VRA Investment Update: Soaring Transportation and Housing Industries; It's Boom Time.
/Good Thursday morning. So I’m working out this morning when Delta Airlines reported earnings…a record beating quarter for both revenue and earnings…which included the statement that they are ordering a massive number of new planes to keep up with soaring travel demand, both in the US and abroad. At the same time we know that transportation stocks are on fire, hitting new 52-week highs yesterday. They’ll get another boost today, with DAL up 4% on the earnings news…
In addition to the red-hot transportation industry (our second-most important leading economic indicator in the VRA Investing System), housing stocks…our most important leading economic indicator…hit a fresh all-time high yesterday. Combined with home prices hitting all-time highs, the American homeowner has never been in better financial shape, with credit scores and net equity in their homes at all-time highs, while mortgage defaults are at all-time lows.
VRA Bottom Line: when both housing and transportation co’s are earnings record amounts of money, with their share prices hitting new 52 week and all-time highs, there’s one thing you can be extraordinarily confident of; the US economy is in excellent shape…frankly its in extraordinary shape…especially when you consider that we’re coming off of 41 year highs in inflation and we have Team Biden in the White House.
Obama, Part Two
Many/most investors feel that it’s remarkable to see this economy and new bull market occurring (we forecast this in “The Big Bribe”), which is exactly why so many investors have been on the wrong side of this new bull market. It just doesn’t seem possible that we could have both a strong economy and runaway bull market, certainly not with this America-hating administration.
I remember this feeling well, as its exactly how I felt a couple of years into Obama’s presidency. In addition to having to deal with QE and insane levels of stimulus/bailouts (thanks again to W Bush for that too), we were having Obamacare crammed down our throats. Remember the Big Lie, that you’ll be able to keep both you doctors and your plans, while saving $2500/year?? Obama only said that publicly, dozens of times. Criminal.
I was hyper-bearish on both the economy and markets, which included being on the wrong side of a stock market that just kept going higher and higher. It was 6 months of pure hell. Then I reminded myself that I was a trend follower and what the hell was I thinking being short a stock market that was going up, even on bad news (a big tell).
I get that same sense from investors today. I think its worse…far worse…and certainly more fearful. Hey I get it. There’s a LOT to be fearful of.
As investors, entrepreneurs, leaders and the smart money, our job is to fight the emotions that come with following the MSM’s nonstop fear mongering. As contrarians, fighting the majority has always come a bit easier for me. This is also why I started building the VRA System more than 3 decades ago. It’s very hard to make money in the markets if you’re on the wrong side of big moves, in either direction.
This is why we spend so much time on getting the primary trend right and then making sure we’re also in the right sectors/stocks.
Both of my mentors drilled this into me (RIP Ted Parsons and Mike Metz); “do you want to use feelings when investing or do you want to actually make money for your clients and beat the markets?”
This is doubly-true when you’re using leveraged ETF’s, as we do in the VRA Portfolio. We don’t have the luxury of being on the wrong side of the markets. When 9/12 VRA System Screens are bullish, we must be bullish.
And when housing and transportation and the semis and the generals are soaring, we must be aggressively long stocks and ETF’s.
The market is broadening out. Textbook early bull market action.
VRA Quick Hitters
-Yesterday June’s CPI came in exactly as we expected, beating forecasts, as consumer prices rose just 3% last month, the 12th consecutive decline in year over year inflation and the lowest level since March 2021. Core CPI actually came in lower than we expected, beating estimates with 4.9% y/y, the lowest reading since October 2021.
Solid CPI beats. The key point to remember is that this is the beginning, not the end, as Tyler and I have been covering here daily and on our VRA Investing Podcasts.
VRA Megatrend Theme: Innovation = deflation = lower consumer prices = lower rates = rising corporate earnings and home prices = long term bull market picks up speed. You’ll be seeing this a fair amount in the weeks/months/years to come (just as we spelled out in “The Big Bribe”.)
- We’ve been pounding the table on precious metals and miners. What a truly great set-up, both fundamentally and technically. Silver is up 9% in 3 days. This move should continue, certainly with a heavily bearish-looking US dollar. As rates plummet…our call…this group will go parabolic.
- I’ve also been pounding the table on China, specifically Chinese tech stocks. Keep buying KWEB, which is up 12% over the last 4 days. Big move higher coming here.
Strong Analytics Point to Strong Second Half
- Over the last decade, July has been the strongest month of the year for the S&P 500, with gains in 9/10 years and an average gain of 3.3%.
- When the S&P 500 is up 10% through first 6 months of the year (its up 14% now) the last 6 months of the year have posted average gains of 12.4% (with gains 89% of the time).
Know this: when the analytics, technicals and economic fundamentals are all lined up…as they are now, with 9/12 VRA Investing System Screens bullish…especially with semis/tech leading the way higher, “fighting the tape” is a losing proposition.
VRA Bottom Line: we are in a new bull market. We remain long and strong as we continue into the best year on record (pre-election years are hugely bullish). As always, we’re keying off of the semis, housing, transports and the generals. We have been aggressively long from the 10/13 bear market lows and will likely remain long, relying on the VRA Investing System to tell us when to take profits and/or add to/reduce positions. Our long term target for the Dow Jones remains 100,000, as we expect Nasdaq to triple as well.
If you haven’t already, you’ll want to order “The Big Bribe”, where we spell out each of the bull market megatrends that are driving the economy and markets higher (for years to come). We like being right but its more important that we crush Mr. Market.
Until next time, thanks again for reading…
Kip
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