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VRA Investing Podcast: Overbought But Bullish Signals Abound. Definition of a Structural Bull Market – Kip Herriage – February 12, 2024

Tune into today's VRA Investing Podcast as Kip covers today's stock market performance including, the small caps leading, the improvement in the internals, the relative strength charts we are watching, and the overbought condition ...

Posted On February 12, 2024Episode 1322
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About This Episode

Tune into today's VRA Investing Podcast as Kip covers today's stock market performance including, the small caps leading, the improvement in the internals, the relative strength charts we are watching, and the overbought conditions we are seeing now in mega-cap stocks. In our view a generational bull market is just now starting to get underway.

Transcript

Don’t look back because the market is closed. Good Monday afternoon, everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. Hope your weekend was fun.

How about the Super bowl? Pretty good game this weekend. Pretty awful. Commercials again, although there were a few good ones.

The Christopher Walkin commercial I thought was pretty good. The Ben Affleck commercial I thought was pretty good. I do not remember the products they’re marketing. But anyway, the bottom line, it was a fun game to watch. Still a lot of talk about whether or not this game is scripted. I don’t believe that’s the case. The 49 ers claiming they didn’t know the overtime rules. What? These rules have been in place for two years now.

They’re not changed at all for the Super bowl. Anyway. It was a fun game. Super Bowls are always fun. Get together with friends and family and watch the final game of the year before you get ready for football again. XFL starting again in April, I think it is. So for you football fans out there, you have to wait just a few months and you’ll get it back again. All right, let’s talk about today.

[00:01:08]:
We have a lot of interesting things happening here, folks. Some big things. I think underneath the surface, I see a lot of people missing some important, I believe, I think Tato vouched with me on this. We think a lot of people are missing some big things here, folks. We are in a generational bull market. We’re at the birth of it. This is the birth of a generational bull market. If people say, well, Kip, how could that be? And look how much we’ve already gone up in a year.

Well, let me remind you, the 1995 to 2000 bull market, which we have said this looks the most similar to us, has. That would mean we’re in 1995 right now, maybe the beginning of 1996. So we’ve got a long Runway in front of us here for a lot of gains to take place. The fact this is being led by tech and by semis just continues to tell us to pound the table on this market. Yeah, we’re overbought. I’m going to talk about all this. Markets overbought. Tech is still leading the way.

It did sell off today at the close or about halfway throughout the day. Great internals today. I think that’s something that’s very important that’s been missing, folks. We had 609 stocks, this is NYSE and Nasdaq combined. We had 609 stocks, hit a new 52 ekai today. It’s been a long time since we have 600 stocks, hit a new 52, ekai. And again, everybody online, I see it on my Twitter account, my ex account, everybody’s. But Kip, as I’m bullish, bullish, bullish have been for over a year.

[00:02:35]:
Bullish, bullish, bullish. Right. People are like kept. Don’t you see these internals? Don’t you see the breath? Doesn’t that worry you? I mean, I get this all day long for some reason, and I don’t understand this, really. We could have this structural bull market size of scope in a way, which, this is a structural bull market, I’ll touch on that a little bit as well. But if there’s one negative, just one, not that there’s only one negative, you can always find more than one. But right now, at this juncture of the bull market, the biggest negative, and I see it like you probably do if you’re active on social media, Internet. I see it all day long, is, what about the internals, Kip? What about the breadth? This market just can’t keep going up based on a few stocks.

Of course, it’s not just going up based on a few stocks. This is becoming a much broader move. Higher. By the way, people that put that out really don’t know how to look at these various indexes. I think and understand the growth that’s taking place throughout. It’s been tech now, yes, but the growth taking place in all these indexes, as far as growth stocks that are taking place of all sizes, it’s pretty extraordinary. No, it hasn’t really broadened out all that much yet to other areas of the market, namely value stocks. But we saw signs today.

[00:03:56]:
We’ve been seeing some signs. This is beginning to percolate. Bank stocks have been doing better. Right. But the small caps had this monster move higher. If you remember last October, the end of October, we told you we had a little capitulation event. We were backing up the truck on the small caps. They had a monster move higher, 22% move higher took place in the small caps in a very compressed period of time, just in a couple of months.

And then we had to get in the sharp sell off. And again, everybody. Oh, here we go. It’s a thin market again. No, it’s not. I’m sharing a chart. I put it on Twitter today. We’ll talk about tomorrow in our letter.

The relative strength chart of the small caps, the IWM rust 2000 ETF, the relative strength of small caps to the SP 500. It has my attention. It has my attention because again, small caps went parabolic last October, November, started going parabolic, and then they had the big sell off. Well, folks, trees don’t grow the sky overnight. Chart patterns don’t develop in just a month or two. These are long term developing moves and repeating patterns that have to play out. Okay. Well, the relative strength chart of small caps SP of 100, just put in a higher low.

[00:05:16]:
Just put in a higher low. And now has been outperforming over the last week. Been outperforming the large caps. So again today, roast 2000 up 1.8% with both Nasdaq and SPF hundred down on the day. Again, that’s interesting. By the way, we’re also seeing a bit of a pop here in chinese stocks. I love, as you know, chinese tech stocks. We saw a pretty good day, up two and a half percent in that group today.

I think there’s a monster move coming. All of this is building to a much broader bull market. This is textbook. This is textbook action. It’s how they build. Just know that. So when you hear all the bears out there telling you the one or two or three things they really hate, remind them there’s like 50 to 100 things you could really love, namely the fact that, again, this is the birth, in our opinion, of a generational bull market of size and scope in the innovation revolution and the roaring 2020s. So we love touching on these themes because, again, we’ve been a broken record on these themes for now, for over a year.

[00:06:23]:
Also, crazy things happening here. Nvidia. Nvidia’s market cap now is the same size as Amazon’s. Is that not a little insane? The stock has just gone absolutely bonkers. Parabolic. There’s a new definition of parabolic. Bonkers. Parabolic.

And now larger than, or at least the same size as Amazon. They bounce back and forth today based on total market cap. These are all things that happen, folks, in the roaring 2020s. These are things that happen in the innovation revolution in a generational bull market. We’re seeing sign after sign after sign. Do you see the news today from Dow Jones? Had a piece on this today. Flying cars are here now. They’re not going to get the full launch until next year.

[00:07:16]:
And I think the first, as I read the article, I think the first is in Saudi Arabia, maybe Dubai. And they’ve got like, this company has a six year contract. They’re getting all the rules and regulations straightened out now, but we’re going to have flying taxis, we’re going to have flying vehicles, one pilot, four passengers that go a couple hundred miles an hour. No more traffic. Right? No more traffic. And if I’ve seen the pricing on this, I don’t think it’s going to be ridiculous. I don’t think it’s going to be ridiculous. So that’s going to spread fast.

We know that Elon Musk and Tesla are very close by. Very close. I mean, within a year, possibly this year, within a year or so of the robotaxis being fully autonomous cars. And I remember when I first heard this years ago, we’ve been fans of Tesla for a long time, and one of the backstories of Tesla has always been, yeah, the evs are great, but wait until they get fully autonomous vehicles figured out. Well, what company has got this figured out? There’s only one company, and that’s Tesla. Obviously. The leader in evs have been for forever. This is the leader in cars now, period.

[00:08:32]:
But they’ve been tracking all this data. They’re a tech company, they’re not a car company, they’re a tech company. And they’ve been tracking all this data and building all this data now for years. They have at least a five year lead time on anyone in the competition when it comes to fully autonomous vehicles. Right? Fully self driving FSD. And the stock is going to go bizarre. What was I saying a minute ago? Bonkers. Parabolic.

That’s what Tesla is going to do. And so that’s why we have it as a tr ten bagger, because once they get number one, once they get their ev pricing down for the lower end to 25,000, which is where they’re going to be next year. We know that because Musk said it. That means next year, but it means it’s going to happen soon. I do think it’ll be next year for $25,000 pricing on evs. They’re even talking about a layoff program for Tesla, getting their costs down. They got a war chest of over $30 billion. I don’t think a lot of people know this.

Tesla has 30 billion in cash to do with what they wish. And so that’s now becoming a larger and larger play for them. I wouldn’t be surprised to see some acquisitions. I certainly wouldn’t be surprised to see some major news come out again about FSD. They kept it very quiet, but they’re starting to open up a little bit about it. Kathy Wood and her team at Arc talked about this last week in an interview that she did. And she said, people just don’t understand this story, but they will when FSD is out and when the evs are down to 25,000 range. That’s when they dominate everything.

[00:10:07]:
And the revenue is just insane. Insane revenue growth is coming. That’s Tesla. So, again, in the roaring 2020s, we have flying cars, we have full self driving vehicles. All the things we’ve been talking about here for so long, and the innovation revolution, these things are happening. This is a magical time. It’s a magical time to be an investor. It is.

And this is the time to stay locked in. As you know. That’s been our view for some time. Not to repeat that, but we have a lot of new people to come and listen. So I don’t want people to think we’re just saying this is the first time we ever said this. No, we have all this laid out in the big bribe, the book that Tyler and I wrote and published in October of 2022. So look what I remember from the 1995 to 2000 melt up. And I remember it pretty well.

I was very active in venture capital, invest in banking, as well as being a financial advisor, of course. And I just remember it being a crazy time. Ipos. The ipos is something I remember a lot. We did a lot of ipo work. I worked with the syndicate desk a lot then, because I helped take a lot of companies a lot. Helped take seven companies public, took two or three companies in the time frame, two to three companies public during the 95 to 2000 melt up. So I was pretty locked into that area.

[00:11:28]:
And we had 100 ipos that came out in multiple years. They went up more than 100% in the first year. A huge number went up more than 300% in the first year, folks, I mentioned that today because that hadn’t even started yet. That’s how early we are in this bull market. The ipo binge and the ipo craze has yet to even get underway. When’s the last time you heard about a hot ipo? Admittedly, I don’t watch much tv, period, financial media, otherwise. But I would know if their ipo is coming out because everybody be talking about it. I see it on my newsfeeds and social media, and I’m not.

Are you? No, you’re not, because they’re not happening, but they’re coming. There are a lot, and I mean a lot, as in hundreds. There are hundreds of private companies right now that are licking their chops because they’ve been waiting, waiting, waiting, because this market’s been so horrible. Three bear markets in five years. In 2018, on unprecedented average, stock loses 40% to 6% value. Unprecedented. People are shell shocked people are just now starting to come around to, hey, maybe this market is not going to crash. Maybe I should have more position.

Remember, six and a half trillion dollars sitting in money market accounts all time high? Those people aren’t buying into it. I guess they’re happy getting 4.1% now, which is where the ten year is. But again, the point is, that’s fuel for the fire. As the market keeps going up, it’ll make more and more believers out of people. And certainly when the IPo market comes back, then it’s going to be okay. Here we go. All right. Now it’s really started.

[00:13:07]:
See, that’s not going to start for some time. And we really don’t want it to do we? Because once you get a lot of hot ipos coming out, it sucks up a lot of capital. Right. That takes away from stocks that are out there performing now, that creates necessarily downside action in the market. It can create periods where you just move sideways. So we don’t want to see the ipo market come back red hot overnight. And I don’t think it’s going to. But I know, I can tell you this, there are literally hundreds of ipos that have been in the incubation process.

Right? They’ve been in the incubation process now for some time. And many of these could be ready to go in a matter of a month or two. So I think you are going to start to see ipos come back. I don’t want to see a slew of them. And I hope that Wall street and the SEC do a better job managing these ipos than they did these spacs. What a disaster these spacs were. We avoided them. We told you we didn’t like them.

These companies were not primetime ready, and we avoided those. Now, not that we don’t own some of them. We do own with Trump Media or Digital World Acquisition Corp. We actually own that in the VR portfolio, and it’s done very well for us, especially of late. But that’s it. We didn’t buy these other ones because it was a fad. And the SEC did a horrible job of managing the rollout of these not ready for prime time public companies, and a disaster followed. And so I really do hope that the SEC and Wall street in general does a much better job of managing this binge of ipos that are coming out, because they are, they’re coming, especially with this red hot market.

[00:14:58]:
All right, Dow Jones today. Also want a bizarre put call ratio readings today. I’ll cover that. Tyler pointed out to me, internals today getting rock solid. Bitcoin. Got to talk about that. Bitcoin. Over 50,000 new 52 week high headed, a whole lot higher.

The having is coming up. It’s like, do we have enough money to invest in all these things? Right. That’s why, by the way, here at the VRA, we limit it to, with everything included. We don’t want to have more than 15 holdings. We keep a pretty tight portfolio. I know some people. That sounds too big. I know a lot of people listening here are probably going, kip, what are you talking about? I own, like, five stocks, or I own five primarily, and I’ve got positions and others, but they’re small.

[00:15:41]:
And I understand that everybody’s portfolio and money management style is different, but I think if you limit it to ten, to 15 holdings in that range, then I think for me at least, this is how I do it, then you’re fine. I can’t track many more companies than that, not that I own and don’t want to miss anything. Insider buying and selling conference calls. We try to keep an eye on everything here. And as I said many times, I think it’s pretty much in every book I’ve written. If you want to have a portfolio of 50 plus stocks, buy an ETF. Right, or invest in a mutual fund, because I don’t know anybody, especially if you’ve got other responsibilities, you get a full time job, what have you. I just don’t know many people who can manage that effectively, that size of a portfolio.

So maybe look at ETFs instead. But that is why, by the way, we keep our portfolio size pretty small here, very focused. But we only want to be in the areas that are hot or about to become hot. And so that’s our approach here. We build positions in our favorite growth stocks. That’s a long term thing. We’re looking for long term capital gains, the big, big moves. Ten baggers, 510 baggers.

[00:16:52]:
That’s what we want there. And then our etfs, those are more of a trading approach that we use with our VR investing system. Okay. All right, so Dow Jones today, all time high. Imagine that. Right up 125 or three tenths, 1%. 38,797. Yeah, it won’t be long, folks.

Dow Jones 50 way. We just got bitcoin 50,000. It won’t be long if we have Dow Jones 50,000. All right, that’s coming. Nasdaq today had gains of over 100 points, then had a sharp reversal at midday with the foot call ratio started exploding higher, finishing down 48 points, just three tenths to 1%. It is noticeable, though. But again, rust 2000 up almost 1.8% today. Nasdaq down, SB 500 down semi is down 1%.

[00:17:40]:
But yet the small caps almost close at their highest of the day. I think that’s very interesting, and it’s reflected in the internals that. I’ll give that in a moment. Again, these are big things happening beneath the surface that I think could be telling us a story here. They could be laying out a game plan, a map of where this market is going to go. The structural integrity of the market, what’s happening meets the surface is so very important to understand how these things work together. But anyway, so, yeah, kind of a mixed day on the markets. Again, all time high in the Dow roast.

2000 soaring. Otherwise, reversals in tech. Look, we’re an extremely robot. We are, but that’s where we are. You don’t get to have an Nvidia become as large as Amazon without some real craziness happening in the market. So that’s happening. I did notice over the weekend, I wrote this up this morning. Very interesting.

[00:18:34]:
I thought over the weekend, Goldman Sachs, JP Morgan, Morgan Stanley, their top strategist, all went bearish on tech. They all went bearish on tech. Now you go, well, kip, that sounds concerning. Are you concerned about that? Well, I don’t know these people. I don’t know if they beat the markets or don’t. I don’t know if their job is just a figurehead, if they’re just good in front of a camera. I don’t know these people. What I do know is this, and I think this tells the story.

Nasdaq, which is tech heavy. Nasdaq. Right. Mostly tech stocks, tech biotech, growth stocks. Nasdaq is still better than 1% below. After today, it may be 2%. We’re going to round up. I think it is 2%.

Nasdaq is still 2% below all time highs. I think most people hear that and go, how’s that possible? Look at the move we just had. What? No. Nasdaq 100 now is at an all time high. Again, that’s the home of the magnificent seven. It’s a much more tight group of 100 companies. Right? So it’s at an all time high. But even the Nasdaq 100 is only an all time high.

Plus 7%. 7% above. Above. Its all time high from late last year, but Nasdaq is still 2% below all time highs. My point is this, and this is to address the strategist at Goldman Sachs, Morgan Stanley, and JPMorgan. I don’t know of a bull market that’s ever ended before, especially when it’s tech led as this one is. How is it that they’re calling a top in tech stocks when Nasdaq is yet to hit all time highs? The Nasdaq 100 is only all time highs. Plus 7%.

Kip Herriage [00:20:33]:
You see, it doesn’t make sense, does it? Doesn’t make common sense. I think, again, I believe a lot of people are still trapped in this mindset of what’s happened in the last five years. Three bear markets. I think a lot of people are still trapped, still in shell shock.

That’s what we’re witnessing here. Because I can envision no other scenario where the top analysts at three major Wall street firms would come out and say that this is the top protect stocks. Now, from a trading point of view that’s neither here nor there. We have overbought sell offs all the time.

[00:21:09]:
Pauses, shakeouts, that kind of thing. That’s not what they’re talking about. They’re talking about this being similar to the 1999 peak. So they’re bearish on tech stocks. And I just don’t know how that’s possible, not when Nasdaq has even yet to hit all time high. So as my mentor Ted Parsons used to say, hey, Kip, bull markets don’t even start until we get to all time highs. That’s when a real bull market starts. That’s when the fun starts.

That’s when the party starts. I can hear Ted saying that in my voice right now. So that’s what I believe is happening here. I think this market is still being figured out by people again, people are in shell shock. We saw it in the book call ratio again today. At the first sign of trouble, people start rushing to buy puts. And I’m sorry, but that’s not the nature of a market. Peak market peaks take place when you have big moves higher and shakeouts take place, and then nobody buys puts.

[00:22:05]:
Everybody’s all in. Every shakeout we’re buying calls, right? And you see it in the poker ratio. You track it by hour. And so you can see the personality, the psychology of the market as it plays out. And we are not seeing anything that tells me we’re anywhere near a significant peak, by the way, and I shared this this morning as well. This is one of my favorites, one of our favorites here. The percent of SP 500 trading above the 52 hundred day moving average is really important to track at extremes, right? On both ways, low and high. Like when you get really ugly bear markets and all of a sudden we have only 5% of the SPF hundred is trading above the 200 day moving average, right.

And it’s 3% above the 50 day whatever. When you see those kind of extreme bearish readings, you just got to back up the truck and buy. And this is one of the indicators we use right now. Again, this is with the SPF hundred at all time high. Not today, but we just closed at all time highs on Friday, right? We just closed at all time highs. But only 63% of the SPF hundred is trading above its 50 day moving average. Only 70.8% of the SPF hundred is trading above its 200 day moving average. Folks, until these readings get to better than 90%.

90. And again, we’re at 60, just basically 63 and 70. Until we get to over 90%, we’re not going to be worried about an important short term peak. And we’ll get there. But maybe, I would think probably April is my guess. Seller may go away. I think probably April is when we’ll get there. But again, just not seeing any of the signs that would tell us we have trouble on the horizon.

And again, we are overbought. Look, we’re extremely overbought. No question about it. Pause it. This is not the time to be aggressive on the buy side, I’ll tell you that. That time was when we were telling you to back up the truck. Okay, after the October lows and again after the January shakeout, that’s when we were telling you to back up the truck. This is not that time.

[00:24:21]:
Discipline is important here, especially this overbought. But by the tip, we’ll continue to be the smartest of smart money strategies. And that’s something we’ve been consistent with from the bear market lows of October 2022. This morning I wrote up the definition of a structural bull market. And I’m not going to put you through it again. I’m not going to put you all through it again. It’s something we’ve been talking here again for about a year, over a year, because a lot of this is in the book about our megatrends. One of those, of course, is the millennial generation.

The red pilling of America, the return of your animal spirits. These things are all happening now. And the financial strength of this market is barely talked about. It’s crazy. It’s barely talked about. When I talk to people about this, their eyes glaze over. Their eyes glaze over and they go, but we just had 41 year highs in inflation. That can’t be possible, Kip.

[00:25:15]:
I’m like, I know, but it is. These are all facts. I’m not going to cover them all again. I’ll mention three. All right. Consumer net worth, all time high. One third of americans have paid their homes off. No mortgage.

Credit score is all time high. I’ve got about ten more. But these are, all of them are all time highs. And then I think maybe even not bigger than that story, because that’s huge. Again, the structural strength of the american way of life for both consumers and corporations has rarely been better, certainly not in decades. That’s how strong it is. And that’s just evidenced by the data that’s just backed up. But I think one thing that’s really important, again, no one’s talking about this.

[00:26:09]:
In the last 15 years, from the 2008 financial crisis, guess what we learned? We learned american companies and american consumers learned we don’t want to go down the road again. We can’t trust our government. We can’t trust Wall street. Who knows when this could happen? Again, we don’t want to have too much leverage. So we’re going to take care. We’re going to get our financial house in order. And that’s what we did. Over the last 15 years, consumers and companies have cut their total debt by about 25%.

That’s through disposable income and market cap. That’s huge. And again, it’s vastly underreported. And also, and this is another biggie. Corporate debt to market value. Market cap sits at 50 year lows. 50 year lows, 50. The point that matters out of all this is that our balance sheets are in extraordinary condition.

[00:27:03]:
And again, there’s two americas. We all get that. We’re having an adult conversation here about the America that matters to the markets. And that’s what this is. The America that matters to the markets. People that own a home, people that have a financial nest egg. And it’s not just baby boomers like me anymore. No, it’s millennials largest segment of the population.

Rocking and rolling. Okay? Don’t believe the nonsense you’ve been told about this group of people, because it ain’t true. It is not true, and they’re driving it all. So, bottom line is, here’s why it matters. These are the balance sheet fundamentals that we see at the beginning of economic expansions, not the end. The deleveraging that’s taking place over the last 15 years is extraordinary. And the ability to lever up is significant. And see, that’s when market tops occur.

Market tops occur when everybody is all in, right? Their credit cards are maxed out. We’re in the bottom 80th, 85th percentile right now. Okay, again, I know you’re not hearing this in mainstream media, so sometimes I got to explain a little bit. But no, the $1 trillion in credit card, the total does not matter. The totals don’t matter. What matters is your debt, credit card debt or otherwise, to disposable income, that’s what matters. And to net worth, that’s what matters. And right now, we’re basically at all time lows as far as from a risk point of view.

[00:28:37]:
So this deleveraging is important because that means when this market does peak and everybody’s got, instead of owning one or two homes, people have three or four homes, and instead of the Dow Jones being at 38,700, it’s at 68,700. When these things happen, as this bull market rolls on in the roaring 2020s, as these things happen, leverage will start to look different. People will be levered up because animal spirits will have returned. Their concerns will be much different. My guess is that’ll be under republican administration. At least that’s the way I see this playing out. But who knows with what’s happening in DC? We just can’t trust anything, which is why we need to control what we can control, which is our approach here with the markets and investing. Also focused this morning in our VRA letter.

But if you’re not a member, come and join us. Vrainsider.com again, vrainsider.com two free week sign up is the strength in the semis. Again, they closed down today, however, and I shared this chart this morning. I also posted on Twitter from the October lows. The semis have done nothing but lead higher. And again, I’m a broken record. Of course, Tyler and I talk about this all the time. The semis lead in both directions.

[00:30:01]:
That’s well established from the birth of QE in 2008, 2009. And we just hit fresh highs for this real estate ratio against semi. Steadio 100 just hit fresh all time highs. Again, just happened on Friday. So this is becoming a regular current. So look at the chart of it and it’s just, wow. I mean, it really is. But a lot of people aren’t tracking this.

And things that I don’t understand make me very curious. But I can tell you that if you want to see the direction of the market, follow the semiconductors, SMH, and that’ll tell you the direction. Not every day necessarily like today. Semis are down, small caps up, big but by and large, this works on a week to week basis. More of your weekly charts to give you a better idea, at least some expansion of time. But again, very, very bullish. The way the semis have acted. Nvidia market cap same as Amazon.

That’s crazy. All right, let’s talk about the internals today, because I do want to spend a little time today on bitcoin and on some things happening in precious metals and miners. Let me check. Oh, put call ratio. So the put call ratio today opened at a point 82. All right? And that’s just above average. It’s like 0.7 something is the average. Anything above that is people a little more bearish than they would be.

But all of a sudden, then, boom, here came the put buyers. The put call ratio expanded from zero point 82 to a 1.58 in 30 minutes. That happened. And then it stayed above one the rest of the day. So it was 1.58. These are 30 minutes reports, 1.58, 1.331.24, 1.19. The point is, it was above one all day and much of the day by a considerable amount. Again, folks, it’s important to understand the psychology of what this means.

[00:31:58]:
Very important. When you have a high put call ratio at all time highs, something ain’t right. That’s not the way it’s supposed to work. That means people are cat on a hot tin roof. They’re just so antsy. They’re ready to jump off at any second. They’re glued to the screen, ready to hit sell button. Boom, boom, boom.

I got to get out. Oh, my God. The Dow just dropped 30 points in an hour. Sell. I mean, I’m exaggerating, but only by a little bit, because that’s what happened today. Once Nasdaq and the semis started to reverse, here came the put buyers. So again, we’ll see what happens tomorrow. But this is not indicative of a market peak.

This action today and the put go ratio, a very important tool to track, is not indicative of a significant pattern change that’s in the near term. It’s just not okay. In the eternals today. Again, I wanted to cover these with you because these are fantastic today, again, even with the sell off and Nasdaq and semis reversing lower. Listen to these numbers. Almost four to one positive. Vance decline in. Yse.

[00:33:08]:
Everyone’s been bitching, complaining about the weak internals, and now we got. Careful what you ask for, bears. You may get it. Well, here you go. Almost four to one positive against decline. NYSE Nasdaq. Two to one positive volume, 80% up volume day for NYSE. Again, SPF 100 was down in the day.

S&P 500, 80% volume day. Nasdaq 71% up volume day. And that’s good for Nasdaq. It rarely gets above 70, 75%. This is a good day. And listen to this one. New 52 highest lows. Again, 609 stocks hit a new 52 week high today to just 67, hitting a new 52 week low again.

That’s Nasdaq & NYSE combined. That’s called breadth expansion. All right? That’s what that’s called. So it’s good to see. We want to see it continue because that, again, that’s been the bugaboo for a lot of people, a lot of smart money people, by the way, that have a problem with that. And I understand that. But what they’re missing is the structural strength that’s taking place in the economy and in the markets. That’s what I think people are missing.

If they’re not paying attention to earnings, they should have seen it this quarter because these tech earnings reports are just astronomical. And, folks, again, this isn’t the one off. This is the beginning of the innovation revolution. And that’s why, again, when we repeat, this is time to stay locked in. All right, let’s go to the sector watch today. It might help if I pull it up 1 second. Here we go. All right, now, our sector wash today of the eleven S 500 sectors, pretty good data today here.

[00:34:54]:
We only had four sectors lower, seven finished higher. Not a lot really happening either way. Utilities were our leader today, up 1.1%. Bonds yields were down today. Bond prices were up the ten year back to a 4.7%. Tomorrow we get CPI data, which will, of course, be telling. So utilities are strong today. Energy, good to see energy stocks bounce up 1% today.

A lot of value here. Again, talk about a group that’s ready to broaden this market out. Energy banks have been doing better. Small caps. Again, we get these groups going, China, we get these China tech specifically, we get this group going, this expansion going, and you’re going to see a market go bonkers, right? Parabolic bonkers. I’m going to trademark that. That’s really it, folks. Downside again, technology down seven to 1% with the midday late day sell off.

[00:35:47]:
But again, red, they’ve been super red hot. So again, some consolidation certainly shouldn’t surprise anyone. Okay, let’s get into the commodity wash day because I want to spend a couple of minutes on what’s happening in gold and silver, really, but more so the miners in relation to the precious metals and then bitcoin, because it’s, again, ready to take its next major move. It already is, by the way, but it’s getting ready to really go parabolic. We get some good stuff for this. I think today, gold today, interesting. I think gold was down $4 an ounce to 2033. So, kip, why do you want to talk about that? Right? There’s no excitement there.

We’re losing money on that today. Why are we going to talk about that? Let’s move on. No, here’s what we’re talking about. Because the one thing that hasn’t happened in this bull market for gold, silver, and the miners, and we are in a bull market, by the way, if you look at the one year chart, go back and look at the two year chart, three year chart, see what I’m talking about. Of course, gold just hit an all time high. Was that a month ago? So, yeah, we’re in a bull market, but the one thing that has not happened in this bull market is the miners have not come to life. GDX is the minor ETF. It struggles.

[00:37:05]:
It struggles. Like, today, it traded 17 million shares. It’s $27 a share. That’s just nothing. This should be trading 60, 70, 80 million shares a day on a good day. And again, on really good days. Well over 100 million shares, 150,000,000 shares, and now it’s just dead. So this group has not done anything because the miners haven’t led, and we’ve talked about this a lot here.

Until the miners start to lead consistently, there’s just not much hope for a big move higher in the metals. Well, today, even as gold was declining, the miners were fairly sharply lower at the open. And then all of a sudden, here came a reversal. So the miners closed up today just better than 1%. Now, I know that’s not a lot on the surface, I get it, but this is how close we watch this group, because once the miners start putting in a number of days, four, five days, where they’re outperforming, doesn’t be big outperformance, just outperformance where the miners are outperforming gold. We’re going to let you know in our parabolic options program, we’re going to take another position there. And of course, in the VRA, we own these now. So we’ll let you know exactly what we’re doing and the actions we’re taking, but want to see what’s happening in the miners today.

[00:38:23]:
And we saw a little bit of it last week. I want to see this really start to build. Here’s why. The Fed’s going to start cutting rates now. Maybe it won’t be by March. When I said at the march meeting, I’m still predicting that, by the way, all it’s going to take is a couple of pieces of data to change their mind real quick. But whether it’s March or it’s the May meeting, which is really late April, April. Late April, May 1 is actually when the cut would be.

So whether they cut rates in March or a month and a half later on May 1, whenever they do cut rates, this group, the miners, should rock and roll. The average move higher in GDX in the last three rate cutting cycles has been 180%. So I think that’s our tell. Make a note of this, folks, because that’s the tell. When the miners get rocking, they’re telling us. They’re our tell, right? They’re our tell that rate cuts are coming. I just don’t think it’s going to be much longer before the miners really start get going here because they’ve so underperformed gold over the last three months. It’s time for this group to get going.

[00:39:33]:
So that’s what we’re watching here. We’ll obviously keep you in the loop. Silver today up sixteen cents an ounce at seven tenths, 1%, at 22 75. Copper today, up three pennies a pound at 372 a pound. Crude oil again, energy stocks were nice and hot today. Crude oil was only up a dime at 76 94. But it does look like a much more fundamentally sound supply and demand story. And again, these energy companies are so cheap.

They’re so incredibly cheap, and they’re just cash flow magnets. And so the next time crude oil gets going, you’re going to see we’re going to make a lot of money in these energy stocks. So, keeping a close eye there as well. Finally, for the day, bitcoin. All right, we’ve been all over this story. All right, for those that are new, Tyler and I, both, on the same day, we both bought bitcoin together at $600. What was this, 2014 or so? 2015? And then we recommended it to our VA members, client subscribers at 2000. So we bought it.

[00:40:43]:
Got a chance to really dig into the story, start to understand, what is this cryptocurrency? What is the blockchain? And then 2000 recommended it. Well, when it hit 64,000 and then topped and reversed lower, we sold at 58,000. That was when we sold. So we made great gains in bitcoin. And then we waited. The shakeout took place. Right. Remember it? Most people, of course, bought at the top, and now they’ve been through years of pain, and that’s why no one’s talking about it right now.

Everyone was talking about bitcoin because of the SEC approval of the etfs, but people weren’t talking about bitcoin because they were making a lot of money in it. People are still pretty beaten up from the sell off that took place. Well, you got the SEC approval, of course. Now it was a buy of the rumor sell of the news event. Now look what’s happening. Here we go again. Bitcoin over 50,000, taking out a new 52 week high now. But here’s what’s significant about what’s happening next, because again, very few people talking about it, but the having is going to take place.

[00:41:46]:
The having takes place in 66 days from now is when the next having takes place. Tyler, I talk about this like, man, look at what bitcoin did the last time they had a having, which was in May of 2020. Check this out. Bitcoin went from on the last having. Again, may of 2020. Bitcoin went from roughly $5,000 to 64,900 in eleven months post the having. So we’ve had now the SEC approval, we have fund inflows coming into these bitcoin etfs. Just astronomical.

Without question, this is the best managed ETF launch in history, no question about it. Really well done. They picked the time, of course, but it was well done. And now people have forgotten about it because again, it was bothering to sell the news. Bitcoin got smoked right after the news. So people are like, okay, that was fun. No, the having is probably more bullish. At least it was last time, wasn’t it? 5000 to 64,000 make 1100%.

[00:42:57]:
Eleven times your money in eleven months. That’s what happened last time. If that happens now, bitcoin’s headed over 500,000. Okay, now, I’m not predicting that, because I don’t think that’s going to happen on this having, but I think people have just forgotten about the significance of this and what it means. Much more expensive to mine bitcoin again, it slows the whole process down. And that’s the way the genius of this structure was first constructed with. So the having takes place in 66, 65 days now. And again, we’re long and strong.

Bitcoin looking for a big move higher. We’ve already had a double. Essentially, we’re looking for. Again, my target had been 50,000 for bitcoin. That’s from about three months ago. We’re there, but now my target is 100,000. It’s been my target all year from the fourth quarter of last year. 100,000 this year in bitcoin because of the SEC approval and the having.

[00:43:54]:
And now the SEC deal is done, and now the having is taking place again. 66 days. So this is still. Although everything pretty much is overbought except small caps gold. Of course, bitcoin is not as overbought as tech stocks, but it’s approaching extreme overbought. But this thing is its own beast. It’s its own animal, isn’t it? And again, for people that say, I just don’t understand the bitcoin story, you don’t have to. In my opinion, it’s just as simple.

Bitcoin is the best supply demand story on the Planet, right? All investments move because of one thing, one relationship. Supply and demand. That’s what everything, your home price, everything moves in relation to supply and demand. The level of girl you could go out with when you were in high school and college, that’s supply and demand. If she’s got a lot of demand, guess what? You’ve just added the supply. She can pick and choose, right? This is the very important topic of understanding supply and demand and its impact on price action, which is everything. So it’s simple. They’re only going to have at most 21 million bitcoin in existence.

[00:45:11]:
It’s going to take many years before they even reach that level. They’re having again, makes it that much more difficult to mine them. And that’s why you’re not going to get a big dilution is going to take place. They find a new gold mine, guess what? You just got diluted by a million ounces or whatever, even though there’s not much gold out there, just a couple of, like, supertankers. Worth is all that. Maybe one supertanker is all they have, period, from the birth of mining of gold. But it’s even more dramatic of an illustration when you look at it in bitcoin, 21 million ever going to be in existence. That’s a finite supply.

Well, we’ll look at the demand. It’s now a legitimate asset in the eyes of the Sec. Of course, other countries had already taken that step, and now those that own it and know this story aren’t about to sell. Why would you. Why would you possibly sell bitcoin unless you’re a trader? But if you’re a long term investor and you believe like I do, that, yeah. Bitcoin is headed to a million dollars. It’s going to a million. I can’t tell you when, but it’s going to go to a million unless something goofy happens, right? All other things be equal, it’s going to hit a million dollars at some point.

[00:46:28]:
And so this is what most investors that own bitcoin and don’t want to sell it. Why would you, why would you. Supply demand just continues to get more and more tight. Demand continues to grow, especially now with the SEC approval, the story is becoming better known. It’s now a legitimate story. It’s not. Oh, well, if they choose to, they can just do away with, you know, it’s here. It’s here to stay.

So it is the best supply demand story on the planet. It should be part of every portfolio, even if it’s small. And now the great thing is you don’t have to go open a wallet with Coinbase or whoever and figure out how to buy it online. You don’t do any of that now, unless you want to. You can just buy one of these etfs. It was like ten of them, right? You can just buy one of these ten etfs approved by the SEC. We haven’t commented on this yet because we still own bitcoin the old fashioned way and we haven’t come out and recommended an official ETF. But I don’t know.

[00:47:27]:
There are differences, of course, with all of them, but these are all legitimate big name companies issued these. We’re big Kathy Wood fans, so we may even recommend the Arc ETF. They’re one of the first to file. Kathy woods, an absolutely rock star, and other people like to beat up on her. They might look smart in the interim, in the short term. Check back in a decade and see what people say about Kathy Wood. Okay. That’s our view anyway.

We’re big fans. And her macro story of the innovation, she didn’t call it that of the AI surge. And their theme is disruption, of course. That’s the thing. That’s what’s going to bring deflation in their view. We think disinflation, deflation, but the point being, they have a great ETF for bitcoin. You can use that one. If you have questions, let us know.

[00:48:23]:
We’ll tell you what we think and at some point we’ll recommend one. But right now we just own the old fashioned bitcoin that you buy through a wallet. And so, yeah, bitcoin is overbought. Everything is pretty much. I don’t think it matters. I think into the having. I think you’re going to see now another buy, the rumor, sell the news build up just like we have at the SEC approval. So it started now, right? It started.

And I think this move is going to be interesting. I think it hits 100,000 quicker than people can really imagine. Like, it wouldn’t surprise me at all. I would not be surprised at all if bitcoin hit 100,000 this quarter in a month and a half would not surprise me one bit. Kind of expected, actually. So just be positioned. Even you got a small amount out. Be positioned.

And there are other vehicles that you can buy instead of a bitcoin, ETF, they’re miners, et cetera. So we’ll keep you in the loop as there are thoughts. But again, we’ve been a broken record on this. We’re big fans. Think it’s going a lot higher. And, yeah, you should probably buy it now if you haven’t already. All right, folks. Hey, always appreciate you listening.

Hope you had a great day. Even better night. We’ll see you back here again tomorrow after the close.

Podcast Newsletter

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Time Stamps

00:00 Super Bowl 2024 recap
04:28 Relative Strength in Small caps
10:27 IPO Market
15:00 VRA Stock market coverage
22:05 Traders looking for a pullback
25:14 Consumer strength seeing all time highs
30:01 Understanding Quantitative easing
34:10 VRA Sector Watch
38:23 VRA Commodity Watch
45:11 Bitcoin hitting 52 week highs

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