JC's Revenge

Summary

Podcast Summary: The Compound and Friends – Episode: JC's Revenge

Release Date: January 17, 2025
Hosts: Downtown Josh Brown, Michael Batnick, and Guest J.C. Parets
Title: JC's Revenge

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1. Tribute to Industry Legends (00:00 - 00:35)

The episode opens with the hosts mourning the loss of two industry legends, David Lynch and Bob Ucher. Josh Brown remarks, "We lost two legends today. David Lynch and Bob Ucher" [00:00]. The conversation briefly touches on the challenges of cold calling, setting the stage for deeper discussions on investment strategies.

2. The Art of Cold Calling and Investment Pitches (00:36 - 03:08)

J.C. Parets critiques a recent cold call approach used by Juan Carlos Perez, emphasizing the importance of building rapport and asking confirming questions. Parets states, "You have to ask a yes question right off the bat" [02:23]. The discussion highlights effective versus ineffective sales techniques, particularly in pitching stocks like MicroStrategy.

3. Sector Rotation and Stock Performance (03:09 - 11:00)

The trio delves into sector rotation, analyzing the performance of industrials, materials, and consumer discretionary stocks. Michael Batnick shares his investment in Caterpillar, noting, "I own Home Depot because industrials homies don't trade like consumer discretionary stocks" [09:33]. They discuss the volatility of stocks like Alcoa and Deere, debating the implications of regulatory actions and technological advancements on these sectors.

4. Sentiment Analysis and Market Indicators (11:01 - 23:05)

J.C. Parets introduces sentiment analysis as a tool to gauge market mood, referencing surveys from individual investors and newsletter writers. Michael Batnick observes, "Investor sentiment is not a headwind" [39:57]. The hosts examine money flows into money market funds, noting a significant increase of $66 billion in a single week [40:31], and discuss its potential impact on the stock market.

5. International Markets and Currency Correlations (23:06 - 44:10)

The conversation shifts to international markets, focusing on the performance of Chinese equities and the strength of the U.S. dollar. Parets highlights, "We've been using Todd Stone's charts... there's some choppy consolidation which is totally normal after two 20 plus percent years" [33:48]. They analyze the correlation between the dollar and bond yields, debating whether the dollar is peaking and its potential effects on commodities and energy stocks.

6. Commodity Supercycle and Energy Sector (44:11 - 59:55)

Michael Batnick and J.C. Parets explore the prospects of a commodity supercycle, particularly in precious metals and energy stocks. Batnick asserts, "If you believe that we're in the midst of a commodity supercycle, which I believe that we are, then I have a hard time believing this isn't going to break out" [60:05]. They discuss specific stocks like Freeport-McMoRan (FCX) and gold, forecasting significant price movements based on market trends.

7. Short Selling and Market Vulnerabilities (59:56 - 75:16)

The hosts touch upon the challenges of short selling, mentioning Nate Anderson's retirement from professional short selling. Parets advises caution, stating, "It is not easy. It's not for the faint of heart" [75:06]. They critique overhyped stocks like Eli Lilly, suggesting potential downturns despite strong performance indicators.

8. Cryptocurrency and Bitcoin Analysis (75:17 - 84:26)

Bitcoin is analyzed in the context of market consolidation. Batnick discusses Bitcoin's behavior, "Bitcoin taking a nice little breather at the 161.8% extension of the base" [64:44]. They debate the significance of technical patterns and Fibonacci extensions, with Parets expressing skepticism about short-term consolidation prospects.

9. Closing Thoughts and Future Outlook (84:27 - End)

In the concluding segment, the hosts summarize their investment outlook:

• Dollar Strength: Potential rollover could impact bond yields.
• Commodity Prices: Energy and precious metals poised for growth.
• International Markets: Continued opportunities in Chinese equities.
• Sector Rotation: Ongoing shifts favoring industrials and consumer discretionary over staples.

Josh Brown invites listeners to explore further resources, stating, "Go to get the charts.com and get all of the charts that we discussed today" [87:12]. The episode wraps up with light-hearted banter about sports and personal anecdotes, maintaining the engaging and personable tone of the show.

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Notable Quotes:

• "You have to ask a yes question right off the bat." — J.C. Parets [02:23]
• "Investor sentiment is not a headwind." — Michael Batnick [39:57]
• "If you believe that we're in the midst of a commodity supercycle, which I believe that we are, then I have a hard time believing this isn't going to break out." — Michael Batnick [60:05]
• "It is not easy. It's not for the faint of heart." — J.C. Parets [75:06]

Conclusion:

In "JC's Revenge," Josh Brown, Michael Batnick, and guest J.C. Parets provide a comprehensive analysis of current market trends, investment strategies, and sector performances. Through technical insights and candid discussions, they offer listeners valuable perspectives on navigating the complexities of business and investing in 2025.

Transcript

[Josh Brown]

So we lost two legends today. David lynch and Bob Ucher.

[Michael Batnick]

Yeah, man.

[Josh Brown]

Just a bit outside.

[Michael Batnick]

Just a bit outside.

[Josh Brown]

Well, you know, Roger Dorn was oh for the century. Was it Roger Dorn with cephal fell tips? Roger Dorn?

[Michael Batnick]

I think so.

[J.C. Parets]

David lynch was a strange, strange man.

[Josh Brown]

Buddha jumbo.

[J.C. Parets]

Jc. That was messed up, what you did to that K. That. That cold.

[Josh Brown]

Have you gotten.

[J.C. Parets]

Have you got that cold called you?

[Josh Brown]

Have you gotten that before?

[Michael Batnick]

Yeah.

[Josh Brown]

Oh, you have?

[Michael Batnick]

Yeah.

[Josh Brown]

You're like on a list.

[J.C. Parets]

You just abuse.

[Michael Batnick]

You pick up.

[Josh Brown]

Because you pick up.

[Michael Batnick]

No, usually I'm nice. I'm like, listen, good luck.

[J.C. Parets]

You and I were in not so long ago. No, I feel like you should have heard him out.

[Josh Brown]

You're looking for new ideas.

[Michael Batnick]

He sucked.

[J.C. Parets]

He sucked.

[Josh Brown]

He was weak.

[Michael Batnick]

We're baby him.

[J.C. Parets]

All right, how would you. How would you pitch MicroStrategy as a cold call? Because whatever he did was like, he. He did the ticker. Okay, but like, he didn't ask a confirming question. You have to ask.

[Josh Brown]

No, he did. He said, how would you like to make 300% in just a few short months?

[J.C. Parets]

He didn't phrase it that way.

[Josh Brown]

Yes, he did.

[Michael Batnick]

Yeah, he did.

[J.C. Parets]

He did.

[Michael Batnick]

That was pretty good, actually.

[Josh Brown]

How fast?

[J.C. Parets]

It didn't land with me. No, you have to be like, hello, Juan Carlos. And they say, yeah, it's me. You've got to ask a yes question right off the bat.

[Josh Brown]

Did I catch you a good time?

[Michael Batnick]

Get him in the.

[J.C. Parets]

That works.

[Josh Brown]

I catch you at a good time.

[J.C. Parets]

Saying, yes, that works. You have to get him in yes mode.

[Michael Batnick]

Why say no when it feels so good to say yes?

[J.C. Parets]

No, but. So. So you. But you kind of messed with him so he didn't get a chance to get into his room.

[Michael Batnick]

He's like, are you pulling my leg?

[J.C. Parets]

So he's like, okay, name of the company is MicroStrategy. What did he say?

[Michael Batnick]

Ticker symbol. MST.

[Josh Brown]

He started with a ticker symbol, but.

[J.C. Parets]

Then he was like, no.

[Josh Brown]

The best part was he gave us a ticker cycle.

[J.C. Parets]

My. My. M for micro. S for seaweed or something. It was weird.

[Michael Batnick]

Weak sauce.

[J.C. Parets]

Weak sauce. And then he's like. Instead of saying, I trust you've heard of the company. He didn't do it. That's what you have to do.

[Josh Brown]

Let me ask you a question. Is an overwhelming amount of demand for a stock Bearish jc Not historical.

[J.C. Parets]

No. But do you know why? You have to ask the person. I trust you're familiar with the company.

[Josh Brown]

Why?

[J.C. Parets]

Cuz if they are, then you've built affinity with the person and they want to keep talking. And if they're not, they feel stupid that they've never heard of it. And then they really want to listen to what you have to say. So it goes like this. Hi, this is Juan Carlos Perez. Did you just do.

[Josh Brown]

Just sprinkle a little accent?

[J.C. Parets]

Yes, I was like a little accent. I almost rolled my R and my L. No, but, but the name of the company I want to tell you about is MicroStrategy. I trust you're familiar with the name. Yes, of course you are.

[Josh Brown]

Yeah, why wouldn't you be?

[J.C. Parets]

You know, because you know what's going on.

[Michael Batnick]

You're a successful businessman.

[J.C. Parets]

While you may be familiar with the company, what you might not be aware of is a coming up in the next two weeks. Grab a pen. I want you to take down some notes and I'll walk you through it. Let me know when you're ready. And then your person says, I'm ready. So you need to get those confirmations along the way. Yes, I'm ready. Okay, I agree. Yes, I hear you. You have it. Has to get that kid never. Because you need a running start. And you kept with him. You're like, hold on one second, I'm going to the bathroom.

[Josh Brown]

I can't believe that's still a thing in 2025.

[J.C. Parets]

Dude, he's in 1185 6th Avenue. Who is the guy that Cold called you?

[Michael Batnick]

Oh, you looked it up?

[J.C. Parets]

I looked up the firm.

[Michael Batnick]

Can you get me one that's not Floppy Johnson? This is like.

[Josh Brown]

Wait, Vanguard's at 1165?

[J.C. Parets]

Yeah, it's not Vanguard. 1185 Avenue. The Americas is like, you know where that is?

[Josh Brown]

Radio City?

[J.C. Parets]

No. Yeah, it's, it's, it's Rockefeller center area.

[Michael Batnick]

Like a California pizza. Like all limp, you know.

[J.C. Parets]

Anyway, the stock is $365.

[Michael Batnick]

Yep.

[J.C. Parets]

Let's say he took you to the mat and closed you. How many shares would you have done first time out with a new broker? 100 shares.

[Michael Batnick]

100 shares.

[J.C. Parets]

That's my rule.

[Michael Batnick]

Yeah. And then I put it on a spreadsheet and I keep track of how you did.

[J.C. Parets]

You know what's crazy about pitching MicroStrategy is that thing moves up and down 20, 30 points in a day. Imagine the renegs if like bitcoin has a rough week. You could end up with like five people reneging on you.

[Michael Batnick]

Yeah, that's a bummer.

[Josh Brown]

I bought MicroStrategy on the close on 2 on Monday. Unironically.

[J.C. Parets]

Michael Cold called himself and and closed himself.

[Josh Brown]

First time I've ever bought the stock.

[Michael Batnick]

Really? Yeah, I got the Caterpillar.

[Josh Brown]

What does that mean, you bought Caterpillar?

[Michael Batnick]

Okay, rotation, rotation, rotation.

[Josh Brown]

Okay. It does look good. Is this still a bellwether?

[Michael Batnick]

Yeah.

[J.C. Parets]

For what?

[Michael Batnick]

Yeah, industrials. Yeah, yeah, of course.

[Josh Brown]

Still the biggest one.

[Michael Batnick]

I don't know if it's the biggest. I think GE is the biggest.

[J.C. Parets]

Oh, did you see what they did with deer today?

[Josh Brown]

Deer? No. You like that stock or you have historic flat forever. Ooh, ooh. It's on breakout watch. Pull up deer.

[Michael Batnick]

J say yeah, no, I know.

[J.C. Parets]

On their way out the door the FTC sued them for $6 billion or something. Because the way those tractors work now, you can't repair it yourself so you're forced to pay a service contract where. And most of the stuff that goes wrong goes wrong with the onboard computer and Deere can access it remotely and fix it for you.

[Josh Brown]

Who's fixing a cat? A Deere tractor by themselves?

[J.C. Parets]

No. If something goes wrong with it, you almost need software support to. Because they're just rolling computers at this point.

[Michael Batnick]

Buying Alcoa.

[J.C. Parets]

So the FTC says materials look like garbage, don't they? Says it's on.

[Michael Batnick]

Oh, Michael.

[Josh Brown]

But they do. I'm not buying alcohol.

[Michael Batnick]

It's a bull market. I don't know if you heard.

[Josh Brown]

What? Higher lows. What do you like about this?

[Michael Batnick]

That it's going to go higher and I could sell it at a higher price than where I buy it.

[J.C. Parets]

Which name? Which name?

[Michael Batnick]

Alcoa.

[Josh Brown]

No, does not look good.

[Michael Batnick]

All right, I guess we'll see what happens.

[J.C. Parets]

We don't do Alcoa here.

[Michael Batnick]

Oh, oh no.

[Josh Brown]

Remember Kenny used to trade.

[Michael Batnick]

What if it goes up 300% in the next several months?

[Josh Brown]

Kenny used to trade Alcoa earnings.

[J.C. Parets]

Kenny Glick.

[Josh Brown]

Yeah. And you called it the Iowa Caucus of earnings. Or did he?

[Michael Batnick]

It's the first one it used to go.

[J.C. Parets]

It used to be because it originally was alphabetical. So Alcoa is aa. So it was Agilent and Alcoa was the first trade.

[Josh Brown]

I don't hate it. It's got higher lows, but there's so many better looking charts.

[J.C. Parets]

The problem with this is if you're wrong on the trade and you stick with it, then you own basically.

[Josh Brown]

Here's what I like, Jason. Here's what I like about this trade.

[Michael Batnick]

It's aluminum.

[Josh Brown]

If it rolls, the stop is so obvious.

[Michael Batnick]

I guess we'll see what happens is.

[Josh Brown]

A stop right under the recent lows.

[Michael Batnick]

At like same as Cowder brother.

[J.C. Parets]

Same trade I get. I gave my.

[Josh Brown]

But it's. But the charts don't look the same. You're saying they're moving on the same shit? What are you saying?

[J.C. Parets]

Yeah, pull up a ui. I gave Mike this breakout on Tuesday. I gift wrapped it for him.

[Josh Brown]

Yeah, did you buy it?

[J.C. Parets]

No, I gave it to you. I said look at it. It's up again today.

[Josh Brown]

I can't buy this chart. Sorry.

[J.C. Parets]

I did this for you.

[Michael Batnick]

Are we flipping the book? Long China or what?

[Josh Brown]

What are you buying?

[Michael Batnick]

Long Communism, Short capitalism, fxi.

[Josh Brown]

It doesn't look terrible.

[J.C. Parets]

Yeah. I dare you.

[Michael Batnick]

No, I got a Chinese software stock that probably doesn't even make software. But it doesn't matter, Right?

[Josh Brown]

My favorite story about that is farming. That's a biotech stock. I thought it was a semi. Ah, who cares, dude?

[Michael Batnick]

We made like seriously, like 400% on Sea Limited. And the entire time Sean thought it was a shipping stock.

[Josh Brown]

Yeah, it makes sense.

[J.C. Parets]

What is Sea Limited?

[Michael Batnick]

It's like the Amazon of Singapore. But Sean thought it was like.

[J.C. Parets]

He thought it was like vessels.

[Michael Batnick]

Yeah. Cause he was buying. I mean, it was one of the best trades of I think two years ago, not last year. The entire time he thought it was a shipper.

[Josh Brown]

Yeah.

[Michael Batnick]

Like we were taking profits. He's like, wait a minute.

[J.C. Parets]

Can I say one thing?

[Michael Batnick]

The Amazon of Singapore, I thought it was a shipping company.

[J.C. Parets]

Dude, that's a real tech. That's a real technician who literally doesn't even know what the stock is. That's hardcore.

[Michael Batnick]

He doesn't care. He just likes that we like this stuff.

[J.C. Parets]

It's not what I do. You know, it's not what I do. But I respect it.

[Michael Batnick]

Yeah.

[J.C. Parets]

Because that's the real. If. If that's the. That's the real discipline is like it's on price.

[Michael Batnick]

Yeah.

[J.C. Parets]

I'm not going to talk myself into the fundamentals. I can't. Cause if price violates, I need to sell it. I don't need to fall in love with it.

[Josh Brown]

Yeah, you just change the story.

[J.C. Parets]

Can you do that?

[Josh Brown]

Do what?

[J.C. Parets]

Can you just buy a chart?

[Michael Batnick]

Yeah, I can, but Sean's not buying a chart. Sean is buying a stock that he knows that we like. Like we put on the common and then.

[J.C. Parets]

Oh, all right. So he's going by. So he's buying the option on a stock that he knows you guys like.

[Josh Brown]

Do you hate this? I took a flyer on the zeros this week. Rates.

[Michael Batnick]

No, I don't hate that at all.

[Josh Brown]

Thank you. I thought you might not hate it.

[J.C. Parets]

What's the rationale on the zeros.

[Michael Batnick]

Because the Korean one is going to rally.

[Josh Brown]

No, because here's the thing. I think that. I just think the rate story went too far.

[J.C. Parets]

Number one, so do I.

[Josh Brown]

Number two, all I am is stocks. I don't have any offsets. So in the event of something unforeseen, these are going to rip.

[J.C. Parets]

So, problem is, though, there's a positive correlation between stocks and that. That bond. Right now.

[Josh Brown]

I don't know. Right now. Fine.

[J.C. Parets]

That could change. Well, but I'm. I'm saying, right, like, aren't we still locked in that paradigm where higher rates, negative stocks?

[Michael Batnick]

I wouldn't for liking duration correlation, but I think it can be moving forward.

[J.C. Parets]

Hmm.

[Josh Brown]

You like duration?

[Michael Batnick]

Yes.

[Josh Brown]

Thought you might. You're a gentleman and a scholar.

[J.C. Parets]

Meaning what? You think bonds rally?

[Michael Batnick]

Yeah.

[J.C. Parets]

So do I. Why?

[Michael Batnick]

Because I think rates go down.

[J.C. Parets]

So do I. But you don't have like.

[Josh Brown]

We're all aligned.

[J.C. Parets]

You don't have, like, an economic reason for that. You're looking at.

[Michael Batnick]

Do I usually.

[J.C. Parets]

No, that's my point.

[Michael Batnick]

Yeah. No, I think the dollar falls.

[J.C. Parets]

We're at in the same place.

[Josh Brown]

I think the dollar falster.

[Michael Batnick]

I think the dollar falster.

[J.C. Parets]

We're in the same place. Yeah.

[Josh Brown]

You buying any homies?

[Michael Batnick]

No, but homies are trading like industrials, so I bought Caterpillar, which is like buying homies. I own Home Depot because industrials homies don't trade like consumer discretionary stocks. They trade like industrials. And Straza has a really good theory about that because the homies don't sell to the consumer. They sell to businesses like industrials do. So that's his theory as to why they don't.

[J.C. Parets]

Yes and no. Depends on. Depends on which. So XHB has William Sonoma in it. You know what I mean?

[Michael Batnick]

Yeah, but Trey's exactly like itb.

[J.C. Parets]

Oh, they're. They're close.

[Michael Batnick]

Okay, I'll put both of them. Overlay. You wouldn't be able to know. Tell me which one. I wouldn't be able to tell you which one.

[Josh Brown]

J.C. i own HD and Sherwin Williams. They're both. There's both.

[Michael Batnick]

Did you just tell me the material stocks suck? You're telling me that you about Sherman Williams?

[Josh Brown]

That's how it's a. It's a homebuilder.

[Michael Batnick]

It's the largest material stock or second largest. Sherwin Williams is not a home builder.

[Josh Brown]

I know, I know, I know, but it's in the home builder basket. It's way more of a. Of a rate stock, housing stock than it is a material stock. It's not a material stock. It might be classified as such, but it's not material stock.

[J.C. Parets]

It's like he stole that pointing thing for me. But he doesn't do it right. I do it hip hop where I'm like. He's like this.

[Josh Brown]

I can't point the gun.

[J.C. Parets]

That's it. No, not a gun. We don't do the gun.

[Michael Batnick]

Sherwin Williams is the only material stock in the Dow Jones Industrial Average.

[Josh Brown]

I'm pretty sure it just got added recently.

[Michael Batnick]

Let's do it.

[J.C. Parets]

Yeah, let's make the show.

[Josh Brown]

But I'm saying there's still time to get in.

[J.C. Parets]

Jc, stop pitching you shitty stock ideas.

[Josh Brown]

Sherwin Williams shitty stock.

[Michael Batnick]

It's the second largest component of the materials index.

[J.C. Parets]

That's right.

[Josh Brown]

Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor.

[J.C. Parets]

Today's show is sponsored by FP Alpha. FP Alpha just released a new tax planning tool available to individual advisors. Achieving scale in tax planning is one of the most challenging and rewarding business lines we are seeing in wealth management today. The tool is designed for advisors looking to balance limited time with valuable insights on a client by client basis. To learn more, go to go.fpl.com compound for all the details.

[Michael Batnick]

Welcome to the compound and friends, all opinions expressed by Josh Brown, Michael Batnick and their castmates are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

[Josh Brown]

Yeah, it's no serve.

[J.C. Parets]

All right, we're starting the show. Ladies and gentlemen, you are now rocking with the all time best investing podcast. We are heard around the world. Heard from listeners as far as Sydney, Melbourne, New Jersey. Melbourne, right? Not Melbourne.

[Michael Batnick]

Melbourne.

[J.C. Parets]

What? Melbourne, Melbourne. No. All right. Ireland, Canada, India. Tons of stock traders in India. I know you know that firsthand fans around the world. First time listeners. Long time listeners. Last time listeners.

[Michael Batnick]

Sorry.

[J.C. Parets]

We do our best. Welcome to the show. This is the Compound and Friends now in its fourth year of operation. I'd like to welcome back fan favorite. I think this is your 75th appearance on the show. Ish. Ladies and gentlemen, Mr. J.C. perez. J.C. is the founder chief strategist for All Star Charts, a technical analysis research platform for hedge funds, RIAs, family offices and individual investors. JC, welcome back to the show. Good to be here with me as always, my co host, Mr. Michael Batnik. Michael Say hello.

[Michael Batnick]

Hello.

[Josh Brown]

Hello.

[J.C. Parets]

All right. Michael said something wild to me a week ago today and I haven't been able to stop thinking about it and I would like for you to help me. And gang up on him. No, you might agree with him. Actually, I really don't know. I don't want to move the goalposts for what you said. This is what I think you said. We were talking about Nvidia and long term winners and like ten baggers, Hundred bag. Nvidia is a hundred bagger for me. Okay. So we were talking about whether or not people that own Nvidia over the last 10 years got lucky or if there's skill involved in that. And my comment is of course there is.

[Josh Brown]

It's not of course there is what?

[J.C. Parets]

Of course there's skill involved. You can't, you can't have a stock go up a hundred X over the course of eight years where it's been cut in half multiple times, it's been downgraded a thousand times, and you stay with it. You can't say there's no skill. It's not trading skill, it's something else. I feel like it's emotional temperance. And to me, that's every bit as impressive as somebody who calls himself a consistently profitable trader and routinely beats the market every quarter with their. It's. It's two different things, but one is not less impressive than the other. To me, Michael's like, no, it's a lottery ticket. You don't get credit for owning a lottery ticket. I don't see it that way. I would love to hear what you think.

[Michael Batnick]

I mean, listen, at the end of the day, I think for some people it was a lottery ticket and they did get lucky. Right. In other cases, they know things about the semiconductor space that you and I and Michael will never understand, right? We don't live in Taiwan. We don't, we know about like basketball maybe, you know.

[J.C. Parets]

But hold on, but is it a lottery ticket?

[Michael Batnick]

No, but hold on. But then there's the. If you're long, the market, right? And The S&P 500 is the greatest momentum strategy ever because it's buying more of the best ones and kicks out the worst one. So as Nvidia is going higher, you're buying more. You won't. You have more exposure. But at the end of the day. And so all those people are in Nvidia for different reasons. Doesn't make them dumb or smart, they're just in. And that's a strategy. What I want to point to in Nvidia is the relative strength. Right? The relative strength has been there. So it just goes back to the cream rises to the top. If you remember, Nvidia broke out relative to the rest of the market. So Nvidia broke out on an absolute basis in the spring of 23. People were still telling me that we were in a bear market and this was just a bear market rally and all that bullshit. Remember that? But Nvidia was already breaking out to all time highs.

[Josh Brown]

I guess he won't answer your question, but I guess.

[J.C. Parets]

All right, so back to you. If somebody says I don't know anything about the stock, I'm just gonna randomly buy it and if I get lucky, I get lucky. And then they end up holding a stock that triples, that's a lottery ticket. Okay, okay. If somebody says I'm buying Nvidia specifically because one day machine learning and augmented reality and the Metaverse and virtual reality and AI will require the type of processors that they dominate in. That's not a lottery ticket. I didn't say that person called their shot and stuff. So I guess the question then becomes like, how did you end up owning this stock? Like did somebody just say buy Apple and then you bought it and forgot about it? There's no skill there. Like you got lucky. Fine. So I think it comes back to like why somebody bought it and why they held.

[Josh Brown]

So listen, I agree with that. I don't disagree with anything.

[Michael Batnick]

It depends on why they bought it.

[Josh Brown]

What you described is valid. That's skilled. If somebody's strategy is, hey, listen, I buy 30 of these, you know, flyers a year. I buy sub $10 billion companies or whatever the number is. Yeah, and some go to 0 and some 100x. That's a sound strategy if you implement that. But he.

[J.C. Parets]

But sounds lottery esque to me though.

[Josh Brown]

Yeah, okay, but that's a strategy going into it if you're just like, I don't know, like I bought six of these stocks and something worked. Like, I don't think that's, that's not skill. It's not repeatable. There's no.

[J.C. Parets]

So, so we agree.

[Josh Brown]

What I was saying. I don't, I don't give people credit for sitting through an 80% drawdown. And then the stock happened to work. Because here's what I know from J.P. morgan's eye in the market. Our friend Michael Semblis wrote a piece called the Agony and the Ecstasy. And let me quote Michael. More than 40% of all companies that were ever in the Russell 3000 index experienced a catastrophic Price loss, which we define as a 70% decline in price from peak levels which never recovered.

[J.C. Parets]

How many?

[Josh Brown]

40%.

[J.C. Parets]

So 60% don't.

[Josh Brown]

So if you know that 4 in 10 stocks experience a catastrophic decline from which they never recover, then I don't really give you credit for ones that happen to recover.

[J.C. Parets]

You have it backwards. You deserve even more credit.

[Josh Brown]

No.

[J.C. Parets]

Yes. Because you lived through a catastrophic decline and you stuck with it, knowing that those are the odds against you. You got even more credit for that.

[Josh Brown]

If you knew the odds, you wouldn't invest this way.

[J.C. Parets]

Invest which way?

[Josh Brown]

By. By sticking with catastrophic declines. So I. I don't think you deserve credit for sitting through monster drawdowns.

[J.C. Parets]

So from my perspective, you should get even more credit for the catastrophic drawdowns you survived. Yeah, I.

[Josh Brown]

Listen, I.

[J.C. Parets]

And if you add to your position in those drawdowns and stick with it, so. And then the stock works. You are a good investor, so I.

[Josh Brown]

Don'T know about that. I think sitting with. Sitting through a hundred bagger and sitting through the drawdowns that you will get is impressive. To have the, the fortitude, the stomach to sit with that. That's impressive. I agree, but that's not skill.

[J.C. Parets]

So. I do think it's skill, but it's a different type of skill. It's the skill of thinking long term and controlling your own emotions.

[Josh Brown]

Yeah, I respect that. It's hard. It's hard as shit. I can't do it. I can't do it.

[J.C. Parets]

These are the best stocks in history. Costco, Nvidia, Apple, Old Dominion.

[Josh Brown]

This. This is great.

[Michael Batnick]

Yeah. Why hate Old Dominion?

[J.C. Parets]

Was it one of the best stocks in history?

[Michael Batnick]

Yeah.

[J.C. Parets]

Okay. Monster Energy is the best out of all publicly traded stocks now. I think it's the biggest return over the last 20 from IPO to where it is. Nvidia might have a beat now, but it's in that list. This shit is hard to do.

[Michael Batnick]

Off the COVID lows, the biggest winner was Alpha Metallurgical. That.

[J.C. Parets]

I don't even know what that is.

[Michael Batnick]

It's a call stock. Yeah.

[Josh Brown]

That's hard to do.

[J.C. Parets]

So I think it's a skill. It's not the same skill as Steve Cohen. It's not even the same sport. It's not the same skill as somebody who is consistently beating the market.

[Josh Brown]

I'm not gonna die in this hill. It's hard. It's hard to measure, it's hard to quantify. It requires something.

[Michael Batnick]

Listen, at the end of the day, it's a bull market. It has been for Years people are making money. It doesn't make you smarter or dumber. It's easier to make money when stocks are going up. It's harder to screw it up. I mean, that's just what it is.

[J.C. Parets]

Which discipline has more inherent luck involved? Buy and hold, long term investing or trading?

[Michael Batnick]

I mean, I don't know enough about.

[Josh Brown]

Bad question.

[J.C. Parets]

What do you think?

[Josh Brown]

Because there's no luck in buy and hold. It depends what you're buying and holding. You hold.

[J.C. Parets]

There's no luck. You buy and hold.

[Josh Brown]

If you buy and hold in the index funds, that's not luck.

[J.C. Parets]

No. You pick two stocks to buy and hold.

[Josh Brown]

Oh, luck.

[Michael Batnick]

Yeah, yeah, that's luck.

[J.C. Parets]

Right.

[Michael Batnick]

I think it's on a case by case basis.

[J.C. Parets]

In the year 2000, you pick two stocks to buy and hold. One is Hewlett Packard, one is Apple, one is flat.

[Michael Batnick]

I know, but who actually does these things? Nobody does this. Nobody lives this way.

[J.C. Parets]

Okay, how much, how much luck is involved in trading relative to luck involved in long term invest?

[Josh Brown]

Let me answer this for you.

[Michael Batnick]

I think it depends on the person.

[Josh Brown]

Hold on.

[Michael Batnick]

Right. Like is Eddie elfenbein, who picks 10 stocks, is he getting lucky?

[J.C. Parets]

No, no, he's skilled.

[Michael Batnick]

Right. Okay, so some people are skilled and some people are lucky.

[Josh Brown]

You can't be a lucky trader for that long. Eventually your luck will.

[Michael Batnick]

That's right. That's right.

[Josh Brown]

If you make money over a period of time trading, you're skilled.

[Michael Batnick]

Yeah.

[Josh Brown]

Because otherwise your luck runs out.

[Michael Batnick]

Yeah, that's right.

[J.C. Parets]

So, right. You can have a lucky year not knowing what you're doing.

[Josh Brown]

You can have a lucky few years.

[Michael Batnick]

And you can make a lot of money because your strategy is great in bull markets. And then comes the bear market. You're wiped out.

[Josh Brown]

Exactly.

[J.C. Parets]

You know what's so funny? I got all these, like, emails at the end of 2021 or the middle of 2021. All these, like, pitches. Like, this trader made 500% during the pandemic and used the money to help his, like, community save the rec center or whatever. And they want me to, like, have him on the podcast. And like, a couple of them, I picked up the phone, I'm like, all right, dude, you're 21 years old. Sounds like you have a cool story. There's no way any of these people are still trading consistently profitable. There's no way any of them have had a better year since 2021. That's an environment where 95% of stocks go up 30%.

[Michael Batnick]

Well, as a matter of fact, it was actually the greatest 52 week period in the history of the United States stock market. And just before that, you had the largest inflows into money market funds. And we haven't had that many inflows until last week.

[J.C. Parets]

Yeah, so that's wild, right?

[Josh Brown]

That monster inflow last week, that had to be one big account.

[Michael Batnick]

I don't know what these people are so scared about. No, it's not because retail and institutional.

[J.C. Parets]

I think that's people moving money into their brokerage accounts. I don't know what is scared of us this year. I don't. I think that's a prelude.

[Josh Brown]

What if they're getting ready to buy a house?

[J.C. Parets]

No, no, no, no.

[Michael Batnick]

Institutions are not buying houses.

[Josh Brown]

But what if they are?

[Michael Batnick]

They are not Blackstone. Nope.

[J.C. Parets]

But where do they move the money from? Stock funds or from. From a checking account?

[Josh Brown]

Paychecks. Paychecks.

[Michael Batnick]

No, these are institutions, bro, not retail investors. Don't matter. Completely irrelevant Institutions. Real institutional money flowing.

[J.C. Parets]

Money funds.

[Michael Batnick]

Yes. More faster than at any point since April of 2020.

[Josh Brown]

But why?

[Michael Batnick]

Right at the beginning of the greatest of the two years.

[Josh Brown]

But why are they doing that?

[Michael Batnick]

Well, because they're scared shitless.

[J.C. Parets]

The entire Trump rally just got unwound.

[Josh Brown]

But why not buy bonds if you're looking to get conservative bonds? I think screaming by, I don't know what.

[Michael Batnick]

I don't know why they did that. I'm just telling you that they're scared to death, which is great. We're buying stocks.

[J.C. Parets]

This is a scared. This is a scared market. And what's interesting about it is we're like 3% from all time high in.

[Josh Brown]

The S and P. You have the AI chart.

[Michael Batnick]

Yeah, that's why I do.

[J.C. Parets]

It's wild to see that level of fear given where the indices are.

[Josh Brown]

But this happens every time we pull back 3 to 5%. People get people.

[Michael Batnick]

It doesn't happen every time. Actually, that's good. Actually, that was a good one, right? It doesn't happen every time. It actually hasn't happened in over a year.

[Josh Brown]

So it feels like it happens every time. There's a 5% pullback, people get this scared.

[Michael Batnick]

You were scared, bro.

[J.C. Parets]

Let's start here. The first two weeks of the year, big tech stocks sold off and tell them why.

[Josh Brown]

Tell them why.

[J.C. Parets]

Hold on. Big rebounds in health care and energy. And when I looked at it, I said, this smells like port model portfolio rebounds to me. There's no fundamental reason why people are bullish all of a sudden on health care and energy. It's just like those are the things that Went down the most last year. There's no more tax loss related selling in those stocks. So they were able to levitate a little bit when the calendar turned over. Tech is the opposite. People have monster gains. The Nasdaq went up 35%. Some of these stocks doubled and nobody wants to do a sale on December 21 and then pay taxes in April. Everybody rolled those gains into January this year. And I said the same thing last year and I still think I was right. So I don't actually regard the first two weeks as, as being indicative of anything. But a lot of people are saying like, okay, this is the first correction of 2025. This is the first correction since. Whatever. Do you see it that way or what do you think is going on here in the last couple weeks?

[Michael Batnick]

German DAX just closed at all time highs.

[J.C. Parets]

They don't pay us taxes and they.

[Michael Batnick]

Don'T have any technology stocks either. I mean, it's a bull market. You want to. I've studied every bull market in history and it's quite obvious that the common theme there is that investors who own stocks make a lot more money than the investors that are selling stocks. Right. And that is very consistent. So that's in bull markets. We want to be buying the.

[J.C. Parets]

So is everything I just said noise that rebalance trade that I think I'm seeing.

[Michael Batnick]

What you're saying is exactly right. What you're saying is very consistent with bull markets as well. We call it sector rotation, you call it rebalance, but we're saying the same shit. Yes, we're going to look at the new Lowe's list, which is non existent. And the reason it's non existent is because every time a group of stocks are close to breaking down to a new low, they come in and buy them. Yeah, that's why the new lows list isn't expanding.

[J.C. Parets]

That's interesting. Right? And you want that rotation in a bull market.

[Michael Batnick]

Of course. And then you got these people, they're like, oh, J.C. you're not looking at the charts. It's like, yeah, bro, I'm the one not looking at the charts. If you're going to accuse anybody of not looking at the charts, it shouldn't be me. So people are looking at the lack of new highs and people are looking at the new highs. How about the lack of new lows? How about, you know, like, yeah, where are they? Start with that Consumer staples are making all time lows on a relative basis. Like, people are like talking about like, oh, sector rotation isn't working. Are you kidding me? Are we looking at the same market?

[J.C. Parets]

Yeah. By the way, sector rotation last year worked great. Financials shot the lights out. We just saw earnings reports from these companies that justified the entire rally. They are, I don't know if you know this. Last year the major six banks, Citi, JP Morgan, bank of America, they returned $100 billion to shareholders last year in the form of buybacks and dividends.

[Michael Batnick]

Not bad.

[Josh Brown]

In the form of fiat.

[J.C. Parets]

That is the highest level of capital return fiat, I think ever to shareholders. By banks. Banks, yeah. So the fact that they were at the top of the list with communication services makes perfect sense to me. That's a rotation. Like financials were not a good trade in 23. They were an amazing trade in 24. That is sector rotation. That's.

[Josh Brown]

Remember, remember one time you were on the show, the dollar ball was. The dollar was a wrecking ball.

[Michael Batnick]

Yeah.

[Josh Brown]

It's not really wrecking shit this time. Kind of interesting.

[Michael Batnick]

Well, a little bit.

[Josh Brown]

I mean a little bit, but not, not nearly to the extent it was in 2022.

[Michael Batnick]

Shall we?

[Josh Brown]

Let's do it. Let's get, let's start the show.

[J.C. Parets]

I want to, I want to do, I want to do 10 year treasuries, $. All that stuff.

[Josh Brown]

Like you didn't bring the charts.

[Michael Batnick]

Everything you're talking about, I have a chart for the sequel, the six banks. I got an equally weighted chart of those six banks.

[J.C. Parets]

No more foreplay.

[Michael Batnick]

I just want to give a Throwback to episode 75 of the Compound and Friends. This is January 6th of 2023. Shout out. Compound and Friends come a long way since then.

[Josh Brown]

That was the bottom.

[Michael Batnick]

So the market had already bottomed six months earlier.

[Josh Brown]

The S and P or the NASDAQ bottomed two weeks before.

[Michael Batnick]

So this was in January. This is the first week of January of 23. So it's two years ago. If you recall, Straza was sitting right here, remember, and we were looking at Wall street sell side strategists with consensus that S&Ps were going to fall in 23.

[J.C. Parets]

Yeah.

[Michael Batnick]

For the first time this millennium, 100%.

[J.C. Parets]

Chance of a recession.

[Josh Brown]

What a chart.

[Michael Batnick]

Oh yeah, probably.

[J.C. Parets]

Yeah, that's. That was the consensus, 100%.

[Michael Batnick]

So for the first time this millennium, Wall street consensus was that S&Ps were actually going to fall in 23. Let's see what happened. So the NASDAQ doubled, you know. Thanks. Wall street sell side.

[J.C. Parets]

I'd like to say that I played a role in this. Yeah, I, I did.

[Michael Batnick]

I did too. Yeah. Yeah. I made a lot of Money.

[J.C. Parets]

This is crazy, though. You almost never see the Wall street consensus strategists.

[Josh Brown]

No.

[J.C. Parets]

Never have ever have an average target for the S and P. That's below. That's. I mean, that's wild.

[Josh Brown]

It never happened.

[J.C. Parets]

Was anyone like banging a gong? Like, guys, this is it. Yeah, us, we, I mean, we did.

[Michael Batnick]

But like we were here. Episode 7 But none of the other.

[J.C. Parets]

Strategies, none of the other strategists said, wait a minute, what?

[Josh Brown]

They're going to dunk on all themselves. Are you.

[Michael Batnick]

I don't read Wall street strategies, but.

[Josh Brown]

Are you nervous now that, that we're on the other side of that?

[Michael Batnick]

No, because it's, it's less valuable when they're all bullish. Because they're always bullish. It's when they're bearish. That's like what the.

[J.C. Parets]

That's a good point.

[Josh Brown]

I agree.

[Michael Batnick]

You know what I'm saying?

[J.C. Parets]

Yeah. Their job is to be constructive.

[Michael Batnick]

So they think the stock market's going to go up. Great. It's a bull market.

[Josh Brown]

Right. The strategy, there's no signal there.

[J.C. Parets]

The strategists meet. Like, if you actually break down that role, one of their main jobs is to have an outlook that's constructive enough that business can get done at the investment bank and be in accordance with what the bank is telling its clients. So they don't have to be permeables, but they certainly shouldn't be like, no.

[Michael Batnick]

They travel in packs. They travel in herds. Because it's safer that way. Because even if you think something very different than the rest of Wall street, you can't say it for the most part because you're probably very much overpaid and you probably shouldn't have that position anyway. And if you go out on the limb and you're wrong, you're. Now, what if you better be right.

[J.C. Parets]

And what if you're, if you go out on a limb and you're right, you're a celebrity for six months maybe. Yeah, that's pretty much. Or longer.

[Michael Batnick]

Yeah.

[J.C. Parets]

Because you're not being paid 2 and 20 for the returns of a fund.

[Michael Batnick]

It's not worth it for you as a sell side analyst to go out and reach. Right. You know, so.

[J.C. Parets]

Right. So the strategist is there to be somewhat constructive. So when they're all negative together, that's crazy.

[Michael Batnick]

And again, I'm not, I'm not hating on anybody in particular or the industry. It's. We have the data, so we just know. Right. And so it's not like one strategist or that strategist is at a consensus. If they're all bearish, like you flipped the book long. Right. As we did, obviously. So that's really the lesson. Right? That's really all it is. So just take the other side, particularly when they're bearish. Now let's look at current markets. So here's the s and P500. And it just looks like an uptrend to me, you know, breaking out of a multi year base. Higher lows. Higher highs. As long as we're above 560, I don't see any reason to be.

[J.C. Parets]

We had enough of a retest.

[Michael Batnick]

A retest of what?

[J.C. Parets]

I don't know. Whatever went on last week had a negative day on Friday. Big down day for almost every stock wasn't that much. But you don't. You. So you don't want to see us retest 560?

[Michael Batnick]

No, I don't. I don't see a problem with retesting. But if we break 560, I think that would be the first crack in this market. Right. Like all these people have been fighting the bull market the whole time. I have no idea why this would be actually the first crack if we were to break below that. But we have it. And if you look at the others.

[J.C. Parets]

560 on the spy, 5600 on the SPX, 560 on the spy.

[Michael Batnick]

Look at the Q's. The accused retested that 500 level to the penny.

[Josh Brown]

Textbook.

[Michael Batnick]

Textbook.

[Josh Brown]

But JC, doesn't the sentiment flip make you more constructive?

[Michael Batnick]

Yeah, right.

[Josh Brown]

Like if people were like if nobody gave a shit about the pullback, then you say, huh, that's a little weird.

[Michael Batnick]

Well, we know for a fact that sentiment is not a headwind. The question is, how much of a tailwind is it? And I think we'll get to it.

[Josh Brown]

But it's been a tailwind this whole time.

[Michael Batnick]

Well, we just, we reset. You know, in fact, last time I was on the show was in August when you had that volatility spike and you got the sentiment reset. Remember AAII investors had the OR newsletter writers had the biggest decline in bulls since the 87 crash.

[J.C. Parets]

Yeah.

[Michael Batnick]

And what happened since then?

[J.C. Parets]

You have to rebuild the wall of worry.

[Josh Brown]

Yeah, exactly.

[J.C. Parets]

There have to be people that get priced out of the market and chase it higher.

[Michael Batnick]

Yes.

[J.C. Parets]

And the only way you get that is when you shake the tree.

[Michael Batnick]

Yeah, that's right.

[J.C. Parets]

So you got to shake the tree every once in a while. I totally agree with that.

[Michael Batnick]

Yep. And the dow, same thing. Dow looks a lot like the NASDAQ you know, there's your 42,000 above 42,000.

[J.C. Parets]

Look at how textbook these pullbacks were. So the S and P never quite got there, but the other two did.

[Michael Batnick]

Yeah.

[J.C. Parets]

Okay.

[Michael Batnick]

Yep. So four 42,000 on the S&P, 500 on the QS and 560 on the spies. Those are the levels.

[J.C. Parets]

Okay. So if we're above these levels of support, it's business as usual.

[Michael Batnick]

Yep.

[J.C. Parets]

Buy your favorites.

[Michael Batnick]

Look for, look for trends, rotation, all that stuff.

[J.C. Parets]

All the, all the good stuff.

[Michael Batnick]

Yep.

[J.C. Parets]

Okay. You see a sector down four days in a row, blindfold yourself, just buy it.

[Michael Batnick]

I don't know about all that. It depends on the sector. But again the laggard. See we've been in kind of like a range bound market. So what's happening is that breakouts are failing and mean reverting, breakdowns are failing and mean reverting. Right. So you kind of have this sloppy mess. So it's about rotation. So like you know, when we're talking about buying Alcoa or buying Caterpillar or buying. Do they look great? No. But they're pulling back to support. This is where we want to buy. These types of names in these range around markets.

[Josh Brown]

We've been using Todd Stone's charts in year three of a bull market, which I know you've seen these charts. Like there is some choppy consolidation which I think is totally normal after two 20 plus percent years.

[J.C. Parets]

Yeah.

[Michael Batnick]

You know, after two big years, every single time we've had two years above 20%, stock market's gone up again the third year. Every single time.

[J.C. Parets]

Yeah. No, it's just not as, what is it called when you like the, when you mix like all the composite is not quite as straight up into the right now.

[Michael Batnick]

But I mean listen, there is, there's other factors. The, we'll get into the post election years. But post election years used to be bad years and Then since the 1980s, post election years are actually the best years.

[Josh Brown]

I love that you do that instead of just looking at the entire average because the entire average could really cloud things.

[Michael Batnick]

Yeah, things change. And Jeff Hirsch. Shout out. Jeff Hirsch.

[Josh Brown]

Jeff.

[Michael Batnick]

Shout out to Jeff, editor of the Stock Traders Almanac. His theory is that in the old days presidents used to be able to get things done quicker and since like the 1980s things are harder to get done early on in their term. So there's less bad things they can do which historically they do early in the term and then they make everybody happy towards the end going into their.

[J.C. Parets]

Own election or my opinion is that this time will be different.

[Michael Batnick]

It always is.

[J.C. Parets]

I think you're about to see a flurry of activity with effectively no real resistance whatsoever anywhere in government. I think this is going to be the exception that breaks. Breaks the. The paradigm that we're talking about.

[Josh Brown]

Next chart.

[Michael Batnick]

Next chart. So we're looking at individual investors. Right. So I don't know if this is exactly right, but the way I think about this group is I think about 300 boomer Republicans in the Midwest.

[J.C. Parets]

Yeah.

[Michael Batnick]

It might not be exactly like that, but it's pretty close.

[J.C. Parets]

That's who's answering this survey.

[Michael Batnick]

Yeah. In my head, the way I view this, whether that's 100, I know for a fact it's not 100 accurate, but that's how we view this group.

[J.C. Parets]

Upper Midwest or Southern Midwest? Because it's a big difference.

[Michael Batnick]

Upper Midwest.

[J.C. Parets]

Yeah. Wisconsin Boomer Republicans.

[Michael Batnick]

Yeah. That's 300 of them.

[J.C. Parets]

That's right.

[Michael Batnick]

That's how I look at this.

[Josh Brown]

Packers fans.

[Michael Batnick]

Yeah, sure. Making the most bearish. They have been in over a year.

[J.C. Parets]

A lot of guys named Clyde.

[Michael Batnick]

Yeah, sure.

[J.C. Parets]

All right, all right. Why do they oscillate this quickly?

[Michael Batnick]

Well, because they're individual. They're individual investors and they're the most. This is the most erratic of all of the polls, which makes sense because they're individual investors. So this is the one that moves the fastest.

[J.C. Parets]

Yeah.

[Michael Batnick]

And it's the most. It's the most bearish. It's been in over a year.

[J.C. Parets]

But also. But it's wild how fast the stock.

[Josh Brown]

They'Re more likely to own, Apple, has gotten whacked in the last week, maybe.

[J.C. Parets]

Oh, you think there are specific stocks that are.

[Michael Batnick]

And by the way, it's been falling for months. So it's not like this just got bearish last week. This has been falling for months. But the point is, is that individual investors, particularly at extremes, we want to take the other side of them. And they are the most bearish event in over a year.

[Josh Brown]

Point. So what we just said about the boomer Republicans, because if you look at, like, inflation survey sentiment data, they're super positive on that. So if this is merely a political survey, which all surveys have become, this would not be happening. So that invalidates our thesis a little bit of what?

[J.C. Parets]

Of who's in this survey. Yeah, well, when they do small business comp. Like, who do you think owns the small businesses when they. When they do. When they do certain surveys, it's like a code word for saying old, rich, white.

[Michael Batnick]

Yeah, yeah.

[Josh Brown]

So that's not this.

[J.C. Parets]

That's not so I think it is.

[Michael Batnick]

I look at it like that. Whether that's right or wrong, looking at it that way has been really helpful.

[J.C. Parets]

Yeah, well, just. Right. Having that picture in your mind is better than no picture at all.

[Michael Batnick]

That's right.

[J.C. Parets]

The point is, these aren't fund managers. No, that's. That's really the most important thing.

[Michael Batnick]

No, if it would be fund managers, it would actually be even more bullish.

[J.C. Parets]

Yeah.

[Michael Batnick]

Because if the fund managers were this bearish, then now we're really talking. Right. Because those matter a lot more than these. All right, so look at the next one. So now we're taking. We're taking the individual investors and the newsletter writers. John, if you want to throw up the next one. So these are. We combine individual investors and newsletter writers. So this is investors intelligence and aaii, combining them both. And look at the average bears. Most amount of bears since November of 2023, spiking. And obviously the bulls continuing to collapse. So, you know, newsletter writers, individual investors, super bearish. And then the next one.

[Josh Brown]

Why?

[Michael Batnick]

That's what I want to know. Like, I don't know what they're so scared about. So in the middle of a bull market. Right.

[J.C. Parets]

Don't the newsletter writers skew bearish all the time? Because that's the point of the newsletter.

[Michael Batnick]

No.

[J.C. Parets]

Or it's not like that. Why do I think it's like that?

[Michael Batnick]

Because when you think newsletter writers, you think perma bears. Yeah, because they have those. But no, but that's not the.

[J.C. Parets]

That's not the sentiment for all newsletter writers. Doesn't go that way.

[Michael Batnick]

No.

[J.C. Parets]

Okay. Maybe it's just. Cause those are the most famous of the newsletter writers are like the cranky old bears that are like gold people. Right. Is that why I think that.

[Michael Batnick]

I just think that you think the newsletter writers are perma bears, but you write a newsletter, you're not a perma bear.

[J.C. Parets]

True, true. I don't know who's in.

[Michael Batnick]

We call them blogs now. But, you know, I don't know who's.

[J.C. Parets]

I don't know who's in that. Who's in that survey.

[Michael Batnick]

Who's in the.

[J.C. Parets]

Like, which newsletter writers would be in there.

[Michael Batnick]

You can look it up.

[Josh Brown]

So we have a lot of trust.

[Michael Batnick]

Yeah. Ye. Investors Intelligence goes back to the 1960s.

[J.C. Parets]

Yeah.

[Michael Batnick]

So the guy. He originally created this in the 60s because he's like, well, when the newsletter writers are all bullish, it's a great time to buy stocks. When the newsletter writers are all bearish, it's a great time to sell them.

[J.C. Parets]

He quickly realized.

[Michael Batnick]

Very quickly, to his credit, he realized it was the opposite. And so the rest is history.

[J.C. Parets]

I love it. Okay.

[Michael Batnick]

And then here's the composite that we create. Josh loves this. So we combine what they're saying and what they're doing, and we're back in the middle. There's nothing extreme about sentiment. Sentiment is like. Like Josh says. Right. Like middling around.

[Josh Brown]

Right down the fairway.

[Michael Batnick]

Right down the fairway.

[J.C. Parets]

Timeout. So you're adding those two sentiment surveys, throwing in a third, then you're putting in VIX equity puts a call ratio on two different time frames.

[Michael Batnick]

That's right.

[J.C. Parets]

And so now it's not just what people are talking shit about, but, like, how they're actually trading.

[Michael Batnick]

That's right.

[J.C. Parets]

That's a really great way to think about the market, sentiment. And. And your point is? We're in no man's land. There's no signal because it's right in the middle.

[Michael Batnick]

Yeah, Listen, there's no. So we know that sentiment is not a headwind.

[J.C. Parets]

Yeah.

[Michael Batnick]

And so the question is, how much of a tailwind is it?

[J.C. Parets]

Not much. We need to get worse.

[Michael Batnick]

I don't think so.

[J.C. Parets]

Really?

[Michael Batnick]

I don't think so.

[J.C. Parets]

You're happy with it right here?

[Michael Batnick]

So much that I'm happy with it. But, like, we're buying stocks and sentiment is confirming that we should be buying stocks. Like we would be buying stocks whether sentiment was like this or not. Sentiment is just confirming that that's probably a good idea.

[J.C. Parets]

Okay. All right. Love it.

[Michael Batnick]

All right. And then so last week we had the largest flows into money market funds since April of 2020, which was the beginning of the greatest 52 week period in the history of the United States stock market. We just got the same thing last week.

[J.C. Parets]

Let's give people the numbers. Among taxable money market funds, government funds increased by 47.45 billion. Prime funds increased by 15.4 billion. Tax exempt money market up 3 billion. So total money market fund assets increased by $66 billion to 6.92 trillion in one week.

[Michael Batnick]

Yeah.

[J.C. Parets]

That's wild.

[Josh Brown]

22 billion from retail.

[Michael Batnick]

22 billion from retail and double that from institutional.

[Josh Brown]

It's a lot of money.

[Michael Batnick]

Yeah. So it's not just retail because they're buying a house or whatever.

[J.C. Parets]

Yeah, yeah, yeah, yeah, yeah, yeah. That's. That's pretty. That's pretty notable. That's pretty notable.

[Michael Batnick]

And this is public information. The Investment Company Institute publishes this once a week.

[J.C. Parets]

But now you can't go the next step and say this is Cash on the sidelines. Because people really flip out when someone says that they don't like that because they say like, okay, it's cash on the sidelines. So they buy a stock, but somebody else has to sell that stock to them. So people really get mad when you insinuate this amount of money building up in money. I don't.

[Josh Brown]

It is fuel. It is cash on the side.

[J.C. Parets]

I know it just like that. Does it? It is cash on the sidelines. But the implication is not that it's going to take the market higher as it comes in because you need to sell it, but it can.

[Josh Brown]

Cause there could be. It's buying pressure.

[Michael Batnick]

Let me tell you something and I could tell you for a fact, I think that we do as good of a job as anybody aggregating sentiment. There's other people who do a great job. I think we're right in there with them. And I can tell you for a fact that it's imperfect, it's flawed, it's incomplete. We know that. And I think we do as good a job of anybody and we know that it's not perfect. So like we could go back and forth. It's really about bringing it all together. Individual investors are scared shitless. Money's flowing into money market funds faster than it has since April of 2020. Right. Like it's bringing it all together in the middle of a bull market with sector rotation. Consumer staples. Next chart. John. Making all time lows on a relative basis. All time lows. Sector rotation. This is bullish. Sector rotation. What the are these people looking at, trolling me on the Internet about? JC is even looking at the charts. JC looking at the charts? Of course I look at the charts. I'll draw them for you.

[J.C. Parets]

This is something. This is the market voting that. There's no need to be defensive right now. Right. When they're selling staples and buying anything other than staples, that's. That's a risk on sign, not a risk. Okay, so you wouldn't look at this as a. You wouldn't look at this as a contrarian then. No, it's one of those things that you want confirmation.

[Michael Batnick]

This is what you see in bull markets.

[J.C. Parets]

Do you want this as confirmation?

[Michael Batnick]

Yeah.

[J.C. Parets]

Okay.

[Michael Batnick]

Yeah.

[J.C. Parets]

They're selling the staples.

[Michael Batnick]

They're selling the staples on a relative basis. If was about to hit the fan, they would be buying the staples on a relative basis. They are not.

[J.C. Parets]

Yeah, okay. That's a good one. I like it.

[Michael Batnick]

So. So again, they're going into money markets. Individuals are scared. Newsletter writers are scared. Staples are confirming that they are all wrong. Right. You know what I'm saying? So then look at the next one because it's like, well, Jay Z, you know, the leaders are driving and the, the Kennedy guy with the things, you know.

[J.C. Parets]

Right.

[Michael Batnick]

You know, like people are saying that the canned goods, the Kennedy is going to like whatever.

[J.C. Parets]

Wait, what? Oh, the packaged food companies.

[Michael Batnick]

Yeah.

[J.C. Parets]

Kennedy ain't going to be there for more than 10 minutes.

[Michael Batnick]

I'm just telling you what they're telling me.

[J.C. Parets]

All right.

[Michael Batnick]

I find it hilarious too. That's what they're saying. They're like, oh, because of Kennedy or whatever.

[J.C. Parets]

Yeah, okay, sure.

[Michael Batnick]

So then here's the market cap and then the equally weighted version doing the same thing. Go back, go back, John. See, they're doing the same thing. So it's not just a market cap weighted basis on an equally weighted basis. Same shit.

[J.C. Parets]

So it's not just like Coca Cola, Colgate. It's the right proctor. It's the whole group.

[Michael Batnick]

That's right.

[J.C. Parets]

All right, so this is confirmation of your confirmation.

[Michael Batnick]

That's right.

[J.C. Parets]

Okay, I like it.

[Michael Batnick]

Right. Ok, so next charge. So then if there's real stress in the markets, you're going to see it in credit because the stock market in America is a measly $55 trillion. The bond market is more than double that. So if shit is going to hit the fan, you're going to see it in credit because they have nowhere to go.

[J.C. Parets]

One of the things that we hear counter to that point though is that these days, the publicly traded vehicles that own junk bonds or high yield bonds, they have their pick of some of the highest quality junk bonds we've ever had. Like the signal might be broken from, from this.

[Michael Batnick]

At least that's like the Kennedy thing with the staples, you know, I'm just pointing out.

[Josh Brown]

Yeah, that sounds like nonsense.

[Michael Batnick]

Bullshit.

[J.C. Parets]

I'm just pointing out it's the least junky junk that we've had in the publicly traded debt market.

[Josh Brown]

Josh isn't saying that. He's making up what other people are.

[Michael Batnick]

Saying he heard right now he's hearing about people doing that.

[Josh Brown]

Voices in his head are telling him you have.

[J.C. Parets]

Wait, you haven't heard this?

[Josh Brown]

No.

[Michael Batnick]

Are these the same people that were in Greece and Italy last time?

[J.C. Parets]

They're saying the real, the real junkie shit is getting funded by private credit off market. What's left in public markets is better than what used to be traded on public markets. I'm just telling you this is the argument.

[Josh Brown]

That's just what they're saying.

[Michael Batnick]

Maybe, but the fact that this is doing that at the same time, that.

[J.C. Parets]

Stables my imaginary friends tell me.

[Michael Batnick]

Right, right. The ones that were in Greece and Italy.

[J.C. Parets]

We had somebody on the show explain this to us. Who was it? You don't remember?

[Josh Brown]

No.

[J.C. Parets]

Ok, I don't either.

[Michael Batnick]

The point is if shit's going to hit the fan, you're going to see it in credit. Credit spreads are as literally making the tightest they've been this entire cycle, confirming what Staples are saying and the individual investors. And if you go to the next one here, the OAS spreads, so these aggregate all your things. So all your different types of high yield bonds, all your different kinds of credit spreads that the double B and.

[Josh Brown]

The even the worst credit, all the.

[Michael Batnick]

Spreads are doing nothing tight like a dolphin's. So like you know, dive into any of the ones you want. Same shit.

[J.C. Parets]

This is like the 50 tweak low list. Like can we at least wait until there's one stock on it?

[Michael Batnick]

That's right.

[J.C. Parets]

Nothing like on credit spreads. Can we wait for one wiggle?

[Michael Batnick]

That's right.

[J.C. Parets]

Even.

[Michael Batnick]

That's right.

[J.C. Parets]

We're not even getting that.

[Michael Batnick]

Zero.

[J.C. Parets]

Okay, that's again.

[Michael Batnick]

So it's a weight of the evidence. Right. It's not just one thing. It's all these things are saying it's a bull market for the people who forgot that it's a bull market.

[J.C. Parets]

Yeah. I think a lot of these spreads also are like an expression of sentiment which is bullish even in fixed income or has been like just nobody's really worried about a recession anymore the way that they were 18 months ago. Like, it's just, it's, it's not, it's not in the realm of possibility for most big bank economists. Like they're not even writing about it. They're not even writing about it to say we're not going to have a recession. It's just, it's like out of the lex con right now. So I think that's, I think that's, this is an expression of that sentiment.

[Michael Batnick]

So before the NASDAQ doubled, they were saying 100% chance of recession and then the NASDAQ doubled and now no recession.

[J.C. Parets]

Yeah.

[Michael Batnick]

Are you guys paying you guys at home? You guys are seeing how this works. Taking notes, you guys, the wine.

[Josh Brown]

I love the wine.

[J.C. Parets]

It's fantastic. What is it again?

[Michael Batnick]

So it's 100% Tempranillo. This is a Gran Reserva from Rioja, bro.

[Josh Brown]

What are you saying?

[Michael Batnick]

The grape is tempanillo, the region is Rioja and it's Gran Reserva, which means that it's aged longer than the other Riojas.

[Josh Brown]

It's delicious.

[Michael Batnick]

So this is in Spain.

[J.C. Parets]

You got that the grape is different than the type of wine.

[Josh Brown]

It's the. Sure, I love it.

[J.C. Parets]

No, but you like, you know what I mean, like the, the wine is not named for the grape. The wine is named for the region.

[Josh Brown]

Is it sparkling? I don't know what you.

[J.C. Parets]

I don't know why I didn't say anything about sparkling.

[Michael Batnick]

In the old world. In the old world they, they, it's by region. So like a Burgundy is Pinot Noir, but they don't call it Pinot Noir. They call it Burgundy or whatever region. Jeffrey Chambertin or something like that. So this is a Rioja. And in Rioja they make Tempranillo, which is the grape. Right. In the new world it'll say Cabernet Sauvignon.

[Josh Brown]

It's fantastic.

[J.C. Parets]

Yeah, it's pretty, it's. It's pretty badass.

[Michael Batnick]

Yeah. This is a 10 year old vintage Granja Serva. This is real deal. Gracias, Denada.

[Josh Brown]

Can I repay the favor with the ticker? Let's keep moving.

[Michael Batnick]

Yeah. No. Well, you were just talking about the new lows list, Josh, as usual. It's almost like you know what chart is coming next. Obviously the new 52 week lows list is non existent. So there's nothing to see there. But so before this is scale, it's.

[J.C. Parets]

Just the number of stocks on it.

[Michael Batnick]

This is the percentage of stocks in the large cap, mid caps and small caps making new one month lows. And we have yet to see any sort of expansion whatsoever. We talked about this in August after the volatility spike, how you had the VIX triple yet no expansion at all in the new lows list. Right. It was a fugazi pop in the vix, Right. Remember?

[J.C. Parets]

Yeah. Oh, this is just because index funds are distorting the market. I've been told.

[Michael Batnick]

Yeah, yeah, it's. Yeah, right. It's because of the Trump. Can we. Okay, so, so next chart. So now we're looking at consumer discretionary versus consumer staples. These are what buy side long. Only fund managers that can't go to cash, they're in consumer discretionary, they think the market's going up, they think shit's going to hit the fan, they go into Staples, they can't go to cash. This ratio on an equally weighted basis making new all time highs discretionaries versus.

[J.C. Parets]

Staples, bullish discretionaries are breaking out relative.

[Michael Batnick]

To stables to all time highs. If you go to the long next chart and zoom out.

[J.C. Parets]

So active managers are not looking for defensive plays in the market yet.

[Michael Batnick]

Quite the opposite. Just consumer discretionary continues to make new all time highs. And by the way, when you study every bull market in history, consumer discretionaries tend to do well in bull markets, just like consumer staples tend to do poorly.

[J.C. Parets]

What you would expect.

[Michael Batnick]

And that's what's happening.

[J.C. Parets]

Yeah. Okay.

[Michael Batnick]

And then here's your chart, Josh. So this is the equally weighted index that we've created of the biggest six banks breaking out above the great financial crisis high to new all time highs. Finally. Wow.

[J.C. Parets]

I mean this to me is like one of the most bullish.

[Michael Batnick]

Why are you flicking me off?

[J.C. Parets]

I'm sorry. This to me is like one of the most like this to me because people don't like randomly double their position in Citigroup. Like you have to feel really Citigroup still sells below book value. They, they basically, they're going to have the, all these companies have the shackles taken off as far as CCAR and how much they can return to shareholders. What c. Carry like the regulation of how much money banks could return in the form of buybacks and dividends. They've had to get approval from the Fed since the great financial crisis.

[Josh Brown]

I haven't looked at a chart in Citi in ages. And if Citi and Wells Fargo are breaking out like this, how bad could things be?

[J.C. Parets]

Stocks, right?

[Michael Batnick]

Yeah, like JP Morgan, Goldman look great fine.

[Josh Brown]

When Wells is working.

[Michael Batnick]

That's right. And Citi.

[J.C. Parets]

That's right, Wells. Wells and Citi are. They look like biotechs that just got like a great clinical phase two. Whatever.

[Josh Brown]

Cannot, cannot be bearish.

[Michael Batnick]

It's hard to be bearish. It's hard to be bearish. By the way. Go to the next slide there. If you guys are interested in the charge, go to get the charts.com and get all of the charge that we discussed today.

[Josh Brown]

I love that.

[J.C. Parets]

Get the charts.com is that. You own that now?

[Michael Batnick]

Obvs.

[J.C. Parets]

All right.

[Josh Brown]

Such a great ticker.

[Michael Batnick]

It's a great, it's a great, it's a domain. It's great.

[J.C. Parets]

A URL.

[Josh Brown]

I call the ticker. Yeah. Domain.

[Michael Batnick]

Get the charts dot com.

[J.C. Parets]

Yeah. Okay. So on balance, there's enough fear in the market that sentiment is not a headwind, it's maybe even a tailwind, but not an extreme tailwind like 2022.

[Michael Batnick]

So the question is, what's the catalyst? What's going to take stocks higher JC rates? Right.

[J.C. Parets]

RFK dollars. All right, so this is important the dollar has been ripping for I don't know how many years. Three years?

[Josh Brown]

Many a year?

[Michael Batnick]

No, not that long at all.

[J.C. Parets]

Oh, really?

[Josh Brown]

If we were to zoom out.

[Michael Batnick]

If we were to zoom out. Oh, the dollar's been ripping for three months, four months.

[J.C. Parets]

No, no, no, no. No. Longer term, though, the dollar has been going up.

[Josh Brown]

It's a secular bull market.

[Michael Batnick]

It's been sideways like three, four years. Okay, yeah, yeah, yeah. But it, but it bounced off those lows, as you can see here. Epic ripper. Let me ask you this. Are you not impressed with how well stocks have held in and crypto have held in and other risk assets despite the, the dollar ripping in your face?

[Josh Brown]

I'm saying.

[J.C. Parets]

Yeah, we were told, we were told it's, it's usually much tougher than that.

[Michael Batnick]

That's right.

[Josh Brown]

Okay, so if this backs off just a little bit.

[Michael Batnick]

And then here's the thing. The dumb money is betting on a rising dollar to an extreme.

[Josh Brown]

How do you measure that?

[Michael Batnick]

Looking at futures market and positioning by commercial hedgers and specs.

[Josh Brown]

But there's dumb money in futures markets.

[Michael Batnick]

Of course. The small speculators are the dumbest money. Yeah, of course.

[Josh Brown]

What business do speculators have speculating on dollars?

[Michael Batnick]

Like, the large speculators are hedge funds. The small speculators are just mom and pops.

[Josh Brown]

But they're buying dollar futures. Yes, Come on.

[J.C. Parets]

And holding them or just trading it.

[Michael Batnick]

The CFTC reports it every week, bro. In fact, they're the most short euro that they've been in three years. Yeah. Commitment to traders report.

[J.C. Parets]

Okay.

[Michael Batnick]

Yeah. So right now is these are people.

[J.C. Parets]

That like, really believe in the Trump trade. And like, they, like, they, they really believe, like, the budget's about to get balanced and all this that we know is not really going to happen.

[Michael Batnick]

I don't, I don't know about all that.

[J.C. Parets]

Well, that's, that's what's behind.

[Michael Batnick]

No, I mean, that makes sense to me. But just in general, when you look at the currency futures positioning, the dumbest money is betting now that the dollar is going to rally.

[Josh Brown]

These are Eagles fans.

[J.C. Parets]

Jc, is this bottom, Is this bottom in the dollar? The election?

[Michael Batnick]

No, it was before.

[J.C. Parets]

Just before, though, when it looked like Trump had a really good shot.

[Michael Batnick]

Yeah, probably. Yeah.

[J.C. Parets]

Okay. If we just saw the entire Trump trade unwind in small caps, like, why would this Trump trade remain intact?

[Michael Batnick]

I mean, I don't know what a Trump trade is, but it's a thing.

[J.C. Parets]

Where people have, like, an irrational level of confidence because we have a new president coming in. It doesn't matter that it's Trump. It's just there was.

[Michael Batnick]

I mean small caps look great. I think small caps. I think small caps make new all time highs this quarter.

[J.C. Parets]

Okay. Even though the Russians round trip the whole election rally.

[Josh Brown]

I agree with you, Jason.

[J.C. Parets]

They're hanging in there.

[Michael Batnick]

Yeah. I mean, yeah.

[J.C. Parets]

Okay, good.

[Michael Batnick]

Yeah. I think smallcast making new all time highs this quarter.

[J.C. Parets]

All right, so. But you think the dollar might be peaking.

[Michael Batnick]

Well, look, go to the next chart. So speculators are actually the most net short they have been since the beginning of the COVID rally.

[J.C. Parets]

Right.

[Michael Batnick]

Where they were all buying dollars short the euro. Short the euro now.

[J.C. Parets]

Now.

[Michael Batnick]

So speculators biggest short positions in years since the beginning of COVID or like the COVID rally. And the euro just retraced exactly 61.8% of that entire rally.

[J.C. Parets]

Is there anything magical about dollar euro parity? So it's about 101 Euro to the dollar. There's nothing about this level that would be the reason it would bounce off.

[Michael Batnick]

I mean it depends. Like if you're here to make money. No, if you're a journalist. Yes.

[J.C. Parets]

Okay. So the fact that we might be bottoming at euro dollar parity is coincidental.

[Michael Batnick]

I mean we're not. We're bottoming at 102.

[J.C. Parets]

Yes. I guess we're not quite there.

[Michael Batnick]

Yeah, yeah, I don't think there's anything there. Okay, but this is almost 2/3 of the dollar.

[J.C. Parets]

What are the ramifications? What are the ramifications for investors if the euro bounces hard here?

[Michael Batnick]

Small caps make new all time highs.

[J.C. Parets]

Footsie and euro stocks should have a decentral rally on the heels of that.

[Michael Batnick]

Yup. Emerging markets, China, all of that.

[Josh Brown]

Apple maybe. I think the strong dollar has been a tailwind to giant tech. I had one.

[Michael Batnick]

I'm sorry, I mean just stocks in general. Yeah, no, you're probably right. You're probably. But look at the different components. So the same way that we do, the same way that we talk about. It's a market of stocks, it's a weight of the evidence. It's a sum of the parts analysis in the stock market. It's no different in the currency market.

[Josh Brown]

For the dollar, is it like 60%?

[Michael Batnick]

Yeah. So look, keep going. Watch. Go one by one. Swiss franc at support by. Wouldn't this be a perfectly logical Swiss watch? Keep going.

[J.C. Parets]

I don't believe in triple bottoms by British pounds.

[Michael Batnick]

Yeah, right. How about Swedish krona?

[Josh Brown]

Absolutely.

[Michael Batnick]

I'm long all at support. Look at Aussie down in support. And then here's Euro with a bullish momentum divergence potentially with crazy positioning, looking for an unwind and then look at the next one. And this is what we're talking about before. So there you go.

[J.C. Parets]

Okay, so let's pause here. 10 year yield versus the dollar. It's almost the same chart.

[Michael Batnick]

They're dancing together. If I, I could have switched the colors and I wouldn't have been able to notice.

[J.C. Parets]

Okay, so, so if you think this correlation holds and you think the dollar is peaking and possibly on its way.

[Michael Batnick]

To an unwind, then Michael's bond trade works.

[J.C. Parets]

Yeah. So I think Michael's going to, going to nail that. I think so too. I have like been very vocally publicly saying that I think this, this run to 5% is, is a complete head fake. There's no way the economy is the thing driving it. If you tell me they're unloading bonds in China or whatever, I wouldn't know like that. That's, that's above my pay grade. I would just say I'm very doubtful that the economy is so amazing that they're now going to take rates above 5%. Maybe I'm wrong. I just, I, I agree with what this chart is saying and, and with the trade Michael put on.

[Michael Batnick]

Yeah, yeah, I think. But the dollar hasn't broken yet. That's the whole thing. Right. So all of this is like hypotheticals. We don't know what's going to happen.

[J.C. Parets]

Is this causal? The dollar and the ten year.

[Josh Brown]

Yeah, same thing.

[J.C. Parets]

No, not as a correlated. Is, is one causing the other or probably.

[Michael Batnick]

I mean they don't look exactly the same for no reason. It's not coincidence. Rates drive dollars sometimes they're positively correlated now. They've been negatively correlated a lot throughout our careers.

[J.C. Parets]

Yeah, yeah. It's not, it's not a permanent, it's not a permanent correlation.

[Michael Batnick]

In fact, this is actually a new correlation relative to the rest of our careers.

[Josh Brown]

Get the.

[J.C. Parets]

Yeah, okay. Yeah, we like the correlations. Okay.

[Michael Batnick]

Yeah.

[J.C. Parets]

So, all right, so that's really important. That's important information if you're out there taking risk. Because this would be a pretty big trend change.

[Michael Batnick]

Yeah. We start, we start breaking 108 on the dollar index. Now things, now things are occurring. So then here's the other side. So speaking of correlations, changing the dollar and oil over the last several years have been moving together. I am not convinced that that's going to stay around forever. I don't think that that's sustainable. So you know, when, when we see oil and the dollar moving together, if we're looking for an oil breakout here. Is the dollar going to break out with oil is the question, or are these correlations going to come off? And I think, I think the answer.

[Josh Brown]

Energy stocks next. Because I am long oxy.

[Michael Batnick]

Yeah, look, inflation, I think, I think.

[J.C. Parets]

Oil and energy stocks are both rubbing here.

[Michael Batnick]

Well, inflation's moving with it. Right. So this is what the bond market thinks about inflation. And tips are making new 30 month highs relative to nominal yielding Treasuries. So inflation is hitting new highs as oil's breaking out. That makes sense.

[J.C. Parets]

The only part of that that doesn't make sense is why would we think the 10 year comes down in that environment?

[Michael Batnick]

Why would we think that the 10 year comes down in an environment that inflation is going up?

[J.C. Parets]

Yeah, because then you're worried about the Fed not cutting rates this year and the yield curve not really moving as much as it would otherwise. Yeah.

[Josh Brown]

If inflation picks back up, the 10 year's not going to come down.

[Michael Batnick]

Okay, but it can stop going up.

[J.C. Parets]

Yeah, I hope it stops going up. I think it's not going to re. Accelerate.

[Josh Brown]

Who's in favor of higher interest rates? Who does that help? Net interest bonds, like a steeper yield.

[Michael Batnick]

Curve would have bond short sellers.

[Josh Brown]

I know, but like real people.

[Michael Batnick]

I'm saying real people. Those are short bonds.

[Josh Brown]

Come on.

[J.C. Parets]

No. All right.

[Michael Batnick]

Very profitable people have been shorting bonds. I don't know if you've noticed when.

[J.C. Parets]

You look at individual oil equities, are you like constructive there?

[Michael Batnick]

Yeah, very much so. Go ahead. Next chart. And then look at this base.

[J.C. Parets]

Dude, I think this is one of the fattest pitches in the market right now.

[Josh Brown]

I mean, what are you on?

[J.C. Parets]

I own Baker Hughes and that stock is just bad.

[Michael Batnick]

Are they still counting their rigs?

[J.C. Parets]

Remember that rig count was a big deal.

[Michael Batnick]

It was a big deal.

[J.C. Parets]

I like oil field service better than I own the IEO also. So I own all the producers.

[Josh Brown]

And Oih looks not that great.

[J.C. Parets]

IEO is like the American. It's 20 conocophillips.

[Michael Batnick]

Yeah.

[J.C. Parets]

Basically it's those types of names. And then I like the. I like the oilfield services names. They all look pretty good to me right now.

[Michael Batnick]

Yeah, I mean, listen, this is a group. I mean, listen, if you believe that we're in the midst of a commodity supercycle, which I believe that we are, then I have a hard time believing this isn't going to break out.

[J.C. Parets]

You see a lot of good setups when you look through the energy stocks.

[Michael Batnick]

Less so the energy, more so all the other commodities. But we're not going to have a commodity supercycle without energy participating.

[J.C. Parets]

Okay, what's the. What are the best looking commodity sectors in the market now?

[Michael Batnick]

Precious metals.

[J.C. Parets]

Okay, right. That makes sense.

[Michael Batnick]

Yeah. I mean they've been. They look great. Precious metals. So go, go. This is an interesting chart. So this goes back to the beginning of the century. Best, best performing asset this old century.

[J.C. Parets]

Wow.

[Michael Batnick]

Is gold.

[J.C. Parets]

What else is in here?

[Michael Batnick]

Real estate outperforming the s and P500.

[J.C. Parets]

That's wild, isn't it? Yeah. Even. Even with the great financial crisis, like relatively early in the period. All right, so you have IYR EFA is international stocks developed mostly Europe and Japan.

[Michael Batnick]

Yeah, Japan and Europe a lot.

[J.C. Parets]

IEF bonds.

[Michael Batnick]

10 year 7 to 10 year bonds.

[J.C. Parets]

Yep. And I yr is real estate.

[Michael Batnick]

Yep. Rates.

[J.C. Parets]

You don't have international fixed income on here?

[Michael Batnick]

I do not.

[J.C. Parets]

Would you like to know what they're doing?

[Michael Batnick]

Not. Please.

[J.C. Parets]

Honestly, the worst possible investment anyone could have made and I'll tell you why. I know that. Well, I know that. But I just looked at my kid's 529 last night. He's in a Target 2030 Vanguard New York State 529 fund. So we just bought one ticker. We bought it when he was born in 2009. The 2030. Right now he's got five years left to go before that thing comes due. He'll be in college in three years is the way we targeted 2030. It's like 20% international bonds. The 10 year average annual return is zero percent. It's unbelievable. It's unbelievable.

[Michael Batnick]

So it's literally one of the worst investments in the world.

[J.C. Parets]

I can't think of anything worse.

[Michael Batnick]

Pot sox.

[J.C. Parets]

Because not only do international bonds not pay a ton of yield because most of those economies are on life support, but then you have the negative dollar on top of it all. So I just looked at it. I'm like, this may be the worst target fund because I don't know, it definitely didn't start out that way. Like when I first invested in it, it was 2009. There's no way it was 20% international bonds. So as the years have gone by, it's gotten more conservative and I just never bothered looking at it. But I looked at it last night and I was like, oh no, no, no, no, no. This is no good. I whack. I whacked the whole thing out.

[Michael Batnick]

Did you?

[J.C. Parets]

Yeah.

[Michael Batnick]

Are you, are you capitulating?

[J.C. Parets]

No, I'm, I'm going, I'm going. 50% U.S. stocks 50% cash. And in the next major event this year. Let's hope it happens tomorrow. I'll go 100% stocks, which is China.

[Michael Batnick]

Chinese stocks.

[J.C. Parets]

Yeah. And then when he's a year away from college funding, that's when I'll go conservative. It's too early to be as conservative as this target date fund got. So anyway, all right, I guess I.

[Michael Batnick]

Still got 14 years, so I got time. I'll call you when the time comes.

[J.C. Parets]

I'm glad you didn't bother with that asset class because it would have been a flat line straight across.

[Michael Batnick]

There you go. That is the zero. See the zero line, there would have been zero. So it's gold, Right. So gold bull market. Copper is right with it. When you study all the. When you study all the commodity super cycles ever, gold and copper don't really move that far apart. Gold's already been making new all time highs. I think copper's next copper to 7.

[J.C. Parets]

Do you follow that? Do you follow any of this shit?

[Josh Brown]

What's the. The only equity play for copper I know is freeport. It looks like trash.

[Michael Batnick]

Does it fcx? Yeah. I like it.

[Josh Brown]

You don't like freeport?

[Michael Batnick]

I do.

[Josh Brown]

No you don't.

[Michael Batnick]

Okay.

[J.C. Parets]

You like it right here.

[Michael Batnick]

I like it for the same reasons we bought Alcoa.

[Josh Brown]

Bro, I know you don't like this chart.

[Michael Batnick]

You said the same thing about Alcoa and I bought it, so obviously.

[J.C. Parets]

No, he probably would by the way, understand it.

[Michael Batnick]

Understand that the reason we bought Alcoa and caterpillar has 99% of the reasons have nothing to do with the charts of Alcoa and Caterpillar.

[Josh Brown]

Al. I get it. I get it. Alcoa looks way better than.

[Michael Batnick]

All right, now look at the gold. How about this? Is this a good.

[Josh Brown]

It does.

[J.C. Parets]

So that looks great.

[Michael Batnick]

Yeah. So gold to 5,000. Why gold to 5,000? Because you got to get to 5 before you get to 10.

[J.C. Parets]

Yeah, I think, I think this, I think this is like a secular bull market for gold.

[Michael Batnick]

That's right.

[J.C. Parets]

Y. Yeah. I wouldn't fight this.

[Michael Batnick]

Yep. So gold to 5, maybe 8 to 10. And then silver to 100. Right.

[J.C. Parets]

Are you bullish? Silver? So if you think gold is going.

[Michael Batnick]

To 5,000, silver's going down.

[J.C. Parets]

No, no, no, no. Definitely not.

[Michael Batnick]

Right.

[J.C. Parets]

It's just a question of which. It's just a question of if nothing has really changed, then this should go faster.

[Michael Batnick]

Yeah. I mean like if bitcoin is gold, silver is microstrategies, you know? Right. You know what I'm saying? And Speaking of the devil. So there is bitcoin taking a nice little breather at the 161.8% extension of the base.

[J.C. Parets]

If you're a bitcoin bull. This is perfect. This is. It's basing right below the record high. What else do you want?

[Michael Batnick]

And do you think it's a coincidence, Michael, that it stopped going up at the 161.8% extension of that entire base?

[Josh Brown]

I do.

[Michael Batnick]

Yeah.

[J.C. Parets]

Michael doesn't believe in Fibonacci.

[Michael Batnick]

All right, so we'll call that a coincidence.

[J.C. Parets]

But coincidentally, do you think this needs to consolidate for. I mean, nobody really knows, but like, if you had to guess, do you think that it's going to spend a long time under 100,000?

[Michael Batnick]

It's not so much how long I think it's going to consolidate. It's. The faster it breaks out from this consolidation, the more bullish that behavior is.

[J.C. Parets]

Oh, really?

[Michael Batnick]

Of course.

[J.C. Parets]

Like you want your whole year, then it's not as bullish as if it happens tomorrow.

[Michael Batnick]

Correct. Right. You want your flags high and tight, like a military fade. High and tight.

[J.C. Parets]

Do you agree with that?

[Josh Brown]

But I thought it was the high. The longer the base, the higher in space.

[Michael Batnick]

Yeah, but these aren't bases. These are flags, bro. That's the base down there.

[J.C. Parets]

What's the difference between a base and a flag?

[Josh Brown]

What's the difference between a base.

[J.C. Parets]

Now for the audience, the. And Duncan.

[Michael Batnick]

Duncan. Hey, don't you.

[J.C. Parets]

Hold on. Don't you want to know?

[Michael Batnick]

I'd love to know.

[J.C. Parets]

Okay, so the base.

[Michael Batnick]

What are we doing?

[J.C. Parets]

What are we doing here?

[Michael Batnick]

No, no, this is good. It's good. The base, you know, says this stock.

[J.C. Parets]

Is a really nice base.

[Michael Batnick]

Saucer bottom, as Edwards and McGee would call it. The Kardashian bottom, as we would call it.

[J.C. Parets]

Just bowl shaped.

[Michael Batnick]

Bowl shaped, that's right.

[J.C. Parets]

And there is a thing that Michael just repeated, which is technicians like to see a really long bowl shaped base.

[Michael Batnick]

Yeah.

[J.C. Parets]

Because that's a lot of pent up potential buying once it's.

[Michael Batnick]

Get Louise on the show and she will tell you that the bigger the base, the higher in space.

[Josh Brown]

The flag is the cup on the handle.

[J.C. Parets]

Okay, now how does that differ from the flag?

[Michael Batnick]

A flag is just a consolidation. So a base is like a reversal pattern. It's like a, you know, in. In this case, it's like a continuation pattern of a longer term going up.

[J.C. Parets]

But it's not going down.

[Michael Batnick]

Yeah, I mean, it's a base. The. A flag or a pennant is just a tight consolidation within an ongoing uptrend.

[J.C. Parets]

So the stock rips to 20, falls back to 18, hits 20 again, falls back to 19, hits 20 again, falls to 19 and a half, hits 20.

[Josh Brown]

How many times do you do.

[J.C. Parets]

That's a flag.

[Michael Batnick]

That's right. And then it breaks out.

[J.C. Parets]

Okay, right.

[Michael Batnick]

We don't know it's a flag until it breaks out. But that's my point. The sooner it breaks out, the more bullish the development is.

[J.C. Parets]

You don't want to see a flag run on for a really long time.

[Michael Batnick]

Because it's probably not a flag.

[J.C. Parets]

Then it's not a flag.

[Michael Batnick]

That's right.

[J.C. Parets]

Okay.

[Michael Batnick]

Okay, so I want to get international here before we hop. We talked about industrials, we talked about aluminum here. Go back real quick to that aluminum chart. So this is the chart that Michael doesn't like. I love it.

[J.C. Parets]

This doesn't look like a chart that you would buy.

[Josh Brown]

I don't dislike this.

[Michael Batnick]

We're seeing sector rotation and this, this retrace exactly 61.8% of the entire rally.

[Josh Brown]

I've heard of this index, the D.

[J.C. Parets]

Cell, the Dow Jones Aluminum Index. This is not on your home screen. What's in this?

[Michael Batnick]

Alcoa.

[J.C. Parets]

Right. What else?

[Michael Batnick]

It looks just like if you look at aluminum futures.

[J.C. Parets]

That other one.

[Michael Batnick]

No, it looks exactly like aluminum futures. Look at aluminum futures and overlay. They're exactly the same.

[Josh Brown]

I think British people call it aluminium. Did I just make that up or they really do.

[Michael Batnick]

They really do. Okay, so all right, so here's the deal. So then, so this is the. I just wanted to throw in China just to remind Michael that it still has not broken out above those 1989 highs. So just Japan. Yeah, Japan hasn't broken out yet, so it got there a year ago. Stopped going up after literally going up for 15 years.

[J.C. Parets]

Coincidence?

[Michael Batnick]

Coincidence. Right. Okay, next. Next chart. So then this is a really interesting one because The S&P 500 has continued to make new highs, but relative to China, it has not.

[Josh Brown]

Oh, that is interesting.

[Michael Batnick]

China actually Shout out China outperformed the United States last year. So did Israel.

[J.C. Parets]

Wait, China? By what measure?

[Michael Batnick]

Fxi.

[J.C. Parets]

The FXI outperformed spy? I guess that's the. That's not really. That's not the Shanghai composite.

[Josh Brown]

It's large cap.

[Michael Batnick]

Thank God.

[J.C. Parets]

It's like large cap Chinese securities that trade in London. It's a. It's a very specific subset of China, but fine, good.

[Michael Batnick]

It looks exactly like the CSI 300, which is the S&P 500 of China. The FXI trades exactly with it and.

[J.C. Parets]

That did better than the S and.

[Michael Batnick]

P. The FXI is the Dow as the CSI 300 is the S&P 500.

[J.C. Parets]

Okay, fair.

[Michael Batnick]

So the Dow and S&P 500 move together even though they're totally different. Hold on. Same as this.

[J.C. Parets]

You're telling me the FXI was up more last year than the S and P? Does anyone else know that?

[Michael Batnick]

Everybody knows that.

[J.C. Parets]

Okay, I didn't realize that.

[Michael Batnick]

And Israel, Wow. If you look at the Tel Aviv125 index outperforming the S&P 500. And then if you look at the Israel index fund, EIS also outperformed the United States.

[J.C. Parets]

Yeah.

[Michael Batnick]

Three countries that outperformed the US last year was Argentina, A China and Israel.

[Josh Brown]

No, India.

[Michael Batnick]

No.

[J.C. Parets]

Huh.

[Michael Batnick]

Seeing rotation out of India into China. And then what a coincidence that we're seeing this outperformance as soon as the economists suggested that the US and the dollar were the envy of the world.

[Josh Brown]

I mean they are.

[Michael Batnick]

If you look at the next chart, this is when the good folks at the Economist decided to put this, this magazine cover of the dollar going into outer space rocket ship dollar after 15 years of outperformance by the S&P 500.

[J.C. Parets]

Well, listen, I love the idea of there being another market that comes along big, whether it's IFA or eem. I love the idea of the S and P getting outperformed this year. If we have a flat year for S and P and all of a sudden you get like this 15, 20% rally for overseas stocks and if the dollar. And I think it's, I think it's great for the industry, for the money management industry.

[Michael Batnick]

And if the dollar rolls, there's a catalyst.

[J.C. Parets]

Yeah, right. I would love to see that, to be that, to be the outcome.

[Michael Batnick]

So I got a couple of charts here and then I got a really interesting short. So these are Chinese stocks is a bubble chart showing the percentage from new 52 week high. So the best ones are over on the right. And then you got the 100 day rate of change on the Y axis. Look at that leader really standing out. This is Casey. Next chart King Soft Cloud, KC. This is a $2 billion Chinese software stock. Look at that bass.

[J.C. Parets]

What I love about it is how it even sounds fake.

[Michael Batnick]

Oh no, I hope it is fake.

[J.C. Parets]

Yeah, right. No, I agree.

[Michael Batnick]

The faker it is, the faster it can go up.

[J.C. Parets]

Believe me, I'm not reading the filings.

[Michael Batnick]

I mean you could be looking at a 5, 6, 7 bagger here, potentially so. Word. Yeah, word. So if we're above 9. I like it long below it. Leave it alone. And then here's the catalyst for China. We just got the biggest momentum thrust in the history of Chinese equities. Best week ever, best day ever, best two day period ever for Chinese equities. This was at the end of September.

[Josh Brown]

But you're not worried they gave a lot of it back?

[Michael Batnick]

No, because we know from experience very consistently that these momentum thrusts very consistently happen at the beginning of bull markets, not at the end. Which is why we're buying this pullback in China.

[J.C. Parets]

If you're like just a regular person, not working on Wall street, not a trader is the easiest thing to do. Just grab some fxi.

[Michael Batnick]

That's right. That's what we did.

[J.C. Parets]

Because it's like, I don't know if it's the highest quality, but it's the biggest Chinese companies.

[Michael Batnick]

You know what we did?

[J.C. Parets]

And if China works, that will work.

[Michael Batnick]

We bought call options in FXI with three different orders, all at different prices. So that if it didn't break out and it took longer, we'd get knocked into those prices.

[J.C. Parets]

Does that have any Chinese tech giant exposure? Yes. Does it have like too much or not too much?

[Michael Batnick]

Yeah, I mean, listen, it's cap weighted, but it looks exactly like the CSI 300. Like exactly. And then if you look at the biggest components of FXI, you're looking at Tencent is 9%, Alibaba is 8%, Melchuan is 8%, JD.com is 4%.

[J.C. Parets]

So those are all tech.

[Michael Batnick]

Yeah. Consumer, you're 33% discretionary, 30% financials, 17% communications, 5% tech.

[J.C. Parets]

Okay, so if somebody wants to get long China for this kind of like relative breakout, absolute breakout.

[Michael Batnick]

There are a lot of ways to get long China. This seems to be the simplest to your point.

[J.C. Parets]

Is it, I'm guessing it has the biggest market cap or K Web, one of those two.

[Michael Batnick]

I think, I think I buy a lot right now.

[Josh Brown]

The management. Right.

[J.C. Parets]

Yeah. What did I say?

[Josh Brown]

Market cap.

[Michael Batnick]

Well, same thing. So FXI actually only has 7 billion.

[J.C. Parets]

Yeah.

[Michael Batnick]

So you actually might be right.

[J.C. Parets]

I think KWEB is bigger.

[Michael Batnick]

K Web is five.

[J.C. Parets]

Oh, okay. I think the hedge funds would be more likely to trade KWEB because it'll, it'll, it should move more. But for an investor that doesn't just want the tech exposure, they would look at fxi.

[Michael Batnick]

Yeah, kweb's got, kweb's got a higher beta. Not, not by that much. I mean it's 14 versus 1 flat for FXI, but it's higher beta.

[J.C. Parets]

What I think the market might be sniffing out is that Trump and Xi are probably going to get along better then the rhetoric makes it sound like they would like. I. I don't. I don't think there's a disrespect there between the two of them. I think they both want to do business. One of them has to pretend that it's that. That they don't. I totally understand that. But, like, I think that's the. That's the bullishness is about. I don't think there's any, like, fundamental, real change in China or anything like that.

[Michael Batnick]

I think that your audience, the audience of the compound and friends is sick of this, like, rah, rah, bullish bullshit and they want some shorts. That's what I think. Do you think that that's true?

[Josh Brown]

No, but. Let's go.

[J.C. Parets]

Let me see that. Rioja. Let's go.

[Michael Batnick]

Rioja.

[J.C. Parets]

Just be careful with the shorts because it's a really tough way to make a living, actually. Shout to. Shout to Nate Anderson, who this week, I guess retired from professional short selling. That guy. That guy did, like, miraculous shit as a professional short seller. Probably. Unreal.

[Michael Batnick]

What's his name?

[J.C. Parets]

Nate Anderson.

[Josh Brown]

What's From Hindenburg Research Silver.

[J.C. Parets]

No, it's Nate Anderson.

[Josh Brown]

I don't know his name.

[J.C. Parets]

All right, whatever. That guy. That guy was like, that guy was like, knocking down frauds and scam artists and, like, fearless.

[Michael Batnick]

Really?

[J.C. Parets]

Yeah. Going up against billionaires. Going up and Shout out Nate. And won most of his. Won most of his fights. All right. But it.

[Michael Batnick]

And he's retiring.

[J.C. Parets]

He basically, like wrote a letter like, guys, this is it. I'm gonna wind. I'm gonna wind down. I've set out to. I've done everything I set out to do.

[Josh Brown]

Well, if you uncover a fraud, it goes 10x right? So.

[Michael Batnick]

Yeah. And then you get paid by the SEC also, right?

[Josh Brown]

Yeah, exactly.

[Michael Batnick]

It's pretty good business.

[J.C. Parets]

No, you. But you get sued. You get sued by everybody. You get counter investigated because you're going up against really well capitalized people who are angry.

[Michael Batnick]

Yeah.

[J.C. Parets]

Not just. Not just angry professionally, but personally. They've been humiliated. They've been accused of things. So they go after you and they.

[Michael Batnick]

Have big positions probably.

[J.C. Parets]

So he's like, look, I did it, right? I made money. I was. We uncovered a ton of frauds. People went to jail. Remember the Nikola scumbag?

[Michael Batnick]

Yeah, sure.

[J.C. Parets]

Like, that was him, really. He. He's the guy that said, that truck's being pushed down a hill.

[Michael Batnick]

All right, Shout out Nate. Shout out Nate.

[J.C. Parets]

Anyway, so I wanted to preface any conversation about shorting stocks with, it is not easy. It's not for the faint of heart.

[Michael Batnick]

All right, So I hate to keep picking on the economists, but they just make our lives easier. So we're going to go ahead and pick on them again. So this was in October, the 2016. Fourth. The everything drugs, not just for obesity, but addiction, Alzheimer's, the whole thing. The Economist. So the journalists at the Economist. So now you're getting journalists to fade and economists to fade in one magazine cover.

[J.C. Parets]

Oh, end of October, early November.

[Michael Batnick]

Yeah, end of October. So let's, let's see what's been happening in this particular obesity drug. You know, so instead of exercising and eating healthy, let's just take a drug. Right. Like, what could go wrong? So here is Eli Lilly. Looks like a massive top to me.

[J.C. Parets]

Yeah.

[Michael Batnick]

This is not like a market bellwether, like a JP Morgan or a Caterpillar.

[Josh Brown]

It's its own thing.

[Michael Batnick]

Or like it's its own thing. Right. This thing was ripping when stocks were not. Right. So, like this.

[Josh Brown]

So would you wait for the breakdown?

[Michael Batnick]

Yes.

[Josh Brown]

Okay.

[Michael Batnick]

Yeah. I mean, listen, we, we've, we've so time out.

[J.C. Parets]

So time out. The stock went from like $30 to a thousand dollars.

[Michael Batnick]

Yes.

[J.C. Parets]

Okay. I think it hit a trillion dollar market cap. It's in a 30% drawdown now already and hasn't even really broken down yet.

[Michael Batnick]

That's right.

[J.C. Parets]

It's at 7:57, 37:40ish a share. This is one of the worst rounding tops I've seen in a long time. And the fundamental story is not that the drug's no good, it's that it's so good that There are now 50 manufacturers coming up with their own versions.

[Michael Batnick]

Maybe.

[J.C. Parets]

Well, I mean, no, definitely.

[Michael Batnick]

So the market cap didn't quite hit a trillion. Hit almost 900 billion, which for a.

[J.C. Parets]

Drug manufacturer is a big deal.

[Michael Batnick]

And just for perspective, in 1980 was a small cap. In 1990 was 10 billion. Got to 100 billion in the dot com bubble, fell to 30 and then went from 30 to almost 900.

[Josh Brown]

Jesse. There's a giant gap back down to 470.

[Michael Batnick]

But look at this. So you got the magazine cover telling you how great everything is. Like literally throwing a party. Go back to the magazine cover. Quick, John. Like, let's just focus on what's happening here. Right. Literally the syringe or whatever the thing is, is shooting out party favors.

[J.C. Parets]

Yeah.

[Michael Batnick]

Right on the COVID of the Economist magazine. And then if you go to the chart, just as it's completing potentially a massive top. And then when you look at it, data that.

[J.C. Parets]

Look at the placement and then look.

[Michael Batnick]

At the Danish counterpart.

[J.C. Parets]

All right, so this was the biggest success story in the European stock market over the last couple of years. Novo Nordisk, one of these companies makes Ozempic and Zeppelin. The other one makes Mounjaro and whatever the other one is. But these were like A and B if you wanted to play the anti obesity drugs.

[Michael Batnick]

That's right.

[J.C. Parets]

Okay, this one looks way worse. This one already broke down making new.

[Michael Batnick]

52 week lows as we speak. So when you got the magazine cover, it's its own thing. Novo's already rolling over. So a breakdown, a breakdown to new lows. You know, call it 710. 700 on the Eli Lilly. I like it short to zero and then. All right, all right, so we got time for one more trade. I think you'll like this one. Time for one more trade, John.

[J.C. Parets]

We do.

[Michael Batnick]

All right, all right, all right. Okay, so Tesla was created.

[J.C. Parets]

Turn the TikTok camera on and turn his mic off. No. What are we doing here? Tesla.

[Michael Batnick]

This is back in the summer. Okay, this is back in the summer. All the Democrats really upset with Elon Musk and just sentiment in Tesla was down. I mean, just everybody hated Tesla this summer. Yeah, we put on a very aggressive long. That worked out very well. But it was really just how well Tesla owned the libs. Right. Like hardcore squeezed in their faces. No company on earth made more money for shareholders than Tesla in the back half of last year.

[J.C. Parets]

Yeah, I think it, it did it add like $600 billion in the last three months of the year or something. It was some ridiculous, crazy, crazy chart.

[Josh Brown]

Show the chart today.

[Michael Batnick]

So, so then this is this summer. So again, on a relative basis, down to support. Everybody hated it. The Democrats hated Elon. Like this was squeezing the libs. Right? So they say that you shouldn't kick people when they're down, but that's actually the best time to kick them. So when they're most vulnerable is when we want to take advantage. And that's what happens. So the reason I preface with that.

[J.C. Parets]

I'm just glad Duncan's laughing.

[Josh Brown]

Unbelievable.

[Michael Batnick]

Hold on. The reason I preface with that.

[J.C. Parets]

Wait, wait, we got to pause for it. I know you like electric cars. I drive a Tesla and you drive a Tesla. But personally, like, I also know you're probably not the biggest Elon Musk fan.

[Michael Batnick]

Yeah.

[J.C. Parets]

But you've like, you've like gotten over that, that juxtaposition of I like the car, but not the guy.

[Michael Batnick]

Right.

[J.C. Parets]

Okay. All right.

[Michael Batnick]

What makes you extreme, whether Republican or Democrat, is if you are not mentally strong enough to overcome your political biases and let them influence your decision making in the market, that's what makes you extreme, in my opinion.

[J.C. Parets]

I agree. It's. It's easier said than done, though.

[Michael Batnick]

100%.

[J.C. Parets]

Yeah.

[Michael Batnick]

And everyone's welcome to have their opinions. Right? That's not what this is about. It's about finding the vulnerabilities of humans and taking advantage of that. And Tesla was that. And the reason I preface with that, because I think the same thing's happening in Disney. Right? So we're in the middle of a bull market. By the way, here's Tesla.

[Josh Brown]

I was about to be like, Tesla's not a short here. So you're not saying that.

[Michael Batnick]

No, no, no, no, no. We're short. Lily, on the break, I just wanted to walk through the story of what happened last year in Tesla when you did short it. No, no, no. We bought it very aggressively.

[Josh Brown]

So what are we talking about here?

[Michael Batnick]

So hold on. I'm prefacing Tesla owning the Libs because it's an allegory look at what's happening in Disney, because I think the same thing is happening.

[Josh Brown]

Oh, I own it.

[J.C. Parets]

I think this is going to 150.

[Josh Brown]

Wait, do you want Disney?

[J.C. Parets]

No.

[Michael Batnick]

Just like Tesla owned the Libs, I think that the extreme Republicans, that Snow White's not white enough and you know, all of the woke stuff. You think that this American institution that is Walt Disney, Dow component, $200 billion company, is going to complete a massive 10 year top in the middle of a bull market?

[Josh Brown]

It might. I own it. It doesn't look great.

[J.C. Parets]

I think it's going higher.

[Michael Batnick]

When was the last time you went to Disney?

[Josh Brown]

Last year? Two years ago?

[J.C. Parets]

Well, so you might be biased by how old your kids are, bro.

[Michael Batnick]

They got some racket going on the world.

[J.C. Parets]

I know, but you have three kids under 10, $12 hot dogs. But you understand, like you're very much in that Disney world. You're in that Disney phase of life.

[Josh Brown]

So wait, how are you playing options? Are you in the options market with this bitch?

[Michael Batnick]

Common and options. Yeah, common and options.

[J.C. Parets]

I knew it.

[Michael Batnick]

You buy, you buy the Disney and then, and then we'll just finish with the, with the semiconductors. Cause that's what people want to talk about. So semiconductors just not completing any tops at all on an absolute and relative basis. Not completing any tops does not look like a top.

[J.C. Parets]

Why do you feel the need to say not a head and shoulders top because was because people saying that it.

[Michael Batnick]

Is because people are convinced because they read in a book once that a head and shoulders top is actually something that's bearish when it's actually the opposite head and shoulders tops in the middle of a bull market actually pattern. And that's what I think we have here.

[J.C. Parets]

It's not a doji. What? I'm just. I'm joking.

[Michael Batnick]

He's just throwing words like I love lamb.

[J.C. Parets]

You know, it's a continuation pattern. It's not the end of a trend.

[Michael Batnick]

Right. Convinces everybody that it's a top because they read it on chapter two of some book. Yeah, but it's not. It's the exact opposite as you say, but it's not.

[Josh Brown]

You ever meet Steve Nissan? Is that how you pronounce the name? Is it Nissan or Nissan?

[Michael Batnick]

I learned that Steve, Nissan has never been to Japan. And that just made me really sad.

[Josh Brown]

And so wait, I learned that Yokozuna was not Japanese.

[J.C. Parets]

What is he, Jewish?

[Josh Brown]

Samoan.

[Michael Batnick]

Really?

[Josh Brown]

Yeah.

[Michael Batnick]

Oh no.

[Josh Brown]

Blew my face.

[Michael Batnick]

Fun fact. Fun fact. All right, so I just wanted to walk through a couple of components. Nvidia doesn't look like a downtrend to me. You know this one, I still think it goes to 175. How about Taiwan semi? You know, if we're above 200, I think you buy a lot of relative strength there.

[J.C. Parets]

And then does this trade. Does this trade with Asia or. I know it's Taiwanese.

[Michael Batnick]

No, it trades with semis.

[J.C. Parets]

It trades more with semis than it does with the region.

[Michael Batnick]

And it's very cap heavy. You got Broadcom, you got Nvidia and Taiwan semi. And then the rest.

[J.C. Parets]

Trillion plus.

[Michael Batnick]

And then the rest look like Micron. Yeah, right.

[Josh Brown]

Why does AMD look so shitty? I tried to buy it.

[Michael Batnick]

I sold it because it's now one of the big three. Right. So this is when. This is when technology started to underperform as soon as it got to those dot com bubble highs on a relative basis. And then look at the. Look at, zoom in on that, John. Right. So I just don't think it's a coincidence that we got back there after 25 years and it stopped going up. You know, same thing as Japan.

[Josh Brown]

Can I show you a chart? You can intel holding on for dear life. I'm not buying it. For the record, I'm not buying it.

[Michael Batnick]

Nvidia, Broadcom, Taiwan semi. If you want to be in semis.

[Josh Brown]

Those are the ones you're not touching this right.

[J.C. Parets]

Arm holdings. Not Yet.

[Michael Batnick]

Nvidia.

[J.C. Parets]

All right, got it.

[Michael Batnick]

And then here's your high beta. So what's the catalyst? So dollar rolls over. You got credit spreads. Tightest they've been this entire cycle. If you get a breakout in high beta, by the way, 50% of high beta is tech.

[Josh Brown]

That was bullish.

[Michael Batnick]

Another 15, 16% is discretionary. So we got a breakout here in high beta relative to low volatility. Off to the races. And then here's your last chart showing the seasonality that we discussed. Go to the seasonals. Yeah. If that breaks out, what could be more constructive? And then there's your seasonality chart at the end. John.

[J.C. Parets]

What's even low volatility these days?

[Michael Batnick]

You have some financial. Some industrials, a lot of. A lot of staples. It used to be Utes, right? Yeah. You got some Utes. Yeah. Remember it's S&P 500.

[J.C. Parets]

All right, so JC, let's wrap up. Let's wrap up for the folks. Like the outlook based on all the charts. So we're saying a couple of things. The dollar looks like it could roll.

[Michael Batnick]

Hasn't yet could.

[J.C. Parets]

The implication to that is 10 year yield. Probably should go with it.

[Michael Batnick]

That's right.

[J.C. Parets]

However, oil may diverge and trade higher.

[Michael Batnick]

That's right.

[J.C. Parets]

Which would be really interesting.

[Michael Batnick]

Yep.

[J.C. Parets]

Uh, we're not so sure that Disney is gonna fall victim to all the political bullshit. I agree with you.

[Michael Batnick]

I think it already has.

[J.C. Parets]

Already has.

[Michael Batnick]

And I think the Republicans get squeezed just like the Libs got.

[J.C. Parets]

I think that's over. Iger is. Iger is back in control. He just like wrote $12 hot dogs, bro. He just wrote a check to like get. Get back into Trump's.

[Michael Batnick]

Have you seen the Mufasa movie?

[J.C. Parets]

Yeah. No, I didn't see it. Did you see it?

[Michael Batnick]

Pretty good, bro.

[J.C. Parets]

There's a live action is pretty good. I like the Lion King one.

[Michael Batnick]

Did you know that Scar's name is Tucker?

[J.C. Parets]

No. What?

[Michael Batnick]

Yeah, is Tucker.

[J.C. Parets]

Don't. No spoilers.

[Michael Batnick]

They tell you like at the beginning of the movie.

[J.C. Parets]

Yeah. Disney had the biggest movie of the year last year. What was it inside out too?

[Michael Batnick]

Oh, yeah.

[J.C. Parets]

The biggest box office.

[Michael Batnick]

Oh, no shit.

[J.C. Parets]

It was like. It was like a billion dollar movie.

[Michael Batnick]

Oh, wow.

[J.C. Parets]

So, all right, I. I think we covered like, what was the other thing that we said?

[Michael Batnick]

We said go to the seasonal chart. Go to the seasonal chart. Just to show that historically we're shorting Lily on a break below 7 on a break. Okay.

[J.C. Parets]

Gold. Higher. Silver. Higher. China.

[Michael Batnick]

Copper.

[J.C. Parets]

Copper. And what else? Bitcoin's. Still consolidating Bitcoin.

[Michael Batnick]

By the breakout.

[J.C. Parets]

By the breakout.

[Michael Batnick]

And then if that dollar breaks 107, 108, that's it. If that dollar breaks, all those things work.

[J.C. Parets]

Okay.

[Michael Batnick]

Michael's trade works.

[J.C. Parets]

Dollar versus euro, or dollar versus the basket or same thing.

[Michael Batnick]

Oh, I think they happen together. I mean, the Euro's gonna. I mean, the Euro positioning is the one that's the biggest extreme. Right. So go to the next slide there and just show everybody where they can get the charts.

[J.C. Parets]

Yes.

[Michael Batnick]

Get the charts, dot com.

[J.C. Parets]

Get the charts, guys. Get the charts.

[Josh Brown]

Why would you not get that? It would be irresponsible.

[Michael Batnick]

And then if somebody. If somebody ever asked me, jc, where can I get the charts? What do I tell?

[J.C. Parets]

Get the charts, dot com. I love it.

[Josh Brown]

Great ticker.

[J.C. Parets]

You're like. You're almost like a genius.

[Michael Batnick]

Almost.

[J.C. Parets]

J.C. and Jeff are on the show.

[Michael Batnick]

Today always, always drinking good wine. Good peeps. Right? Did John Duncan. Did they get some wine?

[Josh Brown]

So, J.C. we're doing this new thing about what you're most looking forward to. And I know. I know what you're most looking forward to. I already know.

[Michael Batnick]

Tell me.

[Josh Brown]

Jimmy Butler getting traded.

[Michael Batnick]

Oh, are we gonna go there? Are we really doing that?

[J.C. Parets]

It's not working so well.

[Josh Brown]

Obviously, he's gone.

[Michael Batnick]

No.

[J.C. Parets]

They kind of have their own Big Three on that team, and he's not in it.

[Josh Brown]

Let me go.

[Michael Batnick]

Hero's playing well. Yeah. I mean, you know Jimmy. I mean, Jimmy. How many kids does he have? And his baby mamas and he's got alimony for days, and she's suing the Woody mama.

[J.C. Parets]

Yeah, but he also doesn't want to just sit there and collect the check. He wants to play.

[Michael Batnick]

No, but fine. But there's. There's. There's something to that. Look at Tyreek Hill with the Dolphins. Same thing. He had five kids this year. Yeah, five kids with five different women.

[J.C. Parets]

This year.

[Michael Batnick]

This year, they were bored. This year, five kids.

[Josh Brown]

His exit interview was incredible.

[Michael Batnick]

But, like, when. When money's like a problem, like, you start acting irrationally. We know. Hello? Yeah, we know.

[J.C. Parets]

Yeah. So you'll be fine. You'll be fine with that.

[Michael Batnick]

Yeah.

[J.C. Parets]

Okay.

[Michael Batnick]

I like Jimmy and Tyreek.

[J.C. Parets]

Can I tell you something?

[Michael Batnick]

Stop having kids.

[J.C. Parets]

Can I tell you something?

[Michael Batnick]

Jesus.

[J.C. Parets]

Jimmy was tough against us in the playoffs. I never want. I would never want to face that team again with him because he just, like. He was like, playoff Jimmy.

[Michael Batnick]

Yeah.

[J.C. Parets]

And that. He was ridiculous.

[Michael Batnick]

I hated him when he was with the Bulls. Hated him.

[J.C. Parets]

Yeah.

[Michael Batnick]

And then he Came to Miami.

[J.C. Parets]

He's just a beast when he decides to take over a game. He literally is one of the guys that could do it.

[Michael Batnick]

Yes.

[J.C. Parets]

I was really tough to watch you watching my Knicks this year.

[Michael Batnick]

No.

[J.C. Parets]

You're not watching at all.

[Michael Batnick]

No.

[J.C. Parets]

They're like one of the more fun teams to watch this year.

[Michael Batnick]

Yeah.

[J.C. Parets]

I know you're not a Knicks fan, but would you go to a game? Yeah, only if they play the Heat.

[Michael Batnick]

No, I've been to Knicks games with you when they're not playing the Heat. Yeah, but they are playing the Heat.

[J.C. Parets]

I think, like, in April, Michael and I saw their worst loss this year.

[Josh Brown]

I lost so much money.

[J.C. Parets]

It was.

[Josh Brown]

We lost to the Magic without their starting five.

[J.C. Parets]

Lost the match. That was so bad. That's not as bad as the OKC loss, which they should have lost.

[Josh Brown]

No, it's way worse.

[J.C. Parets]

That's what I mean. That's what I meant. It's worse. They should have lost to okc. They should not be losing to Orlando. We watched that in person.

[Michael Batnick]

Knicks are four right now.

[Josh Brown]

We're three. We're behind Cleveland and Boston.

[J.C. Parets]

Oh, we still. We're inconsistently. Good would be the way I would say it. We have weird, weirdly bad games every once in a while. Yeah, but listen, we're Knicks fans.

[Michael Batnick]

Listen, you don't have Julius Randle anymore, so that's great.

[J.C. Parets]

He's gonna be gone from where he went.

[Michael Batnick]

Dude, what a bum that guy was for so long. I was telling you guys the whole time.

[J.C. Parets]

Yeah.

[Michael Batnick]

I was telling every Knicks fan that he sucks. Pays no defense.

[Josh Brown]

And his face.

[Michael Batnick]

And he sucks.

[J.C. Parets]

I don't like his face. I like the body language.

[Michael Batnick]

I don't. I don't like anything about him.

[J.C. Parets]

Yeah, well, they're gonna offload him now, Minnesota.

[Michael Batnick]

I don't like anything about him.

[J.C. Parets]

Yeah. All right.

[Michael Batnick]

I'm sure he loves his kids.

[J.C. Parets]

Guys, we want you to go to get the charts dot com. Huge thanks to JC Peretz for putting on for our show as he always does. Just an absolute masterpiece rundown of all the most important charts.

[Michael Batnick]

What was the best chart?

[J.C. Parets]

Best chart for me. I like the gold silver thing, and I like the china thing.

[Michael Batnick]

Wow. Josh. Gold silver. Who are you, bro?

[J.C. Parets]

Oh, I just feel like that's an obvious bull.

[Josh Brown]

More.

[J.C. Parets]

I like the obvious.

[Josh Brown]

I like the staples discretionary, equal weight.

[J.C. Parets]

I mean, just Chef's Kiss.

[Josh Brown]

That's a trend.

[J.C. Parets]

Chef's Kiss. All right, that's it from us this week, guys. Thank you so much for listening. Thank you to J.C. peretz, John Duncan, Nicole, Graham, Rob, Chart, Kid, Matt, everybody who helps out on the show. Keith, who else? Who am I missing? Danny.

[Josh Brown]

Danny?

[Michael Batnick]

Barry. What about Barry? Barry ever get a shout out?

[J.C. Parets]

Shout out to Barry. All right, guys, we'll talk to you soon. Thanks, Chris. Good night.