VRA Investment Letter: Semis; the Most Important Sector of the Bull Market. Is This the Melt-up?
/Good Thursday morning. Heads up; I’ll be on Wayne Allyn Roots new hit show on Frank Speech (Frank Network) tonight at 7:30 PM EST. Wayne, as many/most reading this know, has been the brains behind many of Trumps best ideas this campaign season. Smart move on Team Trump’s part. Each time I congratulate WAR for pushing through another idea, he tells me the same thing; ‘I listen to my base…they’re the best…most of these ideas come from them.” Some rare modesty from WAR :)
But seriously, Waynes been on fire. He’s fighting as hard as anyone to save America from what a Harris win would represent. Wayne and I go back more than 20 years…he’s the guy you want in the foxhole with you. Thank you again Wayne. Looking forward to being back on tonight.
VRA Market Update
Markets are sharply higher this AM. This may well be the melt-up we’ve been discussing. Yes, we’re hitting short term overbought levels…and if right on cue the Dow Jones fell 293 points yesterday. Tyler stressed this on his podcast yesterday; even though we’re short term overbought, nothing changes our bullish views on the market. These pauses will almost certainly be short-lived. I recommend his podcasts for those that want to really understand the inner workings of the markets and how we see them playing out…all based in the VRA System…it’s more valuable than anything you’ll see on financial MSM. Tyler takes his podcasts seriously. I learn something new most every podcast.
Semis; the Most Important Sector of the Bull Market, Flashing Big Buy Signals.
As Tyler also covered…and as we’ve been pounding the table on…the semis continue to look excellent. Think about this…this is where perspective really helps IMO. From the July highs, the semis…the clear market leader from the bear market lows…went on to plummet 28% (SMH) in just 3 weeks.
From ATHs to a 28% 3-week bear market! Both brutal and a massive gift at the same time…because it gave us our next great buying opportunity in the one sector that will continue to lead the innovation revolution higher. We are aggressively long the semis.
During the Dotcom melt-up we saw several tech shakeouts just like this, and “buying the dip” was the smartest strategy of all. From 1995–2000 there were 5 corrections of 10–20%, with a 32% bear market in Nasdaq, just 18 months before the final 170% parabolic move higher. We had a lot of people shaken out of their positions in these shake-outs…including me…I don’t intend to make that mistake again. Will we trade the semis? Absolutely. But…we have no intention of missing the big moves.
We’re loaded for bear in the semis. We think this will pay huge dividends. Semis up big on the earnings news from Micron last night, where they beat (top and bottom) and announced forward guidance that was highly bullish.
From yesterdays Letter:
“If this is the move higher that I’ve spelled out above, especially with China’s stimulus kicking in, this is when the semis/tech should begin to aggressively lead the market higher. The semis have a long runway in front of them before even sniffing overbought.”
We’ve been focused on this chart of SMH from the 8/5 bottom to current, including the breakout of this tight triangle…highly bullish. SMH looks ready for a charge back to ATH’s. SMH remains 10% from ATH. AKA a gift.
Making Money with Charles Payne
Here’s my interview from yesterday with Charles. This marked my 20th time being on his show….no one on Financial TV is more locked in than Charles. Great guy to boot…Charles is America-proud, through and through. Like Wayne, he’s played a huge role in the red-pilling of America, one of our 5 “Big Bribe” Megatrends.
https://rumble.com/v5gf2lp-kip-herriage-live-on-making-money-with-charles-payne-on-fox-business.html
China Launches Liquidity Bazooka — The Roaring 2020’s Picks Up Speed
The world is increasingly awash in fiat liquidity and easy money policies, and overnight, China officially (rejoined) the party. On Tuesday, the PBOC signaled the beginning of a fresh monetary/fiscal stimulus cycle, sending Chinese stocks higher overnight.
Joining the Federal Reserve and ECB’s recent easy money actions, China’s central bank (PBOC) just shot a mini-bazooka.
- Lowered interest rates and signaled more cuts are coming.
- Cut rates on over $5 trillion USD in mortgages.
- Eased rules for second-home purchases.
- Lowered the reserve ratio for banks, freeing up fresh liquidity.
- Pledged over $100 billion USD in equity market support and announced the creation of a stock market stabilization fund (AKA the Chinese Plunge Protection Team).
These announcements surprised the markets, along with the fact that China announced them all at once. Excellent news for all financial assets globally and likely especially bullish for commodities.
VRA Bottom Line: this is almost certainly just the beginning of China’s stimulus. Chinese equities….namely tech stocks…should benefit most, with Chinese tech stocks trading at their lowest P/E and cash flow multiples of more than two decades. The Roaring 2020’s just got fresh ammo (not that it needed it).
And know this; for those that think China’s decision to goose their markets…combined with the Fed’s outsized rate cut of .50%…isn’t being done to help Harris win in November, they should look up the word “naive” in the dictionary…especially if these coordinated moves result in a melt-up move higher for stocks into November. Follow the money. The State protects their own.
In addition to Tuesday nights stimulus bomb from China (we got even more overnight)… we talked about what’s happening in precious metals and miners. As Charles was nice enough to acknowledge, we’ve been pounding the table on this group too. Gold just hit $2700 for the first time with silver at its second highest price in history; $32.50
The miners continue to represent the cheapest sector there is. GDX is hitting its highest price in 30 months this AM at $41.80.
The bull market of bull markets…our long term prediction for this move higher in metals/miners….is now fully engaged. Gold hitting ATH after ATH ($2683), with silver at its second highest price on record ($32.15) and with the miners hitting 29 month highs.
Here too we’ve been pounding the table, with GDX up 59% from the late February lows. We’ve yet to see two important events take place in the miners; volume continues to be anemic…just 22 million shares traded in GDX yesterday.
Also know this; gold is hitting our most overbought designation of “extreme overbought on steroids (EOBOS) with GDX beginning to hit heavily overbought levels. Longer term, this bull market is just getting started.
Until next time, thanks again for reading…
Kip
Join us for two free weeks at VRALetter.com
Sign up to join us for our daily VRA Investing System podcast
