Decoding Trump's Tariff Policies: A Technical Analysis

We'll talk about January's performance, and we will talk about where the market goes from here. So stay tuned.

Welcome back everybody. Like I said, I've got my pal, Jay Woods here with me. Longtime wall street veteran. This guy has been on the floor of the New York stock exchange for decades and he's a wealth of knowledge. So I'm so excited that we get to talk with him today. Now, Jay, welcome to the show.

Jay Woods, CMT: Lindsey, thanks for having me. Thanks for making me feel super old with that decades on the floor introduction, but I have been down there since 1992. It seems like I just started yesterday, [00:01:00] but yeah, it's starting to add up, those years.

Lindsey Bell: we're not as young as we used to be, right?

Jay Woods, CMT: No, but we look good.

Lindsey Bell: we do look good. We look good. We look young.

Jay Woods, CMT: Exactly.

Lindsey Bell: But I want to talk about the 2025 stock market, you know, because I've been thinking about it. And like, okay, I know we're only a month in, we're just getting into February. But when I think about how I would characterize this market this year, I would say it's extremely reactionary. So there's a lot of volatility in the market. The market investors were just reacting swiftly and big moves are happening based on news and tariffs. Policy in general out of the U. S. Out of the Fed. Inflation readings, movements and interest rates. It's quite reactionary. So let's talk about volatility Jay. Now, I hope you brought your crystal ball because I wanted to ask you Are we going to get through it? Will we resolve this issue in Q1? Is it going to be a trump first 100 day or is this gonna be a hallmark of 2025 and the years to come? What do you think? And how you feel [00:02:00] about volatility?

Jay Woods, CMT: Well, you know, there's so much in there and we'll go deep in the weeds, but 2025, definitely the year of volatility. I still believe we're in a secular bull market. But when you're in those bull markets, when I say secular bull market, a market that will continue to climb higher over the next several years. We've had back to back years with 20 percent gains.

This is fantastic. It reminds me a lot of the nineties. So does what's going on in the world. But Trump 2. 0, I think is what's on everybody's mind. And it's very different than Trump 1. 0. And, you know, Trump 1. 0, let's just go back 2017. The market was up every month in 2017, 19 percent gain slow and steady.

Volatile headlines, which we continue to get from President Trump, that's never going to change. But this time, things are different. 2018 was derailed when we had tax implications, a trade war with China. And now, right out of the gate, what are we seeing? Headlines with tariffs, tariffs on our [00:03:00] allies. Not because there's trading issues, but because he wants to use that tactically to get some of his border security put under control and fentanyl drug distribution under control.

So what he's done, and we don't have to agree with it. I quite frankly don't, but he has been putting tariffs as a way to get people to the table. And right now as we tape this, we're seeing a lot of volatility as these headlines continue to come out. And I think that will be the norm for a little while.

And we'll look at the long term ramifications later, but right now, short term, it's got a lot of traders on edge, a lot of investors worried. And I'm sure you're hearing it from people that you deal with on a daily basis that, what does this mean? And if we take that step out and look into the crystal ball, President Trump uses the market as a scorecard.

And I think when things settle we will continue to get back on that uptrend. But will we have the [00:04:00] gains that we saw the last two years in 2025? I'd be surprised to see it, but I do consider this to be a little bit of a pause in a secular bull market right now.

Lindsey Bell: Yeah. I think, Jay, when I think about the volatility that we're seeing now, of course tariffs are definitely a key driver in this moment in time. But I think, you know, Ryan Detrick always says it best. He's always like, "volatility is the tool that we pay to invest in the markets," right? And it's true. And you can use this tool, and these over reactionary moments, to create opportunity to get back in to the market, whether you have cash

On the sidelines, or you're just looking for a new place to invest. And so what I would say is to the advisors or investors that are listening is that, what's typical in any given year is that you can have an average intra year.

So over the course of the 12 month period decline of 14%, and you could see, you know, we see a 15 percent correction every two years, 20 percent bear market every three and a half years. On average, it doesn't [00:05:00] mean it's going to happen, right? We just had two years of 20 percent returns. And so I think it's, it's something we need to be mindful of.

The phone might be ringing a little more frequently for those that are helping others invest. But, eventhough there's so much volatility, January, you look at the January barometer like I do because I used to work with Sam Stovall, so, you know historian of the markets. And the January barometer says that as January goes so goes the rest of the year. And believe it or not, the market was up almost three percent two point seven percent in the month of January.

I know February, we're kind of getting started on shaky grounds here. How do you feel about the January barometer and what that means for the rest of the year?

Jay Woods, CMT: Yeah, I follow it. I like it. Sam Stovall an amazing, amazing man in his own right. 77 percent of the time when January is up, we're up. So yes, the S&P gained 2. 7%. Some people say, yeah, well, you get a head start. So it's, it's not a bad statistic, but [00:06:00] it's not what's going to make or break my thesis for the year.

It's just a, a fun stat. And I I'm full of fun stats and fun facts and I'll use them. But overall I look at the general market trends and I look at rotation. And as a famous technician, Ralph Acampora always says, rotation is the lifeblood of a bull market. And when we see sectors decline, we're not seeing money rush to the exits right now.

We're seeing it rotate into other sectors for January The S& P equal weighted index was up more than the S& P market cap weighted index, which takes into account Apple which was down. Nvidia, which was down. And Microsoft which also is down. The three biggest stocks, about 15 percent of the weighting, are down the S& P 500. Yet, the index itself was okay.

So we're seeing a broadening out, and that bredth continues to be what keeps me bullish. But when you look at those mega cap names, you scratch your head. There's a little weakness there. [00:07:00] To me it's more of a pause and some headlines out of China that is causing this weakness. And I don't think the overall trend in an Nvidia, in an Amazon, in a Google, are changing anytime soon.

But right now we're rotating into other sectors and that is positive because the overall trends continue to be there. You also mentioned those corrections. That is such a strong point because I know people ask, you know, Oh my God, it's a 10 percent correction when you live through those, it is a gut punch.

No one likes it. And then you start to question your overall thesis. Well, has something changed? And to me, if we were to get a 10 percent correction, and I actually called for one at the end of December in the first quarter of this year, that would be troubling to go through, but when you put it into statistical probabilities and the normality and the volatility you see in markets, it would be normal.

We haven't had one [00:08:00] since, oh my God, I can't even remember. I should have this stat at the top of my fingertips, but it's been since October of 2023, so we're going on close to 17, 18 months. So a pullback seems like, oh, it's the end of the world, to me, if nothing fundamentally and structurally has changed in these companies leading us, I'm not overly concerned, but it will be part of the volatility story of 2025.

Lindsey Bell: Yeah. And I think you bring up fundamentals. I came into this year, Jay, and I was thinking, you know, this market has primarily been driven by interest rates, inflation, fed policy, and I was hoping this would be the year the fundamentals would start to matter. As you know, I'm a fundamental analyst. So it's just near and dear to my heart, right? We're in the midst of fourth quarter earnings period right now. And it's a pretty good earnings season so far. I came into the period thinking, Hey, this, this is not going [00:09:00] to be, this is not going to be the catalyst that's going to turn the market around. So I was kind of downbeat about the first quarter despite hoping that fundamentals would become, you know, front and center for the full year. Um, you know, when I look at the earnings picture, it's like I

said, it's been really good. We're getting 20% of earnings in the week that that we're taping this by the way, um, from the S&P 500. So it's going to be a big week. It's been a mixed bag so far. We've had some big tech disappointments. We've had some big tech names blow it out of the water, right? and so I think when we look forward to the rest of this week and the remainder of the earnings period in the rest of the year, you know, do you see fundamentals mattering when valuations are 22 and a half percent now? How do fundamentals play into 2025?

Jay Woods, CMT: Yeah, well, you're talking to a technician first and someone that traded more on a feel for what was going on on the floor when I had humans in front of me, and then follow it, you know, when that changed to [00:10:00] purely price action. But the fundamentals matter. Of course they matter. We're seeing earnings growth.

That means the economy is doing well. We're seeing earnings growth, not just in pockets, but in all 11 sectors, we're seeing continued growth. So you have to be worried about that. And that's why I think inflation is so front and center on everyone's mind. When you hear tariffs are being implemented and it's going to affect our groceries, okay, well, that is going to hurt the average consumer. It's going to affect gas prices. That is the biggest tax on the American consumer And could that finally change the way the resilient consumer has been spending and thus the bottom line fundamentally? So yeah, of course we're watching these things closely. But if you didn't follow price action over the last three years, you missed out because you were too concerned about a Fed that was hiking rates and inflation that wasn't under control. And a lot of that has to do with going back to covid.

When we look back at this time, there's going to be an asterisk [00:11:00] when they write, you know, economists write books about what we've gone through. This is like the steroid era in baseball. And now we're just kind of getting to that new normal. Someone as old as me remembers mortgage rates that were six and a half percent.

And I was excited because they were falling. Now we're going the other way. Now we just need to see it stabilize and then get used to this new normal because wage growth has not slowed tremendously. So we're keeping up with the times. Consumer confidence, it ebbs and flows. But overall the fundamentals continue to be strong.

And while some of these valuations are exceedingly high or feel that way, when you put it in perspective, especially in these mega cap names with the dot com era, it's not off the charts. When I look at an Nvidia trading a little over 30 times, that isn't crazy considering their earnings growth continues to rise ridiculously.

Yes. It's slowing for them, but 50 percent year over year earnings growth is not a bad thing. So I don't think [00:12:00] we're at this euphoric stage that usually ends bull markets. I think we're more of a digestion phase and earnings growth, it's starting to continue to rise. And to me, I think we'll see some stocks really separate from others.

And when you look at mega caps, Microsoft has been struggling. Microsoft is back to where it was a year ago. There hasn't been any growth for those that have invested in it, but Amazon and Google look phenomenal. And these are two of my favorite stocks. And then you look at how they continue to grow.

You look at their stories and then you look at their charts. These are just still breaking out a major basis. So there's room to run there. So it's becoming more individualistic, which I hate. It's so cliche. It's a stock picker's market, but for the people that you talk to on a regular basis, this is great because you can then do your research and pick those winners based on their earnings growth, based on the fundamentals, and then throw in a few technicals and you've got the perfect picture.

Lindsey Bell: Yeah, it makes it a little more fun, I [00:13:00] think, but you know, we all have our thing.

Jay Woods, CMT: This is

Lindsey Bell: When you

Jay Woods, CMT: This is what we do. Volatility, it drives people crazy, but that's what the greatest thing about working on Wall Street. No matter where you are, if you're literally there on the floor, you're there regionally following the stock market, you don't know what the next day is going to bring. It's infuriating, but it's what makes this job exciting.

I don't know what weekend event is going to cause us to sell off on Monday. We've had two of them the week we're taping this. So who knows what's next? It keeps you on your toes. And as a technician, it keeps me prepared. What levels do I want to enter? Where do I want to get out of it?

As someone watching the economy, how is this going to affect inflation in the Fed narrative? So there's always something that keeps us on our toes.

Lindsey Bell: Well, talk to me about the levels you're looking at right now from a technical perspective, because I know you do keep your eye on that very closely.

Jay Woods, CMT: Yeah, yeah. We, we are watching a few things. Let's just go S&P 500 first and then you break it down in the 11 spider Select ETFs. But the [00:14:00] S&P 500 has gotten to 6,100 twice. We had a major reversal on the Friday before tariffs were announced at 1:15 in the afternoon, and we wanna see if we can break out to new highs. Price action where you get to 6,100, you fail.

You return, you test, you fail that, that could potentially be a double top or it just near term resistance and we go sideways a little while. So what you want to watch are levels in the past that buyers have come into this market. And the one thing in the S&P 500, where buyers have seemed to step in, is this 100 day moving average.

It's around 5881. It's a lot lower than where it is, but you know, 100 points sell off 120 points sell off in the S&P 500 is a normal retracement in a cyclical uptrend. And I think that's the first level I want to watch to make sure if we retested, if we hold that level, all right, buyers are still coming to this market.

The rotation theme is continuing. Those mega caps that have been resting [00:15:00] have not broken down. So we're okay. This is healthy. If we break that, then the 10 percent narrative comes a little more into focus. And then I'd be concerned. We haven't tested the 200 day moving average in the S&P 500 in ages.

These are normal retracements that, in long term uptrends, you tend to see. So I don't think we're in a panic mode. But if we break that 100 day moving average, the next stop down could be as low as 5600. If it gets accelerated, if there's panic, you may have a washout and that could go to 5500, which would be a 10 percent correction.

I don't know if that's going to happen. The way we've been sustaining and holding on when we sell off. The buyers are still in charge right now. And the dips are being bought until we break that hundred day, then, then maybe the tune changes. I thought we had a chance to wash out and there's been too much optimism.

So the dip buyers are still in control. And I think the bulls are [00:16:00] here. We may go sideways for a little while and sideways is a direction. People don't remember that. But it frustrates people, but it's constructive to me.

Lindsey Bell: It is a direction. That's a very good point. I think that's smart. One thing I always look at too is RSI and It's suggesting, I think right now it's at about 49, which is right where it should be. So that suggest the market's not overbought and it's not oversold either.

So potentially there's some more downside, like you, you talked about there, but it wasn't that, that 5, 800 level is an interesting level because it wasn't that long ago that we were, we were there. It was January. 10th ish, that we were

Jay Woods, CMT: Yeah. Yeah.

Lindsey Bell: too. So, happy

Jay Woods, CMT: 5773 was the low but we didn't close below 5, 800. And as a technician, I look at market closes. So if we get to a level and then we rebound and we close towards the high of the day, that's good price action. That's what I want to see. So we did see that that was January 13th, my birthday. That was the low and we rebounded since then.

I know I, I, I just like dates and numbers. [00:17:00] Well, thank you. Let's not talk about it. I'm sorry I brought it up, but yeah, that was the low. So that's another key level to watch and you watch closes. If we close at the lows of days, at the lows of the week, that's concerning because momentum is clearly down at the end of the day.

So people are nervous. They're getting out at the end of the week. So closing prices as the technician matter a lot to me. And then you mentioned the RSI. It is at 49 as we're taping this. It's right in the middle of a range. So to me, we're kind of like hanging around this 50 day moving average a little below it.

So maybe we, we failed to recapture and we take that leg lower and retest some of those levels, which we were only at two, three weeks ago. So this is, it's volatile, but it's somewhat constructive. I don't feel that this is the beginning of an end. I just think it's a pause on a nice run right now.

Lindsey Bell: Yeah, I mean, we've got GDP above 3 percent [00:18:00] for the first quarter, according to GDP Now. Obviously that's it's early, early estimates, but we've got a ways to go, but I mean, we've been in this two and a half to 3 percent GDP range for quite a long time, a couple of years now. So that stuff is all good and, you know, we're going to keep on it, but I love the, the technical perspective, like I said, as a fundamental analysts, thinking about the technicals, I think marrying the two of them together just kind of gives you a little more conviction and what you're what you're thinking at from a fundamental perspective. And so I always appreciate talking to folks like you, Jay. You always bring great pieces of knowledge to us.

Jay Woods, CMT: Yeah. And you know, I, I don't ever poo poo the fundamentals. The news will trump everything and no puns intended. But the one thing that's fact is price and price action is, is the thing that people are anchored to when they're buying and selling their own portfolio. They're buying a stock. They remember where they bought it.

And price to me is never restated, but fundamentals and analyst earnings and [00:19:00] projections are always restated. So as a technician that with my bias, he's leaning that way because that's how I've traded markets. Yeah, price action is very important and history doesn't always repeat, but it rhymes and we see that in different levels of support and resistance in the market.

Lindsey Bell: Well, awesome. I'm so glad you joined us. That's a great explanation of your technical perspective and appreciate your time today. Thanks, Jay.

Jay Woods, CMT: Thank you.

Lindsey Bell: Welcome back. That was Jay Woods and what a wealth of knowledge he is. Like I said, he spent a significant amount of time following and studying the markets, the technicals of the markets, and he had a seat on the floor of the New York Stock Exchange. I used to go visit him down there. He's an awesome guy.

I really love his pers his technical perspective on the markets because like he said there at the end, the numbers don't lie. And while he's expecting a 10 percent pullback in the market early this year, we got [00:20:00] pretty close in January on an intraday basis. He looks at numbers on an intraday perspective.

You know, I love the fact that he remains optimistic for the longer term. And I think we both agree that the volatility in the markets really can create an opportunity for investors. So that's something to think about as you're talking to clients and you're doing your own investing out in the market in the year ahead. That'll do it for this episode of What Does it Mean.

You know where to find me on LinkedIn and on Twitter. And we're going to have in the show notes here attached where you can find Jay. He, he's on Twitter. He's active on LinkedIn and other places. So again, Jay Woods at Freedom Capital Markets, check them out online. Thanks again.

Lindsey Bell: [00:00:00] Welcome to the what does it mean podcast? I'm Lindsey Bell. My co host, chris Versace, he's got the week off, but I got Jay Woods from Freedom Capital Markets here with me today. He's their Chief Global Strategist, and we are going to talk all sorts of things, but primarily we're gonna talk about volatility, tariff impact on the markets and earnings.

We'll get dig into earnings. We'll talk about January's performance, and we will talk about where the market goes from here. So stay tuned.

Welcome back everybody. Like I said, I've got my pal, Jay Woods here with me. Longtime wall street veteran. This guy has been on the floor of the New York stock exchange for decades and he's a wealth of knowledge. So I'm so excited that we get to talk with him today. Now, Jay, welcome to the show.

Jay Woods, CMT: Lindsey, thanks for having me. Thanks for making me feel super old with that decades on the floor introduction, but I have been down there since 1992. It seems like I just started yesterday, [00:01:00] but yeah, it's starting to add up, those years.

Lindsey Bell: we're not as young as we used to be, right?

Jay Woods, CMT: No, but we look good.

Lindsey Bell: we do look good. We look good. We look young.

Jay Woods, CMT: Exactly.

Lindsey Bell: But I want to talk about the 2025 stock market, you know, because I've been thinking about it. And like, okay, I know we're only a month in, we're just getting into February. But when I think about how I would characterize this market this year, I would say it's extremely reactionary. So there's a lot of volatility in the market. The market investors were just reacting swiftly and big moves are happening based on news and tariffs. Policy in general out of the U. S. Out of the Fed. Inflation readings, movements and interest rates. It's quite reactionary. So let's talk about volatility Jay. Now, I hope you brought your crystal ball because I wanted to ask you Are we going to get through it? Will we resolve this issue in Q1? Is it going to be a trump first 100 day or is this gonna be a hallmark of 2025 and the years to come? What do you think? And how you feel [00:02:00] about volatility?

Jay Woods, CMT: Well, you know, there's so much in there and we'll go deep in the weeds, but 2025, definitely the year of volatility. I still believe we're in a secular bull market. But when you're in those bull markets, when I say secular bull market, a market that will continue to climb higher over the next several years. We've had back to back years with 20 percent gains.

This is fantastic. It reminds me a lot of the nineties. So does what's going on in the world. But Trump 2. 0, I think is what's on everybody's mind. And it's very different than Trump 1. 0. And, you know, Trump 1. 0, let's just go back 2017. The market was up every month in 2017, 19 percent gain slow and steady.

Volatile headlines, which we continue to get from President Trump, that's never going to change. But this time, things are different. 2018 was derailed when we had tax implications, a trade war with China. And now, right out of the gate, what are we seeing? Headlines with tariffs, tariffs on our [00:03:00] allies. Not because there's trading issues, but because he wants to use that tactically to get some of his border security put under control and fentanyl drug distribution under control.

So what he's done, and we don't have to agree with it. I quite frankly don't, but he has been putting tariffs as a way to get people to the table. And right now as we tape this, we're seeing a lot of volatility as these headlines continue to come out. And I think that will be the norm for a little while.

And we'll look at the long term ramifications later, but right now, short term, it's got a lot of traders on edge, a lot of investors worried. And I'm sure you're hearing it from people that you deal with on a daily basis that, what does this mean? And if we take that step out and look into the crystal ball, President Trump uses the market as a scorecard.

And I think when things settle we will continue to get back on that uptrend. But will we have the [00:04:00] gains that we saw the last two years in 2025? I'd be surprised to see it, but I do consider this to be a little bit of a pause in a secular bull market right now.

Lindsey Bell: Yeah. I think, Jay, when I think about the volatility that we're seeing now, of course tariffs are definitely a key driver in this moment in time. But I think, you know, Ryan Detrick always says it best. He's always like, "volatility is the tool that we pay to invest in the markets," right? And it's true. And you can use this tool, and these over reactionary moments, to create opportunity to get back in to the market, whether you have cash

On the sidelines, or you're just looking for a new place to invest. And so what I would say is to the advisors or investors that are listening is that, what's typical in any given year is that you can have an average intra year.

So over the course of the 12 month period decline of 14%, and you could see, you know, we see a 15 percent correction every two years, 20 percent bear market every three and a half years. On average, it doesn't [00:05:00] mean it's going to happen, right? We just had two years of 20 percent returns. And so I think it's, it's something we need to be mindful of.

The phone might be ringing a little more frequently for those that are helping others invest. But, eventhough there's so much volatility, January, you look at the January barometer like I do because I used to work with Sam Stovall, so, you know historian of the markets. And the January barometer says that as January goes so goes the rest of the year. And believe it or not, the market was up almost three percent two point seven percent in the month of January.

I know February, we're kind of getting started on shaky grounds here. How do you feel about the January barometer and what that means for the rest of the year?

Jay Woods, CMT: Yeah, I follow it. I like it. Sam Stovall an amazing, amazing man in his own right. 77 percent of the time when January is up, we're up. So yes, the S&P gained 2. 7%. Some people say, yeah, well, you get a head start. So it's, it's not a bad statistic, but [00:06:00] it's not what's going to make or break my thesis for the year.

It's just a, a fun stat. And I I'm full of fun stats and fun facts and I'll use them. But overall I look at the general market trends and I look at rotation. And as a famous technician, Ralph Acampora always says, rotation is the lifeblood of a bull market. And when we see sectors decline, we're not seeing money rush to the exits right now.

We're seeing it rotate into other sectors for January The S& P equal weighted index was up more than the S& P market cap weighted index, which takes into account Apple which was down. Nvidia, which was down. And Microsoft which also is down. The three biggest stocks, about 15 percent of the weighting, are down the S& P 500. Yet, the index itself was okay.

So we're seeing a broadening out, and that bredth continues to be what keeps me bullish. But when you look at those mega cap names, you scratch your head. There's a little weakness there. [00:07:00] To me it's more of a pause and some headlines out of China that is causing this weakness. And I don't think the overall trend in an Nvidia, in an Amazon, in a Google, are changing anytime soon.

But right now we're rotating into other sectors and that is positive because the overall trends continue to be there. You also mentioned those corrections. That is such a strong point because I know people ask, you know, Oh my God, it's a 10 percent correction when you live through those, it is a gut punch.

No one likes it. And then you start to question your overall thesis. Well, has something changed? And to me, if we were to get a 10 percent correction, and I actually called for one at the end of December in the first quarter of this year, that would be troubling to go through, but when you put it into statistical probabilities and the normality and the volatility you see in markets, it would be normal.

We haven't had one [00:08:00] since, oh my God, I can't even remember. I should have this stat at the top of my fingertips, but it's been since October of 2023, so we're going on close to 17, 18 months. So a pullback seems like, oh, it's the end of the world, to me, if nothing fundamentally and structurally has changed in these companies leading us, I'm not overly concerned, but it will be part of the volatility story of 2025.

Lindsey Bell: Yeah. And I think you bring up fundamentals. I came into this year, Jay, and I was thinking, you know, this market has primarily been driven by interest rates, inflation, fed policy, and I was hoping this would be the year the fundamentals would start to matter. As you know, I'm a fundamental analyst. So it's just near and dear to my heart, right? We're in the midst of fourth quarter earnings period right now. And it's a pretty good earnings season so far. I came into the period thinking, Hey, this, this is not going [00:09:00] to be, this is not going to be the catalyst that's going to turn the market around. So I was kind of downbeat about the first quarter despite hoping that fundamentals would become, you know, front and center for the full year. Um, you know, when I look at the earnings picture, it's like I

said, it's been really good. We're getting 20% of earnings in the week that that we're taping this by the way, um, from the S&P 500. So it's going to be a big week. It's been a mixed bag so far. We've had some big tech disappointments. We've had some big tech names blow it out of the water, right? and so I think when we look forward to the rest of this week and the remainder of the earnings period in the rest of the year, you know, do you see fundamentals mattering when valuations are 22 and a half percent now? How do fundamentals play into 2025?

Jay Woods, CMT: Yeah, well, you're talking to a technician first and someone that traded more on a feel for what was going on on the floor when I had humans in front of me, and then follow it, you know, when that changed to [00:10:00] purely price action. But the fundamentals matter. Of course they matter. We're seeing earnings growth.

That means the economy is doing well. We're seeing earnings growth, not just in pockets, but in all 11 sectors, we're seeing continued growth. So you have to be worried about that. And that's why I think inflation is so front and center on everyone's mind. When you hear tariffs are being implemented and it's going to affect our groceries, okay, well, that is going to hurt the average consumer. It's going to affect gas prices. That is the biggest tax on the American consumer And could that finally change the way the resilient consumer has been spending and thus the bottom line fundamentally? So yeah, of course we're watching these things closely. But if you didn't follow price action over the last three years, you missed out because you were too concerned about a Fed that was hiking rates and inflation that wasn't under control. And a lot of that has to do with going back to covid.

When we look back at this time, there's going to be an asterisk [00:11:00] when they write, you know, economists write books about what we've gone through. This is like the steroid era in baseball. And now we're just kind of getting to that new normal. Someone as old as me remembers mortgage rates that were six and a half percent.

And I was excited because they were falling. Now we're going the other way. Now we just need to see it stabilize and then get used to this new normal because wage growth has not slowed tremendously. So we're keeping up with the times. Consumer confidence, it ebbs and flows. But overall the fundamentals continue to be strong.

And while some of these valuations are exceedingly high or feel that way, when you put it in perspective, especially in these mega cap names with the dot com era, it's not off the charts. When I look at an Nvidia trading a little over 30 times, that isn't crazy considering their earnings growth continues to rise ridiculously.

Yes. It's slowing for them, but 50 percent year over year earnings growth is not a bad thing. So I don't think [00:12:00] we're at this euphoric stage that usually ends bull markets. I think we're more of a digestion phase and earnings growth, it's starting to continue to rise. And to me, I think we'll see some stocks really separate from others.

And when you look at mega caps, Microsoft has been struggling. Microsoft is back to where it was a year ago. There hasn't been any growth for those that have invested in it, but Amazon and Google look phenomenal. And these are two of my favorite stocks. And then you look at how they continue to grow.

You look at their stories and then you look at their charts. These are just still breaking out a major basis. So there's room to run there. So it's becoming more individualistic, which I hate. It's so cliche. It's a stock picker's market, but for the people that you talk to on a regular basis, this is great because you can then do your research and pick those winners based on their earnings growth, based on the fundamentals, and then throw in a few technicals and you've got the perfect picture.

Lindsey Bell: Yeah, it makes it a little more fun, I [00:13:00] think, but you know, we all have our thing.

Jay Woods, CMT: This is

Lindsey Bell: When you

Jay Woods, CMT: This is what we do. Volatility, it drives people crazy, but that's what the greatest thing about working on Wall Street. No matter where you are, if you're literally there on the floor, you're there regionally following the stock market, you don't know what the next day is going to bring. It's infuriating, but it's what makes this job exciting.

I don't know what weekend event is going to cause us to sell off on Monday. We've had two of them the week we're taping this. So who knows what's next? It keeps you on your toes. And as a technician, it keeps me prepared. What levels do I want to enter? Where do I want to get out of it?

As someone watching the economy, how is this going to affect inflation in the Fed narrative? So there's always something that keeps us on our toes.

Lindsey Bell: Well, talk to me about the levels you're looking at right now from a technical perspective, because I know you do keep your eye on that very closely.

Jay Woods, CMT: Yeah, yeah. We, we are watching a few things. Let's just go S&P 500 first and then you break it down in the 11 spider Select ETFs. But the [00:14:00] S&P 500 has gotten to 6,100 twice. We had a major reversal on the Friday before tariffs were announced at 1:15 in the afternoon, and we wanna see if we can break out to new highs. Price action where you get to 6,100, you fail.

You return, you test, you fail that, that could potentially be a double top or it just near term resistance and we go sideways a little while. So what you want to watch are levels in the past that buyers have come into this market. And the one thing in the S&P 500, where buyers have seemed to step in, is this 100 day moving average.

It's around 5881. It's a lot lower than where it is, but you know, 100 points sell off 120 points sell off in the S&P 500 is a normal retracement in a cyclical uptrend. And I think that's the first level I want to watch to make sure if we retested, if we hold that level, all right, buyers are still coming to this market.

The rotation theme is continuing. Those mega caps that have been resting [00:15:00] have not broken down. So we're okay. This is healthy. If we break that, then the 10 percent narrative comes a little more into focus. And then I'd be concerned. We haven't tested the 200 day moving average in the S&P 500 in ages.

These are normal retracements that, in long term uptrends, you tend to see. So I don't think we're in a panic mode. But if we break that 100 day moving average, the next stop down could be as low as 5600. If it gets accelerated, if there's panic, you may have a washout and that could go to 5500, which would be a 10 percent correction.

I don't know if that's going to happen. The way we've been sustaining and holding on when we sell off. The buyers are still in charge right now. And the dips are being bought until we break that hundred day, then, then maybe the tune changes. I thought we had a chance to wash out and there's been too much optimism.

So the dip buyers are still in control. And I think the bulls are [00:16:00] here. We may go sideways for a little while and sideways is a direction. People don't remember that. But it frustrates people, but it's constructive to me.

Lindsey Bell: It is a direction. That's a very good point. I think that's smart. One thing I always look at too is RSI and It's suggesting, I think right now it's at about 49, which is right where it should be. So that suggest the market's not overbought and it's not oversold either.

So potentially there's some more downside, like you, you talked about there, but it wasn't that, that 5, 800 level is an interesting level because it wasn't that long ago that we were, we were there. It was January. 10th ish, that we were

Jay Woods, CMT: Yeah. Yeah.

Lindsey Bell: too. So, happy

Jay Woods, CMT: 5773 was the low but we didn't close below 5, 800. And as a technician, I look at market closes. So if we get to a level and then we rebound and we close towards the high of the day, that's good price action. That's what I want to see. So we did see that that was January 13th, my birthday. That was the low and we rebounded since then.

I know I, I, I just like dates and numbers. [00:17:00] Well, thank you. Let's not talk about it. I'm sorry I brought it up, but yeah, that was the low. So that's another key level to watch and you watch closes. If we close at the lows of days, at the lows of the week, that's concerning because momentum is clearly down at the end of the day.

So people are nervous. They're getting out at the end of the week. So closing prices as the technician matter a lot to me. And then you mentioned the RSI. It is at 49 as we're taping this. It's right in the middle of a range. So to me, we're kind of like hanging around this 50 day moving average a little below it.

So maybe we, we failed to recapture and we take that leg lower and retest some of those levels, which we were only at two, three weeks ago. So this is, it's volatile, but it's somewhat constructive. I don't feel that this is the beginning of an end. I just think it's a pause on a nice run right now.

Lindsey Bell: Yeah, I mean, we've got GDP above 3 percent [00:18:00] for the first quarter, according to GDP Now. Obviously that's it's early, early estimates, but we've got a ways to go, but I mean, we've been in this two and a half to 3 percent GDP range for quite a long time, a couple of years now. So that stuff is all good and, you know, we're going to keep on it, but I love the, the technical perspective, like I said, as a fundamental analysts, thinking about the technicals, I think marrying the two of them together just kind of gives you a little more conviction and what you're what you're thinking at from a fundamental perspective. And so I always appreciate talking to folks like you, Jay. You always bring great pieces of knowledge to us.

Jay Woods, CMT: Yeah. And you know, I, I don't ever poo poo the fundamentals. The news will trump everything and no puns intended. But the one thing that's fact is price and price action is, is the thing that people are anchored to when they're buying and selling their own portfolio. They're buying a stock. They remember where they bought it.

And price to me is never restated, but fundamentals and analyst earnings and [00:19:00] projections are always restated. So as a technician that with my bias, he's leaning that way because that's how I've traded markets. Yeah, price action is very important and history doesn't always repeat, but it rhymes and we see that in different levels of support and resistance in the market.

Lindsey Bell: Well, awesome. I'm so glad you joined us. That's a great explanation of your technical perspective and appreciate your time today. Thanks, Jay.

Jay Woods, CMT: Thank you.

Lindsey Bell: Welcome back. That was Jay Woods and what a wealth of knowledge he is. Like I said, he spent a significant amount of time following and studying the markets, the technicals of the markets, and he had a seat on the floor of the New York Stock Exchange. I used to go visit him down there. He's an awesome guy.

I really love his pers his technical perspective on the markets because like he said there at the end, the numbers don't lie. And while he's expecting a 10 percent pullback in the market early this year, we got [00:20:00] pretty close in January on an intraday basis. He looks at numbers on an intraday perspective.

You know, I love the fact that he remains optimistic for the longer term. And I think we both agree that the volatility in the markets really can create an opportunity for investors. So that's something to think about as you're talking to clients and you're doing your own investing out in the market in the year ahead. That'll do it for this episode of What Does it Mean.

You know where to find me on LinkedIn and on Twitter. And we're going to have in the show notes here attached where you can find Jay. He, he's on Twitter. He's active on LinkedIn and other places. So again, Jay Woods at Freedom Capital Markets, check them out online. Thanks again.