In today's episode, Tyler recaps a volatile start to the week for the markets. Despite the headline-driven pullback and growing market fear, we examine why the fundamental backdrop remains bullish, highlighting the structural strength of the current market cycle and opportunities emerging amid investor pessimism. Tune into today's podcast to learn more.

Don’t look back because the market is closed. Good Monday afternoon everyone. Tyler Herriage here with you for today’s VRA Investing podcast. Hope you all had a great day out there today. We’ll get to today’s action in just a minute, but I hope you had a great weekend out there as well and again that your week is off to a great start.

Out of the gate this morning it looked like our markets were going to give us that good start to the week. Despite the fact that oil had once again crossed $100 a barrel, we ultimately didn’t finish in those green levels today. There was some green on the screen, so some certainly some pockets of shrink throughout the session today that we’ll get to in today’s podcast.

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But we’ve got a lot to cover here. We’ve got some great stats to share for overall market action. Not only what we’re in the midst of this kind of a pullback right now, but overall midterm years, what you can expect, how much fear we’re seeing in the market right now and how are people positioned and how does that compare to previous pullbacks? We’ll take a look at all of that and more today. Of course, as I mentioned earlier, oil did cross above $100 a barrel again today, so we’ll cover that. We’ll cover the latest in energy stocks and where they finish the day. That one might surprise you as well. When you’re seeing oil prices going up, you’d think it’d be good for energy stocks, right? So why do they finish in the red Today we’ll discuss that and more for the latest in the commodities market. Of course, we’ll cover again our major indexes, market internals, our sectors and much, much more here today.

There was a lot that caught our attention throughout this session. I was lucky enough today to be on the Schwab Network for the watch list, their 2:00pm Eastern Time program. Thank you again to Nicole Palides and for Schwab and Schwab Network for having me on today. We had a great discussion. If you haven’t gotten a chance to see it yet, you can find it on their website, also on their X Twitter feed. We reposted it from the VRA account as well, so please check it out. I’d love to get your feedback on it. As you know, we are classically pretty optimistic on the market as a whole, especially over the medium to long term.

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But as you’ll see here on the podcast today as well, there are some short term hurdles that we have to get over here. But the, the foundation remains unchanged here and that is that fundamentally speaking this is a structural bull market. You’ve heard Kip and I talk about that here a lot. There are so many reasons to be optimistic on this market. Whether it was the earnings growth that we just saw or the Trump Economic Miracle 2.0. We’re getting right into the heart of tax season here where people are expected to get big refunds this year thanks to the one big beautiful bill, Trump’s tax cuts and now deregulation, which should help drive innovation and push the envelope faster. All of those things take a little while to really be felt by the market. As you know, we are looking for massive GDP growth over the next few years and that still remains our target over the short term here.

This has been a headline driven sell off. So again on the foundation from the fundamental side some more I’ll get to here in a little bit. But that remains unchanged. It has been purely headline driven. Of course the oil shock is what’s scaring everybody. Whether that’s from transportation fees, right? Airlines raising their prices. How is this going to affect inflation? Well even after today’s action you still, if you look out to December, are we seeing oil still priced in the $70 a barrel range? 70 upper 70s though still below $80 a barrel is my point. So even the market is still telling us it expects this to be a short term shock to the system.

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And really it is. Even more so than the shock is the fear is the uncertainty. That’s really what upsets the market and why you see this backwardation is what it’s called in the oil market where you see higher prices today than in the delivery in the future. So that being said we the best of the market is telling us is that this will reverse and we think when it does reverse it will happen quickly. So we’ll get to a chart on that here when I get to the energy sector. But that is a big reason for this market’s how upset it was. But we were, it was very different from what we’ve seen in other days since the Iran conflict began. For one the 10 year yield finished lower on the day to day we’ve seen yields go higher during this time.

Jay Powell spoke today and really yo wasn’t that bad actually had some pretty common sense policies to say now as you know we think they should be cutting rates outside of the Iran conflict. They should have been cutting rates already and it surprised us they didn’t react to this with a little more urgency and that to cut rates because of this conflict. But his explanation today as far as from what their point of view is, does make sense, right? If they see this as well as a short term shock to the system for the oil market, it doesn’t make any, they don’t have the policy tools. They’re not equipped to deal with something like that people because if you cut interest rates just because of something like this, by the time that those effects are really felt by the market, it’s 12 to 14, 16, potentially 18 months later. So by that time the crisis is over. So it has to be a real fundamental reason that they see to make a change now again, they should be cutting rates. They’re at least a full percentage point. I mean if you take trueflation stats, I mean they’re too restrictive by about 2 percentage, 2 full 200 basis points.

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2, 2 full percentage points of cuts that they need roughly in that range. We’d be satisfied I think with one, you know, this point take what you can get. But point being, he did have some, some good comments today. It wasn’t his fault that the market sold off today. So we talked about a lot of fun things like that on the Schwab Network interview today. Not so much on the Fed, but the bigger picture from the market. And some of that we’ll break down here. Let’s go ahead and discuss it here.

For the market again, we did start off the day much better today. Then we finished off the lows but but not too far off of them. But the Dow Jones did manage to finish positive on the day to day, up 1/10 of 1% for the Dow. After that we had, let’s see here, the S&P 500 down about 410 of 1%. After that the NASDAQ was down 7/10 of 1%. And not what you want to see here was the semis leading lower, hitting a new low here today as well. I’ll touch on that just a little bit more in a second. But again down 3.1% for the semis on the day.

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And then finally small caps down 1.4% which is interesting because we’ve seen small caps heading higher recently on days where yields were up as well. Now today yields are down but small caps are lower as well. So we’re seeing some things that are not matching the pattern of what we’ve seen recently, which tells us once again that a low is approaching. So we’ll get to a couple of the charts that I want to talk about here. And most importantly, I’LL go ahead and say this now so that I don’t forget it. Why we need kind of the bottom, knock the bottom out flush in the market. That doesn’t mean that we’re going all the way to bear market status. Okay, before I freak anybody out here, okay, this is not a concern to us here what we’re going to use it as I’ll explain along the way, but we’re going to be ready to be adding two positions on an event like this.

Now, it could happen overnight. It is something as simple as, you know, the straight is fully back open and then we’re off to the races again. But the way that this market has been trading and the increase that we’ve seen recently in bearish sentiment makes us think there could be one more flush left along the way. I’ll break it down a little bit more as we go, but Kip and I will be discussing this theme over the course of this week because while that seems scary, and it will be, as we’ve talked about a lot over the last few weeks, pullbacks like this never feel good in the moment. But in hindsight, they’re fantastic buying opportunities. We’ve talked about it. So much of the 1995-2000.com melt up along the way of that 585% rally. There were no less than five pullbacks of 10% or or greater.

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Many of those were in the 15% range, one 20% pullback along the way. We don’t expect that to be the case, but from where we’re looking at it right now, you know, it’s really too late to take any action. Stops will be hit on the flush as well. And a few days later you’ll be regretting that decision to sell. Right. And we want to look to be adding two positions at the time. Well, again, we’ll be elaborating on this more and more, but let’s take a look here at why we say that’s the case. We have the s and P500 at this point down, right at about 10%.

They actually might be the only major index, if I’m not mistaken, that has not gotten to the 10% correction territory. Now, we’ve talked about this stat for a long time. That’s run of the mill. They never feel good, but it is. Happens every 12 to 13 months, even up to 15% happens roughly less than every two years. So that’s not a huge deal. And looking at this chart, we’ll start with the negatives and then we’ll get to the positives, okay. In the average midterm year, we see a pullback, max drawdown.

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You know, some years is better than others. 4% there, but then further down the line, 70s, 25% pullback. Right. 2022, that was a bear market, not just in pullback, but that was roughly 11 months long. It was brutal. 2018, another year there. Okay. Point is, the average pullback along the way for The S&P 500 is then 16%.

Again, we’re just about right at the 10% level. Not even saying that it has to go down to the average here. Okay. But if we get a flush like we saw during tariffs, right when the maximum pain was felt, everyone was freaking out about the. The market. Trump had just come on stage with his charts laying out is 10% and then these for some countries. Right. And then some.

And the market lost it. And Trump came out, I think it was like the next morning and said, I, it’s a fantastic time to buy. That was the low and then it was over. We could be looking at an event like that. It concerned us like we said last week when Trump said, I thought the market could have been hit more, I thought oil could have gone higher. That’s not his attitude when things are about to be heading in the right direction. But here’s the main point, okay? If the average is 16, you know, we’re really. It’s not that that bad.

It’s not down to 16 yet. We don’t think it could. Could it get that bad? It could. Bottoms are messy again, but we’ll look for that flush and use it as an aggressive buying opportunity. And here’s why. One year going forward after that, 100% of the time, the market is higher with average gains of 36% this that alone. I think I could end the podcast there. That’s a great reason why we want to be long the market.

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Another one here. Okay. This is us equities positioning value for hedge fund. Okay. Just hit their second highest level of short sales. Another massive contrarian indicator. And how about this one? We talk about it often. I know, but how often have we seen this? Not in a while.

I don’t remember. I’d have to go back and look. I bet it’s probably not as long ago as I thought, but single digits now on the fear and greed index, we’ve seen the flip in AI to extremely bearish levels. Okay, just to go back to this one real quick, look at this. It’s right around the time of other bottoms tariffs. Okay. So it’s not quite as bad as tariffs. Also not quite as bad as Covid, but look how many instances where this marked around the lows.

Okay, finally. Well, let’s. Sorry, I do want to stick to we also saw the put call ratio today. I don’t have a chart for that one here, but over the last week we’ve been seeing more consistent elevation in those readings as well. So again, while we don’t necessarily, of course, we don’t want to see a flush like that, we have to be prepared for all situations here. We’ve got to have a game plan for it and we’ll use it as a buying opportunity. Again, nothing’s changed in our view. If you’ve listened to my podcast over the last few weeks, it’s been nothing but optimism because this will, in our view, be a fantastic buying opportunity in the future.

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Again, we talked about this a lot of my Schwab Network interview today. I’d love for you to give it a listen. Love your feedback if you have a few minutes later this evening. All right, next up here, let’s take a look. Well, let me take a look at this real quick. Yeah. Before we get to our internals, one other factor we’ve talked about where we’re at as far as PE ratios go for a long time. You know, with this pullback, we’re nowhere near where we were.com era.

So for people calling this a bubble, wow, that was a boring pop that we saw there. Right. PE ratios never even got close to what we saw in the dot com era and now they’re really at even healthy levels. Look at this, the lowest that we’ve seen since COVID Right. Cheapest since 2019. And that’s for the S&P 500 as a whole. The Mag 7 names are in a good position where they should start to shine. It’s really time for the generals to to start taking control of the market.

They just had a phenomenal Q4 earnings. Of course we got Q1 earnings coming up in the next couple of weeks. We’ve got a new quarter coming up. We’ve got a lot to look forward to in this market once this headline issue on the conflict in Iran is resolved. Nothing else has changed. It should be a rocket ship move higher in our view. Looking at the internals on today on the day for the red on the screen, not nearly as bad as you might expect. We’re actually still positive in some areas not long before the close today, really pretty much even on the advanced decline line for the NYSE a little bit worse, but no 2 to 1 beats on the NASDAQ.

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52 week highs and lows, probably our weak spot. But this is going to be a lagging indicator here. Just because they hit an intraday low doesn’t mean they finished at that level either. So it’s a cumulative number. And again lagging volume also not bad here. No 60, 70% kind. I mean really pretty close to flat on the nyse. Not too far away from it on the Nasdaq as well.

Looking at our sectors on the day today, if you had, excuse me, just seen our sectors on the day today, you would have thought there was a lot of green on the screen. And like I said, there were a lot of instances where we had green on the screen today. But for our leadership we had the financials where there’s a lot of concerns about the right, the cockroaches in the, in the system as Jamie diamond has called them. So while we don’t have any love for the big banks, we do want to see them participate. After that little defensive utilities, consumer staples and real estate. Then our laggards on the day, well seems pretty defensive here too. Industrials. But then after that technology and energy.

This is the next chart that I wanted to show here. I want to go back to this. I shared this a few weeks ago where we talked about when the rise in oil prices began and it was just past mid February. This was really when oil prices started to take off. Here we’ll see a chart of energy to crude oil. Okay. Where energy just hit another all time high today here. I’ll go to that chart really quick just so you can see it.

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But then finish negative on the day to day and it has been a phenomenal run. But this is what you want to see from the group. Okay, is the stocks just like you want to see the semis outperforming tech, you want to see gold miners outperforming gold. This is what energy was doing to the commodity. That’s what you want to see. Then this collapse was oil’s next really big move higher. Well that was a little too tough to tell right in the instant. This kind of gave it away.

And this here to us again is telling us in our view the next direction that we’re headed with energy stocks. If it was going to be longer lasting we would expect this to continue lower. We like this, this short term series we’ve got a higher low here on a flush. It might get taken out but we would expect energy stocks again to start outperforming the commodity as the commodity heads back into, you know, the ninety, eighty dollar a barrel range. I also got a great comment today from, from somebody on Twitter from my interview I did last week on the podcast with Grant Cinchfield where we were talking about oil. You know, can companies survive at 50 a barrel or so? And you know, just to clarify there a little bit, I don’t think that we’re necessarily headed right back down to that level, nor do we need to head back down to that level. The most important thing is American energy independence. Then we can handle oil prices at 60, $70 a barrel.

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Absolutely. And get away from these global shock levels because we do have so much here. And then when we see increases globally to the 70, 80, 90 a barrel range, it should be a lot of money coming back into the US as we export that energy. All right here. Let’s take a final look here today at our V Commodity Watch. This is another one that I talked about today, but and on grants as well. It may surprise a lot of people that gold is still higher on the year even when with this thousand dollar an ounce pullback that we’ve seen, we think a massive repricing is taking place in this group. We’ve talked about it at length here on the podcast, especially though in the miners.

We remain very bullish on the miners and especially the junior miners here as well. But gold did finish higher on the day now trading at $4,540 an ounce. Again might surprise you, that is slightly higher still on the year this year. And the miners were negative earlier in the session, but managed to finish just slightly positive on the day. Silver now above $70 an ounce. Copper roughly $5.50 a pound. Oil last trade here, 105 a barrel. You do have now have to go out to December.

These do move a little bit more, especially with the volatility we’ve seen lately. But in December, you’re still seeing roughly $78 a barrel trading in futures. And again, as soon as that headline’s behind us, it’ll be off to the races. Last year for today, bitcoin now trading at $66,884 a Bitcoin.

That’s all that we have time for here today. Please be sure to subscribe to receive our podcast every day at the market close. You can sign up@vraletter.com, click the podcast link at the top and we’d love to have you with us. Thanks again for tuning in. Until next time, we’ll see you back here tomorrow. For the close.