In today's episode, Tyler covers the market's strong month of May, and despite the weakness we saw this week, the markets finished on a strong note this Friday. Tyler will dive into this week's key data releases and the latest on this rotation to value names. Tune into today's podcast to get a recap of an exciting month of May for our markets.

Don’t look back because the market is closed. Good Friday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great day out there today and a great end to your week this week. And if you’re watching our markets today, especially the last smart money hour of trading, it was a pretty good end to our week this week. And if you’ve tuned into a couple of our podcasts over the last few days, kips yesterday and mine today here as well, real, really, real fast here. The one on Wednesday where I said, you know, I don’t think I ever get the all time high days. Well, I didn’t get a day of all time highs today here, but talking about it on the podcast might have helped break the curse.

I was really looking at it again before the smart money hour, the Dow was positive, but the S and P was negative. Nasdaq down 1% into rally for the Dow and the S and P dimension, the highs of the day and the Nasdaq to get back to even on the day. Well, hey, I will certainly take it. That’s a pretty good end to an important week for our market and a pretty good end to what has been a good month for our major indexes, finishing higher across the board for the month. Only. The small caps finished higher on the week, unfortunately. But we did finish higher again across the board for the month of May. And the important point here that I want to point out is exactly that, that we did finish higher across the board this month.

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Nasdaq up 6.28% on the month, and the Nasdaq was leading and the semis led. The Nasdaq semis up 12.27% on the month this month. I believe at the highs of the month, they’re up as much as 16% or so. They lost about a percent and a half on the week this week. So maybe a little under 16% there. But, you know, just overall, even with this last week of trading, it’s been a phenomenal month for the market. But what Kip talked about yesterday, and I talked about on Wednesday as well was the potential we saw here for a rotation into value. Tech has come so far, so fast, by far the most loved sector.

Nvidia, the darling of the market right now. You know, we got to overbought levels and really going back even further. The Dow hit overbought levels, was the first there, and the Dow topped first. The Nasdaq topped shortly after that and then broke all time highs again here earlier this week. But this is the rotation we’re watching playing out in real time here. Nasdaq now overbought taking a little bit of a pause, still right in the range of all time highs. The Dow worked off its overbought readings. The transports had to go through a really nasty correction here, getting a double bottom, or at least the early stages of a double bottom here and exactly where you want to see them rallying from.

And I’ll point out here, the Dow led the way today and the transports led the Dow. This is exactly the action that we were looking for and talking about in those last couple of podcasts. The transports leading the Dow is similar, very different, but similar to Semi is leading tech. It’s what you want to see if you’re bullish that group. And so if we’re looking for a rotation, we want to see the transports leading that rotation. It’s exactly what we got to end up the week here. And the transports finish higher on the month here as well. And they really needed it.

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Again, hit a double bottom, a technical short term double bottom here. And to get back to back days here of rallying despite what the rest of the market was doing, is really, we think, an early tell from our markets here, and I’ll get to the rest of our major indexes here in a minute. But let’s kick it off first here with the report that everyone was waiting on this week. And that is the latest PCE inflation data, which came out this morning, is often talked about as the Federal Reserve’s favored gauge of inflation. That is what they say. And today, coming in line with expectations, which is a win here, below 3% year over year. But I’ll dive right into the numbers. Coming in line with expectations, 0.3% on PCE month over month, again with expectations.

Core PCE coming in with an increase of two tenths of 1%. Again in line with expectations. But the important one, year over year, like I said earlier, below 3%, with year over year PCE coming in at 2.7% and core PCE coming in just about in line with expectations. If you went an extra decimal place out, I think you’d see it was even closer, finishing at or at now 2.8% year over year. Now, of course, we know the Federal Reserve’s goal is 2% inflation. We think that’s a bit of an arbitrary number, should be 0%. They’ve got all the, all the rationale and reasons for why it’s 2%. None of them have ever really made a whole lot of sense.

Why do you want to devalue your currency by 100% every 50 years to pay off a massive, massive deficit that you’re spending at the government is the only reason for that. There’s no other reason, especially in one of the wealthiest countries on earth. But regardless, we’ve said from the beginning of this inflation story that once inflation started heading lower, it was never, never going to head down in a straight line. So that’s what we’ve always said as well. Don’t put too much emphasis on one report. Right. So same thing to applies to today as well. But we will still look at this as a confirmation that we are headed in the right direction for inflation.

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Again, it wasn’t going to be a straight line down, but now we’ve begun to continue the trend lower in inflation, and we expect that to continue here as well, giving the Fed cover two cut rates two to three times this year. And, you know, really interesting that I’ll get to here. I’ll go ahead and cover it now. The odds for a Fed rate cut after the news this morning jumped up initially, bringing back into play here a September rate cut. Earlier in the session today, it actually got to where the probabilities were leaning toward cut, much like our major indexes, though, the stay put team rallied a bit into the end. Just fractures about even roughly 50 50 on there could be a cut in September or they could pause there. November is the next month you would go to to see the majority view. And we saw that increasing here as well on the week this week.

But right after the report came out or going into the report, the Nasdaq was our only major index negative. After the report came out, it joined the Dow and the S and P and started heading higher as well. Yields fell, the ten year finish down roughly nine tenths of 1% on the day. Now at a 4.51, it actually did get below a point, a 4.5 earlier in the session today. But I’ll focus here on the Nasdaq for a second because this was really interesting. You know, like I said, negative going into the report, went positive, could not hold on to those gains after the open, and it looked like it was going to be a brutal session for the Nasdaq today. You’re down roughly one and a half percent, really, until it was still down about 1% going into the final hour of trading. I even said to Josh here on our staff, I don’t know if we’re going to have the umph of this smart money hour to get the Nasdaq back to positive today, we didn’t quite get back to positive, but to finish down 0.01% on the day or two points on the Nasdaq.

We’ll take that as a win on the day today. So I’ll start off there. Nasdaq, our only major index to finish lower, finishing at 16,735. After that. Let’s go ahead and climb the ladder here. Small caps up 0.66% to 2070. Next up, the S and P 500 finishing at its highs of the day today was negative for a significant part of the session as well. Really good to see it finish at the highs of the day and have a strong smart money hour.

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Again, up 0.8%. Eight tenths of 1% to 5277. And lastly here, the Dow Jones up one and a half percent or 574 points on the day today to 38,686. So we want to see this rotation continue to play out. And again, I’ll point out that the transports led today. That is what you want to see here. All right, next up. Oh, well, really fast.

One other interesting point on the day. It became less interesting as the day went on, but the fear and greed index kit pointed out yesterday was one point away from fear mode. And much like our markets today, at midday today hit its lows, got all the way down to a 42. That’s back into fear mode there. And it almost looked like that was some kind of a mini capitulation event that we saw today. People saw the fear and greed index at a 42 and said, people are that fearful, and we’re this close to all time highs. Get me? In this market. That’s almost exactly what it seemed like today.

We finished at 48, so above yesterday’s close, which makes sense. We finished at the highs of the day. But really interesting, just given how early bearish action took over here. And then it rallied into the close. You know, we got back to fear mode and being in neutral is not a bad thing. We do love being contrarians, so when we get to too heavily into greed mode, we’ll let you know. But in a bull market like we’re in right now, we’re not even two years into this bull market yet. 20 months in until we get to the point where the fear and greed index is at extreme greed for weeks and months on end.

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AAI bulls to bears coming in with 50, 60, 65% bulls on the market for weeks on end. That’s when you start to look for a capitulation event. As we see it at the top, a capitulation event right. That’s when you see a market top is when you start to see those levels. And we’re just nowhere near that right now. Another bullish factor day. Let’s just keep them rolling. If you tuned into Kip’s podcast yesterday, you heard him talk about the internals, which we said looked like to us a pattern change.

We had our major indexes lower yesterday, and our internals were positive on just about everything except for Nasdaq 52 week highs and lows. Whoa. That’s a pattern change because we had seen days where we were positive and we had mixed internals or even negative internals over the last couple of weeks. And we said here on the podcast as well, that’s a bit of a yellow flag. Red overbought levels. We took some profits again this week as well. Still positions that we want to be back in, but they’re trading positions to some extent. So that’s why we love stop losses here to protect on a day like today, specifically with the semis.

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But I won’t get too deep into that. If you want to learn some more about that strategy, if you’re not already here with us as a VRA member, come and join us at vra letter.com dot. We’ve got a 14 day free trial going on right now. We’d love to have you with us. And as always, send it any questions to support Insider.com dot? We love getting your feedback, and as Kibba said this week as well, thank you, thank you. Thank you for your feedback. It’s been amazing. And as always, feel free to send to us.

Good, bad or ugly doesn’t matter to us. We love hearing from you. And as always, that we do appreciate the positive feedback as well. So thank you again here. So diving into the internals here, much like our major indexes, started hot out the gate, went negative at least somewhat, and then rallied into the close to finish what looks like here at their highs of the day. Advancing stocks beating out, declining stocks coming in over three and a half to one positive on the NYSE. Nice beat there. Under two to one positive on the Nasdaq, but a solid beat, no question about it.

52 week highs to lows coming in over three to one positive on the NYC here again, and just slightly negative on the Nasdaq. No concerns for us there. This can be a bit of a lagging indicator. We’ve had a little bit of a sell off, and Nasdaq contains a lot of small cap names and not quite primetime players in this index. So no concerns for us. There. And lastly here, volume. Good day today as well.

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Over 70% upside volume. On the NYSE, over three to one positive. And for the Nasdaq as well. No big two to one beats or anything, but again, solidly positive here today. Next up, looking at our sectors, we’ll go back to the rotational theme here one time, because tech. I’ll start with our laggers. Tech was our only major index to finish lower on the day today. Again, to the rotational theme.

This is a natural, healthy part of a bull market, is to get these rotations. You see at one group, go really far, then you get some profit taking, and then reinvest those funds into the more unloved sectors. That’s what we’ve been seeing. And again, part of a healthy bull market. Energy led the way today, up two and a half percent. And what’s interesting here is that, like I said, tech was down on the day, but up significantly on the month. Energy was up significant on the day and down for the month of May. A lot of these sectors were down in the month of May, and they are all value names.

Some of our leaders here, they were up over 1%. Materials, industrials, utilities, real estate, these are all value names, our value sectors, I should be saying. And they led the way today. So there you go. Those are our leaders. We had. Let’s see it. I mean, well, we had ten of our eleven finished positive on the day, and tech was really unchanged on the day.

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So not. Not a laggard, really not negative. And then eight of our eleven sectors finished up over 1% on the day to day. Again, a lot of those, the value names here. And finally, for today, our VRA commodity watch here. Let me get a quick refresh of my screens. 1 second. All right, a little bit of red on the screen here.

After the report this morning in bond yields falling, uS dollar falling a little bit as well. Sorry, yields. Commodities were higher earlier in the session, but are lower now. Gold down just over six tenths of 1% to 23 50, silver down a bigger 3.1% on the day to $30.55 an ounce. Copper down seven tenths of 1% to $4.62 a pound, and oil now down eight tenths of 1% to see $77.26 a barrel. Finally here for today. I think that just about covers all. I just making sure I covered all my bases here for you for the week, I believe so really take home themes here.

We’re looking for the rotational aspect to continue, you know, again, help part of a healthy bull market the internals are improving. Exactly what you want to see, you know, in the positions that we’ve taken profit in, it was just to protect gains. We’re ready to get back into those positions as well. So that’s kind of the quick 32nd recap of the week this week. But lastly here for the day, bitcoin is lower down 1.4% to 67,656 a bitcoin, folks, that is all that 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 would love to have you with us. You’ll also find our transcripts and much more on our website as well.

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So again, that’s VRA letter vertical research advisory vraletter.com thanks again for tuning in, everybody. Hope you have had a great end of your week and hope you have an even better weekend. Until next time, we’ll see you back here on Monday for the close.