The Weekly Trend
The Weekly Trend
Episode 240: Ned Ryerson
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In this week's episode, David and Kevin discuss the back to back weeks with Monday morning gaps down, potential red flags in the market, risk-on bond relationships, Financials, important relative levels, and bearish sentiment.
Welcome back to the Weekly Trend Podcast. Today is Friday, February 7th, 2025 S& P 500 currently sitting at 6044. I'm David Zahling. I'm here with Ned Ryerson, Kevin Ferrari. Welcome back onto the show, man.
kevin--lol-_1_02-07-2025_102950Yeah, thanks. It's I'm glad I got to come back for the 2025 Groundhog Day Gapdown Monday show.
david_1_02-07-2025_102947Yeah, I guess that's just what we're going to do each week is just gap down on Mondays.
kevin--lol-_1_02-07-2025_102950Close it out on Fridays, Gapdown on Mondays, just get back to even by the end of the week and rinse and repeat.
david_1_02-07-2025_102947Yeah, is this, how does that work? Groundhog sees his shadow, then what happens? Is this like the market seeing its shadow?
kevin--lol-_1_02-07-2025_102950Yeah, maybe.
david_1_02-07-2025_102947works.
kevin--lol-_1_02-07-2025_102950Actually, somebody's had to have put that together, right? That's gotta be a thing that's out there already. Like what the returns are for when the groundhog sees his shadow.
david_1_02-07-2025_102947yeah, I mean, well, hmm, probably should, probably, I mean, that sounds like something we could figure out
kevin--lol-_1_02-07-2025_102950Yeah, if it doesn't already exist. Oh, look at this. Harvard business review is on it already in 2023. Okay.
david_1_02-07-2025_102947them.
kevin--lol-_1_02-07-2025_102950I'll have to, while we do this, I'll scan that. See if I can figure it out.
david_1_02-07-2025_102947So Phil, his accuracy rate is 36 percent for the weather thing.
kevin--lol-_1_02-07-2025_102950Probably better than your run of the mill meteorologist. I would think, huh?
david_1_02-07-2025_102947Kind of crazy. I mean, he's, we want, he's, We saw his shadow on February 2nd, which means there's going to be six more weeks of winter. And if he hadn't, we supposedly could have. So we're sitting in a spot of like 70 percent chance that it's going Going to be spring early. They should really reverse this. This is
kevin--lol-_1_02-07-2025_102950Right. I just changed the criteria. Just flip it.
david_1_02-07-2025_102947yeah. This is very, very adverse accuracy here, but to your point, the past two weeks we've had a gap down on Monday, climbed all the way back to previous levels, started green on a Friday, end up red and then gap down again. So now we get to find out if it's the same thing this upcoming weekend.
kevin--lol-_1_02-07-2025_102950Right.
david_1_02-07-2025_102947knows, maybe, maybe investors are just nervous to hold stocks into the weekend. Maybe there's just too much winning.
kevin--lol-_1_02-07-2025_102950That could be,
david_1_02-07-2025_102947People get nervous when things get audited. Shouldn't people get nervous when they get audited? When people and corporations get audited, they probably should get nervous. I mean, the government's being audited now. I would think they would be nervous.
kevin--lol-_1_02-07-2025_102950yeah, I think that's pretty natural. Just when you, even if you're not doing anything wrong, just the fact that,
david_1_02-07-2025_102947Right.
kevin--lol-_1_02-07-2025_102950I mean, like if you were going through an IRS audit, like just the fact that you're talking to an auditor, I think would make you nervous. It's kind of like getting pulled over. You're driving in your car, and it's just kind of natural, I think. Going to the doctor. Going to the dentist, you know, kind of the same thing.
david_1_02-07-2025_102947For sure. But we definitely have had some volatility you know, painting the bigger picture. It was Q4, specifically November 23, we got all those breath thrusts. Right. Right. In the market markets continue to rise through then had a great 2024 uptrend intact another round of breath thrusts in the summer had a little bit of a pullback in July, August, then moved higher December was negative, but then we had, you know, a positive January, seasonally speaking is good for the market if that holds and but we also know that February is, you know, Notoriously the weakest of the six month period when we break down the what's the strongest six months in a year It's November through April out of a 12 month period and in that six months February is the oddball. It's the pucks pucks a townie Phil
kevin--lol-_1_02-07-2025_102950Of all the months.
david_1_02-07-2025_102947of all the months Ned Ryerson of all the months
kevin--lol-_1_02-07-2025_102950Mm hmm.
david_1_02-07-2025_102947So, you know, it'll be interesting every time time will tell and I appreciate you filling in. I know Ian spending some quality time With his wife, Kate, and it's probably necessary going into Super Bowl weekend considering she's an Eagles fan and he's a Chiefs fan.
kevin--lol-_1_02-07-2025_102950It'll be a tense time in the household, I would think, this weekend.
david_1_02-07-2025_102947Yeah, I think they gotta, like, just make sure that relationship's tight. Maybe watch the game in separate rooms.
kevin--lol-_1_02-07-2025_102950I was actually just thinking that. You think they watch it together? I don't think I could do that.
david_1_02-07-2025_102947I think, I'm guessing they do. They seem like they're pretty strong.
kevin--lol-_1_02-07-2025_102950Mm hmm.
david_1_02-07-2025_102947But then maybe, but maybe, maybe then there's another day off next week where they just gotta recoup.
kevin--lol-_1_02-07-2025_102950Could be.
david_1_02-07-2025_102947It's like Vince Vaughn, I just gotta sit over here, put some maple syrup on my pancakes and recharge. We'll see. There's, you know, did you know that there's seasonality with who wins the Super Bowl too?
kevin--lol-_1_02-07-2025_102950Did not until that you informed me of that.
david_1_02-07-2025_102947Like uh, Ryan, I think Ryan Dietrich put this together about when Philadelphia wins a championship, pretty bad things for the market.
kevin--lol-_1_02-07-2025_102950Right.
david_1_02-07-2025_102947So I, I know that a lot of people are cheering, cheering for Philly because the Chiefs have gotten so good. They're easy to hate now.
kevin--lol-_1_02-07-2025_102950Mm hmm. They're the new patriots, essentially.
david_1_02-07-2025_102947Patriots, right? Yeah. how this works is you get so good and then eventually everybody hates you. So most people are cheering for Philly, but Philly wins a championship, not great. So like, the athletics, the Philadelphia athletics, 1910, 1911, 1913, 1929, 1930.
kevin--lol-_1_02-07-2025_102950Now here's the kicker. Had a rough 50 years there, for a little bit.
david_1_02-07-2025_102947Yeah, they did. I mean, it wasn't until 1980 that the Phillies got a World Series. 2008, Phillies won the World Series, financial crisis. 2018, the Eagles won a Super Bowl, worst stock market year since 2008. I don't know, man, maybe, you know, when you're watching the game, I know people out there who are listening are going to be probably cheering for Philly,
kevin--lol-_1_02-07-2025_102950I have that in the back of their mind though.
david_1_02-07-2025_102947got them.
kevin--lol-_1_02-07-2025_102950Maybe they'll end in a tie. Wouldn't that be nice? Everybody wins.
david_1_02-07-2025_102947what game, what college game was that where they to like eight overtimes? It was this season. That would be wild.
kevin--lol-_1_02-07-2025_102950That would be,
david_1_02-07-2025_102947talk about ratings.
kevin--lol-_1_02-07-2025_102950just give up. No.
david_1_02-07-2025_102947have a team you're going for? Yeah, me neither. I'm there for a great football game. I
kevin--lol-_1_02-07-2025_102950As long as it's enjoyable, that would be.
david_1_02-07-2025_102947yeah, I'm there to watch great players like Mahomes and the offensive line of the Eagles and Saquon Barkley. Those guys are amazing. Now we've gone on a lot of diatribes here.
kevin--lol-_1_02-07-2025_102950Yeah, that escalated quickly.
david_1_02-07-2025_102947I don't know if people have turned off the podcast yet, but maybe we should talk markets. So we've had this new characteristic of gap down Mondays, reclaim those levels, get back to near, near all time highs, get red on Friday. Time, time will tell. We'll know on Monday. Well, that's the case again that we're going to have another gap down, but what else are we seeing out there besides just broad market speaking? You know, we, we talk about the 500 A lot in here and that's fair because it's a basket of 500 stocks that are cap weighted, reflects momentum, reflects the best stocks in US markets for the time being. There will be a time where the S& P 500 is not relevant, but it's has been for, don't know if relevant is the right term, but as dominant as it has been, it's a dynasty.
kevin--lol-_1_02-07-2025_102950The chiefs of the market.
david_1_02-07-2025_102947Yeah, chiefs of the market. So what else, what are we seeing maybe underneath the surface? And then I'll let you take it anywhere. You can go stocks, bonds, crypto commodities.
kevin--lol-_1_02-07-2025_102950Well, I don't know. You want to get the bad out of the way first or go with the good.
david_1_02-07-2025_102947Hmm. go. Let's rip the Band Aid off.
kevin--lol-_1_02-07-2025_102950Okay. Just get it over with.
david_1_02-07-2025_102947Yeah, the bad.
kevin--lol-_1_02-07-2025_102950Well, now we're kind of talking about some names that. Are looking kind of like red flags,
david_1_02-07-2025_102947Mm hmm.
kevin--lol-_1_02-07-2025_102950Currently. It's like, I don't know, I guess, where to start with each of those. I mean, I guess Apple's probably your biggest.
david_1_02-07-2025_102947Yeah. I mean, Apple is the same spot it was in summer of last year on an absolute basis. So 0 percent return there. And then versus the S& P. Mean. Yeah. thing hasn't gone, and it gets at the same level it was in September of 2020. So 0 percent return for Apple versus S& P. I don't mean 0 percent return on an absolute basis. I just mean any type of edge
kevin--lol-_1_02-07-2025_102950Zero Alpha.
david_1_02-07-2025_102947Zero alpha since September of 2020.
kevin--lol-_1_02-07-2025_102950Hmm. And I mean, that was, you know, when Apple broke above, what is this, we'll call it like, 235,
david_1_02-07-2025_102947Mm hmm.
kevin--lol-_1_02-07-2025_102950back kind of towards the end of the year, last year, or kind of beginning of December. I mean, that's a pretty sweet looking chart, you know, essentially, through the rest of the year. And then, Merry Christmas. Sayonara. I just ruined it from there.
david_1_02-07-2025_102947So it's been an, it's been an absolute uptrend. And, you know, we're talking about, let's not complain. Like a 68, 69 percent return since September of 2020, but you gain no edge by owning Apple over the S& P.
kevin--lol-_1_02-07-2025_102950Mm hmm.
david_1_02-07-2025_102947You know, and another one I think of is Microsoft.
kevin--lol-_1_02-07-2025_102950Yep.
david_1_02-07-2025_102947Microsoft is at the same spot it was in February of last year. So 0 percent return for one year on an absolute basis versus the S& P. Also same spot it was in summer of 2020. So no edge. For Microsoft versus S& P for four and a half years. for Apple. Interesting.
kevin--lol-_1_02-07-2025_102950Yeah. Kind of a lame range too, like 15 20 percent range.
david_1_02-07-2025_102947Mm hmm. Really hard to grab any alpha in there. So, the way these major cycles work, that we have to keep in mind, and when you think about the makeup of the S& P 500, right, the big continue to get bigger. cap weighted 500 is a momentum strategy. And when major cycles end, it's when the largest cap weighted pieces stop being the strongest contributors. So when you look at like, for example, 2007, right before the bear market there in the market, which was, that was one of the bigger ones down 56%. It was financials at the time. Financials were the largest weighting Now they're one of the smallest, but each cycle has new leaders. In time, we'll tell whether this site, this proves out to be the end of this cycle, that it sees major players like Apple and Microsoft, and we haven't even touched on Google.
kevin--lol-_1_02-07-2025_102950Mm hmm.
david_1_02-07-2025_102947Because Google, you would say, is kind of in the same predicament,
kevin--lol-_1_02-07-2025_102950Right. I mean, Apple and Microsoft have kind of been showing this red flag hand, I guess, for a little bit now. Google's pretty fresh, like, as of this week,
david_1_02-07-2025_102947right?
kevin--lol-_1_02-07-2025_102950you know, with the gap down a couple days ago. And then, I mean, today's price action's pretty unfortunate.
david_1_02-07-2025_102947Right.
kevin--lol-_1_02-07-2025_102950Down a little over 3%, kind of right around a level, you know, we call it like 190.
david_1_02-07-2025_102947Mm hmm.
kevin--lol-_1_02-07-2025_102950Which they held even with the gap down the last couple days, but today, losing that pretty steadily, so,
david_1_02-07-2025_102947So no, no alpha there since of 21. So that's three major players, Apple, Microsoft, and Google, that are percent alpha, right? The leaders haven't been leading for year, years. Is that a bubble? Don't know. Like, the fact that your leaders haven't been providing, you Alpha is worth, think, paying attention to. And I mean, think you could probably throw Amazon in that bucket as well.
kevin--lol-_1_02-07-2025_102950mm hmm,
david_1_02-07-2025_102947I mean, it's the same thing. Spring of 2020 0 percent return turn from an alpha perspective, fine on absolute. These things are the exception, probably Google.
kevin--lol-_1_02-07-2025_102950mm hmm.
david_1_02-07-2025_102947Okay. On an absolute basis. But as far as like generating alpha, not so much for a few years.
kevin--lol-_1_02-07-2025_102950Yeah, and then like even just the three names talked about before, Apple, Microsoft, Google, it's like 15 percent in the S& P right there. Tesla's another one, it'd be nice if Tesla could get its act together,
david_1_02-07-2025_102947Yep. But you've, you've seen a resurgence in things like Netflix,
kevin--lol-_1_02-07-2025_102950mm hmm,
david_1_02-07-2025_102947that was a name that was kind of under a lot of duress, but you know, Netflix is on the verge of new all time highs versus S and P on a relative basis. And then you have things like meta or Facebook, new all time highs versus the s and p. So some rotation happening also amongst the big names you have your winners in Facebook Netflix and Nvidia took a hit weeks ago.
kevin--lol-_1_02-07-2025_102950mm hmm,
david_1_02-07-2025_102947know, with the narrative being deep seek. So the large names are worth paying attention to. That would be, I think we've done a good job covering the red flags here. And I think you could throw in there. We still haven't recorded a new high in the advanced decline line for the NYSE. Typically you like to see that confirm. We still don't have new high in They're trying. I mean, it's. It's cleared the level that goes back to 2021, and some might call that from a technician's perspective, a Wyckoff, a Wyckoff wraparound of prior highs, where it's consolidating near the highs. So on an absolute basis, not too bad. But are there other things we can look at that provide us health of the market? So we have, we have those negative things.
kevin--lol-_1_02-07-2025_102950mm hmm.
david_1_02-07-2025_102947Anything that you're looking at that's on the positive side when we look at the weight of evidence,
kevin--lol-_1_02-07-2025_102950Don't know if I would throw this necessarily on the positive side, I guess it's interesting. Well, I guess long term still positive. If you kind of look at different risk on bond relationships, so like junk bonds versus you take your pick AGG TLT, I mean, I guess if you look at you know, investment grade corporates things like that, you know kind of those relationships over the past couple weeks have kind of gotten to some areas where You know, they've seen quite a bit of relative resistance, historically and have since, kind of paused or pulled back a little bit. So I guess I kind of put that more in the interesting category, like nothing's changed as far as, like the relative trend, uptrend is still intact. So I think largely speaking in kind of the bond areas, it's still pretty risk on which is something maybe to keep, pay attention to here over the next couple weeks, a couple months, I guess if we start seeing, right, some of those red flags we talked about continue and you start seeing kind of a regression in those risk on relationships, then you kind of perk your ears up a little bit. Cause I guess that kind of adds weight of evidence to, maybe those red flags. So time will tell there.
david_1_02-07-2025_102947right? And I think it's it's it's worth noting to like triple c credit spreads have Moved a little higher here since January 23rd. Nothing crazy Still in a downturn, you know downtrend in the spread which is typically risk on We'll see if that continues to hold if we continue to see credit spreads cool off, you know, you meant you mentioned credit You know if we're continuing to see junk IEF J& K versus IEF move higher if we're continuing to see demand for convertibles or corporates
kevin--lol-_1_02-07-2025_102950Yeah. Convertibles look pretty good. I mean, that's a good sign,
david_1_02-07-2025_102947Yeah, still, I mean, I believe year to date are still one of the better credit places to be. I don't think, I don't think we can complain about that. I mean, when you look, that's, that's a risk on barometer and then, and then you're sitting in this backdrop of at the end of last year, we ended up breath wise getting really narrow. You had the bullish percent down into forties. We flip back to X's and you're coming off back to back years where less than 25 percent of stocks in S and P outperformed S and P itself, which is little abnormal, but markets are normally abnormal.
kevin--lol-_1_02-07-2025_102950right?
david_1_02-07-2025_102947So is this is 2025 a year where you see an increase of stocks outperforming the S and P 500,
kevin--lol-_1_02-07-2025_102950Yeah, I mean, I think it definitely could be. even, just scanning through individual charts within some of these different sectors, I think you're definitely seeing good looking charts and kind of from some not necessarily, common names or, areas that, we're doing well last year. So, I mean, yeah, very well could be kind of like an intra sector rotation happening, a little bit of greater participation and,
david_1_02-07-2025_102947well, and to start the year, 50 percent of S and P 500 constituents are outperforming S and P. Which is pretty dramatic change from the last two years where less than 30 percent we're all performing S& P, S& P. So year to date you have than 50%. You might have a character change and you talk about rotation. That's the lifeblood of a market when you see that type of rotation. Until we start to see credit really crumble, you have to give the nod to the trend that's in place. And you're seeing things like financials leading.
kevin--lol-_1_02-07-2025_102950mm hmm,
david_1_02-07-2025_102947you typically don't see financials do well. If a bear market is upon us, it's just not something you see. Typically it's staples, utilities, some of healthcare, but we're not seeing that. I mean, you have financials as a whole being the best sector year to date at almost 8 percent along with communication services, materials, industrials. Not a lot to complain there. And then you look at individual stocks like JP Morgan or American express versus XLF financials. I mean, JP Morgan versus S and P is about to break out of a 30 year base. Does that happen next week? Don't know, but America American express versus S and P already broke out of a 52 year base and the bigger the base, the higher the space.
kevin--lol-_1_02-07-2025_102950right?
david_1_02-07-2025_102947And then I would say there's a term in our industry overused, overused, which is inflection point. And when you look at semiconductors and tech versus the S& P, they're really at important levels. And I think, I, I think that's really going to be the tell in the coming weeks is when you look at versus S& P, whether they can hold this, this neckline, same with XLK versus S& P. If those hold and those end up being quote unquote head and shoulders consolidations rather than tops, I This could be a rip roar in 2025
kevin--lol-_1_02-07-2025_102950Mm hmm. Mm hmm.
david_1_02-07-2025_102947pivoting back to financials. I know you highlighted before we hopped on here, just dealers,
kevin--lol-_1_02-07-2025_102950Yeah, I mean, you're talking about, relative bases there, it's 15 year relative base. It's moving out of today, right? This week, I guess I should say it's a pretty good sign because,, we've been seeing like a lot of those investment banks, brokers, dealers, managers. That space of financials has been pretty consistent for a while, even before some of your bigger banks really started taking off. So those have continued higher and yeah, especially with the credit card names too, I was looking at Discover today too, relative to the S& P, trying to get it out of, call it like a 10 year base, relative base,
david_1_02-07-2025_10294712 years, man.
kevin--lol-_1_02-07-2025_102950so credit cards looking pretty good which can't be a bad sign.
david_1_02-07-2025_102947area that, you know, if we, if we preach that markets are a future discounting mechanism, and I shouldn't say preach, it's just a fact. They are one area that you highlighted this week, you and Ian that I thought was really interesting is just education stocks.
kevin--lol-_1_02-07-2025_102950Mm, yeah,
david_1_02-07-2025_102947And I'm not, I'm not saying that's risk on or risk off. It's just interesting to note the strength out of education stocks that I haven't heard anybody talking about that.
kevin--lol-_1_02-07-2025_102950no. I mean, really it's kind of an area that there's no easy way to access an aggregate really anymore,
david_1_02-07-2025_102947No,
kevin--lol-_1_02-07-2025_102950which always makes it interesting when you see some of those, you know, themes or industries that kind of play out where there's no underlying, you know, basket that people can just buy, that might be kind of driving it. So that's pretty cool to see
david_1_02-07-2025_102947it is.
kevin--lol-_1_02-07-2025_102950for sure.
david_1_02-07-2025_102947look at things like crypto, I know altcoins some call them crap coins, or maybe even more derogatory terms has been quite a a sell off, a bloodbath. Over the past few weeks. Meanwhile, your majors, your Bitcoin, Ethereum, Ripple, they've actually held up pretty well and remain in ranges. We'll see how those resolve. pretty important lines in the sand. there's a lot of pieces that you look at crypto, you know, even commodities as a whole using something like GCC at a really critical point on an absolute and relative basis. We're seeing the market set up that if the uptrend is intact, you'll see these things confirmed to the upside. And if we do have a major correction upon us, you can see things like semiconductors versus S and P tech versus S and P commodities versus S and P. Bitcoin versus S and P. They'll confirm, they'll, they'll let us know whether we have a correction on our hands and we can adjust for our clients accordingly. We're just not there yet. I mean, we, still really good setups that are happening. And when you look at enough charts, there's quite a few things coming out of bases. It's, it's a, it's a market where you could see some weakness in February, but things have, Really set up to give us some information here soon, and that's why I appreciate technical analysis I don't know how you do this from a macro or fundamental perspective where you have this Acute point in time where okay price on a relative basis is really a bunch of these important levels We're about to get some really important information soon
kevin--lol-_1_02-07-2025_102950Right. Yeah. And especially, you know, like a lot of individual stocks. Within a lot of these sectors up against relative resistance and kind of forming bases and pretty good setups, you
david_1_02-07-2025_102947Yeah,
kevin--lol-_1_02-07-2025_102950Kind of your point you're making before, we've seen kind of next relative breadth expansion. I mean, the setups are there. You just need to follow through on them.
david_1_02-07-2025_102947mm hmm And there could be a scenario where it is is February just one big shake and bake February is just those levels actually break and And they turn it into false moves and we rip higher the rest of the year. Also a scenario where do they break confirm and they, they have sustained trade and there is a major correction upon us never break and we're ripping the rest of the year. really three scenarios on our, on our hands. And I know we're reaching the end of our time. And so I got to make sure that I highlight the supporter of this podcast, which is the adaptive select ETF 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. involves risk, including possible loss of principal. ADPV is distributed by Quasar Distributors LLC. So Kevin, we've reached the end of our time. else you'd like to highlight before we hop off of here?
kevin--lol-_1_02-07-2025_102950No, I don't think so. I mean, you had some sentiment, things that were put out there in the universe, about some, skepticism, increasing.
david_1_02-07-2025_102947Yeah think that's fair. The AAII bull bear ratio definitely would still scream skepticism, you know, by no bar charts, shared data that 43 percent of investors are expecting a correction over the next six months, that does not reek of optimism. So sentiment continues to be what I would call a tailwind. People are, remain skeptical of this market. We're seeing the put call ratio rise over the past. Few weeks all put buyers are our future buyers of socks when they got a cover. So we'll see. Time will tell.
kevin--lol-_1_02-07-2025_102950yeah,
david_1_02-07-2025_102947point.
kevin--lol-_1_02-07-2025_102950there's still definitely more in the good category, right? I mean, if you start, like, if we ever have an episode here coming up where we don't have any red flags, then, you know, it's really time to pay attention.
david_1_02-07-2025_102947Yep. I, I completely agree with that. It's when everything is swimmingly, going well, and all the boxes are checked, that you really need to pay attention on, have we exhausted the buying. Well, great having you on here. Thanks for covering. great episode. Everyone that's listening, you know, if you enjoy this, please share it. Please give us a high ranking on your a platform of choice. Enjoy the weekend. I think Super Bowl should be on a Saturday. So Mondays are more productive, but it is what it is. Enjoy watching the game and thanks for listening.
kevin--lol-_1_02-07-2025_102950Thanks. Have a good weekend, everybody.