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VRA Investing Podcast: Unpacking an Eventful Week, All-Time Highs, Sentiment Pulls Back – Tyler Herriage – March 22, 2024

In today's episode, Tyler recaps an eventful week in the markets, discussing the all-time highs in our major indexes & sectors, bullish sentiment, and the potential of the innovation revolution. Tyler breaks down the week's market ...

Posted On March 22, 2024Episode 1349
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About This Episode

In today's episode, Tyler recaps an eventful week in the markets, discussing the all-time highs in our major indexes & sectors, bullish sentiment, and the potential of the innovation revolution. Tyler breaks down the week's market action, highlights key sectors, and provides insights on the VRA investing system.

Transcript

Don’t look back because the market is closed. Good Friday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great end to your week out there. Hope you had a great week as well.

It was certainly an eventful week for our markets. Now today, compared to the rest of the week, was a relatively quiet day today. So we’re going to recap a bit of what we saw throughout the week.

For today, we had only one major index finish positive on the day. But on the week we finished higher across the board here, finished higher across the board for our major indexes that you want to see our biggest sectors as well. And just to give you a little taste of what that looked like, our major indexes were up between 1.6% and 2.85% on the week. That was the Nasdaq up 2.85% on the week. Wait until you hear what the semis did on the week this week. And just really all around, we had a lot of all time highs this week. Nasdaq all time highs, dow all time high, SP all time high, semis all time high, and a lot of our other sectors as well. But despite being at all time high levels, we’re seeing a pullback in bullish sentiment here, which we look at as contrarians, as another bullish indicator here.

[00:01:32]:
So let’s take a quick look. First off, this week. Yesterday we got back the AII investors sentiment survey where we have seen elevated bullishness here. Two weeks ago, we were at 51.7% of investors bullish who participate in the survey in just two weeks, despite being at all time highs, again this week, it is now down to 43.2%. So again, that’s a move that these people have missed out on. If they sold positions during that time, bears during that time. Again, despite hitting all time highs today and yesterday, bears have risen from 21.3% to 27.2%. So yes, it is still heavily bullish leaning there, but these are not the kind of bullish readings you see at a market top until we get to the point where you’re seeing 60, 65, 70% of investors are bullish.

[00:02:28]:
And it stays that way for weeks and months on end when no one is saying that this market could go lower. Everyone is buy, buy bullish. That’s the sign of a market top, and we’re just not seeing that here yet. At every slight hiccup in the market, you’re seeing investors rush for the exit right now. Again, that’s not what you see at a market peak. Secondly, on the sentiment side, and probably more important than the AI survey, has been the put call ratio this week. On Tuesday especially, it was elevated ahead of the Fed meeting. Now people buying puts that day got crushed as we got a great rally after Jay Powell had a rare outstanding performance this week.

But today we saw it again opening this morning. The put call ratio was above a one. And for those of you who aren’t regular listeners, if you’re not sure what the put call ratio is, the average put call ratio is a 0.7. So people buying typically more calls than puts. Anything above a one is seen as excessive bearishness from zero seven up to zero 99. That’s fairly within the realms of the norm for the put call ratio. But again, we opened at a one today. We peaked out at a 1.64.

[00:03:53]:
That is an extremely high reading for the put call ratio. And we finished the session still at a 1.3. It didn’t go below 1.3 for the rest of the day after that. So again, a lot of fear out there right now. Despite hitting all time highs today in the Nasdaq, we’re still seeing this type of bearish sentiment. So again, we look at that as another sign that this is not a market top here. That just isn’t where we are right now. As we talk about here often, we still see it as we’re in the early innings of a new bull market here.

Remember, this is just year two of a bull market that began in October of 2022. Every bull market that has gone on for at least one year has had a follow through year going back to 1950. I believe it’s 14 scenarios. 100% of the time that a new bull market has started, it has gone on at least two years. They average four years. We think it could be even better than that as we’ve been comparing this most closely to the bull market of the 1995 to 2000 dot meltup, when the Nasdaq rose 575%. With what we’re seeing from what we’ve called as well, the innovation revolution, this could blow the 1995 to 2000 dot melt up away even. But remember, it’s never going to be straight up.

[00:05:23]:
Trees don’t grow to the sky overnight. Even from 1995 to 2000, there are many market pullbacks, corrections of 10% or more, including a bear market of 20% or more in there as well. So again, it’s not going to be straight up. But our view remains unchanged that this is the time period where you want to be aggressively buying dips any dip that this market gives you is a gift. That’s how we’ve seen it since those October 2022 lows. That said, let’s take a look at our market action on the as recap this eventful week here for our markets, the Nasdaq was our only major index higher on the day today, up slightly zero point 16% to 16,428 again up 2.85% on the week this week. It was just shy of its all time high from yesterday, but still good to see tech leading on a day with the rest of the market lower. And not only that, just what you want to see leading tech is the semis.

[00:06:27]:
The semis managed to finish up zero point 59% on the day today, adding to their gains for the week. A massive week for the semis, up four and a half percent. So very good week there, Navidea. Also, I’ll point out here some of our megacap tech names. This is why I bring up Nvidia, because Nvidia finished the week at an all time closing high, just below the all time intraday high, but still will take it here as an all time high. So I bring up Nvidia to talk about Megacap tech. This has been one of our themes over the last couple weeks has been the rotational aspect of this market where we’ve seen mega cap tech slightly underperforming. We’ve really seen it in Apple mostly, but none of these megacap names right now are at extreme overbought levels.

You’ve got the other ones that are closer to 52 week highs than Apple, Google, Meta, Amazon, all of these names very close to all time highs and not at extreme overbought levels. So to the rotational aspect, over the last couple of weeks, we’ve seen a lot of breadth, expansion. The mid cap names really outperforming. In addition to the all time highs we’ve seen in our major indexes, we’re seeing it in the equal weight indexes as well as well as the mid cap indexes. So we’ve seen all time highs in the advanced decline line as well. So again, market broadening. But some of those names have gotten overbought. People have rotated, taken profits out of the megacap names and gone into those other names.

[00:08:01]:
Now that they’re overbought, we wouldn’t be surprised if we were able to get a rotation back into megacap, which allows those smaller names to take a pause while our markets remain at all time highs. Again, not near overbought levels here. So really good to see. But the broadening aspect of this market cannot be understated right now. Really good to see. Next up here, the S and P 500 was lower on the day, fractionally by zero point 14% to 5234. We did mark the 20th all time high of the year yesterday. Again, we really like to see that here.

And the equal weight sp, the mid cap sp, all hitting all time highs yesterday. And the internals were just incredible yesterday as well. So any concerns, kind of back to the broadening theme. One last point. Any concerns about this being a thin market here? There’s just a lot, way too much proof out there for that to be your thesis right now. The market is broadening. Next up, the Dow Jones down zero point 77% to 39,475 there. Still, the Dow Jones had a strong week this week, up nearly 2%, 1.97% on the week this week.

[00:09:19]:
And lastly here, the small caps down are laggard on the day, down 1.27% to 2072 for the Russell 2000. Still strong week here. IWM was still up 1.6% on the week this week. So all around, good week for our major indexes. And lastly here, as Kip covered yesterday, that I want to say here again is that the VRA investing system is at a very rare bullish level right now. Eleven out of our twelve VRA investing screens are bullish here. We remain long and strong this market. And as I mentioned earlier about the.com meltup, there were pullbacks along the way.

There’s going to undoubtedly be pullbacks along the way, but the key here is continuing to use those pullbacks as buying opportunities. Buy the dip remains the smart money play here. And we can’t encourage enough, if you don’t already, to begin monthly dollar cost averaging. We’re big believers in monthly dollar cost averaging here as well into our favorite positions. If you’re curious about what those positions are, come and join us@vraletter.com. If you’re not a member already, we have a 14 day free trial going on right now. You get full access to everything the VRA has to offer for a full 14 days. So come join us here.

[00:10:40]:
We’d love to have you with us. You can join@vraletter.com. Finally here for last thing here on our major indexes in regards to what we say here, often new highs beget new highs. Well, we’re continuing to see new highs. I already mentioned the equal weight indexes, but it’s global as well. The german Dax hit an all time high this week. Japan’s Nike hit an all time high today before pulling back into the close, we have other global indexes and ETFs either at or near 52 week highs or all time highs as well right now. And then you go to the economy and you have all time highs and money market flows, funds, excuse me, that is just cash waiting on the sidelines, underperforming the market that’s going to have to buy at higher prices at some point, adding fuel to the fire.

We got another all time high from us home prices this week. So a bullish boon there for the consumer and evercore. ISI, one of our favorite economic research firms, is now forecasting consumer net worth in Q. One likely rose 9% year over year. So despite all the gloom and doom you’ll see out there in the financial mainstream media, the consumer does remain strong. Now, it pains us to talk about this here. We never like to, I guess, cover the downside. We do like to cover the downsides as well.

[00:12:11]:
But the reality of the situation that Kip has covered here a lot is that there are two Americas, right? The divide between the two is getting broader and broader. So the consumer that’s doing well is doing really well. The consumer that’s not doing so well is not doing too well. And unfortunately. But the reality of the situation is those people don’t matter to the stock market. And our job here is to make you money at the end of the day. So like it or not, those people will continue to be left behind by our government here in the US. As unfortunate as it is, the best thing we can do is to make more money and help those people out.

As the old saying goes, it’s hard to help the poor if you’re one of them. And that’s always been our goal here, is to make our members money. That is our goal at the end of the day. So as Kip covered yesterday, yes, we are seeing some softness showing up in the economy, whether it’s employment, but that doesn’t mean a weak economy here. We’re not seeing the red flags of an economic top here either. More just cyclical changes throughout the system coming to terms with a Fed that’s going to be higher for longer. And on that note, the ten year yield actually closed at its lows of the week this week, down 1.24% on the day today to a 4.21. All right, next up here, let’s take a look at our internals.

[00:13:40]:
We were negative here, started out negative here this morning, and despite some attempts to rally from our major indexes, did not get back to positive levels, but again, we’ve been seeing really good internals as of late. So no big red flags from today here. But we did get some weaker than expected numbers declining stocks beating out, advancing stocks over right under two to one. Negative on the NYSE a little bit better, but not much on the Nasdaq. 52 week highs, lows were our bright spot on the day. This does tend to lag a little bit, both to the upside and the downside, but still coming in strong. Definitely not as good as yesterday’s numbers, but good here. NYSE 233 stocks hitting 52 week highs to just 20, hitting 52 week lows.

The Nasdaq came in positive here, but no big beats today. Lastly here, volume, probably our weak spot on the day today. Coming in roughly three to one. Negative on the NYSE, but the Nasdaq was positive today. So you’d like to see some positive internals besides 52 week highs to lows, but volume just slightly negative for the Nasdaq on the day to day. Next up here, taking a look at our sectors on the day. We finished with three out of our eleven s and P 500 sectors higher on the day today. We were led by communication services, just below a 52 week high here.

[00:15:07]:
After that we had tech, also just below a 52 week high. And then utilities makes a little bit of sense as yields were lower on the day. Our laggards on the day were real estate, financials, consumer discretionary and materials. I will point out here that energy also finished lower, but first hit a 52 week high earlier in the session. Same thing with financials as well. Hit an all time high earlier in the day before finishing lower on the day today. Finally here, our VRA commodity. Watch a pullback day here as well.

Gold now down zero point 83% to $2,166 an ounce. Silver down just under seven tenths of 1% to $24.83 an ounce. Copper back below $4 a pound here, down one and a half percent on the day at $3.99 a pound. And oil trying to hang on above $80 a barrel here, down three tenths of 1% to $80.80 a barrel. And finally here for today, bitcoin, down 3.27% to 63,330. Gotten a pullback this week from bitcoin, one that we will use here as a buying opportunity.

Folks, that is all that we have time for here today. Please be sure to subscribe to receive our VRA podcasts every day after the market close, you can sign up@vraletter.com click the podcast link at the top you can see our transcript and everything else we have to offer there as well, including our 14 day free trial out. So thanks again for tuning in. Until next time, we hope you have a great weekend. We’ll see you back here on Monday for the close.

Podcast Newsletter

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Time Stamps

00:00 Markets finished mixed on the day, higher on the week
05:23 Markets experience fluctuations, but tech shows strength.
06:27 Semis gain, Nvidia at all-time high. Rotation seen.
10:40 Global indexes and ETFs hit new highs.
13:40 Stock market rally weakened, but no major concerns.

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