In today's episode, Tyler breaks down a mixed day of market action that saw the Dow Jones snap its 11-day losing streak. As we approach the Christmas season, the market hasn't quite delivered the holiday cheer, but Tyler covers why that could be about to change as we approach the typical time period of the Santa Claus rally. Tune into today's podcast to learn more.

Don’t look back because the market is closed. Good Thursday afternoon everyone. Tyler Herriage here with you for today’s VRA Investing podcast. Hope you all had a great day out there today. Hope your holidays are going well. Hope you’re having a very merry Christmas out there so far in the markets, on the other hand, have not delivered on the Merry Christmas side of things just yet, but there’s still a lot to look forward to into the end of the year. We haven’t even gotten to the Santa Claus rally yet, which if you remember, takes place the last five trading days of the year and the first two trading days of the following year. So we have yet to begin that time period here.

And as we’ve talked about at length on this podcast as well, seasonally speaking, the second half of December is stronger than the first half. We think we see a lot of reasons here that we’re setting up for a good end to the month here. Of course, this week was a bit derailed following yesterday’s Federal Reserve induced sell off. We had a mixed market for our day to day for the day Today it looked like it was going to be a nice bounce back. Earlier in the session we had all of our major indexes higher across the board here. We finished with just the Dow Jones positive on the day and even then just fractionally so. But hey, we’ll take it. This snaps the 11 day losing streak that we’ve now seen from the Dow.

[00:01:42]:
So again, we’ll take that as a little bit of a victory on the day. But the Dow has hit extreme oversold on steroids readings here on the VRA investing system. You know, looking primed here to have a nice bounce back period, which I’ll cover some more throughout this podcast today. Got some great examples here of why now it will actually be a fantastic time to be buying the dip. And so before I dive any further into this podcast today, I’ll go ahead and get that out of the way. Now for the last two years since the October 2022 bare market lows, we have said that the smart money move has been to buy the dip. And I want to say now that nothing has changed from our point of view here. Buy the dip remains the smart money move.

Remember, I mean we just hit an all time high in the NASDAQ on Monday. So we’re not far away even with yesterday’s selloff, still not far away from those all time high levels. And we had hit some overbought readings on the areas like the Nasdaq that has Been holding up better than value names like we’ve seen in the Dow as of late. Again, the Dow just finished an 11 day losing streak. So it’s nowhere near. As I said, it’s oversold here. But the Nasdaq is, was, I should say, a little bit overbought. So no big concerns for us here.

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But if you’ve been here with us for a while, if you’ve tuned into our podcast or followed our work, then you likely know that we are not fans of the Federal Reserve. Not fans of Jay Powell either. I think Kip was one of the first people to say it in a, in a nationally syndicated way that Jay Powell was the worst Fed chair of his lifetime. Now you’re seeing a whole lot of people start to echo that sentiment and have the confidence to echo that sentiment because it’s so glaringly obvious that not only is this guy not very good at his job, but he’s also biased. Right. We talked about this here as well. The Federal Reserve, of the voting members right now, a large majority of those are, are Democrats. And now Jay Powell, they love to talk about, oh well, he was nominated by Trump.

He’s actually a Republican. If he’s a Republican, he’s most certainly a Rhino Republican in name only. Right? We’ve seen it from the James O’Keefe videos, the leaked videos from Jay Powell’s office, people who’ve worked for Jay Powell saying that he has an open disdain for Donald Trump. Right. So this could be another. Get Trump part two here for his second time around. Kip talked about this on his podcast yesterday. I talked about a little bit on the podcast Tuesday as well.

[00:04:40]:
How Jay Powell handled rate hikes during Trump’s first election. Right. And it seems to be that we’re getting something similar now. There’s nothing easier for the Fed than to cut rates in an environment where the economy is still strong. Right? To normalize rates. There’s no reason that that should send the market into a downward spiral like we saw yesterday. And what we saw from Jay Powell was exactly that. Some mumbling, some.

Some stumbling through his words just looked confused. And you heard that analogy kind of a lot today, like why it looked like he was walking through a living room without. With the lights off. We heard that a lot today from the financial mainstream media. When, you know, when the financial mainstream media is talking about how bad it was, that it’s extra bad. Because usually they try to cover for them. These are establishment players, right? So usually they try to cover for them. That was not the case.

And has not been the case today with Jay Powell. I mean, think about that. They’re saying that you’re stumbling blindly through a room is what it looked like while you’re speaking. So that’s what we got out of that. And the market had a clear reaction to it yesterday in a negative way. And Jay Powell, getting back to his old ways here, you know, we pointed this out years ago that he had the worst track record of any Federal Reserve chairman of sending the market lower on days where they were speaking, specifically FOMC days. And there isn’t a close second. Right.

[00:06:16]:
He had done a little bit better over the last couple of years, likely because he was under a Democrat presidency. So he’s trying to do everything in his power to help them out. So it’s certainly the market had performed better. Again, we were cutting rates. So, you know, now that Trump’s back in Jay Powell back to his old ways. And we have seen that, haven’t we, from the last two FOMC meetings. Now, Kip talked about this yesterday as well. Just the kind of snobby remarks that he made in the last meeting.

You know, you remember again, Kip talked about this yesterday, the not permitted under the law comments that he repeated that multiple times when he was asked questions about could you be fired by incoming President Trump? And again, just a very snobby kind of reactionary answer from him. And yesterday’s Jay Powell was no better. Again, just stumbled through it and didn’t really seem to be locked into his job. You know, just what. What could hurt the incoming president. And I’ll go ahead and say that. Right? And so we saw the reaction in the market. Yesterday’s 9.28 drop in the S P500 was the single largest drop on an FOMC day in history.

We knew it was bad, right? But we’ve seen some bad performances. Jay Powell, that was the worst so far. Hard to believe when he has such a bad track record, but that is the case. You heard that right. The worst performance on an FOMC day by the S&P 500. Fortunately, here we’ll get to some of the high notes. We continue to see this as the early innings of this bull market. Remember, we’ve only entered year three of this bull market.

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Now, bull markets, on average, last six to seven years. We expect this to be another bull market just like that. It might have legs to go even further as we start to get into the Trump Economic Miracle 2.0. The roaring 2000s continued and the innovation revolution and really A return to, to a more laissez faire style of economic system, not just here in the US but globally. We’ve talked about this a lot here as well, that we’ve already seen it in Argentina from Javier Malil. Yes, there were some speed bumps along the way to getting to where they are now, but they’re, they’ve seen inflation come down, economic growth picking back up a lot of things that really that country just thought was in, in the, the good old days for them. Right. So they still have a long way to go in the future, but they’re on the right track and that’s what we need to get to here in the US as well.

I’m gonna pause there for a second because I just saw, I kind of want to look this up. It was the amount of, well, two things. The level of regulation. This is what it was. Okay. The level of regulation here in the US has cost us somewhere in the realm of. Yep, here we go. Somewhere in the, in the realm of $4 trillion since 2012.

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And if you would have, if you put that in just U.S. regulations, the cost of regulation, the regulatory environment here in the US you would have the fourth largest GDP in the world. Incredible. Right. That’s how much wasted money there is in our bureaucrac, bureaucratic system right now. It’s absolutely stunning. But again, going back to the Fed here in the market, we certainly look at this as an opportunity to buy the diploma. One other point here about the Fed.

Following J Powell’s terrible performance yesterday, yields were higher, once again hitting their highest level since May of this year, up 1.69% at a 4.57. Here at the close, what was the high of the day? It was 4.59 was the high of the day again, the highest level since May of this year. You’re not what, you want to see yields breaking out above their November highs, you know. Yes. You don’t want to see that on a short term basis. But I’ve got to talk about this here again. I, I don’t want to sound like a broken record, but yields at this level simply do not concern us here. Right.

[00:11:02]:
I guess the fear is really, you know, if you want to go second level on this, the fear is that because of the Trump economic miracle 2.0 that the economy will be stronger next year. Right. And in the coming years as well. So yields will remain higher for longer. Now, I don’t understand how a stronger economy is a bearish thing. Right. Yields being higher in the short term is a little Bit bearish. But remember, we’ve compared this time period most closely to the 1995 to 2000.com melt up where the NASDAQ rallied 507.75%.

We’re only at now after today’s the last two days of trading, we’re at less than 100% in the last two years. So we think this has the potential to outperform the.com melt up period. Right. So if we’re only at 100% of the 575, we’ve got a long exciting road ahead of us. But during that 1995-2000 period, yields averaged above a 6% got as high as 7% early in that time frame. So no, Yields at a 4 1/2% don’t concern us at this level and don’t we don’t see it as a strong enough catalyst to derail the market at this point. Again, we look at this as as you know, kind of a counter trend move and an opportunity to buy the dip. And Tom Lee, who has been very bullish has been up there with how bullish up there with us of how bullish we have been over the last couple of years.

[00:12:41]:
You might recognize Tom Lee from Fun Strat. You know, he’s always on the the financial shows as well. But he was out today with our exact call here as well, going as far to say that not only is this an opportunity to buy the dip, this is a back up the truck moment. Those were his words earlier today. You know, we do agree with that here. We think it’s going to be another phenomenal year for the market next year as well. Yeah, it’s just, it’s exciting really. I think we’ve all gotten excited about it from the election to this point.

Now we’ve seen a little bit of a pause. Yeah. All right. But we’re still, we’ve gone up a long way in a short period of time here. Think what we’re seeing here from the market now is some profit taking from that some year end selling as well. And we can’t forget that this is the most illiquid time of the year for the market. So couldn’t have been a worse time for J. Powell to have done this.

[00:13:43]:
Definitely echoes of his 2018 December From Hell, that 100% on the shoulders of Jay Powell there. I guess he thought, well it’s been six years so maybe people have forgotten Jay Powell. We have not forgotten. Worst Fed chair of our lifetimes here. So now that we’re wrapping up the final full week of 2024 trading as next week we’ll have a day off in the middle there for Christmas Day and the following week we’ll have a half day of trading for New Year’s, I believe, and then New Year’s Day off. That we, I say that because we haven’t even entered into the classic start of the Santa Claus rally. If half days are included, which I’m pretty sure they are, then we actually begin on Christmas Eve of this year and we continue to look for a good Santa Claus rally and a strong start to 2025 as well. Again, there’s so much to look forward to here, you know, but we always have to be on the lookout for, for things like the Federal Reserve where they know that regulation for them is coming.

Right. Instead of the deregulation that other industries are going to see. They’re hopefully we can start to hamstring the Federal Reserve a little bit in there and that, you know, that they’re going to fight tooth and nail to make sure that doesn’t happen. They’re not going to go out without a fight. So, you know, we’ll just be prepared, continue to watch what we’re seeing from the Fed. As of right now, it’s looking 93% odds roughly that the Fed will stay put in January. If you listen to his speech yesterday, that sounds about right from his comments. Right.

[00:15:27]:
But we’ll see as we get closer to that point, some good news. Yesterday was actually out of the vix. During this market tantrum that we saw yesterday, the VIX erupted higher. The second biggest one day spike in the VIX on record was up as much as 74% hitting a high of 28 yesterday. But here is the good news. Historically, when the VIX the last four times we’ve had spikes like this, so one higher, two lower than this. But still the four largest VIX spikes on record. Stocks have made a full recovery with within one month all four times.

Right. So I guess it’s out of five then this would be the final one. But four for four on Vick spikes days like this, the market has made a full recovery within one month. We would not be surprised to see that here. And right on Q you’re seeing the weak hands get shaken out of this market. You know, a lot of people who likely bought the market after Trump’s election and not only after the election but after the rally took place, right. Like oh, fear missing out. They, they can’t miss this move any longer.

[00:16:40]:
Stocks only go up. All those people probably had a rough day yesterday. So I’m sorry if you’re one of them out there, but know that this is the time not to give up but to trust the process, right? Typically socks do go higher and so dips have always been the smart money play. Now, now timing of that is the issue, right? But what we’re seeing in the sentiment indexes right now is really interesting. The fear and greed index has just fallen apart here. We briefly hit greed mode on Monday of this week when the Nasdaq again just three sessions ago the Nasdaq hit an all time high. We opened the day at a 29 which is fear on on the fear and greed index we close the day out at a 23 which is not only fear but extreme fear. You know, again we look at this as another sign that this is nothing more than a shakeout.

Again the post election buyers getting a little scared there. You know, again these, those kind of the fast money they call it. And that’s not to say that it’s all retail, right. I’m sure there’s plenty of institutional money that is panicked that bought late and is now selling at a loss. Those are referred to as weak hands. And you know, that is another reason we look at this as an opportunity to buy the dip. And we have a pullback like this from all time highs in the fear and greed index is remaining at extreme greed mode and no one thinks that the stocks can go lower. You’re getting stock recommendations from your Uber driver, you know, your barber.

[00:18:21]:
When they’re giving you stock recommendations and talking about how stocks only go up, that’s when you’re looking at the signs of a top and we simply are not there yet. All right, so let’s take a look at our market action here quickly on the day. As I mentioned, the Dow Jones broke its losing streak today of 11 sessions up just fractionally by 15 points to 42,342. After that the S P 500 down just less than 1/10 of 1%. Nasdaq similar down 1/10 of 1%. And the small caps were our biggest losers on the day to day. You know this is an interest rate sensitive group so not a big shock there to see the market pricing in kind of this higher for longer theme that has been a theme really for our markets for a while but is re gaining some traction here. But we look at this again as a reactionary move and we do remain bullish on the small caps.

Russ 2000 down less than half of 1% at 2,221. Now we would have liked to see to see the semis perform better on the day to day. And I will point out we finished pretty close to the lows of the day, just about across the board. So not what you want to see there but again we look at this as a reactionary kind of a move here with the semiconductor. Semis did lead the way lower down 1.3% but now is about time to get that rotation back into Nvidia. It’s been a little bit, it’s underperformed the rest of these smaller semi names since its all time high just after the election. We’re now at oversold levels here and it outperformed the market by a lot today up 1.37%. You know, let’s see if we can get Nvidia back in charge here as one of the generals and especially a general for the semiconductors.

[00:20:14]:
Next up looking at our internals on the day to day we did continue the losing streak here. Just shy of 2 to 1 negative on the NYSE advanced decline with more declining than advancing stocks. Also slightly negative on the Nasdaq but not a 2 to 1 beat there. 52 week highs to lows were negative across the board here on the day today after yesterday’s selloff. Not a huge huge shocker though. Volume lastly here was positive earlier in the session for the Nasdaq. Finished slightly negative on the Nasdaq. Also negative for the NYSE today as well.

Looking at our sectors on the day, we did have more sectors higher earlier in the session and some defensive sectors leading the way. But you know you don’t mind seeing utilities finish higher on a day with yields higher. But this has been a tell for from this market that when utilities continue to head higher, I mean we just hit all time highs in utilities as well less than a month ago. Right. As a forward looking mechanism the utilities are a very interest rate sensitive group as well. So again if the stock market’s looking out six months, one year and the semis are rallying on a day with yields hitting their highest level since May, that tells you yields are likely. You know this move is not maybe not completely overdone but reaching that point. So not a bad deal to see utilities leading after that was financials, tech and consumer discretionary while our laggards on the day were real estate, materials and energy.

[00:21:49]:
You know we’re looking at some opportunities here in real estate. Just took some action in the portfolio this morning as well. Come and check it out if you aren’t already a member@vrainsider.com we’ve got a 414 day free trial going on right now. We’re seeing some real opportunities opening up really across the board in this market. All right. Finally here for today, our VRA Commodity Watch. Gold now lower on the day by 1.66%, holding on to 2600 dollars an ounce at 2 609. Silver down big on the day below $30 an ounce, down 4% to $29.47 an ounce.

Copper now down as well, 1.8% to $4.08 a pound. And oil back below 70 here again at $69.22 a barrel. Finally here for today, Bitcoin has also gotten hit in this selloff as well. Started out the day above 100,000, got down to 95, has come back a little bit still. Still down 3.3% on the day at 97. $657 a Bitcoin. Again, another group that we do remain extremely bullish on here. Another opportunity to buy the dip.

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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, Hope you have a very merry Christmas out there. We’ll see you back here tomorrow for the close.