Spicy TACOs?

DANO WEIR: Happy Friday. You're hanging out with Sonoma Wealth Advisors. It is Friday, May 30th, 2025, and we're about to go on the markets. My name is Dano Weir. I'm the marketing director for our firm. Whether you're a client, whether you're considering becoming a client, this is our weekly show where we look at the markets, the stock market, the economy.

DANO WEIR: And this week, we're talking about a new term, which might make you laugh, might make you cringe. We're talking about tacos this week. I've got a graph with a huge spike in it. No, it's not the one you're thinking.

DANO WEIR: Spoiler, it's a Social Security chart. There's a new gulf to talk about in the housing market. And believe it or not, you won't find a headline for it. We actually had a bit of a bullish close to the S&P 500 just a few moments ago. So we will get into all that in a moment. But first, let's start the show.

DANO WEIR: All right. They are managing principals of Sonoma Wealth Advisors, Daren Blonski, CFP, Chris Sipes, CFP. CFP means Certified Financial Planner. And Chris is perhaps a Certified Taco Planner as well. Chris, why are we talking about tacos this week?

CHRIS SIPES CFP®: Well, it's a good thing you asked, Dan, because even when I brought it up with you guys, I must be getting Fed something through my algorithm that you're not, which is.

CHRIS SIPES CFP®: A feature of modern life that we can all live in our own realities based on whatever the the social media gods want to feed us right but this is a reference to an interview earlier this week or i guess a a a reporter asked president Trump how he was reacting to the so-called taco trade on Wall Street. And he says, what are you talking about, basically? And you can look this up.

CHRIS SIPES CFP®: It's like a 30-second clip. And she says, well, the Wall Streeters are calling it the Trump always chickens out trade, meaning that buy the dip because the market's going to go down whenever the tariffs are announced, but then they're going to be pulled back.

CHRIS SIPES CFP®: As you can probably imagine, President Trump didn't love that question.

CHRIS SIPES CFP®: And just a couple of days later, we get the, I guess it's called a truth when you put something out on Truth Social. He put that out that he was getting tough again with China and on the tariffs. But just like a repeat of last week, it seems like the market doesn't really care anymore, you know, because.

CHRIS SIPES CFP®: They also announced, you know, the 50 percent tariffs on the EU last week. And the market was like, yeah, right. Not going to happen. And it seems like we're getting kind of the same reaction today. So believe the market.

DANO WEIR: It's an interesting. And so some other things which happened this week in and around tariffs. There was a who knew that there was a court of international trade in the United States. We're finding about all these corners of the federal government that we didn't know who ruled that.

DANO WEIR: He in fact couldn't be levying the tariffs that he was with his emergency powers that has then been appealed and stayed at least for the moment so there's a few things that have happened in and around tariffs this week and i thought that the phrase not only did i just want an excuse to talk about tacos if you're feeling like there's really there's how do i say this very nicely.

DANO WEIR: If you're feeling like things are going all one way. The taco idea is actually interesting because, you know, it's an indication that Trump has said, you know, very intense things. And there's been a few instances of him actually backing off of them, Daren.

DAREN BLONSKI CFP®: There has been a few instances. You know, when I saw this headline, because this is really interesting, like, Chris, I would venture to say that you and I probably read. Most of the same news sources are very similar within range.

DAREN BLONSKI CFP®: And I miss the taco outburst, let's call it. This week. And, so whenever I started talking tacos and these memes started flying, I'm like, what, who said what now?

DAREN BLONSKI CFP®: And so I went back and I watched the actual press conference where the, reporter, I believe the person was from CNN, which probably inflamed Trump, because he doesn't seem to like CNN, but it was a financial times, reporter that, I went back and listened to an interview with him and It's hard not to hear a lot of bias through whoever you listen to and whatever side of the aisle.

DAREN BLONSKI CFP®: And I was telling Chris and I were talking earlier, like it's amazing now that like moderate and willing to look at both sides of it is like the weird thing now.

CHRIS SIPES CFP®: Right.

DAREN BLONSKI CFP®: And, you know, but when it comes to investing, like you, if you're not doing that, you're in trouble. Like you're going to, you're going to wreck your portfolio.

CHRIS SIPES CFP®: Absolutely. I think that it was Jeff Bezos who said something to the effect of, one of the best things you can do in business is instead of trying to think about all the things that are going to change and trying to be the person that does those changes, more say to yourself, what is going to stay the same and how can I benefit on that? Right. So inverting that.

CHRIS SIPES CFP®: That thought, which when it comes to the national debt and the finances of the government, you know, it's hard not to bet things are going to stay the same. And, you know, as they, as they roll out this new budget and, and, and, you know, it looks as of now, like there's not going to be a lot of changes in terms of the debt and the deficit. Maybe that's where the market's been rallying.

CHRIS SIPES CFP®: I don't know. But I think that it's very interesting when it comes to the treasury debt, you know, how much does this affect the treasury debt? Because, Ben Carlson at Ritholtz has pointed out like, look, we had much higher interest rates in the eighties and in the nineties when our national debt was way, way lower as a percentage of our GDP, our deficits were lower.

CHRIS SIPES CFP®: And so now we've got way larger deficits, way larger debt, and our interest rates are actually lower than they were at that time. So I don't know how much correlation there is between the debt and the deficits and then your interest rates, but it seems like there might be a little more overreaction, I guess, going on in the bond market when you look at it that way.

DAREN BLONSKI CFP®: Chris, speaking of tacos, right? You know, we had all this hype going on for many months up until this point with this new administration about doge and cutting expenses and blah, blah, blah, blah, right? And the new budget, what do they call it? The big, beautiful bill comes out and it just adds to the deficit, right?

DAREN BLONSKI CFP®: Like it doesn't actually achieve what everyone's been saying they're going to do. It's just a further pro prolonging government spending. And I go back to what you and I have said over and over and over on this show. It doesn't matter what side, like they both have to perpetuate spending. And one side likes to say, oh, they spend more than me. And the other side says, oh, they spend more than me.

DAREN BLONSKI CFP®: But at the end of the day, unfortunately for the United States Of America, we are on an unsustainable course that I don't know that we can get off when it comes to spending because we have our, the best thing I can, the way to think about it is you look at like a kid who's addicted to technology. Like we're addicted to spending.

DAREN BLONSKI CFP®: We're addicted to monetary stimulus, fiscal stimulus now. And I just don't think like, because Chris, yesterday you're saying to me, like, I don't get it. Like all these bad economic data is coming out. Like the market just doesn't care. And I think it fundamentally just comes back to a simple truth. And that is that the market completely believes that the government is going to step in and bail everything out.

DAREN BLONSKI CFP®: And until that changes, until we see something different, I think that's a pretty good thesis. And the market doesn't lie, right? And I think that's why you see a bullish close today. And I'll show you when I dig into the charts. We got a bullish close, even amidst all this tariff junk going on.

DANO WEIR: And I just need to keep talking about tacos.

DANO WEIR: I think it's interesting for someone who, you know, as, quote, Liberation Day, the tariffs are happening, as many things have happened with the administration. And it feels like, especially if you're not someone who voted for President Trump, it feels like the floor is being pulled out from under you. And there are things changing.

DANO WEIR: I'm not discounting things that are changing. But this is a perfect example of just because something is announced and just because, quote, experts or other people or people standing to the side of him say yes, yes, doesn't necessarily mean that it's going to happen and doesn't necessarily mean that it's going to play out how they say it's going to play out.

DANO WEIR: So what that can mean for you moving forward as, you know, further developments are going to happen is perhaps check if you can check your emotion. And try to make sure you check in with your advisor, because if you just go all on emotion and go all on what someone says on TV, you're going to end up with whiplash in your portfolio.

CHRIS SIPES CFP®: Yeah, I think it's hard to interpret the market any other way than saying like the market is not too keen on the tariffs. Like when it went, when every time that the cans kicked down the road, the pauses come, the market rallies. When that court order was announced, the market rallied. The futures were up significantly when that happened.

CHRIS SIPES CFP®: And then when they get re-announced, like earlier today, the market was down midday based on the tweets about more to come with China. Yeah. So, you know, but to your point, Dan, I think you have to go with what the market is saying is that. These are not going to be implemented.

CHRIS SIPES CFP®: And at least for the time being, knowing what it knows today, it seems to be looking past those tariffs. Now, we've got a big increase in bullish sentiment this week. Emotions follow price, of course. Look at where we were to start the month versus where we're ending the month. We had a really good May in the markets, a lot of recovery.

CHRIS SIPES CFP®: And so along with that, bullishness is ticking up. Bearishness is going down. We're off of some of those bearish highs that we saw in April coming into the trade wars. Now, the fear and greed index from CNN, which is more of a positioning index, shows 62, which is about the same as it was last week at 63.

CHRIS SIPES CFP®: Bitcoin down to 60, which is still greed, but down. From 78 extreme greed last week with, you know, we saw a brief breakthrough for the all time highs in Bitcoin and it's since sold off. So Bitcoin continues to be kind of the tip of the spear when it comes to the risk in the markets and the market's appetite for risk.

CHRIS SIPES CFP®: We saw Bitcoin rally prior to the market rallying and now we've seen it sell off the last week or so, not dramatically. But it's off of the highs. I think it was like maybe 111, 112, somewhere around there. Now we're down in the neighborhood of 105. So it's really interesting to me how that seems to be the telltale for the rest of the risk markets.

DANO WEIR: I'm sure Daren will have no slides and no graphs to show in refute of what you just said. So no response. Daren has no response to whatever you say.

CHRIS SIPES CFP®: Zero. Zero. We can only hope, right, Dan? We can only hope.

DANO WEIR: Oh, Daren's mic got cut off.

CHRIS SIPES CFP®: Yeah, absolutely. So the outperformance in foreign stocks continues to be the case this year. We're almost halfway through the year now. And you can see the European. So you kind of break down the international stocks into two camps. You've got the quote unquote developed markets, and then you've got the. Quote unquote emerging markets. And there's different countries kind of lumped into the different markets.

CHRIS SIPES CFP®: And then you've got some that just look at it as basically the USA and everything else. And so that's why it's broken down this way to show you that. So US stocks continue to struggle. However, they've kind of got back to even for the year and on pretty much every valuation metric. Out there, they are still very expensive as a group relative to history and where their valuations have been in the past.

CHRIS SIPES CFP®: So kind of interesting that you're seeing all these headwinds and yet people still are willing to pay a premium for US stocks. Maybe that's recency bias. Maybe it's justified. Who knows? But we are about halfway through the year and seeing a pretty, dramatic shift in where the performance is coming globally this year.

DANO WEIR: And Chris, the European, run so far this year has been so helpful to me as someone who if you don't know i'm newer to the firm i'm not an advisor i'm the marketing director and so i'm learning along with you the audience about all this stuff and it's when that that graph where you show Europe hit an all-time high in 2007 and then it's just this March down down down down down and now boom out of nowhere right a great run back up to all-time highs.

DANO WEIR: Is such a perfect example of why you need something in your portfolio that sucks if you want to be a diversified investor. Because look what it did. And in those years of 2008, 9, 10, 11, 12, 13, 14, it's all going down.

DANO WEIR: And if you were talking to your advisor, you'd be like, why do I own this? Bro, this is not working. In eight years, it's not working. And then all of a sudden now, for no reason, at a time when it shouldn't be, it's, you know, going gangbusters.

CHRIS SIPES CFP®: That's the case. And most people don't know that there have been several times in history where the U. S. Stock market even has gone nowhere for 10 years, 15 years. In the case of the Great Depression, it was over 20 years. And so that has happened in pretty much every major stock market around the world. And so if you fall victim to what they call home country bias, which is we all have a problem.

CHRIS SIPES CFP®: Bias for the companies that we know and love and spend our money at. I mean, who doesn't love owning Costco stock or something where you're like, gosh, I go there all the time and spend all kinds of money there. It makes me feel comfortable over owning some company that I don't do business with.

CHRIS SIPES CFP®: But the downside of that is imagine yourself as a European investor and you say, hey, I'm just going to only stick with European stocks. Well, you would have had no returns over the last 20 years, almost, right? So you would have had those lost decades. And anybody who's concentrated is more at risk of falling into that same trap of lost decades.

CHRIS SIPES CFP®: And so that's why you diversify and own those other countries, even when you think there's nothing that's going to happen. Imagine going to the beginning of the year. I can't think of anybody that told you, hey, European stocks are going to outperform this year. They're going to be the place to be due to US policy or anything else. Nobody would have believed you.

CHRIS SIPES CFP®: And that might be the case with the bond market right now because everybody hates bonds. They've been in a bear market for several years at this point. They just went through the worst you know bond market in history in 2022 and 2023. Never seen anything like it.

CHRIS SIPES CFP®: They've just been bombed out. People hate having bonds, right? And with all this talk of the fiscal profligacy of the United States government, nobody wants to own bonds going forward because of the fear that, you know, our government finances are out of control, et cetera, et cetera, et cetera.

CHRIS SIPES CFP®: So, but... Usually, you know, when asset classes are left for dead, nobody wants them, you know, that might be the time to just consider having them as a diversifier. And here's why. And the longer this chart illustrates the different reactions on bonds. Yeah.

DAREN BLONSKI CFP®: Dan, do you like how Chris had to like phrase that when he said, Hey, you, you, you might want to think about maybe owning.

DAREN BLONSKI CFP®: Even even even Chris at this point is like maybe you should because literally if you say bonds too loudly to some investors they lose them yes.

DANO WEIR: Yes that's partially kind of if i if i draw if i draw the graph out large enough a large enough timeframe, there was success at one point.

CHRIS SIPES CFP®: Well, and the. The kind of most basic thing to know about the bond market is that the longer you go out in term, because you can buy short-term bonds, you can buy medium-term bonds, which they kind of term like five to 10 years, and you can buy long-term bonds up to 30 years in the US.

CHRIS SIPES CFP®: The longer you go out, the more impact changes in interest rates have. So look at the one that's highlighted there, the third year treasury. And you can note that if interest rates go up by 1%, you're probably going to lose about 11% off of the value of your bonds, which anybody that's owned bonds over the last three years are intimately familiar with that situation. Now look at the flip side of it though.

CHRIS SIPES CFP®: If interest rates fall by 1%, then 20.8% is the likely upside in that situation. Right. No change is just what the coupon is. That's just what you're going to get in interest. Right. And so something to know as a bond investor is the longer that you go out, the more volatility that you're accepting and the more sensitive that bond is going to be to changes in interest rates, both positive and negative.

DANO WEIR: Should I make a football analogy or should we just skip to the next slide?

DANO WEIR: Bonds and a football analogy all in one conversation we're going to lose there in any moment so so not that you should do this but if you were to be perhaps choosing who you think is going to win the super bowl this year a very safe bet for like the next 30 years to win a super bowl would be the pittsburgh steelers because if you go out long enough over a long enough time frame they've won six and they've been consistently very good however for the last 10 years, they've been...

DANO WEIR: Absolutely dreadful. They've been 500. They've had quarterback problems. There's been all kinds of issues. Extremely boring team at this point. But if you go out long enough, that would probably be a good choice. But a much easier pick would be the sexy new tech stock, which would be like the Chiefs, which they've won a ton recently.

DANO WEIR: They've got a lot of buzz around them, but at some point that ends, and at another point, the team that has been consistently good for a really long time is probably the safer. You would have maybe a better chance choosing them than someone who's new and hot. So I don't know. I don't know if that resonates or anybody, but that's kind of how my high school.

CHRIS SIPES CFP®: I followed you. I followed you. Yeah.

CHRIS SIPES CFP®: Some good news in the market. We got the PCE, the personal consumption expenditures, and that came in right in line with expectations. Now, this is important because it's considered a metric that the Fed follows closely. To, anticipate what's going to happen with inflation. And so, it looks as though the inflation numbers are, continuing to, to tame, true flation, same thing, you know?

CHRIS SIPES CFP®: So if you're somebody who's like, well, I don't believe anything the government puts out. If you look at the true flation numbers, kind of similar. So I think it's hotly debated as to whether the tariffs would be inflationary or... It's deflationary, you know, inflationary because the prices of everything go up.

CHRIS SIPES CFP®: Deflationary because people would actually spend less on those items if they're more expensive. So I think I fall into the deflationary camp. I believe Daren agrees with me on that one. But who knows, right? Strong opinions loosely held, right? Because you got to be ready to pivot to what the market is going to do at any minute.

CHRIS SIPES CFP®: Now, we saw a huge drop off in in in like the the the incoming goods last month. And you'd think, oh, gosh, wouldn't that like affect the economic numbers more? You would think so. Yes. But this little dandy came out this week, which was the personal income transfer payments outside of the off the charts.

CHRIS SIPES CFP®: Spending that we saw during the great financial crisis and COVID, this was a pretty high transfer payments this week. So it's like, well, what gives? A lot of people were saying, why the spike in the transfer payments? And Kathy Jones from Schwab answered with the correct answer. It was driven by one-time payments of Social Security benefits under the new Social Security Fairness Act.

CHRIS SIPES CFP®: And so that was some of the catch-ups that were due for folks that missed out on the pension adjustments, I believe. And so if you're someone that thought you don't qualify for Social Security for whatever reason, you might want to double-check that. A lot of people are finding that has changed with some of these recent changes in Social Security.

CHRIS SIPES CFP®: In terms of the market, in terms of the economy, this last month. There was a lot papered over by these transfer payments that came in last month, which you can see here. This is from the Fed showing the spike in those transfer payments was relatively large going back to 1985. This was a big transfer that happened in April.

DANO WEIR: And this was the windfall elimination provision?

CHRIS SIPES CFP®: I believe so, yes, as part of that Fairness Act. And this happened to be the largest year-over-year increase in the Social Security benefits since the inflation was contained in 1982. So it's a big change.

CHRIS SIPES CFP®: Now, speaking of diversification, one asset class that a lot of folks use for diversification because it's not correlated to stocks. Or to bonds is trend following. And it's kind of a, you know, it's an eccentric asset class. Not everybody knows about it. It's, it's difficult to understand how it works, et cetera.

DAREN BLONSKI CFP®: Come on, man. Like whose side are you on?

CHRIS SIPES CFP®: I think it's cool for sure, but not a lot of people are familiar with it. So trying to do some education here.

CHRIS SIPES CFP®: This is from Meb Faber, but by way of Katie Kaminsky. And she says the SG trend index, which is sort of like the S&P 500 index, but for trend following. So it's like, they're all having their individual returns, but if you kind of mesh them together as this average in the SG trend index is how it's measured. It's down 18.7% for the... One year period ended April 30th of 25. So a pretty bad year.

CHRIS SIPES CFP®: That's the worst 12-month return of the index's 25-year history. So that's the bad news. You can see it kind of falling off the chart there. But the good news is that you can see prior times when that has happened. Typically, the returns moving forward, kind of like any asset class, gosh, you get a washout. Tends to be a good a good forward return expectation in that situation.

CHRIS SIPES CFP®: So Katie shows that the times where it's done really, really well and the most recent being in 2022 during the rising interest rate environment when stocks and bonds were both down in 22 and trend had one of its best years. So following those awful years trend in the past. Not a guarantee or even indicative of future returns.

CHRIS SIPES CFP®: But in the past, the subsequent one-year performance of trend has been very good historically. So if you're kind of looking at those in your portfolio, and I know a lot of people are going, gosh, they've kind of taken the place of bonds, like, why do I own these things? Well, here's one reason why you might want to consider owning them in the future.

DANO WEIR: How does this work, Chris? What even is this? What are they following?

CHRIS SIPES CFP®: It depends on the fund, but they can follow trends in stocks, in bonds, in commodities, in interest rates. They all have different timeframes that they're looking for and ways that they look for those trends.

CHRIS SIPES CFP®: Some of them are short-term trends, medium-term trends, long-term trends. It really depends on the fund. Some are what they call long-only, where you're not shorting anything, betting on it going down, and some are long-short. So it's, it's, it's a, it's different for each fund, both in the asset classes that they trade and also how they trade them. So it's, It depends.

DANO WEIR: I just think looking at this, especially if you're retired, if you're retired and you're always wondering like, you know, oh, how do I get that number up? How do I get that return up? I mean, look at some of these 44, 25, 37. Who doesn't want to see that number at the end of the year? Look at the dark blue.

DANO WEIR: Are you are you cool? Are you chill with 20.8 negative? You chill being down 17 percent? You know, this this to me, Chris, just looks like, you know. Great measure of, can you look at this and tell me about your volatility? Tell me about how much you really are cool with risk. Cause that looks like, that looks like a stick.

CHRIS SIPES CFP®: Well, and, and if you took the label off of that and said, okay, it's not the SG trend index, but it's say the S&P 500, something that people were actually familiar with. They go, oh yeah, sure. I'm fine with that. But you put a label on of the, of trend SG trend and people are like, ah, I don't think so.

CHRIS SIPES CFP®: I don't think I'm good with that kind of risk. Right? Because we, we naturally, if we don't understand something, we don't understand how it works, et cetera. It feels more risky than something we're familiar with. And we feel like we understand. Yeah. So, that's a big piece of it.

CHRIS SIPES CFP®: So Daren, you sent this over, from Redfin. There are nearly 500,000 more sellers in the real estate market than buyers at the moment. Now, this looks like it is the kind of largest such dislocation in this direction, at least. I mean, look at that dislocation in 21, 22 during COVID.

CHRIS SIPES CFP®: Oh my goodness. So many more buyers than sellers, but now that's flipped. So you wonder what's happening in the real estate market. This seems like a big thing, right? And if you've got more sellers than buyers, that's going to put pressure on.

DAREN BLONSKI CFP®: Housing prices right you would expect i mean just i don't know this is just me surmising but the affordability of homes alone is gonna make buyers just say meh i don't know i'll stick where i'm at right versus the sellers yeah people are starting to pile up and i've noticed this i just like to look at Zillow and i'm traveling or in a different town i look at zillows and look the house prices.

DAREN BLONSKI CFP®: And whatnot. And just anecdotally, the number of price cuts on Zillow has been significantly more than I've seen in a very long time.

CHRIS SIPES CFP®: Yeah. Agree.

DAREN BLONSKI CFP®: Not the demand.

CHRIS SIPES CFP®: Yeah. The buyers have really stayed the same since the interest rates went up and you can see we've been basically like trending down a little bit, but pretty much sideways in the buyers since, since interest rates, went as high as they are. And, you know, we update client, values as part of their financial plan. And I would agree with you, the Zillow values on most people's homes are dropping.

CHRIS SIPES CFP®: And so it's, who knows if it's the beginning of a trend, but we all know that they're extremely expensive relative to where they've been historically. So it would be kind of a welcome reprieve for the buyers, at least in terms of you know, getting an opportunity to purchase a home.

DANO WEIR: And this is just, I mean, shot in the dark, but the people to see a spike in this much in people who are selling, I would wonder why they're selling. And I would wonder if it's, I mean, they're like liquidating their house because if they're selling, wouldn't they also be a buyer as well? Because they're probably going to move into something unless they're going to go become a renter.

DAREN BLONSKI CFP®: Not necessarily, right? Because you could be having people who just can't afford what they bought, right? And. We could also be seeing a wave of people who have bought in the last three years expecting rates to go down. So maybe they bought more than they could afford because the affordability went up when rates went up or the affordability went down when rates went up.

DAREN BLONSKI CFP®: And they're like, well, I think rates are going to come down. So I just hold on for a couple of years and maybe they're getting to the end line too. So that could be also driving enforcing sellers into the marketplace.

DANO WEIR: That's kind of what I was wondering. I was wondering if this is people who are just finally over their head and they're like, I got to get rid of this thing.

DANO WEIR: We've seen credit card debt all the way through the roof. All kinds of auto loan defaults are up. I wonder if just now, well, put the house On The Market. I got to liquidate that for other reasons in your financial life.

DAREN BLONSKI CFP®: I think we see evidence all over the place that generally the average consumer is stressed, right? The average consumer is struggling and they like to tell, hey, the price of eggs are down, but has inflation really come down? I don't think so, right? At least not in the basket of goods and services I buy on a regular basis.

DAREN BLONSKI CFP®: So I think the consumer is, in fact, more stressed and I think you see that and this is an indication of that.

CHRIS SIPES CFP®: Yeah. And, and so what's, what's the housing supply say about this? Well, we've covered this where the, the, the supply of new single family homes has just totally decoupled from the existing homes.

CHRIS SIPES CFP®: And that's, you know, because people with existing mortgages and they've owned the house forever. And, you know, people that have owned, owned their home free and clear for a long period of time, they don't have much of a reason to sell. And so we've seen this.

CHRIS SIPES CFP®: Disconnecting of the existing and new home sales or month supply. So we've got seven months of new single family homes, 7.3 and 4.4 of existing. Under four is considered a tight market. So it's a seller's market. Between four and six is a pretty balanced. So prices should stay pretty neutral in that scenario. And then over six is considered a kind of a loose or a buyer's market where the prices are starting to come down.

CHRIS SIPES CFP®: So on those new, new single family homes, you would expect to see those prices dropping a bit. I don't know how it works with the average here, given that, you know, the average is going to show you like what the overall supply of homes is. I wish I had that number, but I would assume it's kind of in that four to six months of balanced. You know, prices, stand the same to dropping a bit.

CHRIS SIPES CFP®: And this is just showing the previous four quarters, nationally what happened with home prices. This is from, MBA research. And, you can see by state, the changes in home prices in on average for the U S house prices have changed 4%.

CHRIS SIPES CFP®: Across the U. S. With a lot of that increase coming from outside of the hot states from COVID. Not much in Florida, not much in Texas. I remember Idaho was a hot place to go.

CHRIS SIPES CFP®: Now most of those price increases are in the Midwest and on the East Coast.

CHRIS SIPES CFP®: That's it for this week.

CHRIS SIPES CFP®: On my side of the slides, guys.

DAREN BLONSKI CFP®: All right. So, guys, what if I told you that, you know, I think, Dan, you kind of teased when we started off the show. But what if I told you that the bullish close in the market had everything to do with the low of COVID?

DANO WEIR: Would not believe you.

DAREN BLONSKI CFP®: You wouldn't. But sure enough, it does. So check it out. So this is the low of COVID right here, March 23rd, 2020. There we go. So you can see us right here, March 23rd, 2020. That was the low. And this is a trend line on the S&P 500. This is the SPX. So this trades a little more frequently than what SPY does. And because you can actually trade the S&P 500 around the world. So it has a theory of more consistent.

DAREN BLONSKI CFP®: Chart to it because it has less restrictive trading times. But SPX here, you can see this was the low. And you can see during the COVID era of all the money printing, why we're still sitting in our houses for this first chunk. And it went way up and then hit this all-time high January 3rd, 2022, right before all the Federal Reserve decided that they would now put all their investments and their trading behavior behind.

DAREN BLONSKI CFP®: Blind trust and no longer we're going to trade the market. And then that turned out to be all the all-time high. And then the market moved down in 2022. And this was the low of 2022. And that was in October 10th, 2022. You can see that that was this era.

DAREN BLONSKI CFP®: This is area, I believe this was right when they came out with the vaccine. There was all this hubbub about the vaccine right here. And then sure enough, oh, we got a magical vaccine. And then market took off. It came back in 2022 was the low. And then the market started climbing back up. And in March of this year, March, April, May, March, April, May, the May low for this year was May 7th.

DAREN BLONSKI CFP®: April, January, April, excuse me, April 14th was the low. And Interestingly enough, that low was the high before the 2022 market. Correction. And so we came in in April and traded down into that 2022, came back up and retraced this. And when we look at our Fib lines on how much the market retraced, you can see here, we're now above 75%.

DAREN BLONSKI CFP®: So bullish because we held that this week, but even more bullish because you can see this blue line right here. That blue dotted line represents the trend line going all the way back to the low from COVID. And you can see when we trade up above.

DAREN BLONSKI CFP®: At 2022, came in, we started correcting, hitting that and getting rejected off this trend line, going up, and then finally broke above it right here and have been up above it until recently where we went back below it and now we're back above it. So the fact that we're back above this trend line, that's pretty bullish on its face because that's an important anchor point, psychological for the market, goes all the way back.

DAREN BLONSKI CFP®: So from the fact that we maintained a 75% retracement, from the fact that we closed now back above the blue line, that's positive. We also had the double top in the formation. So you can see this. So now we're looking at the four-hour chart on the SPX. So every one of these bars represents four hours in the market.

DAREN BLONSKI CFP®: And you can see this double top formed, and it came right back in as the neckline is this blue trend line. And that same blue dotted line there is the same trend line all the way back from COVID, which is pretty amazing. And the market came in. And interestingly enough, it gapped above it. That was Monday, May 12th. It gapped above.

DAREN BLONSKI CFP®: It stayed above it, came back and lost it. And you can see three four-hour segments here just sat on that trend line, went below it, but quickly traded back above it. Came back in today, early on in the day, in this candlestick right here, tested it, and then traded up and bounced above it. So if you look at this on the hourly chart, you can see this even clearer.

DAREN BLONSKI CFP®: You can see earlier in the day it came in, found support, and went above it. Again, this blue line represents the trend line going all the way back to the COVID low, which is pretty amazing that the market's still queuing off that point. It tells you how important that point is psychologically for the market. And then we traded and we found support right there.

DAREN BLONSKI CFP®: Support just means that the buyer stepped in and then the market traded up and closed up the day in a pretty, I would say, bullish stance. A couple of good things here, right? We didn't lose this area today. We actually found support in it. Had we lost that area, then we would have traded down in and probably tried to close out this gap right here that was on the chart.

DAREN BLONSKI CFP®: I'll make that look a little bit cleaner here. So on the chart, there's a gap, that gap that happened on the 12th. The market likes to close gaps. It hasn't fully completed the gap close. So it won't be surprising to me if we do at some point try to close out this gap here. We almost had it closed right here, but not completely.

DAREN BLONSKI CFP®: I think that's interesting. So on its face, you can't look at that in any other way, but say that's bullish. Now, what's even more interesting, if we go back to a monthly chart, in this blue line, this is that same blue line I'm talking about that was really, really important in a short timeframe today.

DAREN BLONSKI CFP®: Based upon this, I think you would be very foolish to bet against this market right now. Because the way this chart is lining up, it's about to rip your face off. And the fact that we closed back above that blue line today looks pretty positive. Rip your face off is a good thing, right? Yeah.

DAREN BLONSKI CFP®: This is in terms of like the idea of like if you're frowning right now on this market, you're about to be left in the dust. That's what this market is saying to me. And the reason is because you see. On a monthly chart, you see this huge candlestick test here of this 2022 high. And then this follow-through candle that's at least so far very green.

DAREN BLONSKI CFP®: And the fact that the weekly, we're basically going to close the month up now above that blue trend line because we're at 530 right now. And that monthly candle is going to look pretty bullish, the fact that we traded up here and we closed. The only thing I don't like about it is we didn't close higher. Than the monthly candle from March.

DAREN BLONSKI CFP®: But the fact that we made it above and the market felt important to close above that blue line, I think that's pretty bullish on its face. I don't think you can argue it any other way.

DAREN BLONSKI CFP®: And I think it would be a mistake not to be bullish on the S&P 500 at this time.

DAREN BLONSKI CFP®: So take that for what it's worth, whether it fits with your politics or not. The reality is... The market looks like it wants to go higher. Now, what do we have to contend with? I was talking to an individual yesterday and we were talking about how right now is a very dangerous time in the market and here's why. So now let me argue the other side a little bit.

DAREN BLONSKI CFP®: So This was the all-time high in this area on a daily chart. And we traded up here and the all-time high was basically right around 6,000. We poked our head above it three times and then went back down and then found our low down here in the 2022 at 4,800. And now we're almost back. We don't have very far to go right now from where we're at today. We're basically, let's call it, we'll call it.

DAREN BLONSKI CFP®: At 3.86% away from the all-time high.

DAREN BLONSKI CFP®: So trying to jump into this market right now and bet that it's not really a great time because worst case scenario, we go up and we bounce back down and then you invested right at the top of this area. At this point, you might as well wait for the market to break out above 6,000, improve that, and then take a position if you're on the fence.

DAREN BLONSKI CFP®: Because the other thing that is still possible is we actually roll back over, right? Because so here's our Fibonacci and our retracement lines. And you can see we're right in this 75 range here. But it's still possible at this juncture that we just did a really strong retrace.

DAREN BLONSKI CFP®: Now we're going to get more terror fights or whatever, you know, we've blown my round. I don't know, whatever the latest du jour is. And then we continue downward. The other thing to look at is, and this is interesting too, so this is that long-term COVID line here. That's that trend line from COVID.

DAREN BLONSKI CFP®: And then you take this all-time high and trend line on the most recent rejections. And you can see we're getting this kind of ascending triangle, which means we're approaching some type of breakout. Buyers, sellers are getting closer. And so either it's going to drop down hard and it will actually close out that gap there that's still on the chart, or it's going to break out and try and take on the all-time high.

DAREN BLONSKI CFP®: So we're kind of in no man's land, but I think it's leaning bullish at this point. The fact that the monthly chart's going to close up where it's going to close up, I think it'd be foolish to be sitting at home betting against this market.

DAREN BLONSKI CFP®: All right. So that's the S&P 500. And I think generally a pretty decent close. Let's look at the gold charts. Gold's getting ready to make its next move. You can see this descending triangle in the gold chart right here where price is descending and the buyers and sellers are getting closer and closer. And then we'll break out at some point.

DAREN BLONSKI CFP®: Let's see the 10 year. Let's look at the 10-year. Rates went up this week. We're still sitting on this kind of support line of resistance or support on the 10-year bond, watching this for our bond people out there. Chris is like holding on by the edge of his seat, sweating bullets that the 10-year yield doesn't go up.

DAREN BLONSKI CFP®: But bonds, the 10-year yield was down today, and so therefore bonds are up. I'm hoping not to get my face ripped off by interest rates. Yeah, you're hoping not to get your face ripped off by interest rates, but you're hoping that you actually do get your face ripped off by the bonds. So, Chris, when bonds rip our faces off, we'll let you do your victory lap. We'll even get you a cake, okay?

DANO WEIR: I do a ton of work for the firm on like vision and marketing and like... Like things that are important to the company and values. I'm going to add ripping off faces as a new key value. We aim to get you a portfolio that's going to rip your face.

DAREN BLONSKI CFP®: Did I send you guys that? It was this linguistic guy, and he was doing like a graduation speech.

DANO WEIR: Yes.

DAREN BLONSKI CFP®: It was hilarious. On God.

DANO WEIR: On God, for real.

DAREN BLONSKI CFP®: Yeah. It was hilarious. There's all the slang terms that this generation uses. And this guy did a whole like graduation speech in it. It was hilarious because having teenagers and listening to their friends talk. And I'm like, well, that's actually what they say.

DANO WEIR: No cap.

DAREN BLONSKI CFP®: Need an interpreter. Yeah. Well, just for the record, it's highly unlikely that bonds are ever going to rip your face off, even if they're doing well. So don't hold your breath.

DAREN BLONSKI CFP®: Financial humor, right?

DAREN BLONSKI CFP®: This is the Q's, just taking a look at the Q's and technology. You can see we're just flirting with these all-time highs. We're right there. And you really want to just sit tight at this point and watch and see if the market can prove itself. The retracement is in. If you pulled out down here and then didn't get back in, at this point, you might as well just wait for it to break out.

DAREN BLONSKI CFP®: But this is why we always say you just ride it, right? Because these tend to get these, especially nowadays. You tend to get these huge retracements that happen very quickly. Just look at the mags, because the mags is such a huge portion of the market.

DAREN BLONSKI CFP®: Magnificent 7, for those who don't know, MAG 7s are super important from overall volume in the market. And this is looked at visually here, when you see our MAG 7s are such a big part of the market. They're so big. I mean, NVIDIA is bigger than the whole financial sector almost. So, if not bigger.

DAREN BLONSKI CFP®: Almost bigger but microsoft certainly is this is over here this is the entire utility sector and it's like half the size of NVIDIA and microsoft alone let alone the energy sector over here microsoft NVIDIA are twice the size of the energy sectors and that's just wacky right eventually this is going to get rebalanced but right until that happens these are super important if you want the market to keep going up.

DAREN BLONSKI CFP®: It's pretty critical. So we're watching MAGs, which is an index that tracks that ETF. And you can see we broke above that downtrend and we actually held it. So after today, I'm going to say the MAGs are bullish. How do you like them, Apples? So you can see the breakout, the retest, and the resumption upwards. So Chris, I hate to say it, buddy, but I think we're going to see some MAG.

DAREN BLONSKI CFP®: MAG movement not maga movement MAG movement and that will draw the whole market higher which then goes into my thesis the fact that oh look this looks positive well that makes sense because mags is positive it doesn't mean we might not still go to a recession right because we all know that the market is not the economy and the economy is not the market what about Bitcoin Oh, I knew you would ask, Dan. I knew you would ask.

DANO WEIR: Well, I teased it.

DAREN BLONSKI CFP®: You did tease it. And check this out, right? So this is the all-time highs. And I'm a little on the fence.

DANO WEIR: We lost your screen. We lost your screen.

DAREN BLONSKI CFP®: Oh, here we go. All right. So here's the Bitcoin chart. And you can see this is, it was an all-time double, or it was basically a double top type formation there. And it went down, came back in. Moved up very quickly. And you can see it's hard to read for sure because we still have three hours before the Bitcoin chart will close for the day or the candlestick.

DAREN BLONSKI CFP®: I don't particularly love it at the moment. The fact that it's holding support right here, I like. You can see right this support area and you can see where it's just sitting. The fact that it broke out, got rejected, broke out, got rejected and came back under.

DAREN BLONSKI CFP®: I don't think that looks particularly great for the Bitcoin chart in the short term. There could be more downside there. I would see a test of $100,000. It did kind of test it, came in, tested, tested, tested, tested, went up, came back. If it doesn't hold above here in three hours, then we could very likely see a $100,000 test.

DAREN BLONSKI CFP®: But the longer it holds at $100,000... More likely it's just going to roll higher because your buyers are just hanging out here buying, buying, buying, buying. And like I always say, there's only 21 million Bitcoin. So finite supply, eventually demand takes it in. So overall, okay, but it's a little on the fence with that chart.

DAREN BLONSKI CFP®: All right. Well, I think we're just going to leave it there. We did a deep dive into the S&P 500 today. And I think generally it's bullish and generally it's a rip your face off. Type of thing going on and watch out. Don't bet against the market up and to the right.

DANO WEIR: Look for a future episode to be titled Rip Your Face Off. But this week it was all about tacos. And what a good day to do it too. I think I may get that for dinner. We are Sonoma Wealth Advisors and this is On The Market. So thank you so much for hanging out with Darren Blonsky, CFP, Chris Seip, CFP, myself, Dano. If you're a client. If you're a prospective client, you can learn more about us at SonomaWealth. Com.

DANO WEIR: You can take our free wealth analysis. Wherever you're checking out this show, make sure to like and subscribe. We appreciate that. It does help us. It helps the show. And, of course, we're on YouTube. We're on Apple, and we're on Spotify. We make it easy for you to find us. So we will leave it there for this week, and we will see you next week. Thanks so much.

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