October's Bear Market Killer History Meets a Tech Comeback

SPEAKER_1 (0:01)

Let's turn our attention to the broader current market here and the setup. Welcome in our next guest, our good friend Ryan Detrick, Chief Market Strategist over at the Carson Group. Ryan, good afternoon to you. So this is meant to be one of the most challenging weeks in the most challenging months of the year. What is going on with this rip we're seeing for stocks?

Ryan Detrick (0:20)

Yeah, well, Sam, thanks for having me back. And I guess it's a little different than what everyone expected. Because like you said, we were told all month how bad September historically was. I know Carson Group, we took a little bit of a different tactic here and said, the first half could be a little choppy. We thought the second half of this month, once we get the Fed out of the way, we can talk about that in a second, the Fed.

We thought we could have a rally and just getting tactical. And last comment on this, the 7610 level on the S&P 500 was right about the June peak. We had a major peak in June, not a major peak, but a peak in June. And then what happened? We broke above and we've consolidated. Like the last six weeks, like literally nothing's happened. I mean, really stocks had a big pop after the Fed six weeks ago. Honestly, kind of just gone sideways, let some longer term moving averages catch up. Bottom line, we think, you know, don't short a dull market, is an old investment saying that they use a long time. It's a really dull market. Last comment here, the last four weeks, S&P hasn't so much as gained 1% or lost 1%. I mean, literally it's just going nowhere. And I think now it looks like we may be going to have a surprise rally kicking off in that dreaded month of September.

SPEAKER_1 (1:23)

Yeah, it's interesting because a lot of you technical folk, we're looking at 7600 level. I mean, I was reading Jay Woods' note out this morning. It kind of feels like it's kind of come out of nowhere. I mean, we are in striking distance of these new highs now. I'm just wondering what the major catalyst is. Is this a sort of a low volume day because of the holiday that might be exaggerating some of the moves in technology?

Ryan Detrick (1:44)

Well, I mean, you know what? If you look at options volume, we're seeing a lot of option volume out of meta and some of those big names. So there's a lot of volume coming on that front. And you along those lines, I mean, literally time we're doing this, right? The MAG-7, MAG-7 ETF, it's like either at an all-time high or really, really close to an all-time high. And that's something we haven't seen in a while, right? We haven't seen the MAG-7 leadership. We know that the first half of the year was all about semiconductors, but I'll tell you, I'm encouraged by that. I think this large Cap Tech comeback that is happening right now, I think is real, Sam. I think that's something we could continue to see in the fourth quarter. Big question, of course, well, listen, financials did not do very well after the Fed meeting. I think they come back a little bit. Industrials have been weak. So it's like we all talk about we want to see a broadening out market. Now you look what's happened and we've seen a weak kind of breath market, but all of a sudden tech's coming back. I think the bottom line is what we're doing, we're overweight equities, we're still overweight technology. You want to have some tech exposure. I mean, half the market, give or take, is connected to AI one way or another, and with communications and tech really taking the baton today, I don't think that's over. So you want to make sure you still have that exposure to those areas.

SPEAKER_1 (2:45)

Yeah, financials, the second worst performer last week. It looks like some market participants thought it was something to do with the Fed because of that flattening yield curve, but there was a lot of high-profile discussions around what the earnings picture was going to look like as well. So let's talk about what the Fed did. Obviously, that move is in the rear view mirror. Interestingly, we didn't get the relief rally that many had anticipated given the market pricing for a hike, but the fact that they came out and said that we could go another one.

How are we thinking about that into year end?

Ryan Detrick (3:19)

Yeah, when we listen to what the Fed said last Wednesday, we looked at it because everybody said US. 12-0 vote. Everyone said, oh, the Fed is so hawkish. We looked at it and said, look at the median dot plot, like one more hike this year. No hikes expected next year. There's 18 voting members. There would be 19, but Warsh doesn't vote. So look at the 18, right?