Yahoo Finance

The Dow closing at another record, the third time this week, while the S&P 500 and Nasdaq waver. Yahoo Finance's very own Jared Blikre joins us here with the trading day takeaways. Jared.

You know what? It's a cyclicals. That's what it is this week. It's a cyclicals. Not necessarily growth tech's taking a back seat. And let me show you the price action. We've had four days in the bag here. We got one month, one more until we close the month of August. Here's four days. So financials is actually the number one sector this week. Uh so that's a cyclical. That's kind of a value sector, more value than cyclical. Then you have energy, arguably defensive. Then you have industrials, that's cyclical, materials, that's cyclical, health care. Well, that's defensive. So as utilities, but you see where we're going here. This is kind of a broad swath. And as I promised, tech is taking it on the chin. So is this other mega cap sector that's consumer discretionary, but something really interesting. Let me just show you the year-to-date totals. Financials is now number one. You might not have thought that, but it is. And Berkshire Hathaway, which is now a trillion dollar company, that is the biggest stock in there, thanks to Geico. It's considered financials.

And so, okay. So cyclicals lead the way. So all clear, risk on. That's what that means. Yes.

Well, the thing is like, No.

No, it doesn't. Okay.

No. Uh we have we got a lot of gas in the tank here from a charts perspective. I could show you industrials. Um this is the year-to-date chart how they've just kind of broken to the upside there. You can see them continuing. I could say the same thing about healthcare. I could say the same thing about materials, but we got to get into the next topic here because the dollar itself could be a headwind. And this is this is my number two. The dollar is reversing on cue. So remember, it was just a couple days ago, we were talking about the potential for a dollar reversal, and it's kind of a longer term play. Uh but that's what I'm seeing in the Dixie right now. This is a this is a two-month chart, and you can see here those two green up candles right there, but in the context of the larger picture, the bigger picture, this is a three-year chart. The reason I thought that is because we're just getting down by potential support, and this isn't a very straight line, but you know, we're probably going to go from somewhere down here to somewhere up here, and it matters how fast we do it. Fast as bad to the upside.

Well, that's why I'm going to ask you because I we were talking about the greenback and you had some advice when you see this rising dollar in terms of what you want to see as an investor, what you don't want to see.

Yeah. So the US right now, you actually don't want to see the US as the best performing country in the world. You want emerging markets to be doing better than us. You want you want the tailwind to be at other countries. But if you see the dollar shooting higher, that could be a signal that people are risk averse. So that's why I'm saying the speed of the move matters. If you get the dollar shooting up quickly, that's going to be a problem for risk assets. It would be better if the dollar broke down here, but that's just not the pattern we're seeing right now.

All right, Jared Blikre, final point.

All right, we are going to look at an interesting development this week in August, and this is a volatility shock. So BFA, I was just going through a note they published recently. Um and they actually found that August is a pretty common month to have spikes in the vic or also down movements and stocks. So uh we have something in statistics called standard deviation or anytime you have a three standard deviation move suffice to say that happens something that happens once in a very long while. Well, in August, you tend to have 38 of these historically. And that's second only to October. But if you're paying attention here, August, September, October, these are some of the highest months. And this is when you see the vix really acting up. So primetime crash season is here, and that's why I'm saying even though we have these sectors set up for potentially higher runs, we do have some tail, we do have some headwinds in the form of the vix and the fact that the buyback window, this is something that we've covered in recent weeks, the corporate buyback window, that's closing in September 6th. That's next week, and that's because of earnings. So a lot of the tailwinds are just kind of evaporating.

You mentioned the vix. I mean, what do you typically see for the vix this time of year?

Well, I'm glad you asked because uh this is so this purple line is what the vix has done this year, and the cyan is what it does on average. And these are two, we fit, we fit these so that they both appear in the same chart here, but they have two different Y axis. What I want to show you here, this spike here, this is what happens in the average year. We got a spike this year, an actual spike that was perfectly on schedule for that. So what I want people to pay attention to is right here, this is the time of year that the vix tends to trend up and this is where we are right now. So draw your own conclusions. So my my point is all of these tailwinds that we had, they're becoming headwinds. And so that's a little bit more caution that we have in the markets.

All right. Thank you, buddy. Appreciate it.

You bet.