The Stock Market is about to FLIP. — Transcript

Full transcript

1. 0:00oh man we have just hit a number that
2. 0:02brings us right back to the Great
3. 0:04Recession we have now had just as many
4. 0:08months of seven percent moves in the S P
5. 0:12500 as we last had during the bottom of
6. 0:17the covid market March of 2020 and the
7. 0:21bottom of the Great Recession in 2009
8. 0:26that could be a pretty good sign that
9. 0:29we've experienced a whole lot of pain so
10. 0:32far and maybe a sign that we could be
11. 0:34getting closer to a bottom hey everyone
12. 0:37meet Kevin here the stock market is
13. 0:39potentially about to flip again and
14. 0:42stock capitulation often happens right
15. 0:45before
16. 0:46elections but if it doesn't happen we've
17. 0:49got three major reasons in addition to
18. 0:52what I just showed you about these stock
19. 0:54moves that could sustain a very real
20. 0:57rally in this video we're going to talk
21. 0:59about those three reasons we're going to
22. 1:01start with a little look into
23. 1:02capitulation around elections that we're
24. 1:04going to talk about these three reasons
25. 1:05the stock market can actually be set for
26. 1:08a massive rally and then I'll show you
27. 1:10which sectors are overbought and
28. 1:12oversold so first let's go ahead and
29. 1:16take a look at the capitulation right
30. 1:19which is really uh extended selling uh
31. 1:22or substantially more selling than
32. 1:24buying especially amongst the retail
33. 1:26cohort right around elections if you've
34. 1:28been a subscriber of this channel since
35. 1:30the 2020s you remember Paul that sounds
36. 1:33terrible since 2020 I don't want to
37. 1:35sound that old since the 2020s oh my
38. 1:37gosh it's like we're in 2030. if you've
39. 1:39been a subscriber since 2020 you
40. 1:41remember I was buying the dip like crazy
41. 1:42right to the Moon rocket launch in March
42. 1:44of 2020. that was great and I never
43. 1:47thought we'd see that kind of pricing
44. 1:48again yet on some stocks we actually are
45. 1:50starting to see March of 2020 pricing
46. 1:52again just look back a couple years it's
47. 1:54scary but what we also saw was right
48. 1:57before the presidential election we saw
49. 2:00a lot of capitulation a lot of selling a
50. 2:03lot of pressure in the stock market to
51. 2:05sell take a look at this chart which
52. 2:07shows you that not only do we see that
53. 2:10sort of capitulation right around the
54. 2:12March 2020 era right here which is this
55. 2:16sharp light a blue line here but we also
56. 2:20see that right here the November 2020
57. 2:24elections I remember in the two weeks
58. 2:26right before that thinking to myself man
59. 2:29what is with all this selling you know
60. 2:31what it is it's uncertainty about the
61. 2:34potential for contested election now
62. 2:38this election midterm election we're
63. 2:39wondering are we going to get gridlock
64. 2:41are we going to get more democratic
65. 2:42control right now it looks like we're
66. 2:43going to gridlock uh and what's
67. 2:45fascinating is we could we still have
68. 2:48one day left to see some form of
69. 2:50capitulation moves here we did have
70. 2:52negative moves last week but we're not
71. 2:55quite in any kind of capitulation Spike
72. 2:58territory we're still according to Vanda
73. 3:00track seeing positive net buying from
74. 3:03retail so what three reasons do we have
75. 3:07in terms of why stock market performance
76. 3:09could actually outperform going forward
77. 3:11rather than continue to underperform and
78. 3:13bleed out the way it has been so let's
79. 3:15get into those three reasons reason
80. 3:16number one stock market performance
81. 3:19after the inversion of the three months
82. 3:22and 10-year treasury yield curve this is
83. 3:25free currently deemed the last shoe to
84. 3:28drop for the Federal Reserve that is the
85. 3:30last inversion that we tend to see in
86. 3:31the bond market is the three-month
87. 3:3410-year treasury yield and while we had
88. 3:36an inversion in the twos and tens and
89. 3:38some of these other things long ago the
90. 3:41threes and tens is the most recent and
91. 3:44last shoe to drop you could see that
92. 3:46charted right here where we actually
93. 3:49just went negative within the last week
94. 3:52we're barely positive right now but we
95. 3:55went negative which is great because
96. 3:59after the inversion of the yield curve
97. 4:02we tend to see some stock market
98. 4:05performance take a look at this chart
99. 4:07brought to you also by Vanda track look
100. 4:10at this s p performance following the
101. 4:15three-month 10-year inversion first 100
102. 4:19trading days so right here you have the
103. 4:22inversion point
104. 4:24and what you'll notice on the right is
105. 4:27you have returns following the inversion
106. 4:30in 8106 68 1900 78 73 89 and 98. you
107. 4:36notice the max downside that we got was
108. 4:40three percent and in three
109. 4:44out of these nine scenarios so in 33
110. 4:48percent of the occasions we went
111. 4:50negative
112. 4:51in 66 percent of the occasions we went
113. 4:55positive but look at the magnitude by
114. 4:58which on average we went positive one
115. 5:01percent two percent six percent six
116. 5:02percent eighteen percent twenty four
117. 5:04percent
118. 5:05so certainly if we took an average here
119. 5:07we'd be somewhere around an eight to ten
120. 5:10percent performance or if we took a
121. 5:12median number we'd be right around a six
122. 5:14percent performance expectation versus
123. 5:16the potential downside median of about a
124. 5:19three percent performance expectation so
125. 5:22somewhat more bullish
126. 5:24in the first
127. 5:26260 days so that's the first 100 days
128. 5:29after inversion in the first 260 days we
129. 5:34get a little bit more Divergence though
130. 5:36and this really leads to some some
131. 5:40detail that we have to dive into here
132. 5:42first without looking at the detail we
133. 5:45get four scenarios here I'm sorry
134. 5:47there's five scenarios that are positive
135. 5:49and four that are negative and you can
136. 5:51see that there are cases where and it's
137. 5:55it seems to be less likely you know more
138. 5:57likely seems to be going positive here
139. 5:59right five out of nine scenarios so more
140. 6:02likely to go positive but you do have a
141. 6:04couple scenarios that in the next nine
142. 6:07months after the inversion you actually
143. 6:09had more pain and that was in 68 right
144. 6:13before that great inflation period and
145. 6:15leaving the gold standard and in 2000
146. 6:18that was still where you had two years
147. 6:22to go in the.com bubble now a lot of
148. 6:25folks are making comparisons to the.com
149. 6:27Bubble now however one of the big
150. 6:30differences between now and the.com
151. 6:32bubble is our stock market today has
152. 6:34collapsed three times faster than the
153. 6:38stock market collapsed during the.com
154. 6:40bubble leading some to say that the
155. 6:43collapse we saw in the 2000s and how
156. 6:45that took three years could potentially
157. 6:47only take one year now well folks the
158. 6:50Market's been falling since the end of
159. 6:53last November and now we're in November
160. 6:55again three times faster one year
161. 6:58negative performance doesn't mean we
162. 6:59could potentially be at a bottom it's
163. 7:01hopeful but nothing is certain so what
164. 7:05is the next indicator that we have
165. 7:08because we don't just have one indicator
166. 7:09the market could be about them we have
167. 7:11three we're going to talk about that
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194. 8:16so reason number two potential Peak fed
195. 8:22funds rate actually being higher than
196. 8:25where we think it really will go now
197. 8:28this is an interesting argument because
198. 8:30if you look at the current fed curve
199. 8:33markets seem to believe that the FED is
200. 8:35going to hike all the way to about
201. 8:385.25 percent and a lot of this comes
202. 8:41because of the Wall Street Journal and
203. 8:43good old Nikki leaks talking about how
204. 8:46we're going to probably see or we could
205. 8:49see right they like to use words like
206. 8:50May or could we could see
207. 8:535.25 or 5.5 as a terminal fed funds rate
208. 8:57and this has led markets pretty red last
209. 9:00week because you know we had also pretty
210. 9:03hawkish Powell mostly after somebody
211. 9:05suggested that stocks were going up and
212. 9:07markets were responding positively even
213. 9:09though they weren't the most stupid
214. 9:11suggestion a reporter could have ever
215. 9:13made during a Federal Reserve press
216. 9:15conference but anyway
217. 9:165.25 is what the market is currently
218. 9:19pricing in as sort of a peak fed funds
219. 9:21rate and this could also end up being
220. 9:23flatter which would be a problem because
221. 9:25this here would signal more pain for
222. 9:27stocks and if we get a little bit of a
223. 9:29steeper sort of return we'd have some
224. 9:31gains over here for stocks now 5.25 is
225. 9:34currently the estimated Peak but that's
226. 9:36not actually what Vanda track is
227. 9:38reporting as their potential Peak they
228. 9:40actually assess that the peak fed funds
229. 9:43rate could be 4.76 percent that's almost
230. 9:46a half percent lower than the current
231. 9:49Peak the market is pricing in and if the
232. 9:52market is pricing in higher than reality
233. 9:54then the Market's going to have to
234. 9:55adjust to a lower rate what does that
235. 9:57mean stock market going up why could
236. 9:59that potentially happen well two
237. 10:01potential reasons number one is the fact
238. 10:03that we're seeing actual observed rents
239. 10:06declined significantly faster than what
240. 10:09the Bureau of Labor Statistics is
241. 10:11showing in their CPI report remember we
242. 10:13get a CPI report this week we get that
243. 10:17on Thursday at 5 30 a.m I'll be
244. 10:19streaming it live and while we don't yet
245. 10:22expect the BLS to show any kind of peak
246. 10:24and shelter inflation we know it's
247. 10:26coming which is optimistic and even the
248. 10:28FED knows it's coming they're just
249. 10:30waiting for this inflection to happen
250. 10:31for the CPI this week I I'm actually
251. 10:35relatively optimistic we're expecting
252. 10:370.6
253. 10:390.6 on the month over month which
254. 10:41actually in my opinion is great because
255. 10:43it's relatively High last month we had a
256. 10:460.4 and anytime we get a high estimate
257. 10:48it's really easy to come in under it
258. 10:50what's bad is when we have estimates
259. 10:52like oh it's going to be zero and then
260. 10:54it comes in at like point one on the
261. 10:55month over month right that's bad but
262. 10:57anyway let's see what happens with CPI
263. 10:59but this is one of the reasons they give
264. 11:01is the inflection point of rents but the
265. 11:03second reason that we should think about
266. 11:05I've gathered this from other sources uh
267. 11:07but it's also I think very valid is that
268. 11:09payroll growth is set to be at zero
269. 11:12percent by the second quarter of 2023.
270. 11:15that's really going to help Drive
271. 11:18pressure down on the FED to keep hiking
272. 11:20so maybe Vander track will be correct on
273. 11:22this but we also have a third potential
274. 11:25reason to be happy folks and then we're
275. 11:27going to talk about the oversold and
276. 11:29over uh bot uh sectors and folks it is
277. 11:32the potential for a Rally post election
278. 11:36remember this red here is post-election
279. 11:40and usually in the about 50 days that
280. 11:44are left in the year after an election
281. 11:46about 52 days after the election
282. 11:49we tend to actually see
283. 11:52kind of nominal slightly positive
284. 11:54performance but it's in that next
285. 11:57calendar year starting in January that
286. 12:00we really get some beautiful average
287. 12:03long-term returns take a look at the
288. 12:05chart here if we get a split House and
289. 12:08Senate or any form of gridlock we're
290. 12:10expecting between 1.4 and 2.9 percent
291. 12:12Returns on average by the end of the
292. 12:15year and if we look at next year we're
293. 12:18looking at potentially as much as 18.7
294. 12:20to 19 rally mode baby so very very
295. 12:24bullish signs here where the overbought
296. 12:26and oversold here you go folks if we
297. 12:29compare sectors to the two-year real
298. 12:32rates to screen out what is out of sync
299. 12:35with the federal reserve's hiking hiking
300. 12:37cycle what do we see we see sell signals
301. 12:40at
302. 12:41energy nickel the dollar
303. 12:45uh Italian and Brazilian equities and
304. 12:48silver here you go Divergence of uh
305. 12:51anywhere between here seven to fifteen
306. 12:53percent
307. 12:54and where do we see buys well
308. 12:58potentially Taiwanese Equity cotton
309. 13:01technology stocks discretionary U.S
310. 13:05consumer yeah consumer services and
311. 13:08coffee baby buy signals across the board
312. 13:10here also anywhere between five six to
313. 13:1317 percent
314. 13:15so if you want to get some of the best
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