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Benzinga
  • 2 years ago
Ryan Detrick - Chief Market Strategist, At CarsonGroup.

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Transcript
00:00 I mean, I know some people talk about this.
00:01 Bespoke was on it.
00:02 I mean, you guys might have been on this.
00:04 The SPY has been trading since 1993, right?
00:07 S&P 500 DTF made a lower low nine straight days until yesterday.
00:13 Yesterday we bounced.
00:14 I did see PCE just came out.
00:15 Looks like might be bouncing a little more.
00:16 So maybe who knows? Maybe I'll begin today.
00:18 But nine days in a row, we made a lower low, super small sample size.
00:22 I will admit people get mad when I point sometimes these things out,
00:25 but it is what it is.
00:27 Look at the screen there.
00:28 A year later, you've got some big returns and I get it.
00:30 Look at those dates.
00:31 Those are some rough times.
00:32 But hey, we just had, you know, a little bit of rough time.
00:35 So I think it's just something I wouldn't ignore.
00:37 The fact that maybe just maybe this is like a flush out, right?
00:40 A major flush out.
00:41 I've got some other things we'll talk about here.
00:43 But it's just interesting.
00:45 This just happened where we had nine days in a row, lower low,
00:47 be open to the idea.
00:49 So I'm going to talk about for fourth quarter rally.
00:52 And that's kind of one thing to be aware of.
00:53 I've shared this chart.
00:54 I think every time I come on with you guys for over a year and a half now,
00:58 we're doing it again because it's just amazing at how well seasonality
01:01 is played out.
01:02 This is the this is the presidential cycle.
01:04 The previous three quarters are supposed to be strong.
01:07 My goodness, were they this quarter when I'll supposed to be that great?
01:10 It wasn't.
01:11 I like them all.
01:11 The guys, you know, all year saying rally, rally, rally.
01:14 And then like in August, we saw the remember when I talked about,
01:17 oh, Mike Wilson saying that was like twenty nineteen.
01:19 And then they all upgrade their targets.
01:21 This is like at the end of the end of the middle of the year.
01:23 I'm like, oh, my goodness,
01:24 wouldn't it be something if we finally had some volatility and a pullback?
01:28 All these bears turn bullish.
01:29 Yeah, make all this happens.
01:31 Anyway, so now we're still optimistic, though, for a fourth quarter rally,
01:35 you know, because the seasonals
01:37 I'm going to talk a little more about fourth quarter rallies here in a second.
01:39 I will skip that one.
01:40 These are some charts I share on Twitter.
01:42 People like them.
01:42 This is a preelection year.
01:43 What's your average preelection year look like?
01:45 Well, it would have been perfectly normal to have a rally early in your
01:49 member, every strategist on TV or almost every strategist on TV
01:52 was saying how there wouldn't be a rally.
01:54 The first half of the year would be the second half of the year.
01:56 You look at the numbers and the stuff we talked about on here today.
01:59 The first half of the year is usually strong for a preelection year.
02:02 It's later in the year.
02:03 Things get choppy.
02:04 And sure enough, that's played out.
02:05 We're optimistic, though, as well as some of these things have played out.
02:08 We're still going to get the upward bias into the fourth quarter.
02:11 Likely, in our opinion, we've been overweight equities all year.
02:13 We're actually looking to buy in here.
02:14 We're talking about adding a little bit more.
02:16 So we have to add more overweight here for a fourth quarter rally.
02:19 Similar chart.
02:20 This is if you're up 10% for the year at the middle.
02:23 So a good start to the year kind of looks the same to me.
02:26 Choppiness is normal around here.
02:28 It's also normal to have some into your strength.
02:30 The credit markets is triple B spreads.
02:33 You get the chart straight from white charts.
02:34 It is shocking to me.
02:36 I'll be honest, the triple B spreads haven't shown more stress than they are.
02:40 Then, you know, sign that if there's a monster under the bed,
02:44 you probably a little bit more worry about the lower graded
02:46 companies paying back their debt.
02:48 People aren't they're not charging more yet.
02:50 And yet the key word, I get it.
02:52 But I think this is another clue that the seasonal weakness
02:54 we're had with 7% pullback, give or take six, 7%, whatever it was on the S&P.
02:58 It's just kind of normal, right?
02:59 It's not a reason to panic because we're not seeing the credit markets panic.
03:03 A chart I share on Twitter. People love this one.
03:05 You know, if you buy any random day, how does the market do 10 days later?
03:10 Well, listen, we just are in the midst of the worst.
03:12 OK, you see it there like the worst 10 days of the year,
03:15 what we just are about exiting, like right about now.
03:18 So, again, it shouldn't be surprising.
03:21 And I get why I mean, let's people say why.
03:23 I mean, I don't I don't know. I don't argue with it.
03:24 I just know the end of September and it could be the Jewish holiday could be.
03:28 I've heard hedge funds stop trading or their fiscal years in October,
03:31 maybe cleaning some books in September, whatever the reason is.
03:34 We knew the end of September probably could be a little rough.
03:37 And it has been.
03:39 Now, the good thing is you see some more green coming up.
03:41 October 28th is my birthday.
03:42 If people like to see what their birthday is,
03:43 that's a pretty good day to buy and if I'm with Simia present, I'll take it.
03:46 Here's a couple, couple more, couple more.
03:50 So this is get a little more in the weeds.
03:51 But I know I got some traders who understand this stuff.
03:53 MACD histogram, right?
03:55 The MACD histogram just flipped bullish.
03:58 Let's see, I guess in early August and early August, it just looked bullish.
04:01 This is a monthly MACD, OK?
04:04 It was negative for more than six months.
04:06 Now that's that's people talk about this bigger picture.
04:08 But the MACD line stayed above zero.
04:12 And I know that's kind of confusing.
04:13 Hopefully most people understand what I'm talking about here.
04:14 We didn't see that in like the financial crisis and the tech bubble.
04:18 So there's some underlying strength potentially.
04:20 And when you have that scenario, that's what I'm sharing on the screen.
04:24 More than six months of a monthly MACD histogram, negative flips
04:27 the bullish like it did two months ago.
04:28 But the MACD line stays above zero the whole time.
04:31 It is what it is.
04:33 Check out the returns.
04:34 They're pretty strong forward, forward performance.
04:37 Yes. The last two months have been a little choppy, a little rough.
04:40 This would be saying, hey, we might want to be thinking about
04:42 seriously buying the dip potentially.
04:44 And that's the camp we're in.
04:45 Just another good chart.
04:47 It is what it is. October tends to be known for a lot of things like bear markets.
04:51 It's not all that bad of a month.
04:52 But November and December are really strong.
04:54 Just kind of, again, things to think about now.
04:56 Reason you guys invited me.
04:57 Couple more on fourth quarter, then we can chat.
05:00 Fourth quarter is strong quarter, right?
05:01 Up 4.2 percent on average.
05:03 It is what it is.
05:04 Twice.
05:05 How am I going to word this?
05:06 Twice as strong as the next best quarter.
05:08 The first quarter there, you see it there about 80 percent of the time.
05:11 Something to think about.
05:12 But here's some other things to layer on top of that.
05:14 When you're down at least 1 percent in August and September, like we are right.
05:18 We're going to be this time, right?
05:20 That seasonal weakness.
05:21 It's kind of normal.
05:22 You and this isn't even looking at how the year is doing.
05:24 It's throwing everything else out.
05:25 Just if you have seasonal weakness in the months that are normally not that great.
05:28 Check it out.
05:29 Fourth quarter has been higher 12 out of 13 times.
05:32 Going back to 1950 up 7 percent on average.
05:34 There's something to think about.
05:36 The seasonal weakness isn't a bad thing.
05:37 It's the last couple of years.
05:38 Right. Beespoke got a cool thing.
05:39 September has been bad like four years in a row now.
05:41 Well, the fourth quarter hasn't been.
05:43 So again, just because September is bad doesn't mean you can't have a fourth
05:46 quarter rally, but this is about the last one.
05:47 If we're in the sweet spot up 10, between 10 and 20 percent for the year,
05:51 like we're going to be today with a little bounce, it looks like for a while.
05:54 There's a new might not be above 10 percent.
05:56 Well, September is looking, but we're going to maybe have an end of month bounce.
05:58 Another one. You're up a little bit.
06:00 What is the fourth quarter?
06:01 Five point one percent average.
06:02 So a little bit better.
06:04 Fourth quarter returns when you're in that sweet spot up 10 to 20 percent.
06:07 Yes. When I do this way, this way, it takes out 87 87.
06:12 We're up like 30 percent for the year or something like that going into October
06:15 or something like that. So, yeah, that took out 87.
06:17 But I don't think we're in the same scenario as 87
06:19 because the market's pulled back and, you know, we're in that kind of sweet spot.
06:22 So that's just something to think about.
06:24 Last one, I believe is last one.
06:25 The government shut down.
06:26 I've done a blog on this and share this.
06:27 Everybody's talking about it. Yeah.
06:28 I mean, it's not great to have government shutdown.
06:30 You want to get a passport when you go to a park?
06:32 People aren't going to get paid.
06:33 I mean, those aren't good things, OK?
06:34 But the market looks past it.
06:36 It is what it is.
06:37 Gain 10 percent during the last shutdown.
06:39 Yes, the Fed did the pivot late 2018.
06:41 So news trumps charts. We understand that.
06:43 But usually these are fairly short.
06:45 I mean, you could say what's one of my worries.
06:46 Maybe the government shutdown lasts longer. Right.
06:48 I think the Ned Davis came out and said every week will take away
06:52 zero point one percent from GDP.
06:54 Now, when you open it back up, people kind of go out
06:56 and the government spending comes back and you kind of make it up in a hurry.
06:59 So maybe an extended shutdown could cause a little volatility.
07:02 I wouldn't be too worried, though.
07:03 And honestly, it usually the market looks right past it.
07:06 Well, there we go. I'll breathe.
07:09 Those are my chart guys. What do we think?
07:11 Holy information station here.
07:14 Man, Ryan Dietrich, Statman on fire here today.
07:17 And you guys got a little break there, didn't you?
07:19 I gave you a break from talk.
07:21 I said, let me know.
07:22 I was ready to bounce. Turns it around.
07:25 This guy, man, gives you, you know, so much food for thought.
07:28 I'm like just trying to digest it all here right now.
07:31 And I don't even know where to go with the question.
07:33 I go anywhere.
07:34 Ball won't talk about football.
07:35 I don't know. We could go back to football.
07:37 Let's go talk to the Bears.
07:38 The Bears aren't doing good right now.
07:41 Yeah, let's bring it back to stocks and bring it back to sectors here, Ryan,
07:44 because we have had a pullback here.
07:47 There has been a dip here.
07:48 And where would you be looking if you're looking to buy the dip?
07:52 Because I mean, there's dips in the IWM and the QQQ are much different.
07:56 The IWM is almost all the way back down to give back all of its gains for the year.
08:01 I don't know what the IWM is up on the year, but I think it's almost nothing.
08:05 Right. So like I'm just looking where it started.
08:07 The year I'm just nothing.
08:09 Nothing. It's basically nothing.
08:10 It might be up 1% for the year.
08:12 And then you got the S&P up 12%.
08:14 Would you stay with what's working with the S&P,
08:17 or would you start looking through the small caps and say, hey,
08:19 maybe there's a catch up trade here?
08:21 No. Great, great question there.
08:23 And I'll put it this way.
08:24 We we're expecting the catch up trade.
08:26 We have been overweight small caps for maybe a quarter and a half or so
08:30 approximately. So it hasn't worked the last two months.
08:32 I mean, no question there.
08:33 So I'm talking my book or not, but we just don't see a recession. Right.
08:37 We think the reality is the Fed is likely done.
08:39 You guys are just talking about some of this stuff.
08:41 You know, we think there could be a catch up trade.
08:42 Historically, small caps do really well in the fourth quarter
08:45 in the first quarter of a pre election year slash election year.
08:47 So so those are some things we're looking at.
08:49 And again, I know there's a lot more shorter term traders on this call,
08:52 but small caps are about as cheap as they've ever been relative to large caps.
08:56 So large caps are a little pricey.
08:58 We've been more neutral technology, even more overweight communication services.
09:01 We thought, you know,
09:02 tech's probably going to come back to earth a little bit.
09:04 Doesn't have to stop going up.
09:05 Maybe just go sideways or so.
09:06 And some of these other areas, cyclicals, we like cyclicals.
09:09 I mean, we've energy's been our favorite group.
09:11 I come on you guys for a while.
09:12 So we like energy.
09:13 Well, now everybody likes energy, but we've we've been comfortable in that.
09:16 We still see some reasons to think energy could do well.
09:18 So those cyclicals and small caps where we have some small tilts,
09:21 we run a lot of money for our more than 350 Carson partners.
09:23 And we've got some small tilts and cyclicals and small caps.
09:27 And it's kind of do or die.
09:28 I did that chart summit with JC the other day.
09:31 And and, you know, a lot of smart people are on there
09:34 talking about small caps or do or die level.
09:36 And I kind of agree.
09:36 I mean, there's some reasons that small caps better bounce now.
09:39 And we have seen that this week.
09:41 Finally, we've seen some small cap outperformance.
09:43 I get it's only a couple of days, but again, it's bouncing where it should be.
09:47 So we'll we're following that one real closely.
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