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VRA Investing Podcast: Small Caps Leading, Bitcoin Recovery, and Bullish Broadening Trends – Kip Herriage

In today's episode, Kip Herriage covers the latest market developments, focusing on stellar internals, small caps leading the broad market higher, and the impact of Jay Powell's testimony for Congress (Hint, yields are falling). K ...

Posted On March 06, 2024Episode 1337
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About This Episode

In today's episode, Kip Herriage covers the latest market developments, focusing on stellar internals, small caps leading the broad market higher, and the impact of Jay Powell's testimony for Congress (Hint, yields are falling). Kip also dives into the performance of different sectors, provides a detailed analysis of the performance of cryptocurrencies like bitcoin, and discusses the potential for gold.

Transcript

Don’t look back because the market is closed. Good Wednesday afternoon, everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. Got a lot to talk about. Going to do it quickly today. Got Jay Powell testifying for Congress today, going to talk about these stellar internals. We saw it yesterday on a bad day yesterday.

The internals were really fantastic and held up again today, a good market today. Semis up 2.6% today, small caps leading the broad market higher. Bitcoin with this shakeout yesterday. Stock market, this shakeout yesterday. Let’s get right to it. First of all, the markets, Dow Jones today finishing up off the highs for sure. Little bit of concern about now about what’s happening with the banks. I wouldn’t be overly concerned about us in these regional banks.

Of course, happening in New York now. Again, I don’t think that’s a big concern. The market is a little worried. The ten year yield now is beginning to plummet again. We’ve been talking about this tenure yields dropped now just in a week or so from better than 4.3% to 4.1%. We think it’s headed a lot lower. We think it’s headed a lot lower. And this is going to continue to propel the markets.

That means tech, that means small caps. That’s the place to be. And of course, bitcoin going to talk again. Dow Jones today up 75 points, up two cent, 1%. SPF 100 up a half percent today. Nasdaq up six tenths to 1%, 91 points. And again, small caps leading away. Rust 2000 up seven tenths, 1%.

[00:01:27]:
As Tyler just covered in our pre podcast meeting. Even in a day like yesterday, where the market got pretty much slaughtered, small caps were the best of the losers and they led again today. That’s now five days in a row. The small caps have been leading. A trend is beginning to develop here. We think it’s going to continue. Small caps remain 14 15% under their all time highs, but have been leading the market higher actually since last October, leading the SPF hundred, certainly higher since then, but still trading at what? Two decade low valuations to large caps. So they’ve been underloved, under owned, frankly hated being coming out of two year bear market, and now they’re starting to get their wind at their cells.

Folks, this market is broadening. That is clearly what’s taking place here. We see it in everything that we’re looking at here in the viewer investing system, and it continues today. Again, yesterday, even with the Dow down yesterday. What was the Dow off yesterday? 404 points. Right. And Nasdaq down even more. Nasdaq yesterday was down 1.6%.

[00:02:36]:
Dow just down 1%. Even then, there were more stocks hitting 52 highs and lows. Volume was only slightly negative. Vance decline just slightly negative. I’ve studied the market internals for more than three decades. They are the foundational strength and the underlying price action of the broad market. They telegraph strength, they telegraph weakness. So we should all know this.

The internals we saw yesterday on a horrible day are not the internals of a market that wants to go lower. We wrote that up this morning for our members. These are the internals of a market that wants to continue moving higher. Matter of fact, we believe this market, as you know, even listening to this at all, over the last year and a half, this market is headed a whole lot higher. I think it wants to pick up speed here. Obviously, we can have an overbought breather at any point. I don’t know, though. This market feels like it really wants to get jump started here and take to the next level.

[00:03:30]:
This could really wind up being another barn burner year. And why wouldn’t it be? Earnings are growth. We have a structural bull market size and scope. That’s been our theme. Strong consumer, strong corporate America, strong earnings. That’s forcing stock prices higher. We think that continues as PE multiples essentially stay flat even as stock prices go up because earnings are growing at such a healthy rate. Jay Powell today spoke for Congress, and guess what? The money printing rockstar himself did not screw us over.

This is a rarity for Mr. Powell, who’s been known to just pull something out of the air that markets don’t like to hear. He didn’t do that today. Again, two day testimony. Today is for the House, a House committee, financial services committee tomorrow before the Senate. And so we’ll still have one more day to worry about with this guy. But did you see what I saw? If you watched any of this? This man has aged a lot since he got the job. He’s aged a lot since he got the job.

Must be a tough gig. And he’s working for his bosses, of course, which are the global cabal of bankers. Can’t be an easy group of people to work for, but he’s definitely aging. Let’s talk about other investments that want to keep going higher besides the stock market. And that is bitcoin. Yesterday was classic shakeout. Absolutely classic shakeout. Yesterday, bitcoin hit a high of all time high, 69,000, 244.

[00:04:55]:
We told you it was going to do that. It did that. Then it fell immediately back 14 and a half percent to 59,268. Didn’t stay there long. Immediately started moving back higher again today. Last trade here is now 66,900, just under 67,000. So it’s already had a big recovery. Now just a couple of $1,000 below.

It’s a new all time high, but 1 second here. Yeah, yesterday was a classic shakeout, but it’s scary, right? I mean, these kind of declines, it’s almost like trading options. But for those of us that have been involved in cryptocurrencies, specifically bitcoin, for a while, we got used to this. And again, the reason that it doesn’t bother me whatsoever and the reason we bought the dip yesterday. Yes, we did. And the reason we’ll continue to buy these dips like this, because that’s the smart money play, folks. It’s been the smart money plays. The stock market from the bear market lows of late October, it’s been the smart money play all year long in cryptocurrencies.

[00:06:05]:
It will continue to be the smart money play because of two very big reasons. The one we already know about, which is the SEC approving the spot, bitcoin ets, of course, nine of these now trading like crazy with amazing levels of volume coming in. I’ll touch on that in a, a minute, minute as well. The other thing, of course, is the having. And the having is coming up here now at 42, 43 days, give or take, always varies by a little bit. I think it’s going to speed up a little bit. But again, that’s not far away. And the markets are beginning to front run this.

What’s interesting is this has typically been, and they only had three havings so far every four years started in 2012, and the previous three havings, bitcoin fell into each of those havings and then took off like a rocket. That was launched this time because of the SEC approval. Now this is a globally approved asset, and now everyone’s anticipating the having and what could happen next. Here’s what’s happened in the past. By the way, this is pretty interesting information. When bitcoin has hit an all time high in the past, here’s what’s happened next. Howard covered his podcast yesterday. In three of the four hits to all time high, within 18 days, bitcoin more than doubled.

[00:07:29]:
More than doubled. Now we’ve got that data behind us. In front of us, we got the having in 42, 43 days. Again, I’ll repeat, I continue to expect bitcoin to top 100,000 into and out of the having. It may be right before it, maybe just after it, but the level of demand is just insane. Yesterday, net inflows. Even with the sell off yesterday, net inflows still came in at a positive 660,000,000 with just over 10,000 bitcoin being purchased. And the amount, volume, trading volume yesterday, we don’t have it finally today yet.

Trading volume yesterday was 9.58 billion. That’s another record. Again, these nine bitcoin approved ecs are just killing it. Which has to make you wonder about all these firms that are not participating nor allowing their clients to participate. How crazy is JP Morgan, Vanguard, Citi, bank of America, Goldman Sachs? I could keep going. Wells Fargo just finally approved it yesterday or last Thursday. They have not only did they not form their own ETF for the SEC to approve, that was a huge miss. They’re not going to let clients.

[00:08:39]:
The firm can’t buy it, the brokers can’t buy it. The clients can’t buy bitcoin etfs. I wrote this morning that I believe I know the safest prediction ever. These firms either jump into the bitcoin revolution now, or their clients will continue taking their money elsewhere. It’s already happening. I’m almost certain that’s why Vanguard CEO just resigned and he’d been there 33 years and he just up and quit. So I think pressured out. I look for these other firms we just mentioned.

Dave Morgan, Vanguard City, bank of America, Goldman Sachs, many, many more. AG Edwards, Charles Schwab. I look for these firms to very quickly begin to change their mind about bitcoin. You’re wondering where the next wave of Biden’s going to come from. I just told you that’s where it’s going to come from. Michael Saylor, who of course is just a bitcoin legend, he had a very interesting interview. He did. And it really is interesting.

This is kind of what we’ve been saying, too. But here we have bitcoin, that is smaller. Market cap is only 1.3 trillion. Bitcoin is smaller than Nvidia, Apple, Google, Microsoft, a couple more, still smaller than Tesla. Bitcoin is smaller than these companies, but it’s not a company. It’s a newly approved asset class. It’s a de facto currency. And it’s global in nature and it trades twenty four seven.

[00:10:04]:
You see where I’m going with this? Not only should bitcoin be larger than any company on the planet, and it will be, but it should be a multiple, larger. Because again, it’s its own asset class. There’s nothing like it. Bitcoin is the king of the hill. And again, it trades globally and is a de facto currency, whether the SEC calls it that or not. This is how people look at it now. I think, rightfully, that is how they should look at it. So again, this story is just getting started.

I will tell you that if these sell offs take place again, and no doubt they will, a big seller will come in, the shorts will jump on. You’ll have these wide twings. The buyers won’t be ready. Again, it’s a new asset class. It’ll be more stable in the future. But this is not that time frame. So I’ll just say again, when we get these big sell offs, continue to buy the dip. Don’t worry about, am I buying it too high? This may sound like horrible financial advice.

Okay. Rarely do I ever say these things. But I will tell you, don’t worry about trying to get the bottom tick. Don’t worry about trying to time your purchase just right. But when it has a sell off, just enter your order, have cash ready. Again. This is what smart money investors do. You always keep a pool of funds already, or if you have to sell something, sell something, take profits in something else.

[00:11:22]:
It doesn’t have this kind of potential, because this is the most unique, and I believe the most powerful investment that small, regular investors like us have ever had the ability to invest in. My best investment ever was a company called Ultra Petroleum. A lot of you know this story. Ultra petroleum of nine year period run of 20,000%. A $10,000 investment turned into 11 million. Up until this day, until bitcoin, I had not seen an investment that had that potential. I never thought I’d have another investment that I’d be able to put my clients in and make 20,000%. Folks, we started buying this at 600, recommended at 2000.

We’re on our way to that now. 20,000%, that’s a big return. But over a time frame, again, I’ll repeat, it’s going to a million dollars. Bitcoin is going to a million dollars. I just can’t tell you when. I think it’ll be within ten years, and I think it could happen sooner than that. It is an extraordinary investment vehicle, and it is an extraordinary opportunity for investors to really get your brain wrapped around. You don’t have to be an expert.

[00:12:26]:
You don’t know the code of how it works. The randomization of what makes this such an incredible unhackable investment vehicle. You don’t have to know all of that. Don’t really understand exactly what the having is, except it’s really powerful. And again, it’s going to reduce the ability for bitcoin miners to mine it. Makes it more twice as expensive. And they’ll be mining half of it every day. Right now, only 900 bitcoin are being mined a day.

In 42 days, that drops to 450. But folks, they’re buying ten times that every day. And as other firms jump in again, it’s only going to increase. Use these sell offs to add to your positions. That is what we’re doing here. It’s what we recommend that you do as well. Also, this is very interesting. Again, Tyler covered this yesterday about the move higher after it hits all time high.

[00:13:20]:
So I wouldn’t be surprised to see bitcoin just hit 100,000 even before the having would not surprise me in the least. Lost in the fact, lost in the end of the bitcoin action is the fact that gold is also hitting all time highs. How about this? Essentially on the same day, bitcoin and gold both hit all time highs because gold has taken much longer and it’s been a much slower advance, but it has in fact hit an all time high. And Bloomberg this morning shows our folks this morning as well. We’ve talked often about the technical formation called a cup and handle formation. These are extremely bullish technical formations. I’ve got bitcoin in the brain and gold just had a breakout of a multi year, five year technical formation, a cup and handle formation. And it’s a perfect cup and handle, and it’s now broken out of it.

Technically, this would target a move to right at 2500. Again, we’re at 21 50 ish right now. So a move here from here to 2500 is expected on a technical basis. However, and this is where it gets really exciting. And I think this is going to be more apt to be the play because if the shorting and the manipulation that’s been taking place in gold for all these decades, if it begins to go away, gold could have a bitcoin like move. The open interest is incredibly low. No one talks about gold. Certainly no one talks about the miners anymore.

[00:14:58]:
Gold and silver are like, why are we talking about that? Let’s talk about bitcoin. Right? This is when you have your most explosive moves, when no one’s ready for it. And the open interest levels tell us that’s exactly the case. The commercials aren’t ready for it. Open interest proves that. But here’s what’s interesting. In the past, when gold has hit a new all time high in these three cycles, I’ll tell you what’s happened next. This is incredibly exciting.

From the 1970 to 1974, moved to all time high, gold rose 560%. In the 1976 to 1980, moved to all time high, gold rose 820%. And the elongated 2000 and 2011 moved to all time high. This is when we first put our first buy recommendation on gold and silver. Back in 2003, when that move took place, eleven year bull market took place in gold. Gold went up 750%. If the average of those three moves takes place here, we’d expect a move of 710% higher from here, from where the base started. From the move started, which is $1,040 an ounce, this would take gold to $7,384 an ounce right now.

[00:16:13]:
Again, it is. Give me the exact quote. Gold right now is 2154. If history holds up, gold would go from 2154 today to 7384, the time frame to be determined. But that’s what the previous three did on average. And folks, this is a great setup. I think it’s a great time to be alive. We said it for a long time.

Kip Herriage [00:16:45]:
It’s always a great time to be alive. It’s a great time to be an investor. It’s a great time to be in America. And this is a very special bull market that’s unfolding for equities, for bitcoin, for gold and silver and the miners. We talk about this being the roaring 2020s, folks. How could you ask for more? What is up with these pessimists? What is up with these pessimists? Oh, my God, please. I’m going to have to get off Twitter, I think, and off social media. I don’t watch the news anyway.

But my goodness, the pessimists have been so incredibly wrong. Look around us. We have the gig economy, we have space exploration, we’ve got bitcoin, which includes tokenization, fractional ownership. These are all going to mean a lot in the years to come. The work that’s being done behind the scenes, to fractionalize all assets. All assets. And to use the blockchain to trade anything and everything, going to open up a world of possibilities and liquidity that right now doesn’t exist for people. That’s the key.

[00:17:48]:
It’s going to provide liquidity. Why do you think the market’s going up now? It knows what’s coming because the markets always do as the best discounting mechanism on the planet. Again, so many different areas. We have innovation, revolution, taking place. And we’ve covered often here. We wrote, of course, in the big bribe, and so far, so good. But again, the roaring 2020, folks, it’s time to stay locked in, we said, for a long time, and enjoy the ride. And look, stay diversified, stay vigilant, stay smart, don’t get too heavy in one individual asset class so you don’t get hurt in case you have a really hard shakeout in one of these.

But with the bull market taking place in equities and cryptocurrencies and precious metals and miners, you got plenty of ways to diversify. You don’t get yourself hurt, but you still participate in all these different areas and then really maximize your returns over the rest of this decade. Again, I’m an optimist anyway, but this has got me very excited, as you’ve probably picked up from the past, from listening to me on these podcasts. All right, what else here? Let’s get to the internals again. Great. Yesterday in the face of a bad market, and again today in a good market, internals were strong. Today, Nasdaq, two to one positive advanced decline. NYSE, better than two to one positive, advanced decline volume today.

[00:19:19]:
What is this? Three to one positive for NYSE, two and a half to one positive for Nasdaq. And we had a combined. Let me do a quick calculation here. We had 431 stocks in new 52 ekai to just 144, hitting a new 52 week high. Again, these readings tell us this market is continuing to broaden. This is textbook early bull market action. That’s the most important thing to know. We are nowhere near a top.

Look, when the IPo market comes roaring back, and we have 100 ipos a year that are doubling on day one, remember, this is what happened in 95 to 2000. More than 100 ipos doubled on their first day of trading. In back to back years, we had, like, tens of ipos that went up more than 300% on day one. We’re nowhere near that. What’s the last ipo you can remember? Right? No one can tell you because they haven’t happened. This is only beginning. Same thing with mergers and acquisitions. Again, financial engineering of the highest order is underway.

[00:20:28]:
It’s not just the Federal Reserve, not just central banks doing this. It’s happening throughout society. And again, bitcoin is going to allow us all to use our own personal financial engineering. The combination of that plus AI, which will tell us how to do it, how to time it, where to be positioned, how to use all these new technologies at our disposal. Again, I don’t understand pessimism here. This is the wrong time to be a pessimist. This is the absolute wrong time to be a pessimist. If you’re not a glasses half full person, you got to work on that, right? You got to work on it, because.

Here we go, man. Here we go. In our sector watch today also, very good news here. Eight of nine of eleven sectors finish high on the day, led by utilities up 1%. They’ve been doing much better. Again, rates are coming down, folks. Technology stocks up nine tenths of 1%. Consumer staples of eight tenths to 1%.

Kip Herriage [00:21:21]:
The rest, everything was up about a half percent. Really nothing to the downside. Consumer discretionary down three tenths to 1%. But again, all the action to the upside today. Same thing applies, of course, to commodities. A bit of a slower bull market, but it is a bull market indeed at all time highs. Gold today up $12 an ounce at 21 53. I expect acceleration from here.

I expect a lot of acceleration from here. Silver up. Copper up two cent a pound at 387. Crude oil up barrel at 70, 913. Love this group as well. Writing it up tomorrow. Energy stocks look fantastic here. We’re long and strong in this group as well.

And finally today, I again bitcoin. One more time, quick refresh. 66,700. Last trade for bitcoin. All right, folks. Hey, always appreciate you listening. Hope you had a great day. To a better night.

We’ll see you back here again tomorrow after the close.

Podcast Newsletter

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Time Stamps

00:00 Small caps leading market trend, undervalued.
05:20 Volatility, but buying dips is smart.
06:37 Bitcoin's periodic surges and potential for gains.
11:22 Unique investment potential with 20,000% return.
13:20 Bitcoin and gold hit all-time highs.
18:28 Diversify, maximize returns, strong market internals.
20:28 Bitcoin and AI empower personal financial engineering.

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