Welcome back to the VRA Investing Podcast! On this episode, host Kip Herriage dives into what’s been a challenging week for the markets, examining everything from geopolitical uncertainty and its impact on oil prices to the pulse of investor sentiment and Federal Reserve actions. Kip Herriage shares sharp insights on the recent correction in the S&P 500 and NASDAQ, the effect of the ongoing war on global markets, and what history tells us about rates during wartime. You’ll hear why extreme fear among investors, record-level put buying, and oversold technical indicators might actually be setting the stage for a major market rebound.

Don’t look back because the market is closed. Good Friday afternoon, everyone. Kip Herridge here with the Daily Verity Investing Podcast. Hope you had a good day today. Hope you had a good week as well. My guess is if you’re, um, as addicted to the markets and investing as we are, it was not the best of weeks. Uh, Tyler put this in pretty good perspective, I thought, yesterday, where, you know, if you’ve done this long enough— like I can say now, both of us have— Tyler’s done this now for almost his life as an investor, uh, and with us now here 8 years, 9 years maybe at the VRA. Time flies.

But if you’ve done this a long time, you know, you’ve seen your share, more than your fair share, of 5% corrections in the S&P 500. That’s what we see now. 8% corrections in NASDAQ, what we see now. I can talk about that a little bit more because, you know, if that’s what the major indexes are, then we know most stocks are down 20%, right? 20% plus. We just lived through this with software stocks and Bitcoin that began dropping last October and bottomed just just before the war. Again, this is one of our big first in, first out tells, and they continue to rally. Bitcoin, we’ll cover that more in just a moment. But again, I think this is an important tell for this market.

I think we’ll look back and say, yeah, the war caused us to have a couple, 3 bad weeks, but something very constructive was happening beneath the surface in the meantime. And that was the tell. And I think that’s, folks, I would— God, I hate to even say this, but This is the kind of thing I’ve seen happen at, at, in, in bull markets, rotational bull markets, where this is exactly what happens. In bear markets, you can’t find any, in a pocket of strength, everything is going down. But in a rotational bull market like this one, the groups move in tandem. And, uh, and that is what we’re seeing now. So we’ll maybe— we’ve covered that a lot here in the last couple weeks, haven’t we? Maybe we’ll come back to that for just a moment. Other topics today Groundhog Day.

[00:02:02]:
As I wrote this morning in my letter— excuse me, I’ve been on the phone a bunch the last couple of weeks. I’m ending every day with a raspy voice. Um, Groundhog Day. It feels like I’ve started every letter the last 2 weeks. It’s now the 14th day of the war. It feels like I’ve started every day the last 2 weeks saying the same thing. For all intents and purposes, now I didn’t say it’s the beginning, but, uh, just a few days into the war, okay, it became pretty clear that Iran could still do damage, but for all intents and purposes, the war has been won. From a U.S.

perspective, again, you hate to tempt fate, but unless something goofy happens, we are not in Iran’s crosshairs as a country. So, you know, as far as the U.S. markets responding to it, that’s about 50% of our revenue, you know, for the S&P 500 companies, about 50% of the revenue comes from international activity. So look, I’m not trying to sugarcoat things, right? As long as the Strait— and that’s what it comes down to, it’s the Strait and it’s the price of oil. Every day this week when oil was going lower, the markets are going higher. Every day this week, right? Monday started with the shock of $120 a barrel oil in the pre-market trading. And then, you know, within 2 days it was down to $76, right? And now it’s back up, last trade here now, 98.60. And so that’s how the market’s trading.

It’s all tied to this oil prices in the Strait of Hormuz. And, you know, I asked this question last week a couple days, and I’ll pose it again because now the media is obsessing over this one question. And I think they’re right. I think they’re right to obsess over this. You know, it sure seems like the US and Israel were ready for this attack. It seems like they did a lot of damage in the first couple days, knocked out some really important people. And as we’re hearing, you know, 90% decline in their missile strikes and drone strikes. So this seems like from a military point of view, that’s been highly effective.

However, from a planning point of view, this is the question that everyone’s asking, even Fox, right? And kudos to Fox. I mean, they’re Trump’s biggest fan. But they’re, they’re even asking the question now, were you not prepared for this? Were you not prepared that Iran could threaten to, uh, close the Strait of Hormuz? Now, effective, they have not closed it, right? Ships, ships are sailing through it, but they just happen to be Iranian ships and Chinese ships. Again, most of this oil going to China. That’s very good news for China. They’re getting the oil they need. And remember 20% of the world’s oil flows through the Strait of Hormuz. The vast majority of that goes to China and the rest of Asia.

But obviously, if we’re not sailing through it, meaning US tankers, then Trump and the team believe there’s a high degree of risk there, and there probably is. The last thing you want to see is a US flagship get blown up on fire in the Strait because it would be nonstop 24/7 coverage in the media, uh, rightfully so. And it would mean oil’s going back to $120 and probably then some. So you got to get this right. I completely understand it. I know it takes more than a few days to get this right, likely even more than a couple weeks. But that is the question: were you not prepared for this possibility? Which was, I think, the biggest the risk. The biggest risk to the global economy is the Strait of Hormuz.

Obviously, Iran knows this. I did see the news today that, uh, 2,500 to 5,000 Marines are now being deployed to the Strait of Hormuz with their amphibious warships. How cool are those things? Again, the key is protecting the shipping lanes. And look, I, you know, if you follow Trump closely— I have For those that don’t know me, I was the first that I know of, and it was kind of a thing at the time, first Wall Street type, someone that’s on TV fairly often, somebody that has a long track record followed by a few people. I was the first that I knew of anyway that came out and vocally endorsed and supported Trump. And that was in, I would say, April, May of 2016. Wrote a book, “Crash Through Prosperity: Becoming Wealthy in the Age of Trump,” before the election where I predicted he’d win. I predicted the Dow Jones would go up 25% in the first year.

Both those happened, of course. And I named the Trump economic miracle. Had it not been for the plandemic, which did happen under Trump, right? Yeah. So, you know, look, that’s history. I know now, but we have had some bad things happen under this president, have we not? Hopefully this is not gonna be one of them with Iran. Bottom line though is I feel like I’ve got a pretty good feel for Trump, for the timing of the things he does, and I think it’s a safe statement to say this guy, he reads the room. He reads the room as well as any politician, and he doesn’t become attached to outcomes. He stays attached to his principles, and he’s done that remarkably well over, you know, even before politics.

But when the situation changes and the room changes, Trump pivots, and he does it instantaneously. He does it on his own, and he does it without apologies. And I think we’re nearing one of those cases here, because again, I think the one thing Trump doesn’t want to see, triple-digit oil. I think that’s something that he understands is a big deal for the country. Look, you only have to go back 2.5 years to find the last time oil was at this level. Look at the range in oil prices from 2022 to 2024, $80 to $116. So realistically, or technically, $98 oil, $100 barrel oil, in and of itself, is— that’s not a big deal. It’s been the velocity of the move.

That’s the thing. And if I’m Trump, I want to do anything that I can to make sure there’s not another move with velocity higher, meaning to pass 120, 130, 140, because then you have a very difficult situation because that means something bad happened, right? You may have seen this today. Zero Hedge put this out, and I actually was kind of surprised they put it out. Let me, uh, let me get to it real quick. I think this is important. Yeah, Zero Hedge, you know, uh, I’ve talked about Zero Hedge for a long time. They are the masters of the psyop, the psyop of negativity. And, uh, one second, my, my Grok app is asking me— or excuse me, my X app, still can’t say that— ask me to re-log in again.

All right, here we go. Yeah, Zero Hedge put this out a bit ago, and, uh, this morning actually. And because they’ve been so negative, you know, they’re always negative, right? And, uh, the thing is, a lot of people read this site. It’s followed, it’s retweeted, it’s, it’s everywhere. And so in times like this when the markets are weak, you know, I, I expect them to remain negative because this, this is kind of their lane they like to stay in. But today they put out a piece that said if Iran allows China and India oil through the strait— that is what’s happening now— that’s more than half of all normal oil traffic already at 7 million barrels a day. Throw in the Saudi east-west pipeline for redirection, which of course is what’s being used now for shipping to redirect, and the blockade suddenly shrinks a lot. The blockade then comes down to less than a million barrels a day.

Which is actually very little. So I think if, again, just to be repetitive, Groundhog Day, it is the Strait and it is oil prices. And that’s what this boils down to. That problem gets solved, the oil problem gets solved, and we’re looking at Melt-Upville. We’re looking at a market that’s going to literally melt up because so many have gotten so bearish. It’s another topic of today. Investor sentiment and put buying is literally off the charts now. I got some good data from you, from Tom McLellan as well, I’ll share in just a moment.

Also today, gonna talk about the 10-year yields continue to rise. You know, I guess we shouldn’t be surprised to see that Jay Powell and the Federal Reserve aren’t gonna try to help Trump at all in this. I covered this over the last couple weeks a pretty fair amount. I see no one else talk, I see almost no one else talking about this. And I think it’s one of the most important topics of the day. And I’ve done the research. I’ve gone back to World War II. And in that time frame, 80 years plus, there’s not a single case, not a single instance where the US went to war— and that’s what this is— and its rates didn’t go lower.

The Federal Reserve jumps in with open market operations basically flooding the banking system with liquidity. This is what they do. They do it to help the country. They do it to help our people. They do it to help the administration. You know, it’s a rally around the flag from the banking cartel’s point of view. And that didn’t happen this time. The Friday before the attack on Saturday, the 10-year bottomed at just over 3.8%.

Over the last 2 weeks, the 10-year yield has risen to 4.28%. And that’s oil prices and interest rates. These are the 2 things that have the serious money concerned about this market. But I don’t know that we’re going to get any help from Powell or the Fed on this, do you? And that means we got to wait till May. When the new Fed chair, Kipman-Warsch, is put in. I just don’t know anything that we can do about that, or that Trump can. He hasn’t even said anything publicly about it. I am very surprised that Treasury Secretary Scott Bessant hasn’t said anything about this.

[00:12:59]:
They have to be battling behind closed doors, because again, this is not normal. This is just not normal, and it is a big deal. At some point, hopefully, others in the media will start talking about this because, again, it’s a— it’s not normal, completely out of the norm, and it’s a problem. It’s a problem for the markets, means it’s a problem for you and I. Cover this morning also, we’ve got a new, uh, a new update from Mitch Ross, the, uh, the fantastic technician at Evercore. We followed his work for many years here, and, uh, I’ll share this in Friday’s letter— excuse me, Monday’s letter— but I’ll actually cover with you this morning as well too, or this afternoon. Um, investor sentiment, extreme fear. We’ve seen it now, extreme fear.

[00:13:53]:
Uh, Wednesday night we got the AAII investor sentiment survey, which came in with up 11 points for bears. 46.4% bears and just 31.9% bulls. That’s a massive change. You know, we had a period of 3 weeks in a row where there were more bulls than bears. That hadn’t happened in 2, 3 years, right? And it didn’t last very long. Again, now we have a 15-point spread between bears and bulls. That’s extreme fear. And as a contrarian, we know that’s bullish.

Kip Herriage [00:14:25]:
Fear and Greed Index is down to 21, actually hit 19 today. Again, that’s extreme fear. And as I mentioned a minute ago, the demand for protection, meaning put purchases, is absolutely off the charts for S&P 500 companies, just off the charts. Like, you have to go back forever to find this level of bearishness. And that is a solid contrarian buy signal, it just is. Look, today’s Friday. I don’t know that anyone expected the futures were higher this morning, market opened sharply higher, Dow was up 400 points, NASDAQ up 180. Was anyone watching surprised that those gains didn’t hold? It’s Friday.

[00:15:05]:
Bad things have been happening over the weekend. But if I’m right about the pivot, and it feels to me like Trump is on the verge, like give Iran an off-ramp, right? Trump continues to say, we’ve killed them all. There’s like, who’s left to negotiate with? He’s kind of asking a question that we’re all asking. What is the point of this now? Are we going to have a land invasion? Because this regime is going nowhere in Iran. The people clearly can’t rise up. They will be executed, as we saw just a few weeks ago where 40,000 were killed. You know, I don’t know if I believe those numbers. I’ve seen 20,000 to 40,000 to 50,000.

So, you know, it’s a massive number. I’m not sure it makes sense to focus on exactly what that number is. It’s an unbelievable number. But this IRGC and these extremists in power in Iran, they’re not going anywhere. It’s next man up for them. That’s their whole thing. Next man up. You probably have, well, you may have guys way down the totem pole that have always dreamed of being a general.

Iranian army, they may either be getting their wish or, you know, be careful what you wish for. So I think again, Trump, I think it’s important that Trump explains to the American people what is the agenda now? What is the mission statement? I think it’s more than a fair question because I think regime change is not going to happen here. And to the American people, As you’ve seen from the polling, the tide has turned. People want clarity. What is this for? Oil prices at $98, that’s not really a problem. Matter of fact, oil could— if oil stayed between, say, between $85 and $100 for the next 2 weeks, Wall Street would get bored with this and stop caring about it. They’d just get used to it. Okay, that’s the range.

That’s the new range. Worst case has been avoided. We got workarounds now. Yeah, we’re missing a million or two barrels a day that would’ve been shipped through the strait, but we got that handled now. I think we’re very close on all of this. I think we’re close to a Trump pivot. I’ll tell you the truth, I think that’s the right thing because I’m asking the same questions now. What exactly is the mission statement here today? Is it turning Iran into Gaza? Because at first we were told that wasn’t going to happen.

That happened. Parking lot. So it’s time for some clarity. But I think if nothing big happens this weekend, we should come in Monday and see a very nice move higher, especially if we just get a bit of good news out of Iran. That’s all this is now. Right? That’s all this is. We’re now in, uh, extremely bullish period seasonality-wise, analytics. As we talked about yesterday, and Ryan Dietrich put out a chart this morning, yesterday has marked the lows for stocks for the last 20 years.

It’s not an exact day today, but the trend has been over the last 20 years that March the 12th marked the lows, and then we had an ex— like an extreme move higher, which is what Goldman Sachs is calling for, an extreme move higher really throughout the rest of the year, but certainly in this most bullish period of March and April. Well, we’re halfway through March now. It was time to get that going. Seasonality is positive. Uh, Tom McClellan, who’s a friend of ours, and his father uh, invented what’s called the McClellan Oscillator, which gives you a level of oversold using advanced decline line for NYSE, right? Uh, to boil it down to its most basic form. And what Tom shared yesterday was that the McClellan advanced decline oscillator is now as oversold as what we saw on April 7th, April 6th, the day before tariff mania. There’s a tariff crash. We’re there now.

Sentiment’s there, seasonality’s there. This, uh, these indicators of being oversold, they’re there, right? This market’s ready to go. It just needs some good news. I also shared this morning, I think, two important charts. Everyone’s talking about 10-year yields. We just did, and it should be. But if you saw the chart I shared this morning, is a 2-year chart of the 10-year yield. Remember, when Trump was, uh, inaugurated, the 10-year yield was 4.8%.

That marked the high that day, right? Since then, we’ve been as low as 3.88%. There’s now a trend line that connects all these peaks. Again, lower highs, and it’s been hit 4 times. We just hit it, we just hit it again this morning. So as it’s done the previous 3 times, and because it’s also hitting extreme oversold on— excuse me, extreme overbought on steroids, we would now expect rates to go lower. If rates continue to go higher, then something else is happening. Combined with the fact that the dollar is now at a quadruple top— last 2 years, the dollar’s been here 4 times. Every time it’s broken lower.

[00:20:53]:
And the dollar’s there now, also hitting extreme overbought on steroids. So rates and the dollar should both go lower from here. Again, that would make sense with a market that’s bottoming based on the technicals, seasonality, etc. So This, this, uh, you know, the primary trends here, right? The secondary trends may be in place now, but the primary trends all point to a resumption of the primary trend. And that’s how we want to stay positioned. Because again, as Tyler said, you know, we get, we get about 3 5% corrections a year, right? That’s average. Every 12, 13 months we get a 10% correction. Well, we’re, we’re at 8% now.

NASDAQ, we’re close, right? We’re, we’re 80% of the way there. So, you know, I think, again, I think the mistake here is to sell. And also, I think, again, our FIFO indicators. Bitcoin is now up 21% from the lows of just a month ago. Software stocks, from just before the start of the war, software stocks are up 12%. And those were the two hardest-hit groups beginning last October. So that really includes Bitcoin, software, momentum stocks, and yes, it includes our other favorite cryptocurrency. It’s Friday, so I’ll mention it— Tao, BitTensor.

Tao, which by the way was up 28% this week, right? So we’re seeing life come back into cryptocurrencies again. This is that FIFO trade, uh, and it’s what should continue to happen. All we need is a bit of good news. Again, it’s oil in the street. That, that’s what this is now. That’s what this is. All right, let’s take a look. Oh, I want to say it— Ross, uh, Rich Ross.

Again, Rich Ross, for those who don’t know, he’s the, uh, chief market technician at Evercore, and it’s fantastic. He just does really good work. As we always tell people, when our work, you know, the VR Investing System, when it, when it, when it lines up with Rich Ross’s work, our confidence level is frankly sky high. Because he looks at things in a different way than we do, but we came to come to the same conclusion. Okay, here’s what he started with. First off, his title was Someday This War Is Going to End, and he says, while crude, credit, and conflict have caused chaos, the major averages continue to cling to support above the 200-day moving average despite a litany of headwinds which should have toppled a lesser tape, the sum of which keeps me constructive— means bullish— against the contrary backdrop of abject fear, lower exposures, and aggressive hedging. Ross is recommending in his long technology stocks, um, he said they’re poised to rip higher off support and take the S&P 500 with it. Obviously still, he’s still bullish.

You know, he’s a big bull on Nvidia as well, as are we. Uh, it’s been coiling now for 6 months and ready to break higher. That’s a, that’s a coiled spring. Ross also makes the same point we do about software. He said all the bad stuff is built into it, it’s a buy. Bitcoin— Ross is a buyer of Bitcoin. Uh, it doesn’t give a target here, but, uh, he had been, he had been neutral on it and now he’s back to recommending it. Yields.

Ross continues to see lower yields, with the 10-year just 2 weeks removed from the first close above the 200-week in 4 years. All right, bottom line is he sees what we do. It’s overwrought, and yields will stall here. That’s his word. So we essentially see it the same way. Um, matter of fact, I think we see it exactly the same way, which is good. I’m looking for a much better week next week. Again, looking for a pivot from President Trump.

All right, let’s take a look under the hood today. Internals were, you know, again, NASDAQ finished down 9/10 of a percent, down 206. Dow finished down just 2/10, down 119. Um, so, you know, not, not a lot of damage is done today. Uh, again, it’s a Friday. But the internals were actually not bad at all. Uh, 2 to 1 advance decline negative, both NYSE and NASDAQ. Again, on, on, in, in, in these kind of, um, uh, capitulation type moves, I think that’s what we have now is a mini capitulation move because gold, silver, the miners are down today too.

00:25:30]:
Silver down like 5%. Uh, this is when the internals start to get really bad. We just haven’t seen that. They weren’t good yesterday, but they’ve held up very well. And that’s bullish underneath the surface. Um, NASDAQ again, NASDAQ down 206. NASDAQ’s advanced decline was positive, slightly so, but positive. NYSE, uh, sorry, that’s, that’s volume, uh, just slightly positive volume for NASDAQ.

NYSE, 61.2% down volume. Again, that’s, that’s very minimal. In our sector watch Wait, there you go. Uh, 5 sectors higher, 6 sectors lower. Again, no damage done anywhere. Uh, there was one sector down more than 1%, technology, just barely over. And then, uh, to the upside, utilities, consumer staples, both have better than half percent. Commodity Watch.

This is where some damage was done for us. Again, we’re very long this group, remain long, remain bullish. And look, it would be a stretch to say that gold, silver, and the miners are at extreme oversold levels because they’re just not. They’ve just held up very well. Gold is still above $5,000, just slightly so, $5,024, down today $101 an ounce. Silver today still— remember the low in our big shakeout we had for gold and silver, the low was like $63, $67, working on memory, uh, for silver. Well, we’re still just under $81 an ounce there, although it was down today 5.2%. Copper today down 3%, $5.67 a pound.

Again, now we’re seeing interest rates— this is interest rates in the dollar, right? I think this is capitulation-like move in this group. Uh, we’re buyers of this group. Crude oil today, again, uh, 99.28 now, up, um, 3.7% on the day. Uh, looking for a pivot, looking for a pivot. All right, folks, that’s it for the day. Hope you had a great day and even better night. We’ll see you back here again tomorrow after the close.