The Weekly Trend
The Weekly Trend
Episode 222: This Is How You Keep Up
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In this week’s episode, David and Ian discuss the continued uptrend in stocks, what type of appetite we are seeing in Bitcoin, and potential scenarios over the next 12 months.
Welcome back to the Weekly Trend Podcast. Today is Friday, September 20th, 2024. S& P 500 currently sitting at 56. 87. I'm David Zarling, and I'm here with someone who has a silo full of sarcasm, Ian McMillan. It's one of the best things that we got going for us. Is humor.
ian-guest136_16_09-20-2024_105510Yeah, silo. I
david_14_09-20-2024_095510I felt like that was a, yeah, a large container.
ian-guest136_16_09-20-2024_105510can store it till futures prices go up.
david_14_09-20-2024_095510That's right. You harvest the sarcasm and then you distribute it.
ian-guest136_16_09-20-2024_105510it
david_14_09-20-2024_095510Right. That's right. This here is the best, the best sarcasm.
ian-guest136_16_09-20-2024_105510I take it into town for the auction process.
david_14_09-20-2024_095510And then they're like, wait,
ian-guest136_16_09-20-2024_105510around.
david_14_09-20-2024_095510the price? Are you serious?
ian-guest136_16_09-20-2024_105510It's sarcasm. Sarcasm has gotten, there's not a lot of sarcasm that goes around anymore and it's gotten pretty expensive.
david_14_09-20-2024_095510Yeah. Cause the humor hurts. People don't like funny for whatever reason. I mean in some states. They're trying to outlaw funny
ian-guest136_16_09-20-2024_105510Isn't that, ugh.
david_14_09-20-2024_095510It's free. That's free speech Ian.
ian-guest136_16_09-20-2024_105510They're
david_14_09-20-2024_095510You see that
ian-guest136_16_09-20-2024_105510podcast. Gavin will.
david_14_09-20-2024_095510yeah, he's gonna try go ahead and come for it.
ian-guest136_16_09-20-2024_105510Well, on a brighter note, we got new all time highs this week
david_14_09-20-2024_095510Yeah, man
ian-guest136_16_09-20-2024_105510and Dow.
david_14_09-20-2024_095510Yeah, I heard that all time highs Don't happen in a bear market.
ian-guest136_16_09-20-2024_105510Woo! You hear those sirens? That's the sarcasm police coming for you.
david_14_09-20-2024_095510Well, I think even even so. Yeah sup 500 new highs Dow Jones and then you look at equally weighted, right? Cause we don't have to just look at cap weighted things.
ian-guest136_16_09-20-2024_105510out.
david_14_09-20-2024_095510So if you look at EQAL, which is the Russell 1000, so you're, it's basically your S and P 500 and then the next 500, a thousand stocks in the U S equally weighted, trying to close at brand new highs this week, right today, but the market's gone too far, too fast. Right. I mean, that's 0 percent return over what, when was the last high there? 34 months, 0 percent return for a thousand stocks.
ian-guest136_16_09-20-2024_105510is a true, right? And I like that you used Russell 1000 because I think it's a true right. We know the S& P is a cherry picked. I mean, yeah, they're large companies, but it's still
david_14_09-20-2024_095510It's a momentum product.
ian-guest136_16_09-20-2024_105510Yeah.
david_14_09-20-2024_095510You know, the large, the big, get bigger.
ian-guest136_16_09-20-2024_105510your Russell 1000, your Russell 2000. I mean, it's straight up mark. Like is what it is. Come. I think they switch. I think it's annually sometime in June or July, Hey, whatever your market cap is, you know, come June 30th. If you're in the top 1000, you're in the Russell 1000. And if you're not, then you're not pretty simple. Being a pretty true representation, I think you even took it a step further with the equal weight.
david_14_09-20-2024_095510Yeah.
ian-guest136_16_09-20-2024_105510I mean it's a, it's a great representation, much more so. and of course we're probably guilty of the, we're, we are guilty of this, you know, we talk about. Stocks, quote unquote. I said it right when we got on. Stocks hit an all time high. Well, the S& P did.
david_14_09-20-2024_095510Right.
ian-guest136_16_09-20-2024_105510did. But this, Equal Weight Russell 1000, is even more of a, like, a pure example of, quote unquote, the stock market.
david_14_09-20-2024_095510Completely agree.
ian-guest136_16_09-20-2024_105510time highs this week.
david_14_09-20-2024_095510Mm hmm.
ian-guest136_16_09-20-2024_105510So
david_14_09-20-2024_095510so it,
ian-guest136_16_09-20-2024_105510can you, yeah, how can you say, going back to your question, stocks, I mean, stocks have gone up a lot in, like, recently. The last months, but you zoom out and
david_14_09-20-2024_095510there's, there's room to run here and that's maybe hard for some to believe. I mean, Russell 2000 hasn't even gotten to a new high. I mean, Russell 2000 is, it's, The same price level it was February of 2021. I
ian-guest136_16_09-20-2024_105510man,
david_14_09-20-2024_095510that's a, that's a long time. Some, some people have had children who are now walking potty training during that time. And that thing hasn't done anything.
ian-guest136_16_09-20-2024_105510in that range. Hey, and we live that range together
david_14_09-20-2024_095510We did.
ian-guest136_16_09-20-2024_105510and
david_14_09-20-2024_095510And I wouldn't, yep. And I wouldn't want to live through with anybody else. I mean, it's, it's a, it's a legit period of time where markets correct. They consolidate,
ian-guest136_16_09-20-2024_105510I mean, it would be normal. Okay. Two. I'd say you pull up a chart of IWM 210 to we'll call it two 33. I mean, it's, it's realistic that we live in this range again for
david_14_09-20-2024_095510right? This that's, there's a lot of history here. There's a, it,
ian-guest136_16_09-20-2024_105510so much history. Okay.
david_14_09-20-2024_095510Because we know by studying supply and demand that the range from February of 21 with the false breakout and then subsequent move down in January, 2022, that that was distribution, meaning at an institutional level, at a massive level, those stocks were being distributed more supply than demand. And therefore we corrected. And then you can argue the opposite, the range that developed the largest range we've seen since the seventies. 22 and 23 in small caps that that was accumulation. So you have this battle between buyers and sellers, which is otherwise known as equilibrium, that we're at this place again, where we have the buyers have to prove themselves here. Same with EQAL, same with the Russell 1000, the Russell 2000,
ian-guest136_16_09-20-2024_105510going.
david_14_09-20-2024_095510you have to be able to chew through supply and the buyers have to prove themselves. And what's interesting about some of these ranges that are developing is it does up the auction process and it, it causes buyers and sellers to interact. It's a competition. It's it's who, who really is putting money where their mouth is. And, you know, you look at IYT as well. I think IYT up against a price level that goes back. The, you know, the 70 level and IYT representing transportation and kind of had a reversal type candle this week. We'll see what they do with it next week. And so you have, you know, I had the privilege of going on stock market TV last week. This is that, I know it's an overused term, but we're there in an inflection point.
ian-guest136_16_09-20-2024_105510Yeah.
david_14_09-20-2024_095510either EQAL or the Russell 1000 is moving higher and breaking the new highs. Or it gets sold off here and we consolidate some more, or it really is the top of the market, but we won't know that till later. But man, if go ahead, I was just going to say, go ahead.
ian-guest136_16_09-20-2024_105510I think you make such a great point with, I don't think it's an overused term or just at a period in the market where a lot of things are coming into inflection. Like that's what happens when you go sideways for two years,
david_14_09-20-2024_095510Right.
ian-guest136_16_09-20-2024_105510you get a lot of inflection points. If this was 2013, 2017, probably not a lot of inflection points.
david_14_09-20-2024_095510Right. And, and, and what Ian's highlighting there is a lot of inflection points, oil, right, when we look at oil, it's at a horizontal price level where buyers have stepped up in the past. We don't know if they'll step up here now, but this call it 65 66 dollar level really important that goes back to 2021 again you look at the dollar Dxy using a trade weighted dollar this 100 level is an inflection point you look at eq al at an inflection point You look at transportation stocks at an inflection point This is where we need to pay attention.
ian-guest136_16_09-20-2024_105510What I think, you know, we all love to joke about oh, we all want probably not a joke I mean, I don't think anyone disagrees with wanting You know the quote unquote lower prices at the pump
david_14_09-20-2024_095510Oh, sure.
ian-guest136_16_09-20-2024_105510But oil is probably not something you want to see Go to 20 a barrel.
david_14_09-20-2024_095510Correct.
ian-guest136_16_09-20-2024_105510like we're kind of in this sweet spot. I mean, it's, you know, we're 70 bucks a barrel. This is where you can get some pretty good. I mean, it's stable. We haven't gone anywhere for almost two years on oil. I mean, we've been between 60 and maybe a couple spurts up into the high 80s. I think this is exactly like where you would want oil, you know, just Chill out. I mean you look at like your are, you know, some of the more recent rallies we've had in stocks 2012 to 2013 I mean oil kind of just chilled out.
david_14_09-20-2024_095510Right.
ian-guest136_16_09-20-2024_105510We didn't have big moves. We kind of just I mean the 90s it was pretty Of course, there's probably more volatility in every single asset nowadays, so.
david_14_09-20-2024_095510Well, and what consumers need to remember is we tend to be very self centered when we think about these things, and here's what I mean. Yes, it's nice to have lower prices at the pump for yourself, but there is a point, and I think this is what you were highlighting, is earthmovers, semis,
ian-guest136_16_09-20-2024_105510Construction.
david_14_09-20-2024_095510airplanes, construction,
ian-guest136_16_09-20-2024_105510Back
david_14_09-20-2024_095510they all use, these are.
ian-guest136_16_09-20-2024_105510your, I mean, IYT, like you just mentioned, in general.
david_14_09-20-2024_095510Right. These are all areas that consume liquid energy, and if there's not enough demand for that, that's a warning sign. So we'll see. I mean, in oil being heavily linked to gasoline it is worth paying attention to that we hold the 65. Level I, you know, you could see and I'll say gasoline if we're using futures for that, holding two bucks, and that should get everybody that should give everybody an idea of how much it costs to transport gasoline and what the taxes are in their own state. If I'm saying 2 a gallon
ian-guest136_16_09-20-2024_105510Yeah.
david_14_09-20-2024_095510and you pay X, well, that difference. So you're probably paying a 3rd. I know in Wisconsin, you're paying a 3rd and. Whatever it takes to, to get it to market and taxation in other States is different,
ian-guest136_16_09-20-2024_105510Yeah, and of course that depends on how close you are to some big pipeline. Lens. A. I
david_14_09-20-2024_095510gasoline blends right in, in the, in the upper Midwest. We shift to different blends based on winter. And we're about to hit that we're coming into that period of time where we're going to shift blends. I don't know what it's like in North Carolina. I mean, you guys don't, I mean, you get some winter, but you guys are also below kind of a snow line is what I'll call it because you guys don't, I mean, you might get a snowfall, maybe
ian-guest136_16_09-20-2024_105510we get a, maybe everything. Three to four years, you'll get something decent. But
david_14_09-20-2024_095510you get a.
ian-guest136_16_09-20-2024_105510it's going to be a dusting.
david_14_09-20-2024_095510Like a snowflake, you get a snowflake, you
ian-guest136_16_09-20-2024_105510well and so, you know, okay, let's go back covid. Let's well, let's take out negative 40 we had 20 like you can get 20 a barrel on crude. Does anyone want to go back to that? No, so I think that's a great example of your point like cheaper Oil and energy sounds cool when you pull up to the pump in your suv or your truck or whatever In the grand scheme of, is the economy alive, you really don't want quote unquote cheap oil.
david_14_09-20-2024_095510know, a nice, a nice balance. And it's the beauty of supply and demand. It's about, it's the beauty of free markets. You know, when you, when you hear someone talk about fixing prices at like a grocery store or or, or, or energy products, you should immediately get nervous because that's what brings economies down. I mean, and we've done things like that in the past in this country. There's other notorious countries that have done things like that, like Venezuela, trying to put in price controls.
ian-guest136_16_09-20-2024_105510me, tell me about Venezuela.
david_14_09-20-2024_095510Yeah, not, not so great. Great baseball players, amazing baseball players. There are a few of them on the Brewers division champs, but as far as like price controls on goods,
ian-guest136_16_09-20-2024_105510Great
david_14_09-20-2024_095510a great idea.
ian-guest136_16_09-20-2024_105510in there.
david_14_09-20-2024_095510Yeah. Yeah. I had to, I was,
ian-guest136_16_09-20-2024_105510have to!
david_14_09-20-2024_095510I was finding, I was, I was like, how am I going to get this in there? Perfect Venezuela. But yeah, I mean, it's, you want free markets. Because free markets are a weighing machine. They're a discounting mechanism. They let you know what's really going on. And that's why we use technical analysis. I mean, I love all the fundamental stories. I mean, I get it. I get why people get wrapped up in Jerome Powell talking and rate cuts and all those things. But as you've highlighted in the past, the bond market runs before. What the Fed does. I mean, is it really all that surprising that TLT or treasuries, long duration treasuries ran into prior resistance? As the rate cuts were announced and now we're cooling off there So if you went and bought 30 year treasuries And don't have a process for how to diagnose whether they're confirming or denying a thesis The only way to do that was is with technical analysis.
ian-guest136_16_09-20-2024_105510It's the only, only, only way. And I've seen as this run gets more extended, Dave, and the, to go back to your phrase earlier, we've gotten too far too fast, which, I think that really depends on how far you want to zoom out on charts.
david_14_09-20-2024_095510Well, and what are we talking about? You know, are we Are we talking about something like orange juice or are we talking about stocks because we're talking about stocks using eqal we have a zero percent return for three years if you're talking about orange juice i mean i i might be able to see your point
ian-guest136_16_09-20-2024_105510Well, and how, I mean, there are now at this point, there are plenty, plenty, baskets full of talking points. Yeah. about why the market shouldn't and cannot Keep going.
david_14_09-20-2024_095510correct
ian-guest136_16_09-20-2024_105510I mean, we're so deep in oh, if Kamala gets elected or oh, it's just You know, I mean just whatever the cost of living Yeah to go to your point that we're up 30 percent in the last what I mean When do we bottom october 2022 technically
david_14_09-20-2024_095510yeah
ian-guest136_16_09-20-2024_105510that?
david_14_09-20-2024_095510even
ian-guest136_16_09-20-2024_105510so much since then And there's all this personal You pain from people that probably overextended themselves. That's not the point, but there's a lot of hand wringing out there about why is absurd that stocks would go higher.
david_14_09-20-2024_095510well and let's let's let's be frank i mean i see the receipts from the grocery store for my family prices have have absolutely gone up but
ian-guest136_16_09-20-2024_105510have. No one is going to deny that.
david_14_09-20-2024_095510right but let's remember why we're in markets Like why, as an investor, as, as someone who is going to retire, we are involved in them to protect purchasing power. We are not involved in them because they're fun. You know, I get it. I get that there's a million subscription services out there. There's all this, you know, fancy, you can trade this, that, and the other thing, and those are good and great. And you could treat it as a casino, or you could treat it as. This is how I protect my dollar. This is,
ian-guest136_16_09-20-2024_105510up.
david_14_09-20-2024_095510this is how I keep up because in the end, when you retire, you're going to have funds that you need to access for your lifestyle, for medical expenses, you name it. The reason investors are involved with markets are not for the jollies. It's for being able to protect your dollar. And when you have inflationary environments, You do see equities move higher. You do see things like we haven't even talked about gold yet. I mean, every, you know, it's interesting how quiet the industry is on gold at this point, considering gold bug nation is alive and well,
ian-guest136_16_09-20-2024_105510Goldbug Nation is alive. I mean, and it looks good. On an absolute basis. It's up another percent today.
david_14_09-20-2024_095510but still in a,
ian-guest136_16_09-20-2024_105510to own gold over stocks?
david_14_09-20-2024_095510yeah, it's been in a range since February of 2022,
ian-guest136_16_09-20-2024_105510Yeah, I'm just not there on, on that trade off. You gotta show me more. And you know what? I can make that decision. How long it takes me to make that decision, Dave? Two seconds.
david_14_09-20-2024_095510And the chart can show you that.
ian-guest136_16_09-20-2024_105510The chart, I pull up a chart, I divide gold by S& P, and it hasn't gone anywhere. You are at a, it's been an equal trade off, like you said, for two and a half years.
david_14_09-20-2024_095510Yep. You could own gold. You could own stocks, but does that not speak to the reason why we're involved in these things is because. It's about protect, it's about keeping up with the price of orange juice. It's about keeping up with the price of these different things that are in the market, right? Because when you retire, you don't stop eating.
ian-guest136_16_09-20-2024_105510And that's why the mattress savers don't know it's a noble, mental thing, probably not as common as it used to be in previous generations, but yeah, you can't, you can't just shove it in a mattress. You gotta put it to work.
david_14_09-20-2024_095510And we're starting, we're starting to get to like,
ian-guest136_16_09-20-2024_105510Does that take risk? It does!
david_14_09-20-2024_095510yep,
ian-guest136_16_09-20-2024_105510take risk.
david_14_09-20-2024_095510opportunity risk.
ian-guest136_16_09-20-2024_105510Yeah, then there's also the opportunity risk of if you don't keep up. If you decided you were gonna put in a CD you know, up until what, two years ago paying you basically nothing. I mean, is it safe? Yeah. Is it going anywhere? No, it's FDIC insured, you're fine. You can collect your, you know, historically speaking, very small amount of interest. Or you could have had it in stocks and you know, I mean, it's
david_14_09-20-2024_095510Well, do you remember peak T bill? We call it peak T bill internally where we were, we were getting a lot of inquiry about should I just own T bills and get that? And I'm not saying, so our models, some of our models hold T bills. We're not opposed to T bills. They're, you know, paying four and a half to five and a half percent.
ian-guest136_16_09-20-2024_105510it's still better than having it be in cash
david_14_09-20-2024_095510But since October, late October, 2023, you have equities up 38%. And at that time having to walk clients through that, there's opportunity risk here, like you could either get 5 percent and we're not even at a full year yet. We're about a month away.
ian-guest136_16_09-20-2024_105510or you can get 28
david_14_09-20-2024_095510Yeah. So it's. It markets are a wonderful place. It is the lighthouse of capitalism and free markets there, you know, to be able to participate in all these different types of things, like to be able to buy something that's a K one free gold product. Or to be able to buy Argentinian stocks. This wasn't something you could do 20, 30 years ago, but now we can, and we can identify using ratio analysis, relative strength analysis. Where is the strength? And there's something to be said for what we're seeing out of financials or what we're seeing out of financials globally. You know, even if you look at EUFN, European,
ian-guest136_16_09-20-2024_105510UFN is on it's above i'm pretty sure that was on my I mean it's above a relative to now close hey, look at this. I mean year to day highs actually, Six and a half year highs
david_14_09-20-2024_095510so there's definitely some undercurrents developing in financials in Argentinian stocks that using ARGT as an ETF to, as a proxy for that, there's a fair amount of financial Argentinian stocks in there. And time will tell how that all plays out. But if you have Singapore also performing well, you have to be, you have to do your due diligence because you can't just buy VEU, right? VEU versus the S& P still in a massive downtrend that's been going on for well over a decade. But there are spots that are showing up internationally that you can participate in. Perfectly, perfectly viable. So we, what else Ian worth highlighting, you know, we could shift to bonds, you know, we, not
ian-guest136_16_09-20-2024_105510let's do it. I think that's a great segue, right? So we had a 50, 50 basis point rate cut this week. So that would mean, right, Dave, that, well, clearly rates will go lower. I mean, they just cut them. They just cut them. So bonds will go up. will go lower. We know how the machine works. Yada, yada, right?
david_14_09-20-2024_095510really what we're seeing.
ian-guest136_16_09-20-2024_105510is it, or is it just the fact that Like Dave and I have talked about for literally years on this podcast Bond market already made its move.
david_14_09-20-2024_095510Yeah, it's priced it and this is the hard part for a lot of investors because if you consume popular financial networks or popular financial magazines, somehow we think we're getting inside information and we forget that the market is an arena full of really smart people whose very livelihood depends on this. And so they're looking at this information, digesting it, putting it in their pivot tables, put it in their Excel sheets. Figuring out all the, all these different factors and looking out six to 18 months. And it's not, it wasn't the market was basically continuing to highlight that this rate cut was not a surprise.
ian-guest136_16_09-20-2024_105510Well, and it goes back. I mean you I mean, it's it's cool and fun to talk about the S& P and individual stocks the amount of money Moved around in the fixed income arena just absolutely dwarfs
david_14_09-20-2024_095510Yep,
ian-guest136_16_09-20-2024_105510Anything to do with global equities
david_14_09-20-2024_095510for sure.
ian-guest136_16_09-20-2024_105510dwarfs it And yeah, these are, I mean, there is, I mean, there are entire governmental, I mean, trillion dollar budgets run off of what treasuries or U. S. treasuries are going to do
david_14_09-20-2024_095510Exactly.
ian-guest136_16_09-20-2024_105510funding it. And these governments need to be aware of what is going on in, don't give a, I don't care what Apple's doing, but U. S. treasuries make a move. Oh, yeah, that's a big thing.
david_14_09-20-2024_095510Well, and even, even the credit markets, when we look at across the spectrum. So if we look at like credit markets for. You know, municipal communities, or you look at credit markets for apple itself, or you look at credit spreads, you know, you look at triple C credit. We had a spike in a tightening. And so the way you look at triple C credit is these are funding for really either highly levered or poorly run companies. And so they're paying a higher, higher interest rate. And what we're seeing is a, actually since the VIX spike, a massive cooling off and credit spreads, which is a positive development. It's a risk on type environment is if poor company, if poorly run companies can get access to cash or the cost of that cash cheaper, that's a positive, positive development.
ian-guest136_16_09-20-2024_105510Yep. And I I mean you mentioned this spike Dave right into august 5th Monday august 5th. We know what monday august 5th was they had the big sunday night jap japanese yen I think they raised rates right by like 25 bips Everyone got spooked in the currency markets and big hoopla that Monday. I remember it like it was, I mean, it was only six weeks ago. And since then we've yields have crashed, yield spreads have crashed, and the S& P is up 13%.
david_14_09-20-2024_095510And it was a wonderful time to analyze. So when you, when volatility increases, what's important to remember as an investor. Is that's when correlations go to one, meaning most investment instruments start trading the same direction and the beautiful thing. Oh, sorry, go ahead.
ian-guest136_16_09-20-2024_105510I was gonna say everyone, you just sell it, you just want out.
david_14_09-20-2024_095510Yeah, and the beautiful thing is that's the very environment to understand what, what beach balls got pushed underwater and that are going to pop back quickly. You know, I think about housing or home construction
ian-guest136_16_09-20-2024_105510For sure.
david_14_09-20-2024_095510as an example of that, because,
ian-guest136_16_09-20-2024_105510that's gotta be just on the I forget who has consumer, I think Dan has consumer discretionary now, workbook.
david_14_09-20-2024_095510you know
ian-guest136_16_09-20-2024_105510But yeah, housing came back very quickly. Had been a leader and after all the after all the dust has settled, it remains a leader.
david_14_09-20-2024_095510Great. And that's, and that is an important concept that you just brought up is who, what has led us since October of 22, the, the bottoming of the market, which you don't know in real time. But as we moved out of that, what were the leaders, right? You had Eli Little, you had Nvidia, you had housing. So when these VIX spikes happen, when these volatility spikes happen, do those things continue to hold up or are there divergences that are breaking down? We have not seen that. We've not seen the things that have been leading like semiconductors, NVIDIA, Eli Lilly. And there's a quite a few other stocks that have led since then. So I don't want to just limit it to that, but the just the simple point being made that the leaders continue to lead. And that's a healthy piece of information to keep track of on whether this market is over or not. And so we can, we continue to see a bull market confirmed. Now it really gets confirmed if we see transportation stocks Russell 1000 equal weight hold these highs,
ian-guest136_16_09-20-2024_105510Semis come back,
david_14_09-20-2024_095510right?
ian-guest136_16_09-20-2024_105510semis are back had a good week. That again, that's been one of your leaders and we got, I mean, you want to talk about, we got a trend line bounce. We got the 200 day bounce. I mean, it's, there was a good risk reward here on semis lately, not back to new relative highs yet. And I'll be honest with you, Dave and no one, I S put this out in January. We broke above the four, when we broke above 4, 800 a fib extension of the January, well, the 2022 bear market, a fib extension 4, 800 down to about 3, 500. That was going to take you to 5, 600 on the S and P put that out there in January. we broke to new highs, a lot, a lot, a lot of angst over that my Twitter. So we got to 5, 600 actually a little bit quicker than I thought we would. And we consolidated here for about three months. So again, I just want to put it out as a warning that should we hold above 5, 600 feels weird saying this as a warning, but since most of the market mentality is Oh my gosh, how can this keep going? We hold 5600 and there's a very, I mean our next target is essentially 7000. It's another 25 percent. So 5600 to 7000 is 25 percent. Is that going to go in a straight line? The answer is, I'm 99 percent sure it will not go in a straight line.
david_14_09-20-2024_095510But it's it's interesting that that's setting up going into the
ian-guest136_16_09-20-2024_105510the target.
david_14_09-20-2024_095510the best six months
ian-guest136_16_09-20-2024_105510Yeah,
david_14_09-20-2024_095510the best six months november through april is historically you look at any cycle november through april Of the following year is the best six months and especially so In an election post election, whoever your candidate is, I don't I really don't care.
ian-guest136_16_09-20-2024_105510is. I don't really care. I'm genuinely just trying to retire
david_14_09-20-2024_095510Right.
ian-guest136_16_09-20-2024_105510and I will say this so we talk about okay. Ian. Well, what is your Time frame if we stayed on trend we stay on trend the halloween 2023 lows We get to seven thousand the smp Basically by in a year basically by next august Now, can it go before then, right? I mean, we reached 5600 in July. still kind of there, right? You get the consolidation. But I mean, it is, it is, it is very much not unlikely that we are at 7000 by next summer S& P.
david_14_09-20-2024_095510And the
ian-guest136_16_09-20-2024_105510am not willing. I think the big mantra that if you've listened to this podcast for any amount of time, I'm not willing to just put my retirement on hold because I quote unquote, don't think that that could happen. Or I think that that's crazy. I'm not willing to do like, dude, we're above 5600. I'm, I'm in, in more than a handful.
david_14_09-20-2024_095510right.
ian-guest136_16_09-20-2024_105510We're
david_14_09-20-2024_095510that's yeah.
ian-guest136_16_09-20-2024_105510It's coming off the table.
david_14_09-20-2024_095510And that's the beauty of technical analysis is Ian is highlighting the potential. But not going in blind and saying, I'm married to this opinion. It has to be my way or the highway. He's saying, if this, then that it's a binary outcome, the potential is there, right? We have a bullish percent that's sitting, the offense has the ball, but it's not at the goal line. It's at like the, the opposite 30. So there's room to run your plays. There's room for upside, but we can be wrong. And 5, 600 5, 600 at this point is that level. You would know that you're wrong. And then you start talking about the 200 day moving average is the next level of these different instruments. So Ian's Ian's talking about making a call, but contrary to how they do it on talking head TV, there's an opposite approach. Ian married his wife. He didn't marry his opinions. 7, 000 can be a thing.
ian-guest136_16_09-20-2024_105510I mean, we fall back through 5, 600 and I'm like, I'm done. It's off the table where we grew. I was our, I mean, clients know that it's there
david_14_09-20-2024_095510It's it's.
ian-guest136_16_09-20-2024_105510the table.
david_14_09-20-2024_095510It's a thesis, right? We're Bayesian scientists. You take the most recent information, you give it a heavier weighting, the prior information, prior information, also being important. For example, if you use XLK versus SMP, so technology versus SMP, well, we do have a horizontal level that's important to note on whether technology is worth being involved in that goes back to March of 2000, we haven't cleared that level. But what's interesting is you are seeing other areas of the market starting to step up. And do we see a broadening out of participation as we head into November,
ian-guest136_16_09-20-2024_105510I mean, you've got tech below a relative 200 day that is now flattening out.
david_14_09-20-2024_095510Which we know a flat 200 day typically means a hot mess.
ian-guest136_16_09-20-2024_105510hot
david_14_09-20-2024_095510alike.
ian-guest136_16_09-20-2024_105510And yeah, I'm here to tell you. And maybe this changes. Maybe we're here in mid October and I have different feelings. But, tech? Not, I mean, you know, an S& P and being in the same boat. You're not missing out. Like, you're not, there's no opportunity cost right now in tech to me.
david_14_09-20-2024_095510Right. Right. You're, you're just saying that relationship's at equilibrium at this point. You might not be able to gain an advantage there over being, if you're saying the default is being involved in the S& P. That technology might not provide that at this point. Time will tell,
ian-guest136_16_09-20-2024_105510You
david_14_09-20-2024_095510but
ian-guest136_16_09-20-2024_105510You just mentioned financials and the move they're making. Real estate holding up. I mean, Discretionary stood its highest relative level since May today. Industrials trying. They've got a flat relative to underday. That's, yeah. I mean, I think, golly, that's a perfect example of a hot mess. Relative chart.
david_14_09-20-2024_095510I use an XLI for that.
ian-guest136_16_09-20-2024_105510I am
david_14_09-20-2024_095510Well, and that, I mean, in some ways that has a rising, then it does have a rising 200 day and just came out of a consolidation. So economically sensitive areas continue to lead. So, you know, this isn't a scenario at this point that it's, Hey, we're hiding in staples. We're hiding in the yen. We're hiding in risk off areas. And there are stages to market development. There are times where it's just stocks performing. There's times where it's stocks and bonds. There's times where it's stocks, bonds, and commodities. And it is interesting to see gold doing what it's doing. Meanwhile, not all commodities are doing that you have oil against it, as we highlighted before against an important level, but the overall weight of evidence, again, weight of evidence in a courtroom continues to support that this market is guilty of an uptrend. It just is. And that can change, but the evidence has to present itself, and it hasn't yet.
ian-guest136_16_09-20-2024_105510no. And
david_14_09-20-2024_095510it will.
ian-guest136_16_09-20-2024_105510you
david_14_09-20-2024_095510Someday it will.
ian-guest136_16_09-20-2024_105510you know, the ETF continues to stay out what I would consider on the risk spectrum. You know, in regards to what it's like, there's we don't need, I mean, you can, that's all public information. But yeah, it's, know, not every day we're going to be up 1%, but Hey, like it's. You said this 30 minutes ago, higher highs and higher lows. I don't, I don't know what else to do. Like, I don't know what else to tell you.
david_14_09-20-2024_095510For sure.
ian-guest136_16_09-20-2024_105510It's an uptrend. And we just broke again to new highs on multiple indices and, and advanced decline, like breadth has been okay. All the advanced decline lines are fine.
david_14_09-20-2024_095510Correct. And, and this is,
ian-guest136_16_09-20-2024_105510Nasdaq, S& P, NYSE composite, all those advanced decline lines continue to move higher.
david_14_09-20-2024_095510and, you know, what's interesting is investors also tend to get myopic about, Oh, interest rate cuts at the top of a market. Well, if we only look back to the year 2000, yes, I get it, like Shane Murphy, a technician I have a lot of respect for, he did the research, he did the work, he didn't just get myopic and look at 20 years of data, he looked back in time, and when we look at the first rate cut, so this being the first rate cut, being above 25 basis points, we had a 50 basis point rate cut, people, you know, people tend to be like, oh, recession is here, here comes the recession. Well, yeah, if you look back to the year 2000, that's a, that's an accurate statement, but when you look beyond that and go back into the eighties. That's very untrue. You see 12 months returns that are double digits. So do we really get to be surprised if there's a rate cut and the market continues to run? I don't think so because markets move in different cycles. We can't just look at the cherry pick data that we want to look at. His chart is pretty clear. Yes, 19 or I'm sorry, 2001 and 2007. We had a rate cut and there were recessions. The first rate cut, there were recessions after that, and you had negative S and P 500 returns. But when you look back to the 80s and 90s, you had positive 3, 6, and 12 month returns. And so credit to Shane for looking this up and actually doing the work rather than just Buying into the nerve that that others are trying to preach out there that is only looking back a certain amount of time So is this the top of the market? I have no idea. We won't know that till later, but we will know that below 5600 that below 5400 below a 200 day that that's more likely that thesis increases But at this point Yeah, people thought it was over then
ian-guest136_16_09-20-2024_105510probably screwed. But hey, that's also a big rate. I mean, there's also, you can have a 15 percent drawdown, would be so painful and so loud, Dave. Oh my gosh. And that just takes us back to 4800. Can you imagine a 15%? I mean, so, so loud, so much adamancy about this is it. This is where it ends. I mean think about last October.
david_14_09-20-2024_095510And so it, again, it goes back to how do you make investment decisions? We know we need to be involved with markets to protect purchasing power. How do we then engage the market with a rules based approach? And the very simple answer is by using technical analysis, which is the study of supply and demand, supply and demand being economic law, not economic theory, not voodoo, not some made up contrived thing or not some data point that gets revised later. You're using the hard data, the most recent data you can get to make educated decisions. Understanding that pride is set aside and you participate until the data says otherwise. And right now the data says to participate as we have been since Reformation or late October 2023. Our clients are very familiar. We've been very heavily involved in this market and there will be a day that that changes. There will be a day that we have to adapt. And, and speaking of adapting, I should highlight the supporter of this podcast, the Adaptive Select ETF listed on the NYSE under ticker ADPV, which helps investors access two of 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 5200. As always, investing involves risk, including possible loss of principal. ADPV is distributed by Quasar Distributors LLC. Ian, what else do we want to touch base on? We haven't talked crypto. We could cover more commodities. We could highlight other interesting area developments market wise. Where do you want to take this thing before we wrap it up?
ian-guest136_16_09-20-2024_105510I think Bitcoin continues is still below a 200 right into the 200 day last couple days last couple sessions from the underside But really I mean you zoom out on a Bitcoin chart You know and if someone made me place a trade today, it's probably a buy order The consolidation, the wrap around here around this 60, 65, 000, 64, 000 that we've seen go, I mean, since February, we're six, seven months into, mean, it's high, like Bitcoin is what it is. High beta has big daily moves, but from a price behavior standpoint, I mean, that's, that's quite the I guess if, if you like, Names for chart patterns quite the handle on the cup and handle.
david_14_09-20-2024_095510Yeah, it, it's a quality digestion of supply. So if we're saying supply exists at 6, 300 or 63, we know that to be the case, cause that's where bit kind bit Bitcoin sold off in April 21. That's where Bitcoin sold off in November of 21. We've since gotten back to that level and move sideways. In a range that Ian's talking about chewing through potentially chewing through supply. If that thesis is correct, we would see Bitcoin clear 30, 70, 000, and we would be more than willing to participate in that if it is not an opportunity cost. For example, if we compare it to the S and P 500. You know, if we look at Bitcoin versus S& P 500, that's where you want to see this 15 level. So if you take that ratio, 14, 15, you'd want to see us clear that in order to say, Yeah, I'd rather put the dollar to work for my client in Bitcoin than in the S& P. We're not there yet. There may be a day, we're just not there yet.
ian-guest136_16_09-20-2024_105510you know, like I said, you, you, you know, and this is a wide range. It's I, you know, Bitcoin is, is high beta.
david_14_09-20-2024_095510It's a bucking bronco. Yeah. I mean,
ian-guest136_16_09-20-2024_105510range. And you can say, oh my gosh, Ian, that sounds insane. I can't deal with a 33 percent nine month range. okay. Take off, take off the axis, take off price. It's a 33 percent range coming off of what was, I mean, a 370 percent move. this is a very tight, tight consolidation in the context of Bitcoin. I think it's healthy. I think it's, I mean, if you're below a 200 day, I can't, I can't give you the The go ahead. That's just kind of like a personal, got to at least be a lot. We got to at least be above a 200 day
david_14_09-20-2024_095510yeah, you want to see the prior 200 days of information show that buyers have control.
ian-guest136_16_09-20-2024_105510but it's there. I mean, I'm not, I'm not shocked if by January we are above 70, 000.
david_14_09-20-2024_095510Right.
ian-guest136_16_09-20-2024_105510I'm also not shocked if by January we're sitting at 63, 000 exactly where it is today. Agree.
david_14_09-20-2024_095510and give to, give an insider's view on, on how technicians work. The thesis of hire exists above 55, 000 and if we're below 50,
ian-guest136_16_09-20-2024_105510I agree
david_14_09-20-2024_095510above 50, above 55, 000 that thesis is intact below. That thesis is broken. And so again, that's that binary, binary decision making. If this, then that. It's like being an option quarterback, or it's like picking on that linebacker where you're, wherever the linebacker goes, you go the other way. Same thing with Bitcoin above 55, 000, this consolidation and it's information, right? Consolidations, quote, unquote, should resolve in the direction of the prior trend, the prior trend being up. So this consolidation Bitcoin should quote, unquote, resolve to the upside when it doesn't, that's information you set up and go, Oh, this all turned out to be distribution at this level. And so you wait for resolution out of this. So we'll see. Time will tell. It's another range. It's another inflection point that exists at a horizontal level, and we're seeing this across a wide variety of instruments, and probably something that exists until the election happens,
ian-guest136_16_09-20-2024_105510Probably
david_14_09-20-2024_095510of who your favorite candidate is.
ian-guest136_16_09-20-2024_105510would agree with that.
david_14_09-20-2024_095510All right, we are up against the end of our time. Anything else you'd like to highlight before we jump out of here?
ian-guest136_16_09-20-2024_105510Continue. It's an uptrend.
david_14_09-20-2024_095510It is. And this is, we're involved,
ian-guest136_16_09-20-2024_105510you wish.
david_14_09-20-2024_095510yep, involved because this is how we keep up. This is how we protect purchasing power. If an uptrend is on our hands, we have to participate. We don't have to participate below 5600 or we can take our foot off the gas below a 200 day moving average. We don't have to participate, but right now the opportunity cost at this point is not being involved in this market. We continue to see higher highs and higher lows, rising 200 day moving averages, quality breadth metrics. You know, if you want to check off boxes, these are it. Does it have to continue? It doesn't. I wish I knew the future. We don't. But Ian, I love doing these with you. We hope our listeners really appreciate this. If you do, we ask you to share it. We ask you to give us a high ranking that gives us feedback that you appreciate what we're providing to you guys. With that, Ian, thanks for being on here again with me.
ian-guest136_16_09-20-2024_105510Have a great weekend, everyone.