sell off there, which if we got, if we get.

That’s what we get, you know, we were looking for it on Monday morning at the open. They don’t always time out just like you would like to, but when you see them, you want to be ready to act again. Having some powder dry really helps there. All right, next up, let’s take a look at our sectors on the day to day. We, we did finish with some positive sectors today. Four out of our eleven s and p 500 sectors. And mostly the defensive names. As I mentioned earlier, yields were lower.

[00:18:35]:
The biggest borrowers in the nation are utilities. And utilities led the way today, again helping that yields were lower there. After that. We had another defensive sector, consumer staples. After that, materials. And then financials, as the financials had a good amount of green on the screen today for the big mega banks, if you will. After some concerns after earnings last week, let’s see if we can get a little bit of a bounce back here. We don’t personally invest in any of these names.

We’re not big fans of the big banks out there, but you want to see them participating as part of a healthy bull market as well. Then to our laggards on the day. As you might expect, tech led the way lower, followed by real estate and then consumer discretionary interior industrials. We’re after that. Should wanna run a couple of quick charts here. All right, nothing much else to report there on our sectors for the day, but much like our major indexes, we are at heavily oversold levels on the short term VRA momentum oscillators and approaching those levels as well on our longer term VRA momentum oscillators. All right, finally here for today, let’s cover our VRA commodity watch. Gold was lower earlier in the session, now slightly higher here, just up 0.04% to 23 77.

But just what you want to see on the day and what you want to see from this group really overall, is the miners leading the way and showing strength. On a day when the market was lower, there was a flight to safety trade today. We haven’t seen that every day of this recent pullback. But on days when you see outperformance from sectors when the market is lower, you want to keep an eye on those sectors, you want to keep an eye on strength. And that’s what we saw from GDX again, up 1.57% on a day with, with gold flat. Next up here, silver down on the day by really pretty flat. Down .02% at $28.28 an ounce. I’m not sure if I quoted gold.

[00:20:53]:
$2,377 an ounce. Next up here, copper remaining near its highs here, near a 52 week high. I want to say 18th month high. Why not? Why not find out here for you. All right, trading today flat on the day at $4.34 a pound. Again, that is hovering near its highest level since June of 2022. So almost a 24 month high there for copper. Finally here, oil.

We’ve talked about this some here on the podcast, but oil has continued to fall here from its peak at the beginning of the month on its price per barrel. And this may sound contradictory because we do remain bullish on oil and gas stocks. We remain bullish on the energy sector. We also like uranium as well, to throw you a little curveball, but my point by dragging this out right now is that hopefully a lower price for oil today, which is down big, 2.9% to, to $82.86 a barrel. And hopefully, hopefully, what that is telling us is that these geopolitical conflicts will be resolved before something major happens. That’s the hope. I’m not saying that I have some insider information here, because I do not. But if things were looking like they were going to get more heated, especially in the Middle east, you have massive oil producers in the area.

Even if it’s not necessarily Israel being a massive oil producer, still the conflict in the area would send oil prices higher, and we just haven’t seen that now since oil peaked. So again, I like the group here, but I also like this weakness in the price per barrel for that reason that hopefully we can resolve these geopolitical issues without more big blowups, without more loss of life. Finally here for today, bitcoin lower again today here. Down 2.8% now to $61,262 of bitcoin as we get closer and closer every day to the halving as the ETF’s continue to create more bitcoin demand. We remain extremely bullish here on bitcoin. But folks, that’s all we have time for here today. Please be sure to subscribe to receive our VrA podcasts every day at the market close. You can sign up@vraletter.com click the podcast link at the top, and we’d love to have you with us.

[00:23:33]:
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 Markets see mixed trends, potential buying opportunities.
06:22 Fed speakers express inflation concern, but still deflationary.
07:50 Investor sentiment shifting quickly, put call ratio bearish.
11:40 Nvidia's bullish catalyst leads to stock surge.
15:52 Stocks slightly declined with some improvement overall.
19:08 Big banks participating, tech leads market lower. Oversold. Gold slightly higher at 0.04%.
22:28 Geopolitical tensions could raise oil prices. Bitcoin falls.
23:33 Thanks for watching, see you tomorrow.

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