The Stock Market Is Showing Signs Of Technical Breakdown | Lance Roberts

**Lance Roberts** (0:00)
And the really big problem has been for the markets as of late. It's just that we can't make it above 7,000. 7,000 has been a very, very tough level for the markets. We just keep coming up here, challenging that level. We think we can get above it for a day or two, and then we kind of pull back from it. We keep taking out important support, the 20 and the 50 days, we keep taking those out. That's important because we're about to cross the 20 below the 50 That would suggest that we may get another leg lower here in the market.

**Adam Taggart** (0:39)
Welcome to Thoughtful Money, I'm Thoughtful Money founder and your host Adam Taggart. Welcome you back here at the end of another week for another weekly market recap with my good friend, the nihilistic portfolio manager, Lance Roberts. Lance, how you doing?

**Lance Roberts** (0:53)
You've been reading my articles again.

**Adam Taggart** (0:55)
I have, I have. We're definitely gonna talk about that this time. Happy Friday the 13th.

**Lance Roberts** (0:59)
Yep, what could go wrong?

**Adam Taggart** (1:02)
What could go wrong? Yeah, we'll see. It's been a heck of a week so far.
I've been on the road and barely keep my eyes open here, but hopefully you'll be so entertaining. You will spark me back to life here. But look, it has been a down week in the market so far. We've seen that weakness in both software and the AI stocks continue from here. Last time we had you on, Lance, I think the past two times, we've been looking at how the S&P had kind of broken down out of a wedge that had been trading in for a good long while and trying to see if it could get back up so that upward resistance would become support again. But I don't even think we've gone back up to that upward resistance line anytime soon. So anyways, what are you seeing here? Because I just saw a headline from Goldman Sachs saying that they're seeing a real lack of willingness to buy the dip or they actually said, buy the effing dip. So for some reason, Wall Street seems a little skittish still. It's not whether it's tech stocks, whether it's Bitcoin, it just seems a little bit reluctant to try to find a bottom here yet.

**Lance Roberts** (2:18)
Well, yeah. And as we're talking about this, the market's down 1.2 percent, I think, from its high.

**Adam Taggart** (2:25)
So I mean, keep it all in context.

**Lance Roberts** (2:28)
Yeah. So I mean, yeah, it's like, oh my gosh, it's this big correction in the market. It's really not. It's been a really interesting rotation, though, because we've seen a lot of money rotate out of the large cap, mega cap stocks, those type of things, software stocks into areas of the markets like energy, industrials, materials, staples is a good example as well. You'll know that, you'll remember that back in September or October, we were buying stocks like Verizon and Altria and these very boring companies that nobody wanted. And those have had huge rallies and they're now extremely overbought. In fact, today, we just went in and took profits in companies like Altria, like Verizon, those type of things, just to reduce those back to target weights because now they're so extremely overbought that we're likely going to start to see some fishing potentially in other areas. So again, this has just been a very typical market rotation. It's always important to keep things in context because remember, coming out of the April Liberation Day last year, we had a massive rally in these stocks. These stocks had huge rallies from their lows. They were extremely overbought. So a bit of a correction is not surprising in a lot of cases. Software has been the more notable one because it's been such a huge correction. Over the last kind of three months, software stocks are down about 24% relative to the S&P 500 So there's been a very big decline there. But that's where opportunity exists. Nobody wants to buy them right now, but there's a lot of opportunity that's now starting to develop in big mega-cap tech companies, big mega-cap software companies. Because they are so beaten up, their valuations have come down dramatically, and they have the highest rate of earnings growth and revenue growth in the overall market. Interestingly enough, the areas that people are chasing right now, like emerging markets, international markets, staples, energy, those have the lowest rate of revenues and earnings growth relative to other areas of the market. So you're paying a big premium.
Everybody's always talking about, oh, the valuations in tech stocks. Those are actually fairly cheap relative to what you're paying for, say, energy stocks right now, which are grossly deviated from their underlying revenue source, which is oil prices.