Bears?

Daren:
[0:02] All right Chris it's friday it's on the markets as always it's great to be back with you to talk about the markets and the economy, um dude this is funny this meme right so i i reached out to my buddy in new jersey this this morning actually i was coming back from the gym i'm like hey man what's up with all the ufo stuff going on in new jersey like is this real like people like legit seeing these things, and he's like well they're not around my house but everyone's saying they're actually seeing them and there's like there's literally drones flying around and the government going we

Daren:
[0:39] don't know who they are and what they're doing somebody's got to know um i.

Chris:
[0:46] Think things are getting so weird i was talking to somebody about it today and they're like you know i hope it's ufos because if it's the u.s government testing something over their own citizens that's wrong if it's the u.s government letting a foreign government in you know that's wrong if the government really doesn't know what it is that's wrong unless it's a ufo and i'm like where are we that we're hoping that it's alien what a weird just what a weird time and and that this is kind of how i feel about he's like he was asking me how do you feel about the the drones over new jersey thing i'm like honestly i haven't even been following it like i don't have the emotional capacity for anything else at this point it's just there's too many weird things happening i can't take it anymore i

Daren:
[1:35] Told i told my buddy i'm like well here's how i look at it because the pentagon saying like yeah we don't know. And I'm like, if the Pentagon is really doesn't know what these UFOs are flying over New Jersey, like, I don't know what's scarier. The fact that there's UFOs flying over New Jersey or the fact that the Pentagon doesn't know what's flying over New Jersey. Yeah.

Chris:
[2:01] Uh, of all the places for them to visit us, they chose New Jersey.

Daren:
[2:05] So that's the thing I keep asking myself, like what strategic like reserve of like older, you know, military equipment. I'm like, maybe they're just outside the city and they're circling the city. Cause like from a plane is kind of close. And I'm just like, what's of interest there that they're like, Hey, we need to fly around New Jersey. It's definitely not the place I thought that no offense. If there's someone from Jersey listening, but where I thought the aliens that were coming to visit us would go first.

Chris:
[2:35] What I, I can almost guarantee you that whenever the real reason comes out, it's going to be so dumb. It's going to be so dumb that like, it's going to be hard to believe that it was so dumb that it was happening.

Daren:
[2:49] It's like some kid trolling.

Chris:
[2:52] Yeah, exactly. It'll, it'll be something like that. And we'll all be like, Oh, really?

Daren:
[2:59] Yeah it's interesting but well nonetheless uh we're not going to talk about ufos all today and we're talking about markets and what's going on out there and interest rates doing interesting things potentially increasing inflation and what that could mean but also i think more importantly than any of that is a reinverting yield curve and um when a yield curve reinverts that becomes problematic historically now maybe this time's different but maybe not, so before we get into that uh let's do our opening and we'll be right back after this.

Music:
[3:37] Music

Daren:
[4:14] All right. Let's see here. Okay, so we're going to go from UFOs to Bank of America Global Research. And what happens to the market in the second half of December historically?

Chris:
[4:30] Well, typically, and this is from Mike Zaccardi via Bank of America. He says uh according to b of a the second half of december has historically been the second strongest period of the year plus one percent on average positive 69 of the time or almost seven out of ten times so that's why we always talk about the santa claus rally although um you know i feel like we've been hit or miss on the santa claus rally since we've had this show, Daren. I know we've been skunked at least once, maybe twice in the four or five years that we've been doing this show. But that would line right up with the statistics of being positive seven out of 10 times. So anyway, I think the only downside to this is pretty much everybody's expecting a positive end of the year. That is absolutely the consensus at this point. So that always makes you a little nervous yeah

Daren:
[5:35] Well that's why we titled today bears and there's a stuffed bear running out of the screen because good luck finding true bears at this point.

Chris:
[5:44] Absolutely sentiment dropped this this week just to touch down to 43 from 48 on the aaii sentiment indicator the cnn uh indicator is neutral at 50 which is about where it was one week ago. That one is a positioning indicator. So how are people actually positioned, which is interesting. And then you've got Bitcoin at 76 extreme greed, which is up slightly from 72 last week. Been kind of hovering around that 100,000 mark. It's weird how we as humans kind of attach ourselves to round numbers when if you think about markets like they don't really care about that at all

Daren:
[6:29] Well that's not exactly true that's sort of true but if you think about markets as a reflection of the whole emotional conscious of the human race or whoever is trading nowadays it's kind of ai so i could make the argument that big fat round numbers less matter less than they have historically now because i don't think that Perhaps the algorithms care more. I don't know. But big, fat, round numbers seem to be magnetic, like the market likes to move there and build support there. And that's kind of what you're seeing in the S&P, which I'll show later, 600 on the SPY or 6,000 on the S&P 500. And they hover there and we get a lot of support and resistance around those big, fat, round numbers.

Chris:
[7:16] Absolutely. Yeah. And, you know, when you look at sentiment, you know, we always look at the weekly surveys, but I think it's also important to look at, you know, what funds are being released at the time. So as an example, you know how the hedge, the funds that are actually hedge funds against something bad happening always take in a lot of money right after a catastrophe. I'm blanking on the name for those types of funds, Daren. Maybe you remember where market goes down. That fund has a huge return. Most of the rest of the time, it's losing money kind of steadily. It's almost like an insurance policy where it's costing you. But boom market goes down and they kind of act inversely you remember the name of that type of fund uh i'm just blanking on it right at the moment anyway those get very popular those get very popular like like nasim taleb runs one um they they get very popular right after a catastrophe so usually if you see a lot of those being released and or touted in the media of like, hey, this fund had a huge return, you know, you know, you're probably at the bottom of the sentiment cycle. And I think on the reverse side of that, when you look at what's been released lately, which is leverage long ETFs, meaning that

Chris:
[8:46] If you, if you want to get two times the exposure to NVIDIA or three times the exposure to NVIDIA, or you're trying to buy, you know, some fund that's going, you know, two or three times long, Bitcoin, all these types of things. And now there's also these leverage funds that are being, you know, rolled out. That's like, hey, it's NASDAQ and Bitcoin. Like you're getting, you're getting more and more risk, you know, on top of each other. And those are coming out everywhere. You've got the meme coins. We're not going to mention any of their names, but one in particular that we were just looking at before the show that's taken on $600 million in market cap that's larger than 85% of publicly traded companies that's literally named after an awful bodily function.

Daren:
[9:40] Just say it, Chris. Just say it.

Chris:
[9:43] My Midwestern sensibilities won't allow me to, Daren. But if there's ever some indicators in the market of like, hey, what's being released? How do people feel about risk right now? People are very comfortable with risk. It feels like the animal spirits have been released here lately.

Daren:
[10:04] You know, it's interesting. I had this like epiphany this week. I was doing some real estate analysis for a client and we were looking at whether or not their real estate investment was actually a good investment. And we were analyzing what the actual true leverage of that real estate property was during their four years of owning it.

Daren:
[10:28] And it was kind of interesting because this property is around a million dollars and they had about four times the leverage in it. They were basically levered up four times to make that investment work. And I thought a lot about that. I'm like, dude, if you lever up four times in the stock market, you know how much risk that is? Like that's insanity.

Daren:
[10:49] Like that's like, and this particular individual put a huge chunk of their portfolio in this lever. And i was like wow it's just interesting how psychologically economically like the conscious of people is okay with like hey i'll just sink half my net wealth into a levered up real estate property but i can't imagine taking you know a triple qqq levered product which would be the triply three times leverage on the q's or the nasdaq like could you ever imagine advising a client to take three times leverage on with half their net wealth on the nasdaq like never you would never do that right like that would be for the riskiest of the riskiest of the you know ponzi scheme chasing uh crypto bros and like you just wouldn't do it but yet in real estate like we don't necessarily like it's not super smart but people aren't freaking out about three four times leverage on real estate i just thought that was really interesting it was kind of a realization to me that huh it's funny how we treat the stock market leverage different than we treat other economic um aspects yeah.

Chris:
[12:05] Yeah good point um Continuing on with the optimism index, we got these numbers released earlier in the week. This is from Joe Weisenthal at Bloomberg. He says, a gigantic surge in small business optimism. And immediately, the soft components of the survey are now matching the hard data, which you'll see on the next slide. So we were talking a lot prior to the election about how all the numbers looked great you know like the economy was humming along uh the market set all-time highs you know all these numbers are looking really good and yet the sentiment from businesses uh especially was really low well uh lo and behold um we are definitely a political animal now uh especially in the u.s where um a lot of that is just driven by your politics and is the person that you want to be in power in power or not. Because now that has jumped up significantly on the soft data versus the hard data. And so we've got optimism now in line with those numbers. And so that's very interesting. And to your point about how our psychology goes into the market, it's just a reflection of the human condition and how we're looking at things,

Chris:
[13:31] It's going to be interesting to see if that manifests itself in further gains in the market or not. Last year, we had sentiment kind of in the gutter for the small businesses and everything, and the market still did really well anyway. One of the best years on record. So who knows if that's going to be enough to keep us going and chugging in the markets in 2025.

Chris:
[13:59] One last one here on this, or sorry, there's two more. Another one on the sentiment side, this is a financial situation one year ahead, much better off, also jumped significantly. This is from Lance Roberts. He says, since the election, consumers are much more optimistic about the financial situation over the next year. So um you know everybody's kind of piling into that that end of the boat for sure um and and that jump is significant all at once obviously

Chris:
[14:34] Um last one on the sentiment and this is from uh mike sicardi again and he shows um via goldman sacks that we are maxed out across a host of sentiment indicators so if you look at But the current feeling would be the dark blue triangles or, sorry, diamonds in this. Sorry, I'm recovering from being sick, so my mind's a little bleh. But anyway, it's showing kind of the risk on versus risk off. And we're definitely tilted in terms of positioning. You look at risky bond flows, global equity flows, U.S. equity futures positions. They're all pretty much all the way to the right in terms of risk. Momentum is working very well right now. The VIX is low. Bull bear spread very high. So in terms of sentiment, it's hard to see how it gets much better than it is at the moment. There's very high expectations for the economy and the markets moving forward. Which conflicts with the old faithful yield curve, right? And I don't know if the word is disinverting. I don't think that is a word, but that's what I'm going to say.

Daren:
[16:01] It can be, Chris. Just make it a word.

Chris:
[16:05] The yield curve has been disinverting, which means that the short-term rates are almost the same as the long-term rates where they've been higher. The short-term rate's a bit higher than the long-term rates for a long time, going on, I think, about three years now. And so this is of note because you'll notice in prior years, right before a recession, the yield curve tends to start heading back to even, and then we get a recession. And um now we are we are heading back to that territory so yield curve inversions in prior you know history have have always uh uh preceded a recession now there's been a lot of this time is different you know we've never done x before in history uh over the last five years so So if there's ever going to be a time where things are different than normal, it's now. But I think after today, this is probably going to be above zero for the first time since it was inverted back in April of 21, I believe.

Chris:
[17:25] And that's largely due to longer rates going higher because this is the short-term rate, the two-year rate. And you can see that's basically been hovering in the same range for about two years now. It's been up and down, but basically sideways for the last couple of years. So most of that disinversion is happening from the longer rates being higher. And uh so who knows if that's inflation expectations if that's growth expectations if that's growth and inflation expectations the rate market is trying to tell us something and what that is will only be clear in hindsight of course um but uh it's it's of note and when you look at the expectations of Fed fund decreases here,

Chris:
[18:21] Again, according to Mike Zaccardi, just 2.1 cuts priced into the next six months. We had as many as over six earlier in the year in 2024 were expected. And really since then, we've gotten some really strong numbers. The market continues to be strong. Like we said, with the sentiment indicators, you've got a lot of really wonky stuff going on. So it makes it a little tough for the Fed to justify cutting rates, especially if you start to see inflation start to tick up again. I do think that Powell really is cognizant of not being taken over by inflation and not losing the battle right at the end. So I think he's going to be very careful to not let go of the reins on the rates before they're sure that inflation is crushed. And right now, the long end of the curve is kind of questioning whether or not that's coming back or not.

Chris:
[19:26] So we talked a lot about sentiment in the U.S. I would say that's not just inside the U.S. because a lot of foreign investors are also piling money into the U.S., which you can see here. This is from Charlie Biello. He says U.S. Stocks are now trading at over 22 times forward earnings versus 14 for international stocks, which is the widest valuation gap in history. So you can see in the past, they'd always kind of moved together. And then recently, it's just completely different. So going back to how investing works a lot like horse betting or sports betting, it's like it's not enough to know which is the best horse or which is the best team. You also have to take in the odds into account because right now the odds are saying the U.S. Companies are the best and it's priced that way, but it's also got a huge spread in order for you to make any money.

Chris:
[20:27] The spread is very wide because everybody knows that. So where you make money in betting, of course, is when you find a discrepancy in the payouts versus what was baked into the cake so say like when uh when an unranked team beats a beats a ranked team at their home uh uh field you know when when that home team had you know 20 plus uh point spread to win right that's that's where the betting pays off not in betting on that home team to win when the spread is that large so hopefully that makes sense in that analogy the degenerate gamblers out there will know what I'm talking about.

Daren:
[21:16] Degenerate gamblers. You notice that degenerate is almost a claim to fame now amongst the degenerate investors.

Chris:
[21:24] Oh, unfortunately I'm painfully aware of that. Yes. But you know, those odds, those odds have been flipped for a while. You can see here that, you know, this is a long-term chart from Charlie Bielo again, and just showing how out of whack that U.S. Versus international valuation has gotten to. And it's been that way for quite a while. The last time we even had anywhere near that was during the dot-com bubble at three. And we've way exceeded that. Now we're at three standard deviations, which is considered very extreme in the financial world. Um so uh you know there may be some opportunities there for those that are willing to go against the crowd and uh and also willing to be wrong for a longer period of time because this this has all been you know assumed for many years now and nothing has uh has changed on that front yet so you

Daren:
[22:28] Saw the chart i sent you this week Chris that good old arc surpassed um your famed and loved Warren Buffett.

Chris:
[22:39] Yes yes over the last uh was was since 2014 yeah uh

Daren:
[22:45] Yeah which isn't a good sign right like when you start seeing Warren Buffett lose that bad you almost wonder like how close to the end are.

Chris:
[22:56] We of this

Daren:
[22:57] You know yeah he isn't a dummy right these.

Chris:
[23:04] Are all reasons why you know aliens landing are low on my list

Daren:
[23:08] Of weird dude i still like it's just it's just still crazy to me that we're talking about aliens landing and we have these orbs and these drones flying over new jersey and apparently our government has no idea what were what they are like that's just ludicrous the it's gonna be like a nine-year-old.

Chris:
[23:32] Kid from his

Daren:
[23:32] Parents basement just screwing with.

Chris:
[23:35] People and it's going to feel

Daren:
[23:36] Like the dumbest thing ever it's.

Chris:
[23:38] Almost going to be like nobody nobody will believe it because it'll be so dumb they'll be like no way

Daren:
[23:42] How'd that happen, although i don't know if you've have you seen any like the marvel um movies or like uh what are they called um where it's like the end of the world the dude snaps his fingers i'm blanking on what the movie's called but you know like you just wonder like oh is that this that moment where the other aliens come to this world and we're all those people running around scared and hopefully we got some mutants floating around yeah yeah.

Chris:
[24:15] Yeah i'm at that age with my four-year-old where we're reading a lot of uh avengers and and such so yeah let's hope that if there are aliens

Daren:
[24:24] There are there.

Chris:
[24:25] Are some avengers as

Daren:
[24:26] Well some good good aliens out there too yeah to protect us.

Chris:
[24:32] I'll choose to believe that

Daren:
[24:34] So I thought today I'd just start off by going through kind of the Forex factories list of economic indicators for the week. One that I think kind of spooked on the market this week was this CPI coming in. It came in at expected, but as you can tell, it's up from previous. So it was expected to be up and it was right where they thought it would be. But yet it was higher inflation ticking up a little bit. And then more on the leading indicator of inflation, PPI, producer prices index popped up way above expectations. Now, this tends, as you can see, to be a very noisy indicator.

Daren:
[25:10] So it could just be a momentary thing. But I generally say that there's definitely a pro-business kind of feeling out there right now. And I think that's somewhat of what's riding and pushing from a tailwind standpoint, the market and making us wonder, hmm, is inflation back? And then I think when you look at the 10-year, and you can see the last five days, the 10-year just went straight up, which is not good for bonds, not good for diversified investors. But what I'll tell you from a technical standpoint, there's a couple good news, bad news about this chart.

Daren:
[25:48] You can see we talked about this breakdown, I think, last week, and then it came back up and tried to reclaim and didn't. But the fact that now it went back down, found support in this area, it's headed back north, tells you that there's some strength behind that. Um, what I will say though, um, this trend line, I would say now is invalidated, um, that it's now holding that support. Um, so I think the, the, um, the strength is, or the risk is to the upside, um, at this point. But if you look at this long-term trend line, this red line here, we're still right below it. So it still has to contend again with that long-term trend line. So the long-term trend line is going to be stronger than a shorter term trend line, which is where it was getting resistance before. You could also argue that it found resistance on that long-term trend line, which happened to coincide with this other downtrend line versus the uptrend line. So now that's below the downtrend, we'll want to watch that. We'll want to watch real closely around 4.5 range. The break's above that. I think we go higher, but there's going to be a ton of resistance right here, I think.

Daren:
[26:58] So the run on that might be over, which wasn't good for bonds this week, right? What happened to bonds? Flip it around. They went down, right? So the fact that bonds are now below and closed below these upward trend lines, I don't like. I think that doesn't look good technically for the bond market. I think you could still probably argue that there's a trend intact somewhere around here in range if we took this trend line and moved it kind of up. Something like that. You could maybe argue that uptrend is still good. It's just looking weaker. So we'll see next week what 10-year rates do. That's our last full week before Christmas. Then we have Christmas, and then we have going into the end of the new year. Like Chris showed earlier, things are pretty positive going into the end of the new year, typically, historically. But I can remember a New Year's Day almost, Chris, where we were sitting together selling and tax loss harvesting portfolios because it was getting obliterated in 2018, I think that was.

Daren:
[28:10] So, you know, who knows what's going to happen. So let's talk about SPY. This is the S&P 500, the largest U.S. Stocks. and you can see we're just working a nice trend line still working up i think that trend's still intact i think upward momentum's intact kind of a little softness this week didn't really go anywhere but i i don't think that it's not intact at this point we closed above our primary trading time frames on these simple moving averages and exponential moving averages so the traders are still in the game i don't think there's anything to worry about at the moment the stock market i I think indicators would lead that, hey, we're headed higher the rest of this year. I think that the odds are that way. What happens next year when we get closer to inauguration?

Daren:
[29:01] I don't think we can not talk about what happened in Syria this week. Try not to get political, but we try to be geopolitical in this broadcast and talk about macro environments and how that impacts markets. And the fact that basically Russia and Iran bailed out of Syria and backing this regime, I think that's pretty monumental for changing Middle East politics, but also leaves Iran a lot more vulnerable.

Daren:
[29:31] To potential strikes from Israel because now they have a clear path through Syria. They don't have to fly over Jordan and then just a little bit over Iraq. So that whole setup now looks even more likely, I think, to potentially become a flashpoint. And I especially think, given that Trump has said to Netanyahu that do what you got to do with Iran, Um, that is a higher risk. Although typically Trump likes to say, Hey, that's not, um, that's, that's not, you know, do the war thing because he's tends to be pro business and war is not good for business other than for the defense contractors. So I could see, and this has happened in the past and I've noticed this over time that this period of time in between when we have another president elected we have our lame duck president right now basically just trying to pardon anybody he can get political favor from at this point uh that um that's happening and all pardoning is happening and then you have this moment in time i've seen israel do some pretty intense things as far as um taking out things that need to be taken out they've bombed, Palestine in the past or Hamas, however you look at it.

Daren:
[30:53] It wouldn't be shocking to see them use this moment in time where there's kind of disorder among Americans and those who control the power waves of the government that if they were to step in and take out the nuclear labs of Iran, it's that this is that moment, right? That you see historically that happened. So I would be watching that over the next few weeks as a potential as we go into January 20th.

Daren:
[31:19] It'll be interesting to see how that plays out. I also think that given that the Ukrainians would love for the Iranians to stop shipping their drones to Russia, you could also see some moves made on Iran to kind of get them out of the mix with the Russian-Ukraine conflict. So interesting next couple of weeks. I think I'm definitely on lookout for geopolitical moves and global reshuffling, which would impact the oil market. And we've been watching oil for a while, been talking about this declining wedge here, and it's just rolling around this support line of 68. Found support again this week, and the fact is just sitting there bouncing could tell you a couple things. And we talked about this last week where it's this very similar setup to this look right here is starting to look really similar, right? So if we saw something break out in the Middle East over the next month, month and a half, the market's kind of whispering that something's in the mix. Because when you see this really tight volatility, you see a breakout up or down, break down.

Daren:
[32:29] And just given what we saw in Syria this week, it's not going to just be smooth sailing for the Syrian people. Unfortunately, I don't think that's the case. I could see something happening, which would then spike oil up. Or if we get rid of a depreciatory event, which wasn't the case when we saw CPI, you would see it break down. We've not seen that at the moment. So anyway, I think watch oil for the whisper about what's about to happen when it comes to the Middle East.

Daren:
[32:58] And what we'll see over there. I don't know if you heard of this, Chris, this week. I think we should talk about this because this is kind of mind boggling in some ways. And I'm not even sure how to make sense of it all yet. But Google came out with this willow chip. Did you read anything about that?

Chris:
[33:17] Yeah, pretty amazing.

Daren:
[33:19] And they said like the willow chip is so smart that it was it like it proves there's other dimensions or something. Yes. I was like all right my mind's bent um let me think about that for a while but like this chip that is just so powerful uh that it proves there's other dimensions out there um i'm not even sure what to make of that at this moment but from a technical standpoint you can see google all-time high right here. And it breaks out with the announcement of that chip comes back in and tests it, find support at the all time high. So if I'm a short-term trader, I'm liking that set up a lot, but that's pretty crazy, right? To think about, they have this chip now that proves there's other dimensions.

Daren:
[34:14] I don't even know what to make of that other than, wow okay we'll see what's happening but why does that matter is because google this is not an ad i endorse i'm getting rid of this just popped up there you go um you can see uh google is oh you guys even see that so that's good you know it's really annoying about finviz i love this heat map i hate how they do pop-up ads everywhere man just annoys the scott out of me and they just popped up a political ad that no one had to see luckily but um google if that you know it's one of these big dogs it keeps pulling up the the rest of the indices but you can see struggle struggle bus at least today um on the magnificent seven quote unquote in all week although we did i mean amazon up eight percent this week that was from that chip uh so interesting this one dude broadcom did you see pelosi on this one.

Chris:
[35:10] No, I missed that.

Daren:
[35:12] So Pelosi made like almost $2 million on a trade like a few months ago or weeks ago. She put a massive trade on Broadcom. And sure enough, it rips when earnings comes out. Like when does it just stop being obvious and just feel like fraud? I mean, it's just crazy that that's still allowed. But anyway, Broadcom smashed earnings and magically Pelosi had herself a nice little position on it. I just don't even know what, I'll put that in the willow chip bucket. Like I don't, in the UFO bucket, like how do you even, like it's just so obvious

Daren:
[35:53] at this point, but all right. So let's go and take a look at gold.

Daren:
[36:02] Gold rates going up. That's not good for gold, but what I'll say about gold, and that I like about the structure of gold is you have this downward trend line here and it was finding resistance, resistance, resistance. It breaks out, finds support, and it closed right above support. I like that. That's bullish in my book. But that might also lead into this idea that rates are going to turn around again here in the next week. But that's a nice setup, right? Those are always nice setups for the traders out there that like those downtrend, find support, bounces up. That's probably one of my favorite setups if I'm in trader mode that seems to be consistent. None of it's 100% consistent, but that looks good from a short-term perspective that we're going to get a breakout in gold. I'd still maybe want to look for some follow-through. If I got a green candle right here, I'd probably take a bite on that. But if it goes below that, obviously it's a failed breakout. Talk Bitcoin. Bitcoin's just been... This chart looks mean, dude. All right. So mean is a term in my book that it's about ready to rip.

Chris:
[37:19] Yeah, it's hard to argue any weakness there.

Daren:
[37:24] Mean is in a positive sense. It looks good.

Daren:
[37:27] So you can see here this building structure. So here's an example. Now compare these two areas, kind of this very similar build, build, build, build. and we're right at that hundred and it's building up. You can see here's another example that build that kind of stair stepping up. And then you just get these lowercase G-O-D candles that they're called that Bitcoin's known for where it just rips up. And it looks to me like we're about ready to do that same thing.

Daren:
[38:01] Now, let me flip on the other side of that because we could also argue that it's a topping pattern because see that look also somewhat looks like that look right um so be careful be cautious be thoughtful be diversified right like don't get over over the top of your skis on this one um i think fundamentally uh i really like the the setup here um technically it looks pretty good but we could easily be topping out the fact that we keep dropping below a hundred, reclaiming a hundred, dropping below a hundred, reclaiming a hundred tells me that there's a lot of buying going on right here. And that buying, um, will ultimately prices set on the margin, just suck it up higher. Uh, so be, be watching for that. I almost would argue that we would expect to see a breakout this weekend.

Daren:
[39:01] I'll be watching this weekend. I could very easily see one of something like this pop up this weekend on that chart. But in fairness, because it's just do the other side of the coin on this, because I think that's important.

Daren:
[39:17] You know, here's another example of this kind of building up, up, up. Although it's a little bit different than other times. This is a good example of what I was showing on the oil chart earlier with this descending wedge. That and then you get this breakout which sort of looks like what's going on in oil right now that's why I was talking about this idea of you got this descending wedge happening and, And then this breakout. So it wouldn't shock me if out of nowhere, Israel starts bombing Iran and their nuclear sites. That would just be, or Israel really goes after the Houthis because they pretty much have demolished Hamas. They demolished Hezbollah. Syria is done. Russia is out of Syria. Really all that's left is Iran and one of their proxies, and that's the Houthis. And the question is does um does israel go after the houthis or just go straight to iran well counter.

Chris:
[40:25] To that though all all of that is happening and oil has gone down

Daren:
[40:29] Right so.

Chris:
[40:31] Maybe even if even if that happens oil continues to you know descend

Daren:
[40:36] Right yeah i mean because Last time it really broke out, this was during the Russian invasion of Ukraine, right? And ever since then, it's just calmed down. But volatility's wound up, right? So yeah, it's gone down, but maybe it goes up short term because you have that look there. I don't know. It'd be interesting to see. Certainly, at least the rhetoric coming out of the Trump administration is like, we want peace. We don't want wars. Figure your garbage out. Let's get on with building. That's the rhetoric. Who knows what's going on behind the scenes? But that's certainly the rhetoric at the moment.

Chris:
[41:21] It well and even if you correctly predict what will happen that the result of that is is low because if you list all the things that have happened you know even over the last year and you're like hey is the market up or down as a result of this um you know yeah if you get part a right getting part b right is extremely difficult

Daren:
[41:46] Yeah, absolutely. It's all, it all makes perfect sense in hindsight, but getting there is tough. This is interesting on the, so this is the Dow Jones transportation index, which I always look at like this index tracks the companies that are like the arteries of the economy, and the arteries of the economy are how the economy pumps and the arteries look pretty healthy. Like look at that breakout, long-term downward trend breakout. We did get it. This is like a formation, what we would call a double top. See that double top there? And we broke neckline. That would say that we're probably going to test this area pretty, pretty strong. But the fact that it is broken out above there, that's pretty good economically. Um the in that basically broke out the day of the election look at that 11 11 that time frame, but it looks like maybe that's over now and maybe we're going to come back in you know like all politicians small.

Chris:
[42:50] Stocks though are negative since the election right if you go to iwm

Daren:
[42:56] Iwm is still positive because this was the election no.

Chris:
[43:00] From november 6 go to go to november 6th is that am i looking at that right

Daren:
[43:06] Yeah i think they're about even from november 6th they're actually just right on that support line from november 6th you got a double top there too though which is interesting right yeah.

Chris:
[43:18] I guess what i'm saying is not not the uh huge breakout that you would expect with all the optimism jumping and you know kind of the rhetoric that You hear that the market's just going straight up since the election. Not really.

Daren:
[43:37] Yeah, I mean, I think the... What I would think about here would be, you know, all politicians, there's this moment after something happens where everyone's excited and then like that veneer, that honeymoon period. What I would say the charts are telling us right now is that the honeymoon period is probably coming to an end. And whether it lasts another couple of weeks, you know, we do something like this or we do like this, like, you know, then it's time to deliver, right? And will we have a peaceful transition of power? One, we all think we will, who knows? Two, like once the Trump administration gets in there, like how disruptive is it? Because he's talking a lot about disruption, right? Whether you like that disruption, you don't like that disruption. He's still talking about disruption. And once he gets in there and starts disrupting, what's the impact of that disruption? Because disruption doesn't, markets don't generally like disruption, right? They like to know what's coming in the future. And if you disrupt a lot of things, like that's not generally good. So my whole question is like, fine, you can threaten, you're going to cut all these government employees, but what are you going to replace it with? Because if you just stop the printer press, you know, things aren't going to go well for you. I hate to break it to you.

Chris:
[45:05] Well, I'm just looking at price as an indicator and using my trusty old Y charts, which is updated as of yesterday. So it's not a candle chart. It's showing IWM is negative 1.75 since the election. And then we were down another 60 bps today. So call it right around 2%. So since the election, U.S. Small companies' stocks are down 2% despite all the hype.

Daren:
[45:34] That that is well yes i think that's true Chris because if you look at this candlestick right here so this is this is the elections candlestick on 6th of november and you can see price action during that day was still in where we're at that's true though if you're talking about clothes.

Daren:
[45:54] You see what i'm saying about clothes yeah yeah so clothes was up here and if we do an info line here we'll do if we take off a close to here then we're down 1.75 but we're still in that candle so from a technical perspective i still say yeah it's a it's it's in the ballpark right i'm not the fact that it closed inside this can't this wick here tells me there's still support in this arena. Had it closed below that wick today, I would have said, yeah, there's a lot of weakness there. But I would say the honeymoon period is getting shaky. America is finding out who they elected for good or bad at this point, right? Like we're, people are starting to see, well, maybe it's not all roses and glory and maybe something's coming. And I think you have to accept that potentiality. And if we're going to do all the changes, we're going to change. It's not going to just change overnight and everything's going to be great. Like, that's just not a reality. Like we're going to, and what I'm really curious to see is if they're truly going to make all these changes across the political government economics world, like if they're going to make all these changes, how are they going to lead us through those changes? Because that's difficult. That's not an easy task.

Daren:
[47:24] And you can talk it and you can throw the rhetoric, but that comes with ups and downs. And the markets, I think, are whispering that to us at this point. When we look at the front edge of the risk curve, that's where you're seeing some more weakness, right? You can see we're about to lose that 20 simple moving average, which is a key trading average. So the traders are getting, I don't know, maybe I'm going to take out and you're about to get a cross. So when you get these crosses of the nine EMA over the 20, that can be an exit point for traders. That's interesting. Front end of your risk curve, you see weakness. Socks, though, look at socks jumping up. They're breaking out. So socks is the semiconductor, Philadelphia semiconductor. I'll bet a lot of this is driven by the Google willow chip, though. Um i'm interested to do a lot of reading over the weekend on the willow chip to learn more about it but pretty pretty wild um that some piece of electronics

Daren:
[48:29] quote-unquote is proving that there's another dimension i don't even know what to make sense i.

Chris:
[48:36] Wonder if there's a dimension where valuations matter anymore

Daren:
[48:39] There's a value that's right or value stocks actually are good there's a.

Chris:
[48:46] There's a fundamentals dimension

Daren:
[48:47] Yeah for real the um you can see here um this is the vix so what the vix measures is complacency amongst those who trade uh the s p 500 futures so typically when they get anxious then you see it spike up because the market's going down. And what they're telling you right now is they're excited for their Christmas vacation. They don't want to deal with this right now. They just want to hang out at home with their family and not trade the futures. That's what that's telling you right now. And that's why you get kind of this putter to the end of the year. And then we'll come back into the January and see what life has to deliver to us. I think that's it, Chris. I think, I don't think there's much else to cover today. Actually, maybe the dollar. We'll just look at that real quick. Breakout on the dollar. Look at that test. Breakout, test. Dollar's going stronger, but the move might be over. There's a lot of resistance right in there.

Daren:
[49:58] But that's a strong test of support. I mean, that's a picture-perfect setup what I'm talking about, where you have the breakouts and it comes back in, tests it, holds. Goes up. That's a great setup, um, too. Anyway, I think we'll leave it there. Have a wonderful weekend, everyone. Enjoy the still fall for another few days, uh, weather, and we'll be in the winter.

Daren:
[50:24] And, uh, if you have any questions as always reach out, take care.

Music:
[50:28] Music