JD Durkin: Bring in the great Jay Woods, Chief Market Strategist at Freedom Capital Markets and a CNBC contributor, because this man is far smarter than I am, to help us understand why we’re starting off this week. We’re just a few days after an interest rate hike.
Jay Woods: Yes, here we are. Not at all-time highs.
JD Durkin: No.
Jay Woods: It’s a perplexing market. I wrote a note this weekend and I called the market the ultimate tease between the bulls and the bears. Which way were we going to go? 7,200, was that line in the sand?
Well, today we broke out. Not exactly how I thought it would go down, but what led was technology. So we’ve got to follow the trends. And when the trends break out to the upside, you’ve got to be nimble in this market.
What is leading? We’ve got those Magnificent Seven names. If you look at the MAGS stock symbol there, the ETF broke out to new highs. When you look at the biggest stocks that move this market, they’re all going back to or near all-time highs. Meta leading the charge today. Apple at all-time highs. Nvidia trying to get back above 230.
So when you look at the market, it’s bifurcated. It’s confusing because, yes, oil is down one day. Today, all is clear? No, it’s not. But today the bulls win. And if you’re in technology, I think you have a few more days to enjoy this ride.
We’ll watch Micron in particular. They have earnings next week. That stock still has a long way to go, about 10%, to get back to all-time highs. If you remember, their earnings were great last quarter and the stock went down. So maybe it gives us a little run as we go into earnings and then lifts from there. So a lot to watch over the coming weeks.
JD Durkin: How do you trade on, or how do you think about, a week like this, which in general does not have a whole lot to trade on in terms of economic data? Not a ton of earnings. We’ve got Costco and Cracker Barrel and a few others. No disrespect to those names. General Mills.
As a technician, I know you were eyeing the 7,600 level coming into today’s session, but how do you see these next few days playing out, that we don’t have those real market catalysts we typically have?
Jay Woods: For the long-term investor, it’s tough because you’re looking for that trend. You’re looking for that all-clear sign that we want to get, that it’s great to jump both feet into this market. It’s not. But there are pockets of strength.
So as a professional trader down here for 28 years, you go where the puck is. And, you know, a good hockey analogy, seeing that the Rangers and Devils kick off the preseason tonight, but I digress.
What you want to do is go where the strength is. And right now, trends are breaking up in some of these beaten-down names. Semiconductors and software both went up in unison today. Remember those DRAM stocks I mentioned? Micron, but SanDisk making a run and breaking some near-term downtrends. So that is where you want to go.
And, you know, the hope is this Trump-Xi summit does bring out something good. So right now technology is leading. It’s probably going to be a short-lived rally, but let’s enjoy it while we have it.
I think the S&P, 7,800, we may run into some resistance, and all we need is one spike in energy, and there’s going to be cold water on the rest of this market rally.
JD Durkin: Dare I ask, do you still see a possible drop to 7,250, or after today’s move of 1.5%, is that, for at least now, kind of couched on the back burner?
Jay Woods: No, it’s definitely not couched. I’ll go back to Kevin Warsh and his meeting. Geopolitical concerns remain, all right? We have a volatile president. We have volatile markets.
We have not had that big drop just yet. We’ve been teetering. We’ve been Weeble Wobbling and wobbling, not falling down, JD, for those really old people out there. But what we haven’t had is that, you know, flush-out.
And if energy is to have another super spike as we go into this election season, these AI stocks do have a headwind. If you watched 60 Minutes last night, we talked about that build. And what is the one bipartisan thing people in this election cycle believe in? They don’t want AI building in their backyard.
So there is going to be some pushback, and that could be the stumble, the blockade, before we get the all-clear where I believe this market can rally and the S&P, we’ll be talking about 8,000. I think we’re a few months away from that. But today was one for the bulls, and we’ll let them enjoy it.
JD Durkin: Outside of the obvious, which is what happens in October and what happens in December for the FOMC, what gives you confidence in the next few weeks to figure out if this was a one-off move, the interest rate hike that we got last Wednesday, or the start of a more aggressive interest rate-hiking cycle?
Jay Woods: Well, it’ll be energy because energy is the big inflationary number that people are concerned about. That is what they talked about at the Fed. We need energy to get back under 90 or to trend in a different direction. Right now, the trends aren’t good.
The one trend that I do like, my Philadelphia Eagles are 2-0. And I didn’t come here unhinged. I brought you a little gift, but I go back and forth all the time about the Giants and the Eagles. You can just reach your hand in there, my friend. It’s not going to—it’s not a trap.
JD Durkin: I came dressed for the occasion.
Jay Woods: Yes, you did. And I think you should do the same exact thing. Your Giants have a big game tonight, so maybe they’ll trend upwards like the technology sector did today.
JD Durkin: Are you kidding me? I had a Monday Night Football—
Jay Woods: You’re very welcome.
JD Durkin: I’m very grateful for that.
Jay Woods: That is what it’s all about.
JD Durkin: Do you like the Giants tonight against—
Jay Woods: Oh, come on. I’m actually rooting for your Giants. I do not like Sean McVay or the Rams.
JD Durkin: Fair enough.
Jay Woods: And you can pack it in this. It’s burning my hand. It’s really toxic.
JD Durkin: Yeah, I bet. I’m surprised it doesn’t burn in.
Jay Woods: Yeah, it wasn’t good.
JD Durkin: Jay Woods, good friend of ours here on the show, good friend of mine personally, even if he is a big Philadelphia Eagles fan. You’re welcome anytime.
Jay Woods: Thank you, buddy.
JD Durkin: Yeah, you got it.
Jay Woods: That means a lot.
JD Durkin: All right, no problem. See you again soon.
