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VRA Investing Podcast: Welcome to Q3. What To Watch For The Second Half of 2024 – Tyler Herriage – July 01, 2024

In today's episode, Tyler recaps a fantastic first half of 2024 and points out how this bodes well for the remainder of the year, with historical trends suggesting continued growth. He also dives into notable market movements, esp ...

Posted On July 01, 2024Episode 1414
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About This Episode

In today's episode, Tyler recaps a fantastic first half of 2024 and points out how this bodes well for the remainder of the year, with historical trends suggesting continued growth. He also dives into notable market movements, especially in tech stocks like Apple, Amazon, Tesla, and Microsoft, which are at/near all-time highs. Tune into today's podcast to learn more!

Transcript

Don’t look back because the market is closed. Good Monday afternoon everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great weekend out there and a great start to your week as well. And we have officially made it to the second half of 2024. We wrapped up last week, the end of Q two, the end of June, and now we’ve got a lot to look forward to here for the second half of 2024, which we expect to be a very good second half of the year here. But first, let’s quickly recap what was a fantastic start to the year as well. The S and P 500 in the first six months of 2024 has powered ahead by 14%.

.4% that is the 16th strongest first half performance since 1928 for the S and P 500. So you can tell it’s not exactly an extremely rare occurrence, right? That’s a pretty strong number for rallies, over 10% plus for the first six months of the year. And what it means going forward is even better. It bodes very well for the second half of the year, as Ryan Dietrich pointed out over the weekend that when the market is up double digits for the first half of the year, the full year, the full rest of the year has never been lower and has finished up 25 and a half percent, or, sorry, 25.1% on average. And that last six months is also higher 88% of the time. So there were a few cases in there where the market still finished up on the year with a rough second half, but 88% of the time is pretty good and it fits in perfectly with what we’ve been saying going back to the October 2022 lows. After we completed the first year of Arbol market in October of last year, that’s when we began alerting our members and listeners here on the podcast of a fantastic secondary statistic here. And that is going back to World War two.

[00:02:24]:
There has not been a single bull market that went on for at least a year that did not complete a second year higher as well, 100% of the time going back again to World War two. So as we still have a few months left here until we get to that two year mark, we think it’s going to be a phenomenal next few months. And really, like I said, a phenomenal second half of the year because we again, we aren’t even through year two of this bull market yet. So this is still early innings here. Bull markets average lifespan is just about four years, and we saw before COVID a phenomenally long bull market as well, that this has the potential to outdo here. I’ll say it one more time. I know we talk about it here often on the podcast, but with as bullish as we are, we can’t stop talking about it. That we have compared this period most closely, in our opinion, to 1995 to 2000, when the Nasdaq rallied 575%.

I’ll point out that during that time, in that massive move higher, yes, there were pullbacks along the way, including a technical bear market of a pullback of over 20%. But as we look at that time period, if we were to experience something like that, which we don’t see anywhere in the near future, but somewhere along the way to 2030, where we have made our long term call here of Nasdaq 40,000 by then, Dow Jones 100,000 by 2030. So any pullbacks that we were to get along the way we would use as buying opportunities. Now, I know a 20% bear market doesn’t seem like a pullback, but go look at a chart of the Nasdaq from 1995 to 2000. A 20% pullback after a 200% move looks very like a just a drop in the bucket of the move higher that the Nasdaq had. So it’s tough to see the forest for the trees when you’re in the moment. Right? But remember that comparison to that time period. And one other comparison to that time period is that yields were much higher during that time period, averaging between the five and 7% range the entire time.

We aren’t even at 5% on the ten year yield right now, and it has very many people freaking out even after, especially after a day like today where the ten year yield was up over 3% on the day. I’ll get to that more here in a second because there was, the action in tech was even more impressive on a day with the ten year up over 3%. But right now, as we head into the second half of the year, we start this year, or start the second half with eleven out of twelve VRA investing screens bullish. That’s a record level of bullishness in our screens here. So again, very early innings here. And now that we’re in July, nothing has changed because this is, in fact, one of the most bullish month of the years. In fact, for the Nasdaq 100, it is the best month of the year over the last ten years now. And we started it off on the right foot here today with the Nasdaq leading the way.

[00:05:47]:
Now, I know I’m jumping around a little bit but I’ll get to our market action here in a second because this was an interesting start to the week that saw a bit of a pattern change from what we’ve seen over the last few weeks we’ve talked about here. If you’re a regular listener, this rotational aspect to a bull market that is part of a healthy bull market, that when the tech names, the generals get overbought and need to take a little bit of a breather, you see the value names coming to life. As many people often say, the other 493 stocks in the S and P come to life when the generals get overbought and need to take a pause. Now, a lot of those are value names. So over the last couple of weeks, we’ve seen small caps having short terms of outperformance, the Dow having short periods of outperformance as well. And today, we started the day the Dow was up almost 300 points, a little over 250 at the highs of the day. And at the time this morning, the Nasdaq and the semis were negative. So we’re looking at that saying, okay, you know, still part of this healthy rotational aspect.

The generals have been acting much better as of late. So, no, no concerns for us here. But as the day went on, we saw the value sectors start to head much lower. The Dow, after being up over 250 points, still finished higher on the day, but just by 50 points. While we had the Nasdaq finishing at the highs of the day today, we had the semis finishing at the highs of the day today, and the Nasdaq 100 as well, finishing at the highs of the day. And again, the generals really had special performance today. Apple, which got a lot of hate earlier this year, has very recently gotten back to all time highs, but still been a very quiet move. Not as much love from the major analysts like you see on this stock pretty often.

[00:07:48]:
Well, today, just three points away here from an all time high. Amazon also up over 2% on the day to day. Really across the board here, generals. Microsoft hit a new all time high today as well. Up over 2%. Meta finished higher, but just slightly and really across the board here. A good day today. And then, of course, you know, our favorite is Tesla here, which finished up over 6% on the day today.

And I’ll get to that here in a second as well. I got a few points I want to make about Tesla, but kind of again, jumping all over the place here because it is an all over the place kind of week this week. Cause it is a holiday shortened week. We have the July 4 holiday on Thursday. And then I actually didn’t know this until today. It’s even shorter of a week than that. Wednesday will just be a half day of trading as well, and then a full day back opened up for Friday. But despite the day and a half of the markets being closed this week, there’s still a lot of important action to come here.

First, it really kicked off today as we had US ISM manufacturing data, which came in weaker than expected. You know, another sign here that people are looking at that this us economy is slowing, right? A big part of that being how restrictive the Fed has become here. Now, in our view, this is not the time to panic. This is not weakening or this is not contracting economic data. It’s just weakening economic data. A slowdown, not a recessionary type of reading that we’re seeing just yet. But that didn’t stop the talking heads from coming out in full force to fear monger today that, oh, a certain number of analysts predict a recession. How many times have we heard this right? It’s one of the main reasons we were so bullish in 2021.

[00:09:50]:
After 20, 2100 percent of economists called for a recession in 2021. That didn’t happen until we did get a bear market in 2022. But if you would have sold in 2021, you would not have been very happy with your performance if you were in money market accounts per se, versus being in the market in 2021, where the S and P nearly rallied 30% that year. Again, 100% of analysts were looking for a recession then. So bring it on. Bears keep getting louder and louder. You know, we’ve seen the fear and greed index, despite being at all time highs, being in fear mode for a big part of this rally. It is now back to neutral here.

And we’ve seen an increase in bulls in the AAIII, but that really has stagnated as well here. So that’ll be an interesting one to see this week. But so after, now that we got this economic data back, after that economic data came in, excuse me there. The ten year did gap up on the day. Today was up big, over 3% on the day now to a 4.47. Still, as we see it, this is no surprise to us. We talked about it on the podcast over the last couple of weeks that yields had hit oversold readings, short term oversold readings, and that a bounce back from oversold readings is not a huge surprise. This downtrend that we’ve seen going back to the peak at just below 5% in October of last year remains in place here we could even get a few more.

We wouldn’t love to see more days in a row like today with yields up 3%. But this market, in our view, could handle it here, just like I said earlier, it handled it during the 1995 to 2000 melt up. We think it can handle it again now, but ultimately our view remains unchanged. This is still a downtrend. If you look at the charts, you can still see a clear downtrend for yields. And we expect over the medium to long term that yields will continue their move lower. Make no mistake about it, the Fed here, while they might talk a big game about hire for longer, and we’re going to be restrictive. They cannot wait to get back to easy money policies.

[00:12:10]:
They can’t wait to get back to a low interest rate environment. Make no mistake about that. Here. They’re looking for opportunities to do so. They’re not looking for opportunities to hike rates here again, despite the Fed speakers that you might see. Right. But also coming up this week, we do get more economic data. Tomorrow we’ll have jolts data Wednesday jobless claims, and on Wednesday, Fed minutes as well.

And on that note, Jay Powell will be speaking tomorrow as well. So stay tuned. We don’t expect anything impactful for the markets from Jay Powell tomorrow. Depends on what Jay Powell we’re going to get though, right? As we’ve talked about, he’s become increasingly unpredictable. We doubt he’ll say anything that really spooks the market here, although he has a bad reputation for holiday weeks. If we remember the 2018 Christmas from hell, where Jay Powell continued to hike rates into what is a notoriously illiquid time for the market, and specifically the bond market is the Christmas holiday. And they hiked rates, which led to the massive sell off we saw that year as a Christmas Eve half day of trading, the 24 December, and Jay Powell just ruined everyone’s Christmas. He was the grinch that year.

So we know, not a great track record on holiday weeks, but let’s just see if he can stick to the script tomorrow. Again, if anything impactful comes out, we’ll talk about it here. We don’t necessarily expect that, and nothing really out of the way that we expect to see from the minutes on Wednesday either. Then after the holiday this week on Friday, we’ll get the highly anticipated economic news with June’s jobs reports coming out on Friday. So stay tuned. We’ll be reporting on that here with this jobs data that we’ve seen really for the last year now, where I believe it might even be over a year now where every single jobless report, job report, not jobless jobs report, has been revised lower in the following month. So we’ll see if we continue to get those revisions. The labor market is much softer, I will say, than what we’ve seen in the data over the last year, and you have to look at the revisions to really notice that.

[00:14:38]:
So we’ll see if that continues as well. So should be an exciting holiday week here. We’re already 14 minutes into this podcast, and all we’ve covered is what is coming this week and a little bit of what we saw today. But we’ll get to our markets here in just a second because there’s still some fun continuing here, but it really doesn’t start till next week. And that is that. Now we are in Q three, Q two earnings season is upon us. This year has been flying by. It seems like we just got through with Q one earnings and we still had a few over the last couple of weeks.

There’s always those late comers to earnings, but we expect Q two to have been a strong quarter for earnings here as well. With the holiday week. I believe at least that the earnings timeline kind of gets pushed back a week here. We don’t start now until next week, which the big banks are always kind of the unofficial start of earnings season. So we’ll have a few smaller names earlier in the week, and then next Friday we really kick into high gear. We’ll get JPMorgan Chase, Citigroup, wells Fargo and other big banks and a few other big names in there as well, like Delta Airlines, which will be next Thursday, and then the week after that will start to kick into high gear. But big tech doesn’t start reporting until later in the month, I believe. So stay tuned.

We’ll be reporting on that here every day at the market close. If you haven’t signed up already to receive our podcast every day at the close, you can do so@vraletter.com. we’d love to have you here with us, and as always, any questions, please send them in to support insider.com dot. Your feedback really has been incredible. We love getting research from our clients or even just an anecdotal story that either disagrees with what we see in the market or maybe can be another point that you might hear right here on the podcast, could see it in our blog. We’ve got a phenomenal VRA community here, and we always love your feedback and getting pieces of research like that from you. What’s so interesting about what we do is exactly that is the community and where you find experts in seemingly unexpected areas. You know, we’ll get an email from somebody who’s very in the energy space or in the nuclear space or works with semiconductors and has a career in that industry.

[00:17:07]:
We get some of our most valuable insights from our members here, and we can’t thank you enough for it. We really do appreciate it. So come and join us. If you’re not with us here already, again, you can do so at vra. Letter.com. podcast is free. Comes out every day at the market close. But while you’re there, check it out.

We’ve got a 14 day free trial for our daily updates, our VRA portfolio, our special reports. You get all of that for free for 14 full days. So come and join us. We’d love to have you here with us. All right, that said, we’ll finally move on to today’s action today. As I mentioned earlier, an interesting swing there, again agrees with our rotational theme where we, the generals had gotten overbought, needed to take a little pause. Now they’re back off to the races. As we talked about, we just saw an all time high from Microsoft.

You get Apple right in the range. You got basically all of these tech names right in the range of all time highs here, which is very good to see. And we’d love to see them continue to do their jobs as the generals leading the way here. But the Nasdaq up eight tenths of 1% on the day to day. Tech leading the way, exactly what you want to see, to 17,879. I will point out that we do like to see the semis leading tech. And while we didn’t get that today, the semis were able to rally from this morning where we sold off this morning, able to rally back to finish positive up just zero, 7%. But that is a high of the day where we finished.

[00:18:42]:
So, hey, we’ll take it. Next up, the S and P 500, up 0.27% to 5475. After that, the Dow Jones up just over one 10th of 1%, up 50 points on the day to 39,169. So keep in mind there, yes, the all time high is above 40k, but even with a little bit of slower action, kind of sideways action, really, since that all time high, we’re only less than a couple percentage points away from that all time high. So again, no concerns there. Small caps had a really good into the week last week. Could not continue that outperformance here today. Lagging today down eight tenths of 1% to 2030 for the Russell 2000.

Next up here, taking a look at our internals on the day to day. You know, on a day with a lot of green on the screen, really, especially for our major indexes, you’d like to see better internals. So a little disappointing on the internals side today, but no real red flags. More has the feeling of a slow summer day of trading, as now that we’ve kicked off July, we are really in the heart of summer here. And so you do get a little bit lighter volumes. Nothing to be afraid of there. Kind of par for the course. But again, on a day with three out of our four major indexes positive, a little disappointing on the internals.

We had declining stocks, speeding out, advancing stocks for both the NYSE and the Nasdaq. It was over, two to one negative for the NYSE, but a little better for the Nasdaq. Next up, 52 week highs to lows. One of our two bright spots here today did come in positive for the NYSE, although just under three, one negative for the Nasdaq. Lastly, volume did come in negative for the NYSE, but our second bright spot of the day, Nasdaq volume, did manage to come in positive. Again, though, all around here, pretty light numbers on the day. You know, whether that’s summer trading or the holiday short week, maybe people kind of getting out of the office early with Wednesday and Thursday being a half day and a day off. We’ll see, we’ll see what the volume looks like for the rest of the week.

[00:21:02]:
This week. Again, though, it is an exciting week, so it’ll be a fun week to watch what the markets do, even if there are, there is light volumes and lot of people out of the office. All right, that said, let’s take a look now at our sectors on the day to day. If you just saw this, you might have thought it was a little bit worse of a day. We had just five out of our eleven sectors finishing higher on the day. Tech, just what you want to see. Leading the way, followed by consumer discretionary, financials and then communication services. Also.

Energy, though, did rally back to finish positive on the day. Did not get back to its highs of this morning, but not surprising here. Oil having a big day today, getting above $83 a barrel for the first time since April. So I’ll touch on that here more in a minute as well. Then for our laggards on the day today, we did have materials leading the way lower down one and a half percent, kind of one of the value sectors we’ve talked about. But it peaked out a few months back, no major concerns for us here, but this is the lowest level that we’ve seen in the materials in a couple of months since April. Again, no major concerns, but we’d like to see them performing well. After that, we had industrials and real estate as our laggards on the day.

Both of those down just right about 1% on the day to day. I will point out here, you know, I mentioned the real estate sector just now, as it is part of the S and P 500 sectors. But for our purposes, we like to use the home builders. We think that’s a better tell of what to expect from the sector as the real estate sector is made up mostly of reits. But we did see a multi month low here from the home builders as well. Again, no major concerns for us here. We look at this as an opportunity. We traded nail, which is a three time leverage housing home builder ETF.

[00:23:00]:
We are looking for an opportunity to get back into that position. We aren’t quite there yet, but stay tuned. Come and join us at VRA letter. We’ll alert you to when that time comes. All right, finally here for today, our VRA commodity. Watch where we did get some green on the screen today. Gold now up just slightly one 10th of 1% to $2,341 an ounce. Miners pretty much flat on the day.

No real action to report about here. Next up, silver, up six tenths of the 1%. Still below $30 an ounce for silver there at $29.75 an ounce. So still try to get back above that $30 range. Silver has made a nice base, though, here at about the $29 range, which has served as nice support. You know, look for that to keep building. As they say in technical analysis, the broader the base, the higher in space. So this is a short term base here, but still healthy action.

Next up, copper, up just over half a percent to $4.41 a pound. And oil, as I mentioned earlier, getting back above $83 a barrel today. Up 2.3% now to $83.41 a barrel for oil. And lastly here for today, bitcoin has had some big action. It really began yesterday. I’m gonna pull up a chart here. I want to make sure I get this exactly right for you. There we go.

[00:24:35]:
Started off yesterday at 60,000, was below 60,000 just a couple days before. That. Has since rallied significantly all the way up to 63,196. A bitcoin here. This is a group we do remain long term bullish on here. We’ll use pullbacks and dips as buying opportunities. Folks, that is all 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 that podcast link at the top and share with your friends as well. We’re always looking for new members of our VRA community here. Again, I can’t say it enough. Thank you for being here with us. We truly have such an amazing community here and we could not be more grateful to all of you for it. So 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 S&P 500 first-half performance predicts strong second half.
05:47 Bull market rotation between tech and value.
06:53 General performance positive, Nasdaq and Dow fluctuate.
10:31 Bull increase in AAIII has stagnated. Economic data shows ten year gap up.
16:02 Daily podcast at market close, seeking feedback.
17:58 Tech stocks lead the market, hitting highs.
20:11 Stocks decline, Nasdaq fares slightly better. Light volume.
23:25 Silver prices stagnant but showing healthy signs.

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