The Weekly Trend
The Weekly Trend
Episode 237: Phil D Gap
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In this week's episode, David and Ian discuss the recent pullbacks to election gaps, and those sectors that held their gaps and reclaimed 50 day moving averages. They also discuss the current state of the growth versus value relationship and recent moves in commodities.
Welcome back to the Weekly Trend Podcast. Today is January 17th, 2025. P 500 currently sitting at 6, 007. I'm David Zarling. I'm here with Ian Profitable College Sports McMillan.
ian_1_01-17-2025_121237They need to be
david_1_01-17-2025_111240They need to be, right? Why, why run a college sports program negative? Doesn't seem to make sense.
ian_1_01-17-2025_121237for the sake of fairness, I guess
david_1_01-17-2025_111240Hmm. Fairness, because life is fair.
ian_1_01-17-2025_121237Markets are fair.
david_1_01-17-2025_111240Yeah, right. Markets are
ian_1_01-17-2025_121237Markets are very fair.
david_1_01-17-2025_111240Mm hmm.
ian_1_01-17-2025_121237We're back above 6, 000. That's not where we were last Friday.
david_1_01-17-2025_111240No.
ian_1_01-17-2025_121237So you're not being very green this week?
david_1_01-17-2025_111240Mm hmm.
ian_1_01-17-2025_121237That's good.
david_1_01-17-2025_111240we were to close like this, and we have a few hours to go, we'd have a bullish engulfing candle on the S& P on a weekly basis. Now, what that means is, the opening price and the closing price exceed the closing price. The price opening and close of last week. And all this is happening with breath, you know, participation of stocks at extremes, you know, we, we don't have going into today. We didn't have a single sector of the 11 sectors above a 50 day moving average.
ian_1_01-17-2025_121237Wow.
david_1_01-17-2025_111240You had bullish percent in O's down in the 40s. And as you highlighted before we hopped on here, not a lot of damage done to the broad index in that scenario.
ian_1_01-17-2025_121237There is not, I mean, I'd say, what, markets have been weak for about a month now?
david_1_01-17-2025_111240Mm hmm.
ian_1_01-17-2025_121237Middle December. I'm sure you can find stocks or sub industries that have been weaker or stronger. But yeah, for Broad Market, about a month, maybe five weeks but big, big bounce back this week so far. What stood out to you then, Dave?
david_1_01-17-2025_111240Over the past week I think what you highlighted there is just, yes, we saw weak breath underneath the surface. fully realize that the S& P. It doesn't represent the whole market, and yes, it's a consideration when all the sectors were below a 50 day moving average, but I think in context, it's important to remember what's the direction of that 50 day moving average, and what's the, yeah, and what's the direction of the 200 days. For many sectors, it's up. For some sectors, it's flat. So yeah, in some cases, like energy. You know, have you been hanging around and not doing much for quite a bit? You know, I think it's fair to say that energy really hasn't done much since June of 2022. But here, energy is back above a 200 day, a 50 day. And by all intents and purposes, I mean, it's the best performing sector. Year to date. know that we want to be paying close attention to January performance for the market as a whole. And right now S& P is close to for January that, you know, so goes January, so goes the year is the seasonality saying, and so we've got a, a few days left, know, we've got a four day trading week next week with Martin Luther King day on Monday happens to be inauguration, which I just heard they're moving indoors. Cause it could be so cold. I wonder how many
ian_1_01-17-2025_121237Yeah, I saw it snowing in D. C.
david_1_01-17-2025_111240Really?
ian_1_01-17-2025_121237Yeah, because I saw I saw, I read a story last night, a car went into the river
david_1_01-17-2025_111240Oh, into
ian_1_01-17-2025_121237in Arlington and then all the videos had snow,
david_1_01-17-2025_111240Wow.
ian_1_01-17-2025_121237and it's cold there.
david_1_01-17-2025_111240I know here we're supposed to get single digits with minus 10, minus 20 windchill next week. Yeah. Your favorite type of weather?
ian_1_01-17-2025_121237Not what they have in Antigua.
david_1_01-17-2025_111240No.
ian_1_01-17-2025_121237No.
david_1_01-17-2025_111240beautiful. Beautiful all their housing there is super, like, colorful. People take pride in their homes and They may not be the biggest homes you've ever seen, but
ian_1_01-17-2025_121237They take care of them.
david_1_01-17-2025_111240they take care of them. And one side of the Island has rain forest. side is like arid, like California. I mean, it's pretty diverse Island.
ian_1_01-17-2025_121237That's pretty cool.
david_1_01-17-2025_111240Yeah, it was a good trip. to relax. Good to take a chance to mourn dad and rethink some things reset. So I appreciate you guys covering for you. And Kevin did a good job last week, kind of highlighting where some important levels were for the market. And so far we've responded to those, I would
ian_1_01-17-2025_121237Yeah, we got a little, you know, we talked about last Friday. We were below that 58. 50, barely. So that was kind of your first maybe chink in the armor.
david_1_01-17-2025_111240Mm hmm.
ian_1_01-17-2025_121237But, Monday, we gapped down, most, most things closed quite a bit higher, back above there. So, so far, just another blip on the radar. And, and, pretty strong uptrend.
david_1_01-17-2025_111240Yeah, it's a strong uptrend. speaking, and even sector speaking, just because you do have rising 50 days and 200 day moving averages, you know, I'll go back to yes, there was weakness underneath the surface. But now you have this feels like another table is set moment. In the market where I don't want to call it to the extreme similarity to October, early November of 2023, but what we don't have is extreme breath. The other way, extreme positive breath. And that's typically when you see correlations go to one and correction start, we're actually starting from a new base. It's almost like you had a reset in breath and, you know, we have price levels that you guys highlighted last week that we can watch there's, there's always going to be a market with red flags. I know we talked. Before hopping on here about Apple, Apple would be one of those where it's
ian_1_01-17-2025_121237Yeah!
david_1_01-17-2025_111240worth paying attention to.
ian_1_01-17-2025_121237Apple's I don't know what we're doing over there. But, needs to get back above 237,
david_1_01-17-2025_111240And you have this scenario where, in addition to breadth resetting, you have credit spreads actually cooling off. So credit is not tightening, which is another way to say that money is flowing
ian_1_01-17-2025_121237Yes.
david_1_01-17-2025_111240freely. You have a relationship like junk bonds versus intermediate treasuries continuing to consolidate and move higher. Thank you very Another indication of risk on positive money flow. And then you have the biggest inflow since April of 2020 into money market
ian_1_01-17-2025_121237That was gonna be my next comment. Yeah, I mean you want to talk about and we're on a six Okay, so clearly you hear March april 2020 big influx into Money market funds. Okay, that makes sense Six percent drawdown after a 28 percent rally Well, I mean that was just year to date. So if you actually go back to November, I mean it was It was strong And then we had the same rush to cash. And I get that part of that is cause there's more money in the system. Right. Like I wouldn't compare money market flows in 2024 to 1970,
david_1_01-17-2025_111240Right.
ian_1_01-17-2025_121237Cause there's like way more just money out there that would be naturally sitting in cash no matter what. But yeah, to go back to something, and I would say in the grand scheme of COVID pretty near term, four years ago, four and a half years ago. So to see that behavior again, I do, I do find that fascinating.
david_1_01-17-2025_111240Does that reek of optimism?
ian_1_01-17-2025_121237No. So we still have clearly not. Well, if we haven't hit optimism, we haven't hit euphoria.
david_1_01-17-2025_111240Right. So we're still living in skepticism.
ian_1_01-17-2025_121237And then you get these, yeah, these overnight moves like we had Wednesday, I guess it was I don't know, some guy, was it CPI or something? Whatever, these things they release at 8. 30 in the morning and 8. 30 Eastern, earlier for you. Gets futures in a tizzy and
david_1_01-17-2025_111240I don't
ian_1_01-17-2025_121237what do you know?
david_1_01-17-2025_111240I don't get up for the CPI
ian_1_01-17-2025_121237continuation of the trend we've been in. Now we're not to new highs yet. Some things are some things are to new highs
david_1_01-17-2025_111240but you highlighted before that. I mean, it's really to see there's a gap up overnight from the election
ian_1_01-17-2025_121237yeah
david_1_01-17-2025_111240and this, this corrective move since mid December filled that gap,
ian_1_01-17-2025_121237Yeah, s& p cash filled that perfectly and then immediately bounced like intraday bounced
david_1_01-17-2025_111240Right. And there's important levels there, whether you're looking at volume profiles and points of control or volume weighted average price the auction process is a beautiful thing to watch. Right? Because what, what really is happening when price is falling right? Sellers are outpacing buyers, but it's all about finding where the buyers are willing to step in. And so far the buyers are willing to step in at 5780 cash on the S and P. And I would argue that I bet that that point on 11 sectors being below a 50 day is going to dramatically change, you know, when I look financials back above a 50 day, communication services above a 50 day, industrials above a 50 day, materials are not, real estate is
ian_1_01-17-2025_121237rsps right there So equal weight s& p is there
david_1_01-17-2025_111240utilities back above a 50 day, discretionary never got to a 50 day, XLK back above a 50 day, energy back above a 50 day, So, you know, we have an environment where now it's almost 8 out of 11 sectors back above a 50 day moving average.
ian_1_01-17-2025_121237well better panic buy.
david_1_01-17-2025_111240right, and that, and that's what happens is, you know, we also saw, you know, bar charts on, on Twitter or X posted that hedge funds reduce their leverage at the fastest pace in more than two and a half years. So there's a pretty big deleveraging that just happened. combine that with the flight to money market, most we've seen since. The COVID crash, it reeks of setup that people might get caught again. And I'll say, I don't see a lot of BTFD out there,
ian_1_01-17-2025_121237No, no crypto community is pretty hype
david_1_01-17-2025_111240right?
ian_1_01-17-2025_121237And they've got some silly, you know, they got their typical Silliness going on fart coin and whatever you want to this stuff. They These people,
david_1_01-17-2025_111240and diamond hands. But I mean, isn't it telling
ian_1_01-17-2025_121237but Bitcoin back to all time highs almost.
david_1_01-17-2025_111240And isn't that telling that Bitcoin did that made this move with the dollar stronger and
ian_1_01-17-2025_121237Great.
david_1_01-17-2025_111240really well versus the broad market. And so now you have a scenario on your hands where is Bitcoin about to launch to its next. Like higher and people are going to be caught with their swimsuit off as the tide goes out and leaves it behind time will tell and we have our price levels that we can use whether it's
ian_1_01-17-2025_121237The relative chart looks really good.
david_1_01-17-2025_111240Mm hmm
ian_1_01-17-2025_121237Bitcoin versus S& P looks really good, right? Cause that's a thing, right? It's Bitcoin can do great. S& P has been in an uptrend for, you know, for the 15 months at this point. So yeah, getting above relativized, consolidated nicely. I mean, I'd definitely rather own it than gold. Yeah.
david_1_01-17-2025_111240one and how how bearish are we getting if? Things like comm services and discretionary don't even get to their 50 day For, as much as we lament about Apple, JP Morgan going out to brand new all time highs. How bearish can that be? If financials are holding up well, I mean, banks in general,
ian_1_01-17-2025_121237Yeah.
david_1_01-17-2025_111240up well, really hard with that type of characteristic to get overly bearish this market, now you have a potential breath reset on your hands.
ian_1_01-17-2025_121237After just a 6 percent decline?
david_1_01-17-2025_111240Right. And a lot of top calling,
ian_1_01-17-2025_121237Mmm.
david_1_01-17-2025_111240which could still happen. I'm not here to say that the S and P has to make new highs. Or that the Russell's even close to making new highs, Russell 2000.
ian_1_01-17-2025_121237Yeah, well, Brussels got You know, you just mentioned banks. Industrials have been good. But, that healthcare sliver.
david_1_01-17-2025_111240Well, and, and, another, another orange flag would be tech underperforming.
ian_1_01-17-2025_121237Yeah? Which is gonna be a headwind, right? Rotating, I mean, we've talked about that. So, we, I look at the, an XLK. Versus S& P chart, we'll talk about it. I mean, we talk about it internally.
david_1_01-17-2025_111240Mm hmm.
ian_1_01-17-2025_121237It's not Oh, we have, golly, we haven't, now we do own some semiconductors
david_1_01-17-2025_111240Right.
ian_1_01-17-2025_121237Don't own any broad tech. So that means that I'm Clearly ready to go value over growth.
david_1_01-17-2025_111240Well, and that, and that's what, what's going to be my next question to you is, like, you look at something like pure growth versus pure value, like an RPG versus RPV, or even a S& P growth versus S& P value. So, SPY G versus SPY V.
ian_1_01-17-2025_121237Still growth, very strong.
david_1_01-17-2025_111240So what's going on there? If tech, if tech is underperforming and I, I mean, most tech is considered growth.
ian_1_01-17-2025_121237Yes, it is
david_1_01-17-2025_111240So what's the deal? How,
ian_1_01-17-2025_121237And small cap tech is terrible. I mean small cap tech versus IWM PSCT versus IWM. This is not a, it's not a good Stitch We're a year and a half into underperformance.
david_1_01-17-2025_111240Well, and I think what's interesting is are the things that are contributing the most to RPG outperforming are things like VST, a utility.
ian_1_01-17-2025_121237Ah, OBSD.
david_1_01-17-2025_111240You got some aerospace. You got some airlines, you know, it surprises me to see United Airlines as a growth company.
ian_1_01-17-2025_121237Hmm.
david_1_01-17-2025_111240you got Arista networks,
ian_1_01-17-2025_121237OBSD, yeah.
david_1_01-17-2025_111240some cruise lines. So it's not your typical, yes, tech is growth, but it's the other growth stocks. That are not tech that are that are carrying the carrying the water.
ian_1_01-17-2025_121237Airlines have been hot.
david_1_01-17-2025_111240Mm hmm.
ian_1_01-17-2025_121237Cruise lines have been hot. The travel, I'm I think it's, Kevin has discretionary workbook, right?
david_1_01-17-2025_111240Yes
ian_1_01-17-2025_121237And he had that yesterday.
david_1_01-17-2025_111240Mm hmm.
ian_1_01-17-2025_121237So, yeah, your retail, your it's just been a pretty calm, I mean, 2024 retail. There's the apparel stuff. Yeah, Cruz ETF CRUZ, it's a strong, absolute, I mean, it's a, it's a, we had a breakout in late October election, just helped, also an area, so an area that never filled its election gap, which I think sets it apart,
david_1_01-17-2025_111240Oh, yeah strong. You're just saying Strength during that time frame and what was that again?
ian_1_01-17-2025_121237CRUZ.
david_1_01-17-2025_111240Oh cruise lines
ian_1_01-17-2025_121237Yeah. So one of those areas that had been strong over the last month, you know, four or five weeks. Dave talked about a lot of these areas, including broad indices, going back, filling their November 6th election gaps. And yet those areas that didn't, I think, I'm willing to bet, if we made a list of them today, and then came back in December, I'm willing to bet the majority of those would be outperformers over the next, you know, 11 and a half months
david_1_01-17-2025_111240Yeah, I think that's fair. I think that's definitely fair. And so the uptrend, still intact at this point and will be until we close the below important levels regardless of the naysayers the narratives You people with one foot in, one foot out, time will tell. I guess at this time I want to highlight the supporter of this podcast, which is the Adaptive Select ETF listed on 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 long term market downtrends. Investors can find out more, including how to invest in ADPV, by visiting ADPVETF. com 1 833 880 5200. Investing involves risk, including possible loss of principal. is distributed by Quasar Distributors, LLC. So what else Ian, what else do we want to highlight? You know, we touched base on energy being the strongest sector to start the year. What are we seeing out of some of the key sectors? Energy commodities like crude.
ian_1_01-17-2025_121237energy materials industrials. Yeah, your top performers for through the first 17 days commodities, I think are pretty if you take a gcc Etf gcc Out of it paid it out a big dividend back in 2022. So i'd say just that I think it looks you know a gcc Breaking out to new highs Crude is Not breaking. I mean, it's been on a nice run, but GCC's held up pretty well
david_1_01-17-2025_111240Yeah.
ian_1_01-17-2025_121237and then Yeah, and so you break it down to the individual commodity level Coco, which wrote, I mean, really never fell off. Most, I mean, most of this stuff has been pretty good. Orange Juice, a lot of your winners from 2024 have stayed strong. Corn has been very strong the last quarter of last year and end of this year. In fact, corn's up to over, I don't know, over one year highs. So, again, you go to the grocery store this weekend, your cobs are a little more expensive. Don't be surprised. And other, and other things have not. NatGas has been a big, big winner over, I mean, in 2024. We went from a 1. 60 to, we're up to over four bucks now. Close to four bucks, but soybeans pretty weak.
david_1_01-17-2025_111240When you better get your steak now.
ian_1_01-17-2025_121237Get your steak. Yeah. Cattle continues to be very strong. Could be paying for your cattle, for your steaks in gold. Maybe you could offset a little bit of it. If your butcher takes gold bars.
david_1_01-17-2025_111240Yeah.
ian_1_01-17-2025_121237Coffee has been very strong. Cotton, cheap. Buy your t shirts. So mixed, but overall, I mean, up. Definitely up. Do I want to own commodities over stocks? Eh? I mean, some of them I would. Like, do I want to own GCC over stocks? I'm not quite there yet, but, I mean, we're getting up there to where
david_1_01-17-2025_111240But aren't you thankful that you have a process for that?
ian_1_01-17-2025_121237Yeah, I don't have to sit here and guess at what I, you know, some big macro thesis about what I think is going to happen to commodity prices.
david_1_01-17-2025_111240Yeah, just pull up a GCC S& P chart. Step one, right? Still stocks in favor if you're using S& P. Then start digging.
ian_1_01-17-2025_121237That's all there is to it.
david_1_01-17-2025_111240Yeah, don't need to overcomplicate it. And I do find it interesting too when we do look at stocks and we look at something like the Russell 2000. And I know that Marlin Capital out here highlighted that small cap positioning is the lowest we've seen since basically 2020. I mean, it's, it's, let's call it 15 year lows in small cap positioning. There's a reason for that. I mean, small caps have been meandering and not getting out of the basement.
ian_1_01-17-2025_121237Ah, they just never really, they put it together for a month or two, sometimes a quarter for two, a quarter or two, but
david_1_01-17-2025_111240When you know what, what cap level is typically ignored, that's really showing some positive signs as mid caps.
ian_1_01-17-2025_121237mid caps. And I ignore them, I'm guilty of that. But they do. I mean, you gotta be, yeah, you gotta be in mid caps over small caps.
david_1_01-17-2025_111240And that are, they're at a really important area of polarity versus S& P, you know, going back, what, since 2004, so we're talking about 20 years, we haven't seen mid caps at this level since then.
ian_1_01-17-2025_121237Hmm.
david_1_01-17-2025_111240it'll be interesting to see if the minor leaguers, if the farm system is strong, if, if mid caps, if we're going to get some more mid caps that show up in the S& P 500 in the next year or two. We'll be interesting to watch. So overall, I mean, you have strong crypto for the most part, and I'm talking about your Bitcoin and ripple moving higher, you have gold strong while the dollar has been strong. That's notable. And you have all sorts of sectors reclaiming their 50 day after what appears to be a reset in breath. Again, you're not going to check all the boxes, right? We mentioned the red flag of These other areas have to carry if Apple's going to struggle. That's why we use charts. Anything else you want to highlight for our listeners?
ian_1_01-17-2025_121237no. Earlier in the year, I think we'll have a lot more confirming information in two weeks come the end of the month. Like you said, so goes January. Typically goes the year, not saying it happens in a straight line, but the the winners from January typically January. Come December, end up being pretty near the high of the list as far as performers and that could be, that could be to the downside too not done until you get to new highs on the indices and those can always fail too, there will, at some point there will be an all time high that fails and leads us into a bear market. Very, very little evidence. As we saw in most drawdowns in 2024, very little evidence that quote unquote this one is going to be it. So,
david_1_01-17-2025_111240So the trends continue to trend. Hard to complain with that. Obviously, we're aware of things to look for. as always, you're never going to check all the boxes. But definitely notable that across many different measurements, That we filled the election gap and price responded hard there and moved higher. And as Ian said, if we get a positive January that typically it's not a prediction that 2025 is positive, but it, it makes sense, right? If you, if you score first in a game, or if you have, if you win the first quarter of a football game. Many times you end up winning the game. The stats, the odds are in your favor. So, appreciate it, Ian, for being on here with me again. As always, a great job. And I look forward to what 2025 brings. I know we have some big plans here. At Client First and Adaptive. so I'm excited for this year. And we appreciate everybody listening. Hope you guys enjoyed this episode. And you did, please share it with your friends. Give us a high ranking on your favorite podcast platform of choice. And we will see you next week.
ian_1_01-17-2025_121237Have a great weekend everyone.