In today's episode, we provide an analysis of the day's market performance, and the potential for continued market gains, despite being at extremely overbought levels. Additionally, we cover insights into the themes and trends to look out for as we approach the end of 2023 and head into 2024.

Don’t look back because the market is closed. Good Tuesday afternoon, everyone. Tyler Herridge here with you for today’s VRA investing podcast. Hope you all had a great day out there today. It was another good day for our markets today, finishing at or near the highs of the day for our major indexes may major sectors as well. Good day all around. A good start to the week of what if we finish positive of this week, could make eight weeks in a row of gains for some of our major indexes here. But a quick heads up, we are going to be taking a little bit of time off here for the holidays as we gear up for what we expect to be a fantastic 2024.

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So we’ll be back intermittently throughout the next couple of weeks until we get into the new year. Coming out with podcasts on important days. We’ll still be provide VRA updates for subscribers. So if you’re not with us already, if you want to stay up to date, you can sign up@vraletter.com check out our 14 day free trial there. And if you’re already a member and you haven’t checked out the new Vraletter.com as well, lot of great features on there for you. Now, if you’re tuning into this podcast and you’d like to read a transcript instead, we also have that on the new website as well. So again, check it out@vraletter.com. It will be a little bit more sporadic over the next couple of weeks here again as we gear up for the new year and what we expect to be a fantastic 2024 as we’re finishing the year strong here in 2023.

And as I mentioned earlier, another good day for our markets today. Again, a number of 52 week highs and all time highs today. But as we’ve pointed out here for the last couple of weeks now, we are at extreme overbought levels. But there is a but here, as we see it, the odds continue to be in the favor of this market moving higher. And we have a few reasons for that. And first one off the bat here is there’s not anything more bullish than a market that gets overbought and stays overbought. Now that might sound a little contradictory here because we talk about at extreme overbought levels. That’s when you want to be looking to take some profits, possibly.

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But at the same time, again, there’s nothing more bullish than a market that gets overbought and stays overbought. So when we look at our VRA investing discipline here, based off the VRA investing system, overbought levels is just not ideally when you want to be putting on new positions. There are traders out there who may like this environment. That’s not our style here. So we stick to what we know and what we know to work. So now as we see it is again either the time to be deciding if you want to hold positions into what we think is going to be a great 2024 or take some profits. We’ve done some of that here at the VRA, taking a little bit off the table. Still groups that we remain very bullish on long term, but maybe in the short term just a little bit too overbought.

And we’d like to see if we can get in again later. And if we have to get in later at an even higher price, that’s fine by us because we already took profits in those positions. But we’re not day traders here, so that’s not what we’re looking for. We’re looking for the best times to buy positions. We call ourselves opportunity traders here. So being at overbought levels like we are now, the opportunities aren’t presenting themselves as much again. As I talked about on my podcast last Friday as well. We’re big believers in dollar cost averaging when you do see opportunities like that approaching.

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But that being said, there are some very important themes going into 2024 that we need to look at here, especially when you’re at a market at extreme overbought conditions, it gets a little bit tougher to make decisions. So here are some of the themes that we see is very important for the end of this year and end next year as well. First and foremost, the Federal Reserve is done and everyone knows it now, especially after J. Powell’s FOMC meeting from last is now the market is pricing in rate cuts where they hadn’t even been talking about that a month ago. Now everyone seems to know it. So the Fed front running there is underway. When the Fed stops raising rates, it’s typically very bullish for the market until the next rate cut cycle begins. So that’s a huge boost for stocks.

We’ve already seen it here this month. As I mentioned, we’re going on eight weeks of gains here, the second seasonality. We are in the heart of the most bullish time of the year from October to the beginning of May, the most bullish time of the year, with December being right in the middle of that. And we’re approaching what is usually referred to as the Santa Claus rally as well. Now, Santa has come a little early this year as we’ve had a good strong first half of the month of December. The Santa Claus rally technically takes place for the last five trading days of the year into the first two trading days of the next year. We see this latest action as well, the front running of that rally. Third here is the market is continuing to broaden.

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We’re seeing it in the percentage of stocks above their 50 day moving average, percentage of stocks above their 200 day moving average. And I’ve got some more points on that here that I’ll cover in our market watch. But let’s just say this to lead off, it’s not just the magnificent seven leading the whole market higher, as people have said for the whole year. We’ve disagreed with that from the beginning, and now we’re really seeing some proof of it here. The magnificent seven being the seven largest stocks that are out there. Fourth here that we’ll also cover in our market watch is record levels of liquidity here. Cash on the sidelines. We’re starting to see that come back into the market, but we have record levels of cash in money market funds.

That is all fuel for the fire, for the move higher that we see coming as well. And fifth, again, a market that stays overbought or gets overbought and stays overbought is very bullish as well. So yes, we do remain bullish even at these overbought levels. As I mentioned, it’s not the time when we would want to be putting on new positions, but holding on to some is fine here, especially as we head into what we expect to be a great year. And we’ll continue to report on those here again after the new year as well. So that said, let’s dive in to today’s market action. Some really interesting action today as we did finish at or near the highs of the day across the board here. And just what we want to see, the group that we’ve been saying needs to play some catch up.

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Leading the way today, small caps up 1.94% to 2020. Next up is the Dow Jones, which hit an all time high today, has been on an incredible run, up roughly 16% now since the October lows. Up another point, 68% today, just 37,557. Let me take a quick look here. Just shy at the highs. I mean, we did finish just about at the highs of the day for the Dow as well. Next up, the Nasdaq hit a 52 week high today. Sells a little bit of work to do to get back to an all time high, but was up zero point 66% to 15,003 but I’ll point out here the Nasdaq 100 hit an all time high today.

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But going back to my point that the market is broadening here, we now have 92% of the total stocks in the Nasdaq 100 above their 50 day moving average. That tells you it’s not just seven stocks leading the way higher. And I have more of that coming here as well. But first, the S and P 500 hitting a 52 week high today, also up just under six tenths of 1% to 4768. But what was really interesting here is that the equal weight S and P 500, the ticker symbol RSP, if you want to find the ETF, just hit a 52 week high on Friday as well. And I believe a closing 52 week high today, too. And it did so quickly. In just 33 days, we went from a 52 week low in the equal weight S and P 500 to a 52 week high.

That’s an incredible gain. That’s the only time it’s happened since 1957. Only one time it happened faster, which was in 1982. The average stock went on to gain 46% over the next year. And the S and P 500, I’ll point this out as well, talking about the market broadening, the S and P 500 just got what is referred to as a degraph thrust, which is that 70% of the S and P 500 made fresh 20 day highs. That’s only happened six times going back to 1957. And the result, the market was up 100% of the time six months later with average gains of 14%. So we should be looking at an impressive next six months here for the S and P 501.

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Last point here to my other point earlier, record levels of cash on the sidelines. We’ve been talking about this for the last few months, that we have roughly $7 trillion sitting in money market funds. That means funds that are underperforming what the market did this year. We said that would add fuel to the fire going forward. Well, as we started to get 52 week highs and this cash on the sidelines, realizing, hey, we’re missing out on a party here and we’re tired of getting left behind. Well, just this week we saw the largest ETF in the world, which is the spy, just saw a record setting inflow on Friday of $20.8 billion, the largest one day inflow of any ETF ever. That is only going to continue as this cash continues to come off the sideline again. Fuel for the fire as we head forward from here.

So good day across the board for our major indexes. One other point, kind of going back to the beginning here of the Fed being done. Another factor that’s bullish for the market here as we see it in 2024, yields will continue to head lower along with the US dollar, both finishing lower on the day today as well. Next up, let’s take a look at our internals on the day today. After a slow last few sessions in the internals, we came back in a big way. Positive across the board today. Advancing stocks beating out declining stocks. Over four to one positive on the NYSE.

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Just under three to one positive for the Nasdaq. 52 week highs, lows also coming in strong with 232 stocks. Hitting 52 week highs on the NYSE to just 13. Hitting 52 week lows on the NYSE. Good numbers there. Over three to one positive on the Nasdaq as well. And lastly here, volume, strongly positive with 84.8% upside volume today on the NYSE and just over two to one positive for the Nasdaq. Next up here, looking at our sectors on the day today, we did finish with all eleven s and p 500 sectors higher on the day with six of those sectors hitting either a 52 week high or an all time high today.

So our leaders on the day, we were led by energy as oil has picked up some steam. I’ll get to that here in a minute. After that, communication services. That is a new 52 week high. After that, materials, 52 week high. Financials been an unloved sector since, well, for a while here. Also hitting a 52 week high today. Industrials, that is an all time high today.

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And let me get a quick look here. One thing I want to check. Transports had a good day today as well, hitting a multi month high. It’s a little bit of a side note there as the Dow Jones hit a new high today as well. We look for the transports to follow if you’re a fan of Dow theory. After the industrials, though, consumer discretionary 52 week high. Healthcare not far away from one. And then some of our laggards, if you want to call them that, they didn’t lead today, but the tech sector hit an all time high.

Semis just shy of their all time high today as well. So good day from our sectors on the day today. All around there again, all eleven s and p 500 sectors finishing higher on the day today. Finally here for today, our VRA commodity watch. One last important trend here that I wanted to cover. Gold up zero point 65% today to $2,053 an ounce. But the impressive factor here was GDX leading the way just what you want to see the miners outperforming the commodity itself. GDX, the gold miner ETF, up 2.67% on the day today and breaking out of its recent downtrend as well.

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That is a technical bullish breakout there for GDX. And another reason that we remain very bullish on it here was today another ETF XME, which is the metals and mining ETF, actually hit a 52 week high today. As we say here, often new highs beget new highs. We expect GDX to follow here. And as we see it, this is the group for 2024 that has the most potential, as I mentioned earlier, another factor that really helps this group that we see as a major theme for 2024, again, lower dollar and lower rates. If we continue to see that, which we fully expect, then we expect this group to go on a run. We’re still significantly off 52 week highs and all time highs from this group. So as we see it, this is the group with the most potential as we head into 2024.

Next up here, silver, up 1% on the day to $24.35 an ounce. Copper, getting close to breaking out to a multimonth high, up 1.44% at $3.90 a pound. And lastly here, oil, up 1.83% to $74.44 a barrel. Finally here for today, bitcoin continuing a bit of a pause here. Still hanging out above those $40,000 a bitcoin mark, which is good to see. Now down 0.7% on the day at 42,325 a bitcoin. Folks, that’s all that we have time for here today. Please be sure to subscribe to receive our VRA podcast.

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You can sign up@vraletter.com we actually don’t have the sign up link on there yet, but you can view all of our podcasts there and the transcripts as well, as I mentioned earlier. So we’ll be back kind of intermittently here with regular updates, fairly regular updates on big days, big information happening. But other than that, we hope you have a wonderful holidays, a very merry Christmas, and a very happy new year as well. So we’ll see you back here a little bit after the close for some updates. But other than that, we’ll see you back here after the new year. So hope you have a great rest of your day. We will see you back here soon for, for the close. I think Kip might be doing one tomorrow.

We’ll keep you posted on that one as well. So thanks again for tuning in. We’ll see you back here soon after the close.