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VRA Investing Podcast: The Extraordinary Set-up For US Equities Continues – Tyler Herriage – March 26, 2024

In today's episode, Tyler covers a range of market topics including the performance of various sectors, important economic data, and significant upcoming events. He offers insights into the current bullish market trends, potential ...

Posted On March 26, 2024Episode 1351
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About This Episode

In today's episode, Tyler covers a range of market topics including the performance of various sectors, important economic data, and significant upcoming events. He offers insights into the current bullish market trends, potential future scenarios, and the dynamics of trading events like the conversion of Digital World Acquisition Corp into DJT, Trump Media Group. Tune into today's VRA Investing Podcast to see what the markets are telling us in today's action.

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 out there today. It was a little bit of another lackluster session for our market here today. We started out positive across the board and we just kind of slowly gave up those gains into the close of the day to finish at the lows of the day, silver markets took a little bit of a breather. It looked like there was a little bit of hesitation from buyers this week. Really.

One, it’s a holiday shortened trading week. We’ve got Friday off for good Friday, but also a lot of economic data out this week and not really a whole lot of good news catalysts out there right now. But earlier today with some of that economic data coming back and consumer sentiment coming in weaker than expected or sorry, that was consumer confidence. There we go. I’ll cover some of that here in a second. But earlier in the session, it looked like it was going to be a little bit of a bad news is good news because our markets were still higher on the day despite that weaker than expected economic data. Really nothing that raised any red flags out there, but just kind of there’s no, again, good news catalyst on the day to day. And going forward this week, yes, Friday is closed, but that doesn’t mean there will be no action on Friday as we’ve got the latest look at inflation data with PCE coming out and there’s another big event, or not big.

[00:01:47]:
It’s like a speech, maybe Jay Powell speaking on Friday morning as well. So again, just a little bit of hesitation out there on this holiday shortened week ahead of a long upcoming weekend. But taking a look at some of the economic data today, again, not all bad out there. Housing data showing median home prices were down, not a terrible thing for the consumer. And then new home sales were lower from the previous period but still came in strong at 5.9% year over year growth. So certainly again, not all bad out there, but consumer confidence came in weaker than expected. Just narrowly missed where we were last month, but came in well below expectations. So I don’t put a ton of stock into survey based data, but it is interesting to look at for the trend there.

But again, our major indexes just couldn’t really get the wheels turning. Today started out strong out of the gate, but just kind of slowly down, gave up those gains into the close. Nothing’s changed in our view here. We’ll continue to use moments like this as opportunities to buy the dip here as this really is an extraordinary setup here for us. Equities on multiple fronts. You know, our long term views, our big bribe mega trends, and our big bribe bull market that we see going through 2030, taking the Dow Jones to 100,000 kipp, covered a lot of those themes yesterday, covering all of our mega trends and why we remain so bullish on what we see as a structural bull market here. But also for the rest of the year here as well. We’ve got some great analytics and this is barely scratching the surface on some of the analytics that we have as we head into the second half of this year.

[00:03:41]:
I’ll go ahead and name one that I actually didn’t have on my bullet points here, but that’s just the second year of a bull market. It’s been an incredible run over the last few months, no doubt about it. But every bull market that has gone on for at least one year, this goes back to World War two, has continued to finish higher in that second year 100% of the time. Going back, I believe is out of 14 scenarios or something like that, where new bull markets have began, always continue into year two. We expect that here as well. But now, as we have just two trading days left in the month of March, we’re about to, excuse me, about to wrap up another interesting statistic here, where if we can hold on to the gains for the month, which I believe the S P on the month is still up. Well, if I get my screens working here, the S and P on the month is still up over 2%. So we can hold on to gains for the month.

It’ll complete five positive months in a row of straight gains for the S and P 500. And believe it or not, that bodes very well for the rest of the year as well. So check this out. When November, December, January, February, and then March are all higher the rest of the year. The final nine months, has never been lower. Another 100% scenario here, eleven for eleven. When those five months are higher, going back to 1950, we’re higher at the end of the final nine months of the year, 100% of the time. Average returns of 11.9%.

That’s the kind of year that we expect to get from our markets here this year. And also heading into a historically very bullish month of the year here as well. April is the second strongest month of the year historically, which also means here that we should have even more liquidity coming into the market. We’ve got beginning of month fund flows. Those take place every month as well. As beginning of quarter fund flows here as we enter Q two for April. I said that there weren’t a whole lot of catalyst events this week for our market. But you do typically, or I don’t say typically, I’ll say often.

[00:06:09]:
Often you get front running of those fund flows as well, especially if they’re expected to be a high number. So we’ll see if we get some of that later this week as we head into the long weekend. But overall, great setup here in the short term and long term as we head into sell in May and go away after April. Yes, that strategy has worked time and again for many years, but we’ve seen the market buck that trend a little bit here over the last, you know, six, seven years. So we’ll see, we’ll cross that bridge when we get to it here. But as Kip covered yesterday and we covered again to members this morning, we do get asked here often. You know, especially when you start to see the cryptocurrency crazes, you’re seeing the start of ipos. You know, you had Trump media also going live today.

So people ask us a lot, is this a bubble? To which we would say yes, that might surprise a lot of people, but especially if you’re a longtime listener, you know, how are you so bullish? But you’re saying we’re in a bubble. Well, as we see it, we’re in the early innings of this bubble just beginning to form, really here. We’ve seen glimpses of it over the last few years. But until we get to the point where we’re looking at something like when meme stock mania was going crazy, you know, the AMC’s the gamestops of the world, and then you have crypto going crazy as well. You’ve got your markets at all time highs. Yes, we’ve got all time highs, but it hasn’t been anything crazy like that where you get into an Uber and, you know, you hear from somebody that they’re buying these stocks or you’re hearing people quitting their jobs to become day traders. You know, we saw a lot of that in 2020 after coronavirus insanity. We’ve had a bear market or two since then.

So a lot of those people are out of the market, back at their day job. So until we get to that point of it again, as we see, we’re nowhere near a market top here. And despite being right in the range of all time highs, we have seen sentiment fall. We’ve seen it starting to show up in the AAIII investor sentiment survey. We’re seeing it in the fear and greed index as well, which fell today, is now well out of extreme greed territory at greed at a 67 here, you know, still in green territory. But just a month ago we were at a 74 and higher, right? So, and we’re still right in the range of all time highs here for our major sectors, for our major indexes. And yet we’re two things, sentiment is nowhere near over exuberant, and two, we’re nowhere near extreme overbought levels in our favorite areas. So these are the kind of pauses that we really like to see.

[00:08:57]:
It refreshes the market, really, and provides a great buying opportunity if you’re willing to go out there and buy the dip. And right on that note, perfect segue here into our favorite, one of our favorite technical observers here of the market from Evercore, which is rich Ross, who remains extremely bullish here as well. We’ve referenced his work a lot here on this podcast, but when, when we see things similarly and just about right now, we line up on almost everything. It usually lines up pretty well going forward from there. And Rich Ross is raising price targets here, raising his S and P 500 price target to over 6000 in the next twelve months as a 15% move. He loves semis and tech here, another group that we really have been pounding the table on here for years. He also loves bitcoin with $115,000 price target. We’re right in that same ballpark as well, and bullish on gold here as well.

And now sees energy stocks heading higher. Really great work. We posted some of it in our members update this morning. If you’re not already a member, come and join us at vra letter.com dot. We’ve got a 14 day free trial going on right now. One other factory he put in here is a quote from Mister Market about rate cuts, which I’ll point out today. Yes, our major index is finished at the lows of the day. I was going to cover this later, but the ten year also finished at its lows of the day at a 4.23, down just under half a percent.

As we said here, often it is better if they can hold off on rate cuts here for the Fed because it means that the economy is stronger. Right? And so here’s the quote that he put in here. Is better to have fewer cuts and stronger earnings than more cuts in a weaker economy. Exactly our point of view here as well. So good to see that our views are lining up. And lastly here, before we cover the markets and news on the day, I kind of already referenced this. Today, we finally got the much anticipated conversion of Digital World Acquisition Corp into DJT, Trump Media Group here. So the symbol was DWAC.

[00:11:16]:
DWAC has now been changed to DJT. If you’re a member here with us, then, you know, we prepared you in advance to a potential buy the rumor, sell the news here event with this conversion. So for some of our new listeners, if you’re a new trader, this is a great example here of a buy the rumor, sell the news event. So I want to cover here for a minute here. In this particular scenario, every one of these is going to be different. Right? And I’ll cover maybe a couple here at the end, maybe kind of anecdotal to this, but. So here’s today’s just a great example, though, as, again, this was a much anticipated merger. I’m not going to get into the details of it.

You know, it seemed to be another get Trump type of opportunity from the SEC. They delayed this, delayed this, delayed this when there was really no reason to. This should have taken place a year and a half ago, really. But now the merger has been approved, and what a lot of professionals in finance will do when there’s a much anticipated event like this, whether it could be an earnings release, a big news announcement, a conference, all kinds of different things. But in this case, it was this conversion. So what the pros will do is come in and buy the stock ahead of the news release. After the SEC approved it, this was pretty much a done deal, and the stock has only gone up since then. So they’ll start to buy the stock with the goal in mind of selling the stock as soon as the news is announced, in hopes that that news will drum up demand from retail investors and allow them to unload their shares.

So with DWAC specifically here, you know, the pros in finance who watch this stuff every day have known that Trump holds a company and that it’s about to be changed to a ticker symbol of his initials. That means a whole lot of people are about to be introduced to this stock. They would see the news for the first time today, or maybe they’ve seen it a couple times and decide to finally buy. That’s what they’re hoping for. Right. And that’s a lot of what we got today. Initially, the stock ramped up on the news, hitting as high as $79 a share during the session day. It’s not a good day.

[00:13:35]:
Finished up over 16 at $57 a share. Really? 58 57.99. But again, well, off the highs of the day. So that’s kind of what we thought the stock would do after the transition. You’d see a big pop, and you get a lot of selling pressure into that from these buy the rumors, sell the news kinds of traders. So we did take profits on our position here also. It was good timing for us. We’ve owned it for some time.

We got 100% gains in the position. So our discipline here from the VRA investing system says to sell. So that’s part of it, of why we sold today as well. That doesn’t mean that we may not come back to DJT in the future here. You know, during 2021 was another good example of this, when we traded a lot of positions in the meme stock craze like AMC traded in and out of it multiple times. So we’ll keep an eye on it here. And if we start to see anything like that forming as well, you know, we’ll shorten our time horizons and look for more trading opportunities throughout that. But stay tuned.

We’ll be continuing to report on that here and to kind of wrap up the buy the rumor, sell the news event. You know, it doesn’t always take place the way you think it might. Sometimes you get a sell the rumor, buy the news type of event. They’re all different. Each case scenario is different. That’s the way that we played this one here. And again, it helps that we’ve been building that position for some time and had 100% gains. All right, so that said, let’s take a look at our market action on the day to day.

[00:15:08]:
As I mentioned a few times now, we did start off the day hot and finished near the lows of the day. The semis were really the first to give up the goose going negative first. And as we say here often, you’ll see tech leading the market and semis leading tech, not the other way around where semis are leading the way to the downside. That’s what we got today. Again, no real concerns about it, just pointing out what happened today. But the Dow Jones led the way, if you want to call it that, down. .08% so down the least of the day, really. I mean, that’s pretty much flat to 39,282.

Next up, small caps down 0.19% on the day to 2070 for the Russell 2000. Next S and P 500 down 0.28% to 5203. And finally here, the Nasdaq down just over four tenths of 1% to 16,315. And I will to wrap it up here. The semis were down nine tenths of 1% on the day today. Looking at our internals here, not bad readings really for finishing lower on the day, but similar to our markets, these numbers were positive all session and just kind of faded into the close. We had declining stocks beating out, advancing stocks for both the NYSE and the Nasdaq, but just no big beats here. Next up, 52 week highs to lows coming in four to one positive.

On the NYSE, we had 147 stocks hitting 52 week highs to just 33, hitting 52 week lows and just barely. Negative on the Nasdaq. Negative by just seven issues. Lastly here, volume did come in negative for the NYSE, not by a lot, and actually managed to come in positive for the Nasdaq on the day. So there’s a bright spot there. Next up, taking a look at our internals on the day to day. We finished with three out of our eleven s and p 500 sectors higher on the day today. We did have more higher earlier in the session.

[00:17:12]:
A lot of these, you know, banging on the door of new 52 week highs, new all time highs as well. But our leaders on the day were healthcare, financials and consumer staples. Just three out of our eleven sectors finishing higher on the day. Our laggards were utilities. Energy taking a little bit of a backseat here after leading yesterday, and then tech and real estate. Finally here for today, our VRA commodity watch. Gold now higher slightly on the day by 0.15% to 2179. Next up, silver down 1.15% to $24.60 an ounce.

Copper holding on to $4 a pound here, down just a quarter of a percent to $4 almost exactly. And oil down as well by 810 of 1% to $81.29 a barrel. Finally here for today, bitcoin working hard to hang on to 70,000. Dip below it a couple times a day. Now back above it by 0.34% or 240 points to $70,106 of bitcoin. Folks, that is 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 click the podcast link at the top.

You can sign up there. You’ll see our full transcript and everything we have to offer as well. So 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 Holiday-shortened trading week, with mixed economic data.
03:41 Expect bullish market to continue based on history.
07:02 Early innings of bubble forming, not extreme.
12:01 SEC delays, pros buy, stock price rises.
15:44 Small cap, S&P 500, Nasdaq down slightly.
17:51 Copper, oil down; bitcoin strives for 70,000.

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