Joel Elconin - Deteriorating Market Breadth, Bond Yield Risks, and The Rosh Hashanah Trade

0:00Hey everyone, welcome to the K E. Rapport and A Dayly Editorial on Thursday, September 10th. We are chatting with Joel Alconon. Joel is the co-host of the pre-market prep show, also founder of the Stock Trader Network. Both those links will be in the show notes. Joel, let's look at the broad averages they are down again today. I was looking at the S&P chart and quite frankly, the S&P hasn't done anything. It's moved sideways to down since the very beginning of August. Almost a month and a half now and the equal weight. That was one thing that we were tracking where even as the market was moving sideways, the equal weight just kept moving higher as money was rotating into a lot more stocks. But now the equal weight is really starting to break down. Joel, is this a time to get a little concerned about these markets? Well, you know it's always time to get concerned with me. Thanks for having me, gentlemen, this Thursday afternoon. There's factors working against the market here. Seasonality is something

1:03that you need to pay attention to. It's not the end all be all, but we're coming into a seasonality pattern that's not exactly favorable to the markets. Well, Joel, speaking of seasonality, I know that something we've talked about many years in a row is the pattern of the sell, Rasha Shana by Yum Kapoor trade. I think you were just waxing philosophically on your side about this. Want to break that down for listeners so they understand it and maybe unpack it a little bit? Yeah, the strategy is built around the Jewish New Year, which is commences on Friday and theoretically the more orthodox, the practicing Jews, a little bit more religious. Back in the day, they would rid themselves of their investments and anything else, just to focus on the holidays and focus on the family and asking for forgiveness. And then 10 days later, when you come back, Yum Kapoor, you're free to focus your tone for your sins and whatnot and

2:03back to focus on the market. So that's where it tends to say, Sal Rasha Shana and by Yum Kipper. The results of the markets in between those 10 days has been mixed it best. So it's not a full proof strategy. We all know being fully invested over the long horizon is the most profitable strategy and trying to time the market is a little bit difficult. But the Natalie gender, the question, is it just the calendar? September and October are usually file tile months. inflation data though, it was kind of in line. That's not what the street wanted. So here you have, but I think this is the way you got to look at it guys. I mean, we're not that far from record highs, right? Oil is elevated. Geopolitical risk isn't going away. Ukraine, Russia, you know, Iran,

3:06the FADS goal of 2% inflation is that unrealistic and the bond vigilantes. I mean, they're sending their own signals to the FAD here. Then putting in the FAD and the Treasury into a pickle. Yeah, the tenure almost back to that 5% level. You did also mention oil. Are we getting back into this trade where now that oil is breaking down and above $100 a barrel, that inverse correlation between oil higher pretty much everything else lower? I mean, everyone wants to ignore it. And the fact of the matter that it flows into diesel, that flows into gasoline, it flows into a lot of products. And not only is oil, but with the disruption in the street of hormones, I don't know if you've looked at wheat or some of the other commodities that flow through there. So what the market's been doing very well at doing it is saying, well, oil really doesn't matter. The AI trade is going to compensate the AI efficiency trade. I think what people are waking up to the

4:10realization that you're just in oil breaking out here, you are breaking out to new high, seemingly no, you know, no resolution to opening the streets of hormones. And you can ignore factors in the market for a long time. But there's a point of realization where you have to say, wow, you know, that here is a cell signal looking at me straight in the face and I didn't take it. Joldy, have any thoughts on oil equities? Because the only sector that actually can celebrate the higher prices are the producers that can monetize the higher prices. What about something like XLE or XOP? I mean, the performance speak, you know, speak for themselves. I mean, they're back at XLE's back at all time high. You know, CVX is approaching. It's all time high. XMobile, I mean, XMobile is a little bit off its all time high. So you know, the strength in the market. And I think it's going to continue. Also, some of these car companies pay a decent dividend. So I mean,

5:15you don't fight the trend. Do we make anything out of today where oil is really breaking out? Crude, I'm seeing is up about 6% it's up over $5 almost $6 a barrel. But the energy stocks are flat on the day. Yeah, I noticed that too. And I mean, maybe just a little bit of, you know, selling in the strength a little bit of profit taking. I mean, I do see a fewer max, but that could just be, you know, rotation. A lot of these saying, you know, maybe pulling some money out to put, you know, into something that's been underperforming. I mean, you know, some of these stocks have had multi-day winning streets. And I mean, you just can't go straight up or straight down. So, you know, perhaps just a little bit of profit taking in a few of these. And maybe there's some expectation that, you know, this, you know, always can get a Trump truth or a Trump tweet or something, you know, hey, you know, with the table, though, that has been much less frequent as of late.

6:17Yeah, it's a good point. There's spent so many days in a row of an uptrend. Maybe some people just ringing the register on their trades and cash in. It is strange to see the oil stocks flat to down. Some of these stocks are down on a day where oil is surging, but it also speaks to the inflationary cost across the marketplace. One sector that's taken it on the chin is the small caps. Let's look at IWM and the Russell 2000. That's been rolling over and out, it's breaking down through moving averages. Yeah, I mean, that actually broke down to that on RSP. They broke the 50 day, the S. of P cash is breaking in today. You know, everyone has their own, you know, methods of technical analysis, but you know, something hangs around. They don't give you a chance to buy the low too much, right? And if you look at the S. of P cash, that's actually starting to breach its 50 day moving average today. One other factor that you have to consider is, you know, the roll over and the futures contracts begins today and that kind of, you know, makes things a little bit more volatile as, you know, positions are reversed between the September

7:21and the December contract. This is the, you know, the September, you know, expiration with the seasonality. Often, uh, mark turning points in the market and, uh, this is hope, this is not, not a major bear's, uh, you know, turn in the market, but, uh, right now, you know, coming back down to the highs of the area from where we broke out from, that is something that I've been looking for, old resistance, new support. Well, we'll see, we'll see if we can hang in here for the S. of P, the 50 day, kind of trading there right now, right around, uh, 797. So Joe, is there anything out there that you would be buying or this sounds very much just like, so on sidelines. No, no, I mean, this market is just incredible for rotation. And as bad as the market looks today, look at Apple, Apple's up 10 bucks to 325, uh, 13. I mean, having one hell of a day here and also, you know,

8:29this is AI trade really dead. I was looking at the micron and I was looking at the broad micron in sandess and just a few day, uh, yesterday, I believe both of these stocks reached on the highest level since the Leo low here. So they're not selling off everything here. So I would keep in high, I would, you know, keep an eye on these stocks that are not as dependent on the flow of oil. Could they actually become the safe havens again? Some of these big mega capped tech stocks. Yeah. Yep. Yep. I mean, Nvidia, you know, has maybe finally, uh, establishing a trading range, trying to look to see what other green I have on the screen. Uh, Staples are doing okay. I mean, Coke is up 53 cents today. Your drug stocks, some, you know, sometimes are a, uh, you know, a place where people were hiding their money. You know, your pouring stocks like AT&T and Verizon, you know, you're not going to get rich on the principle, but perhaps on, uh, you know, good

9:35dividends and whatnot. If you, if you can play the, uh, you know, the quarterly cycles with the dividends, but that's nothing, nothing, nothing on my buy list right now. All right. Jolton, how much more to say? Thank you as always for your time. And if you want to follow along with Jol, see what him and his co-host Dennis are talking about, what stocks they're following. And right now, it's, I think, a very news driven market too. So any key news that comes out of those stocks, those guys cover it on that pre-market prep show and the Stock Trader Network. Click those links in the show notes. And I will also link to Jol's article around the Jewish holiday trading seasonal patterns. Jol, thank you. As always for your time. Great chat. I'm going through this week. Okay. Thanks guys.