The Weekly Trend
The Weekly Trend
Episode 229: Emotional Bodyguard
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In this week’s episode, David and Ian discuss the initial market reaction following the election, seasonal expectations, and a healthy mindset to have around politics and your portfolio.
Welcome back to the weekly trend podcast. Today is Friday, November 8th, 2024 P 500, currently sitting at 6, 000. I'm David Zierling. I'm here with soon to be birthday boy, Ian McMillan. You got plans for your birthday?
ian-guest911_21_11-08-2024_124931Yeah, we got some plans. We'll do some stuff tomorrow for the football game. I think my parents are coming up sunday after church.
david_19_11-08-2024_114931Very nice. That's excellent. I
ian-guest911_21_11-08-2024_124931It
david_19_11-08-2024_114931Got a little early birthday present from Mr. Market.
ian-guest911_21_11-08-2024_124931Mr. Market. How about this guy?
david_19_11-08-2024_114931You know, I remember.
ian-guest911_21_11-08-2024_124931through. Wow. What a week. What a week
david_19_11-08-2024_114931Yeah things move slow and then they don't and I read, you know, last week was flashback Friday and we talked about the breath for us that we saw late last year in 2023 and what do you know, trends continue to trend things, which is move higher, of course, with the backdrop of everyone's favorite topic, the election,
ian-guest911_21_11-08-2024_124931The election, right? A lot of nervousness going into the election. Whether you know, from what's the market gonna do versus, you know, personal emotions, I guess, for a lot of people. We had some I would say inklings, right? We know that the market is a future discounting mechanism. There had been things happening leading up to the election and certain assets, even gosh, when what polls closed at seven Eastern
david_19_11-08-2024_114931right,
ian-guest911_21_11-08-2024_124931on Tuesday and almost immediately you started to see markets move all different types of assets, stocks, crypto rates. Through the night, they were all kind of making their stamp, I guess, putting in their opinion on who they thought was going to win. It was a continuation of a lot of those same trends that we
david_19_11-08-2024_114931right
ian-guest911_21_11-08-2024_124931And
david_19_11-08-2024_114931and that's where it's important to remember that, you know, going into a present elect, you know, In 2016 of a Donald Trump, you know, markets had gone close to limit down. And then we saw subsequently stocks rise after that. And 2017 being one of the least volatile years on record for the market. But it's also important to highlight that this also could have happened if Kamala Harris had won.
ian-guest911_21_11-08-2024_124931Yes. And for clients listening to this, if you well, you will, you should have gotten the client letter yesterday. Please read that. No charts. Actually, I think in five years of writing, over five years of writing client letters, probably the first letter I've ever written that didn't have a chart in it. Usually they've got lots of charts because we're a firm that has a technical and this technical analysis discipline, But we talk about the election and the reality that it's been fun. It's been great. This office has to stick, right, Dave? I mean, we can't just give it all back.
david_19_11-08-2024_114931Right.
ian-guest911_21_11-08-2024_124931If your party, if the person that you voted for one, that's great. Congrats. the person that you voted for, I mean, this could have also happened if Kamala Harris won.
david_19_11-08-2024_114931Correct.
ian-guest911_21_11-08-2024_124931Let's all be honest about that. Now
david_19_11-08-2024_114931And it also.
ian-guest911_21_11-08-2024_124931back to my comment earlier, there were things as Trump's lead in the predictive markets, we'll call them predictive markets. We're not going to talk about polls. But as Trump's lead grew through other measurements. The gambling markets, and particularly you saw these assets move. You saw interest rates go up. You saw Bitcoin start to rally and you saw stocks continuing to rally. And then we've had the reaction. I mean, all three of those now rates have come back down a little bit.
david_19_11-08-2024_114931When it could have gone the other way too. You could have had a president elect Donald Trump
ian-guest911_21_11-08-2024_124931Can
david_19_11-08-2024_114931and the market sell off.
ian-guest911_21_11-08-2024_1249315%? Yeah.
david_19_11-08-2024_114931There's no guarantee in markets. And we've covered ad nauseum with our clients that there's no presidential party that has a monopoly on market returns. And really, if we were really digging into the data, I know stock traders almanac by Jeffrey Hirsch does good work on this.
ian-guest911_21_11-08-2024_124931Yes.
david_19_11-08-2024_114931What you're really looking for, honestly, is a Republican Congress. And that's not an endorsement of Republicans. That's not a political show. It's just when you look at the data,
ian-guest911_21_11-08-2024_124931It's just a hundred years of data.
david_19_11-08-2024_114931yeah, 100 years, and you look at when there's a Republican Congress, and especially, you know, in situations where it's split, where you have a party in presidential executive power, and then you have congressional power, a different party, those are actually your better outcomes. That's And to have situation where you have a Republican Congress, your average annual returns are much higher
ian-guest911_21_11-08-2024_124931They are. It's
david_19_11-08-2024_114931and
ian-guest911_21_11-08-2024_124931and maybe that changed maybe going forward, Dave will be the worst four years of Republican Congress we've ever had for the market.
david_19_11-08-2024_114931right. It's possible.
ian-guest911_21_11-08-2024_124931says you probably shouldn't err on the side of that.
david_19_11-08-2024_114931Right. And it's just fascinating how people get caught on the presidential election and not other elections, even your local elections. Yeah. Your local elections, what possible connection to a market could they have? But in the end, the impact that you have as an individual around you, the individuals around you. You could have way more impact on your friends and family and community than any president can. And so that's my encouragement to listeners is like, get involved in your community. If you're upset, if your favorite candidate didn't win, go get involved in the community. Don't sit around and you're allowed to be, anybody's allowed to be upset if their candidate doesn't win, that's fine. But to think that it's going to have ramifications on the market. Or your life where you can control your life and you can control your interactions and who you pour yourself into go that direction. Don't go down the, it, the executive power thing. You just have to be careful that you don't marry your biases and opinions to the market. Mark, it's going to do what it wants to do, whether you think it's the right direction or not.
ian-guest911_21_11-08-2024_124931Yeah. And I get it. If you were nervous, I'm sure there were a lot of people that said, we're just going to. I'm just going to sit on the sidelines till the election's over. It's too nerve wracking for me and I don't know what's going to happen. So I'm just gonna, I mean, yeah, I mean, I guess, are you getting in now?
david_19_11-08-2024_114931Well, then again, you know, I know we talked about this several months ago, but you're now caught in a situation where if you haven't been involved, when are you going to get involved right here, right now.
ian-guest911_21_11-08-2024_124931Like now, after we're up, you know, we've had the biggest four day move in markets since the, you know, November 2020, 22, when the
david_19_11-08-2024_114931Yeah.
ian-guest911_21_11-08-2024_124931P bottomed. Now, I wouldn't say that's when stocks bottomed, that's technically when the S& P bottomed. I think there's a fair argument out there that says, unquote, the stock market actually bottomed a little over a year ago. But the S and P that index and specifically, and the thing is if we had been in a downtrend going into this, I get not being involved. get it being a quote unquote surprise to the upside, but that wasn't the case that we have had on Tuesday like, you are an intermediate to long term trend follower. And you're zooming out in charts and you're truly agnostic of what goes on politically, what things go on the headlines, you are a tried and true trend following, I care about price, then you should have been involved, like you should have been involved going into Tuesday night in risk on assets,
david_19_11-08-2024_114931And the reality of trend following is you're going to get involved when it might not feel great from a narrative perspective and the top's going to happen when everybody. And grandma is euphoric and you're not going to be out in the exact top. There's no such thing as the bell ringing at the exact top. And now with SAP 500 being up 38%, since the breath thrusts that we highlighted last week that happened in late October, early November of 2023. We've seen uptrends all over the place and many asset classes. And most notoriously in. U. S. equities, the point being if you stayed out because you were nervous about hard landing, soft landing, completely missing that the market was pricing in, there was going to be no landing or because of election and your least favorite candidate is now in office or going to be in office, are you really going to stay out of an uptrend because of that? That's irrational and double minded and that's why we use price because price is our emotional bodyguard, right? Price protects us. from our own incorrect, irrational opinions about situations. You know, how many times, for example, how many times have we seen the market rally when war breaks out? No one wants war. I get that. I don't want war, but there's plenty of times where negative events happen, quote unquote negative narratives and the market moves higher. So your least favorite candidate gets in and the market moves higher. Who's wrong? Well, if price is moving higher the market's not wrong.
ian-guest911_21_11-08-2024_124931That's reality.
david_19_11-08-2024_114931That's reality. And so
ian-guest911_21_11-08-2024_124931I'd rather tell my wife she was wrong than tell the market it was or not.
david_19_11-08-2024_114931Yeah. Do you get to do that on your birthday?
ian-guest911_21_11-08-2024_124931I, preferably neither. Preferably. I have to have that conversation with neither, but I had to pick,
david_19_11-08-2024_114931But you're now in an emotional, a glass box of emotion. If you haven't participated in this. and your least favorite candidate won, you will not want to get involved, and we're now heading into the best six months.
ian-guest911_21_11-08-2024_124931yeah, like we just started and that was the whole thing and we have, we've had, I mean, we had a good market reaction in 2020 when Biden got elected.
david_19_11-08-2024_114931Correct.
ian-guest911_21_11-08-2024_124931We broke to, we had spent that whole, You know, August, September, October, and kind of a wide range Biden gets elected early November and we rip higher for long time. These are not, you know, it could have been, don't know, who cares who got elected? This is historically what the market does.
david_19_11-08-2024_114931Uptrends are uptrends. Why fight them?
ian-guest911_21_11-08-2024_124931speaking of these market reactions. How often is it that get the spike and who outperforms small caps, regional banks,
david_19_11-08-2024_114931Right.
ian-guest911_21_11-08-2024_124931this we're going on like three, four election cycles of this small caps, get the big push. It's probably gonna, you know, if history is in England, any inclination is probably continues throughout the end of the year. Small cap outperformance. saying that does happen, but again, statistically speaking, this is just how these things tend to go.
david_19_11-08-2024_114931Right. And then you see, you see large caps pick up later.
ian-guest911_21_11-08-2024_124931Yeah. Then we get into the year and like kind of people start making more of their, more specific bets, Paul, you know, those people that invest based on what they think some policies going to be bullish or bearish or whatever those people spend their time looking at. But they do look at that, they do have assets, they are market participants, they are supply and demand, and they are investing on those things. They are moving markets based on that. It's not what we do. We kind of let those people make their bets and then follow whoever was the strongest.
david_19_11-08-2024_114931So the world's not going to end.
ian-guest911_21_11-08-2024_124931I just, I don't think it is, don't, and it didn't end in 2020. It didn't end in 2016.
david_19_11-08-2024_114931Right. And everybody's least favorite, Character got an office.
ian-guest911_21_11-08-2024_124931Yeah.
david_19_11-08-2024_114931had a shot at this. Everybody's had a shot at the least favorite getting in.
ian-guest911_21_11-08-2024_124931And how much higher is the market?
david_19_11-08-2024_114931Right. And it's a perfect example of our personal biases cannot have any inch in an investment process. It just can't.
ian-guest911_21_11-08-2024_124931Since election night stock market's up 185%. We've had two presidents during that essentially. Eight years.
david_19_11-08-2024_114931And so markets are going to do what markets are going to do. And the table was set back in October, November 23. We had two breath rust since then at that point. And then again, in July of this year. And we're heading into the best six months. And so it's probably hard for investors to envision that this keeps going, but we're also not long in the tooth when we look at average months of a bull market
ian-guest911_21_11-08-2024_124931No.
david_19_11-08-2024_114931or average all time highs. You know, I believe we're sitting around 46 or 47 all time highs and a bull market year typically sees in the mid fifties. So we might see more all time highs before the year is over. And is that really a surprise if we're in the best six month window and that best six month window is amplified post election, regardless of who the presidential candidate was or was the presidential elect the six months, November through April are the best six months. And in an election year, they're even more amplified in that direction. Now I know there's some good seasonal charts out there that like Zaccardi shared where typically you rally into the inauguration and then you have a kind of a cooling off period. So we're talking about now through January.
ian-guest911_21_11-08-2024_124931Yeah, let's do that. I'm cool with that.
david_19_11-08-2024_114931Yeah.
ian-guest911_21_11-08-2024_124931Well,
david_19_11-08-2024_114931speaking of, go ahead.
ian-guest911_21_11-08-2024_124931I was gonna say, I mentioned earlier, since election night 2016, stock market's up, well, let's call it, you know, 200 percent essentially. Lots of things are up more than 200%. And you've had how many, so you had Q4 2018 drawdown. Think it was technically 20 percent might've been like 19. 8 or
david_19_11-08-2024_114931Yeah. You've had three 20 plus corrections. In that period of time. Yeah.
ian-guest911_21_11-08-2024_124931percent and you, and every party's their shot at, you know, being the leader, getting their policies and America and just trucks through. Don't go look at what's happening in Europe. I'll tell you that. Yeah. It just gets worse and worse. I know you mentioned earlier to me, Dave, emerging markets all time relative lows, Europe, all time relative lows. I mean,
david_19_11-08-2024_114931Yeah.
ian-guest911_21_11-08-2024_124931they were a lot of red countries on Wednesday. A lot of those country ETFs were red.
david_19_11-08-2024_114931Yeah. Not all stocks are the same and wouldn't you know what? The trend continues there on a relative basis that international stocks continue to underperform us stocks, and we continue to see new brand new relative lows from international stocks. And that's why you don't buy and hold international stocks. So I use relative strength and ratios.
ian-guest911_21_11-08-2024_124931You do not own that for the sake of diversification. Pointless. That's 10, 20, 30 percent of your portfolio. Could have been in something better
david_19_11-08-2024_114931And speaking of uptrends and downtrends, I do want to highlight the supporter of this podcast, the adaptive select ETF, which is listed on the New York stock exchange under ticker ADPV, which helps investors access to the most prevalent factors in markets, momentum, and relative strength using proprietary identification methods. The adaptive select ETF attempts to own the strongest 25 large cap stocks. When the market is in an uptrend. And since not all market environments are the same adaptive select seeks to prevent extended declines by moving to short term treasury bills and cash during long term market downtrends, investors can find out more, including how to invest in ADPV by visiting ADPVETF. com or calling 1 833 880 5200. Investing involves risk, including possible loss of principal. Distributed by quasar distributors LLC. And so we have this ongoing uptrend. We have confirmation of the uptrend. Do we consolidate from here? We could, that's absolutely an option for this market considering it had the best post election move we've seen on record in these first four days, some digestion would be perfectly normal
ian-guest911_21_11-08-2024_124931and I could say short term Russell has I mean short actually as we sit here on Friday lunchtime Russell's where I the opening gap handle on Wednesday morning I it's spent Wednesday and Thursday sideways. It's consolidating up here very nicely
david_19_11-08-2024_114931Well, it'll be information if we zip through these levels on small caps I can't tell you what the likely scenario is there because we're still at 0 percent return for small caps since November of 21 So we're sitting on three years of 0 percent return on small caps and haven't reached all time highs yet And so do you see some an auction process in here that consolidates in? Confirms the demand in the market probably, but if we don't, if we go right through this, like a hot knife through butter, that's tremendous information on the risk on nature of this market. And then you look at all sorts of relationships like discretionary versus staples with the, you know, we're looking at XL, why going out to brand new all time highs for the first time in three years, you look at equally weighted consumer discretionary, trying to also go out at new all time highs. You're seeing financials hold up. Well, the areas of the market that you would expect, I know you did some work this week on the credit markets. When you see. Junk bonds continuing to outpace the aggregate bond complex.
ian-guest911_21_11-08-2024_124931and what have we been saying for weeks that there is no sign, there is no sign that like, hey, going into this election, you should probably be a little wary.
david_19_11-08-2024_114931Right.
ian-guest911_21_11-08-2024_124931of that, from really anywhere in the market.
david_19_11-08-2024_114931And even like, you know, we've highlighted triple C credit spreads in the past on here, and we continue to see those be cool, meaning like they've cooled off, they taken another leg lower this week, so we continue to see the green light from credit markets. And then you add in the move we saw to Bitcoin this week,
ian-guest911_21_11-08-2024_124931Wow huge move.
david_19_11-08-2024_114931now sitting up near, you know, 76, 000, and we've talked ad nauseum about the 70, 000 level on Bitcoin, and now we're above that
ian-guest911_21_11-08-2024_124931mine. Yeah, you're breaking out of the, you know, consolidation. We've been consolidating since March. And it was last week. talked about the chart. That was shared. And I apologize. I cannot.
david_19_11-08-2024_114931By Larry Thompson,
ian-guest911_21_11-08-2024_124931Larry Thompson about Bitcoin's post of 20 2012 2016 2020 Bitcoin tends and those are all those were different presidents,
david_19_11-08-2024_114931different parties, different presidents, I
ian-guest911_21_11-08-2024_124931and Bitcoin is it is consolidated and kind of chilled out leading up to the election then it tends to just take off like a rocket. so far we are kind of seeing this. And now when I say take off like a rocket, I mean, we have in theory, much more to go. Just in 2020, we had a move of 350%. We went from 13, 000 to 49, 000 on Bitcoin.
david_19_11-08-2024_114931mean, it's
ian-guest911_21_11-08-2024_124931Not saying it happens again, but we're 3 for 3 in history.
david_19_11-08-2024_114931of Bitcoin moving higher after election.
ian-guest911_21_11-08-2024_124931Yeah. And again, it was one of those things where as the results started coming out, there was another risk on asset that was moving. You know what else moved a lot election night? Dollar.
david_19_11-08-2024_114931Yeah, a lot of dollar pairs, a lot of volatility and cross currencies for sure.
ian-guest911_21_11-08-2024_124931and that has led to some weakness from our gold friends. Very much so. Still I still put gold in the uptrend category for sure. That relative chart just continues to be such a mess.
david_19_11-08-2024_114931Right. When I,
ian-guest911_21_11-08-2024_124931not
david_19_11-08-2024_114931and I think the big winner from an election standpoint is these betting markets
ian-guest911_21_11-08-2024_124931Yeah.
david_19_11-08-2024_114931we saw, we did see them in 2016 and 2020, but they've gained more popularity. What I mean by that is you could take a wager on who, now we don't do that, obviously, but that's a betting platform. That's not something we do for our clients, but you could take a wager on who's going to win. And what a perfect example of free markets and price showing and having some predictive power in them. Cause poly market predicted I forget the name of the third one, all of them weeks leading up to the election, we're pointing to a Trump victory. And then that night just exploded higher. And so what what a testimony to what price is, because it's one thing to, as an investment manager to say, Oh I'm bearish, but how are you actually positioned? Are you positioned bearish? Same thing with a voter. You know how many people you could ask who they voted for and they'd probably lie to you. But when they put their vote in, it's different than what they say. And so these PR these prediction markets. Where you could take a wager on who's going to win. What a unique tool. And I, you know, there was an interview with there's an individual that placed a pretty large bet on Trump and I forget if it was poly market or predicted, but, and they asked him, you know, how did you come about your process? Well, he used the neighbor theory, which is
ian-guest911_21_11-08-2024_124931yeah, is the guy
david_19_11-08-2024_114931the neighbor. Yeah. Yeah. The neighbor method, which was. Rather than asking someone who they're going to vote for, who do you think your neighbor's going to vote for? And what a clever way to identify potentially an edge there. Now that cat's out of the bag as far as the method goes. But maybe the
ian-guest911_21_11-08-2024_124931still think mentally it's still usable, like,
david_19_11-08-2024_114931Oh, absolutely. It's definitely a bona fide.
ian-guest911_21_11-08-2024_124931Like a psycho, a psychological way, you That guy put, and that guy put, I think, close to his entire net worth. I think he put in, what, 30 million,
david_19_11-08-2024_114931Yeah. And that's not a recommendation.
ian-guest911_21_11-08-2024_124931and he's gonna profit, and I think he made 80 million, so he'll profit 50. It's
david_19_11-08-2024_114931Right.
ian-guest911_21_11-08-2024_124931good
david_19_11-08-2024_114931it,
ian-guest911_21_11-08-2024_124931guy. Hey he kept it simple, and look at all, I mean, how much money do they pay these pollsters, and, I mean,
david_19_11-08-2024_114931and they were all wrong.
ian-guest911_21_11-08-2024_124931and they've been wrong.
david_19_11-08-2024_114931Right.
ian-guest911_21_11-08-2024_124931Like, it's,
david_19_11-08-2024_114931not about what people say. It's what they do. And that's, what's amazing about these prediction markets is it's people actually putting money on the line, real money, right? That's a real hurtful potential rather than just saying who, so these, you know, these, like you said the real losers are these pre election pollsters who don't seem to get it right, but these predictive markets do. And so it's why we use price that these markets that we look at. They're looking out six to 18 months in the future on the prospects of companies, economy, taxation, policy, they're looking at all of these things. And so why would we not study price? Like if we, if you didn't have a chart of the ability to study supply and demand, you're just making like a ill advised bet, a guess. You can use information to say, is this an uptrend? Okay, let's be involved with it. If it's not an uptrend, let's not be involved in this. Let's not overcomplicate. Life is complicated enough. Why make markets harder than they need to be? And I know Ian, we talked about, you know, kind of for the past six months, the kind of rotation of sectors and breadth was just fine broadly, but there was no real advantage in one sector. Over the S and P 500. Has that changed? Are we seeing change? You know, because the foot has dropped and this is where the dust starts to settle anything from, you know, a sector standpoint, maybe, you know, the big what's interesting to me is when you look at the past week, you know, again, the election was on Tuesday. How much discretionary, industrials?
ian-guest911_21_11-08-2024_124931Discretionary for sure. I'll tell you another one. Utilities, Which had been, you know, there's 50 50 on utility strength, weakness and for stocks. I will say that I think it's another reaction to how the feels. Rates are going to go. Utilities actually, yeah, I mean, they've, They got crushed to sleep on a relative basis. Tech. I'm still off the tech train. I say that Magnificent seven. That's a different, that's a different story with a different chart. But XLK is a sector. Energy, right? I mean, that was another asset. It's come back a little bit, but we saw oil prices tank on Tuesday night. And they bounced back. We'll see if that does kind of, if that does still play out longer term. But that, right, that's one of Trump's big things is drill baby drill, cheap energy. And that's a sector that had been weak for months.
david_19_11-08-2024_114931Right.
ian-guest911_21_11-08-2024_124931Healthcare, be in south. Is that market telling you, you know, there's a lot of talk around, there's been a lot of talk around healthcare and a Trump administration. That's another trend that had been in place for months. Financials have held up well, think so. I mean, they had probably the biggest move on Tuesday, would you say?
david_19_11-08-2024_114931Yep.
ian-guest911_21_11-08-2024_124931By far, gave some of it back yesterday. Again, this is on a relative basis. Basically financials ended up being flat yesterday where the market moved higher. So gave some of it back staples, new lows,
david_19_11-08-2024_114931Well, that's not
ian-guest911_21_11-08-2024_124931interesting. That got hit. What that did get hit was
david_19_11-08-2024_114931Okay.
ian-guest911_21_11-08-2024_124931home builders did not have a good Wednesday. So surprising, right? Cause now, and I think it Oh, who was it? I think it was Michael Noss. He's a CMT up in Canada, and he, I mean, he made a good point. Something that we love to talk about. and Thursday, if your stock or sector was down, that's a sign.
david_19_11-08-2024_114931Right.
ian-guest911_21_11-08-2024_124931That's a sign.
david_19_11-08-2024_114931Yeah, when you're weak, when you're weak and a strong tape, you should be paying attention.
ian-guest911_21_11-08-2024_124931you absolutely should be. So I would put homebuilders on that list I don't know what the market's trying to say there.
david_19_11-08-2024_114931When I think the, so the, we've got 11 major sectors, and since election, the top performers are discretionary, financials, industrials, tech, energy, and communication services. Negative, or slightly positive returns for health care utilities and real estate. And health care utilities and real estate are notoriously your risk off sectors. And so here we go again with another piece of evidence pointing towards risk on behavior. And you know, how bad are things for the market if discretionary is your top performing sector or financials are your top, you know, second best performer or industrials. Like they're the, you know, the only ones that have outperformed the S and P during that period were discretionary and financials. And so you sit there and say, okay, more evidence of risk taking behavior in an uptrend, and you brought up Bitcoin, you know, we haven't talked about commodities other than gold a little bit anything we're seeing out of the commodity complex worth highlighting, think you mentioned energy, so we could, you know, talk about oil,
ian-guest911_21_11-08-2024_124931Yeah, and you've seen soybeans have had a huge move. I mean there's definitely been some moves, now a lot of these were in bad trends to begin with, this isn't, you know, necessarily this the beginning of something new But other than that, I mean same with silver, gold, silver, right, that was a relationship that itself hadn't really Taken off you've seen Palladium that had a huge move. And has just absolutely, I mean, down 20% just this month.
david_19_11-08-2024_114931Speak. Speak. Speaking of being, being down how is it interesting? Is it to you that something like super microcomputer, SMCI gets added to the s and p 500 and since that point of being added to the s and p 500 is now down approximately 80%? And
ian-guest911_21_11-08-2024_124931just uncanny timing.
david_19_11-08-2024_114931does that make you nervous when the Dow Jones announces they're putting NVIDIA and the Dow Jones
ian-guest911_21_11-08-2024_124931knew you were gonna go there.
david_19_11-08-2024_114931and removing Intel?
ian-guest911_21_11-08-2024_124931Yep. The haul! NVIDIA on the DAO, I'm so glad you brought this up. Well, they announced that last Friday,
david_19_11-08-2024_114931Right.
ian-guest911_21_11-08-2024_124931and yeah, of course, 4. 30, going into the weekend, and you're just like, you gotta be The DAO. Let's just say the DAO does not have the best track record for timing its entries and exits on. Components?
david_19_11-08-2024_114931And so you just pay attention. You pay attention, you know, and the way to use technical analysis is here we have NVIDIA at or near all time highs. And if it can't hold 130, that would be your first clue. If it can't hold, it's 200 day, 200 day moving average, which is currently sitting at 106. Okay. If it can't hold those, then that would be information that may, maybe we have another SMCI on our hands, another super microcomputer. But time will tell. You know, when you look at semiconductors, they have not reached a new all time high. That would be a potential divergence there when you think about it. Or are they just sitting in the wings and it's the same playbook from the last 12 years, which is small caps lead out of this. And then tech takes over.
ian-guest911_21_11-08-2024_124931How about the fact that the most hated bank stock, Wells Fargo made it to all time highs before a lot of other bank stocks?
david_19_11-08-2024_114931Oh,
ian-guest911_21_11-08-2024_124931Now, am I saying you should have owned Wells Fargo over Bank of America the last seven years? No, I'm just saying from a price, behavior perspective. And the mindset that all time highs bring to market participants, think it says something.
david_19_11-08-2024_114931It's really hard to get bearish on a market of financials that are doing fine, especially some of the worst financials.
ian-guest911_21_11-08-2024_124931Yeah, it is. It really is.
david_19_11-08-2024_114931And so here we sit a few days removed from an election.
ian-guest911_21_11-08-2024_124931How can you say that a year in though, Dave? I mean, we're already up 38%. Or whatever we're up in the last third four. If you go, actually go back to the October 20, 23 lows
david_19_11-08-2024_114931Yeah it's about
ian-guest911_21_11-08-2024_124931so s and p is up 45%.
david_19_11-08-2024_114931right. And what's interesting is that's not crazy historically. It's great. There's been history made during this process. And what I mean by that is, for example, the last four days, Being some of the best four days of post election that we've seen, but it's not abnormal when we look at average returns in a bull market,
ian-guest911_21_11-08-2024_124931And you're sitting here telling me that it could just stay just as good?
david_19_11-08-2024_114931it could, it won't be without, it won't be, I mean, how many times do we say on here markets don't move in a straight line, but let's just say the uptrend is intact. And until that changes there's nothing to do there. You know, you stay participating and yes, there will be a day and it could start on Monday. I don't know. Like I, I wish I knew the future that the market starts to correct. And this was a top that we, you only know the top afterwards. You never sit there and go, Oh yeah, I knew that was the top. I remember, you know, I knew exactly when that was going to be. And I pulled out exact top. No, that's not how this works.
ian-guest911_21_11-08-2024_124931never been able to do that, to be honest.
david_19_11-08-2024_114931Yeah. It's
ian-guest911_21_11-08-2024_124931I don't think so.
david_19_11-08-2024_114931no that's not how this works. The uptrend is intact. There will be a top someday. It could start on Monday, but all signs point to that not being the case. Now, could we consolidate in a 5 percent range, this move that we've had this week? Absolutely. It's one of the better stock market weeks that we've had. And could some digestion be here? Absolutely. You know, that, that's absolutely. Possible. And I think that's trouble for an investor who hasn't been involved. And what I mean by that is if they weren't in this move and we have some type of three to 5 percent consolidation in their mind, they will say, see, I told you, I can't get in like the market's about to roll over and then in December, if you have another 5 percent move that you didn't participate in, all of a sudden you're talking about 10 percent that you didn't participate in because. The subsequent days with,
ian-guest911_21_11-08-2024_124931You Yourself out.
david_19_11-08-2024_114931yeah, you psych yourself out. It's why we use technical analysis. It's our emotional bodyguard from this type of stuff. And we'll know if we're drop back below 56 40, if we're back below a 200 day moving average, which is currently sitting at 53 85, we're back below the, April or March highs of 2024 near 5270. Those are some lines in the sand that we could pay attention to that. Oh, maybe cause bull markets tend to end when there's an absence of buyers. It's not necessarily an increase in sellers. It's. You've had buying exhaustion and have you pulled all the buyers out of this market? That's always possible. We, but we'll know that because that dynamic between supply and demand would change. And the first thing that you would clear to the downside is. Is 56 20 and then it would be 43 80 and then it would be 52 70, but we don't know When that's going to happen We just pay attention to price and when it does start to happen you start making adjustments But for the time being this remains an extremely healthy market Despite whether your favorite candidate won or didn't win. I know that's hard to hear. It's really hard to see that your opinion doesn't matter. Like imagine someone came up to you and said, Your opinion doesn't matter. Well, that's what Mr. Market does every single day. And it's why I enjoy being a part of them because I feel like it gives me pretty good thick skin, pretty good discernment.
ian-guest911_21_11-08-2024_124931does. I agree with that.
david_19_11-08-2024_114931It's a humble pie making machine,
ian-guest911_21_11-08-2024_124931And you're only good if you learn to accept to be wrong. You'll never survive if you aren't willing to be like yeah, I was wrong about this trade. So I'm going to hop on out before this gets worse.
david_19_11-08-2024_114931And it's a process. You're never going to bat a thousand. You know, one of our internal teammates here, Benjamin Trock, brings it up in such a great analogy, which is the harder you try when you get up to the plate. You're gripping your knuckle, you know, you're gripping the baseball bat and you're white knuckling it and you're trying, you know, that's actually a detriment.
ian-guest911_21_11-08-2024_124931Rage trading
david_19_11-08-2024_114931Yeah. Rage trading or like trying to fix it through effort, let the market do the work, let the market carry out its uptrend. Don't make it harder than it needs to be and have a process where if we're above a certain level, let's participate. If we get up, if we get up. You know, two old fastball where you want it. Let's crank it. Let's hit it. Let's smoke it. Let it be the fat pitch. But if you're sitting, Oh two. Yeah. You might have to, you might have to fall off some pitches before you see that. And it's the same thing. The markets, why fight a trend? Why get up there and white knuckle a trend when you can just participate in it, just be involved. And so we continue to see that information from the market. There will be a correction at some point. Wish I could tell you Ian and everyone listening when that is. so much. But it wasn't this week
ian-guest911_21_11-08-2024_124931is not this week.
david_19_11-08-2024_114931and with the VIX now sitting near 14
ian-guest911_21_11-08-2024_124931I was going to bring that up. We've got what? Like, lowest since July on volatility where we were at one point today.
david_19_11-08-2024_114931and if that continues to move lower Towards the lows of the year near 12. Are you now talking a melty type environment where we don't?
ian-guest911_21_11-08-2024_124931about where you're just up 2025 dips a day.
david_19_11-08-2024_114931Right,
ian-guest911_21_11-08-2024_124931boring. But it's one of those things where it goes back to the situation we just talked about, not where you get it. If you're just going to trickle higher for a lot of people, then it's even worse
david_19_11-08-2024_114931right,
ian-guest911_21_11-08-2024_124931because
david_19_11-08-2024_114931that's what and
ian-guest911_21_11-08-2024_124931Oh, I'll do it. We're well, I'll do it on the first correction. And then Mr. Market, like he always does just never gives you the correction. So you're much further down the road.
david_19_11-08-2024_114931yep, and it you know, we'll see how this plays out But the data and evidence continues to stand that we're in a rising trend, an upward trend, a risk taking environment, you know, anytimes you have the credit market pointing to this and stocks matching that behavior with your risk on sectors doing well, continues to be a U. S. centric market. We can't fight it. It would be irresponsible. It would be not in the best interest of our clients to fight this market. Let's wait for when we have downtrending information. When we see a spike in credit spreads, when we see junk bonds, rollover versus aggregate bonds. When we see price levels break to the downside, we'll be the first to highlight it on this show.
ian-guest911_21_11-08-2024_124931Oh yeah.
david_19_11-08-2024_114931But for the time being,
ian-guest911_21_11-08-2024_124931that we aren't input. Like we, I mean, we said that for years, we don't get on here and BS you and then we go back to our market calls and do something complete opposite of what we talked about
david_19_11-08-2024_114931we're just here to highlight the information at hand and the information is at hand is we have an uptrend was confirmed this week. Yes, there was an election. I'm not here to tell you, you can't be sad if your favorite candidate didn't win, but as we talked about before we got on here, I'd like to think that there's way more important things in life to be sad about than an election. So while you're allowed to not like a candidate who gets elected, you get to, you do get to appreciate the other things in your life that are more important. And you do get to appreciate a market that continues to move higher. And just let's use technical analysis to be our emotional bodyguard. Let's let the adaptive process be our emotional bodyguard to protect us from our own selves, regardless of our opinion
ian-guest911_21_11-08-2024_124931I can't
david_19_11-08-2024_114931of who the candidate is.
ian-guest911_21_11-08-2024_124931it's protected me.
david_19_11-08-2024_114931Yeah.
ian-guest911_21_11-08-2024_124931it's not like i'm immune to emotions. I'm still a human
david_19_11-08-2024_114931Right.
ian-guest911_21_11-08-2024_124931still have an opinion on Oh, I bet this stock's gonna do this or I think that could be good for this group of stocks Does that mean that gets implemented? No, it stays a personal opinion I mean if it plays out Doesn't end up like a price chart tells you, you know, yeah, you should get involved here. You know, that's a, that's another step, but can't tell you how many times. I mean, I was willing to accept Wednesday morning going into Tuesday night that Wednesday morning, knowing how we're positioned, we could get crushed.
david_19_11-08-2024_114931Because we were in an up,
ian-guest911_21_11-08-2024_124931the
david_19_11-08-2024_114931because we were,
ian-guest911_21_11-08-2024_124931you take every night as the market closes. Yeah,
david_19_11-08-2024_114931it's cause we were in an uptrend. You weren't positioned that way because we were in a downtrend.
ian-guest911_21_11-08-2024_124931there, yes, there was this event actually. And speaking, I didn't even know we lowered like this whole, I had no idea we lowered interest rates yesterday until, like, seven o'clock in the evening. Sound a little I care about these events. It's just an event now as a part, like, as a U. S. Citizen. No, it's not just an event as a market participant. It's just another blip on the radar in the middle of an uptrend
david_19_11-08-2024_114931We want to. Yeah, we want to focus on the signal and avoid the noise and The signal is price and the noise is the narrative and price moves first and then we get the narrative and so we'll See where we are six months from now, right? We're heading into this seasonally strong period and will be noticeable if this six months is not strong It's off to a good start doesn't have to say that way But that will be information if we're breaking the levels we just talked about That'll be information in this environment because it's quote unquote, supposed to be strong. And when it's not, that's when you pay attention. And so time will tell, but Ian, I appreciate you being on here. You always do a great job. Your letter to clients was fantastic. Just reminding them that regardless of the outcome of the election, we're going to be okay. That's one of the things we can be thankful for. We live in a great nation. We can still have polite discourse with each other, share a beer. You know, we get to be thankful for our veterans this next week. And so make sure you thank someone who served this next week that they fought so that we could have these emotions. They've
ian-guest911_21_11-08-2024_124931Yeah.
david_19_11-08-2024_114931yeah. So that we could cast a vote. We could be thankful that we cast a vote many countries that might not be the case. And we could be thankful for that. And we could be thankful that we could be participating in markets that protect our purchasing power. And we can hug our loved ones and spend time with them because that matters more than any market. So I hope those listening to this, we gave you great information this week. If you liked it and appreciate it, please do share it. It helps us get the word out. And it's a compliment to us. You give us high rankings on whatever your favorite podcast platform of choices, but Ian, I hope you have a wonderful birthday with your family. I can't wait to hear about it. Thanks for doing.
ian-guest911_21_11-08-2024_124931everyone.