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VRA Investing Podcast: The Incredible Rolling Bull Market, Leading Sectors, and Commodity Trends – Tyler Herriage – April 03, 2024

Check out today's VRA Investing Podcast as Tyler covers the market action for the day, including insights on the latest Fed speakers and their impact on the market. He also dives into the performance of major indexes, sectors, and ...

Posted On April 03, 2024Episode 1356
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About This Episode

Check out today's VRA Investing Podcast as Tyler covers the market action for the day, including insights on the latest Fed speakers and their impact on the market. He also dives into the performance of major indexes, sectors, and commodities, giving special attention to the incredible rolling bull market and the bullish indicators for gold and bitcoin.

Transcript

Don’t look back because the market is closed. Good Wednesday afternoon everyone. Tyler Herriage here with you for today’s VRA investing podcast.

Hope you all had a great day out there today. I will probably keep this podcast a little brief today as I will be on with the great Wayne Allen Root tonight on his tv show at 07:30 p.m.. Eastern. So we hope you can join us live on the Wayne Allen Root show.

You can find the links on rootforamerica.com or live on frankspeech.com as well. Again, that will be at 07:30 p.m. Eastern 06:30 p.m. Central here for anyone else here with me in Texas. But that being said, we hope you can make it tonight. And Wayne, thank you for having me on again on your show. Looking forward to it this evening. But that said let’s take a look now at our market action on the day to day.

[00:01:02]:
Got a lot to cover here in a short period of time this morning. Our major indexes had a nice jump out of the gate this morning in spite of having a number of fed speakers coming out. That just never really bodes well for the market. Especially they like to talk the market down in times when we’re approaching all time highs. We’ve seen it time and time again and nothing different from today. As the first up this morning we had the Atlanta Fed president Bostic, who mentioned that he supports just one rate cut for the year and likely he said won’t be until Q four. That’s when he is looking for it, but just what you want to see. The market continued to head higher.

Just took that in stride. And after he spoke as well, yields began to move lower as well. Then we had Jay Powell speaking at Stanford University today. Nothing new here. He just reiterated that the Fed doesn’t expect to lower rates until they gain more confidence that inflation is dropping to 2%. Like you said before, it didn’t have to get all the way down to 2%, but they want to make sure it’s heading in the right direction. But he did also add in there as well that rate cuts could happen at some point this year. So no solid dates here yet.

[00:02:25]:
But again, as they were speaking, yields headed lower, ultimately finishing at their lows of the day or close to it, down two tenths of 1%. So nothing big there but the ten year now at a 4.35%. And really, again, nothing new out here from the Fed. Kip and I have both called for rate cuts this year, but I do want to say here again that the longer that the Fed can wait to cut rates, that’s not necessarily a bad thing at all. It means the US economy is performing well in the face of tighter financial conditions. That ultimately is bullish. And speaking of the economy, we’ll get back to the Fed here in just a second. But while I’m on the topic this morning, we also got back the latest ISM data, including the latest PMI, the purchasing managers index coming in at its 15th straight months of expansion territory here.

Another sign that the economy is stronger than most would expect right now. And we also saw another uptick in business activity last month as well. So good signs from the economy. As we talked about here, yes, the economy has weakened, but that doesn’t mean that it is weak. So to wrap up here on the Fed and interest rates and what we’re seeing right now, the market is still looking for two to three rate cuts this year. I believe the average expectation is for three, still down from six earlier in the year. Again, good. That means the economy is stronger than most anticipated this far into the year.

[00:04:06]:
And right now the market, based off the CME’s FedWatch tool, is pricing at a probability for the first rate cut to be in June with a 61.5% chance for a 25 basis point cut in June. So you’re going to hear a whole lot of talking heads out there, especially as we do have a Fed meeting at the end of this month. Begins at the end of this month month. So we’re still, we’ve got a good time to go before that. A lot of economic and inflation reports between now and then, and we’ve got the Fed blackout period, which is always a nice period before those meetings. But you’re going to hear a whole lot of people starting to say that if the Fed doesn’t cut rates now, then they can’t do it until after the election this year because they don’t want to, you know, come across as a political entity. Right. Over the last few years that really has gone out the window.

[00:05:04]:
We know that the Federal Reserve is another political tool. I mean, it’s made up of, I believe the voting members are like 80% democrats, registered democrats. So we know which way they’re leaning and if something they can do can help support their guy, we certainly wouldn’t put it past them here. So that’s about it. On the Fed, really nothing new. There’s a long way of saying nothing new there, and the economy does remain strong. But the key point is that this Fed speak couldn’t derail the market earlier in the session. We did lose some steam later into the day, into the close, but we still managed to finish mostly positive here.

Three out of our four major indexes higher on the day, and no one finishing at the lows of the day here as well. So let’s jump in here. Leading the way today, small caps up just over half a percent to, to 2076 for the Russell 2000. Next up, the Nasdaq up just over two tenths of 1% to 16,277. And just what you want to see, semis led yesterday and they led again today. They didn’t lead small caps, but they led the Nasdaq, up 0.46% for SMH. Another group that we do remain long and strong here. And finally, the Dow finishing just slightly lower on the day, just over 110 of 1% to 39,127.

[00:06:30]:
And I will point out here, the transports have been acting better here. You know, they finished up, they actually led the way today, up 7.72% on the day day that led all of our major indexes. This is a group that we would like to start see participating here. Again. It speaks well to the strength of the economy when the transports are doing well. Alright, next up here, let’s take a look at our internals on the day to day. You know, for a day that finished mixed to positive, we’ll call this a pretty good day from the internals overall, advancing stocks beating out declining stocks on both the NYSE and the Nasdaq. No big two to one beats or anything here, but both coming solidly in the green.

Next up, 52 week highs. Lows coming in strong for the Nyse. Over four and a half to one positive there and very few stocks, just 36 stocks hitting a 52 week low. And for reference, that means 169 stocks hitting 52 week highs. Now, it was negative here on the Nasdaq. Now the Nasdaq is made up. There’s a lot of companies in there that kind of skew the scoring here. A lot of, you know, really not that quality of names.

[00:07:50]:
So you can get these blips on the 52 week low list from the Nasdaq for that reason. But even today, just, just negative by ten issues there, so not by much. Lastly here, volume coming in positive for both the NYSE and the Nasdaq. Again, no big two to one beats here, but solidly positive. Not even close. Not like it was neck and neck there. And we were almost two to one positive on the Nasdaq. So good day to day.

Overall from the internals, what we want to see continued broadening action from this market. And I do want to touch on this broadening aspect here and what we’re going to start covering more of a new theme for us here that we’re calling the incredible rolling bull market. I’ll cover that here right as soon as I’m done with our sectors. It’ll be a good segue, but. So first up, then looking at our sectors on the day today, we saw the new highs continue here, which is good on a day where we didn’t get all time highs from our major indexes, although we are still very close. But today we finished with seven out of our eleven s and P 500 sectors higher on the day to day communication services, which is a proxy for tech here, the two largest holdings, meta and Google. But the sector hit a 52 week high today. Very good to see after that energy we had hitting an all time high today.

[00:09:15]:
I will say this is a group that we have been bullish on for some time. We’re now reaching extreme overbought on steroids here on the VRA investing system, and that will lead us into this rolling bull market here in a second. So remember that that energy has been on a great run, is now reaching overbought levels after that. We also had materials and industrials higher on the day, just shy of 52 week highs there. And then our laggards on the day, consumer staples, utilities, healthcare and financials. Another more on the, on the minor side of the rolling bull market. We’ve seen good action from the financials lately, you know, with no love, no position there for that group, but as a healthy bull market, you want to see those groups participating as well. So onto this new theme, the incredible rolling bull market, because this looks to be building and we think that it’s significant here that what we have seen, we’ve talked about the rotational aspect of this market, that each time one sector gets really hot, it goes on a nice run, but then gets overheated, another sector starts to get hot, maybe even an oversold sector.

[00:10:29]:
And so we’re rolling from one sector to another. That keeps our markets overall, our indexes around the levels of all time highs, while preventing our broad markets from getting too overheated from one group or another. So take a look at this. I mean, first we saw it in the semis in tech after the bear market lows of October 13 of 2022. They were the first to go and they’ve had an incredible run since that time. Then we saw it in other growth areas as well. It spread to value stocks and then to global markets. We saw Japan hitting its first all time high in over 30 years.

We’ve seen other like the DaX hitting all time highs as well, and other places, India, just to name a few there. And then of late, we’ve seen great action in the small caps, in precious metals and miners and energy stocks, while some of these other sectors have taken a little bit of pause to get them out of extreme overbought territory. And so I’ll even add in the financials as one of those as well. That kind of has flown under the radar because we don’t have any positions there. So now that energy has reached extreme overbought levels, we’ll see where this rolling bull market takes us next. But we’ll let the market tell us where to go from here rather than tell trying to attempt to tell the market what to do, that is typically not a winning strategy. But to kind of wrap up this theme, this is exactly what you want to see from a bull market. This is textbook bull market action, especially in an early bull market.

[00:12:09]:
We see this as the early innings here of this bull market. We haven’t even gotten two years into it yet. All right, finally here for today, our VRA commodity watch. Let me get a refresh of my screens here as gold just continues to rally here. Actually, it’s pulled back a little bit since I started this podcast, but hit another all time high today. Finished up the day 1.72% at $2,321 an ounce. Got as high as 23 30 I saw was the high, although I’m not seeing that on my charts here. Now, maybe it was just below that level, but still, just what an incredible run we’ve had here from gold to get back to all time highs.

But I really want to point out and focus on today is the action we’re seeing in the gold miners. Because during a bull market run for gold, you want to see miners leading the commodity. That’s the sign of a truly strong bull market in gold, and we’ve been getting that outperformance, especially since the end of February. The miners, since they bottomed GDX, is up 28% in the last three or 23 trading sessions, was up another 2.16% on the day to day. That’s its highest level since May of last year. So to give you some perspective, in that same 23 trading sessions, that GDX is up over 28%. Gold is up 13%. Good move from gold, but not what we’ve seen on the miners.

[00:13:41]:
We’ve seen over two times performance then two x performance from the miners. That’s exactly what you want to see. You want to see two, three, four x returns from the miners outpacing the commodity. That tells us that we are in a bull market here and has this extremely bullish on this group here. And then if you want to take a deeper look into it, a little volume analysis, which we cover here on the podcast from time to time as part of our VRA investing system. But if you look at volume, you can see just how unloved this group is. You know, volume. Just 25 million shares traded, and that’s about been the average lately.

You know, we have, we had, there’s not been a single day with 49 million shares traded or more in this last 28% move higher in the miners. That tells us that big money has not gotten anywhere near this group yet, and again tells us that we are early, and that makes us even more bullish. As far as if you’re playing a baseball game, we would say this is inning number one. Still for the miners, next up here, silver having a phenomenal day today. Up 5.4% to $27.32 an ounce. That is silver’s highest level since March of 2022. It’s been on a hell of a run. Copper also hitting a 52 week high today, up 3.5%.

[00:15:06]:
Big day there to $4.21 a pound. Now. Oil up slightly as well today. Got above $86 a barrel for the first time since October of last year. It has since settled a little bit here, up just over half a percent to $85.65 a barrel. And finally here for today, bitcoin was a little bit higher earlier in the session, now essentially flat on the day, up two tenths of 1% to 65,819. And I got to say, we really liked this consolidation from its all time high just a month ago, setting a new higher low here, a new base, short term at least. And we’re now just 17 or so days away from the next halving, which is incredibly bullish for bitcoin.

After that event, we would not be surprised to get some more front running of that event as well. We think bitcoin looks like it’s preparing for its next big move higher, folks. That’s 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 at vra letter.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 Fed holds rates, economy strong.
04:06 CME's FedWatch suggests 61.5% chance of rate cut in June.
09:15 Bullish market experiencing extreme overbought conditions. Rotation.
11:08 Bull market shows diverse sector activities.
15:06 VRA Commodity Watch Update

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