Stock Talk - A GOAT shows on April 24th: Perfect Historic Track Record

Starting point is 00:00:00 Investors for the past three weeks, we've been messaging our followers and investors that the data says it's not time to paddock, but rather, it may be time to step up if you have some extra cash lying around and add to your stock positions. If you're already retired, heavily invested, or still in your savings phase early in your career, years from retirement, this message just might be for you. The S&P 500 after essentially peaking December 6th, just under 6,100, then beandering for three months into March, banking on the frictional tariff policies of the current administration, the index looks to have made a low on April 7th. That's a minus 21.5% peak to trough intraday move lower and almost 19% lower if you're using closing prices. A trillion dollar question is, was April 7th a low or the low for the overall S&P 500 in U.S. stocks? For two weeks, our team messaged the X few periods like the great financial crisis in 0708 and the popping of the speculative dot com bubble in 2002. 2001, which did proceed longer and deeper recessions, history says enough damage had been done

Starting point is 00:01:06 and one should be adding to desired stock positions. Here's the log chart of the S&P 500 since the end of the great financial crisis in 2009 that we've been sharing with our followers over the last two weeks. We went from the top of the channel at around 6,100 in early December of last year to the bottom of the channel the last five months as initial hopes by investors for a growth-oriented policy in D.C. instead for changing tariffs, Doge cutbacks, and other frictionary policies. Historically, if we aren't entering a prolonged recessionary period,

Starting point is 00:01:39 this graphic would say buy stocks, add to positions. Yes, against all the normal doomer calls most recently, due to the uninspiring, historically, unpredictable and dreaded Death Cross, which we discussed last week. You can catch our thoughts on the Death Cross in last week's episode entitled market correction or bare market, a low or the low? And then, on April 24th, one of the financial markets goats, greatest of all times in the market appeared. One of the greatest of all time indicators showed up. And then something very rare happened. Between April 8th and April 24th,

Starting point is 00:02:17 it happened when the S&P 500 cash closed at 5485. What was this thing? A Zweig breath thrust, something we've discussed twice prior in my years at Oak Harvest. We've discussed this rarity once in late 2018 during the fourth quarter of 2018, minus 20% Christmas Eve decline, and then again in late October 2003, when the markets were down 11%, when many were declaring a recession was forthcoming. A quick recap of what the Zweig breath thrust indicator is, it's been developed by Marty Zweig, it was historically relevant since 1939. Yes, Bears, and Mark market historians, prior to 1939, its success rate was not very good. Prior to 1939, the signal was about 50-50 or coin flip in success. Here's all the data per Paul Sienna of Bank America's securities,

Starting point is 00:03:10 inclusive, but given its 85 years of history and multiple years of winning streak, it's worth including in our work. As wide breath thrust signal is triggered when the 10-day exponential moving average and the NYSC advancing stocks divided by advancing plus declining stocks goes from below 0.4 to above 0.615 within 10 trading days. Admittingly, everyone's data is a little different, and I'm going to quote a few sources here whose data isn't perfectly aligned, but does message the exact same thing. What's that? It's bullish. The idea behind the signal is a quick change in investor sentiment in positioning from negative to positive, a sudden swing from negative breadth to really, positive breath is a sign that the bottom has formed and that buying is overwhelming selling,

Starting point is 00:03:59 that sellers have exhausted themselves. Those on margin accounts have been blown out at the lows, and all that's left are buyers and short-coverers. Okay, post-zwig breath thrust since 1939, according to Merrill Lynch, using Bloomberg data, the S. SP 500 was higher 100% of the time, 16 out of 16 in 130-day and 190-day training days with an average gain of over 17 and 19.5%. Since 1939, after 250 trading days, for about a year, the SP 500 was up 15 out of 16 times, averaging over 21%. No guarantees, of course, but that's the math. Doing that math, the SP 500 target a year forward would be 6650, remarkably close to the Oak Carvest Group year-end, 2025 target of 6600 to 666. Take a look at the dataset from Paul Sienna at Merrill, Bank of

Starting point is 00:04:53 America Securities. Likewise, investors, after a couple of weeks ago, after a 60 to 1 positive volume New York Stock Exchange Breath Day and a 15 to 1 advancing to decline day on April 8th, our team foreshadowed the possible coming of this is why breath thrusts posting Ryan Dietrich at the Carson Investment Group's historic data on the topic using Ned Davis and fact set data. His data is a little different. I don't know why, but he's using Ned Davis data. This indicator has been triggered 19 times since World War II, 1945, and the SP 500 has never been lower six to 12 months later. Take a look at this data set once again. S&P 500 hire 100% of the time, 19 for 19, averaging over 23% and a median closer to 25%. No guarantees, of course, but doing this math, the S&P 500 forward

Starting point is 00:05:48 target, a year later, 6855-ish, remarkably close to the Oak Carbets financial bull market peak, Goldilocks in the second half of 2025, first half at 2006, of around 7,000. This begs the question. Are all sell-side strategists who have been radically cutting their overly aggressive year-end S&P 500 targets over the last two months, going to have to raise them again throughout the second half of 2025 right back toward where they started the year? We've previously shared the October, 1998 long-term capital comparison, mid.com overlay path. But recent events, including many first-quarter technology earnings calls in the last two weeks, point to a mid-AI buildout, not a peak and collapse of AI. I know you're saying to yourself, it's different this time. Maybe it is,

Starting point is 00:06:36 but so far, it looks and feels a lot like it did back then. Investors have been rarely this fearful and sentiment, rarely this negative. And historically, when it's been at these levels, you've been better off buying and walking away for 12 to 18 months than selling. Per Lance Roberts at RIA here in Houston, net bullish AAA sentiment as low as prior major lows. It seems to me that April 7th wasn't likely the low, not a low, in many things for the next nine to 12 months. Another positive piece of training data from the Carson Group during option expiration week of April 13th, the SP 500 gained more than 1.5% for three days in a row.

Starting point is 00:07:15 How rare is this over the last 75 years? Super rare. Only 10 occurrences over the last 75 years. The average gain over the next year? Yep, over 20% with no misses. No guarantees, once again, of course. I get it. When things move this fast, it feels horrible. However, historically, this is exactly when individual investors should slowly add to their long-term stock allocations and not retreat. Why? Because time is on your side. Volatility is ramped up because many traders are being forced to sell at the lows, being de-risk or being blown out for taking excessive risk at the wrong time. Historical volatility spikes like we've just seen are buy and hold points, not pull the rip-cord and eject points. No, there hasn't been a lot of good economic news out there on the screens

Starting point is 00:08:01 right now. These are definitely the times that are stressful for investors and those cared with managing other savings and financial plans. But I ask you this question, who are you listening to? Are you listening to too many people in their opinions about your money? Investors, here's my list of who one should be listening to about their money and investments. Some of you are dependent on whether you are an investor or a trader, but it's a pretty short list. Worth listening to your financial planner, very different than most financial analysts and most financial advisors. They should know your personal financial situation, not just your investment holdings. You want to listen to Warren Buffett, the goat for buy and hold investors do that.

Starting point is 00:08:40 David Tepper, Appaloosa hedge fund, a goat for hedge fund investors. Rare does he speak, so when he does, it's meaningful. Another trader, Steve Cohen, 0.72 SAC hedge fund, the goat for hedge fund traders. The markets themselves, rare indicators produced from the likes of Marty Zweig, who we just talked about. Not worth listening to? Okay, 99 and a half percent of investment newsletter writers. Also, most financial news commentary. Also, who not to listen to? As far as I'm concerned, 99 and a half percent of retired hedge fund billionaires. Almost all economists, ignore them.

Starting point is 00:09:19 Almost all famous rich billionaires. You can ignore them too when it's talking about your money. And then finally, 100% of one-hit wonders, which there are too many to list here. Can the markets go lower in 2025? Of course, there are no guarantees. But the data is saying the worst of the first half of 2025 financial storm is likely passed, like the fourth quarter of 2018 and like the fourth quarter of 1998 and like so many other corrections over the last 15 years. Regardless of the path for the economy and financial markets

Starting point is 00:09:49 over the next few months, the investment team at Oak Carvis will be here, crewing the ship and adjusting our models where we can. Until next week, have a blessed weekend and know that Oak Carvis team is doing what we can to plan for you and your family's future, regardless of what stage you're at in your career or in your retirement. content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right

Starting point is 00:10:31 for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance is not indicative of future results.

Stock Talk - A GOAT shows on April 24th: Perfect Historic Track Record

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