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VRA Investing Podcast: Stocks Rally With Tech & Semis Continuing To Lead – Tyler Herriage – April 23, 2024

In today's episode, Tyler covers the market's strong start to the week, with notable gains led by technology and semiconductor sectors. Highlighting Tesla's after-hours rally despite a slight earnings miss. He emphasizes the impor ...

Posted On April 23, 2024Episode 1370
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About This Episode

In today's episode, Tyler covers the market's strong start to the week, with notable gains led by technology and semiconductor sectors. Highlighting Tesla's after-hours rally despite a slight earnings miss. He emphasizes the importance of watching the market's reaction to incoming data just as keenly as the data itself.

Transcript

Don’t look back because the market is closed. Good Tuesday afternoon everyone. Tyler herriage here with you for today’s VRA investing podcast. Hope you all had a great day today. And the good start to the week continues here today. We got another day here of our major indexes finishing higher across the board, making this a very good start to the week this week. And just what you want to see, tech and the semis leading the way. Just to give you a little taste of that, the semis are already up 4.3% on the week this week.

So that’s in two sessions alone there. And we’re seeing a lot of bullish indicators around this market that we’ll cover here today. We’ll also get into the latest earnings releases today, which we got Tesla after the close. We’ll also get to our major market action and the much needed improvement from the internals that we have been seeing here and of course our VRA commodity watch as well. So let’s jump right into it here. A few signs coming out for our market today. Quick high notes here. The US dollar finished lower on the day today.

[00:01:18]:
That makes back to back sessions lower for the dollar today, including an outside day today. It looks like as well a technical bearish signal which would be good for anybody looking for a weaker us dollar. We also saw the ten year today down over half a percent now at a 4.59. So failing to take out those recent highs, which I mean really recent, just from April 16, it was the multi month high, the highest level since November of last year. We wanted to see that remain as our high there and then continue our path lower. Regardless here, you know our views, yields under 5% are not a concern to us as far as could potentially derail this market. We cover it here often during what we’ve compared this period to. If there’s some new listeners out there, I don’t want to skip ahead too much, but we’ve compared this period, we’ve called it the roaring 2020s, but, but mirrors more closely.

Not the roaring 2020, sorry, the roaring 1920s. Not to be confused with that. We think it resembles more. So the.com era melt up, right? A lot of people focus on the.com bust and what happened to stocks from there and forget about the fact that the Nasdaq was up 575% in the five year window from 1995 to 2000. And even more importantly for today’s market, where were yields during that time period? Well above where they are today. That’s the answer to the question. We really averaged above 6% during that time period, and it didn’t derail the market. So we look at this as the same case here.

You know, now we’ve seen yields run into resistance. We’ll see what happens, really. The next big resistance level is just below that 5% where it failed from its breakout in October of last year. So those are really the shorter term highs that we’re looking that we don’t want to see getting taken out. But, like, it wouldn’t invalidate the way we look at the market if it did happen. Also today, just kind of covering some of the high notes that we, we don’t always cover these on the podcast, but there’s interesting things happening here right now. So today, the VIX fell big, 7.38% now into a 15 range. So taking back, you’re giving back all of those gains that it’s given through the middle part of April here.

[00:03:58]:
And what we like to see from the VIX, similar to yields, is a higher low here on this recent rally the VIX failed to take out. It’s October lows of last year, another area we want to continue to see lower highs. Again, nothing that would derail the market as we see it here, but kind of marks the top, or, sorry, marks the bottom of this pullback. That’s what we’re looking for here in the VIX for that blow off day where it hit a 21. Still not extremely elevated or anything, but we’d like to see that mark the top and the VIX and also marking the bottom for our market there as well. And so far, it looks like this pullback will be short lived. And I’ll tell you right now, you know, a little freebie here for anybody listening to the podcast is that we have started now, as we would tell you, we would alert you to, we have started to dip our toes back into the water, so to speak. Here.

We were already positioned right. But now, as we’ve talked about for the last few weeks on the podcast, we’ve been looking at this as a buying opportunity. And now we are starting to make those moves here. And as always, we’ll continue to dollar cost average into our favorite positions over the long term. Now, if you want to get some more info on that, I won’t dive too deep into it today on the podcast, but you can find all of our updates at vra letter.com dot. And if you’re not already a member, we’ve got of a 14 day free trial for you there as well. Then later in the week, this week, not that much later. Now, Thursday morning, we will get the latest look at inflation data.

All eyes have been on inflation data recently between inflation and the Federal Reserve conflict overseas, Israel and Iran, of course, Russia, Ukraine, and yields being on the rise. These are all the major factors that are shaping the narratives of this market right now. And we’ve seen inflation now come in higher. A few readings in a row here on CPI, PCE, PPI, all of them have come in a little bit hotter than expected for the last few months. And that has done a lot here to increase bearishness about this stock market has really affected sentiment here. But we’ve said this from the beginning, inflation was never going to be straight down. Kip talked about this on his podcast yesterday as well, that the good news here is that overseas we’re seeing a more rapid decline in inflation than we are seeing here in the US. Some of that makes sense.

[00:06:40]:
We just added 40% to our money supply during coronavirus insanity. A lot of that is still working its way into the system or just working out the after effects of what that looks like in our system. So Europe has been a great example. We talk a lot about China and how they’re exporting deflation, but a lot of emphasis has not been placed on Europe, which led the way higher when inflation really began to show up, back when the Fed was still calling it transitory, inflation in Europe was much higher than, than it was here. It peaked out at a higher level than it did here, and now it’s falling faster than it is here. We expect the US to continue to follow up Europe in that regard in this disinflationary environment. Right. And so let me say this, which is probably even more important than the news that we get on Thursday.

And for, again, for new members out there, this is a theme that we come back to a lot. It’s not the of news that matters. It is the market’s reaction to that news. And so the good news here for inflation, even with the last few readings being higher, is that we’ve seen lower highs in inflation readings. Right. It hadn’t gone back to the highs of a couple years ago. Now, if it were a chart of a stock, it would look like the coming move should be lower based off of our system, if we’re just looking at it from a technical point of view. But again, regardless of where the news comes in Thursday on PCE, which we will be watching for and reporting on here on the podcast, but more closely, we will be watching the market’s reaction to that news.

If the market can rally in light of another higher than expected reading if yields can fall in light of that as well. Or maybe we even get good readings here. You know, we’ll have to wait and see what we get from the PCE. But again, it’s not the news that matters. It’s the market’s reaction to that news. And that’s going to be a theme for the rest of the podcast here as well, because the same applies to earnings. And we got some big earnings today after the close. We’ve really kicked in to high gear here.

[00:09:04]:
Now for, for Q one, earnings this week really sets the tone for the next couple of weeks. So we had Tesla today reporting out after the close. I’m going to start here and then kind of go into our a more recap of the earnings. But this was the big one that everyone was watching for today, reporting after the close and before I dive into the numbers from today. Charles Payne shared this earlier today, and I thought it was important to reference here as well, you know, because we follow this stock closely. We’ve seen this. But he put it all in one place in a great chart today. And so take a look at this.

First off, before today, the last four quarters in a row, Tesla has sold off after earnings reports. The average losses one week later for Tesla were 11% for the last four reports there. Right? Elon doesn’t usually get stuck in a big cycle like this, but it happens to the best of companies. So going into Q one, earnings today, expectations were very low. And so once again today, even though expectations were low, Tesla did come in slightly below estimates. But what is different today to the last four quarters of earnings is that Tesla has done almost the exact opposite in after hours. Right now, despite missing on revenue and earnings per share, still pretty good revenue, 21.3 billion. But despite missing on both of those, Tesla is now up over 9% in after hours trading.

Again, coming back to that theme here, it’s not the news that matters. It’s the market’s reaction to that news. And right now, that reaction has just been fantastic. And let me say this as well. If you do go check out our daily VRA updates, you will see that before the close today, before Tesla came out with earnings, we had a piece that went out to members talking about the new positions we were putting on and also what we expected from Tesla’s earnings. We actually were looking for a weaker quarter. As I mentioned, it didn’t help that we just had four negative quarters in a row. But what we said was that the bad news was already baked into the cake.

[00:11:31]:
Tesla has sold off quite a bit from its highs. Even its recent highs has sold off quite a bit. I mean, we’re just over 200 not that long ago. Let me pull this chart up here for you. I’ll quote it exactly. I mean, we’re just over 200 in February, that we broke below 200 in early March. We’re now, as of the close today at 144, an after hours trading, already back up to 158 here. So we’ll see what said on the earnings call later today.

Our case for Tesla continues to be about the long run here, people. What they miss about this story is that they look at Tesla and they see a car company, they look at their earnings and they look at number of units moved, which, of course, these are important metrics, right? That’s a big part of their business, is being a car company. But that is not all they are, and that’s not even what they primarily are. What Tesla primarily is, is a tech business. Right? We talked ABout this a lot. The incredible advancements that Tesla has made, and in particular, Elon Musk, because what he’s done at SpaceX, what he’s done at the boring company, he combines all of these things together, has engineers working on different products in different areas, bringing their unique views into these fields and applying expertise, whether it be on rocket science or batteries, and bringing them together in different industries, the best of the best. That’s what makes him so incredible and what makes Tesla so incredible. And that’s the story that people are missing.

It’s not even about full self driving coming out in August. The important point here is they have more cars on the road that have the ability to read this data from all types of different traffic incidents. Right? And then apply that to their learning models. For AI, they have more data than anybody else. So that’s going to push them hard, hopefully to be faster to market as well. Then we get into robotics, and I just briefly mentioned what they’re doing in AI, which Twitter has its own AI as well. So you see how all of these things can integrate with one another and improve one another as well. So really good to see Tesla rallying here.

[00:13:53]:
If you can’t tell already, we are big fans of the company. We’ve called it what, it’s one of our VRA ten baggers as well. All right, so moving off of Tesla now, because today we also had some other big earnings, namely Texas Instruments coming in after the close. Slight beats here. Let’s see what they’re up now, though, because they were up nicely when I last checked, about the same that they were up 6% in after hours trading. Visa also reporting today coming in, beating on top and bottom line estimates, also up 3% in after hours trading. Bank stocks actually did really well today as well. As we talk about here often, we’re not fans of a lot of these companies, but you want to see them participating as part of a healthy bull market.

And so what’s really good to kind of wrap this up on earnings here, what’s really good to see, especially with the Tesla news today, was that companies who are reporting earnings are reacting to the upside now because last week we saw some earnings that were actually not bad at all and could have been interpreted as pretty good. But the stocks collapsed going into the end of the week, namely, we saw it from Taiwan, semi saw it from supermicro as well. So good to see the inverse of that this week. Texas instruments just barely beat up significantly. Tesla missed up significantly as well. So again, to wrap that up, it’s not the news that matters. It’s the market’s reaction to that news. And this change that we’ve seen in the reaction we see as important here, we want to see it continue as well.

So stay tuned. We still have a lot of earnings to go later this week. Tomorrow we’ll get Boeing and at and t in the morning and then on to some big tech names. Again. We’ve got meta after the close, a few other big names after the close, but no one else really in tech. And then Thursday, let me zoom in here. My chart here is pretty small. Then Thursday after the close will be a really big tell.

[00:16:01]:
We’ve got Microsoft and Google reporting after the close. Both of these stocks with the recent sell off in our markets have pulled back. We’ve called this a fantastic buying opportunity setup here, and it’s looking like that’s going to be the case for Microsoft and Google as well. So we’ve got some other big name. You got intel coming in. We got Exxon Mobil, Chevron. So it’s not all just tech out there as well. Big week for earnings.

Stay tuned. We’ll continue to report on them here as well. All right. So now moving on, let’s take a look at our market action on the day to day. As I covered at the beginning of the podcast, what was really good to see today is tech leading and semis leading tech here for a second day in a row. Again, semis up 4.3% to start the week, percent to start the week this week after being up 2.3% earlier today as well. But it wasn’t actually tech that led the way, it was small caps. This is another group that we do like, so we love to see small caps leading the way as well.

Up 1.79% on the day to 2002 for the Russell 2000. Next up, the Nasdaq, up 1.59% to 15,696. And what’s really good about this recent sell off is that we’ve just had a couple of back to back days of rallies here, so we’re still, we really haven’t even exited extreme oversold territory yet. We’re still oversold on a lot of metrics here for our major indexes, for some of our larger names, for our major sectors as well. So we’ve got a lot of room to run if the last week does end up marking the low, and regardless of next week marks the low or not, we’re going to continue to use these as buying opportunities. We remain extremely bullish over the medium to long term and any pullback we’ll continue to use to buy dips. Nothing has changed. In that view.

[00:18:03]:
Buy the dip remains the smart money move. All right, next up, the S and P 500, up 1.2% to 5070. And lastly here, the Dow Jones up just under 710 of 1% to 38,503. I will point out here that makes four positive sessions in a row for the Dow. And the transports led today as well. That is what you’d like to see. Transports, 1.3% or so. I don’t want to misquote you on that.

Yeah, 1.39% on the day. Also wrapping up three days in a row right at their 200 day moving average. We want to see them get back above that as well. Next up here, looking at our internals on the day, nothing other to say than great readings here. We got a little bit of weakness into the close. Nothing to be overly concerned about. These numbers were just a little bit better in about the last 30 minutes of trading compared to the closed, but still good numbers here. Advancing stocks beating out, declining stocks coming in just shy of five to one positive on the NYSE and just under three to one positive on the Nasdaq as well.

So good readings there. 52 week highs, lows coming in positive on the NYSE for the first time in what feels like a while here and just barely negative on the Nasdaq. But again, much improvement from the recent reading, so we’ll take that as a win as well. Lastly here, volume was a little bit better going into the close we had 85% upside volume on the NYSE in about, at about 30 minutes before the close today we finished just shy of 80%. And you do get some more refreshes here at the end of the day. So why not give it one more final look here. 79.2% on the day. What old school technicians will look for is 80% plus upside volume for back to back days as a bullish breath thrust.

[00:20:09]:
This is about the environment when you get them. So we’ll continue to watch for it here. Lastly on volume, Nasdaq coming in roughly two and a half to one. Positive on the day today, just shy of that level, but good readings again here for the Nasdaq. Looking at our sectors on the day, we finished with ten out of our eleven s and p 500 sectors higher on the day to day. Communication services led the way. It is a proxy for tech. The largest holdings there are Google and meta, both of which finish higher on the day.

And I will point out here, Google going into earnings on Thursday is not far away at all from all time highs right now. Its all time high was just eleven days ago, so I mean eight or nine trading sessions ago, so not long, but good to see them get back above and into blue sky territory again. So after communication services, we had tech may not surprise you. And then industrials and healthcare. Our one laggard on the day was the materials sector. Finally here for today, our VRA commodity watch. A little bit of red on the screen here. Gold down just less than half a percent now at $2,335 an ounce.

So it’s been a rough last couple of sessions after getting back above $2,400 an ounce. But what you want to see here in a another area that’s seeing a long term bull market is the miners leading to the way. And we got that again here today with the gold mining ETF. GDX is the symbol there. GDX up 1.6% on the day to day. So again, exactly what you want to see on a day with gold lower. Next up here. Silver is now higher on the day by 0.37% to $27.34 an ounce.

[00:22:08]:
Next up, copper down 1.16% to $4.42 a pound. I just want to get one more refresh here. That is yesterday after hitting a 52 week high yesterday and pulling back a little bit, so continuing to pull back a little bit from that level. Oil, you know, still just above $80 a barrel. So no big moves here, but it is higher on the day by 1.82% to $83.39 a barrel here. And what was interesting was energy was lower in the session but rallied to finish at its highs of the day today. We do continue to like the energy sector as well. Finally here for today, bitcoin kind of hovering, you know, has had a good last few sessions since the having, but we see the move here is still only building steam down just a less than quarter of 1%.

Today was higher earlier in the session. Today actually got back above $67,000 of bitcoin. Now just below it at $66,367 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’d love to have you with us. Thanks again for tuning in. Until next time, we’ll see you back here tomorrow for the close.

Podcast Newsletter

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Time Stamps

00:00 Dollar lower, technical bearish signal, yields under 5%.
03:58 VIX indicates short-lived market pullback, starting recovery.
06:40 Europe leads inflation trend, US to follow.
12:03 Tesla: More than a car company narrative.
14:42 Market reacts positively to some recent earnings.
17:06 Stock market up, room for growth. Buy.
22:08 Commodity updates: Copper down, oil up.

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