The post-election bump was driven by a sense of certainty and sector-specific rallies, as investors anticipated policies favorable to certain industries under the new administration.
The Russell 2000 breaking its 2021 highs indicates a strengthening in small-cap stocks, which have historically shown strong performance after making new highs, often rising 10-23% in subsequent months.
Small-cap and mid-cap stocks are participating in the broader market rally, following the lead of mega-cap stocks. The Russell 2000 and S&P Mid-Cap 400 have both reached new highs, signaling a shift in market leadership.
Gold is struggling due to rumors of peace in the Middle East and expectations of a resolution to the Ukraine-Russia conflict, which reduces its appeal as a safe-haven asset. Additionally, gold has not provided consistent signals for profitable trades.
Jay Woods uses RSI, MACD, and Bollinger Bands for technical analysis. RSI helps identify overbought and oversold conditions, while MACD and Bollinger Bands provide additional confirmation for his trading decisions.
Jay Woods uses indicators like the VIX to gauge market sentiment, which helps him understand fear or euphoria in the market. He also looks at sector rotation and individual stock behavior to assess overall market sentiment.
2017 was marked by low volatility and steady gains, with the S&P 500 rising every month. Despite political headlines and uncertainty, the market remained in a secular bull market, driven by sector rotation rather than political events.
Financials, utilities, and communications have been leading the market in 2024. Financials are up 37.34% year-to-date, utilities are benefiting from the AI and nuclear energy narrative, and communications are seeing strong performance due to sector rotation.
Regional banks, or 'stadium stocks,' are gaining attention due to their sponsorship of sports stadiums and strong technical setups. The KRE index has broken out above levels seen during the 2023 regional banking crisis, signaling a potential recovery.
The AI boom is different from the internet bubble in that valuations are much more reasonable. For example, Nvidia's PE ratio is under 40, compared to the much higher valuations seen during the dot-com era. The IPO market is also relatively subdued, indicating less frothiness.
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Hello and welcome to another episode of the Investing with IBD podcast. It's our special holiday edition. Since we do have Thanksgiving holiday coming on Thursday, we decided to do a little bit of an early session here. So we're coming to you live on Monday, November 25th, 2024. And to help me walk through things, we're bringing Che Woods back to the show.
He's been doing a last minute fill in. Really appreciate you coming on the show, Jay. Figured who better to kind of walk us through some of this sentiment than someone who was on the floor of the exchange, the New York Stock Exchange, for decades. He is now the chief global strategist at Freedom Capital Markets. Welcome back to the show, Jay. It's good to be back and I look forward to talking with you over the next hour.
Yeah, I look forward to that as well. We got a lot to kind of discuss and I'm going to start with just pulling up some of the market stuff that we had going on today. Here's the NASDAQ composite. I mean, we really have kind of done this already.
really strong move since the election. We got this real big post-election bump, kind of pulled back a little bit, but we're getting support at that 21 exponential day moving average. And things are looking pretty strong overall.
No, I love the way we're setting things up. We had a little bit of an overextension, a little bit of euphoria after the election, certainty, and then certain sectors, you know, rallying because they thought they favored the soon-to-be president. And then we had a bit of a hangover, as I called it. And now what we've done is we traced a little bit and we held on to most of those gains. So to me,
positive price action as we kick off what are the best six months of the year seasonally and, uh, finish what has been a phenomenal year. I mean, this is the best, uh, election year we've ever had. And, uh, one of the best years going back to 1997. So things have been going well. And when you get a little pullback, yeah, you get nervous, but as you know, we get three, 5% corrections a year. We only had two of them this year. Uh,
and a little bit of a pullback and we're holding it. I think we're poised to finish this year strong with five more weeks to go. And, I mean, we'd be remiss to not mention the strength in the small cap indexes. I mean, the Russell 2000 indexes
you know, for, for quite a while seemed like it was just in the doldrums, you know, couldn't get above or couldn't stay above 2000. It just kind of kept on going around that area. And then it was like 2200 was the level that we were watching for a while. And finally, it really seems like, okay, well, we're finally kind of taking out the 2021 highs that we had and things are looking stronger on the small caps. And I'm also just going to throw up the mid caps as well. The, the,
S&P 500, S&P mid cap 400. That's just been stretched out to new highs recently. So is this kind of a change from the old guard, the mega caps that were really kind of pushing the markets higher for so long? Is it time for the small caps and mid caps to shine?
Well, you know, they're never going to lead, and you don't want them to lead. But they're going to participate. They're going to follow along. They're going to join the party. And the analogy I always use about these small caps, and I've been wrong, they finally made new highs. I said they would make new highs. So maybe I can spit it and say I was right. But when they come to the party, they rage. They're up 10% just this November.
Think back to last year when they started making their move back from the dead. They were up 23% from October 23rd to December 23rd. They jumped almost 15% the first half of Q3 when we hit July, the end of June to August. And then they fizzled. So every time they had this big rally, you get your fork. Okay, we did get to new highs. We should pause here. Hopefully we break out. It's a hell of a base, but...
Do I look for them to be the leadership? No. What I'm seeing right now is the tide is lifting most boats, if not all boats, and we'll talk a little bit more about that theme later on. But yeah, the Russell, welcome back. You're beating the Dow year to date, so it's been a good year, but if you look at it day by day like you and I do, it's been a frustrating ride. We've seen nothing but zigs and zags, but yes, the trend, if you go from the beginning of the year to now, we're
We're up, I don't know, what, 15%, 17%, and most of that was just over the last few days. So it's so frustrating to watch this. And the two bigger sectors that make up that index I want to talk about later, which is the biotechs. They've been struggling. The regional banks, they've been struggling. They're starting to do something I like. So I think this trade has legs, but I've been...
I've been burned so many times. You just buy the small caps, have small exposure, put it away, and then look later in the year. Because if you're trying to trade it like I did for a little while, it's very frustrating. And you know what? Since we're kind of talking about some of these areas that a lot of people look at, I mean, you know, gold is...
I mean, that had a rough day today. Back below the 50-day moving average line, if you look at the SPDR gold shares GLD, is this something that you pay that much attention to? I always mess the gold trade up personally. I've had a few successful ones in there, but it's tough for me.
You know, you follow it technically, and that's basically how, if you're going to trade it, that's how you have to make money. And it's never going to do anything dramatic. There are so many great equity plays that you can go into. But gold used to be that hedge against inflation or the safety trade. Well, guess what? There was rumors that there's going to be peace in the Middle East.
I know Trump is going to solve Ukraine-Russia in one day. At least that's what he said, right? So you're going to see gold come in a little bit. But no, gold has not given me consistent signals over time where it's something I put in my top 10 to follow list when looking at market indicators. That's for sure. So...
In general, I mean, I should have mentioned at the outset, you do have some three special letters behind your name, CMT. So you do have a lot of technical experience. You had to take that test, and that's no joke. So what indicators do you lean on? I mean, certainly one of the things I usually ask CMTs when they're on the show is,
You learned so many different indicators and you have to be careful of not using all of them because otherwise you'll never do anything because you'll get conflicting signals. What do you kind of lean on when you're looking at the markets and doing your technical analysis? Yeah, I keep it simple, Justin. I really do. I mean, I look at it, you know, basic, you know,
Thank you for watching.
But RSI has been good to me. But when you study for that exam, yes, I studied Fibonacci levels and Fibonacci retracement lines. I'll use those to justify some of my calls over time. But I like to look at things on the short-term basis, then back it out over the long-term basis. So when we go over a few things later, I will do just that. Let's look on the daily time frame and then the weekly time frame. When I was trading as a market maker on the floor for the –
the heart of my career from 92 to 2020, I was looking minute by minute. Then I got in anchor VWAP trades. Uh, so it depends on your timeframe. But for me, uh,
My process, RSI gives me that overbought, oversold. When I see stocks that are overbought cross below 70, it looks like it's a good opportunity to lighten up, to get out. And then the same thing. When they're oversold, then they cross up over 30. Overbought cross under 70. Those are signals to me. Bollinger Bands have worked well as well, but I don't want to get too complex overbought.
I know a lot of people that love Ichimoku Clouds. Katie Stockton, a good friend, makes a great living on that. And it works, but to me, RSI, MACD, and just keep it as simple as possible, and then use other indicators to confirm what my thesis is, that helps. But it's not my be-all and end-all, that's for sure. Well, and...
It's funny that you say keep it simple, because for those that don't know, in terms of CMT royalty, I guess you belong to that royal family, being the nephew of Ralph Acampora. And there's so much about Ralph's work that was about keeping it simple. The eight-year-old view, I don't know if that's what he called it, where if you showed it to an eight-year-old, what would they say? Well, it's funny you say that, because that's when I started as a
You were that eight-year-old. I was that eight-year-old doing point-and-figure charts and little weekly bar charts on two stocks that he gifted me, IBM and General Motors. So, yeah, I've learned a lot from Ralph. And, yeah.
You know, it makes your workload a lot easier too, by keeping it simple and the process has worked. But when I was an aggressive day trader, no, I would get a little more complex, but I would try to keep those things simple. But my support resistance would be within nickels and dimes, not within, you know, dollars and you know, $5 ranges. And then Brian Shannon and I have become very good friends. I know he's been a guest on your show and he,
As someone that saw the changes on the floor, when people come into your crowd, they want to know, hey, how's IBM looking? It goes down to you were a buyer yesterday. You may want to buy some here. Well, what's the volume? Well, it's $20,000. Well, here's $2,000. I just want to go along and be 10% of the volume. That was volume-weighted average price, and people just would trade to the average.
So those day traders in your audience, and I know you have some very successful ones, anchor VWAP levels to me are a must. You have to have that arrow in your quiver if you're going to be trading. Otherwise, you're lost because the way the algos work, moving averages and VWAP averages are critical to everyone that trades.
Yeah. And, you know, let's kind of shift to that a little bit because, again, you have all this experience being on the floor of the exchange. And when you were kind of gauging sentiment, I mean,
I mean, there was almost a visceral sentiment gauge in terms of you're looking around, you're getting the buzz of the crowd, you're seeing the fear or greed in people's faces. So maybe explain a little bit about how you got that kind of sense of, I mean, you were there in the 90s. You saw that froth.
What did that look like to you, and how are you shifting your sentiment indicators now that you're no longer on the exchange? And, I mean, even the exchange itself is very different from when you started. Yeah, you can't get a sense of the computers still hum the same way in bull markets and bear markets. You don't get that, like, vibe or that…
Do they heat up a little bit? They get a little faster in those downtrends. I know during COVID it seemed like everything was on fire, but I think it's because I had COVID. But yes, you don't know exactly what the sentiment is from
physical point of view. I mean, you could walk onto that trading floor and you could feel the euphoria. You could feel, I mean, one of the greatest memories I have was the frustration of the euphoric times during dot com and people just explaining to me this is not normal. And then I got to do that during 2021 with my own son who thought you could just buy any meme stock and I go to my son Kevin, this is not normal. This is a little irrational. But
trying to find that top is tough. And there's a lot of money to be made if you ride these coattails as long as you get out in time. So the 90s were like nothing I've ever experienced. I would go back there in a heartbeat. The music was better. Everything was better in the 90s. But the sentiment gauge...
has changed. So you have to look at different indicators, and you look at the VIX, and even the VIX gets a little out of whack. You know, when we saw it last time I was on your show, it was after the Japan Yen carry trade. Remember that, the fear that that caused? You know, greater than 9-11. The VIX ticked to 60. There you go. That was ridiculous. But sometimes things get a little carried away, and when people...
panic it's as a market maker i love it i you want to be the other side of that trade you're not going to catch the low but you know we're getting towards an end and then on the other side of that euphoric if you start looking at your 401k a little more often and i took a peek after election week you know wait a second okay let's get a little too frothy uh let's pump the brakes and
Maybe we take a little off the table. We reallocate. And I see some reallocations happening in certain sectors right now. And I can't wait till the next segment when we start talking about that.
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Well, we're kind of in there right now, full bore. And I'm just going to shift this to 2017 because one of the things that you were noting, and again, of course, we've had these times on the VIX where we had some pretty strong numbers in terms of
you know, kind of panic situations. The, you know, back in 2008 with the great financial crisis, COVID certainly brought that. But in 2017, and again, if we kind of, you know, think of, okay, we got a Trump administration. Again, we have something to kind of look at the first time, the first go around. And 2017 was kind of a marked time
you know, marked low volatility, as you kind of mentioned before. And if we take a look at how the S&P 500 looked, and again, you said this, you know, kind of in the opening, it was
I mean, it looked easy. You know, it was just you basically didn't have much of a correction throughout 2017. It was just kind of up for the most part, sideways at worst. No, I'll throw some stats your way. It was up every month of the year. So it was slow and steady, 19 percent, just under 20 percent for the year. And this was going into Trump's first administration where there were
out of control headlines. For just January alone, the inauguration, Sean Spicer yelling, that was the greatest crowd, period. And you're like, what?
I have eyes. I saw Obama's crowd. I saw yours. And, like, everyone's going, this guy's nuts. And then some of the policies, some of the things he'd say, some of the things he would tweet were out of control. But the market didn't care about any of that. It just slowly went up. And we were in a secular bull market when he came to office. Guess what? We're in a secular bull market now. In 2017, up 12 straight months. Volatility, eh-eh.
No, we did not have it. The 50-day moving average was the guide. We closed below it 17 times. Just 17 closes below the 50-day moving average in the 100-day?
We tested it once and it held that one day and rallied back. We didn't even sniff the 200 day. So you want to talk about slow, boring markets. You never short a dull market. And if anyone was shorting 2017 thinking Trump's going to cause some crazy volatility, they were wrong. Yeah, they got it right in the beginning of 18 when the tariffs started taking control. Uh,
But for the most part, trying to predict what the market's going to do based on Donald Trump tweets and Donald Trump crazy quotes, you're going to lose money that way. You want to follow your trends. You want to follow the stocks that lead, the sectors that lead, and you'll be okay. So I use this word as the word of the day. The first appearance I had in January on a network, and I said, the word of the day is earmuffs because this is an election year.
And you're going to hear some crazy stuff. I believe we did. And guess what? The market is crushing it right now. And, you know, these headlines are nuts. Just today, with the Treasury Secretary being named, I got questioned about, well, what about the other candidates being... Yeah, it's...
it's, it's, it's Looney Tunes. Who knows what game show contestants going to be running? What's, you know, department in Washington. It doesn't matter. The market is still chugging along. The setups to me are looking good that we're going to have a solid first quarter and, uh, you know, we'll take it a quarter at a time. I think the next year will be good. I don't anticipate a year like we just saw though. No, for not for sure. Yeah. Well, and you know,
Again, if we look back to 2017, I think it's so important. A lot of people have been saying, look, the best thing you can do is when you're doing investing, leave your politics out of it. Just look at the market. Look at what the reactions are. That's where it's at. But
as steady as the S&P 500 was, there was some sector rotation under the surface. I mean, you know, even if we go back to the Russell 2000, you know, the small caps really kind of started in this super strong way, you know, right after the election, and then kind of didn't do anything for, you know, quite a while, and then kind of ended the year really strong. I
You had a lot of different areas that were taking their turn leading in 2017. And so it wasn't necessarily as easy as that S&P 500 chart made it look, unless you just put your head in the sand and bought at the beginning and didn't do anything and didn't look. Yeah.
No, I think you nailed it. Rotation, rotation, rotation. That was the theme of this year. Remember 2023 when we had that nice year? That was seven stocks. This time, no. Those seven stocks, some of them participated. Tesla is now joining the party. But the rotation, and this is a Ralph Akinpour line, rotation is the lifeline of a bull market, the lifeblood of a bull market. And money is not leaving this market. It's staying within equities, but it's rotating sector to sector. Do you know what the leading sector was just last week?
For only the second time all year, it was materials. Materials joined the party. Welcome. Before that, it was energy two times in the last six weeks. Energy did nothing. It was a Trump trade. But we had utilities leading. And then this is what I really like. Financials, by the way, I have this right in front of me, up 37.34% year-to-date. Best sector out there. Technology, 1, 2, 3, 4, 5, 6th place, up 22%.
I love it. I love that technology is not leading right now because I think technology is where you want to be over the long term, but we're seeing rotation. Utilities, number three, they were number one for a while, and they're number one in my hearts right now. We'll talk about them, too. But financials, utilities, communications leading, health care.
care of getting hurt. Thank you, RFK, for putting a scare into people there. Talk about, you know, Trump appointments. But we're seeing rotation. And overall, the worst performing sector is up almost 8%. And we're seeing every other sector take that leadership role at one point in time. This is healthy. This is unbelievable action in the market. And there are a few other sectors that are just starting to rotate into. And I can't wait to see where they take us.
Mm-hmm. So, you know, one more thing just to kind of wrap up this segment, you know, because you did mention the 90s and certainly one of the things that a lot of people are looking at is the AI. And there's been kind of
the AI, artificial intelligence trades, you know, the stocks that are really heavy into it. There's been kind of the infrastructure trades, as you kind of mentioned with some of the utilities. Look, if you're going to have AI and you're going to use these chips that, you know, heat up so much, you're going to need more cooling, more energy, all of those things. So, you know,
how does this kind of compare to that internet, you know, bubble that you live through on the floor versus, you know, versus what you're seeing now. And again, back then, a lot of people said, oh, this is looking frothy. This is looking, you know, the irrational exuberance speech. When did that come out? 1997. Yeah. That was another like two years. You got two more years out of it after the rational exuberance. I,
I don't see it like that. Yes, AI is a big story, but the valuations are just nothing like they were in 99. Uh, so you look at a stock, the poster child Nvidia, uh, you know, what's that trading at PE wise under 40. Well, these stocks were trading twice that Amazon was out of control. Amazon's calmed down a little bit, still frothy ish, but it's Amazon. It's, uh, it's not going anywhere anytime soon. Uh,
I think we had that exuberance in 2021. The SPAC boom going, you know, all these companies. The IPO market, to me, is the tell. And the IPO market is still relatively dead. When you look at statistics, yes, we've gone up slowly the last three years. But there's no euphoria. There's no we got to run out and buy this stock. Yes, Reddit did very well. Asana is doing all right. Rubric, Semi, Cyberplay doing okay.
But we're not seeing this rush to the market right now. And we've been trading at all-time highs every day this year pretty much.
So we're not in that euphoric phase, which to me is a great thing as a secular bull. And then, you know, to use a great Ryan Dietrich stat, you know, this is still a young bull market. The average bull market lasts five years, five months. We're two years, three months into it. We're up, what, 72 percent? The average bull run over that period of time is about 190 percent. So if this bull was to be average,
We're going to be hitting S&P 10,000 by June of 2027. That isn't a bad thing. We're going to be hitting Dow 50,000 because we love round numbers. We like hats. We get hats for round numbers. Dow 50,000 in quarter one of this year. You know, if you say that, you sound, oh, my God, analyst says Dow 50,000. It's just math. It's a little less than 10% from where we are.
I don't think that's a crazy call given the momentum we have, the sentiment that is out there, and the seasonality factors at play. Things are set up for a good run over the next three months, four months, and then we'll revisit it.
Are you using target prices that much for yourself? I mean, there's marked moves. There's different things that you can kind of use to do the math for you, if you will. But do you use any of that? Or is it kind of just recognizing the trajectory of your stocks? Or what do you kind of use to kind of get a sense? Well, I do. There are three or four things that people use. I mean, if you want to go back to old point and figure and do your counts specifically,
Those were actually some of the most accurate targeting ways when you're looking at bases and big breakouts. For me, I look at nice rounded bases. I look at ascending triangles. And then you can have basic math going from the top of the base to the bottom of the base. And then usually that's a measured move up. And I'll give you one or two of those later.
To me, those have been hitting on all cylinders. A lot of people like to use Fibonacci extensions on their targeting.
I'll look at them, but I won't base it on that. It's a lot easier to find levels of support because you have that roadmap already written. When you're breaking out, making new highs, it's more of a challenge to put a number behind those things. So you look at terms and percentage. You put them in historical precedent, and it gives you a target. What I notice is most analysts, including myself personally,
We'll go lower on our targets than higher unless you want to be the guy they all talk about. I don't like to be the guy that cries fire when I get bearish, and I have been bearish, but not over an extended period of time over the last few years as I've taken on this role. 2022 was interesting. But...
When you get bullish, yeah, I can make a case for S&P 7000 right now. That's, what, a 15% gain? On average, we go up 8%, but we never have an average gain. So 15% would be a great year. I could see that happening, but I haven't gone on record with any specific number. Then you get trapped into these numbers and then...
And guys like you, Justin, will be calling me out. Well, you said 7,000. But you said, no, I wouldn't dream of it. I don't want anyone calling me out, so I don't do it to anyone else either. I hear you.
Thank you.
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Well, you know what? You've kind of teased a little bit. Hey, we'll get to this later. We'll get to this later. Let's make later now. So you've talked a lot about some of the individual areas that you like. And I want to start with what you're calling the stadium stocks because that's a term I haven't heard before. I love it.
So what are stadium stocks? Stadium stocks, well, where do my Phillies play? So this is financial. Where do my Eagles play? Lincoln Financial Field. Pirates, PNC Bank, Ravens, M&T Bank. Ravens Stadium right now, my favorite stadium if you look at technically. You know, CMA, Comerica Stadium, Tigers. I've noticed that all of these stadiums sponsored by regional banks, look at the charts. The Toledo Mudhens, 530.
third. That stock looks phenomenal. Why? It's not because these teams are doing well in the stadiums or, you know, hitting attendance records. They just happen to sponsor arenas and these stadium stocks, as I call them, are all breaking out roundabout bottoms. Where have we seen it? These are the patterns I like. These are where I can give you some targets. Um,
Let's look at the KRE. We can go to the BKX if you want to go to the leadership in the financials. But the KRE, what we've seen over an extended period of time, go back three years on a weekly basis, is a nice rounded bottom. And we just broke out above levels that we saw during the regional banking crisis in March of 2023. And now we have a target upside to all-time highs. These are the patterns I like.
When you look at stocks that have something to reverse, yeah, I wish I called the bottom. I do. But what I see is constructive areas. Now, let's talk about the fundamentals. Why would you like regional banks? Oh, let's see. We have a president in place that likes mergers and acquisitions, doesn't like red tape.
We have an IPO market that has not come back, that could come back. We haven't had a regional banking deal in years outside of the three that happened because they were failing during the regional banking crisis. We could see some mergers there because why?
because Washington may allow it to happen. What they need, the balance sheet, those restrictions may get lowered, so they may be free to what? Buy back stock. So, to me, the fundamental story is there for the regionals, given the administration, given the people in power, and then technically, my God, the
The roundabout, the bases, and soon-to-be breakouts put up M&T Bank. That's Ravens Stadium, even though they're based in Buffalo. Buffalo Stadium is – I don't even know what that one is. I don't even think it's a regional bank. What is the symbol on M&T? I just blanked a second. MTB. MTB. MTB. Thank you. MTB. Yeah, I know. There's no and as a symbol or it should be M&T. That would be nice.
I almost put MDV and I'm like, no, that's the database. What was that? An ampersand, the hand symbol. Make that a symbol to give me a dollar sign. Give me a Bo Jesus stock symbols out would be pretty cool. Uh, we can change block to an actual block instead of SQ, which still is square to me. Maybe, maybe you can get some of that done, right? You know, if it's Dan Gallagher who gets this role, I got it in there. We went to high school together, so I'll see what I can do. Uh,
But M&T Bank, let's go back on a weekly basis and look at what this stock has done. It's just breaking out to new highs, and it's got a phenomenal tailwind to it. So to me, this is best in class, and I'd like to be best in class, but I also look at opportunities. PNC about to, on a weekly basis...
get back to its old highs. The KRE getting back to its old highs. The question is, will it consolidate? Will it fail? Or will we get that saucer bottom with the little cup handle and the breakout? Those are the best breakouts that I like. This setup, to me, gives you a nice risk-reward favorable setup over a longer period of time. So these stocks look great. Comerica, CMA, the symbol there.
Look at what this stock has done. On a daily chart, it's phenomenal. What an uptrend. But on a weekly chart, it's just getting back to those March 2023 levels and breaking out. So if it gets back to its old highs, which we just saw happen today in the Russell, which we're starting to see in a lot of these other smaller cap stocks,
You've got a nice gain there. If it continues, wow. Fifth third, FITB, another one. Yes, they're the Toledo Mudheads. They need to up their game and go pro when it comes to stadiums. But another chart that is just reversing and breaking. These are the setups I like. These are the risk-reward plays that could really...
go favorably and when the financials move, I think I may have used this stat last time we talked because I was touting the financials going back to March. The XLF, it's been around 25 years. It's been down 10 years. It's been up 15 years. So that's not a great run rate. But when it's up, it tends to trend three years at a time and it
average gain in the XLF is 21%. That number is going up as it's up 37%. But when I started talking about it, it was up 10%. And I said, we're going to have at least an average year. So we got that other 10% and we continue to go higher. Uh,
I love the big banks. They continue to lead. Goldman Sachs, J.P. Morgan, wow. Citigroup, wow, that stock is just trash. But even that is picking its head up and looks okay. But to me, the leadership remains the big banks, but the regionals are starting to catch up. The tide is lifting those boats, and there's money to be made. And when we talk about this election cycle,
Focus on areas where you can make money. I don't care about your politics. If you can make money doing this, all right, donate to your next candidate if that's what you want to do. But right now we're seeing good opportunities, and the stadium stocks to me are one of those areas. Well, another area that does sometimes get on the stadiums – I'm just going to throw up KIE here, insurance –
Yeah. A lot of these insurance stocks. And I mean, again, you usually think of insurance as being kind of slow and boring, but you know, we're going to get to utilities in a bit, but I mean, gosh, insurance for slow and boring. It's been one of those things that's been nice, nicely outperforming. Yeah. And if you insure three kids like I do, oh my God, the insurance bills have gone through the roof. I don't root for the insurance industry to do well, but yes, they've had a hell of a run. Yeah.
Um, the uptrend is strong. The momentum continues to be there, but personally, I don't root for this industry. I just, I just don't. Um, and you throw in a few natural disasters. I know we got hit with two hurricanes, three actually. Um, that one in North Carolina, Irene was pretty bad. Um, that will be bowed well over time for, for these insurance stocks. But, um,
Yeah, and then if you look at the king of insurance stocks, you don't think Berkshire Hathaway, but Uncle Warren owns Geico. He owns insurance plays. Progressive, I think, is part of him. Progressive also, Progressive Field, home of the Cleveland Indians. But this is a sector that has done well. I don't know if I would go chasing it, but if you're in it right until the trend changes, it's definitely a good place to be.
Yeah. And Berkshire is one of the largest components of XLF that you mentioned earlier. I can't remember what the weighting is, but it's over 10% in that XLF. So speaking of kind of slow and pokey, let's take a look at the utilities. You did mention the utilities, and I think you said it. This is not your grandfather's utility, right?
These are not your grandparents' utilities. I mean, maybe American Water falls into your grandparents' utilities. Great dividend. It's a water company. I don't think they found a way to harness energy for some of these, you know, to Bitcoin mine and to power data centers. But what has? Companies with exposure to nuclear. That has been the story, and I think that will be the next big story. Yeah.
Aaron Yodfeld, he's the CEO of Generac. I was the market maker for a stock. I have much respect for him. He was on a different financial show, and he was talking about the demand that the grid is going to face over the next five years. And ChatGPT, I don't know if you use it, Justin. I started using it pretty aggressively recently. It's phenomenal. Justin, have you used it? You know who uses it the most in our household is my son. Yeah.
He's 10 years old and he will have chat GPT create stories about he loves WWE. He'll have chat GPT create stories for him about wrestlers doing different things. And he will have chat GPT adjust the story. Oh, make this wrestler the heel in this story. And he'll, you know, on the fly have and he reads that. That's where he's doing most of his reading right now is chat GPT stories that he's creating.
Yeah, it's an amazing system, but what does it do? It takes a strain on the grid. So according to the CEO of Generac, Aaron Outfeld, 17 times more energy goes into one chat GPT search than a regular Google search. So when he is making these stories about the WWE, which sounds pretty cool to me, um,
The stress on the grid is tremendous, and this is spreading globally, but domestically it's putting a strain on the grid. So you want to look at utilities. And when I look at the utilities, I look at the XLU. If you look at the XLU on a weekly time frame going back 40 years, you're going to see a pattern that is near and dear to my heart. We talked about these saucer-rounded bottoms with a nice breakout.
Then what did it do after it broke out? It came back and retested. Old resistance became support and we took a leg up. So to me and to your audience, these are the setups from a risk-reward point of view that I love. Now, you think utilities and you're like,
Really? But no, utilities are an AI play. They're a nuclear play. Then you talk about the fundamental story. Who has nuclear exposure? Well, we've got nuclear exposure in a lot of different sectors. Visteon, which is VST. Is it Visteon? Vistra. Vistra Energy. I apologize. Yeah.
Best performing stock in the S&P 500 this year. How about that? Who did Microsoft just do that deal with? Constellation Energy. What did Constellation Energy do? Went through the roof, broke out. Wow. And what was the playing Constellation? Nuclear. Oklo, which is not a utility stock, still a little more speculative than others. OKLO. But
What are they doing? They're building generators in the middle of nowhere. I think this one's in Idaho, if I'm not mistaken. No offense to our Idaho friends, but you live in the middle of nowhere. But this is the power that will...
You know, power the grid. And this is where investments are going. And there are already established utility companies that have nuclear constellation. They own Three Mile Island. Remember Three Mile Island? I do. I lived 50 miles from there and I thought the world was going to come to an end. We were doing drills under the desk. Like, what the hell is that going to do if we have a nuclear explosion? But everyone was doing that. Not just those by. I was in California and we were doing that.
Yeah, you're going to fry anyway under that desk. Come on, Red Dawn came out, right? Yeah, Red Dawn. Oh, what a great first PG-13 movie ever. There's a fun fact for you. I don't know if you knew that. I did. I remember that. I'm like, oh, I got to go. I'm 13. This is great. We'll raise it.
My brother and sister can't go. But I digress. Let's go back to utilities and let's go to nuclear. What are some other opportunities there? NextEra Energy, NEE, the old Florida Power and Light, they have access to six nuclear power plants.
That stock, I personally own it. It has not made the full breakout. It's been a little more volatile than I'd like, but I think it's poised to go higher. Dominion Resources, one of my favorites. Why? Because of the location where they power. They power Washington, D.C. You're talking about cyber stocks that they have to power. But Dominion, letter D. Hey, quick, how many one-letter stock symbols are there, Justin?
Well, there can't be more than 26. All right. Give it in full for that. The old trick on the floor was, quick, how many one-letter stock symbols are there? 50, 60? Then the young clerk will be like, 50, 60? They wouldn't get it. I posed it wrong to you, but there are 22, just so you know. Okay.
And D being one of them, Dominion Energy. I look at this stock technically, I look at it fundamentally, and it's got room to run. On a daily basis, it looks great. Look at it on a weekly basis. It just broke out and has a long way to go to get to those November 2020.
one highs, I believe they are. Doing this off the top of my head. Look at that. It just broke out of a nice, what do we see? A little rounded bottom. Got room to go. So Dominion, just to get back to all-time highs, which I believe it will over time, time being six to nine months. If you got the patience, you got it. The storyline is there. So I like Dominion in that space. And then
um, there's one other I'm blanking on. Do you have my notes in front of you? Uh, in the, I do. It's, um, oh,
Oh, Southern Energy. Southern Energy. Yes, sir. A little slow today. I'm sorry. It's late for me. But Southern Energy, talking about leadership, it's already done the breakout, the roundabout, the move. So I am a believer in buying best in class. That's why I own J.P. Morgan in the financial sector. It's best in class. You got to be there. Goldman, same way.
Southern right now looks like it's the best poise of this group in the utility index in the XLU to really lead us on that leg higher. So these are the setups I like. And like you said, not your grandparents' utilities. It's kind of got a great story behind it. So you keep hearing nuclear. It's much safer. Someone was smart enough to tell me, remember Fukushima, the nuclear power plant in Japan that had that meltdown? No one died.
They had it contained. It scared everyone to death. But, you know, nuclear has become a much safer way and a much more efficient way of generating power. And I believe this administration, the person that they put in power of this Department of Energy, he came from oil, but he's on the board of OKLO, which is looking to bring more nuclear to life. So you follow...
those political dots and you see people that want things good to happen for their industry. I give you Elon Musk. Look what Tesla's done since he's gone into office. Well, he's not even in office. I don't know what the heck he's doing. But he's at every event with Trump, so he's one to watch. And anything that he touches, from a regulatory point of view, he controls government efficiency effectively.
I have a feeling it's going to be favorable to what he wants. So keep an eye on Elon Musk's stocks and Elon Musk. And then if you're looking for the political bent, let's see if these two can get along for more than a year. I know Trump has had some great people by his side in the past. It doesn't always end well. So...
If you want drama, get some popcorn, watch that show. I watch charts and stocks, and right now those stocks continue to do well. Yeah. Well, I also wanted to make sure that we touched on software, another area. Again, if we're just painting those broad strokes, looking at IGV, this is the iShares Expanded Technology Software ETF. Yeah.
certainly a lot of the computer software enterprise, but you've had computer software financial, you've had computer software medical, education media. I mean, it's a lot of the software stocks have been looking really strong. And so maybe talk a little bit about the IGV makeup. Yeah. And where's the weakness been, Justin? It's been in the semiconductors. So what are we seeing? We're seeing a rotation within the tech sector. Look at the divergence between the two of them. Semis were down, I think, 15% coming into this week. NVIDIA is...
holding solid. It's not going down, but it's not going up. And where are we rotating to? We're rotating to the IGV, to the software stocks. We're rotating to cyber stock. The hack ETF broke out. The cyber ETF broke out. But when I look at the IGV, my God, you look at the breakdown of the stocks within the sector.
My favorite in that sector, the number one weighted stock in that sector, Salesforce.com, CRM. That stock, a Dow stock, rounded bottom breakout, came up, retesting. Oh, my gosh. You want to do targets on this one? We've got at least another 80 points to go from current levels. That, to me, is somewhat conservative, given that I think it was a 110-point decline from the neckline to the base, but okay.
you know, you look at that stock and I think there's a lot of room to run. It's in the right sector at the right time. It's the leader of that sector. Technically, you've got targets up another 80 points from current levels. Love it. Oracle, ServiceNow, Microsoft is slowing down. It's Magnificent 7. We're staying away. But these stocks are doing well. And then another one that I love, talked about this one somewhere else, Palo Alto Networks. It's
It's software. It's cyber. It checks both boxes for me. And what has it done? It broke out. It retraced. It held beautifully. It's kind of in the process of holding. So your risk-reward setup in a Palo Alto network is phenomenal. Okay, we go to the 50-day moving average. Where is that? 365. Okay, we go a little below that.
That's our downside risk. The upside, wow. You go from the left-hand side where we fell out of bed to that ascending triangle, and you have a target of another 70 points from current levels. And guess what? That's up 20% from where we are, and this stock over the last 10 years has averaged...
up 26% year over year as far as returns go. So if Palo Alto Networks was to make this measured move, which I believe is 70 points higher from current levels, we get about 20%. And guess what? We're still not at an average year for the stock. So to me, these are the sectors and the stocks within the sectors that I really like. And that's how I do it. When you talk about approach, you talk about measuring your moves. You look at the sector, you look at the strength within the sector, you...
plow through a ton of charts in each sector. You look for opportunity where the risk reward is in your favor, and then you look for trends that are strong, and you just stay in them. So, yeah, buy some insurance stocks. Fine. Boring, boring, boring. But guess what? 2017 was boring as well, like these insurance stocks. And if you were in it, like everyone in their 401K, just buy it, put it away.
You got a hell of a nice year. Doesn't really excite you from a headline point of view stock-wise, but it was fun when you looked at the end of the year, how you did.
Well, you know, speaking of boring, I know you wanted to kind of you like to hold yourself accountable. So last time you were on the show, you were talking about some of the the boring stocks that you were talking about then. One of them was ATR just and we can go through some of these. I mean, packaging, you know, it's not like, you know, something that people are usually thinking of as being that impressive. But I mean, when the when the economy is doing great and consumers are buying, guess what? That stuff is getting packaged.
Yeah, and I knew the stock because I was the market maker, so I followed that. I followed the sector. Not a lot of people do follow packaging, PKG, good stock. But what I saw was the patterns that I'm seeing in other places now, and it broke out. It continued. And when I talk to your audience, when I talk to any audience, I try to say, hey, the reward is in our favor right now, and we got that trade right. Mattson, Kirby, the transports, other stocks,
household names but the setups were there then i took a shot in a stock that oh my god call me out on pfizer this stock broke a long-term downtrend looked like it was finally going to hold above 30 it didn't i mean you know the risk reward setup was there i didn't lose a lot on the trade but you know you're not going to get them all right and then robert kennedy comes in and boom uh
anything that's vaccine-related got destroyed. Probably a great buying opportunity, but I'm done with Pfizer. You know what? It's burned me a few times trying to pick the bottom. You think it's turning around, and it sucks you back in, and you just stole. Brian Shannon, another friend of the show, bad things happen under the 200-day moving average. There's a lot of money to be made in bear markets under the 200-day moving average, but you've got to be quick.
And you want to follow those trends. So I always look barometer of health, stocks above the 200-day moving average. The stocks that I gave you earlier, all above the 200-day moving average, all starting to trend higher. We didn't catch the lows. No, shame on us. We didn't take a shot when they were getting destroyed. But right now, the trends continue to be strong, and you want to get there.
part of that trend. You want to go along for the ride. So those are the setups I like. But yes, to hold me accountable, I did come with boring stocks. I warned you that they would be, but I thought they'd be profitable. Three out of four hits, so we're happy about that. And I apologize for the Pfizer, you know, the one that I actually was in. The other eight
ask me that question. Jay, you like this, but are you in it? No, I'm not. Then buy it, go buy it. When I buy it, it won't work out. So at least you're eating your own cooking. And you know, to your point though, you know, a lot of these, you know, this is one of the things that people should know. Okay. So someone talks about a stock and, and we were talking about this on our IBD live show this morning, you know, David Ryan, uh,
I saw him speak, you know, when I first started out back in 1997 and I bought a stock because David Ryan liked the stock. It was pure one imports. It was the first stock I ever bought, but David Ryan never called me to tell me when to sell it, you know, so I didn't know what to do. Right. But you're talking about, you know, you, you know, when to sell these, you know, when it's not acting right and you're keeping your losses very small on these. So if it doesn't work, boom, it's out. You're, you're onto the next thing. You're not saying, Oh, hold this until it works. Uh,
Or no matter how bad it gets. And your whole premise of the show about sentiment and market sentiment, I survived. I mean, I thrived at times too, not going to lie. But I survived 28 years on the floor in an environment where people were just dropping like crazy. I saw people blow up. You have to have an exit strategy. And I think that's what's making me
do okay in this market strategist role that I've been taking on in the last three years and talking about the market because I want to be relatable to an audience because I traded just like everyone in there does. And then I want to know your timeframe and then I want to structure it in a way that's going to resonate because you get in, but what's my game plan? All right. I could say I love NVIDIA, you know, put a buy, put a, okay, fine.
I do, and I want to buy it. I want to put it away. I don't look at it. But these other stocks, you know, okay, measured moves. Let's see if we can get that. And then, you know, if you sell it and like micro strategy is a perfect example. Talk about stocks that have just gone astronomical, you know, as Ralph would say, you get a nosebleed looking at the chart, MSTR. Okay.
I've had people text me, people that I've met through this job. Hey, I own this one. Congratulations. When should I sell? You've got a triple right now. You should sell at least a third, and you're free-riding that trade. But I would sell it, hope that you're wrong, and then try to get back on a pullback, which I think is inevitable. Remember CMSI? Super? No, SMCI. SMCI, right. Right.
Yeah, SMCI. I call this super happy fund stock because it just was going up every single day. It was like one of these Chinese stocks back in the days of – what's the Chinese ETF? Not the RRF.
the arc. K-Web or K-Web is the internet. K-Web, thank you. Senior moment. See, you're five years younger than me. You've got that one. Come back to me in five years when you don't. But yeah, K-Web, we've seen some moves and we'll see them again. Look at Peloton's coming back. Zoom just had earnings. They're coming back. Some of these beaten down names. DocuSign has come back.
are they back to stay? Are they back for good? No, but... Or Carvana. I mean, talk about one that was left for dead. And I do have a position in Carvana, but man. You know, I did that one on a show and I did it and I go, I like it.
And I'm good friends with our auto analyst here, and he explains to me why I should, and I believe him. But I'm like, the chart's telling me something different. We went back and forth, and I hate to be right because I love this guy. But, yeah, it's just the chart was telling you that this is the setup you want to be in, and it rounded out, and it broke, and you had upside targets that sounded ridiculous. They hit.
I don't see this company going back to old highs, but I'm not going to fight the trend because it continues to climb higher. But yeah, it's not going to work like Carvana for a lot of these stocks that have beaten down. You tell me Peloton's going back to triple digits. Go ahead. We'll sit here and laugh.
Um, I can't imagine it, but, uh, I think the people that work there would be happy if it got back to 12, got back to 15. Um,
To say that we're going to have pandemic-like moves in these stocks, I think is just not feasible. But can you make some money off them off the bottom? Maybe. It's not my usual, but some of these have started looking a lot more interesting. And look, I mean, we had NVIDIA, to be fair. I mean, this was an ugly move down in 2022. That was what, almost 70% down. Keep that chart right there. This is my favorite chart of all time.
This is a technician's dream. This was the S&P 500 before the S&P 500 took off. This was your beautiful rounded bottom. 2022 down, 2023, all we did was make back 2022's losses. Now, they went and broke out ahead of everything else, but that was the setup showing us
All the setups we're seeing now. Look, NVIDIA did this. It led the way. Now there are other stocks just getting back to regional banks, just getting back to where they were.
Is it NVIDIA? No, it never will be. But you can make 20% to 40% on these moves. That's a good year. That's a good trade. And that's all you want. And when I talk to the young kids, my kid included, they want these trades like NVIDIA all the time. They want the next Vistra. I want to give it to you. But guess what? If I'm in it,
I'm out of 30%. I'm out of 40% because I don't believe in it. Like I do to just put it away in my 401k and the 401k. I have JP Morgan. I have ice, the parent of New York stock exchange. Look at that trend over 20 years, just slow and steady up. It's not going to be the sexiest stock. It's not going to get you for it, but these exchanges you can give me, I'll take, give you the NASDAQ, just beautiful uptrends over time. Um,
And then you diversify within sectors and you put it away. You put in best of class. I own Walmart. All right. I didn't think Walmart would go up 60% this year. That's the greatest year ever. At least 25 years. But, you know, you look at the trend. You believe in the company. You buy it. You put it away. Should I be trimming this one? Yeah, probably. But I'm just not going to look. Okay.
And Target may have an opportunity here if you're looking for mean reversion plays. I tend not to, but let's see. It just got kicked to the curb. It's not going out of business. If you went shopping this week, you haven't. You know what? Well, I shouldn't say that. My wife did come in with her phone and was showing me Black Friday deals. So we were doing some shopping this morning. But to your point, I mean, XRT...
The retail ETF and and look, I kind of didn't touch this for a while because there were too many meme meme ish, you know, GameStop, you know, oh, it's up 200 percent in a day. XRT, you know, it just looked funny to me. But man, I looked at this ETF today was up three point six five percent and most of the positions are about two percent.
you know, 2.3%. So it's very spread out. So it wasn't just one stock that was doing it. I mean, you know, Bath and Body Works, you know, helped today. That was up, you know, 16%. But it was pretty broad-based in XRT. Also XHB, the home builders today. So I'll kind of let you do closing thoughts with maybe some of those that were acting a little bit different and
back on board today. And certainly the 10-year treasury yield dropping, you know, maybe help some of that. Yeah, the 10-year, let's focus on that one because you ask about major indexes and indicators you look at. I always look at the 10-year. The fact that the stock market was able to absorb that spike from the low to recent highs at 4.5%.
Tells you a lot about the resiliency of the equity market right now. Usually a move like that, especially given the speed of it, would have caused us to correct a little bit. 5%? Yeah, sure. Why not? We didn't. We didn't. And now we're making new highs. So...
The 10-year, if this can crack a little bit lower, I don't anticipate it will because if you look at the 10-year over 20 years, 30 years, I mean, this stock, it's broken out. Something's changed. We're going to have elevated rates for a while, but we do have a guy in the White House that's going to yell and scream to get him down.
Let's hope we don't have a global pandemic this time around to actually make it happen. But we can stabilize the rates at these levels and watch the equity market continue to thrive. So I look at that. You look at the homebuilders' mortgage rates.
They have not really come in. We're still well over 6%. We peaked at 8%. But the home builders continue to thrive. There is demand. But there's demand because people aren't leaving their houses. So we've got to build new ones because no one's moving out. 2.75 mortgage. I told my wife, we're staying. We're not going. I am never leaving my house. 3.5%. I don't care. I'll stay in the basement forever. Yeah.
Uh, yeah, it's just, I'll rent it out upstairs. But, uh, no, uh, we, we came at a good time and everything in this economy is cyclical. And right now we are in the midst of a secular bull market, strong rotation, sector to sector, uh,
I believe with financials leading, technology still strong as ever, the AI story playing out, the way to power the AI story, all of these things are still in the early phases. Maybe we're in the middle innings, but doesn't mean we're close to being over. And guess what? When these things end, they usually end with a bang and not a whimper.
And there could be a lot of money to be made as we continue to rally. But as we go into year end, I suspect that some of these beaten down names that we presented here, these stadium stocks, as we call them, should be a benefactor. And that's what I like. I like software. I like stadiums. And, you know, take a shot on these ARK stocks, too. My God, you know.
Yeah, I mean, as you mentioned, 2021 really showed how, you know, the...
Yeah. You know, as you know, to your point about the 2021 where things really kind of heated up with the IPO market. I mean, that was really the top in, in arc K, um, as well, but like you mentioned with the docu sign zooms and all that of the world, our K, you know, seems like it's, it's coming back as well. Uh, but Hey, Jay really appreciate you coming on the show. I hope you have a wonderful Thanksgiving. Thank you for all the knowledge that you were sharing with our listeners today. Um,
And again, if folks haven't already, what's your Twitter handle where people can get? I mean, you're pretty active on Twitter. I'm on the loose guy now, too. It's Jay Woods 3, J-A-Y Woods 3. You can follow me there. A lot of Saquon Barkley talk over the last 24 hours. That's been fun. As an Eagle fan in New York, it's just been exuberant. And then, hey, Justin, last time you had me on,
the next day you went off to Hawaii and then I find out you're having me on and you're going off to Hawaii again. What, what is this, you know, pattern we're in here? I don't know. You come in fast and furious, Jay. And I just, I need to, I need to take a break when I'm done with you. You know, so Aloha to you and Aloha to your audience. It's always great joining you and you can subscribe to my newsletter. Uh,
It's, oh, God. I'll pin it to my Twitter. Freedom Capital? But, yeah, it's at freedomcapitalmarkets.com, and you can subscribe to the newsletter every Monday. I'll give you some fun facts and some stocks to watch and some overall thoughts on what's going to happen, not just this week, but over the coming weeks as well.
Well, I'll have you on again soon because I like going to Hawaii to visit my daughter. So I'll use you as the excuse. So looking forward to having you again on soon, Jay. Enjoy. Happy Thanksgiving. Happy Thanksgiving to you. That's going to wrap it up for us this special Thanksgiving episode. Thank you so much for joining us, folks. Really appreciate it. I hope you all have a great time with your families over the Thanksgiving holiday.
Friday, we are going to have a shortened session. I am actually going to be working from Hawaii on Friday, um, but we're going to have a shortened session, so it won't be too bad. Maybe I'll do some of that from the beach. Uh, thank you so much for watching. And next week, we're going to have Anne-Marie Band back on the show. She, of course, is the author of the trading book, uh,
Great options talk, great futures talk. She's actually one of our options experts that is writing content for us on investors.com. So it'll be great to get her take. I know she's been talking a lot about some of these iron condors and some calendar wheels. So we'll find out what she's into right now. Hope you join us for that at the regular time on Wednesday, 2 p.m. Pacific, 5 p.m. Eastern next week. Thanks for watching. We'll see you. Bye now.
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