Welcome back to the VRA Investing Podcast! Today, Kip Herriage takes us through a down day in the markets, driven by renewed tensions in the Middle East and rising interest rates. He’ll break down why the VRA system remains bullish, but just shy of a perfect score, and what’s needed to push it to new highs. Kip Herriage discusses the interconnectedness of the housing market and interest rates, his bold GDP forecasts, and why he remains unwaveringly optimistic about both the economy and the stock market—even as geopolitical risks linger. Tune into today's podcast to learn more. 

Don’t look back for the market is closed. Good Monday afternoon everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. Hope your weekend was a good one as well. You know we came back today to a bit of a down market. Futures were lower this morning on the back of renewed tensions in the Middle East.

We’ll talk about that a little bit. Also what the playbook we think is going to be from here, the tells that we’re looking at to tell us whether or not we’re in a risk on or risk off market. Also on the very investing system we remain at 10 out of 12 screens bullish had a question over the weekend from subscriber ours that says what was what’s it going to take to get to 11 to 12 screens bullish or even 12 out of 12 screens bullish. First of all, in the history of the VRA system we’ve never been at 12 out of 12 screen. There’s always something wrong. There’s always at least one or two of a bought or there’s one sector, not one part of the economy not participate. It’s always something that’s not perfect. Right.

[00:01:03]:
But we had been at 11 out of 12 screens bullish on a number of occasions. I think four or five occasions we’ve been at 11 or 12 screens bullish and I ran the screens this weekend. Here’s what we need to get to 11 is screens bullish. Again, we’re 10, 10 of 12. Now we need the housing market to start picking up speed again. The housing market remains all of the three major housing indexes, right. They all, all three of the ones we track remain below the 200 day moving average, although they are picking up steam getting closer to it. Today was not a particularly good day.

So a little bit further away and we need rates. These are really interconnected, aren’t they? We need interest rates to begin falling again. You know that’s we as I’ll cover in a minute. You know that did not happen today. That’s one of the reasons the Market was down 10 year yields today surged to 4.44%. Today the high has been 4.48%. That’s the, the, the high during the war. Right.

Actually the high was running up to that. So just to the end of it. So again the high has been 4.448 ten year today, 4.44. So we’re getting close to a, the kind of breakout you don’t want to see on the 10 year yield. So those are the two negatives and again they are interconnected the housing market and interest rates. And so that’s what we need right now. We’re still at 10 to 12 screens. Bullish.

[00:02:26]:
I don’t really see much. It would take quite a bit for us to get back down to nine or even eight, much less seven screens. Bullish. This is a very different bull market. This is a very strong bull market. This is a structural bull market based on a lot of very important things that are working just as they should be with a US Economy that’s building some serious steam here. Our forecast remains for this year that we’re going to have 5% GDP this year. The first forecast was, we said the beginning of the year.

It happened in the first quarter and then the war happened with the shutdown in the fourth quarter. War this quarter. So that’s not going to happen. But I do think it’s entirely possible that we’ll get a 5% GDP early third quarter. I, I would think is it looks again that’s a big time contrarian call. I, I doubt you’ll find anybody else making that call which is one of the reasons we’re so confident in it. We’re looking at the data, manufacturing data, pretty much all the economic data is really starting to, to build a head of steam. And you have to remember this.

The bea, the Bureau of Economic Analysis, okay, They’re the, they’re the, it’s a government group. There’s, there’s your clue right there. Government led group that, that collects and disseminates all the data, right. That goes into the GDP reports, et cetera. And just like with the CPA C CPI reports which I believe we get one this week. They’re they, they lag. They lag by months. Their collection is pathetic.

[00:03:58]:
I mean it is, they, they even admit it, you know, the way they collect it. That’s why you have so many revisions of all these reports. The first report is not that the first report shouldn’t be trusted. The first report should never be trusted. Just, just remember that as we get, start getting reports all of a sudden the GDP is hitting 4% then 4 and a half. That’s happening this year also. We, we forecast that in 20, by 2020 we say in 2028 that we’ll have 10% GDP. I actually think it’s going to happen before that.

Again we are super bullish. We have been for four years. We’ve been right. Why would we change anything about that? And now we got the right president at the right time. We think is the end result is we’re going to have a stock market that essentially doubles every three and a half years. There’ll be stretches where it does double than that. I think we’re going to have stretches for the markets double every two years. And we’re entering that phase now.

And look, look at the strength of the market. I think the market’s telling us as a discounting mechanism, there’s something very good this way is coming. And I think that’s exactly what it is. Um, so again, we remain very bullish on both the markets and the economy. And it is key, though, that we get this war behind us because that’s what we saw today. You know, from, from jump this morning, I guess news was that Iran had fired four, four missiles at the uae. None of those struck targets. Apparently one fell into the water, three were intercepted.

[00:05:25]:
I guess there was a rumor, and this is really what sent the market tumbling today. This morning after the open, there was a rumor put out by, by, by Iran. Imagine that, saying that they had struck U.S. carriers and, or at least a U.S. carrier. And that was quickly denied by the U.S. but by then the damage was done. So, you know, I think that what we’re seeing really is Iran knows they’re trapped because they are, they’re completely trapped.

This is not what the media’s reporting, as you probably have seen. You know, I haven’t watched CNBC for roughly five years now. It was a propaganda network for the plandemic. So I had to say goodbye to that. Don’t miss Jim Cramer at all. I miss a couple of people on the show. But anyway, so I watched some Bloomberg in the morning. They’re, they’re better, but they, you still have to look at their reporting, you know, with a side eye, because you can hear the, the far left, really, the deep state propaganda coming from them because they just aren’t telling anybody the truth because the US obviously has decimated Iran’s military.

That’s happened. The strait is completely blocked off. But that’s it. Our, that’s, that’s what we did. That’s what the US decided to do. Right. Iran can’t import, export anything. And now, of course, over the weekend, this was kind of the, the news that was super bullish this morning.

[00:06:51]:
Was it Trump? I think he called this, what was this? Project Freedom? I think that, I think I got that right. Project Freedom, which is going to finally get ships going through the Strait again, I guess apparently at our expense, since nobody else is going to help out with this thing. But it is what it is. And so again, there was some hope coming into this morning that we’re going to get some good news with ships being able to go back, pass through the straight again. And now that looks like that’s been delayed a bit. So, you know, again, we’ll see what happens here. I do think, I think two things. Again, this is, we, we.

Look, we’ve been right on this. Right, We’ve been right on this. We said from the beginning that when the US and Israel are on the same side of a war, the best thing you can do as their enemy is to surrender early. Just, just call it quits, because you’re going to lose. So why put your country through that? And that’s what’s happened with Iran. We also said beginning at the, in the third week of April, just before the markets bottomed, excuse me, March, we told you that the lows were in. They were. We told you that the war was coming to an end.

It has. And even though we might have a, you know, a bit of a nervous ceasefire right now, I think that’s the best way to say it. I still think it’s over for two reasons. Iran’s goose is cooked. Their oil industry is about to be in serious trouble. There’s no place to put the oil. Shutting in these wells causes massive problems. So Iran wants us to end.

[00:08:27]:
Trump wants this to end. When Trump pivots, he pivots hard. Again, we’ve covered this with you often. We’ve had. Now, this is the fourth instance of Trump’s two terms, fourth time where we’ve had a three to a four week market meltdown. 2018, when Trump and Powell got into it. Powell was hiking rates into December when no one was around to buy the market for worst fourth quarter ever. Worse than anything in the Great Depression.

That was number one. Again, these all lasted three. The majority of the damage lasted three to four weeks. Second time was the pandemic. Again, damage was done in three to four weeks. The third one was last year, tariff mania. Damage done in three to four weeks. And now this one.

Damage done in three to four weeks. And when Trump’s pivoted on each one, that’s because he’s ready to move on. He’s done what he wants to get accomplished, he’s ready to move on and he’s ready to see the market start going higher again. We know that Trump watches the markets probably closer than any president certainly that would admit it. Trump admits it, you know, openly. He loves seeing the markets go up when he’s president. So I think that the lows are in. I think that when he pivots, he pivots.

[00:09:36]:
And so I do believe that we’re seeing, still seeing the very tail end of this. And I’ll personally, I’ll be very surprised if we have a restart of military action between the two. So I think, again, the markets have figured this out clearly. You know, we came in today very overbought, right? We’ve had what an amazing April we had, right? One of the best Aprils in history. And the seasonality here is fantastic. Over the last decade. Excuse me, over the last decade, during May, June, everybody say, seller, main, go away. That, that used to be a thing.

That’s not a thing anymore. But, but over the last decade, 90% of the time, the market’s been higher in May, June, July, give or take, 90% for each of those months. So seasonality is good. We believe Trump has made the pivot. We think the war is over. We think the markets know that the war is over and now we’re dealing with remnants of it. Also, we’re bullish about, again, these are some macro things that we think matter. It’s not just Trump, it’s Trump and Bessant.

Right? These two guys are a powerhouse together when it comes to the economy. And they know that the midterms are coming up in just right at six months. Right? Trump wants people to have enough time to forget about the Iran war. A lot of people hate this, right? To forget about high gas prices, except high food prices. And Trump and Bessant both want people to be blown away by what the economy and the markets do over the next six months going into the midterms. I’ve read, and I think this is true. Most people, most voters make up their mind by the end of June, mid July, there’s not a lot of time there. So you got to step.

[00:11:21]:
They’ve got to step on the gas. I think they know that. To really get the markets and the economy rocking and rolling again and again. That’s. I think that’s exactly what’s going to happen. Voters vote with their wallets. Trump gets it as much as any president ever. And of course, the 401ks and finally, you know, is this is the 250th anniversary of America with the World cup here.

A lot of anniversary parties taking place this year. I think that it’s a great opportunity to have some real animal spirits in this country. And it always helps when the economy and the markets are doing well. So it’s for all those reasons. Again, seasonality, analytics, macro reasons. Obviously, what’s happened in April, you’ve probably seen the data like I have. When you have a month that’s as strong as April, was that me? That means something? It means something. There’s been so much bullish analytics on this that I’ve lost track of it.

But the bottom line is the, the markets at, when you have an April like this, the markets average something like a 25 to a 35% return over the next year. And that confirms the data that we found as well. So again, a lot of reason to be bullish here. We think dips will remain a buying opportunity. And again, I am not, I’m not. Hope this isn’t family last words. I am not concerned about this war starting up again for all the reasons just talked about here. What else today? Oh yeah, the tells.

[00:12:47]:
Okay. So as we told our. And by the way, we launched Parabolic Options program number 25 today. If you weren’t able to join, we, we didn’t put our first trade in today because of what I’m about to tell you. But if you have an interest, let us know. We can still get you in for the, for the program. We will probably have first trade or trades tomorrow. But here are the tells we’re looking at.

This is, I think we learned a lot, you know, from the onset of this war. We know what’s making the markets move in. Either risk on fashion or risk off fashion. Here are the five things that we’re watching. Okay. And it’s really, frankly there’s, there’s, there’s nothing but these five that we’re watching. And when it comes to a tell and it comes to market direction, right? Risk on, risk off. Here they are, no particular order.

10 year yields again. 10 year yields up sharply today. That’s risk off. Gold and silver both gold and silver down. Silver down 4% today. Go down 2.4% today. That’s risk off. Right? Semis again.

[00:13:51]:
The market leader period, right. Today had been down as much as 1.5%. Rallied into the close down just 6/10 of a percent, but again still lower. Still leading the market lower today. So that’s something to again we pay. That’s a tell as a risk off tell today. And finally oil. Not finally, but oil again today.

Oil up, finishing up 3% today. Last trade 105 a barrel. Again, that is today a risk off indicator. And the last one is bitcoin. Of all the tell. Of all the indicators today that we’re tracking For a buy sell signal. It’s oil. Excuse me.

Bitcoin, that was higher today. Love the chart. If you’ve been listening to us, you know we believe the lows are in. This was before the war even started. The lows were in when Bitcoin bottom at 59. 7. On the outbreak of war the first night, bitcoin bottomed and is led higher. Bitcoin’s now leading higher as a classic first in, first out trade, classic FIFO trade and continues to lead higher.

[00:14:54]:
We think bitcoin hits all time highs this year. Today Bitcoin up 2%. What was the last trade here? Yeah, I’ll cover that more in just a moment. But again that was the loan tell today. That gave us a bullish indication. Everything else was risk off. That’s something we’re paying attention to. And for all our new Parabolic members, until that flips, they don’t all have to be bullish.

But until we see what we want to see, we’re just going to be patient and wait and see when it’s safe to go back in the water and initiate our first trade. What else today? Yeah, not again. Just, just not a great day. Internals today weren’t great. 10 of 11 sectors were lower. Let’s go and take a look under the hood today in our, in our internals watch. All of these were negative but one. Excuse me two NYSE advanced decline was two to one negative.

NASDAQ advanced decline was negative 1.7 to one. Again this, these, this is in great damage here but it’s still eternals have not been great. They were very good on Friday but they’ve now been negative for five out of six trading days. Again we want to see that change. But our view on this is this is how extreme overbought markets work out. Work off their extreme overbought nature. It’s exactly this kind of action weakness under the hood without any damage being done. Again we’re still hitting all time highs not today, but last week almost every day hitting all time highs even as the internals weren’t good.

[00:16:27]:
Folks, that’s a classic bull market action tell, right? So also we’re seeing rotational strength software stocks again. That’s another of our, of our FIFO trades. Frankly I should have led with that. Software stocks IGV today up 2% on the day. Now we’re seeing some of the leadership, Oracle, Microsoft, really getting legs here. Earnings were just fantastic, right for these two. And so software stocks of course led lower beginning last September, October and now they’re Leading higher along with bitcoin. Again classic first in, first out trades.

Again that’s the rotational theme of this bull market. I was on Charles Payne show, I guess it was Thursday and this is one of the things we talked about. You know when you have a rotational characteristic of this bull market that we’ve seen here where some groups get weak, others get strong, they help each other, they support each other, they rotate in and out. Again that is classic bull market. At textbook bull market action. Want to see that continue. And I think now that this, the, the internals have been weak we’re going to start seeing these overbought indicators really start to fall by the wayside. And, and by the way that that is already happening happening.

That is classic, classic bullish early indicator. We’ll keep watching it here in our sector. Watch Today again a 10 of 11 sectors finished lower led to on the downside by materials down 1 1/2% again oil, oil up, gold down, silver down, copper down. You know you’re seeing a trend for materials today that would be weak miners down etc Today industrials down 1.2%. Also makes sense. That’s it, that there was nothing else down more than 1%. And to the upside one group led and that was energy up 8/10 of a percent. Again these, these oil companies, Chevron, Exxon reporting earnings are crushing it.

[00:18:19]:
But it’s interesting isn’t it? Have you seen their stock prices? They continue to move lower even as their earnings are killing it. That’s a tell. That’s a tell. The markets are looking through this and that the markets believe oil prices are going to fall going forward. We see that also in the futures for oil, for oil trading as well. And again those are powerful, powerful tells. Commodity watch today again not pretty here. Gold today down $112 now set to 45 32.

We’re going to focus on these charts tomorrow morning. I wrote this up for our parabolic people. Just take a look at our favorite tell for this group which is gdx the gold miner etf. Again you’ll see if you know how we we use the VR investing system. You’ll look at this chart and you’ll get it right away. First of all after being the market leader for close to two years talking about the gold miners, right? Gold and silver being red hot, we all know the story that bull market continues. Of course we’re seeing counter trend moves now these are counter trend moves lower and the primary trend will soon re exert itself. Mark those words.

But as far as GDX goes. I think it’s a great example of a trade we’re about to put back on, meaning the miners. And we’ve got some very interesting ideas. We’ll share that with you soon. But first of all GDX now is only what, three bucks a share above the 200 day. Check out what it did the last time it hit the 200 day went parabolic for about 2 weeks. Again this is what smart money traders and investors are looking at. In addition our, our fast moving momentum oscillator which is stochastics.

[00:20:14]:
Right. It’s the first one that tells you if you’re overbought or oversold. Stochastics is now hitting extreme oversold levels. So you see where I’m going with this. Now the other indicators start catching up. Before you know it we’ll have a couple updates, we’ll get a fresh MACD buy signal and then you’re off to the races again. So again these pullbacks are welcome. They give us great setups, they remove the excess greed that builds up in these and it just launches your next, your next opportunity to make money.

And so that’s how our VRA system works. Just being cut and dry with you there. And again we love this group. Love it. On the pullback commodity watch again gold today down 112. 4644. Silver down $3.3 an ounce. Down again.

A big 4.2%. Last trade 7316. Copper today down 2% at 586 a pound. Crude oil today again up 3%. 10509. And finally today again bitcoin trading. Like a champ here really. We’ve loved this chart for some time.

[00:21:19]:
Again first in, first out and I’ve got 30, I’ve got 30 different screens up in here on my screens. Here we go. Last trade in bitcoin. It’s coming here it is. Bitcoin last trade right at 80,000. That’s up 1.3% of the day. 80,057 to be exact. Again we think all time highs before year end.

And again that’s to tell that’s a leading Bitcoin and semis. Bitcoin and the semis. There are two liquidity tells. We have others but these are our two leaders. When bitcoin and, and the semis are leading the same direction that’s the direction the market’s going to go in. That’s a call we’ve made from the, again from the pre war lows. It’s held up. We think it will continue to hold up.

And so we’re looking for the semis to once again start getting some legs along with bitcoin. And again, folks, we’ll be off to the races. All right, folks, that’s it for today. Hope you had a great day and a bit better night. We’ll see you back here again tomorrow after the close.