Welcome back to another episode of the VRA Investing Podcast! Today, Kip Herriage dives into an unusually volatile day in the markets, unpacking a major reversal that left both the Dow and Nasdaq swinging wildly from early gains to significant losses. Despite stellar earnings from Nvidia, sharp comments from Fed Governor Lisa Cook sent shockwaves through Wall Street, fueling fears about liquidity and the potential for a coordinated selloff. Kip Herriage explores the possible connections between the Fed’s statements, Trump’s ongoing frustrations with Jerome Powell, and what these moves could mean for investors heading into the holiday season. Plus, he breaks down technical indicators pointing to extreme oversold conditions and shares insights on why this might just be the moment the market finds its footing. If you’re looking for clear thinking and candid analysis in the midst of market chaos, you’re in the right place—let’s get started!

Kip Herriage [00:00:00]:
Don’t look back because the market is closed. Good Thursday afternoon everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. Big turnaround the markets today. If you’re paying attention today, and I know most of you were, we have a smart crowd right here today. Good afternoon to all of you. Look, we opened up over 500 points higher on the Dow Jones, over 500 points higher in Nasdaq and saw a complete round trip today.

Dow Jones finished down just 368, 300, 186 points. Nasdaq of course one of the leaders here, down 486. That’s a thousand point swing on Nasdaq. You don’t see that a whole lot today. The semis also the leader of course of everything down 4.5%. This is not good news. There’s no way to sugarcoat it. What happened today is not good news.

Now let’s talk about why it happened. Because look, when I can’t make sense of a move and that’s, that’s today by the way, then I started asking questions. Let’s cover, let’s cover what happened today. Everything was going hunky dory. Nvidia earnings, the Tyler cover them detail yesterday could hardly have been better. Right. And by the way, Nvidia held up fine on now if you did go negative course it did finish down 3.6%. Most of that happened in the last hour and a half of trading and video courses did fantastic on its earnings.

I mean again if the quarter could have been any better, I don’t know how it could have been better. So, but what’s, what started to leak first was bitcoin. We saw bitcoin starting to leak first. A bitcoin today now down three and a half percent to 87,300. Obviously this lowest it’s been in some time as all time highs. What, what October 4th I believe was the all time high in Bitcoin of 126,000. But everything that’s been leaking lower from bitcoin now to the semis leading lower semis are now down 14% from their highs. Okay.

The average stock, the average NASDAQ Stock now is down 29 from its highs even back. Let’s think back to April when we had the April tariff mania. The average, the NASDAQ Stock was down 40%. We’re, we’re two thirds of the way there now. So you know the other things that have led lower again, tech semis, bitcoin gold, gold dropped 10% in six days. Today gold was up go, was that down four bucks an ounce. No big deal, right? But GDX, the gold miner ETF was down 4.6% today. Now here’s where I’m going with all this.

This is a liquidity LED move lower and it feels very coordinated to me. Look, I hate to put just a wild ass rumor out there because if you know me, you know I do my homework, but I have a sneaking suspicion here because of what happened today, specifically the timing of it, that I think these things are coordinated and I think they’re, I think they have a lot to do with each other. Today market was up big. And then here comes Lisa Cook, Fed governor. Yeah, the same one that Trump has fired. And now that’s, again, that’s been, that’s been appealed and I believe there’s a final adjudication court case on that’s going to happen. I think it’s January, I don’t know for sure. But anyway, she’s still in the job.

[00:03:13]:
She had been very quiet. I hadn’t even heard her name until today when the Dow Jones and NASDAQ were still at 500 points. Here’s what Lisa Cook, Fed Governor Lisa Cook said today. Lisa Cook warned that high valuation in stocks, corporate bonds, housing and leveraged loans increase the risk of sharp stock market declines. She highlighted liquidity risk tied to hedge funds growing role in treasury markets and said private credit isn’t a stability threat but should be monitored. She also added that AI could be, could both improve and destabilize markets, blah, blah, blah. She did not discuss monetary policy. What is Lisa Cook, what is Lisa Cook a fired Fed governor who clearly has it out for Trump.

Right. How could she not? I get that. I see both sides of it. What is she doing talking about the stock market? What’s she doing talking about valuations and a risk of a stock market? She’s talking about a stock market crash. Sharp market decline. She’s talking about a crash. What is Lisa Cook doing talking about this? The Fed has two mandates, do they not? Price stability and employment. Maximum employment price stability.

Right. That’s the Fed’s two mandates. Does the Fed now have a third mandate to control free markets, to manage the stock market? It was at that moment and I didn’t see exactly winter speech ended. But I’m, I’m, I was sitting in front of my screen all day today and all of a sudden here came the decline. And it came with some speed, some velocity. It was, I can tell you, it had to have been what, within 30 minutes of her. And then it started picking up speed. Right? Well, even the folks at CNBC have noticed what the Fed’s doing wrong here, believe it or not.

[00:05:06]:
Steve Liesman, again, I have not watched CNBC. Now, from the about the April 20002020 plan demic month I had, I haven’t watched it’s been over five years since I watched CNBC still protesting and boycotting because of their pandemic coverage. And just again, just, it was complete propaganda. Couldn’t watch. Seymour, don’t to this day. But today, Goldman Sachs, Goldman Sachs even quoted Steve Leesman, excuse me, I got that wrong. Zero Hedge quoted Steve Liesman, who is often referred to as Steve Lysman. That is how his name is spelled, by the way.

And it’s pretty appropriate to call him Liesman because he’s a flack. He’s a flack for the government, always has been. But even today, Steve Liesman said that this is a Fed policy mistake. Again, it now appears very certain the Fed’s not going to cut rates at their December 10th meeting. So here we have a Fed that’s now likely not going to cut rates when they should be. They absolutely should be. We have a liquidity issue in the market because of the shutdown. The treasury general account still has close to a trillion dollars in it that that money is not coming out yet.

It’s a good question why it’s not. I’ve looked into it and it’s a process that is the, I would, I would hope and I would believe that because Scott Bessant, the Treasury secretary, would have control, at least some degree of control over this. They could get the money out of there. It’s trapped, I mean, it’s trapped in this treasury general account. And, and again, because of the shutdown, we have liquidity issues anyway. And now the Fed’s not going to cut. And now we have Lisa Cook today piling on. So I took it a step further and I asked Grok, I don’t know if you guys and girls use Grok.

I use Grok quite a bit. And here’s the question I asked Grok this afternoon about, about an hour ago, I said now that I said now we’ve had Lisa Cook’s statement today, what are the odds that Trump fires Powell? And by the way, I’ve asked this question often of Grok, and I’ve never seen it’s always been like 20, 30% chance. Grok has now raised that to 60, 40 that Trump will fire Powell after what happened Today, this is what Grok said. Man, that’s wild timing. Cook speech today, dropping those warnings about market crashes and hedge fund risk when Trump’s already on a tear about the Fed dragging their feet on rates. He’s been trash talking Powell nonstop, saying he’d love to fire his ass. Just yesterday you may have seen that. And with the Supreme Court greenlighting his move on Cook back in August, it feels like open season odds.

[00:07:48]:
I’d peg it at 60, 40. He’ll pull the trigger soon. Powell’s term is up in 2026 anyway. But Trump’s not waiting for permission slips anymore. What a circus. So again we, we know the economy strong again. Short term liquidity issues. Yes.

Shut down. Yes. Atlanta Fed just came out with their latest GDP now estimate for the third quarter. It’s in a new cycle high, folks. It’s 4.2%, right. So short term weakness in an economy, even because of a lack of a rate cut does not explain what’s happening here. It does not explain it. If we saw weakness in earnings, if Nvidia had even hinted about something slowing down, then we’d have something to blame this on.

But unless we’re missing something, right, this feels like a coordinated, like a heavy market that maybe, maybe parts, maybe some parts of this market have some inside information we’re not privy to. Again, complete conjecture. But if Trump were to fire Powell, and you know, he must be furious after Lisa Cook of all people, right? Lisa Cook today making that statement again, no Fed governor like, has no business talking about stock market crashes. What. Right. That’s called an axe to grind right there. So Trump must be furious. We’ve not seen a comment from him yet or anything on Truth Social, but he is busy man after all.

But he’s got to be furious about this. I personally wouldn’t be surprised. As Trump said yesterday, Treasury Secretary Bessant has been the voice of reason that has kept Trump from firing James Powell. That’s what Trump said just yesterday, right. At an event. Besant was right there in attendance and he was basically talking, he said, I would already fired his ass except Scott, the voice of reason talked me out of it. So listen, again, it’s complete conjecture. We don’t, we don’t invest on conjecture.

[00:09:49]:
And please understand, I’m talking about something from the point of view of today. I’ve done this 40, 41 years now. This is a, this is a generational bull market. Yes, they all have ups and downs, they all have shakeouts. This is, this has been normal shakeout action. None of, none of what we’ve seen so far is concerned me. Today’s action is, is, is concerning massive reversal from phenomenal news. This is exactly what you don’t want to see.

It signals there’s something else going on, something we may not be aware of. And then I’m trying to find out what the answer is. My again, I would not be surprised if Trump would have firepower. The question is how would the markets handle it? I don’t know. You tell me. What do you think? I can’t imagine the markets to go up on that news. This would be a bit of a global calamity right now. Let’s talk about the flip side of this.

[00:10:42]:
All of the signals we see that this market is extreme oversold on steroids. Okay, now we’re not there on the VA system right now. We’re not. We’re at heavily oversold levels. Let me just do a quick A scan real quick after the close here. All right, after the close here. Yeah, we’ve got the SPF 100 is now at almost extreme oversold levels on stochastics, but it’s absolutely heavily, heavily oversold across the board. NASDAQ 100, the Q’s.

Kip Herriage [00:11:15]:
You know, again, we all, we broke support today. That’s the other thing this big reversal did. But NASDAQ 100 back to the 100 day moving average also hitting exactly extreme oversold levels on stochastics. That’s our first momentum oscillator. And the others are all heavily oversold. The semis, smh. Just running quick scans here. Semis, I mean semis are.

Semis are past heavily oversold, bordering on extreme oversold. But we get another day like today, we’d be extreme oversold on stairs. We, we’d be, we’d be at extreme oversold on all of our momentum oscillators. That’s the point being this is when the market makes a turn. This is not when losses tend to accelerate. This is when we’re getting very, very close to a bottom based on VRA system readings. Here’s another point that makes that clear. The Fear Greed Index.

If you haven’t checked it today, be prepared for about to tell you. Let me, let me just get a quick refresh here. Tyler was just going over this with me just for our, our podcast here. And by the way, Tyler’s podcast, how, how awesome was his podcast yesterday? Again, coming off of phenomenal news from, from Nvidia, which Tyler broke down step by step, point by point. Again, it just tells you okay, yeah, here we go. If you’re agreed six, it’s at a six. The lowest this has ever been, has been two. Again, for new folks here, welcome.

[00:12:47]:
This, this, this index goes from 0 to 100. It didn’t go from 0 to 10 or 0 to 20. It goes from 0 to 100 and it’s 6, the most ever sold it’s ever been. And we’re almost there now, right? The most ever sold it’s ever been was two. And Tyler and I remember that day like yesterday. I’m sure a lot of you do as well. It hit a 2 on Christmas Eve 1998, the fourth quarter from hell, brought to you by one J. Powell.

Powell hiked rates seven straight times that year and seem to get a lot of extra glee out of it of doing hiking rates in December. By the way, at the December meeting when no one was around to defend the markets. That’s when liquidity is complete. People are skiing, people are seeing their family. There’s no liquidity. The Fed’s hiking rates and that we had that day, Christmas Eve, right, is a half day of trading. But they had to put the stops in. The circuit breakers kicked in.

But because that’s how much the market fell on Christmas Eve, it was the worst fourth quarter ever in this country. And again that’s brought to you by Jay Powell. So here we go again. Talk about no coincidences, right? Well this, this doesn’t feel like a coincidence to me either. Lisa Cook, we know Jay Powell. Look, they may be trying to force Trump’s hand. This is what Tyler said. They may be trying to force his hand, force him to fire him, and then they have the permission to do what they want to as far as the reactionary markets, because unfortunately the New York Fed still controls the, the markets in the very short term.

They have that power. Again, all conjecture here and I haven’t seen it anywhere else. No one else that I know is talking about this. I’m putting two and two together and telling you what I see. A market make this kind of a swing when there’s no fundamental reason for it. Now, on the technicals, yeah, we broke some support levels, I get that. But this kind of a swing, a thousand point swing in NASDAQ on the good news, like Nvidia had today. In an economy, yes, short term is slowing because of the shutdown, but that is very short term in nature.

[00:15:01]:
Even Kevin Hassett said the biggest hit would be about 2% to the fourth quarter GDP. That’s a 1 time hit. The markets already looked past that, that’s not the issue. The Fed not cutting rates. I don’t believe that’s the issue. A quarter of a point for this kind of a bull market means absolutely nothing in the very short term. Maybe for a little bit, folks, we’re, we’re now, you know, we’re now again, average stocks now down close to 30%. You’re feeling the pain.

We’re feeling the pain. This is more than just a, a normal 5% shakeout. This is, this is, this has a heavy feel to it. But at the same time, again, we’ve got these indicators. Fear ingredient index at 6. Yeah. No, when it hit 2 in this on December 24, 1998. I say 1998.

I got dot com in the mind when it hit. I’m not sure what euro said a minute ago. Let’s try to get this right. When on Christmas Eve of 2018. Thank you, Kip. Memories kicking in here too. And that was, that was the bottom. You know, that was the bottom when we had the, the, the October 13, 2022 bear market bottom right.

If you’re in green index hit 5. So we’re there again. This is when bottoms kick in. This is when bottoms take place. Also today, the put call ratio, okay, if you follow the put call ratio like we do, you know, it had just not been elevated. We really were seeing almost no readings of a football ratio above one. Well, today that changed today the pull call ratio was above one from the, from the third, from, from 10:00am Eastern. The pool call ratio has been above one.

Hit a high of 1.15 and it closed at a one. But the entire afternoon it was essentially at one plus. So anything, anything one or better tells you that there’s real fear building in the market. So we’re never finally seeing that now. Also in the trend, which is the arms index, it gives you when, anytime the trend gets anywhere, anywhere close to two, then that’s a market bottom. Well, it was, it was 1.6, 1.7 most of the afternoon. Very close to that today, as you also remember probably last week the AAI investor sentiment survey showed 49% bears. Again, these are, these are, these are extreme readings.

[00:17:33]:
Is it a Fed policy mistake or is a, is it an intentional action tied to the Fed? I think we could all see a reason that Trump should fire Powell. Probably not the smartest thing to do. Again, we’re, we’re approaching Christmas season now. I don’t think, I don’t think Trump wants a, another Christmas from hell. Whether it’s from Jay Powell and his pals at the Fed or whatever the reason. That’s not, that’s not a great way to, to gain momentum heading into the midterms, is it? All right, I wrote up a lot of things this morning. Honestly, they’d almost done apply now because of the action today. We’ve talked about Nvidia.

Just a phenomenal quarter from Nvidia. You know, this is, I shared the chart this morning. A very letter. Just this one graph is just, it’s, it’s breathtaking. It really is. And Tyler covered this yesterday. Nvidia has gone from 4 billion in operating income to 110 billion operating income and done it in less than three years. 4 billion to 110 billion in less than three years.

And they can’t handle the business. So does anyone see, does anyone see any AI business slowing? Any data center business slowing? Right. No, because it’s not. Doesn’t mean it’s, it doesn’t mean we might not get an announcement next week that it is slowing, but we’re getting no indication that’s the case. Again, when I, when I see things that don’t make sense like this, today’s reversal, I start looking elsewhere for an answer. We find out if Grok is right and that Powell is going to fire. Trump’s going to fire Jay Powell. 60, 40.

That surprised me. Grok’s pretty good about this kind of stuff. I haven’t checked Poly Market or the other prediction markets. My guess is it’s not that high. I think we would have heard that if that was the case. But anyway, it was Lisa Cook’s statement today that marked the peak of the market and it marked the reversal. And what is she doing? What is a Fed governor doing talking about stock market crashes when we’re just off all time highs? I think it’s a question that deserves an answer, don’t you? The eternals today were not horrible at all. Matter of fact, we had 3 to 1 negative advanced decline for NYSE NASDAQ also 3 to 1.

Again, these are not bad readings. NYSE down volume was 81%. That’s the second day this week we’ve had better than 80 down volume. You don’t want to see that continue. NASDAQ down volume was only 67.6% and we had 400 more stocks in 52 week low than hit 52 week high. Again, that’s not good. That’s a cumulative reading. It’s hard to make sense of that on a day to day basis.

Kip Herriage [00:20:27]:
But anyway, that, that’s that’s, that’s where the numbers come in. And our sector watch today, 10 of 11 sectors lower technology again from being up 3% to down 2.6%. That’s what happened today. Big reversal. Tech down 2.6%. Consumer discretionary down 1.7 and industrials down 1.7. The only group up today, consumer staples as one would expect typically to have staples do well on negative market action. And again, commodity watch.

[00:20:59]:
You know, again, we didn’t see any, anything of that would tell us there’s a lot of fear in this market from the commodity watch today. Quick refresh. Gold today was only down just a couple of bucks here. Come on, screen. Here we go. Gold today down $6 an ounce at 4076. If we are having serious liquidity issues, we’re not. We’re having some short term liquidity issues.

But if we’re having serious liquidity issues, this, this would be gold down 100 bucks an ounce today. Not seeing that last trade. Gold 4076 by the way. Also seasonality. I think we shared the seasonality chart with you this week. Thanks to Ryan Dietrich does this great work. Seasonality chart indicated that today, today is the day. That from this day the market bottoms and moves higher.

[00:21:56]:
This is the time to be in the market from December to the end of the year right now. So today again, from that point of view, today could well mark the lows. Silver today down 1% at $50.35 an ounce. Again, no panic there. A copper today down 1.2% at 495 a pound. Crude oil today down 81 cents. Excuse me, 48 cents a barrel at 58.77. And finally the day, Bitcoin again right now trading at just off the lows of the day.

Kip Herriage [00:22:25]:
87, 300. That puts it down 3.4% over the last 24 hours. All right, folks, stay with us. Again, this is a generational bull market. Nothing’s changed about that. The fundamentals are completely intact. 9 of 12 VRA investing system screens remain bullish. That, that, that could drop to eight after the action today.

Kip Herriage [00:22:45]:
I will check it tonight. I don’t believe that’ll be the case. But again the. When you’re. Anytime we’re above 7 screens bullish, then it’s a buy signal. Anytime we’re at 9, 10, we’ve never been past 11. Anytime we’re at 9 or 10, that’s still back up the truck territory. This is a.

We still have complete buy signals in the market right now. But again if you own momentum stocks, you’re not feeling that? My men’s stocks are being hit. And that is typically a liquidity, short term liquidity issue in the market. And we know who controls liquidity in the markets. That’d be the Federal Reserve. All right, folks, that’s it for today. Hope you had a great day and even better night. We’ll see you back here again tomorrow after the close.