The Weekly Trend
The Weekly Trend
Episode 244: Process > Prediction
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In this week's episode, David and Ian discuss the major indices currently below their 200 day moving averages, the current strength in international equities, Bitcoin struggling with $91,000, and what the potential scenarios are for the market with the S&P's current price action.
Welcome back to the Weekly Trend Podcast. Today is Friday, March 7th, 20. Currently sitting at 56. I'm David. I'm here with Ian McMillan. We've entered March Madness.
ian_1_03-07-2025_121213Feels like it.
david_1_03-07-2025_111212Whether you're
ian_1_03-07-2025_121213a very good start to the month.
david_1_03-07-2025_111212No,
ian_1_03-07-2025_121213Hey, it's not a terrible surprise. But here we are.
david_1_03-07-2025_111212right. Two weeks ago, we laid out the Bears thesis. We talked about the January low, the zero line, the election gap.
ian_1_03-07-2025_121213Yeah.
david_1_03-07-2025_111212A 200 day moving average, and here we are
ian_1_03-07-2025_121213Below
david_1_03-07-2025_111212below those levels in something like the s and p 500, I think you highlighted that. Whether it's online or in our internal chats, you know, small caps already below a 200 day Nasdaq, below a 200 day, and here we're on the I don't wanna use too much of an outlandish term, but s and p 500 below a 200 a. It brings up the old adage of Paul Tudor Jones, one of the best investors of our lifetime. Nothing really good happens below a 200 day moving average,
ian_1_03-07-2025_121213it's still, I mean, it's still upward sloping, but um,
david_1_03-07-2025_111212and that's really important context for sure.
ian_1_03-07-2025_121213it
david_1_03-07-2025_111212I.
ian_1_03-07-2025_121213I mean, I think it gives a little bit, maybe a little bit likelihood that there's some type of recovery. But hey, I think it's a pretty clear line in the sand as well. it's been probably 16 months since we've really even had to talk about this. So, hey, but hey, it happens.
david_1_03-07-2025_111212The last time the s and p 500 was at its 200 day moving average was in October, November of 2023.
ian_1_03-07-2025_121213That was
david_1_03-07-2025_111212You know.
ian_1_03-07-2025_121213very, yeah. I mean, we were down there for what, like two or three weeks below
david_1_03-07-2025_111212Yeah. What? Yeah. Not even like, like one week. One week. I mean the Nasdaq last time it was at a 200 day was August of 20, 24. Small caps had a couple more visits along the 200 day, but your point is valid. We're below the past 200 days of information and. That should pique our interest. Now, we're only 6% off the highs, but there are some pieces of information that actually in some ways remind me a little bit of October of 2023. And I, I didn't tell you I was gonna do this. I, but we had an episode from back then and it, some of the information kind of feels similar to now. The fact that the rubber band is stretched.
ian_1_03-07-2025_121213It definitely is stretched. I think Dietrich had a good I mean, at least short term. This will be the first streak of seven straight days with at least a 1% move, I believe he said prior to the 2020 election. A lot of
david_1_03-07-2025_111212I.
ian_1_03-07-2025_121213I mean, all these, it's really been a. Kind of a waterfall. I mean, we've had one. Okay. I mean, we'll call it two quote unquote green days, you know, those weren't really super impressive. Not from like a candlestick standpoint. It
david_1_03-07-2025_111212I wanna play.
ian_1_03-07-2025_121213pretty constant.
david_1_03-07-2025_111212Yeah. And I wanna play you the clip from back then because I think it, it mirrors a lot where we're right. We're at right now
ian_1_03-07-2025_121213Okay.
david_1_03-07-2025_111212it's not a guarantee that we're gonna have the same outcome.'cause right after that rubber band was stretched back then. It came back to its resting state. We had breath thrust and we moved higher, but I think it's worth playing to highlight just the environment that we're in. And when you think about seasonality, the weakness in this year from August, September, even part of October is normal. But you've also heard us talk about October being amplification month. And so we're right on that precipice. And I think we've described on here in the past of a stretch rubber band, and there's really two outcomes for a stretch rubber band. It either snaps or it returns to its normal state. Its rest state. Is what I should say. This market, when you look at what's happening underneath the surface, these mega caps are either gonna catch down and that would be the rubber band snapping, right? You just have an acceleration to the downside and amplification directionally to the downside. Or this is the final flush in the final piece of October, which would be classic to see heading into November, December, January, February, March, and April, which are the best six months out of 12. We see it rip higher from here. And so I wanted to cover that because we're kind of at that same precipice here. Like we're either gonna see the rubber band flush, like you're gonna have this flushing where all correlations go to one, and you see a big event of selling. It is interesting that we're in another month of seasonality march, and you know, the phrase goes for October. It's buy in October and get yourself sober. I can't think of a lot of things that rhyme with March. You know, I don't know if it's like buy stocks in March so you don't get marched. I don't know what it would be, but there's nothing that really rhymes with March. But seasonally speaking, we do have an environment, seasonally speaking in March where we do tend to see. Lows in March, in the second week, time will tell, but we haven't seen in the current environment. We haven't seen a 90% down day yet. The VIX is elevated, but we haven't seen a really high move in the vix, like a spike in the vix. We haven't seen a jump in the put call ratio. Those are all things that I think we have to be aware of, that there could be, as we talked about last week, one more flush, one more move down'cause remember leading into this we had extreme bearish sentiment like sentiment that usually see, you see off of market bottoms, like the bottom of the oh eight crisis or the bottom. During covid, you see these huge spikes in bear sentiment. We have that already, but yet the positioning hasn't matched by fund managers retail. It's an environment where you could see one more quick move down to get bearish positioning that then sets up the next leg higher time will tell,
ian_1_03-07-2025_121213I
david_1_03-07-2025_111212or.
ian_1_03-07-2025_121213One thing that's been interesting to me this correction, so when we look back at like, so two things. So we're 12 days from all time highs, candles. Those are, I'm using candles and not calendar days. So about 8% off the highs in 12 days. The correction that you talked about from July, 2023?
david_1_03-07-2025_111212Yeah, the August, September, October correction. Yes.
ian_1_03-07-2025_12121312 days into that we're down about half of this.
david_1_03-07-2025_111212We.
ian_1_03-07-2025_121213and that got a lot, and that ended up being a 10% correction. It took. 65 calendar day. So about three months, five. I usually, I say 22 market days a month, rule of thumb. So basically three months to go down. 10, 11%. Very orderly. we had some green weeks in there.
david_1_03-07-2025_111212Right.
ian_1_03-07-2025_121213When you moved to last July and August. So 15 bars, 9% correction. Never really got that close to a 200 day. We had a little bit of a rally. So this one to me is different in that, I mean, it's been quicker. And two, there's been like, no. There's been no gap downs yet. It's all, it's been a lot of opening higher and closing red.
david_1_03-07-2025_111212Right.
ian_1_03-07-2025_121213know. I don't think we've had a or I guess we have had a gap. We had a gap on Tuesday. Now we went up and kind of filled it. I mean, last August we had gaps to the downside. The summer before that 2023, we had gaps that were not filled. I don't know. This one just seems more, consistents not the right word, but I mean, they're hammering it like intraday. When you watch it, there aren't many intraday rallies, and when they try it just gets slapped right down. And same with these, you know, when we've opened green. They even tried to rally it today and. It all the way back down.
david_1_03-07-2025_111212And each week kind of has this upside down V formation where we're red on Monday. Have some positive price action Tuesday, Wednesday, Thursday.
ian_1_03-07-2025_121213Yeah.
david_1_03-07-2025_111212On Friday, and that characteristic really hasn't changed. So we'll see. I mean, below a 200 day, you've already had breath weakness going into this. Now to be fair, you still have some international strength.
ian_1_03-07-2025_121213Yeah, international. Gosh, there's some good spots in international over the last week.
david_1_03-07-2025_111212You did a good job highlighting for clients in the most recent writeup that these rebounds in international, on a relative basis, and now in some ways they're starting to look good on an absolute getting above, you know, major highs that these, this decade long downtrend on a relative basis. This might be how you see that turn, but it's gonna provide plenty of opportunity along the way, so we'll see.
ian_1_03-07-2025_121213And you got, I mean, V-G-K-V-G-K breaking out to highest level since oh eight. So it's a European ETF or an US ETF that tracks European stocks. But yeah, I mean, you had double digit Poland, Spain, Germany Finland, Austria. China, not European, but I mean really strong runs out there. I mean, pretty much everything in Europe up at least 5% over the last week. That V-G-K-E-T-F itself up 7%. I mean, I give'em not a lot of things in the US at all time highs, so they do have that going for'em. Yes, to your point. When we zoom out, we, like Dave said, we talked about with clients this week in the letter do we wanna start piling into European equities? I'm still not quite convinced of that.
david_1_03-07-2025_111212Yeah, that's a pretty long-term downtrend. I will say a really good step one has been reclaiming, you know, you look at something like VGK versus s and p or IEV versus s and p.
ian_1_03-07-2025_121213Yes.
david_1_03-07-2025_111212Reclaiming the September 22 low Is a really good start. cause typically, you know, when you think about big baskets of stocks it's not that easy to turn a big barge overnight. And so you typically see trend reversals that take time and it's been a good start to the year for international. Does that continue? No one knows. If you were to start to turn the barge, this is might be what it starts to look like. Is the opportunity over? Absolutely not. Again, this is a decade long downtrend in these areas.
ian_1_03-07-2025_121213Oof. Yeah.
david_1_03-07-2025_111212You know, they've been opportunity costs since December of 2007.
ian_1_03-07-2025_121213You're not making that back in two months.
david_1_03-07-2025_111212Right. You know, the, we're talking about. On a relative basis, IEV versus s and p is still down 75% from the December oh seven high. So plenty of work to do. And typically turning the barge round takes time. And when I say time, I mean months to years. And is this the start of that? It absolutely could be. And if that's the case, it will provide opportunity for our clients in the coming. Months for sure. But as far as grabbing a falling knife at the start of the year, that's not really good risk management. That's just taking a shot. And so here
ian_1_03-07-2025_121213They're going up.
david_1_03-07-2025_111212They're going up now, and it's good to see some of these on absolute basis. You know, I, IEV still has to clear it's 2007 high. So if you think about that's 20 years of 0% return for European stocks. VG K is in the same situation, whereas, you know, when you look at a 2007 level in the s and p 500, the s and p is up 265%. So Europe had 0% return. The last 20 years the US had. 265% return for that relationship to change will take time. And if you were to kick it off, it might look like this, and that'd be great. If there's a differentiator in the coming years away from the s and p 500, selfishly as a team that manages money, it'd be great to have that differentiation.
ian_1_03-07-2025_121213Agreed.
david_1_03-07-2025_111212tell.
ian_1_03-07-2025_121213I would love it. Definitely been the mega cap tech show for a while. And we're kind of seeing right, the headwind that can become when those big names don't go up.
david_1_03-07-2025_111212right.
ian_1_03-07-2025_121213Because while Russell's Russell has been terrible, we get that, but, you know, equal weight s and p doing a little better. Over the last couple weeks,
david_1_03-07-2025_111212Right and.
ian_1_03-07-2025_121213happened in 2022. Tech led to the downside. So in that snowball can start going back down the hill, it is really tough to overcome.
david_1_03-07-2025_111212Right.
ian_1_03-07-2025_121213And we know techs looked, I mean, how bad is tech looked on a relative basis for a while. Ugh.
david_1_03-07-2025_111212Well, and that's a key piece of evidence. You know, especially when you look at something like XLK versus the s and p, you have this relative formation that goes back to May of 2023. So 0% return for tech stocks versus the s and p since, you know, we're that's a healthy almost two year consolidation. Now, if that breaks to the downside, if that confirms that was distribution, yeah, there's gonna be problems with US markets for sure. And.
ian_1_03-07-2025_121213unless everything else is gonna come to the rescue and I just, I don't know. I dunno if I see that happening.
david_1_03-07-2025_111212Right, and it, there's some, I mean, there's some bifurcation here. There's, you know, we talked about Europe, some parts of Asia being strong equity wise. So you can't sit here and say everything is risk off. But you can look at triple C credit spreads which have been rising the last few weeks. You can look at something like junk bonds versus intermediate bonds, which I believe are below a 200 day moving average.
ian_1_03-07-2025_121213Yes, they are.
david_1_03-07-2025_111212You can look at something like XLK, right? The largest waiting with the s and p has been now struggling for two years. Yes. It's been a nice return in the US markets since late 2023, but here we are and are, is this rotation in international? Is this is international gonna succumb to the same selling pressure, right? Correlations go to one. And that's that flushing piece that you wonder is still on the table. Do you still have a scenario where correlations go to one and most things get sold in the next week, and then it's time for the market to start rising after that? Or it doesn't that kicks off a new. A new bear market time will tell. I mean, Ian, I really wish I knew this. I really wish I knew where US stocks would be six months from now, but I don't. All I can use is the process that we have and one of those simple tools, you know, if you're a client you're very familiar with this, is if you've got a five day moving average of something like the s and p below a 200 day time to park the car. You don't need to drive in the snow storm. We'll protect client accounts. And maybe it's late October, November 23, where that happens for a week. You park the car for a week and then it's springtime and you're out on the road again the following week. That could happen as well.
ian_1_03-07-2025_121213It happens.
david_1_03-07-2025_111212Yep. And it, I do think it's interesting the sustained selling that you were highlighting before, since mid-February, I.
ian_1_03-07-2025_121213Yeah.
david_1_03-07-2025_111212we still haven't gotten that 80% downside day, 90% downside day. You still haven't gotten that.
ian_1_03-07-2025_121213There's, yeah, I a hundred percent agree. I think you mentioned earlier, I mean, no, I mean, I think even on Tuesday there was like a ton of call buying. We can't get the put call race yet. A spike. It is, yeah, kind of complacent out there. And there's some other metrics that show the opposite, like total, I know total put buying is at an all time high. you know, according to some research and Right. You still got the a i bears and bull spread, which we talked about last week. Now while those surveys are typically contrarian signals I mean people did, that survey started flipping pretty bearish, like in oh seven. Again, I'm not saying that's what's happening here.'cause certainly that survey has marked tons of intermediate, long-term bottoms over the last decade plus. But sometimes can't be. Right. And I write, I mean, I'm there. I typically see it as a contrarian signal, but people can be bearish early and be, you know, right. We'll see.
david_1_03-07-2025_111212Yeah, we will, we'll see where we end up. But it is interesting to have a pretty big bellwether like the s and p negative on the year below, the January lows below the election gap. Currently sitting below a 200 day now we're quite a few hours from close. That could change. You know, we could see it close back above a 200 day, and we look back at this episode and all the bearish signs were already there. And you know it to me, I guess, you know, perfect world, which we're not in, you'd see that capitulation event before we move higher. You'd see that. Throw the baby out with the bath water. 90, 80% down days, maybe one or two of those.
ian_1_03-07-2025_121213Yet either.
david_1_03-07-2025_111212Right. You'd see that Vic spike, you'd see put call. You know, you brought up, put volume, but you bring up a good point there. That's a, when you say put call ratio, that's a ratio. You could have record put buying, but that must mean if the put call ratio is muted, that the call buying is also large.
ian_1_03-07-2025_121213It is, and those metrics are always tough to me because when they're i'll, you know, it'll be some graph of nominal. Put buying going back to 2000. And that's always tough to me'cause there's just constantly more money in the system.
david_1_03-07-2025_111212Right,
ian_1_03-07-2025_121213Like
david_1_03-07-2025_111212but it did.
ian_1_03-07-2025_121213be, that number in five years will be even bigger. But it, and, but that doesn't necessarily mean right, if we put it in more context, like puts first calls and that ratio still hasn't. So that just means that there's also record call buying going on apparently.
david_1_03-07-2025_111212Right. And that's when the call buying has, is the part that's got a decrease. So we still have this environment where people say they're bearish. But haven't positionally expressed that. cause you would see a jump in the put call if the call buying stopped and you would see capitulation flight to cash, and maybe that's what this week will cause. Or maybe it's next week or maybe not at all. Maybe this is just a normal right, because we experience. A 5% correction in something like the s and p 500, four times a year on average.
ian_1_03-07-2025_121213That's once a quarter.
david_1_03-07-2025_111212Yep. And a 10% correction once per year. And I'll go back to, you know, Ryan Dietrich could point this out. That's the price of admission. And another way to think about this is we all have a bias called loss aversion.
ian_1_03-07-2025_121213Yeah.
david_1_03-07-2025_111212Where losing a hundred dollars bill outta your wallet feels way worse than finding a hundred dollars bill sitting on the sidewalk,
ian_1_03-07-2025_121213Well, and I think that swagger's your zero line. And it's fair. I mean, humans are gonna human like it's impossible. And I think this I'll put it in the same category like a high watermark. IM, it's impossible to not. Have those thoughts and emotions now how you handle them can be different
david_1_03-07-2025_111212Right.
ian_1_03-07-2025_121213matters to you and your process can be different. But yeah, I mean I think it's right. And February usually a where you just came off a big bull market. You've got bonus and tax refund season. Likely some high watermarks being hit here in early 2025. And those stick with people to say, well, a month ago my account was at X and now it's at y and that's not fun. Or, well, I remember on December 31st where my account balance was, and gosh we're two over two months into the year, and I'm negative. screw this.
david_1_03-07-2025_111212Right.
ian_1_03-07-2025_121213You know, those are real emotions. Whether they're a part of a valid process is a different discussion. But I mean, even as me as someone who does this professionally, like I'm aware of high watermarks
david_1_03-07-2025_111212Right, and you're describing.
ian_1_03-07-2025_121213Am I panicking? Am I panicking because, X percent off it? No, because I understand how trends work, but they're still like, oh yeah, quite a bit. We're off of that.
david_1_03-07-2025_111212You're saying like a high watermark is when you use that term, you're meaning like when someone looks at their balance and they're like, oh, I'm at the highest I've been. I'm at 500,000, or
ian_1_03-07-2025_121213I
david_1_03-07-2025_111212I'm at
ian_1_03-07-2025_121213January I had 400,000 and now I'm down to three 50.
david_1_03-07-2025_111212Right. Or I'm, you know, I would.
ian_1_03-07-2025_121213just sticks with people. I mean, you and I have both witnessed this for sure over our careers. Again, it's a very natural human emotion. But when things go up for 16 months and then it doesn't go up maybe for multiple months, right? 20 15, 20 16, or you can go sideways for two years.
david_1_03-07-2025_111212Yep.
ian_1_03-07-2025_121213Not really be in this terrible bear market scenario but that 400 grand is just constantly stuck in the back of your mind until you get to 4 0 1 again.
david_1_03-07-2025_111212Right. And that's a natural part of trends and there's two things there. One would be if you think about the two facts, the average annual return is 9%. Which is the least likely scenario. So that a 9% return in the s and p 500 is defined by extremes. Like one year you'll have a 20% return, and another year you'll have like three.
ian_1_03-07-2025_121213Yep.
david_1_03-07-2025_111212The other thing that's can torment investors if they don't have a process is if you do have a 10% correction once per year, think about that. You have to sit through minus 10. To get positive nine.
ian_1_03-07-2025_121213Or add up the fives, add up your four or fives. You're in theory sitting through 20% worth of corrections to get nine.
david_1_03-07-2025_111212Right. And that's the price of admission and uptrend. Now could this turn into a downtrend and we have to protect accounts? Absolutely. And that is something we stay disciplined to and will do. But volatility within uptrends that's a attribute of markets. They just don't move in a straight line.
ian_1_03-07-2025_121213Never
david_1_03-07-2025_111212And yeah, you can go months before the high watermark in the account is reclaimed.
ian_1_03-07-2025_121213Well, you said earlier since the top in oh seven s since the top in oh seven and p's up 265%
david_1_03-07-2025_111212Right? And that's just. And that came with
ian_1_03-07-2025_121213A lot of crap.
david_1_03-07-2025_111212right, a lot of crap in between. You know, you had 2011, you had 20 15, 16, you had 2018, you had the Covid crash in 2020. You had a two year bear market in 22, 23. We don't have to sit through all of those as part of our process, but it is a grander reminder that. Markets don't move in a straight line. They typically have four or 5%, four minus 5% corrections in a year, one 10% correction in order to get your average return. And then I'll throw on top of that, when you look at durations of bull markets, so if we wanna make the argument that we're, you know, in, in year three
ian_1_03-07-2025_121213Okay.
david_1_03-07-2025_111212a bull market, year three tends to be the choppiest.
ian_1_03-07-2025_121213Okay. That's good info. I did not know that.
david_1_03-07-2025_111212Yeah, that tends to be your Choppiest environment and I know Grant Ridge did a nice job highlighting this, that year three is just different than years one and two.
ian_1_03-07-2025_121213It's like
david_1_03-07-2025_111212while the bull market is relatively young. You have two scenarios. You've got this. We haven't tested the 200 day in a long time, and so here we are. That's perfectly normal. You have you, I should say three things. You have February, March seasonality, which is typically negative going into the second week in March, and you have this third year of a bull market, which tends to be the choppiest,
ian_1_03-07-2025_121213Like a three-year-old toddler because
david_1_03-07-2025_111212right?
ian_1_03-07-2025_121213know how to walk, they know how to throw tantrums. Years one and two. You're still crawling.
david_1_03-07-2025_111212Yeah. Why do they call it the terrible twos? Is it, has it been your experience at, I think it's age three.
ian_1_03-07-2025_121213I mean, I would say like, yeah, two, two or three. Probably more so. Three. I can definitely tell like Connor was really good, but you can tell like our youngest who is at 18 months right now, like way more of a temper tantrum kid than our older one than he's gonna be. So I, I mean year three, and that makes sense. Looking back on, right, because you had 20 13, 20 14, then you get 2015 into pain in the butt.
david_1_03-07-2025_111212It's one of those maturity things for a bull market that you're gonna have this type of scenario. And so, and really when you are managing money or operating as an investor, I. You operate in a thesis, right? We highlighted the Bear's thesis two weeks ago. You also operate in binary thinking. If this, then that. For example, if the five day is below a 200 day on a Friday, we protect. It's that simple. Is there a scenario where we get a flush? In the market. What I mean by that is correlations go to one. We get a quick move down that gets people really bearishly positioned, and that actually ends up being the fuel that leads us on to year three and four of a bull market. Also, a scenario, do we not get a, yeah, do we not get a flush and we move higher from here? Also a scenario, and so you have to have a plan. We can't predict these things. You have to have a plan for each of those scenarios. It's kind of like. One of, one of the valuable lessons of life is when I had the privilege of playing quarterback at a high school and college level is you might have a linebacker step up into the A gap. The A gap being right between the center and the guard. Okay. I've seen this before. This is, could be a blitz like this. This linebacker could be coming on a blitz. That blitz could be purposeful directly or it could allow a outside defensive end to stunt in. He is o occupying alignment or he could drop into coverage. So in my mind, pre play, my pre-snap read, I have to understand the different outcomes of what that linebacker's gonna do. Same thing in markets. What is our reaction to different scenarios that unfold? And we do, we have multiple scenarios on our hands. Currently, uptrend is still there. But we're below some important levels, like the zero line, the election gap, the January low, that's information and the 200 day, that's information characteristic change.
ian_1_03-07-2025_121213And it's not just the s and p, right? So Nasdaq below the 200 day Russell's been there for a while. Dow might have gone and tested it. The Dow's held up. I mean, I'm sure at least it's your always beta index. Now still even with today's move lower. And of course we're recording this, we've had some recovery.
david_1_03-07-2025_111212That's just it. We could be above the 200 day by the time this is edited out the door and the market's closed. And that's okay. That, that falls into one of those scenario scenarios for the market is maybe today is the day where people get you know, we've had an uptick in, I could say I've gotten family texts about the market and being nervous about it. We've gotten. Client contact about being nervous about the market. So we're also aware of these external factors of like, oh, sentiment is pretty pessimist, pessimistic here,
ian_1_03-07-2025_121213For an
david_1_03-07-2025_111212so,
ian_1_03-07-2025_121213correction.
david_1_03-07-2025_111212right, which is perfectly normal. And so you, you do set up
ian_1_03-07-2025_121213it
david_1_03-07-2025_111212right.
ian_1_03-07-2025_121213I mean people are still so on edge,
david_1_03-07-2025_111212Completely honest.
ian_1_03-07-2025_121213two years in. Like I get texts from friends. You know, and I wouldn't say that they're constant. I've gotten'em before, gotten'em a little, you know, the whole like, we're due for what? We had a bear market two years ago,
david_1_03-07-2025_111212Right. And before that we had a bear market two years before that,
ian_1_03-07-2025_121213that, and
david_1_03-07-2025_111212and a bear market. Yeah.
ian_1_03-07-2025_121213the whole like, we're due is so. I get, I mean, I get it. If I wasn't involved in markets, if I wasn't in trend follow, if I hadn't discovered technical analysis, I might be sucked into that mindset too. But to, I mean, yeah, we're two years into okay, going into year three when we know that bull markets last. Typically 6, 7, 8 years and those, and there's a year or two in there that are pretty lame.
david_1_03-07-2025_111212And you know, we're coming off, we're those bear markets we just mentioned 2223. That was one 20. 2020 was another one in 2018. Typically you see a 20% correction or more every four years, and that's, that was three in five,
ian_1_03-07-2025_121213And I could say, you could say right, 2018 had two of'em.'cause you had v McDon.
david_1_03-07-2025_111212right?
ian_1_03-07-2025_121213And you had Q4. And that's really like the, to me in my career, Q4, 2018 sentiment was like the, I mean, COVID was, can throw Covid in there, but that was so,
david_1_03-07-2025_111212It was so fast,
ian_1_03-07-2025_121213and it was so abnormal. Like there was no one in the world that knew what was going on.
david_1_03-07-2025_111212right? And people had. Outside noise levels that were at the time appropriately correct. Meaning like you're concerned about your teammates, you're concerned about your school, you're concerned about your family, you know, rightfully so, your priorities where, whereas now, like, are tariffs gonna physically hurt you? Like, are they physically gonna cause death? Not likely. Which is a little different than a pandemic. That the initial phases of now we can, we could go on a whole three episode journey of Covid and what it really was, but pandemic speaking where you're legitimately looking at reprioritizing your life and recognizing health and life are at stake, which is a little different than now, which is. Pocketbook, right? You're looking at pocketbook and you're looking at your account and tariffs and all the other noise that goes with it. But the signs are there that we're close. You know, whether it's the noise sentiment internal client sentiment, family sentiment'cause you know, some of these things that we highlighted before now. Every great bear market starts from this type of scenario as well. So I don't wanna, I don't wanna sit here and say six to 12 months from now, we can't be lower. That's, and it's why we use our processes. It's why we use that five day and two day to guide risk management if it's time to
ian_1_03-07-2025_121213we bounce and rally here for a couple weeks, it's gonna fade, but we could rally to 6,000 and not fix anything.
david_1_03-07-2025_111212right. You could still be range bound. I mean, even if we were to talk in Range Bound terms we have a 0% return since September of 2024 and something like s and p 500 that hasn't s and p hasn't gone anywhere in return terms, and that was after a really nice period of time. And you could, like you said, you could rise 6%, you could get back up into 6,000 and still be range bound. Don't know you have to have a process and a plan. And again, as the client letter highlights, having a plan, having a process is way more important than having a prediction. I cannot tell you where the market's gonna be six months from now for whatever reason. Investors like that type of thing where, you know I suppose it goes back to that bias of you go to the doctor and you wanna be told everything's okay.
ian_1_03-07-2025_121213I gotta be admit I lost too much money doing that.
david_1_03-07-2025_111212Right.
ian_1_03-07-2025_121213So I'd rather just have like a risk reward line in the sand and say. Hey, if we're below this, I don't really feel comfortable owning stocks, but if we're above this, I'm cool.
david_1_03-07-2025_111212Right.
ian_1_03-07-2025_121213And you gotta find, like everyone's gotta draw their own line for what fits you. But yet there can't be a, and you could be wrong. Right? And the whole, also, the whole point of that is you all like. One. I think it bring, at least for me personally, it brings a lot of peace of mind. It like, I can't, and I do that, I literally, I will write post-it notes and it's just a reminder that if you're below this or above, right, it works both ways. If you are above some level, a predetermined level. I would say don't make these decisions like in the moment, have some type of predetermined level where you're like, okay, if we're below this, and it could be incremental, right? Like it doesn't have to be this, I go from a hundred percent exposed to zero. But, and you don't have to worry about the headlines. It is just if we're here, I wanna be involved. If not, I cannot tell you much. I mean, I am bald and I have a lot of gray hairs, so, but I'm willing to bet it would be even worse. If I had, was still Yeah, just trying to figure out, I don't know. What are you gonna do buy stocks when there's a ceasefire in Ukraine? Like what? Like what's the end goal here?
david_1_03-07-2025_111212Right.
ian_1_03-07-2025_121213Or when the bird flu's over, you're gonna buy, I don't, I don't know how you use that to
david_1_03-07-2025_111212and it doesn't tell you when you're wrong,
ian_1_03-07-2025_121213No.
david_1_03-07-2025_111212right? If you blindly buy because, oh, the president delayed tariffs, or there's a ceasefire in Ukraine, or like, you know, all those examples that you gave, how do you know when that thesis of buying is wrong? Stocks could keep declining after that because guess what? The market knows more than you or me or anybody listening, which is a hard truth. People don't like to hear that. People like to often say, oh, I think the market has this wrong.
ian_1_03-07-2025_121213Me. It doesn't Trust me. It does not have it wrong.
david_1_03-07-2025_111212no. So it, it makes sense to have a plan. In preparation for outcomes. You know, if I can use that example again if a linebacker steps in the a gap before the ball is snapped and I just ignore it and I just predetermine like, make a prediction,
ian_1_03-07-2025_121213he's not blitzing.
david_1_03-07-2025_111212he's not blitzing
ian_1_03-07-2025_121213not. I ain't worried about it.
david_1_03-07-2025_111212or he absolutely is. You can't live in absolutes like he's absolutely coming or he's absolutely faking. No, it's what do I do if he comes? What do I do if he doesn't? And paying attention to the other players on the field and having a plan for that, right? Because if I signal to by tight end fill when you go out on your route, if you see that blitz coming, you fill that spot. That's one way to beat it. You just have to have a plan. And for us it's pretty simple. You know, we've taken our foot off the accelerator. Our clients are aware that we're holding higher le levels of cash. Are we fully out? No. Now I can tell you that the support of this podcast, the Adaptive Select ETF, has a tool within it and it's worth highlighting that AD PVS listed on the New York Stock Exchange. It helps investors access two of the most prevalent factors in markets, momentum and relative strength uses proprietary identification methods. Which allows adaptive select to attempt 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 down trends. Investors can find out more including how to invest in A DPV by visiting ad pv etf.com or calling 1-833-880-FIVE 200. Investing involves risk, including possible loss of principle, a dvs distributed by Quasar Distributors, LLC. And I know in that particular strategy there is a method. It's, yeah, it's gonna own stocks, but when a certain environmental indicator is there, such as a five day and a 200 day one closing below the other on a Friday, it moves to cash and T-bills. You can have those.
ian_1_03-07-2025_121213To the.
david_1_03-07-2025_111212Right. So it's about having a plan, and here we are, you know, six, 7% off the highs. We're within normal parameters of an uptrend. Perfectly normal. We see that. We see this each year. We're heading into a seasonal period where a bottom typically happens in March. Does that happen? If it doesn't, that's information. If we close March. At the end lower than where we are right now. That's really information to pay attention to and time will tell and there is no prediction about where the market's gonna be six to 18 months from now. But if we're back above a 200 day, that's proof that buyers still have control of this bull market. And that's really what you have to be asking yourself. So what else, Ian? What else do you wanna touch base on before we wrap it up?
ian_1_03-07-2025_121213So with all the. Weakness in equities, there are some things that begin to perk their head, right? We kind of, even with gold not moving that much now, its relative chart has started to move through some important levels.
david_1_03-07-2025_111212Right. Highlight.
ian_1_03-07-2025_121213I think that Bitcoin has had some interesting behavior. Certainly one of the bigger like. Oh, should we be risk off? Should we be risk off? Kind of, out there really struggling at 91,000, which is I mean, what it's such a great asset because there's no fund. I mean, there's, I mean, I guess if I was, we had invited some Bitcoin maxi on, he could probably tell us some, but I mean, it's such a pure, asset in regards to able to follow it for price. Like there's no earnings reports. It trades 24 7. But really struggling now. It is above a rising 200 day, but tough, I mean 91,000. I think that's a fair level to use if you wanted to be on the flip side. Now again, maybe harder with an upward sloping 200 A, but you know, and all the positive news coming out around Bitcoin or it's been touted as positive news, I think that they're gonna, they sign an executive order to start a crypto fund. And do you see Bitcoin Take a break here. Just with all the big news around that kind of seems so.
david_1_03-07-2025_111212Yeah, and I think it's interesting when that news comes out, how often that's the end of the. Into the rally, and I think you've got a trade weighted dollar back within a range back below 1 0 4, 1 0 5. I think that's extremely important. You mentioned gold above important relative levels, and so you have these dynamics at play and then I'll, you know, when we talked about August, September and October of 2023, you know, it was down with US stocks, international stocks, and we're not seeing that here. So is this a rotation in international stocks? We do really have to be paying more attention to what's going on with foreign and world stocks. I think that's definitely on the table that we could get pretty US myopic focusing just at the US when you have some strengths showing up overseas and that doesn't really fit the narrative either, right? You've got a pro-America president touting tariffs. You would think, right? Your natural inclination would be like, oh, that's gotta be negative for international stocks. Well, here we are, and international stocks are doing better to start the year than US stocks. Okay? Let's sit up and pay attention to that.
ian_1_03-07-2025_121213For
david_1_03-07-2025_111212So
ian_1_03-07-2025_121213I really like that. That's a great point.
david_1_03-07-2025_111212Don't marry the narratives, marry your wife and price, and you'll be all right.
ian_1_03-07-2025_121213Correct.
david_1_03-07-2025_111212So we reached the end of our time. Ian, I appreciate you being on here. I know you, you and Kevin are gonna do your best to cover while I'm gone on a trip. And if anybody listening is gonna be at future proof down on the 18th and 19th, please reach out to me. I'd love to connect. But otherwise, I appreciate you and Kevin covering for me, Ian. Much appreciated.
ian_1_03-07-2025_121213Yeah, have a great weekend everyone.