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VRA Investing Podcast: The Generals Continue To Rally, but Small Caps Are Leading – Tyler Herriage – June 27, 2024

In today's episode, Tyler dives into the day's exciting action under the hood of this market. As we near the end of Q3 we continue to see strong volume ahead of one of the most bullish months of the year, July. He also unpacks the ...

Posted On June 27, 2024Episode 1412
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About This Episode

In today's episode, Tyler dives into the day's exciting action under the hood of this market. As we near the end of Q3 we continue to see strong volume ahead of one of the most bullish months of the year, July. He also unpacks the latest trends in our major indexes, highlighting significant movements in small caps and tech giants.

Transcript

Don’t look back because the market is closed. Good Thursday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great day out there today. Going to be a little bit of a quick podcast today, but we’ll make sure and cover all of the day’s action and what should be a very eventful into the week tomorrow. So certainly not a slow day by any means, unless you just looked at the markets on the surface, when you take a look under the hood here, there’s really a lot going on. And like I said, it’s going to be an exciting into the week tomorrow, into the month and end of the quarter all coming in tomorrow here. And then, of course, we’ll get a presidential debate tonight, which I’m sure everyone is going to be watching.

And then, of course, tomorrow morning, the really big news, the latest look at inflation data with the Fed’s favored gauge of inflation here. So we take a look at all inflation data here at the VRA, whether that’s the consumer price index, producers price index, PCE, all of the above. But tomorrow is the PCE, which is again what the Fed says is their favorite gauge of inflation. So leading up to all of these things really culminating tomorrow, not shocking that we didn’t see crazy action today. We are continuing to see strong buy side volume, though, which tells us we’re seeing more and more front running of July’s action, and tomorrow will be the final day. Now, if you’re a new listener here, if you haven’t tuned into our podcast this week, what that means for our markets here, and we talk about it at the end of every quarter. Well, we talk about the end of every month, really, but especially at the end of every quarter, because at the end of every month, or, excuse me, at the beginning of every month and the beginning of a new quarter, you do get fresh fund flows from 401 ks, new retirement accounts and share buybacks, all kinds of different aspects. And then, of course, you get earnings following that up as well.

[00:02:25]:
We expect Q two earnings to come in well above expectations, continuing to beat analysts expectations that have missed to the low side, multiple reports in a row here. So again, with all of this coming up, not crazy that we didn’t have a really big day today, but the small caps had a big day today, up over 1% and finishing at their highs of the day today as well. But as the old saying goes, when we have the Dow and the S and P really just flat to higher on the day, the old saying never short. A dull market really applies here again as we head into a new month and a new quarter as well, and another earnings season on top of that. And leading up to this, in today’s action, at least, we’ve been talking about this rotational theme for the last few weeks. Now that the generals lead, then when they get to overbought levels, you start to see the rest of the market, the value names, as everyone says, the other 493 stocks in the S and P 500 start to participate. Well, we’ve seen that rotation time and time again, and now it looks like the general’s time to continue leading here. And they have done so this week in a big way.

Really kind of under the surface as well as you got companies like Apple that are right at an all time high. Not quite there, though, but again, kind of a sleeper move here with not a whole lot, not a whole lot of fanfare. Nvidia has really sucked a lot of the oxygen out of the room as far as attention goes from market watchers and specifically those in the financial mainstream media. They love to focus on the meme stocks and the high flyers when they miss time and time again. Great moves from great companies like this move in Apple. Now, we’ve also seen Microsoft hit an all time high today, Amazon hit an all time high today, and Google hit an all time high today as well. And like I said, Apple right at getting back to an all time high. Meta is in the same boat here as well and had a good day today as well.

So what may have looked like a slow day on the surface of the market, you can clearly tell here, a lot of action going on under, under the table here. There we go. But good to see a day like today where you have three of the magnificent seven hitting all time highs and another two right there as well. So again, good day under the surface here. So let’s take a look at our major indexes on the day today, as I mentioned earlier, led by small caps up a full percent and finishing at their highs of the day today at 2038. Very good to see here. You know, we’re big fans of the small caps and you really want to see them performing well because it means that they, excuse me, rushing through my words here today. Small caps are a great reflection of the US economy.

[00:05:42]:
It’s where most of the mid cap, smaller cap companies as makes sense, right? The small caps, that’s where they are, though. So if the Russell 2000 is doing well, it means the US economy is holding up well included in that. Next up here, the Nasdaq up three tenths of 1% today to 17,885. Also just right at an all time high there as well. Let’s see, less than 100 points away from that number. Now, we were up 53 today. Semis were lower on the day, though. Again, been an incredible run here, so no real concerns for us there.

Next up, the s and P 500 up just under one 10th of 1% to 5482. And same boat there for the Dow Jones up just under one 10th of 1% to 39,164. Next up here, looking at our internals on the day today, I gotta say, maybe not a stellar day of two to one beats across the board or anything, but this is much, much better than what we have seen lately. We’ve seen a number of days in the last few weeks where we’ve had higher major indexes with mixed to negative internals or just flat internals. That’s not what we saw today. We got some beats here coming in positive. Advancing stocks, beating out declining stocks for both the NYSE and the Nasdaq. Little better on the Nasdaq.

Just barely shy of two to one positive. Next up, 52 week highs and lows did come in positive. Just under two to one positive on the NYSE. This was our one negative spot for the Nasdaq on the day to day. No concerns for us there. As we talk about often, 52 week highs and lows are a bit of a lagging indicator as well. So next, volume coming in positive on the NYSE, nicely positive. And then over two to one positive on the Nasdaq.

[00:07:48]:
And good volume here as well. This is exactly what you want to see. Again, volume. Confirming a bit of this front running action that we’ve been looking for into July. And again, tomorrow is the final trading day of the month and the quarter. Next up here, looking at our sectors on the day today, this is where you really saw the rally into the close today. Again, the action under the surface, which is so important. At midday today, there were only a couple of sectors higher.

Communication services, which is mostly made up of meta and Google, hit an all time high. So that is something you really like to see. New highs do get new highs. But other than that, I believe earlier in the session it was consumer discretionary and communication services were our only sectors higher on the day. We rallied back to finish with six out of our eleven sectors higher on the day today. Real estate actually leading the way today. A little bit of a buy the rumor, sell the news kind of event is housing data came in weaker than expected with pending home sales down 6.6% last month from the prior year. So not ideal data there, but good to see not only the real estate sector, but home builders responding and finishing positive on the day to day as well.

That is a sector we’re very much looking into right now. So if you want to stay up to date on what we’re doing in one of our favorite sectors there, come and join us. We’ve got a 14 day free trial going on right now at vra letter.com. all right, after the real estate sector, we have consumer discretionary followed by communication services. Again, an all time high there. Then our laggards on the day were consumer staples, materials and financials. But the losses were pretty small for our lagging sectors on the day to day. And one sector we’ve been talking about a lot has been the financials.

[00:09:56]:
We have no love for these big banks here, but we do want to see them participating as part of a healthy bull market, which we still see that we’re just in the early innings of here. But what you really want to see, perhaps even more importantly than the financial sector, is the regional banking sector. This sector can often flash warning signs ahead of other sectors. So earlier this month, we saw KRE, the regional banking ETF, dip below its 200 day moving average, but since then has put in some solid work above those levels and now making further room above the 200 day moving average today up over 1%. We’ll take that as a win on the day today. All right, finally here for today, our VRA commodity watch. A lot of green on the screen here. Good to see gold overnight almost dipped below $2,300 an ounce.

Rallying back today. Up over 1% now to $2,338 an ounce. Silver up one 10th of 1% to $29.28 an ounce. Copper down on the day now by seven tenths of 1% to $4.33 a pound. And oil now up 1.2% to $81.88 a barrel. And finally for today, bitcoin continuing to look like it’s trying to base around this $60,000 level before its next big move higher. We do remain extremely bullish on bitcoin here. Up today 910 of 1% at $61,537 a 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 at vra letter.com, click the podcast link at the top. We’d love to have you with us you can also find our transcripts of the podcast there as well. Thanks again for tuning in. Until next time. We’ll see you back here tomorrow for the close. Bye.

Podcast Newsletter

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Time Stamps

00:00 Preview of inflation data and market trends.
03:47 Apple, Microsoft, Amazon, Google, Nvidia at peaks.
09:56 Big banks participate in bull market cautiously. Regional banks indicating market shifts with resilience. Gold price almost dipped below $2,300.
10:57 Gold, silver, copper, oil and bitcoin prices.

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