In today's episode, Tyler recaps the latest market action, covering the record-breaking run, including the semiconductor sector’s 45% rally since the March 30th lows. Despite today’s pullback, the VRA sees this as a refreshing pause before the next leg higher. We’ll also discuss key topics shaping investor sentiment, from oil’s rise above $100 a barrel, to tomorrow’s highly anticipated earnings reports from the big tech “Mag 7”. Tune into today's podcast for more!

Don’t look back because the market is closed. Good Tuesday afternoon, everyone. Tyler Herrich here with you for today’s VRA Investing podcast. Hope you all had a fantastic day out there today. Hope your week has been off to a great start as well. Yesterday was a little better. We got some all time highs.

There were still some out there today, but there was some more red on the screen especially for our major indexes here as we did finish negative across the board today. But let’s just recap a little bit here. What a remarkable streak it has been for our markets, specifically the semis. Like we talked about from the very lows at March 30 and before that that we wanted to see the semis leading to the upside and wow, have we gotten that 45% plus gains since March 30th for the semis. And we’ll recap some of that rally today. It did come to an end yesterday for the semis, although the NASDAQ still hit an all time high. So we’ll cover that move. Our major indexes today, of course, as per usual, our internals, our sector watch and a few other fun topics out there today.

[00:01:34]:
You know, on a day with this much with, with red on the screen, a normal amount of red, I would say. And overall I’ll get to this in a second. Healthy bull market action as we see it here. But so on a day with some red on the screen, we’ll keep it a little lighter for you. For example, tomorrow we’ve got hopefully the final FOMC press conference coming from none other than Jerome Powell. We’ll talk about that a little bit here today. And of course, the topic that’s really on everybody’s mind is oil above $100 a barrel. That scares the market, right? Scares economists because of inflation costs, scares the consumer because of inflation costs.

You know, people think about it most often as, oh, oil is going up, the price I pay at the pump is going to go up. But as we saw during the 2022, you know, inflation crisis, highest levels of inflation in 40 years, potentially longer depending on who you ask, on how it was calculated. I mean, we added 40 to our money supply in just about two years. From COVID to the inflation crisis, that is a topic for another time. But as we saw then, energy goes into everything. And if you’re, if you are familiar with this space, you do think about it in that way. But there are a whole lot of people who don’t. It goes into the transportation costs of your food, of your clothing of airfare, just about everything into plastics.

Right. There’s so many. It touches every part of the economy at the end of the day, in so many ways. And this might have been what Frank Herbert had in mind. If you’re science fiction fans here at all, Dune was written by Frank Herbert. Or have you just seen the movies? Phenomenal movies as well. So either one of you read the books or seen the movies, or you’re just familiar with kind of the pop culture references of it. Spice is the commodity traded all over the galaxy.

It is what makes the economy move in the Dune universe, if you will. And one of the sayings in the movie from the very beginning is the spice must flow. Well, I believe it might have been based off of oil, actually. It’s been a while since I’ve looked into that. But in this case, it is. Oil’s the spice. It must flow to keep the economy running. We’re seeing Middle Eastern countries, you know, whether it’s the UAE leaving opec, you know, trying to look for a place to sell their oil, what the damage that is done to the Iranian economy as well.

[00:04:26]:
You know, we can dive into all of these things of what it’s doing, but what it appears to be happening, what we’ve said from the beginning is there is really. It was a lot of speculation in the beginning, but it, you know, the kind of the. What the administration had put out, what we were seeing, the way they were messaging, appeared as an attempt to realign the global structure of the oil market, whether it’s disrupting OPEC and ensuring that we’re transacting in dollars. Right. It ensures the US Place as the leader of global transactions for the most important commodity in the world as far as keeping the economy moving. Right. I think there’s probably a debate about what’s the most important commodity overall, but that’s a debate for another time. There’s no doubt that it’s essential.

Right. So if that’s the case and that’s the world we end up in, I think that what we’re seeing right now absolutely bodes well and bodes in favor of the U.S. i think anybody watching from the sidelines would agree with that take as well. If not, I’d love to hear about it. You know, maybe we can dive more into it, but that’s. I’ll get to more on oil in our VRA commodity watch, if that’s a topic you’re interested in, stay tuned. We’ll get there as well. But I do want to recap this market on the day quickly because overall this has been an incredible move and exactly what you would expect in a bull market.

[00:06:00]:
And not only is this a bull market, in our view, this is a once in a generation kind of bull market that we’re still in the early innings of. We’ve compared it a lot just quickly here to the 1995-2000.com melt up when the NASDAQ rallied 580% at the recent highs, you know, the Nasdaq was up close to 146% or so, right in that ballpark. So to give you a frame of reference of how much further not only could this go, that’s just an example, we think this will exceed those gains and the time period as well. So we just saw a correction of 10%. You get those in the market roughly every 13 months on average. This one happened about 12 months from the most recent one from tariff mania. Both of them proved to be fantastic buying opportunities that buy. The dip approach, even in very scary situations has been repeated in investors minds here.

So we think really for going forward, likely until year end, the dips are going to be bought aggressively, especially after what we just saw. But again, think about this. So normal correction, healthy bull market action, rally back to all time highs way faster than we even thought. But that just shows you, you know, the strength of this bull market, the demand out there. And again, you know, there’s so much the ocean of liquidity that we’re talking about that’s still yet to come off of the sidelines. Some of that might start now, but again, think about it. So we’ve got an Iran conflict that’s enough by itself to shake up the stock market. But with that came the $100 barrel of oil.

Scared the market of course, yet we just hit all time highs 18 day, 45% move higher in the semis. Again, classic bull market action. To the point. Now we’re at extreme overbought levels. And I’ll elaborate more on what that means in a second for our major indexes and when you get to our most extreme overbought designations on the VRA investing system, that’s typically when you get pauses. And for this kind of action today, and even if it continues for a few sessions, we would look at that as a healthy restful pause for the market. Again, classic bull market action. The overbought signals again are just that.

[00:08:31]:
They’re not a silver bullet. They’re a signal to be used within the framework of the rest of the system. Right? They’re not the end. All be all of trading signals. So a market that does go up and gets to overbought levels and stays overbought is extremely bullish as well. I know that sounds counterintuitive, but for us here at the vra, Kip talked about this yesterday. In a bull market like this, you want to hold your winners through the rips, ride them as far as you can, right? Because often they go much longer than people expect. So it’s not the time we’re putting new money to work.

It’s a time where you already want to be positioned and enjoy the rest of the ride. Higher. And we’ll get to that more in a minute, but I’ll go ahead and share this chart again. Even if you are buying at all time highs, there’s far worse things you can do in the market. It’s actually one of the best times to be a buyer for anyone not in this market. Yet you feel like you’ve missed out. You’re wondering, should I be putting money to work? It wouldn’t be the worst decision. And we do certainly believe one year, two year, three years down the line, you’re going to be so happy that you started today.

[00:09:41]:
The best time to plant a tree was 20 years ago. The second best time is today. You’ve got to start that long term way of thinking when it comes to your financial future. We talk about it so much. There’s never been a better time to take control of your financial future and to use the tools available at your disposal. So again, with this massive move higher, despite all the conflicts, oil at $100 a barrel yields have been above 4% almost the entire year this year. And none of this has been enough to stop this bull market from hitting all time highs here once again. So again, classic bull market moves.

I do want to elaborate more on just what it means, the strength of this bull market. With yields at this level, oil at these levels, just imagine what these moves are going to look like in the next few months as these these tensions alleviate as yields move lower. As we’ve said for a long time now, as oil moves lower again, I’ll elaborate on that some more. But also, how about earnings? Bull markets don’t peak until after earnings have peaked and we have not seen even the best of earnings yet. We’re just getting started on Q1 earnings season. We already know we got fantastic Q4 earnings season, not only from the market as a whole, broadly speaking, because that was what everybody’s been saying for years, oh, it’s only seven stocks. It’s Only seven stocks and then the Mag seven do nothing for about four months, have some of the best earnings of any companies ever and still can’t catch a bid. So everybody wants to have it both ways.

[00:11:25]:
You know, the Mag 7 are lagging, so everything’s got to sell off or the MAG7 are rallying. So it’s just seven stocks leading this market. You can’t have it both ways. So without even a major portion of the Mag 7 reporting. I’ll get to this here. Let’s go ahead and we’ll start here. Okay. You know, we had a couple names today.

Nothing really worth writing home about just yet. We’ll report on some of this more over time. But for the podcast today, we’ll stick to the high notes and that is tomorrow after the close four of the Mag 7. We’ve already had Tesla, we’ll get Nvidia late as per usual. We have Microsoft, Amazon, Meta and Alphabet all coming in tomorrow. So it’s going to be an eventful day after the close tomorrow. And again, here’s what we’ve seen so far though. Markets don’t peak until after earnings have peaked.

And so far only 28% of the S&P 500 kip covered this yesterday, but I got to, I got to cover it here as well. 28%. 140 companies before today had reported Q1 results. Of those, 81% have beat analyst expectations with double digit earnings rate growth on average 15.1% in the mega caps just crushed by that metric as well and in Q4. So that will likely improve, which at 15.1%, that’s an incredible growth rate, the highest that we’ve seen recently and above where we saw in Q4 and Kip talked about this yesterday as well. Analysts continuing to raise their earnings per share growth. Now we’re gonna have to be raising ours as well because they’re starting to get close to us, right? In some cases exceeding us. But again, so the how impressive this has been, the five year average that S&P 500 companies exceed earnings estimates is 7.3%.

[00:13:21]:
That’s the five year average. So far it’s been 12.3%. So phenomenal numbers here again, another sign that we’re just nowhere near a market top. All time highs again just yesterday, not a bearish occurrence. All right, so again, some exciting stuff to watch for this week and specifically tomorrow. And that isn’t all because tomorrow will also get hopefully the final FOMC meeting from Jay Powell before Kevin Warsh is sworn in as the new Federal Reserve Chair Kip covered this yesterday as well. Jay Powell will be staying on board. We’ll see.

You know, it is fairly common, I believe, for them to retire after they’re done with their position. Of course J. Pal is going to try and stay on as long as he can. But it so we’ll see. If Kip and I were kind of joking, I don’t think this is the case, but I was kind of joking about it before. If Jay Powell is going to throw one last curveball in there, one last wrench into the system on on his way out, I wouldn’t put it past him. I don’t expect that to be the case though. One thing that is interesting here now that it seems that the path has been cleared for Kevin Warsh to get into office.

[00:14:43]:
You know what’s really interesting is that that rate rate cut expectations have not fallen at least a little bit, at least according to the the CME’s fed watch tool. We’re not seeing any kind of move lower yet. I think there’s still a lot up in the air here of expectations. It is looking like again that the path has been cleared, but we’ll see if we get any details tomorrow and what the messaging looks like leading up to May 14th. So just a couple of weeks away now from that point, so should be fun to watch between now and then. All right, let’s quickly here cover our market action on the day to day. Again, as I mentioned, we are at extreme overbought levels so that is when we would expect to see a move like this. And again, although that might sound counterintuitive that when you get to extreme overbought levels and continue heading higher, that that is in fact bullish.

Again, these are signals and are part of a broader framework of the VRA investing system which I would, you know, like to take. It probably should share this even more often, but right now we’ve got 10 out of 12 screens bullish here. So again, but when we are at these overbought levels, which is a technical screen, again, this is when we pause putting new money to work. Not necessarily an absolute sell signal. So if you aren’t already with us, come and join us. We’ve got a 14 day free trial going on right now@v letter.com we’d love to have you with us. You of course get full access to everything we have to offer, our daily updates, the full VRA portfolio and again everything that we have to offer back there. And you find our podcast with the transcripts up there on Our website too.

[00:16:35]:
All right, so quickly here for our markets we were led by the Dow which was essentially flat on the day to day was higher earlier in the session today. After that we had the S&P 500 down roughly half a percent. Slightly better than that. The Nasdaq despite hitting an all time high yesterday was down roughly 1%. Just over or excuse me, that’s the NASDAQ 100. The NASDAQ overall down 9/10 of 1%. But the semis did lead the move lower today. But again after an 18 day 45% plus move.

I mean I, I didn’t have to draw this one up to show you how incredible of a move higher this is. This is sox, the semiconductor index. So it actually moved a little bit more than the ETF smh. But again from these lows here, I’m just going to eyeball it. You know, 7,084 is low so we’ll go a little over it even to today still 40% move to the all time highs, 48% move. If you can see that there it was not too small on your screen. Just incredible. And again to the level of overbought.

[00:17:46]:
I mean, wow, the most overbought we’ve been in, you know, well over a year. So again, amazing move here and this is the kind of pause you would expect to see after a move like that, a pause that refreshes. Finally here small caps did lead the way lower. They’ve been, you know, acting good to the upside, especially from the lows, down just slightly more about 1.1% on the day today. All right, any final notes here? That’s about it for our markets. Again, all time highs that we saw yesterday, not a bearish occurrence and we remain extremely bullish on this market going forward for our internals on the day we on a day with those red across the screen, you might have expected these to be a little worse. Really not too bad. Advanced decline, both negative NYSE and NASDAQ but no two to one losses or anything.

52 week highs lows came in positive for both the NYSE and the nasdaq. Finally volume tried its best to come in positive for the NYSE. Just barely negative there. Slightly worse on the NASDAQ but again no 2 to 1 beats on the day to day. So again we’ve seen now three sessions in a row with weaker internals. You don’t want to see that become a trend. Absolutely. But again after a move like that, a pause that refreshes is to be expected.

[00:19:12]:
Let’s see here Looking at our sectors on the day to day, we were led by the energy sector, as one might expect with oil at these levels. Earnings coming up for these companies, you know, for the first time since oil really has shot up in price, at least some of that will be reflected in Q1 earnings. Likely more so into Q2 as we are now ending the first month of the quarter. After that though, we had real estate, consumer staples and healthcare. So the defensive names which have been lagging. And then our laggards on the day, tech, materials and industrials. Finally here for today, our VRA commodity watch. Again, more red on the screen here.

See where we’re at in futures trading. We’re actually up now in gold. Getting a little late start today. $4,610 an ounce. Silver now it’s 73.14 a barrel an ounce. I’m thinking about oil here. 73, 14 an ounce. Copper just below $6 a pound.

[00:20:16]:
20. Now on to crude, which is actually now just below, just barely below $100 a barrel. Again, kind of to go back to this point, I know we touched base on it a little bit earlier, but as we see it, oil at $100 a barrel, not great for the market, but it’s more of a headache than a hamstring. Much like we’ve said of bond yields and I touched on earlier this, they’ve been elevated. We’ve been looking for them to move lower for some time now and we do. That remains our expected case scenario. But they’ve been above four. But we’ve said the full time as well.

It was not enough to hamstring this market but a headache. So the optimistic side of this, just imagine, just imagine the kind of rallies we’ll see later this year when we have oil firmly below these levels. You know, back into the 80s, 70s and this Iran conflict, hopefully behind us in full. You have the 10 year below 4% housing starting to move and really just the fear and the uncertainty that is involved with elections as well. So as we start to look forward to that. The market is a forward looking mechanism. It will start to price those things in and we think it will be to the upside if the market can rally like this with all of these, you know, wall of worry bricks in this wall of worry. The market loves to climb a wall of worry higher.

So it’s what we expect to see from here. Finally for today, bitcoin. Let’s see here. Still lower on the day. I have trouble refreshing my screens here, but roughly $76,350 of Bitcoin. We we do still remain very bullish on cryptos, specifically bitcoin. We’ve got one other one other one we like here at the VRA as well. So come and join us again.

[00:22:13]:
14 day free trial. You’ll get to find out exactly what it is. No risk at all. Cancel at any time. But we think you’ll stay with us for life. That’s why we offer it, because so many people stay with us. And as always, thank you for being here with us. We’re so grateful for all of you tuning in here for all of our members listeners.

You really make what we get to do here every day very fun. So as always, send any questions in to support at VRA Insider. We’d love to discuss with you and we’ll address some of them here on the podcast as well. So thanks again for tuning in. Until next time, we’ll see you back here tomorrow for the close. You can sign up for our podcast every day. Receive them in your inbox@vraletter.com, click that podcast link at the top and like share, subscribe and subscribe everywhere. Whatever socials that you like on there, we’re on most platforms. If we’re not on one that you like, let us know. Again, thanks again for being here with us. We’ll see you back here tomorrow for the close.