Markets Find Support

Daren:
[0:01] All right Chris it's saturday morning it is not our normal friday broadcast is one of our saturday broadcasts um and we got to get this done quick because you got a buckeyes game coming up and we all know how you get if we get in the way of a buckeyes game

Chris:
[0:22] I appreciate you looking out for me there yeah buddy so uh.

Daren:
[0:27] Lots to talk about but i mean we're not going to be able to talk about the markets this week without talking about some bitcoin um so we are going to dive in and talk about what's happening in bitcoin because if you haven't noticed there's been a bit of movement there and um that'll be interesting but i think overall you know we talked about last week how the markets corrected back after the election. The markets went up right after the election and then came back down. And we talked about a critical support level that the markets were looking to find in order to move forward. And hey, man, support was found. So the markets bounced up and I'm going to show you why here in a minute. So we'll be right back after this.

Music:
[1:14] Music

Daren:
[1:51] All right. Well, Chris, I'm proud of you that you used a Bitcoin meme as your first slide for today.

Chris:
[1:59] Yeah. Did you recognize that guy in the picture?

Daren:
[2:02] Yeah.

Chris:
[2:03] Yeah. Yeah. For those that don't know, that's Michael Saylor. He's the CEO of, it's called, what is it? MicroStrategy? Is that the name of the? yeah um he's also like this he's he's very prominent in the bitcoin community um but this was from back in 2000 which i believe is pre-bitcoin uh i could be wrong about that but um when his company microstrategies was not related uh or tied to bitcoin in the same way, and um you know six billion in one day six billion back in 2000 would have been, you know quite a bit more than it is today um so so quite the day when you look at the long-term chart of micro strategies it's it's pretty crazy um especially here recently and so i guess um you know just kind of documenting the twists and turns of life i bet he never could have imagined where he'd be, you know, 24, 25 years later. And so just interesting.

Daren:
[3:13] Yeah, super interesting, but definitely a sign that this guy's been taking some heavy leverage positions for a long time. And Bitcoin wasn't his first rodeo.

Chris:
[3:26] Which, I mean, like in fairness.

Daren:
[3:30] He's gone from despised to profit a couple times through the Bitcoin life cycle. Yeah. There's a lot of, I don't know, warranted criticism and warranted kind of questioning of his oversized position in Bitcoin for his company. He's definitely the guy walking into the casino and putting all the chips on Red 92 or whatever.

Chris:
[3:57] Yeah, yeah. Well, because the main thing is that he's using borrowed money, right? Or leverage as the finance folks like to call it. Borrowed money is borrowing money from others and buying Bitcoin, which historically, no matter what you're doing with borrowed money, especially a lot of it, when you get highly levered, it's usually very, very, very risky. You got to know what you're doing. And many blowups have happened from using too much leverage, right?

Daren:
[4:31] For sure. Before we go to the next one, Chris, I wanted to bring up this particular dashboard. This is the Clark Moody Bitcoin dashboard. One of the cool things that I appreciate about Bitcoin is that it's relatively transparent. You don't always know who the buyers are, but you can see the buys and the sells and you can see what's happening on blockchain.

Daren:
[4:53] And much to the shammies of this administration's criticism about Bitcoin being a drug lord's tool. I think there's actually more transparency about it than there is even the dollar or gold for that matter. But one of the transparent aspects of it that we've been watching for a very long time for those who've been watching us for, you know, the three, three and a half years, whatever it is, we've been on filming these every single week is the supply of Bitcoin. So this is looking at the total percentage of supply that's held in corporate treasuries is sitting at 11.55, almost 12% if you round it up. So over 2 million Bitcoin are sitting in corporate treasuries right now. And we've watched that number creep up over the last three years. I think when we first started watching, if I'm recalling correctly, it was like 2%, 3%. And it's really climbed up. And the reason I show that is because as more institutions adopt Bitcoin as a viable, I don't even want to call it a store value because I think that's debatable, but call it a digital gold, as Mr. Saber would say.

Daren:
[6:12] Then there's this network effect that takes place where more people accept it for what it is. And that's what you're seeing with lots of people integrating it into a portion of their portfolio, lots of companies integrating it into a portion of their corporate treasury deposits. And now lots of countries looking at it becoming a strategic supply of value, right? And we saw Senator Loomis out of Wyoming putting a measure forward in the House, or is it Senate, to suggest that we should have a strategic supply of Bitcoin as a U.S. government. So anyway, you're seeing this network effect take place. You're seeing more people engage with it. And as that happens, it builds on itself. So, with that in mind, you can see prices sitting right at $98,000 right now, just tapping on the door of $100,000. Now, Chris, we've made a lot of memes over the years about Bitcoin and people talking about Bitcoin at Thanksgiving. Wouldn't that be something if Bitcoin hit $100,000 right in time for Thanksgiving? I know there's a lot of people who are Bitcoin supporters out there who have been looked at as fools by their families for many years would enjoy that moment of watching Bitcoin hit $100,000.

Chris:
[7:41] Did you see that meme of the family like sitting at dinner and they're all like looking in the same direction, kind of like looking up and then it shows like the attic open and then there's the little like, you know, guy up there that I forget what movie that's even from, but he's like staring down at the people like, you know, all above them and Royal and cracked me up. Oh i was laughing so hard um yeah.

Daren:
[8:13] Anyway that's exciting though we'll see

Chris:
[8:15] What happens yeah well i think right in your presentation today well i i think it's apropos because it's like why why is gold doing so well why is bitcoin doing so well uh well because or possibly one of the reasons being, you know, the amount of spending that not only our government, but governments around the world are doing and will have to continue doing because they're all in massive, massive debt. The sovereign debt across the planet right now is at all time highs. And so governments everywhere are running massive deficits, which means, you know, basically they're spending more every year than they're bringing in. And they already have massive debt. So they've been doing this for a long, long time. And if you're on one side or the other and you feel some air of superiority to the other side, got news for you, it's happened under both administrations and it will continue to happen under both administrations because guess what? They don't really have a choice. Anyway, that's my bias on this. Go ahead, Daren, with your slide.

Daren:
[9:28] I threw this in too, because I think it's a great point, Chris, but it's, you know, you look at the, this area here, this is the deficit, right? So many people, what's a deficit? Well, this means that, um, there's a chunk of money that, um, we only have 4.47 trillion in revenue and we're spending 6.1 trillion. And so there's that deficit and that keeps adding to the national debt. And a lot of what we've talked about on this channel is how this big debt bubble is building. And that debt bubble keeps going and going and going. And we've made the point many times for people who have said that.

Daren:
[10:09] They're really worried about the political shift, those kind of things, that neither party can afford to stop spending. And I think that's really helpful just to keep that in mind because it keeps going up. And you can see this is a current national debt of the U.S., United States. So they can't stop spending. that's going to keep going up and up and up. And the reason it's doing that is because we're spending more than we're bringing in. So then when you look at the politics that are perhaps at play right now, and that is like, well, what's this Doge, this Doge department headed by Elon Musk and Vivek Ramswami, what are they going to do? Like they're going to go cut all this fat and waste. But when you really look at it, at the end of the day, these entitlement spending, Social Security, Medicare, National Defense, Veterans Support, those areas are pretty untouchable, right? And those three areas pretty much cover all of the national income and payable taxes.

Daren:
[11:20] So then what gets interesting is you say, okay, well, which one of these are you going to cut, right? Now, these are big, broad categories. You don't really know what's in it. We don't have to dive into it. That would take too long. But the point is, is just that there's a lot they can't cut. You can't touch Social Security, Medicare, national defense, especially nowadays, without significant political ramifications. So they've got an interesting needle to thread here because they've got to somehow cut the fat out of the government. But they've also have to keep themselves in a politically benefit. They have to politically benefit from it, too. So it'll be interesting to see how they thread that needle over the next few months. I want to show this because it's likely, you know, right as when we see the political winds change and spin, Chris and I try very hard to be middle of the road, independent thinkers on this channel, don't particularly support any political party and look to criticize both equally.

Daren:
[12:21] As we see things shift, the question asks, well, what will this next energy department, what will the U.S. Energy infrastructure, how will that look moving forward here into the next presidential term? And we're likely to see less of this kind of renewable energy, solar wind, this was the big push of the Biden administration and the Green New Deal, right? I thought this slide was particularly interesting because you can see solar and wind and the amount of mine materials that each of these two require in juxtaposition to coal, nuclear, and natural gas. So quite a bit more natural resources have to be pulled from the ground in order to make these things happen. So it'd be interesting to see how things change from an investment standpoint. What we did notice, though, in the last cycle is that gas and oil and such actually did better during the Biden administration than it did in the Trump administration. So, you know, just assuming that oil and gas and these coal-related nuclear are all going to go to the moon, I think would be a foolhardy move, right? You don't know for sure. Sometimes it goes opposite.

Daren:
[13:45] And then the last slide before I interjected in this presentation, Chris Freud, was I thought this was rather interesting. This is buying a home in 2024, cost 42% more than renting one. And when you think about that, and we go back in history, at least in recent history, you can see in 2008, we saw, right, leading up to 2008, saw a very similar dynamic.

Chris:
[14:10] Yeah.

Daren:
[14:11] So if we get how,

Chris:
[14:12] Go ahead. I was going to say, it's interesting because, you know, dealing with folks and their finances, I would say that homes are the one where you see mistakes financially. The most, especially in people that are otherwise good with money. Because there's, I think, a false narrative that a house and real estate in general is always a good investment. And that I do not think is true, especially if it's your home. There's just a large part that's basically consumption. But these things swing in times of value and non-value where it's better to rent than to buy, even though it doesn't feel as satisfactory to rent, of course. But I think it's important to note that outside of cars, I think homes are probably the second biggest financial mistake most people make along the way. And it can be a doozy.

Daren:
[15:21] Yeah yeah i think there is this complacency right that just buying a home is a great financial move and i i don't think that's as true as it used to be you know um now with the standard deductions on annual deduction being higher you're less likely to get as much benefit from a tax standpoint um and unless you buy a house in an area that's going to highly appreciate it can bite you pretty good and financially it can really set you back and this is why we always say that you know make sure you know if you're buying a house or a home and distinguish the difference between the house and the home and a house is an investment the home is a place that you know is a long-term play for you and make sure you're really clear when you're doing that

Chris:
[16:11] Right. Okay, so I put this one in here this week to just show, I heard on a Free Witch podcast, I wish I could credit it, but it might have been Animal Spirits, that Bitcoin is now the ninth largest asset class in the world. And here it's showing that Bitcoin surpasses the Great British Pound to become the fifth largest currency in the world. So that's of note, not only from an adoption standpoint around Bitcoin, but also I think of note because showing the benefits of diversification, showing the benefits of not assuming that whoever, the landscape is today, whoever's in power today, whoever's been doing well today is going to continue in the future. Because remember that prior to the United States, the British were the empire that ruled the world. They had the largest segment of the global stock market, just like we do today. Their currency, the British pound, was the global reserve currency.

Chris:
[17:24] All of those things change over time, and it will change for us as well. It could be in the short term, it could also be in the very long term, but it will change because that's been the history and the rhythm of humanity, right? So amazing, though, that Bitcoin, a digital currency, I guess is one way you could look at it, has moved up to this status. You know, I think it's, you know, regardless of how you feel about it, it is definitely a, I guess, more of an adopted asset class now that, you know, you've got all the big players offering access to it. It's no longer the, you know, the wild child that it once was. It's much more of a domesticated asset class. Now, it can still move like the

Chris:
[18:19] wild child asset class that it's always been in and probably always will be. But in terms of adoption, it's much more mundane now than it was even, I feel like, three or four years ago.

Chris:
[18:35] Okay, so we've got sentiment. This was a surprise to me that we dropped from 49 down to 41. That's a pretty big weekly drop, but bullish sentiment's still high. We've got the CNN fear and greed index at 61, which is greed, up from 51, which was neutral last week. And then at Bitcoin, we've got 94 out of 100 extreme greed up from 80 extreme greed one week ago. So sentiment's pretty high, which you can see on the next chart, which is from Bespoke. And Bespoke says the rolling 12-month average of AAII's bull-to-bear sentiment spread. So basically what's the difference between the bulls and the bears is at its highest level since 2005 before the financial crisis. It's taken this long, so almost 20 years, for individual investors to fully believe, and they put believe in quotes in the stock market again.

Chris:
[19:36] So, um, you know, our sentiment is back to where we were, uh, really throughout the nineties. Um, and it's, it's only been exceeded, uh, you know, at the.com bubble, which is the same thing. When you look at valuations and a lot of the different metrics, there's only been one time in us history where sentiment's been higher, valuations been higher. And that was during the 2000.com bubble. So when you're kind of looking at the probabilities of outcomes moving forward, of course, anything can happen. Things can go longer than you expect, et cetera, et cetera. But things look pretty good right now on a historical basis when you look at valuations and sentiments.

Chris:
[20:22] And you can see that in the positioning as well when you look at the total stock allocation. So this is looking at how much the average American investor has allocated to stocks, to equities. And you can see again we were at the top end of the range around 70 percent tends to be you know towards the top and we're at 68.94 now uh only again exceeded at least according to this chart one other time in history which was the dot-com bubble when people were close to 80 percent i think it was around 77 uh was the top of the allocation now look at the flip side of that when you're talking about the probabilities of outcomes moving forward. If you look at the bottom of the recession, the gray bar in 2009, when stocks had just been absolutely wiped out, the economy was wiped out, sentiment was awful, valuations, we got to below 10. So we got into single digit price to earnings ratios in 2009 and 10.

Chris:
[21:31] And, um, and so at that time, Americans had, uh, right around 40% allocated to stock. So a pretty, a pretty low allocation. Um, you know, and then, and then the market's gone on this bull run since then. So, uh, you know, basically everybody's in the boat at this point when it comes to when it comes to the stock market um and you see that reflected in, net worth um you know overall sentiment we talked i think it was last week Daren about being the product of your investment uh environment when you were when you were coming of age as an investor which for us is a core.

Daren:
[22:16] Investment memory right like all the childhood core memories we have core memories from learning the market right

Chris:
[22:24] Yes absolutely and for better for worse i think for us uh 2008 was absolutely that core memory for me i don't know about for you but um, That core memory. Plus, I was aware enough of the financial markets in 2000 to remember that as well, on both sides, which was punctuated by the 9-11 attacks.

Chris:
[22:51] Absolutely, we'll never forget where you're standing when that happened and you heard that news. And so for us, 40-somethings, those bookends of the dot-com debacle and then the housing crash, that's always going to be burned into our minds for sure.

Chris:
[23:14] But that's not for every generation. Right. Some, some are going to look at, you know, their formative years, like the baby boomers when, uh, you know, stocks in the early eighties started their, their long-term bull run and bonds. You know, if you would have bought long-term bonds in the early eighties and just held on to them until about three years ago, uh, boy, that was the trade of the century. Long-term treasuries from early 80s just held to say about 2021 would have beaten the stock market and with a lot less volatility. So if you had a combination of stocks and bonds, which most folks do during that time period, wow, it's been a great time. So this, I think, was a surprise to a lot of people. This was from Mike Ziccardi, and he's showing the millennials actually have a higher net wealth than both boomers and Gen X at the same time. You know, Gen X, it's obvious why. Look at the time period that Gen X was coming of age, you know, during the dot-com and 2008 crisis. So of course it's going to be lower uh but boomers from 1989 to 92 um weren't much better off than than gen x um.

Chris:
[24:32] And then you look at the millennials. They've really benefited from the last few years in the markets and the transfer payments and all the things.

Chris:
[24:43] Which I think is counter the narrative because most of what you hear is that it's been an awful time to be an investor and etc. But I think they've been kind of uniquely positioned in some of the stranger assets like Bitcoin, as an example, and they've been adopters of the meme craze. You know um and so uh you know i think this is this is counter to what you hear um in in the media but showing that um you know they're doing better than what was expected and you know sentiment has still been low um you know consumer sentiment has been low so it's almost like not recognizable and i think a lot of that is because of inflation you know when inflation's in the mix people just are not as happy even if the numbers look you know better if all the metrics look better if you avoid the recession if the stock market's hitting all-time highs your house is worth a fortune etc etc etc uh people really hate inflation and uh and that's obvious um one obvious outcome of this this latest election um because when you look at you know the economy and the financials and everything else.

Chris:
[26:02] You wouldn't have expected a change in direction.

Chris:
[26:07] But I think inflation is what bites from the populism standpoint. People just really don't like inflation.

Chris:
[26:21] Now, when we look at the last four periods where we've had the type of concentration and outperformance, this is from somebody that goes by Global Macro, so he chooses to stay anonymous. But just showing the other periods of time where the top 10 stocks have been outperforming the rest of the S&P, and you can see this most recent outperformance we've gone through from 23 to 24 is the most extreme in that case. The prior periods where that's happened, the following 12 months, you get the pendulum swinging the other direction. The following 12 months, the rest of the S&P has outperformed. Now, maybe we're starting to see the beginnings of that. I hesitate to even say because small stocks have started to take off so many times over the last five years, Daren, only to be just completely wrecked a few months later.

Chris:
[27:22] So it could be another false start, but we saw a really strong takeoff in the small stocks here in November so far relative to the rest of the market. We saw not the greatest response to earnings on nvidia this week um so maybe we're starting to see that that regime change probably too early to tell but historically um you know these things go in cycles and and as soon as everybody's piled into the the top 10 it switches to the other other uh assets so, I thought this was interesting from the Financial Times showing that corporate executives are selling at an all-time high. You can see only really exceeded by, or I should say in competition with, that time period in 21. Remember when Elon dumped all of his Tesla stock right at the top?

Chris:
[28:25] And in hindsight, it was obvious why. um so you know be cautious uh because those on the inside typically know you know the most um there's a lot of reasons why they sell as is is the um uh the old adage you know you got to fund certain other projects and things but there's only usually one reason why they buy that's because they think it's going to do better so um you know keep an eye on there because you got valuations very high. Bezos was dumping a bunch of stock. There's been a lot of insiders unloading. So keep an eye on that, along with Buffett going into his cash pile as well. So Buffett's in his 90s now. Maybe he's lost it, but I'm going to bank on the fact that he still knows what he's doing.

Chris:
[29:24] From wisdom tree you're showing the valuations relative to history on tech so that's the top the forward price to earnings ratio we're back we're back to where we were uh you know in 21 um and we're pretty high so that top green line there is a standard deviation um and so only you can see though the tech bubble wow you know the biggest difference i think between now and then of course is then none of these tech companies really had any earnings to even speak of a lot of them were even pre-revenue you know when they were selling at these huge valuations that is not the case now the the companies that are are selling at such rich valuations are also the best companies probably ever built to this point um you know top performers that um just amazing companies from a financial perspective from a business perspective as well um but nonetheless they're highly valued and then you look ex-tech we're still pretty high on the s&p um but not anywhere near the 28.2 that we see in in tech we're at 19 uh for the rest of the S&P, which is high, but not as high as the tech companies.

Chris:
[30:46] And then, of course, you've got the spreads on high-yield debt back to where they were in 21, super tight, meaning that you're not getting paid much more over what's considered risk-free in the Treasuries, credit risk-free. You're not getting paid much more above the Treasury rate to take on risk in corporate bonds. So this is from Jurian Timmer, and he says, in terms of volatility and valuations, it's hard to see things improve very much from here. The implied equity risk premium sits at 320 bps, or 3.2% for rough civilians, while high yield credit spreads are down to 256 basis points, which would be 2.56%. So that's that spread that I'm talking about there. You're getting paid an extra two and a half percent to take on a whole lot more credit risk. So the market's really not pricing in any type of stress, you know, full steam ahead at this point with the markets and everything is looking rosy.

Daren:
[32:05] Well in speaking of rosie uh i had to slip in one bitcoin indicator so one of the cool things about bitcoin is it's transparent and see what's happening on chain and so what this particular sofer signal uh is indicating is when people are taking profits so you can see when bitcoin was bought and when it was sold because it's transparent. And you can see this lighter green here represents realizing long-term gains when it's weak and realizing long-term gains is strong. And you can see right before all these market tops, we had big moments of realizing long-term gains, and we don't have that quite yet. So for those that don't think it's going higher, I think I would look at the data to suggest that it's very possible it's going higher. It doesn't mean that it's not going to dip first, but I don't think we're done seeing what we're going to see there, at least in this particular halving cycle. And Chris, now that the elections are over, we can get on to using Polymarket for more informational and instructive and important matters. And that is determining who the college football champion is going to be for 2025. It's looking good for your Buckeyes right now, Chris. It's looking good.

Chris:
[33:30] Yeah. Yeah. It's instructive. Absolutely. Love it. Appreciate that on your Saturday morning. Well, we didn't get to mention it, but Scott Bessent was nominated as Treasury Secretary last night. There are some very good interviews. If you're interested in learning more about him, there's some very good interviews. The one I sent you, Daren, was from Capital Allocators. um but long story short he has a trading background and a legit trading background um, and uh so i think it's going to be really interesting and polymarket by the way had him as the leader for a while and that's who turned out to be um you know so another mark up another win for the betting markets um yeah.

Daren:
[34:23] Like seriously getting to the point Chris with these polymarket like why is anyone even watching legacy media to try to figure out what's actually going to happen yeah because yeah literally everything the legacy media said was wrong even that dude from the wall where was he from yale or something that predicted 13 to last 13

Chris:
[34:42] American university there.

Daren:
[34:43] We go he's wrong

Chris:
[34:44] Yep alan lichman yep he was he was wrong too yeah um anyway you know if there's anybody that can help dig us out of our fiscal you know hole that we've gotten into um you know hopefully uh best is is the person to help with that right um because he he definitely has a knowledge um that you would think would would help him in that position i i I can't imagine anybody would actually want that position, but some people do, and he does. Anyway, he's got a really interesting background, and I'm optimistic that he's going to be leading the Treasury moving forward. We'll see. We're also getting some changes at the SEC, which is a big news as well. Well, Gensler will be stepping down in January. So, you know, there's going to be a new direction, I think, in a lot of the financial markets. You know, so it's going to be interesting to see how that works out.

Daren:
[35:56] And speaking of traders, let's dive into the trading charts for the week. So what you're looking at is the SPY, which is just a product of the S&P 500 that looks to track the S&P, which is the largest 500 U.S.-based stocks. And this is looking at the four-hour chart. So each one of these candlesticks represents four hours of price variation in the markets. Markets open for eight hours, so half of a market day. And you can look at and get a sense of what we talked about today and we said market finds support well here's where market found support so last week actually let's go to the daily chart just so you can see the days here so friday thursday wednesday tuesday monday so we ended the market last friday right here and we talked about this how hey the market gave back all the gains because this was after the election right here went up went down and we talked about well we'll see if the market finds support and sure enough the market found support it took

Daren:
[36:59] Let's call it three days of testing that support line and then off to the races for the week and that's usually a very good trade signal telling you that there's a lot of support in this area it's telling you we're probably going to take on 600 in the market I think you know some of these people that were calling for basically 630 on the SPY, but on SPX, it'd be 63,000 for the end of the year.

Daren:
[37:28] That's where they're looking like they're in good shape right now. I don't think it's a far press to say we make on an all-time new high right now just based upon this chart. Very consistent, steady line up, continues. Moving forward, we need to take on this trend line right here um and not get rejected from it so we'll see what happens next week and all that amidst this like nuclear war armageddon russia's launching icbms into ukraine and nuclear threat yada yada yada just another example of why paying attention to legacy media is absolutely horrific for your portfolio. Um,

Daren:
[38:13] So S&P looked good this week, looked strong. I think you've got to read that as at least bullish on its face. We've got still some territory to take on to get super comfortable there, but I think the odds look up into the end of the year, at least right now. Next week, I expect to be fairly quiet, soft, maybe a float higher. And then really, we've got three weeks and off to the races to see what happens. When we look at our market leading indicators, just to kind of get a sense of like the front end of that risk curve that they tend to move first. Your transportation, which is like the arteries of the economy, you can see look really strong. It's, you know, a nice breakout after the election. It's coming back up and taking on that all-time high in the DJT or the, it's not the all-time high price. That was way back in 21, but it's still taking on that. It looks pretty strong. um iwm which is a russell 2000 uh which treaded sideways for a long time you heard Chris refer to it earlier in the session um and these value stocks that are generally found in the iwm look pretty good taking on all-time new highs looks really strong so Chris i i think you can start to do somewhat of a victory lap and roll down your windows in your sweet 1970s mercedes these bends because your value stocks maybe are looking good. I like that chart. That looks healthy.

Chris:
[39:38] You know me too much, too many good things happening at once. And I'll be like, you know, crouched looking for what's going to go wrong. Right. So if the Buckeyes win the college football championship and value stocks, I'll perform.

Daren:
[39:55] Dude, that's going to be.

Chris:
[39:57] It's going to be peak. Yes. Geek moment. Absolutely. You got it.

Daren:
[40:03] Well, let's take the socks. So, I mean, Chris, we know how painful it's been for you to watch the Philadelphia Semiconductor Index just go up. These growth stocks that historically don't outperform those value stocks, and you just painfully watch those things roll higher and higher. I mean, this chart is looking less promising because we broke below some of these critical moving averages here. Um so you know it's possible now we get this which is kind of my base thesis right now is the these value type or these growth type stocks just tried trade sideways um and then you get these value stocks really taking us higher on the general indexes um but when you go to igv which is the front end of the risk curve which is highly tied to this crypto mania we're seeing right now That looks very promising, and there's a lot of strength in that market. But for our diversified investors, the most important, I guess, indicator is watching this 10-year treasury,

Chris:
[41:11] Right?

Daren:
[41:11] And the reason is because as this 10-year treasury goes up, their bonds go down. So conservative diversified investors have been punished miserably for a long time because you can see 2020, 2021, this was the bond market and this is where we sit here. So people who are invested in, say, they're conservative investors that also have a diversified portfolio, which is usually recommended, it's been more difficult because their portfolios haven't really increased like the stock market had shown. Yeah. It should also be noted when these bonds start really doing well and diversification actually pays again, because there will come a time, it will be interesting to see how those who brag at the barbecue about their performance of their high-risk stocks, how they actually perform. Because whether or not they can actually tolerate buying bonds at that point will be interesting when they take a 50% haircut in their portfolios.

Daren:
[42:17] So Chris and I are big believers of patience wins the game.

Daren:
[42:21] Diversification is the only such thing as free lunch. And there are long periods of time in history where that doesn't pay off. And you just have to sit through it because over time it does tend to pay off and you tend to do better. So we're watching that 10-year really, really, really closely because if this starts going up higher, then that's not going to be good for the bond markets. This breakout, so there was this downtrend here, and the fact that it broke out above that and then reclaimed this long-term support, I think on its base, is not bullish for bonds. That's bearish for bonds, which would go in when you compare that to SOX or IGV, which is the front end of that risk curve, suggesting that we're going to see more strength in that high risk area. When you look at the S&P 500 and see strength there, looking at those two pieces suggests that, yeah, bonds are going to tread water longer and stocks are going to continue moving up. We've talked about oil and this geopolitical situation forming. And you can see this breakout and you can see we broke down, but we're still holding that $68 a barrel support level in oil. It looks to me like things are certainly going to calm down in the Middle East. You're certainly seeing signals of complacency and, okay, maybe we pushed too far coming out of the Iranians, at least in word. And I guess some indeed.

Daren:
[43:51] I think what's left of their Hezbollah and Hamas contingencies are fragments of resistance. And with the potential rumors that the supreme leader of Iran in a coma and dying,

Daren:
[44:10] That looks to be calming down because the age of resistance at least looks fragmented more, which would be good or bullish for holding oil. Well, it would be bearish oil because oil would not shoot up as high. And it looks like there's some calming. Although we have this whole nuclear threat thing going on, there are rumors at least coming out of the potential ceasefire in Ukraine and Russia getting negotiated at the moment. All of that would keep things geopolitically looking good. And then all our attention could go. Switch to other things if all the wars calm down going on throughout the United States. We look at our VIX, thinking about volatility. We're still in this lower volatility band here, sitting in a place where you would expect the market to creep higher unless this shoots up. Um, that's looking, that's really measuring the complacency of, uh, those who trade the, um, S&P 500 futures, suggesting that they are complacent at the moment.

Daren:
[45:21] All right. Um, let's take a look at gold real quick. Gold got a nice pop this, right? So we had this just crater session, but gold just ripped up this week, which I think was interesting, even though rates didn't go up. And it seemed like a lot of the global wars were calming down and yet gold continues to march higher perhaps on the back of bitcoin i'm not quite sure how to read that one yet

Chris:
[45:45] You know i i forget who said it but uh there's some correlation between gold and bitcoin where actually gold is like a leading indicator for bitcoin meaning that when you get a big run in gold. You'll likely see it in Bitcoin as well and vice versa. It's just that Bitcoin moves so much more. So if gold's up, I don't know. I'd have to look. Let's just say it's 25% this year and Bitcoin's up something like 100%. It's just going to move like gold only afterwards and then a lot more so, good or bad. Yeah.

Daren:
[46:26] Either way, we saw that sell

Chris:
[46:27] Off into the, you know, 50 day moving average and it looks like gold's really, you know, picking back up again.

Daren:
[46:34] Yeah. I mean, gold reclaimed every important moving average there. It will have to contend with this long term kind of support trend line up at around. 2700 an ounce um but wow did people buy that dip i mean that's strong by meaning that i i also could look at that like look at a sentiment indicator right i kind of like gold is a sentiment indicator on how safe people feel throughout the world and certainly people are thinking that gold is pretty significant i don't know if you saw the headline that texas is talking about a gold silver backed currency um it's kind of interesting um anyway that's um i think we're going to leave it there Chris because i believe it is buckeye time in four minutes and we don't want you to miss count right so with that everyone having a wonderful weekend the rest of it and um Next week is Thanksgiving. It will be, we'll wrap up the markets, but it won't be a full week in the markets next week. But we'll be back if anything of critical importance happens. And with that, we'll sign out for the week. Have a great weekend, everyone.

Music:
[47:51] Music