VRA Investing Podcast: Semiconductors Soar, Market Rally, and Liquidity Update – January 18, 2024 – Tyler Herriage

In this episode, Tyler breaks down the market action from today, highlighting today's rally that turned around what was a suboptimal start to the week for our major indexes. Tyler also delves into the significance of share buyback ...

Posted On January 18, 2024Episode 1311

Listen On

About This Episode

In this episode, Tyler breaks down the market action from today, highlighting today's rally that turned around what was a suboptimal start to the week for our major indexes. Tyler also delves into the significance of share buybacks, global liquidity, and inflation trends. Tune into today's VRA Investing Podcast to see what the VRA Investing System is telling us going forward.


Don’t look back because the market is closed. Good Thursday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. We hope you all had a great day out there today after what was a call it suboptimal start to the week for our major indexes, our major sectors as well today. All of that turned around as we rallied in a big way today, finishing higher across the board for our major indexes. All of the sectors that we look at here most closely at the VRA, and not only did they finish higher, they finished the day strong as well, which is exactly what you want to see as we finish at or near the highs of the session today. Again, those leading sectors here, tech and the semis leading the way. We also got great action in housing, and we saw a number of all time highs as well as 52 week highs today as well.

So we’ll jump into all of that on the podcast here today. But first, one of the big catalysts in today’s action futures. This morning, tech was positive just before the open. Some of our other major indexes were lagging. And then this morning, we got one of the first tech earnings for Q four here as Taiwan semiconductors reported earnings this morning. And if you looked at it on a year over year basis, it wasn’t very impressive. Earnings for Q four as revenue slipped one and a half percent from a year ago. Net income dropped a big 19% from Q four 2022 for Taiwan semi.

But the stock was up in a big way today after the news, up 9.79% on the day to day for Taiwan semi. As they did beat on what their expectations were. They were able to beat estimates at least and also on the quarter over quarter view as, so sorry, just kind of backtrack there a little bit again. But they were able to beat on revenue estimates and net income estimates. So that’s what the market was really reacting to there. And the quarter over quarter numbers were much improved, up 14% from Q four earnings versus Q three earnings. So as we say here, often it’s not the news that matters, it’s the market’s reaction to that news. And the market reacted to those big quarter over quarter numbers, ignoring the year over year numbers and looking forward to what we can expect in 2024.

And the market likes that outlook that Taiwan semi painted going forward from here as the company expects revenue growth of more than 20% in 2024 as they’re looking for continued strong demand in none other than AI products. Of course, the market likes anything to do with AI in the name right now. But good to see the first tech earnings here really taking off. Next week, we’ll really start to dive in to tech earnings. We still got a few more big banks to go tomorrow, insurers as well. And then next week, we get into the fun category here for tech. We got Netflix next week, Tesla, intel and a lot of others. So stay tuned as we’ll be reporting on that here.

And one other factor that hasn’t gotten a whole lot of attention with this earnings season, and that is, it’s an important one not to forget, is that earnings reports coming in also ends the share buyback blackout period, as well as companies can’t buy their own stock from four to six weeks prior to earnings. I think it’s like 24 hours after earnings are released. It’s either 24 or 48 hours after they’re released, they’re allowed to start buying back their stock again. Now, love or hate share buybacks, it’s more liquidity for the market. And at this point, 93% of S and P 500 companies are in this share buyback blackout window. We have an average period of about two weeks left to go before these companies can start buying back their stocks again. But we’ll look at that as another theme for this year is additional liquidity for the market. Share buybacks are a part of that as well.

And another thing that we’re seeing right now that we wrote about to our members this morning is the increase in global liquidity as well. Pomp put this out. Anthony Pompliano, also known as Pomp Big Bitcoin fan, tweeted out a few charts or in his update this morning, put out a few charts showing that global liquidity had hit its lowest level, really since COVID and now has began to turn up here. We do expect liquidity to continue higher from here. We’ve talked so much about this, whether it’s cash on the sidelines coming into the market, we see all of that as extra fuel to the fire going forward. Also today, one other factor in economic news is that inflation modelers, this was Nick Timorose put this out. He’s kind of known as, commonly called kind of the Fed whipsper or the guy that Jay Powell goes to to release some of this information. Kind of an early, what’s the word I’m looking for here? He’s the guy who breaks the news before the Fed is able to, basically.

So today he put out a piece that inflation modelers now expect. Core PCE rose just zero point 17% from November. That would be the lowest twelve month rate, or would lower the twelve month rate to 2.9%. And that has been our view here. We talked about it before the January inflation numbers came out. We’re looking for a good number there, not a terrible number. I called it a Goldilocks number for the Fed. It gets people off the fact, off their back about cutting interest rates.

So really a fine number for the Fed there. But we do expect this number to come down. I mean, we’re seeing it whether it’s energy prices, which have a little bit of a lag. So that might be why they didn’t show up so much in January. Also rent prices as well, which is on a massive lag there. Something that inflation metrics haven’t taken into account yet. So that added to a little bit of the optimism for today, is inflation heading lower, although I will point out, yes, rates were higher on the day the ten year hit its highest level since about mid December. So the highest level of 2024, up nine tenths of 1% today at the highs of the day, at a 4.15 there a lot of people talking about yields going back up.

It’s funny how quick the market sentiment changes. One week you got everybody calling for rate cuts, and the next everybody panicking that the ten year is just a little bit higher. But remember, just in October, what, three months ago, yields peaked at a 4.97% on the ten year. So rates have come down a long way in a short period of time. When you look at a chart here, you look at this and begin to think, okay, it’s a little bit of a bounce back, a countertrend move. As we see it. The trend is lower from here. That’s our continued view.

We’re sticking with it here. Ultimately, we see this as a short term pop on race before they continue their trend lower. All right, so that said, let’s take a look at our market action on the day today. All of our major indexes did finish higher on the day here. We were led by the Nasdaq, and as I mentioned earlier, all of these finishing at or near their highs of the day today, but Nasdaq leading the way. Let me just get a quick refresh of one screen here. So Nasdaq of 1.35% to 15,055, not far from its 52 week high there. About 95 points away.

Yeah, 95 points away from a 52 week high there. Still roughly 7% away from an all time high. And as we have said here, this party really doesn’t start until all of our major indexes have started to hit all time highs. Dow did that within the last couple of months, really recently here, may the last couple of weeks. Well, we still got some work to do on the Nasdaq and the SP. But what we did see today, the Nasdaq 100, the NDX, or if you want to look at the ETF, the Q’s, QQQ hit an all time high today. Exactly what you want to see, tech leading there. We also saw an all time high in the semis today.

Big move higher after that Taiwan report this morning. So we had SMH hitting an all time high today. Nvidia hitting an all time high today. Taiwan semi hitting a 52 week high today. AMD all time high as well. I might have said that one a second ago, but really good to see the semis rallying here when the semis are leading. That is not a market that we want to be short, especially not when they’re hitting all time highs here. And we got it in the mega cap names as well today.

We had apple up over 3% and a lot of these names at or near 52 week highs as well. Some of these all time highs, but basically higher across the board. Microsoft, let’s see, is that just shy on Microsoft from a 52 week high there? I think about one penny off from the highs of the day. But really most of the mega caps higher on the day as well. So good day overall for the Nasdaq. Next up, the S and P 500 up zero point 88% to 4780. After that, small caps up zero point 55% to 1923. And lastly here, the Dow Jones up zero point 54% or 200 points to 37,468.

I will point out here, even leading the Dow today, if you’re a Dow theory fan, transports have some work to do here, but they did some of that today, up a nice 1.7%. So overall, very good day from the market today. Next up here, let’s take a look at our internals on the day today. We saw rough numbers earlier in the session. It’s been a fairly rough last two sessions for the internals. Big downside volume today, erasing some of that at least as we did manage to finish closer to the highs of the day after this morning, similar to our market finishing higher into the close. Let me get another refresh here. There are some updates that come in within the last 30 minutes of the close to the internals about what we saw earlier before the close.

So let’s take a dive into this here. Advancing stocks did beat out declining stocks today, no big beats here, but the first day of the week that both of these were positive. So good to see. We’ll take it as a win here. Next up, 52 week highs and lows did manage to come in positive on the NYSE. Did come in roughly two to one negative on the Nasdaq, though we’ve talked about this here often. It’s a bit of a lagging indicator, but still an important one to watch and one that we want to see continued to improve. And finally here, volume, the reverse of 52 week highs to lows, slightly negative on the NYSE.

No red flags there though, but managing to come in positive on the Nasdaq for the day. So again, the theme here for the internals improvement over the first two days of trading on this shortened holiday week. Next up here, taking a look at our sectors on the day today. We finished with seven out of our eleven SP 500 sectors higher on the day. As you would expect, we were led by tech. The tech ETF XLK also hitting an all time high today as well. So tech in the semis, all time high, exactly what you want to see after that. The proxy for tech communications services, mostly made up of tech names, also finishing higher on the day, just shy of a 52 week high there.

After that, industrials and consumer staples, excuse me, consumer discretionary. Our laggards on the day were utilities. They’ve hit a bit of a slump here as rates have been trending a little bit higher. After that was real estate, which was lower on the day. But we always like to point this out that the real estate sector in the S and P 500 is primarily made up of reits. So it’s not a real look at what the housing market is doing. We prefer to look at the housing market. So we do that by looking at the housing index and the home builders.

Home builders today we’re up a nice 1.26%. That’s based off of ITB, the home builder ETF, and once again nearing a 52 week high here. Kip covered this on his podcast yesterday. We booked strong gains in the three time leverage home builder ETF last year. That’s nail N-A-I-L. We are eagerly looking for another entry point there as well, as we had also the housing index higher on today. HGX up 1.3% on the day. So good day from housing.

After that from real estate, we had energy and consumer staples lower on the day today. Finally for today here, our VRA commodity watch. Give a quick refresh my screens here. Got some green on the screen. Today. Gold up nine tenths of 1%, still above $2,000 an ounce at $2,025 an ounce. Silver up similarly zero point, 94% to $22.88 an ounce. Copper now up just over six tenths of 1% to $3.75 a pound.

And oil, it’s been in this lower seventy s range for weeks now. It seems up 1.9% though, to $73.87 a barrel. Finally here for today, bitcoin kind of proving the skeptics right here on a buy the rumor, sell the news event. No big surprises here. Bitcoin went on a hell of a run leading up to this bitcoin ETF. We’ll look at these pullbacks here as a buying opportunity as we do remain medium to long term bullish on bitcoin. And it is a position of ours as well. Bitcoin now down three and a half percent to 41,190.

A bitcoin, folks, that’s 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@vraletter.com check out the podcast link at the top. You’ve got our transcripts there as well. You can listen live on the website. Thanks again for tuning in. Until next time, we’ll see you back here tomorrow for the close.

Podcast Newsletter

Listen On

Time Stamps

00:00 Market closed with strong rally in tech.
04:40 Global liquidity increasing, inflation predictions emerging.
08:34 Stocks near highs, tech leads, more to come.
10:35 Market had a good day, despite challenges.
14:39 Oil at $73.87, Bitcoin down to $41,190.

More Episodes

Episode 1419 | July 11, 2024
VRA Investing Podcast: CPI Data Impact, Rotational Trends, And A Healthy Bull Market – Tyler Herriage – July 11, 2024

In today's episode, we will dive into the rapidly changing landscape of interest rates after this morning's better-than-expected inflation data. Despite today's sell-off in tech, we see a healthy bull market underpinned by rotational sector performance, confirmed today by the impressive market internals. Tune into today's podcast to learn more!

Episode 1418 | July 10, 2024
VRA Investing Podcast: Market Gains Continue, Generals Leading, and VRA Remains Long and Strong – Kip Herriage – July 10, 2024

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

Episode 1417 | July 09, 2024
VRA Investing Podcast: Navigating Q3, Inflation Data, Q2 Earnings, and All Time Highs – Tyler Herriage – July 09, 2024

In today's episode, Tyler dives into the latest market action, and continued all-time highs, following the July 4th weekend. We will also break down J Powell's first day of congressional testimony, what to expect from the latest inflation data, and upcoming Q2 earnings. Tune into today's podcast to learn more!

Episode 1416 | July 03, 2024
VRA Investing Podcast: All-Time Highs For July 4th, Tech Leads, and Economic Data Highlights – Tyler Herriage – July 03, 2024

In today's special July 4th episode, Tyler covers an exciting, shortened holiday trading day that saw incredible moves in the market, including all-time highs for the S&P 500 and the Nasdaq, marking their 23rd and 33rd records of the year. He also dives into the latest economic data and what we expect next from the Federal Reserve. Tune into today's VRA podcast to learn more!

Episode 1415 | July 02, 2024
VRA Investing Podcast: All-Time Highs, Tesla’s Surge, and Contrarian Investment Strategies – Kip Herriage- July 02, 2024

In today's episode, Kip takes a deep dive into current market trends and explores why he stands firmly as a contrarian investor. We'll unpack Tesla's recent 10% stock surge, and fresh all time highs from the mega-cap tech companies like Microsoft, Apple, and Amazon, and all time closing highs from our major indexes. Tune into today's VRA Investing Podcast to learn more!