Our next guest says that there is risk the “Bear market could be roaring back“. So let’s go off the charts with Chris Verrone a strategas a Baird company. Chris, what levels are you watching, what are the charts telling you right now?
Yeah well, I think we got to put the last several days in some into some contact into some context here and we’ve had this rally over the last couple of months. Remember, the entire move took place below a downward sloping 200-day average and I thought what was interesting on Friday, and again, today.
For the first time in a couple of months, you had all the major indices go on and make new one-month lows and our rule really has been when you make a new one-month low underneath the 200-day, it’s a pretty good message to step aside and it’s often a sign that the downtrend is reasserting itself. So we got that on the S&P. We got that on the triple cues over the last several days.
If you go to the second slide, you know what we show you here is the number of individual stocks making new one-month lows has started to re-expand uh here as well. On Friday about 30%, today about 50% of the S&P made a new uh one-month low so you have names in weak trends making new one-month lows. It’s historically a signal that hey let’s take a step back from this rally, let’s protect ourselves, let’s preserve uh some capital now. What I think is driving all of this uh is this moving rates.
Our big call the last several months has been that bond yields would remain stickier than the consensus believed. I think we certainly have seen that with 10-year yields here back above 3.10 but really two-year yields I think is the big story new cycle high on two-year yields. You have European yields on the verge of new highs as well.
But what’s really curious about this move despite yields up, we’ve seen nothing from banks. So banks remain weak. Utilities have continued to exert themselves as leadership so I see late cycle leadership. I see banks weak. I see utilities strong and I see rates at new highs now. If you think about this just in terms of leadership, our other big view here has been sell stuff like technology stealth. Sell stuff like discretionary in favor of energy.
So last two slides here look at tech relative to energy. I think this is one of the most important pairs in the market. This couldn’t even get back above the 200 day. This has failed and then lastly discretionary versus energy. Right, this is the whole secular leadership debate right now. I prefer the energy names over consumer. I think this has failed. I think rates up and risk to S&P here.
Hey Chris, it’s Tim. I prefer the equity, the energy trade as well and I guess my my question ultimately back to some of the leadership that had been defining the bull market for five years. uh the underperformance of semiconductors and I talk about semis all the time to the S&P so I look at that downtrend all the way back from say December of 2021 of semis to the S&P. Looked like we were breaking above that downtrend but in fact doesn’t look like we ever did. I just can you comment on that because that’s a relationship that really has defined much of the market of the last 10 years.
Tim, great point and we’re all over that we talk about it every day the two leadership relationships that have really defined the decade were semis over S&P and discretionary over S&P. I think both are done. Just go chart by chart among the semis. Nvidia weak, AMD weak, we’ve seen micron break down QUALCOMM has rolled over. So I think you’re spot on this change away from semis is not a cyclical change. I think it’s a secular one. I think semis are done as your leadership. They were so good for a decade. Don’t expect it going forward.
Thank you very much Chris Verrone of strategas. Let’s go ahead and trade this. uh guy I’m going to turn to you because bonowin sort of already had a say in his piece when he was talking about the two year. The ten year the relationship between the two and then each of them on their own but Chris brought up some interesting charts there. What do you make of him?
Well, I mean, he brings up the semis. And Tim said this for a while, I mean that’s the new oil. And, if they start to roll over, I don’t think it’s august particularly. Well I’ll say this about yields quickly. You’re in environment now.
In my opinion, that if 10 year yields go higher, it’s probably not good because they’re not going higher because the economy is getting better. And if yields go lower, it’s probably not good because it’s probably some form of flight to quality because the market’s selling off. But I’ll tell you if you’re looking for a trade that TLT traded down to 108 ish back in October of 2018. Dan can tell you exactly what happened back then and we made that low again. So a little bit of double bottom to trade against. And maybe you will see a flight to quality in the form of bonds here.
Dan, it’s interesting you know Chris also brought up financials and not having done much there even his rates are moving higher. I’m just looking over one month down about nine tenths of a percent sort of smack in the middle of all the moves.
They don’t act great and I know Mike Mayo was just on the ot with Scott before and he was talking about how well capitalized these banks are and just really how different they are than the last sort of recession that we had um you know prior to the pandemic that sort of thing. They don’t act well. I mean, I just said keep an eye on JP Morgan close that around 114. 110 is that kind of line in the sand and I think that would be a good indicator just about how bad the consumer is going to get.
And we’ve been talking about the outperformance of Goldman and Morgan Sachs Goldman and Morgan Stanley over the last few months or so. In some of those more investment bank looking ones. Not the money centers have acted um a bit better and I’ll just say this what guy just outlined about yields is that you know that 10 year if it were to come in if there is a flight to quality, it really speaks to the lack of growth and that really does speak to the fact that you have a two-year yield you know at 3.4 or something like that. It just speaks to an inflationary environment which again going back to the whole theme about this block is that that should weigh on equity valuations.
Absolutely it makes sense it seems as if it did on Friday and then into today as well you.
| 8/30 |
| https://www.youtube.com/watch?v=DXoRkicpDD0 |
| Let’s go off the charts |
| explode or fire |
| What levels are you watching? |
| we have got to put the last several days into some context |
| All the major indices go on and make new one month low |
| When you make a new one month low underneath the 200 day, it is a pretty good message to step aside. |
| 주가분석: 1. 기본적분석: 회사 재정상태/주력상품 분석후 투자. 2. 기술적분석: 주가.거래량 과거 흐름 분석해 주가 미래 흐름 예측 = 차트 분석 |
| 200일 이동 평균선: 일간프레임 기준으로 가격이 200일 이동평균선보다 위에서 움직일 경우 전반적인 상승 추세. 120일에 비해 장기추세를 나타내지만 변화의 반영이 느려서 급등/급락하는 주가 반영에는 대응이 늦어짐. |
| 데드크로스: 200일 아래로 50일이 교차할 때=하락추세. 골든크로스: 200일 위로 50일 교차할 때=상승 추세 |
| You have names in weak trends making new lows. |
| sell tech, sell discretionary in favor of energy |
| Consumer Discretionary: nonessential goods and services, such as appliances, cars, and entertainment |
| in favor of : 대신 |
| This is the whole secular leadership |
| secular: 세속적인 |
| It looked like we were breaking above that downtrend |
| I think you’re spot on this change |
| spot on: 딱 맞다 |
| This change away from semis is not necessarily a change but a secular one. |
| What do you make of him? |
| = What do you think of this person? |
| if 10 year yields go higher, it’s probably not good because they’re not going higher because the economy is getting better. And if yields go lower, it’s probably not good because it’s probably some form of flight to quality because the market’s selling off |
| A flight to quality refers to move by investors: Away from low-quality bonds toward high-quality bonds. A flight to quality should result in: The yield on U.S. Treasury securities falling and the price of corporate bonds falling. |
| if you are looking for a trade, that TLT traded down to 108-ish back in october of 2000 |
| So a little bit of double bottom to trade against. And maybe you will see a flight to quality in the form of bonds here |
| A double bottom is a pattern in asset prices that creates a W-shaped movement. It indicates that after two lows, there will be a significant increase in price. A double top is an opposite movement in price compared to a double bottom. |
| august = respected/impressive/위엄있는 |
| 9/10 of a percent smack in the middle |
| how we will capitalize these banks |
| 110 is that kind of line in the sand |
| line in the sand = to put a stop to or a limit on something. It was time to draw a line in the sand, forget the past, and work together. |
| what guy just outlined about yields is that you know that 10 year |
| – 단기 채권금리: 기준금리의 영향을 많이 받음. 2~3년 안에 돈을 갚기로 한 채권이니 당장의 금리에 민감하게 반응. 짧은 기간이라 그동안의 금리 변화 어느 정도 예상 가능. – 10년 금리: 3.10% 2년금리:3.48% 8/29 – 미국 1962년 이후 총 7차례의 경기침체가 있었는데, 모든 침체기에 앞서 장단기 금리가 역전. 금리가 역전되고 나서 5개월에서 23개월 후에 경기가 침체국면으로. – 길게 봐서 경제 상황이 좋아질 것으로 예상된다면 장기 채권의 금리는 올라감. 경기 호황이 예상되면 적극적으로 장기 투자에 나서기 위한 자금 수요가 늘어나고, 당연히 돈을 오래 빌릴 때 부담해야 하는 이자율도 높아지는, 빌리고 싶은 사람이 많은 상황. – 경기 호황을 예상한 투자자들이 안전한 자산에 속하는 채권 대신 주식 같은 고위험 자산에 더 많이 투자한다는 점도 영향. 경제 상황이 좋으면 주식이 채권보다 더 큰 수익을 기대할 수 있는 투자처. 시장에서 채권을 사려는 사람이 적어지면 가격이 내려가는 것이고 채권 가격과 반대로 움직이는 금리는 오름. – 경기 전망이 어두울 땐 거꾸로 장기 자금 수요가 줄어들어서 채권 금리 하락. 위험한 주식 대신 채권에 투자하는 사람이 많아져 채권 가격 올라감. 장기 채권 금리가 하락하면 경기 부진을 예상하는 사람들이 점점 많아지고 있다는 뜻 – 상당폭의 기준금리 인상은 미국 성장 둔화 및 침체를 유발해서 안전 자산인 장기국채의 수요가 증가하고 이는 장기 금리의 하방 압력으로 작용. 연준의 기준금리 인상으로 단기 채권 금리는 상승하나 장기 채권 금리는 유지 혹은 하락하여 장단기 금리차 축소 및 역전이 나타나고, 이를 통해 경기 둔화와 경기 침체의 선행지표가 되는 이유를 알 수 있음. |
| inflationary environment which again going back to the whole theme about this block is that that should weigh on equity valuation. |
| seems as if |