VRA Investment Update: Tesla, Semis and Housing; Extreme Overbought on Steroids. "Buy the Dip" Remains the Play.
/Good Thursday morning. We started the week with each US broad market index trading at (or “very” near) our most overbought designation on the VRA Investing System; “extreme overbought on steroids”. The S&P 500 and Nasdaq have now surged to their highest levels in 14 months, as “buy the dip” looks very much to be the smart money theme of this young bull market. As in, if you blink you’ll likely miss the dip. This is the nature of young (powerful) bull markets, certainly when they’re being led by tech/semis and housing stocks. Melt-up markets don’t allow for pauses that last more than a brief period.
However….
Important VRA trading/investing note: while we called the market bottom on 10/13/22 (a top 3 capitulation of my 37 year career) and then forecast in our new book “The Big Bribe” that we have entered a 1995–2000 dot-com-like bull market. This current level of overbought in the VRA System and our discipline prevents us from adding to our broad market ETF positions, while continuing to add to our VRA 10-bagger growth stocks using monthly dollar cost averaging.
I’ll illustrate just how overbought we are, via charts of 3 of our top positions; Tesla, Semiconductors and Housing.
Charts of 3 Top Positions; Extreme Overbought on Steroids
Tesla (TSLA)
We added Tesla to the VRA Portfolio on 5/18 at $174, giving us 1-month gains of 51%. While we will continue to hold TSLA, as seen below, it’s now reached extreme overbought on each of our momentum oscillators (RSI, MACD, Stochastics and MFI) making any new purchases at these levels “higher risk”. We doubt that the dips will last long.
Semiconductors (SMH)
We have aggressively recommended SOXL (3 x Semi ETF) from the 10/13/22 capitulation lows, giving us 8-month gains of 302%. As seen below, the semis have reached extreme overbought on each of our momentum oscillators (RSI, MACD, Stochastics and MFI) making any new purchases at these levels “higher risk”. As with Tesla, we doubt that the dips will last long.
Housing (HGX)
We have aggressively recommended NAIL (3 x Housing ETF) from the 10/13/22 capitulation lows, giving us 8-month gains of 242%. We sold half of our position this morning, as seen below, housing has reached extreme overbought on each of our momentum oscillators (RSI, MACD, Stochastics and MFI) making any new purchases at these levels “higher risk”. As with Tesla and Semis, we doubt that the dips will last long.
VRA Bottom Line: VRA Investing System Upgraded to 9/12 Screens Bullish
As overbought in the short term as we may be, the improvement in the internals, small caps and transports have upgraded the VRA System to 9/12 Screens Bullish.
While our discipline prevents us from adding new broad market ETF positions here, we highly recommend that our newer VRA Members (and those looking to add to positions) do so on pauses/shakeouts. While its true that “bad things tend to happen” at this level of overbought, its also true that markets that reach extreme overbought and stay there for extended periods are our most explosive bull markets.
We’re in the first inning of a long term, highly explosive bull market that we believe will last years.
Fox Business Interview with Charles Payne
Here’s my interview from Tuesday on ‘Making Money’ with Charles Payne
https://rumble.com/v2via3f-kip-herriage-live-on-making-money-with-charles-payne-6.20.23.html
Analytics That Point to Long-Term Bull Market
Lastly, here is the compelling the data that Tyler covered in his interview with Wayne Allyn Root last Friday. The train is leaving the station.
Until next time, thanks again for reading…
Kip
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