Meet Raghee Horner -Managing Director of Futures Trading - a successful futures trader, futures trading mentor, and Forex and day trading strategy master.
Benzinga's PreMarket Prep is the #1 go-to source for everything you need to know before the market opens! Join our expert hosts as they break down the latest market trends, analyze key indicators, and provide actionable insights to help you navigate the trading day ahead.
Benzinga's PreMarket Prep is the #1 go-to source for everything you need to know before the market opens! Join our expert hosts as they break down the latest market trends, analyze key indicators, and provide actionable insights to help you navigate the trading day ahead.
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00:00 Rogie, welcome to Benzinga's Pre-Market Prep. How are you doing this morning?
00:03 Good morning. How are you doing? Good to see you both.
00:06 I'm good. Yeah, I think this is our first time getting to chat.
00:08 So I know we were talking a little bit this morning. We've got a busy week. We got the JP
00:14 Morgan Healthcare Conference. We've got financials reporting later in the week.
00:18 What are you seeing that's catching your eye?
00:21 The first, I was listening to you guys talk about a little bit of that January effect,
00:25 and I love that you're talking about it because so much of December was window dressing, Santa
00:30 rally. And so seldom do we look at the other side of window dressing, which is at some point,
00:36 all that stuff has to come back out of that big window. And you have this window undressing,
00:42 kind of unraveling. And I wasn't sure if we'd see broader participation where semis and tech
00:49 could rally with energy and healthcare, but instead we're seeing some sector rotation.
00:54 We're seeing those leaders, some profit taking, and we're seeing some classic movement into those
00:59 laggards from 2023. So nothing weird so far with as weird as 2023 was, 2024 right now is for me,
01:08 feeling like a little bit of a warm hog. There's some familiarity here. So I'm very optimistic
01:12 about the year. Do you think this weakness continues,
01:16 or is this a buying opportunity for 2024? There's two really interesting things at JP
01:22 Morgan and health conference, financial and healthcare sector. If financials can continue
01:27 with that rally into earnings and post earnings starts to just accelerate, the SMP has got to go
01:33 with the waiting that financials have in it. If healthcare can keep up the move, I mean,
01:38 UNH has been sort of an outlier in that group. And maybe something like Johnson and Johnson and Merck
01:45 and Abbott get the memo. Again, I might be sounding a little Pollyanna, but I am looking at a buy the
01:52 dip. I'm not veering from that at all, but you've got to be so much more selective. I'm not saying
01:57 every index is a buy the dip. I mean, obviously we're going to see what happens to the Dow
02:03 this morning with Boeing. But overall, yes, I want to buy the dip because the one thing that
02:08 window undressing can't undo is the expectation that we have that the Federal Reserve is going
02:15 to be pretty active come March. Yeah. And of course we have a CPI
02:20 coming this Thursday, which should give us a little bit more insight if the Fed is able to
02:25 end up cutting at some point in the first quarter of 2024. I mean, Raghi, do you have any thoughts
02:30 just in terms of the inflation reading? Do you expect this to continue to fall or are you worried
02:37 that we might start seeing inflation pick back up again? We haven't seen signs of it in all the
02:42 little outlier data points. And I don't think even, it's got to be a really hot number for the Fed to
02:49 back off what that track is. Last time I looked at the Fed fund futures, March expectations are a
02:55 little bit lower for the rate cut, but it's still the most probable. Same thing with May, same thing
03:00 with June. So I'm still looking for that first rate cut no matter what in either March or May.
03:05 It doesn't matter if it's a delay. Obviously we'll see a little bit more chop and pull back
03:10 because so much of the rally was geared towards what was just probably bonkers expectation for a
03:17 quarter point, quarter point, quarter point cut in March, May, June. But even if it's a little bit
03:24 less dovish, I'm still looking for the rally to overlook a lot of the things that admittedly
03:30 don't look good because look, Gang, I mean, I know you guys have both traded these environments.
03:35 For those of you that have never traded an accommodative pivot from the Federal Reserve,
03:40 it's hard not to be a bull. I can't be a bear here. Yeah. And you talked about selective buying
03:46 here. I want to throw it at you here. Give us some names here, Raghi. What are you looking at
03:51 on the pullback here? Because if you think we're going to, you know, the Fed's going to be
03:55 accommodative, it probably means higher stock prices. Where are you looking? So in tech, I heard
04:00 you all talking about tech earlier. I wanted to get into Amazon, Meta and Microsoft. Those are my
04:06 favorites. TikTok had a moment where it sort of knocked the legs out from underneath Amazon with
04:12 that possible foray into e-commerce, but I still like Amazon for the long side, but Meta, Microsoft,
04:17 Amazon for the tech side. I mean, talking about financials, you think about the uptrends that
04:23 have been in JP Morgan, Visa, MasterCard, Bank of America, Wells. I know I'm going really fast,
04:28 but those are, it's hard not to like something in the top 10, 11 names within the XLF. The only
04:36 chop I believe we've seen is from Berkshire, you know, in terms of high concentration weighting.
04:40 So it's hard not to want to love to buy some dips in XLF, which might just be a better way than
04:47 trying to pick a boat, just play the tide in the XLF. I'm not super optimistic across the board
04:55 in healthcare yet, but basic materials have gotten on my radar. Basic materials, XLB, Freeport,
05:01 Mac, Moran. I'd love to see copper futures continue to move higher. Metals and mining are starting to
05:06 get on my radar. What about Alcoa? There's a forgotten one and it's really had a rough couple
05:11 of years, $90 back in 2022. It got down to 23 bucks just a few months ago. It's up here at 32.
05:18 Is this one you'd look at or is this just not? You know, what's interesting about Alcoa is that
05:22 downtrend that was just relentless through last year. We finally, at the very end of December,
05:28 popped up through two really important levels. Got above 30 and it got above the 200 exponential.
05:34 It's hard to hate a stock north of that 200. Is it going to gain some traction? It's really
05:39 too soon to tell, but if we dip back down to 30, I wouldn't mind putting on a smaller position to
05:44 see if we can regain some traction north of 33. Going back to financials real quick,
05:50 Raghi, I mean, you mentioned some of the bigger names. What about KRE or some of the regional
05:55 banks? I mean, we saw, of course, a lot of the turbulence in this space has been from the higher
06:02 interest rates. Do you think if we do end up getting these cuts in March or May that you expect
06:06 that the regional banks could be winners from that? KRE and IWM, Russell Futures,
06:13 they definitely put on a show at the end of last year that frankly, I was hoping but not expecting.
06:18 I thought if we're going to see some tax loss harvesting, if we're going to see some weakness
06:22 get weaker, that was exactly where I was thinking and it just defied gravity. KRE got above the 200
06:28 back in October, I believe it was, got above 45. It's an uptrend. The only thing that's looming
06:34 is last year's sort of opening. If I'm looking at whether stock is up or down on the year,
06:40 it's got to get above 60 to probably get some real attention. But north of 50 here,
06:46 it's hard to hate on it and you're so right. With that macroeconomic inevitability of some rate cuts
06:52 coming, maybe not as many as we think or hope, but with those rate cuts coming, it's hard to hate on
06:56 KRE and then therefore, hard to hate on the Russell Futures, the Russell 2000.
07:00 Lewis Author There you go. And then let's go back to the
07:03 material space real quick. You mentioned copper. Are there any other specific commodities that
07:10 you've been looking at and why copper? Kim Walsh
07:13 So copper is an interesting one. While gold and silver get a lot of the attention, if I'm really
07:17 looking at the economic optimism that tends to come with an accommodative monetary policy,
07:23 it's not just the US Central Bank. We're starting to see pivots from Lagarde and the European
07:28 Central Bank. So if we're slowly starting to see the FOMC, the ECB start to slowly move towards
07:36 rate cuts, hard not to look at the two canaries in a coal mine, which should benefit from this.
07:42 Crude oil, which is still iffy, but definitely copper. Copper got above 3.8 on the futures
07:48 contract, which is also above its 200. And so I'm watching XME, I'm watching even SLX, the steel ETF.
07:55 Freeport-McMoran is a great proxy for copper if you don't play copper futures.
08:00 Lewis Author Which ticker was that, Raghi? Sorry.
08:03 Raghi Sarkar Sorry?
08:04 Lewis Author Which ticker was that, the copper one?
08:05 Raghi Sarkar FCX, Freeport-McMoran.
08:07 Lewis Author FCX.
08:08 Raghi Sarkar Yeah, I'm way too caffeinated this morning,
08:10 guys. Sorry.
08:10 Lewis Author Oh, you're good. Yeah, that's where you hear
08:13 the Dr. Copper thing a lot, where people say you can look at copper as a gauge for the overall
08:17 economy because it's used in so many things from construction to technology. And now even a lot of
08:23 copper is going into the manufacturing of EV batteries. So I've been looking at a lot of
08:28 copper names myself. And again, you can kind of just look at copper's chart and when the economic
08:33 outlook is good, it's typically going up. And when the economic outlook is bad, it's typically
08:37 going down. So a lot of people use that copper as kind of a gauge for the overall economy.
08:41 Raghi Sarkar Staying above 3.8, that's what I'm looking
08:44 for in the front month of copper. And we still have maintained that even though right now we're
08:49 pulling back to it. So there might be an opportunity to jump into a little bit of copper here. But
08:53 I think getting above 4, again, it's just a matter of climbing the rungs of the ladder.
08:58 But if we can find some support here this week, that should bode really well. And to your point,
09:02 that CPI, if it's flat or even cool, here come those more aggressive break cut expectations.
09:09 Hard not to keep an eye on copper and maybe even crude this week.