The Weekly Trend
The Weekly Trend
Episode 233: Looking for Clues
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
In this week's episode, Ian and Kevin discuss the recent developments in growth versus value in equities, resurgence of mega cap names, November 6th election price gaps, cryptocurrencies, and the U.S. Dollar.
Welcome back to the Weekly Trend Podcast. Today is December 13th, 2024. S& P sitting at 6045. 6045. I'm joined by Kevin Ferrari today. Talk a little markets, talk a little trends, maybe change of trends, maybe sideways trends. Is there anywhere you would like to start, Kevin?
ian-host703_1_12-13-2024_102615I think you're kind of talking about maybe potentially moving sideways here a little bit. I think that's been, at least personally kind of from what i've seen this week, the most consistent theme Because I know what the way we kind of split some of the areas in the market I guess i've had a little bit more of a value tilt, I guess lately with like industrials staples things like that, even the S& P sideways week really haven't gone anywhere. And I know like when I've been looking through a lot of these individual, stocks, charts of those, and like some of these sectors, you're seeing a lot of those that, really have had, pretty strong last couple of months, really starting to, have some consolidations set up, so I don't know. I guess it would be natural, right, for a lot of those names to kind of digest some of those gains here which makes sense. But yeah, especially on the value side though, value's been getting
squadcaster-206g_1_12-13-2024_112614Terrible.
ian-host703_1_12-13-2024_102615right?
squadcaster-206g_1_12-13-2024_112614If you look at like, SPYG versus SPYV. Just yeah, another big move recently in favor of growth, in favor of large and mega cap. NASDAQ versus Russell 2000 relationship has made another big jump. I and that's really been a pretty even battle going back to November of last year. Big moves from both sides at certain points, but overall pretty in line with each other. Kind of maybe like Nasdaq ready to take another move higher. I really thought after the election that we would see, and we did see pretty strong breadth for us. We did see a lot of participation for a couple weeks. certainly here, first two weeks December, man, a lot of that out performance has been sucked out Right back to the mega caps. And you, before we jumped on, you were kind of going over, right? Most assets, a lot of assets day after the election November 6th, Wednesday, November 6th. A lot of big gaps. And would you take us through us kind of what has happened since then with certain areas of the market?
ian-host703_1_12-13-2024_102615Yeah, for sure. I think this is where kind of, the gap started becoming a little bit more evident was just looking at kind of that difference between growth and value, because when you start looking at, Some of these sectors, well, excellently for energy, essentially, they've filled that November 6th gap already and actually continue lower here now.
squadcaster-206g_1_12-13-2024_112614Negative reaction since the election then really for Energy.
ian-host703_1_12-13-2024_102615yeah, basically, initially positive and then towards the end of the month there has been getting sold off pretty steadily. Materials, which have been pretty bad there for a while.
squadcaster-206g_1_12-13-2024_112614Materials.
ian-host703_1_12-13-2024_102615filled that gap immediately and, kind of bumbled around there for a little bit, but it had been getting sold off pretty steadily. Some of these areas we're talking like nine, 10 days of, down days, like down nine out of 10, down nine straight, 10 straight for some of these areas.
squadcaster-206g_1_12-13-2024_112614right, we're getting russell 2000 today on track day With a closing price below the open and 12 out of the last 13 with the same characteristics You
ian-host703_1_12-13-2024_102615Yeah. And that's starting to become a little bit more evidence in other areas too, which, you know, and that, Really where it gets, I think, kind of interesting, too, with those November 6th gaps, like when you look at industrials using XLI haven't filled that gap yet. Kind of look like that's potentially what they might be doing. Really, XLI is, only probably like, what, percent and a half there, roughly.
squadcaster-206g_1_12-13-2024_112614I look at this chart.
ian-host703_1_12-13-2024_102615right?
squadcaster-206g_1_12-13-2024_112614Really, we got to slam on the brakes here, XLI.
ian-host703_1_12-13-2024_102615And I think what you were kind of talking about this too before we hopped on, with like financials and regional banks, I think that's the one that has the most potential to be hit the hardest. We're going to fill this gap, right? Cause just financials in general is, almost 6 percent from that gap yet,
squadcaster-206g_1_12-13-2024_112614Yeah,
ian-host703_1_12-13-2024_102615Whether or not it's actually going to, try to come fill that who knows. With a lot of these other areas fill in the gap just kind of makes you wonder, right? We're gonna see that too from financials, regional banks, industrials almost there. But at the same time, you're talking, XLC really hasn't looked back for the most part. Mm hmm Mm
squadcaster-206g_1_12-13-2024_112614Yeah, that's, that's more of your runaway gap. I would put XLY in that category too.
ian-host703_1_12-13-2024_102615Yep.
squadcaster-206g_1_12-13-2024_112614And we've seen that. I think Dave has Discretionary Workbook, we've you see it I mean retail pretty darn strong of these online retail ETFs Really doing I've got really nice relative charts Ebiz or an Owen Ellen consumer discretionary definitely strong of course Amazon Tesla that helps The mega cap theme, right? We've had Apple broke out a couple weeks ago to all time highs, finally got above the two, two thirty six. And it's been cruising. We've got Amazon came back and retested. It's big breakout area around 194. Yeah, they've been strong.
ian-host703_1_12-13-2024_102615Meta's still strong?
squadcaster-206g_1_12-13-2024_112614highs earlier this week.
ian-host703_1_12-13-2024_102615Yeah. Like all those kind of, Fang, Magnificent, Seven Names, things like that, that, were pretty hot kind of leading into the election seem to be kind of picking back up here.
squadcaster-206g_1_12-13-2024_112614And just on the week You've got, XOI, XLC, staples, but everything else
ian-host703_1_12-13-2024_102615May I read on the way?
squadcaster-206g_1_12-13-2024_112614solidly in the red. Materials, utilities, healthcare, the worst. So that doesn't make me too nervous.
ian-host703_1_12-13-2024_102615No. And
squadcaster-206g_1_12-13-2024_112614Russell by far the worst this week. You've got NASDAQ positive on the week. Down two and a half percent.
ian-host703_1_12-13-2024_102615Right. And I guess, from a, I guess like market cycle and sector rotation perspective, um, the areas that we're seeing kinda hold up and still perform well, like technology, discretionary communication services. Are, still the areas that you would expect to be performing kind of the best, relatively speaking, while you're in the midst of a bull market, so it,
squadcaster-206g_1_12-13-2024_112614Yeah, you make a good point. Even, with a few months of underperformance, If you zoom out, and this is some big tech super cycle, then yeah, you've kinda I like that. You've really gotta assume that when all the dust settles, megacaps and tech and that's gonna be your leader coming out.
ian-host703_1_12-13-2024_102615right.
squadcaster-206g_1_12-13-2024_112614And that's what you'd get, right? We all, I say, I think it would be really cool to have the 90s. Um, Right. That's what you would, that's what you would see if Going to have another big, obviously it's not going to be dot com, whatever they end up calling this.
ian-host703_1_12-13-2024_102615Ai, it's gonna be the ai. Mm-hmm
squadcaster-206g_1_12-13-2024_112614um, bubble or whatever, crypto. Crypto's held up pretty well this week, given the weakness in stocks. Still 100, 000 on Bitcoin. Had a rough Monday, but we're, we're above where we were a week ago.
ian-host703_1_12-13-2024_102615Right. Yeah, it'd be nice to see Ethereum get above like 40, 60 it's been pretty near for a while, but you know, still holding up for sure. Yeah. Yeah. And even, like a lot of your, blockchain and other like crypto ETF related funds, things like Bitcoin miners, have been holding up well for the most part. So I think that area as a whole has kind of been doing all right,
squadcaster-206g_1_12-13-2024_112614agree.
ian-host703_1_12-13-2024_102615but we'll see. Right.
squadcaster-206g_1_12-13-2024_112614All right. So stocks, some taking a break, the bigger, the the mega cap sectors So that obviously helps, major indices that we know are tilted that way. Breath kind of falling off, you take an equal weight SMP versus SMP. That's certainly rolling over. So outside of that, where are we looking? How are we looking in the fixed income space? Can we run to long term treasuries yet? If we're scared of stocks.
ian-host703_1_12-13-2024_102615I don't think so.
squadcaster-206g_1_12-13-2024_112614No?
ian-host703_1_12-13-2024_102615Nope. Yeah. TLT, 20 year treasury is getting hit pretty hard. Just aggregate bonds in general.
squadcaster-206g_1_12-13-2024_112614Terrible. Terrible week from long term bonds.
ian-host703_1_12-13-2024_102615And
squadcaster-206g_1_12-13-2024_112614to, we'll see. This is gonna be, could be a big base. This could take another year or two if they're gonna turn it around. I guess it's not. But yeah. Rates right back higher, which is what you would expect in a rising rate environment.
ian-host703_1_12-13-2024_102615now it makes sense. Right.
squadcaster-206g_1_12-13-2024_112614Gonna air to the end. It might get messy for a few weeks or a few months. Actually rates are where we were at late November last year. So, if I look at a 30 year Treasury yield last November 30th, we're sitting at 4. 5. Today we're sitting at 4. 6. Now when you zoom out, Right, you get more context to that,
ian-host703_1_12-13-2024_102615Right.
squadcaster-206g_1_12-13-2024_112614but to the point we've been trying to make the last 30 seconds, you've got to assume that it resolves higher and that means higher interest rates.
ian-host703_1_12-13-2024_102615Yeah. So, we're still definitely seeing the lower now duration funds to hold up the best and like, especially like, I think we kind of talked about quite a bit before too, especially seems to still be tilted towards kind of your lower credit qualities too, as well. So it, Even within the fixed income space, maybe long term bonds aren't necessarily at play, but it's not like it gets risk off totally within that area, which is good to see.
squadcaster-206g_1_12-13-2024_112614If you pull up like a JNK versus AGG, that's not bad.
ian-host703_1_12-13-2024_102615No. No,
squadcaster-206g_1_12-13-2024_112614that's a strong uptrend. Same with credit yields. I think David mentioned earlier in the week. Or, sorry, credit spreads had a a little bit of a bounce, but you're still not seeing anything from fixed income. No, maybe everyone's positioning for 2025. do they call that? Window dressing.
ian-host703_1_12-13-2024_102615yeah, gotta get your tax loss harvesting in.
squadcaster-206g_1_12-13-2024_112614pretty. Gotta let everyone know that you own the bitcoins. All the best stuff from the year.
ian-host703_1_12-13-2024_102615Right. Yeah, and if you got some of those losers for tax purposes, right, you better harvest those losses. Mm
squadcaster-206g_1_12-13-2024_112614Them like a good farmer. So not as exciting as an environment. The last week or so Unfortunately,
ian-host703_1_12-13-2024_102615We probably could have just took this week off.
squadcaster-206g_1_12-13-2024_112614we could hey, there's no one that wants ducks to go up every single week more than me. But It's healthy. It's healthier. If we don't do that, we take a break When you When this isn't even a, this is not, and I don't want listeners or clients to think that we are in the midst of some correction. This is not rolling over stocks where we were at 10 days ago. We've just been sideways, not trying to sound the alarm bells. Now I will say, yeah we're getting up there visually. When you look at an SMP, when you look at some of the breadth numbers, Like, I think Mark Maiden had a good, you look at something like stocks above a 200 day. That has fallen off. There's some other things out there. We are definitely extended would a good five ten percent correction probably Be beneficial. Yeah, would it stink sure? But we just had, how big was our correction we had this summer? a solid 10 percent back in July and August.
ian-host703_1_12-13-2024_102615And using the S& P, a 5 percent correction takes you back to the November 5th, 6th gap. So you fill that gap, that's 5 percent right there. Because, you looking at some of these other sectors, that's kind of what it's foreshadowing. Maybe some of these areas consolidate a little bit, others fill their gaps if they haven't already.
squadcaster-206g_1_12-13-2024_112614I think you're making a good point.
ian-host703_1_12-13-2024_102615Chop around here a little bit, and then trend is still up, continue moving higher.
squadcaster-206g_1_12-13-2024_112614I'm kind of disappointed, I Now, let's say, let's keep with that potential hypothesis, I def I think it's pretty I think it's pretty plausible. Now, is that gonna coincide with Santa Claus rally?
ian-host703_1_12-13-2024_102615Mmm,
squadcaster-206g_1_12-13-2024_112614And then we get a negative Santa Claus rally, or we get a negative Well, January, it'll be by January 30th.
ian-host703_1_12-13-2024_102615right.
squadcaster-206g_1_12-13-2024_112614but first the first five days of January for
ian-host703_1_12-13-2024_102615Yep, there's the first five days. Santa Claus rally is
squadcaster-206g_1_12-13-2024_112614and then January barometer, which is the whole month.
ian-host703_1_12-13-2024_102615Right.
squadcaster-206g_1_12-13-2024_112614So if we're going to, let's get, if we're going to fill this. I don't know if we're getting there before Santa Claus rally. So, but just something to keep in mind. I certainly like paying attention to those. We do as a team. I think we were three for three last year. I believe so.
ian-host703_1_12-13-2024_102615I know we missed one of those for sure.
squadcaster-206g_1_12-13-2024_112614January might've been, what's January? Negative.
ian-host703_1_12-13-2024_102615No, I think it was Santa Claus Rally,
squadcaster-206g_1_12-13-2024_112614Yeah.
ian-host703_1_12-13-2024_102615that when we did our Lunch and Learn presentation.
squadcaster-206g_1_12-13-2024_112614Cause it was good like the first two days. We didn't know maybe that was the year before, maybe that was 2022. Either way. I'll probably have to go back and look at a client letter, a lunch and learn presentation to reboot my memory, but yeah, we'll be paying attention to those, but to the point, maybe some colliding forces there with a gap fill and to get an early read on 2025. We will see if it matters.
ian-host703_1_12-13-2024_102615So, actually, I went back and found it, so we actually were only one for three, so the Santa Claus,
squadcaster-206g_1_12-13-2024_112614for three.
ian-host703_1_12-13-2024_102615yeah, the Santa Claus rally, we didn't hit it, first five days, also negative, but we hit the January barometer. And I found, so, StockTrader's Almanac actually looked up years where we had a negative Santa Claus rally in first five days, but we were up for the month of January. There were three years, obviously prior to 2024, so it was 93. Um, All three years were positive, and this is kind of crazy, in 85 and 91, for the full year, they were both up 26. 3%. So the exact same return, which is kind of crazy.
squadcaster-206g_1_12-13-2024_11261426 percent this year?
ian-host703_1_12-13-2024_102615Yeah, probably about that, right?
squadcaster-206g_1_12-13-2024_112614On the S& P?
ian-host703_1_12-13-2024_102615And then in 93, it was up 7. 1, so obviously small sample size there, but, now with 2024 barring some kind of drastic,
squadcaster-206g_1_12-13-2024_112614S& P up 26. 6 as of today, right now.
ian-host703_1_12-13-2024_102615isn't that almost creepy how that comes out? So, yeah, that, that scenario now is four for four for positive on the whole year,
squadcaster-206g_1_12-13-2024_112614give up 26 percent in the last two weeks,
ian-host703_1_12-13-2024_102615Right.
squadcaster-206g_1_12-13-2024_112614if that happened, we got way bigger issues.
ian-host703_1_12-13-2024_102615Right. Absolutely. So, so we'll see and that right there in and of itself. Kind of tells you, right, based, kind of going back to what you were saying originally, even if we're not necessarily there and we do see kind of a, short term, intermediate term pullback, as long as it kind of resolves itself by January, right, it's kind of the same setup that we had coming into this year. So, it's a time I'll tell. It's definitely not doom and gloom if that happens, I guess is my point.
squadcaster-206g_1_12-13-2024_112614That's pretty eye opening. I would not have expected those to be positive. I would have expected more of a mixed bag. All right, Kevin. Anything else that you would like to share with our clients and listeners before we head out to the cold weekend?
ian-host703_1_12-13-2024_102615I think, kind of the only other thing we've kind of been watching, I think, Dave was kind of talking about the dollar yesterday a little bit, messing around with this kind of 106, 107 level using DXY. Kind of between there and 100, it's been a pretty consistent range there for a while last couple years.
squadcaster-206g_1_12-13-2024_112614Yeah,
ian-host703_1_12-13-2024_102615time will tell there.
squadcaster-206g_1_12-13-2024_112614here for a long time. Yeah, you're right. About a little over two years. November 22.
ian-host703_1_12-13-2024_102615Yeah. So it'll be interesting to see, is the dollar gonna kind of break higher from here? Are we going to see that, kind of range continue and we're going to pull back a little bit more towards, one oh five, a hundred, somewhere in there.
squadcaster-206g_1_12-13-2024_112614Probably one of the reasons Russell's struggling. Probably one of the theories floating out there at least.
ian-host703_1_12-13-2024_102615And really, commodities for the most part been kind of sideways as well, which
squadcaster-206g_1_12-13-2024_112614waiting. Yeah, sideways.
ian-host703_1_12-13-2024_102615so time will tell on that one. But other than that, I think. That was really all I had
squadcaster-206g_1_12-13-2024_112614You can't even wait in C mode. Very short term. Again, strong uptrend. There will be corrections. I had a client letter that went out this week. So if you are a client, please make sure to read and digest that as well. But that's Is it for today? We wish you all a wonderful weekend.
ian-host703_1_12-13-2024_102615for sure. And I don't know if I will necessarily be on for Christmas. So I guess Merry Christmas to everybody. And I guess if I'm not on around the new year, happy new year as well. All
squadcaster-206g_1_12-13-2024_112614Thank you, Kevin. Have a great weekend everyone.
ian-host703_1_12-13-2024_102615right. Take care, everybody.