Stocks At A Decision Point: Which Way Will They Break? | Lance Roberts & Adam Taggart

**Lance Roberts** (0:00)
We have two ways to go from here. Either the market is going to come back down and retest this 100-day moving average, or we're going to break above this trend line and make a move back up towards 6100

**Adam Taggart** (0:17)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you here back at the end of the week for another weekly market recap with my good friend, the tub thumping, Lance Roberts. Lance, how are you doing, buddy?

**Lance Roberts** (0:31)
I'm doing good. It's, we're day early. It's Thursday. So, you know, the stuff we talk about today hasn't actually wrapped up the end of the week yet. So, you know, we'll have to take some of the things. We're going to make some assumptions about tomorrow.

**Adam Taggart** (0:46)
And, folks, the reason why we're recording a little early this week is because if you're watching this, when this video initially releases on Saturday, Lance and I will be at that exact same time at his conference for his firm, RIA, Real Investment Advisors, Real Investment Advice out in Houston, Texas. So, we'll hopefully be having a great time doing that while folks are hopefully having a great time watching this video, Lance. All right. Well, look, you didn't ask, but I'll tell you anyways. Tub thumping. It's actually a real word. It's not just a chumbabumba song. It means expressing opinions in a loud or dramatic manner. And I thought, you know, that's a great adjective for Lance.

**Lance Roberts** (1:30)
Too much, yes. I do have opinions, that's for sure.

**Adam Taggart** (1:34)
Okay. You're not that quiet about him either. Exactly. I'm sure your wife would corroborate that too. All right. Well, look, Lance, kind of interesting times in the markets. They were definitely showing some weakening, which we talked a lot about last week. They've kind of bid a bit this week. So I'd love to get your reaction to that. And interestingly, one of the things that kind of helped add wind to the market sales was the recent, or appeared to add wind to their sales, was the recent inflation data that we got, which wasn't spectacular, but it wasn't as big as the market, I guess, was expecting, and the market is sort of having a little bit of relief rally in response to that apparently. So how do you want to tackle this?

**Lance Roberts** (2:23)
I mean, we just kind of work in a couple of directions. First of all, the weakness that we've seen really since the end of December, and then really the first two weeks of January so far, has been absolutely normal. We had a, you know, everybody tends to forget when we go through these periods of correction, we start getting lots of emails. It's like, oh my gosh, when's this sell off ever going to end? Okay, calm down. We're down like 4% from the peak. And, you know, we were talking about back in early December, said, hey, look, this market's really extended. We're about to go into mutual fund distribution periods. We're about to go into corporate share blackout ahead of earnings. And that's a major buyer of equities that evaporates from the markets for several weeks. So this correction that we're watching right now is, you know, or I've been there, actually, it's almost over now. But, you know, it's simply working off that previous overbought extended condition. We had a lot of bullish sentiment in the markets. That's been mostly reversed now. Corporate share buybacks have been absent. Those are about, those actually start back today. The window opens back up today. JPMorgan kind of kicks off the official announcement period. We have the major banks, JPMorgan, Goldman Sachs, yesterday. We've got some more banks today. Regional banks are really kind of coming in right now over the next few days. And in about a week or so, not this coming week, but the following week, we'll get Apple, Microsoft, Google, the big boys, right? So once they announce, their window to buy shares opens back up. Now, this year, the expectation right now, and based on all the announcements that have been made, is that share buybacks will exceed for the first time $1 trillion. And it's like, we just throw around $1 trillion and $1 billion like left pocket change these days. But that's a massive amount of buying of corporate shares this year, and that's going to provide a bid. And if you go back and look at the ebbs and flows of corporate share buybacks and the ebbs and flows of the stock market, there's about a 90% correlation between those two. So basically, when corporations go into blackout and they can't buy shares, markets tend to decline because you're removing a major buyer from the markets. When they're engaged in buying shares, markets tend to go up because they're a major buyer of equities. And we've talked about this before. Going back to the turn of the century, if you net out household purchases in terms of what household sold versus what they bought, international, what they sold and what they bought, pension funds and hedge funds, what they sold and what they bought, so you net all that out, that is about flat.