In today’s episode, Kip tackles the turbulent market conditions we’ve seen over the past four weeks, offering a seasoned perspective shaped by decades of market experience. Despite the recent “brutal” stretch and news-driven sell-offs, Kip makes it clear: this isn’t a bearish show. He takes listeners through the importance of staying disciplined during periods of fear and extreme oversold conditions, explaining why selling during these times is a mistake and how it’s possible to beat the market by sticking to the fundamentals. Kip dives into the impact of rising interest rates an anomaly for wartime economies unpacks the role of systematic algorithmic trading in recent market moves, and discusses the broader macro environment, including geopolitical events, the Federal Reserve’s actions, and the ripple effects through commodities like gold, oil, and Bitcoin. Tune into today's podcast to learn more. 

Don’t look back because the market is closed. Good Friday afternoon, everyone. Kip Herriage here with the Daily VRA Investing Podcast. Hope you had a good day today. I hope your week was a good one. We got to stop meeting like this, you know, when these market— this is 4 weeks in a row, been pretty brutal. Uh, but, uh, you know, I’ll start with this, okay? We got a lot of good topics to talk about today, and this is not going to be a bearish podcast, by the way. Um, so that’s what you’re looking for, you’re in the wrong place because I’ve just seen this movie so many times.

And, uh, you know, uh, pretty often we get asked the question, what’s the key? How have you beaten the market in 19 to 22 years, which is what we’ve done? And in a time like this, it’s, it’s, it’s a great illustration of how we’ve done it. We don’t— what we don’t do is sell when the markets are hitting extreme oversold levels. And all the counter-trend moves are hitting extreme overbought on steroids. That’s the setup right now, right? That’s the setup right now. Uh, we added to our gold miner positions yesterday, maybe a day early, but not really. The ones we added were exactly where they were yesterday. Junior miners that are just too cheap, you know. The miners have led lower.

[00:01:18]:
I believe next week they’ll start moving higher. Um, and You know, I’ve seen— again, I recognize this level of trading when I see it. I recognize the personality of the character of it. And, um, what we saw this week, if you noticed, it was heavy, right? Uh, yesterday we had a great reversal, right? Um, and it was, you know, news-driven. And that’s what— that’s what this market is. It’s computerized, it’s news-driven, it’s algorithmic selling pressure. That’s CTAs, right? That, that is, that is, that is point-blank CTAs. It’s computerized trading, systematic trading.

There’s not a person doing it. They’re trend followers. They, they, and they base their trades on momentum, directional momentum. And that’s what we saw this week. This is 80 to 90%, in my opinion, of what we saw this week. And I’ve read that in other places as well that track this more closely than I do. That’s what they say as well. And it always feels really heavy and, and, and like, please give me a break when you’re going through it.

It’s painful. But then, especially when it’s news-driven, which is what this is, then it just ends. And this is when the biggest moves higher take place. And this is why it’s, it’s so— this is why it’s, it’s such a bad idea to sell when we’re this oversold, when the fear level is this high. So Fear and Greed Index is at 15. Uh, this week we got the AAII Investor Sentiment Survey, which is like 30% bulls, 52% bears, right? These, these are extreme readings. And the point that we’ve been making, and I really do— I know it’s our point, but I think it’s an important point— is that this remains a generational bull market. This is when the fundamentals and the macro really matters.

[00:03:08]:
And I, I think if people understand this is a structural bull market, I think if you understand that, then you look at this from a different lens, right? And you go, okay, we— all right, first of all, we get 5— we get about 3 5% corrections a year. So we’re, we’re just over that down the S&P 500. NASDAQ just hit 10% today. Uh, Tyler just ran all the numbers and just reported it to me, so it’s spot on. I think I I think he said, uh, 9.7% at the close, had a little bit of rally in the close. So, and we also get one 10% correction every 13 months, give or take, right? So now we’re there in NASDAQ, again, not, not there in the S&P 500. So what we’re seeing is normal, right? And it’s news-driven. Now listen, I’ll be honest with you, I didn’t like the news today, and this is what drove the markets lower today.

Also drove oil higher, not a lot, but higher, and interest rates. That’s, that’s the dominant theme. That’s the dominant theme that’s taking the markets down. Again, I’ll make this point again. I, I’ve heard almost no one else make this point, and I find that very suspicious. Here’s the point: going back to pre-World War II, this is the first time that we’ve gone to war or military conflict, however you want to describe it, that we’ve not seen interest rates fall. And folks, that is always driven by the Federal Reserve. We know this Fed hates Trump.

Certainly the chairman of the Fed despises Trump. It’s been get Trump with this guy pretty much since when he got the job. But now Trump hired the guy. So I mean, look in the mirror, President Trump, you brought— you’re the guy. Um, he can blame other people if he wants to, but the buck stops with the big guy, right? But it doesn’t change the fact that this banking cartel has it out for Trump. Rates are going up at a time when ordinarily they would be going down. That’s, that’s a big point again that I hear no one else making. And again, I imagine that this financial media, right, that, uh, that despises Trump just as much.

[00:05:18]:
So you got the New York Investment Group, right, the, big, the big, uh, white-collar guys the elite of the elite that despise Trump. He’s trying to tear down their entire pyramid system, right? This is the whole shadow government, that deep state government Trump’s trying— these are all his enemies that have a lot of power that are all ganging up on him now. And again, the Federal Reserve not using open market operations to flood the banking system liquidity in a time of war. I, again, I’ve said before, I’ll say it again, If I was Scott Bessant, I would be publicly making this point loud and clear. I’ve not heard Scott Bessant on this. Trump has even been quiet about this. He continues to call, you know, Powell too late, but he’s not making this point. I think it’s an important point.

Matter of fact, I’m certain that it is. But that’s what’s happening. This move in rates is what’s pressured gold, silver, and the miners. Higher rates are competition for gold. It creates a stronger dollar as well, although the dollar was weak. If you notice, the dollar actually moved lower, uh, 4 days this week, the last 4 days of trading days of this week. Um, by the way, while I’m on the topic of interest rates, the 10-year yield, which is most important, you know, a bond yield, everyone, everything, pretty much everything’s based off the 10-year. The 10-year now is well into, on the VR Investing System, well into Extreme overbought on steroids.

Now, it doesn’t mean we have to have an immediate reversal, because sometimes things can stay at extreme overbought. We see that. But this is DangerVille, right? I would not— I would not be shorting bonds here. There’s no way I’d be shorting bonds. I’d be buying bonds, because this, this level of overbought is when bad things happen. And because we know this is news-driven and we know what that news is, it’s all about the Strait now. It’s not really about Iran, it’s about the Strait, and it’s about oil prices. Iran is still a problem, as we saw yet this week, right, when they, uh, they bombed the Qatari, uh, LNG facility, you know, largest in the world.

[00:07:33]:
Apparently 20— I didn’t know this before— 20% of all LNG Liquefied natural gas flows through that facility, that plant, and they hit it. They did significant damage to it. That got Trump’s attention. It got Netanyahu’s attention, which you can take one of two ways, by the way, because Trump came out and said that shouldn’t have happened. That was like an apology. I was actually surprised he said it, but you can tell that’s where the sensitivity is. That’s what the Iranians know now. You know, Trump also said today What I found interesting in two interviews that I saw, he said, we’d like to negotiate, but we can’t find anyone to negotiate with.

Well, I wonder why that might be. Yeah, number one, he’s taking them all out. Number two, anybody gets on the phone to talk to him is probably being targeted by an inbound missile within about 5 minutes. So I can understand their reluctance to, to get on the phone with anybody and talk about this. But these always happen through back channels, and frankly, I think that’s what’s about to happen. Because again, We’re there. We’re extremely oversold on the markets. We’re extremely overbought on yields, extremely overbought on fear, if you will.

And this, again, this is when big reversals happen. And that’s why, again, that’s a big reason that we have beaten the market, because the last thing you want to do is sell at this level. Now, if we had understood— if I had— me personally, if I had understood when this happened, because I really believe this is going to be very short-term more surgical, like the nuclear attack that we had on Iran last year. I thought this would be closer to that. I was wrong. This is much different looking. I did not like the news today, and this again what drove the markets lower today. We were just slightly lower, and then the news came out that now we’ve got 3 additional warships headed to the Middle East, thousands more Marines headed to the Middle East.

[00:09:23]:
So this, this is beginning to sound like and look like Mission Creep and boots on the ground. It looks like that. And even though I’ve been wrong about how long this is going to go on, remember, Trump did tell us as it started, this will take a few weeks. Well, we’re, we’re in week 3, about to start week 4, so we’re still in his parameters. But what we know about Trump And we’ve seen this, by the way, this is interesting, I think. From his first term to now, the big drawdowns with the big short-term corrections we’ve had have all been 3 to 4 weeks. The pandemic, 3 to 4 weeks. Tariff mania, just over 3 weeks.

And now we’re that same time frame with this war. And again, if you are Iran’s neighbors And they still have relationships with them. I mean, they’re neighbors. These guys probably went to school together. Their kids, you know, go to private school together, they vacation together. They’ve been friendly for a long time. I mean, they’re the same color, speak the same language, and they most have the same religion or very close to it, right? And so, um, you know, there must be back— there must be back-channel meetings. Taking place here.

And I, I really do think that we’re at that stage, because if you’re Iran and you say, okay, now there’s 3 more warships coming, these guys are about to get— they’ve already been really serious, now they’re about to get deadly serious, right? It’s going to go from surgical strikes to we don’t come back from this. I think this is when you have to make a deal. The problem here, and again, I don’t mean to play both sides of it against myself, The problem is we’re dealing with fanatics, you know, we’re dealing with, with religious fanatics that want to get those 72 virgins. They don’t want to be a martyr. That’s what they want to do. And I, I really do believe that’s what they want. This is why they’re such a tough enemy to beat, because they believe it. They believe their stuff more than we believe our stuff.

[00:11:32]:
They just do. They’re willing to die for it. I don’t know a lot of people willing to die for free market capitalism. Or patriotism in the U.S. It’s just, again, that’s, that’s the, that’s the analogy that I think the most makes the most sense here. Again, this is something that Trump and the military have to know at every level where they’re being in research and, and their gaming and, you know, the AI programs they use. They, they have to all know that what I’m talking about here, they know all this far better than I do. But when this started, we made the point, and I’m going to repeat it today because I still, I still believe this point that we weren’t going to sell, we weren’t going to reduce our portfolio, we’re going to continue to add to it.

And we have, you know, again, we’ve yet to add to our leveraged ETFs, but that’s going to happen on Monday, Tuesday. Again, we’re at that level of oversold that, that based on our discipline, that’s when we, that’s when we have to act. Okay, uh, we’re just below the 200-day moving average now, extreme oversold. If we get it lower up on a Monday, we’ll be at extreme oversold on steroids on every index. We’re close to it now. We are deep, deep into extreme oversold, but not all the momentum oscillators have quite gotten to oversold levels yet. So we’re not quite there. We’re there in the gold miners, right, GDX, and in gold and silver.

We’re there too, but, but not quite on the markets. Remember, the S&P 500 now is down just what, 5, 6% Again, NASDAQ of course always moves the fastest in both directions, and it’s down, as I said a minute ago, 9.7%. But at the beginning of this, we said that we have confidence in Trump. We think he’s earned that trust. The same thing goes for our US military. And by the way, by extension, you have to have that, I think, in my opinion, have to say that you may not like them, You may not like what they’ve done, but when it comes to the military and military strategy, you have to have that same— in my opinion, have the same— that same level of respect for Israel and for their military. I, I— and that again is a point we’ve made. If you go to war against the U.S.

[00:13:41]:
and Israel, you are going to lose. It’s just a matter of time. If they didn’t have the Strait right? If they didn’t have, you know, decades to, to, to reinforce it— I mean, imagine the weaponry they have that’s buried or, you know, under the sea. I mean, you know, this is, this is probably what they’ve done. Trump, that’s again, that’s why we don’t have warships going through the strait right now. The what-ifs— the last thing you could do is have a $2 billion warship, you know, explode. I mean, you think oil’s high now, you’re seeing, you’re going to see $150 if that happens again. That’s why this has to be methodical, right, and step by step.

And that’s what Trump and team are doing. But we do have confidence and trust, and we do believe this is going to end sooner than later. And again, when you see a market like this— computerized selling, news-driven selling, right, CTA, algorithmic, systematic selling pressure— that’s what this week was. When that ends, here comes the rip-your-face-off melt and move higher. And we’ve just seen it too many times. And this is why I think it’s, it’s a huge mistake to sell here. Now, it’s also a good reason to be, again, to, to be diversified and be hedged. And we had that in our portfolio, but right now hedges aren’t working.

You know, again, you got pretty much everything going down, including bonds. That’s why this is so weird. Because this is the time where bonds should be going up in price. They’re going down. This is a time when gold— gold, not silver necessarily, industrial metal— but gold should be going up. It’s not. It’s going down. This is Federal Reserve, central bank.

[00:15:24]:
It’s got their fingerprints all over it. And again, I do not know why Trump and Bessant aren’t making this case to the public. The public should be aware of this because this is, this is not normal. What’s happening here is this is not normal. Also, it’s Friday. You know, the last 3 Fridays have been followed by pretty bad Mondays, you know, at least deeply red futures on Sunday night. So this kind of a Friday didn’t surprise me, especially on the news that we’re sending more warships and more Marines, right? And again, rates continue to creep higher. We do have mission creep taking place.

So this didn’t surprise me. But again, I think next week it’s going to be a very different story. We’re going to be adding to some additional positions on Monday, putting a new one on. We’ve already got that mapped out, ready to go, and in both parabolic and VRA. I think the winners coming out of this are going to be those that are adding to positions here. I also want to make the point while we’re on the subject of the war With friends like we have, who needs enemies? I mean, seriously, Trump called NATO cowards today, and he’s exactly right. You know, when Europe needed us, NATO countries needed us. Ukraine is not NATO, but they’re European.

When Europe needed us when the war broke out between Russia and Ukraine, we were at the front of that line. Now, I don’t— I never liked that. I’m guessing most of you didn’t either. I always had a lot of questions about, about that war. I did not believe for a second that October 7th, which they call their 9/11— I don’t believe that official story for a second. I don’t believe most smart people do. Most informed people do not buy that story. That was a— that was as, as, as clear of a false flag operation as I have seen, on par with 9/11 false flag.

[00:17:36]:
Because again, we haven’t talked about this in a long time, quick refresher: they left this, their border open for a couple of hours. It took for the Israeli military to respond. Are you kidding me? Charlie Kirk made this point, and it’s a point worth repeating. He didn’t believe it either. He said there’s no way that could, that could have happened with the military and the surveillance program they have. They have every inch surrounding their territory wired for sound, right? Video drones. They have military stations. They, they obviously shut that down and pull people away.

Charlie Kirk said, I’ve been there. I’ve flown across the entire country by helicopter. Took about 45 minutes. I mean, got the time a little wrong, but I think that— I remember that’s what he said. And he goes, this whole thing is fenced in. There’s security everywhere, surveillance everywhere. And that’s why he didn’t buy it. And I think, again, most reasonable people that have the— spend 5 minutes doing the research didn’t believe it either.

Right? But, but the point being, again, we, we came to Europe’s defense and we did it aggressively. Again, I get real problems with that, okay? But now we need them and, and, and to help with the Strait, and they’re just, no thank you. You know, they put out a release yesterday, and I wrote it up this morning. They signed a release. We, oh, we will be there for the Strait, But you read it and you could see there’s some holes in it, you know, uh, in due time based on planning. I mean, they’re not rushing to help, but I think we’re going to see a very different Trump when this ends when it comes to Europe. Trump is going to make Europe pay the price, as he should, for this. We may wind up controlling the strait.

[00:19:34]:
Charging, you know, outrageous fees for to pass through it or something that Europe is going to pay the price for. By the way, so I read last night Europe is paying— their energy prices are 7 times what Americans are paying for our energy. 7 times. If anyone’s going to be motivated to make sure this strait is, is protected and clear. It should be Europe. What a lost— what, what a lost— I was going to say country, meaning the UK. What a lost continent. Absolutely lost.

And that’s another reason that we’re going to just continue to, to bury them and leave them in our tracks, because this is going to end. And again, I’ll make the point one more time. With the pandemic, it was about 4 weeks in April selling, and then it just ended. With the tariff mania, it was just over 3 weeks, and then it just ended. So, you know, it’s only 2 cases now, on our third, but Trump knows when to pivot, and he does it without reservation and without apology. And I feel like we’re getting close to that, and maybe not right there yet, but close. Um, not sure what you all think, but I, I don’t see this getting a lot worse. I don’t think it— I don’t think Iran can do much more, but they do have some surprises, as we saw again this week with Qatar.

So they got to be respected for sure. Um, what else here? But again, as I said at the beginning, if you’re looking for a primary reason to stay invested— what’s your biggest reason, Kip? It’s on the fundamentals. It’s earnings growth, right? It’s GDP growth. Now again, we just had a bad Q4, but that was really based on the shutdown, okay? Because we see things like what’s happening in the trucking industry. Trucking is booming, right? You look at this chart, it’s going parabolic. That’s because manufacturing, that’s because of Trump’s tariffs, because of the one big beautiful bill. Industrial growth in this country is back. Manufacturing jobs are coming back.

[00:22:07]:
All basic industry is back. That’s the backbone of this country. It used to not be, it is again now. And so again, we’ve got Q1 earnings coming up here in— what is that, starting about 3 weeks? So the market’s going to start front-running this. Again, seasonality is extraordinarily bullish here. The markets want to go out. We saw it yesterday. The markets want to go higher.

You can just feel it. And again, in the VRA system, we are there, right? The counter-trends is extremely overbought on steroids. The primary trend is extreme oversold. This has been— this is when reversions to the mean take place, right? And so that, that’s our call. That’s why we’re adding 2 positions, because— and that’s how we beat the markets. That’s how we beat the markets, right? Uh, Warren Buffett, you want to be greedy when others are fearful. This is that market. If you, if you like Buffett, you like that quote, you should really like where we are right now.

All right, what else today? Let’s look under the hood. These are not good internals, not going to sugarcoat it. Uh, 5 to 1 negative advance decline in NYSE. NASDAQ was better, 3 to 1 down volume for NYSE, 80.1%. You never want to see above 80, but again, this can also be a bottom kind of a reading. That, that is not I wouldn’t call it extreme, it’s, it’s highly extended. You don’t want to get back-to-back 80% days. So again, we want to see this improve on Monday.

[00:23:37]:
Um, NASDAQ, uh, 73.8% down volume, and this was ugly as well. We had 648 stocks on a new 52-week low to just 95 hitting a new 52-week high. In the letter this morning, I shared also a couple of, uh, data points Investor sentiment, again, I mentioned earlier, Fear and Greed at 16, that’s certainly now 15. Uh, the NAAIM, right, this is the professional exposure index for professional money managers, etc. It just fell below 61, and when that happens, the S&P 500 has been higher 8 of 9 times over the last 2 months. That’s pretty good, pretty good stats from a market stats And then, uh, thanks to, uh, Bespoke for this, we now have 48.2— this was as of the open, it was worse at the close, no doubt. We now have 48.2% of the S&P 500 is oversold versus just 10.2% that’s overbought. These are the most extreme readings since tariff mania, since the bottoms of tariff mania.

So again, we’re, we’re seeing indicator after indicator that says We, we are there. Doesn’t mean we can’t go a little lower, but, but, but we’re there. This is a news-driven market. We know what the news needs to be. The strait needs to open, at least have progress. Actually, there, there was a Greek ship that went through the strait today with this transponder on. That, that hadn’t happened in a while, right? So I consider that progress. Again, this is a Friday.

I always discount Fridays, especially during corrections, because they feel just like this. Right? Uh, but you know, if we get lower open on Monday, I can already tell you we’re adding to— at least we’re putting on a new position and likely going to add to two others, our leveraged ETFs, because it’s time. They’re there. And I, again, based on all, all of our indicators, various system, you know, once this is over with, look out above, right? This is the time to be positioned for what comes next. And to look through what’s happening now. Okay, uh, uh, a sector watch, also ugly today. 9 of 11 sectors finished lower, uh, led the downside by utilities with rates going higher, 4.11%. And just to make a point on, on rates again, just because I think this perspective helps, yes, the 10-year yield now is up to a 4.39%, just below 4.4%.

[00:26:06]:
Okay, and yeah, it, it is essentially going parabolic. Remember, the war started, we’re at 3.8. So what does the Fed do? They assist with rates going higher instead of lower, which is what they always do in time of war. This is a big deal, and everyone— I’m telling you, I’ve done this 40 years— everyone should be talking about this, and no one is. I don’t Things I can’t understand like this, they drive me crazy. And this is one of those things. I think Scott Bessant and Trump should be pounding at all of their administration, you know. And where is the administration? I just don’t hear— I don’t hear from— I hear from Trump and from Bessant and a few others.

And then, you know, the press secretary is great, but very few— again, this war is not popular. You know, we are seeing a fractured Republican Party. Obviously Trump has to know this. Anyway, I’ll move on. The point I was making on rates— yeah, rates have gone parabolic short-term, but when Trump got inaugurated, the 10-year yield was 4.8%. We’re 4.39% today. So just again, I think it’s important to keep things in perspective. Rates have fallen by a pretty fair amount since Trump was inaugurated, and the primary trend is lower rates.

and that will kick in once again. Uh, also down today, real estate, again, uh, interest rate, uh, affected, down 3%. Uh, tech down 2.2%. To the upside, financials actually finished a bit higher today. Again, they’ll be the first to report earnings. They should be extraordinarily good. And energy, again, with oil prices a bit higher today, energy also up slightly on the day-to-day. Now, commodity watch, or, you know, uh, gold opened with gains of— just before the market opened, gold was up like $80 an ounce.

[00:27:51]:
Once rates started going higher, you know, here came this. And that’s what it is again, it’s rate-driven. Uh, gold finished down, uh, 2.4%, $4,492. Silver, uh, $67.81, down, uh, $340 an ounce. Copper today down 3%, $530 a pound. Crude oil today, um, $98— excuse me, $98.09, up 2.6% today. Brent crude, uh, is up— was up 3.8% today to $112.83. And finally, the day Bitcoin— this is, I think, the tell, because this continues to be the tell.

Bitcoin is holding $70,000. Remember, the lows of the morning of the war, uh, first missiles, was— it was $59,700. Bitcoin is $70,500 and up on the day. So again, first in, first out. Bitcoin momentum software. They were the first group to get hit last October is when that started. And now they’re first to bottom, and they all bottom just before the war started. That is a first-in, first-out rotational bottom call.

And I think it’s, uh, really important. I think it’s really important, and I think it’s going to wind up— I, I think, I think, high confidence call here, this will be the tell that told us we should remain invested and keep adding to our positions. This right here. And the fact, of course, that the semis— now they’re down today, but what wasn’t— the semis have continued to lead higher. We share that chart with you this week. Semis, S&P 500, continue to lead higher. There’s a, there’s a trend line in place that has not been broken from the April 7th lows of the semis leading the market higher. And again, that is another very strong tell.

[00:29:34]:
If that changes, we’ll tell you. But that’s been the, that’s been the tell for broad market direction from the birth of quantitative easing in, in 2008-2009. The semis lead in both directions. All right, folks, that’s it for the day. Hey, hope you had a good week. Hope you have an even better weekend. Try to enjoy yourself. This, this, this too shall pass, and we’ll get back to having fun in the bull market that will continue.

Have a great weekend. We’ll see you back here again Monday after the close.