In today's episode, Kip discusses the market's turbulent start to September after a surprisingly strong end to August. He will dive into the significant events impacting the market, including the Nvidia antitrust subpoena, the upcoming jobs report, and the impact of the Federal Reserve's upcoming rate decisions. Tune into today's podcast to learn more.

Don’t look back because the market is closed. Good Tuesday afternoon, everyone. Kip Herriage here with the Daily VRA investing podcast. Hope you had a good day today. A long weekend as well, and a good Labor Day weekend. Let’s get right to it. Not a great day today. You know, we came off of what turned out to be a pretty good August.

We’d start off rough with the japanese yen carry trade meltdown that kicked the month off, but that produced our August 5 bottoms. And that was, that was a pretty significant bottom. Bottom. Because we rallied, went parabolic off of that, and we finished up the bunker. Gains across the board for our major indexes, not the small caps, but SPF 100, Dow Jones and Nasdaq all finished higher for the month of August. Dow Jones, of course, on Friday finished at another all time high and the SB 500 was clinched. Four months, four straight months of gains just, just missed on having its own all time high on Friday. But then, you’d never known it.

You’ve never known about looking at what happened today like, you know, a complete other side of the coin. Right? Ugly day today. We are in September, as most of you know. By the way, this may be the most crowded trade that there is, right? September seasonality is not good. Matter of fact, it’s the worst month of the year. So, look, the fact that every, literally everybody and their mother knows this, I don’t know, this is going to hold up. And by the way, seasonality is kind of weird for September because the first half of September is flat. But the second half on analytics, but the second half of September, that’s when the damage is done.

[00:01:37]:
And so here we are, starting out, you know, out of the gate, first trading day of the month. And let’s get to it, because it was not pretty. Although the internals weren’t bad, there are some positives here. There also was no real fear. Volatility index skyrocketed. Vix was up 33% today. But outside of that, the pull call ratio was benign, and we just didn’t see a lot of fear outside of the vix skyrocketing, although the semis did get it hard today. But here we go.

Dow Jones today finishing off the lows not by a whole lot, finishing down 626 points. That’s down one and a half percent. Unfortunately, that was our winner on the day. Next up, SV 500 down 2.1%. Russ 2000 down 3.1% and Nasdaq down 3.3%. So just, it’s exactly the opposite. What you want to see, because tech was lower. And guess what? Led tech lower.

Yep, the semis. This is a brutal day. SmH semi ETF closing down on the day, 7.9%. Nvidia led the way lower. We just found out. And this is, this is, this is worth, you know, this is worth spending a couple minutes on. Nvidia, of course, is not just the most important chip company, is the most important company in the planet, period, because they kicked off the AI craze. And that was that first quarter.

[00:03:00]:
It was may actually, of last year on the back end of the regional bank crisis. Here comes Nvidia talking about this AI boom and exploding revenue. And of course, the stock went on a massive tear. We all know that story now. But today we learned. And by the way, Nvidia closed down something. Eleven over 11% training right now, down 11.4%. But it also is up a lot from the lows.

It hit $90 a share on August 5. It’s 106 now. But again, it was down $13 a share today. But today we learned that the Justice Department has subpoenaed Nvidia, trying to find out if there’s some antitrust violations here. So remember, this is the Justice Department that is working on behalf of Kamala Harris now because Biden, of course, no longer matters. So they’re working on behalf of Kamala Harris. Does the government not want her to get elected? Is that what’s happening here? Because I’m telling you, if Nvidia crashes and something, again, it’s very unlikely because these things move very slowly. It’s unlikely anything fast is going to happen here.

But the timing just seems very strange to me that this would come out knowing that, again, the market got tanked today, knowing that this would hurt Kamala Harris’s chances for president. Because, you know, every poll you look at, and it’s been the way time memorial, every poll you look at says the same thing. What’s the most important issue facing the american family and american voters? It’s the economy, James Carville said. It is the economy. Stupid, right? Bill Clinton’s a right hand criminal. That worked for. He’s still, he’s still going, too, by the way. What a goofball that guy is.

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But I actually had a chance to meet him and his wife a few years ago. Pretty nice couple. She’s a big time, as you may know, a big time conservative. I don’t think. I’m not sure she’s active anymore. And James Carville, of course, a big time liberal, and they met and fell in love about that. But yeah, it’s very odd to that. You see a Democrat Justice Department go after Nvidia hitting the market like it did today.

Who knows what’s going to happen going forward with this. That caught me by surprise. But again, the big issue today, frankly, it’s September. It’s September seasonality. The analytics are not good. But again, that’s a very crowded trade because everybody, their mother knows this. So you look, we came into today with the, on the VR investing system. We came in today, started trading today with the S and P 500 and Dow Jones at heavily overbought levels to almost, almost extremely robot right there on the cusp.

Okay. So just using discipline, we wouldn’t be buying here anyway. But what’s different, though, is because the semis and tech on the very investing system that are now hitting heavily oversold, beginning to hit heavy. Let me just run a quick, I want to see real quick here. Quick, quick scan on the semis, on the Vera investing system. They have just entered oversold levels. So, not heavily oversold, but they’ve entered oversold levels. That’s on the semis and on the Nasdaq 100, which is the same thing as Nasdaq on the charts, essentially.

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I mean, it’s a very close looking chart. They’re now both oversold. So I think what this is setting up, and I’m going to share this chart tomorrow with our folks for both the semis and Nasdaq 100 because I think it’s very instructive. We’ve already had the big shakeout in the semis. Remember, the semis fell 28%. They had a bear market, 28%. Brutal bear market in the semis again, in three weeks, from the July highs to the August 5 lows, 28%. And that was the bottom on August 5.

So even today, you know, with the big move lower today, we are nowhere near that bottom. I’ll tell you what it is. The lows for SMH to semi ETF on August 5 were 423. We closed at 461 today. So we’re way above this level. That’s why we’ve been saying the lows. Room for the semis. Frankly, you just want to buy the dip here.

Look, could it get a little cheaper? Sure. But look, we’re talking about the leader, the leader of what’s going to be a generational bull market. It’s going to be tech. It’s going to be semi’s leading tech. We are so early in this bull market. Really, I’ve said it before, I’ll say it again. This is the equivalent of being in late 1995. If we’re talking about the comparison to the.com melt up, that’s where we are.

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That’s how early we are in this bull market. So when you get these shakeouts and we had five or six of these in the.com melt up, we actually had a 32% bear market in Nasdaq that was very similar. We just saw in the semis. It lasted, but it was longer lasting. That only lasted three months. Again, this was 28% in three weeks for the semis. So we think the lows are in there. Very confident in buying the semis here, very ETF.

We don’t like to pick individual companies here. If I had to say, obviously if I was going to buy a single chip company, what would it be? It’d be Nvidia, that’s who I’d buy. And I would buy to this pullback. Leveraged ETF’s gives us exposure to a number of different companies and the leverage of course, gives us the extra juice needed to really crush mister market, which is what our primary goal is. So again, your invested system still sits at ten out of twelve screens bullish, folks. That is, that’s back up the truck territory. We just came off eleven of twelve screens bullish. We’ve been there for about six months and in history we’d never been at 1112 before.

So yeah, the very invest system was downgraded last week. We share this with you this time. And the reason for the downtick again from eleven to ten screens bullish, it’s not a big change. Right? But market leadership is degraded again. Look what, look what led lower semis in tech. That’s not a bullish setup. It’s nothing. If that’s all that I saw happening, I would be concerned.

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It’s not all that I see happening because again, we’re so early in this long term bull market. If you didn’t read, by the way, I’m going to share this tomorrow morning too. Over the weekend, the Wall Street Journal did a feature on the millennial generation and how they’re so much better off than any big generation before them. It’s a fascinating article. And what is really cool about that article is we wrote that up in the big bribe two years ago. One of our big bride megatrends was the strength of the millennial generation. We did an entire chapter on it. Tyler wrote that chapter.

And now here comes the Wall Street Journal two years later, echoing everything that we wrote in there. And so again, everything you’ve been told imagine this, right? The media lied to you. Imagine that everything you’ve been told about the millennial generation was complete bullshit, okay? They have more money, they’re smarter, they understand technology. They’re born entrepreneurs. They love stocks, they love bitcoin, they love investing, they love housing, right? And they’re super smart, right? So they can figure out the answer to any problem in about 10 seconds. All right? So that’s why Tyler is my right hand man. He wears about ten hats every day. If I have a question, I know where to go.

I don’t go to Google. I go to Tyler, and I can. So many other millennials same way. Josh Foley, one of our other employees, Danielle, also another of our employees. Super smart millennials that can figure anything out in about 5 seconds. So the Wall Street Journal article didn’t surprise me. But it’s just funny because when we talk about the power of millennials generation, we should see the eyes are still rolling. What are you talking about? Don’t you know that they’re still broken, living with their parents in the basement? Like, man, whoever told you that did not do you any favors, right? Again, believe it or not, the media lies to us, right? So again, that’s the reason for the downticks.

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Semi tech led lower seasonality. Of course, September is not a good month. And then also we had a big move higher, so our markets got overbought. That’s the only reason the investing system got downgraded. And again, that was slight. So we are buyers of the semis. Again, you can’t go lower here. But we’re not worried about trying to micromanage the markets.

We’re not extreme oversold. We’re not heavily oversold. Could it get cheaper? Yeah. Will it? Maybe. I think today took a lot of sting out of this move lower. With the vix up 33% today. And again, I think what I’m keen off of, what Tyler and I keen off of is Friday. We’re keen off of Friday because we got some.

The jobs. The jobs numbers coming out on Friday. This is important stuff, okay? The market was already down this morning, okay? The futures were down open lower. And then we got the ISM manufacturing data, and it was a mess. Came in at 47.2%. And immediately, like Bloomberg, everybody, Dow Jones news is saying, oh, anything below 50%, it means you’re going into recession. And that just couldn’t be anything further from the truth. That is not the truth.

Anything below 50% means you’re not expanding. It’s not. You don’t have an expansionary economy. But as long as you’re above 42.5%, you’re not in recession zone. So at 47.2%, is the manufacturing economy booming? No, it’s not. But look where interest rates still are. The Federal Reserve is going to cut on September 18. Right.

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And probably because of data like we got today with the manufacturing data and Friday’s jobs data, we think the Fed, we still think the Fed’s going to cut by half point. There is some other inflationary data coming out in the next 30, a couple of weeks or so that could be a little stronger. That might make them hesitate. But I think by and large, we know it’s going to be a quarter of a point. I think it’s going to be a half a point. I think it should be a half a point. And the market is going to start anticipating that the market’s going to start front running that. But here’s the key thing.

Here’s the key thing about, this is important. Here’s the key thing about Friday’s job setup, okay? Last month we found out that they had to revise job creation down by more than 800,000 jobs because they basically lied to us. Now, we knew all along, we talked about it every time going these mystery jobs, they’re pulling from the future when they have to revise. These lowers can be massive revision. So if you’re paying attention, if you kind of know what to look for, then you weren’t surprised by that revision. Actually what they were saying, the revision could be as much as a million jobs. So it was only 800,000 plus. Right.

So it was a win for the government. Right. It’s so backwards thinking, you know, it makes your head spin and smoke coming out of yours, trying to keep track of all this craziness out of a DC in our unit party system. We have. But here’s the key point about frauding. If we have a say, let’s say we have a good jobs number, let’s say that. Okay. The estimates, I think is like for 150 or something.

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Don’t, don’t hold me to that. I, I don’t really know where the estimate is for Friday. I’ve, again, too many numbers going on today. Just come off a long weekend, too. But let’s say that the estimate is for 150,000 jobs created for the month of August, right. Let’s say that it comes in at 170,000. It beats estimates. Oh, my God.

What’s the feds, are they not going to cut, are they only going to cut by a quarter of a point. No, no, no. Understand this. That is not how the markets will look at that number. The markets look at that number and go, it’s horseshit anyway. You can’t believe it. They’re just manipulating it. It should be revised sharply lower right now.

Don’t trust it. So there, there’s the scenario I think, that we’re going to be presented with. If we get a really good jobs data number on Friday, the markets aren’t going to believe it. Bond market certainly did today, Bob. Ten year yields back down to 3.4% today. But if we think about this, if we get a bad, a weak jobs number on Friday, I really don’t think it will be. But if it’s a big mess, then you’re going to get recessionary concerns. All right.

So, and then you get guaranteed a 50 basis point rate cut on September 18. So, you know, the markets become such a game from, from a market timing point of view in the short term, it’s become such a game of front running. And we talked about this a lot with you. Never in my career has it been more important to understand what’s happening, what’s, what’s going to be announced later this week because the smart money is front running all this and because this administration leaks like a sieve. Right. There’s complete criminality in this administration. They just leak. So if you follow market direction, you’re probably going to be on the right side of the market.

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So that’s kind of what I’m saying here. I think we may get some follow through tomorrow, but I think that may be about it. You know, we had a, in our parabolic options program, we had a very nice profit we took today and some volatility calls that we purchased on Friday, thinking that we make it off to a rough start. We have a hedge in the bureau portfolio. Of course, the election is coming up and then we still got mutual time there. So we’re going to keep that hedge on. But again, I would not be at all surprised to say Thursday if we’re not buying calls in parabolic options and if we’re not aggressively adding to positions in the VRA portfolio Thursday, because I think, I think that, I think that the jobs report is going to be front run, and I think that, I think that the, I think that September, I think the volatility in September is probably going to come on the front end just to, just to screw everybody up again. It’s a very, very crowded trade.

All right. Imagine living in my head all day long because these are all the scenarios that I’ve got going around in a computer, which, you know, I wouldn’t trade for anything. I kind of like that. We make our calls here. We’ve had it, we’ve had a good run, but we stay grounded, we work our butts off, and more than anything, we pay attention to what the market is telling us. The market’s telling you what it wants to do. You just have to listen. No one can tell the market what to do.

Just listen to it. You start to get an idea of the flow. Right. And the feel of the market, because all these markets have personality and characteristics. And this is, by the way, a massively big bull market that’s underway here. I think you all know that if you listen, this very long, we’ve been calling this a generational bull market. It has not disappointed. And we’re going to have to have a lot of, a lot of years where we have gains of 25% to 30% plus to get to our targets.

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So we’re up, what is it, 18% for the s 500 so far this year. And I think any shakeouts in the month of September will be looked back on as a gift. Of course, any election insanity we have to take into account. But remember, the markets are the best discounting mechanism on the planet. So the election is two months away. Right. What’s the market been doing? It’s going higher. So either is telling us it doesn’t matter who wins from the market’s point of view, and I think that’s probably more accurate than not.

But think about how much better the market would do if Trump wins. So we’re going to be paying very close attention, certainly, as we get into the month of October, for a direction, because I think that’s going to be a tell. The markets always know before anybody else, and that’s why we pay attention to them, because they’re speaking to us. We just have to listen. All right, let’s take a look under the hood today and see everything. Yeah. Oh, Tyler has some great data from you, too. We had three sectors hit an all time high today.

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Right. That’s pretty interesting, is it not? We also had Nvidia. This is pretty wild. Nvidia today lost $262 billion in the market cap. That’s the most by a company ever in a single day. It beat a met out, which I think lost $232 billion. So about $30 billion left when they, when they, when they missed on their quarter last year. I think it was last year.

Right. Time flies. But I. Yeah, kind of wild, this Justice Department investigation to video. I mean, again, if you’re Kamala Harris or whatever her vp’s name is, you know, we just call him. Well, we don’t really don’t call him anything because no one really knows anything about him. You know, he’s a stolen valor guy. This, that’s what we call him, stolen Valor.

But if you’re part of that campaign or if you’re a Democrat leadership, in Democrat leadership, it’s not Democratic Party, by the way. Of course it’s Democrat party. But if you’re in the Democrat party, you got to be looking to this Justice Department, launching an investigation into Nvidia, you know, going. What? No, no. We want the market going up. We need people feeling really good about the economy going into November, not worried about their 401K. That doesn’t help Kamala, comrade Kamala, as Trump loves to, loves to call her. Okay, let’s take a look under the hood today.

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Again, these were not bad readings today. You know, we were a little concerned that the pro call ratio closed at a. .79 it never got elevated today. That, that’s, that’s not a predictor of a bottom. That does say in of itself. There’s more to come. We also follow the trend, which is some people call the arms index or the trend. Today it closed at 1.29.

That’s elevated. But on a day like this, you really like to see this thing, 1.81.9, some bounce over two. Those are big buy signals. We didn’t get there either. So we didn’t see the football ratio. We didn’t get it there. And we certainly didn’t get any kind of capitulation in the internals. These were not horrible readings at all today, for example, now, NYSE down volume was 76%.

That’s not horrible, but it’s not good. But we’ve seen a lot worse on days like this, believe me. Nasdaq down volume was 65.8%. Again, not a big deal. The advanced decline both for NYSE and Nasdaq was three to one negative. That’s not, again, that’s just not big. Not on a day like this. Now with the record losses in Nvidia, and again, the semi is finishing down on the day, 8%.

Right. These internals, especially for Nasdaq, should have been a whole lot worse than they were. So I think that’s a real positive. And check this out. We had 292 stocks at New Pittsburgh high to just 209, hitting a new 52 week low. So, you know, some data that kind of points to both directions. But I know, bottom line is that this day could have been a whole lot uglier from the internals point of view. And I think that’s because the lows are in.

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You know, the August 5 lows will be the lows. And so everything now is just backing and filling. And so many people that just know that, okay, September is the worst month of the year. We get some downside action in the morning. Let’s short into it. And with these zero date options that are so much controlling the markets of on a very short term basis, you know, they get on the same side and it’s a snowball. It’s a snowball. But it does work both ways.

Remember, it works in both directions. All right, now, sector watch today, this is not pretty. We had nine of eleven sectors finished lower, led to the downside by technology down 4.4%, getting led by cinemas lower. Energy down 2.4%. Oil was down big today. And then several sectors down around 2%. One and half, 2%. And to the upside, real estate and consumer staples up slightly on the day.

And our commodity watch today, the futures market overnight woke up this morning, gold was up like eight, $9 an ounce. It looks great on the charts. There’s no reason gold shouldn’t be. Keep going higher here. And they’d only finished down, it came off the lows quite a bit. At the lows of the day, gold hit a low 2505 and only finished down $3. Now is at 25 24. So it’s pretty good comeback.

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The miners did not reflect that again. You know, when the market gets hit, the miners just get hit. I mean, what that does is present you a buying opportunity. But GDX was down 3.5% today with gold only down four tenths of 1%. So go figure, right? Silver today down $0.74. Announced at the big two and a half percent at 28.44 an ounce. Copper down twelve cents a pound at four hundred and eight a pound. Crude oil again taking a pretty big hit today on supply demand worries in case the global economy is weakening.

We’ll talk about that. I don’t think that’s the case. I think. I think that there’s a lot of drilling going on though. And I think it’s just a lot of supply. I think demands fine. There’s just a lot of supply right now. Gas story looks much better, by the way.

Crude oil today again down $3.36 a barrel at $70.19 a barrel. And finally today, bitcoin. This is again another asset class, that this is the environment that it thrives in. Inflationary assets. Now you’ve got bond yields that are plummeting lower, will continue to get the dollar that’s resumed its long term bear market. Now they’re oversold. The move lower, there’s oversold. So that may be part of it.

Political uncertainty, geopolitical uncertainty. You know, these are, these are, these are environments where gold and bitcoin should act as this kind of stabilizing force. You know, there really should be some kind of a store of value flow to them, right? Like, we got bonds today. We just don’t get it on a regular basis. And either bitcoin or gold, go figure that, too, right? We’ve got a lot of money driving the markets, but it’s very concentrated and it’s antsy. Everybody is scared to death. And so the first sign of weakness, these things must go. Doesn’t matter what they are.

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Pretty much all asset classes have to go. All right, go. But anyway, bitcoin today after trading higher over the weekend, now 58,000 down 1.6% of the day. And, yeah, I think that’s it for the day. All right, folks, we’ll hope for a better day tomorrow. Again, hope you had a great day, even go tonight. We’ll see you back here again tomorrow after the close.