March 7, 2025 – Jim Puplava and technical analyst John Roque at 22V Research dissect a faltering stock market as the MAG7 stocks, once index darlings, stumble—Nvidia stagnant despite stellar earnings, Microsoft sliding, and tech sectors like XLK breaking down. Roque, bearish on Nasdaq and semis, predicts an S&P drop to 5200, citing shifting leadership and a "risk-off" mood. Amid tariff noise and a wavering 10-year yield, he eyes gold’s outperformance and foreign equities’ surge. With sharp insights on metals, oil, and Trump 2.0’s market impact, this exchange is a must-listen for investors navigating today’s volatile landscape. Tune in!
Follow more of John's work at www.22vresearch.com or on X @dachartlife
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Key points from today's show:
MAG7 Stocks Faltering: Nvidia stagnant despite strong earnings, Microsoft sliding, and Apple holding up best, signaling a breakdown in the tech giants dominating indexes.
Tech Sector Weakness: Nasdaq and semis face bearish outlook, with XLK breaking down and Roque targeting Nvidia at 90 and Microsoft at 370.
S&P Outlook: Roque predicts a decline to 5500, potentially 5200, as leadership shifts and a "risk-off" period emerges—sell rallies, not buy dips.
Interest Rates: 10-year yield may drop to 3.6%, with 2-year weaker, amid tariff noise and Trump’s push for lower rates.
Precious Metals Strength: Gold up 28% last year, silver close behind; Roque likes both, plus copper, seeing gold outperforming the S&P.
Oil vs. Copper Anomaly: Oil targets $52 as energy weakens, while copper rises, defying traditional correlations.
Foreign Equities Surge: Europe and Hong Kong outperform the U.S., with unique sector winners, marking a shift from past cycles.
Trump 2.0 Impact: Tariff uncertainty drives caution; unlike Trump 1.0, focus shifts from buoying markets to long-term policy, accepting a 5% S&P drop.
Transcript
Jim Puplava:
Well, the stock market's having a little bit of a difficult week. Instead of being positive for the year, the markets have now gone negative. Where does it go from here? Joining me on the program is John Roque. And John, I want to begin our discussion with the MAG7 stocks because they've dominated the indexes over the last two years and now it seems like they're breaking down. If you take a look at Nvidia, which blew out earnings, it's gone nowhere since last summer. Microsoft is going down, I guess maybe holding up. The best is Apple. But I'd like to get your take on the Mag 7.
John Roque:
Hey, Jim, thanks for having me. Always a pleasure to be with you. So I've gotten lucky since mid-January to be negative on Nvidia. I think the stock has risk here. And my target on the downside has been 90. And my target on the downside for Microsoft is 370. What I'm going to say is going to sound like I'm a bit of a wise guy. I don't think I am. But you might remember, and your listeners might remember, that in the summer of 2024, Jensen Huang was at a conference in Taiwan and signed a woman's "boos-tee-ay”. Now, I know that we've seen some sentiment extremes in our individual and collective careers, but I can't remember ever seeing a CEO rise to that particular status of a rock star and perhaps beyond, and sign a woman's "boos-tee-ay”. That may have been something that David Lee Roth would have done or Eddie Van Halen. So I thought that we had reached the kind of sentiment apogee or peak for Nvidia. And your point is a good one. They didn't respond well to their earnings news and the stock has made no net progress since early June of 2024. And momentum continues to deteriorate for it. I think Nvidia has told us as much as we need to know about it, that it could not go up on its earnings news. And I think the environment, or at least the trading environment around the stock, is changing and has changed. And so I think it's going to work lower and I think it's right to reduce on bounces.
Jim Puplava:
And also if you take a look at, you know, for the longest period of time, the Nasdaq, of course, led by the Mag 7, has been one of the real leaders. It looks like, you know, if you take a look at XLK, that's breaking down. It looks like the tech sector is in for a sharp pullback.
John Roque:
I agree with you again, Jim, and I'm also negative on tech as a whole. I'm also negative on semis. Of course, that's within tech. And my internal work, my internal market work, is weaker for NASDAQ than it is for the New York Stock Exchange. So I'm keen on reducing risk among NASDAQ stocks and I've even been looking for shorts among that group as well in Nasdaq.
Jim Puplava:
And John, let's talk about the S&P itself. So if you're looking at, you know, the various sectors, we've got consumer discretionary breaking down, consumer staples, a defensive play that's, you know, looking good, energy's breaking down. You've got the financials now starting to go lower. You've got health care, well, that's holding up. Industrials almost touching its 200-day. So a lot of these sectors are starting to break down. What's that picture telling you technically?
John Roque:
Yeah, Jim, I think your observations are right. I think that we are kind of in, in quotations, a "risk-off" period. You want to play defense, you want to reduce your positions, the number of positions and, or the size of those positions. And I think you want to sell rallies. I think we've been conditioned for a long time, and rightfully so, to buy dips. But I think it's changed here and it's changed, and you're right on it with the leadership no longer—the former leaders no longer being leaders—and I think that's a drag. And the NASDAQ has a greater proportion than to their market cap dominated by these stocks. So they're coming in more. But the S&P looks like it's got to work lower as well.
Jim Puplava:
Okay. I want to move on to interest rates. You know, they started coming down here recently. We got down, I think, to what, 4.2 on the 10-year. Now they're backing up a little bit. I know the President would like to see rates go lower. I'm not sure Jerome Powell is going to cooperate with that in any way. So where do you think interest rates are heading here?
John Roque:
Hi. Well, Jim, thanks. So I think that the 2-year yield is more obviously weaker than the 10-year yield. But it would not surprise me if the 10-year yield weakened and got down to around 3.6 or 3.5%. But the 2-year yield is much weaker and obviously so with respect to the 10-year.
Jim Puplava:
And then one of the stellar performers, you know, we talk about the Mag 7 stocks, but if you take a look at what happened to precious metals last year, John, you had gold up, I think, 28%, silver close to that. They're off to a good start this year. They're pulling back a little bit. So what's your take on metals?
John Roque:
I like the metals. I still like the metals. I got lucky with them over the last year and I still think they're in good shape. I like gold. It probably does need some consolidation. I like silver and I like copper here as well. But I think for your listeners, if they're able to see it, and Jim, what I'll do is I'll share the chart with you when we're done here and then perhaps you might want to, you know, put it up on your website or put it somewhere where your listeners can see it. And we're in a position now where gold is actually—we know it's gone up on an absolute basis and we know it's gone up in all currencies on an absolute basis—but it is now turning on, in an important fashion, relative to the S&P 500. And the chart I'll show, with data back to 1927, shows that there have been only three prior cycles where gold has really rallied relative to the S&P 500, and all three of them were fairly lengthy. It might be that this goes up, this relative ratio where gold outperforms the S&P, because the S&P comes down and gold doesn't have to go up. But the ratio suggests that we should certainly have some gold relative to our stocks. And I'll send that to you when we're done. And then if you want to share it, it's fine with me.
Jim Puplava:
Okay, now let's talk about—you've got copper prices, which have been rising, and Dr. Copper. That would suggest economic growth, but at the same time you've got falling oil prices. Explain those two, John.
John Roque:
I don't think I'm good enough to explain them. I think I'm good enough to just identify them. And so I've been lucky enough to be short, or conceptually short, oil prices since the summer of 2024. My target has been on the downside for West Texas, $52. And I think that's still in play. So I want to be short oil or stay short. And I think the energy sector is going to come under renewed pressure. And at the same time, copper is improving. I don't know that I'm good enough to make sense of it, but I do think that it's important in this environment to not necessarily try to correlate markets or asset classes—meaning in the past we may have seen something in copper that would have given us a clue for oil. But I don't think that's the way the environment plays out right here. I think you see copper and don't necessarily believe that it's likely giving you a clue about something else. Just believe the clues you're getting from copper are for copper alone.
Jim Puplava:
You know, we've seen some anomalies like we just spoke about between copper and oil. Another one, John, is the price of precious metals with the rising dollar or rising interest rates over the last couple of years.
John Roque:
Good point. I wonder if this is a reflection of big budget deficits, fiscal profligacy by governments around the world. Perhaps it's also a way for other central banks to kind of diversify themselves away from holding dollars, in principle, via Treasuries. And so maybe they want to—they've picked up their gold holdings. I think it's actually kind of a check against fiat currencies, and especially so because it's working against all currencies. So maybe that's the answer there. Again, I don't want to make too much of a potential narrative. I just want to make sure that my eyes are open enough so that I can see any potential change or real trend action.
Jim Puplava:
So we've been talking about the US market. A lot of strategists are saying the place to be this year is, let's say, in foreign markets, maybe Europe, which has not done as well. Actually, most markets internationally have not kept pace with the US markets. What's your take on foreign equities?
John Roque:
Well, Europe has been, you know, sort of gangbusters on a year-to-date basis. It's almost as if Donald Trump is making international markets great again. And so it is true, not only in Europe, but in Hong Kong as well. I've gotten very lucky with Hong Kong and I think it's right that China and Hong Kong will continue to do better. And I'd like to look to pullbacks or consolidations there. Europe is pretty extended, led by Germany, but the other four of the big five markets are certainly participating—France, Italy, Spain, and the UK. So it's fairly broad. And interestingly, the sectors that are winning there, because the markets there are winning, are not the sectors that are winning here. So there is something different going on here with respect to Europe outperforming the US. It's outperforming the US broadly and the similar sectors are not even working here, which is usually what happens. So if it works there, it usually works here. But that's not occurring this year. So it really is a distinction from prior cycles.
Jim Puplava:
So if you're looking right now, John, are you on the fence or are you mainly in cash? You mentioned you're looking at things to short. What's your overall position on the market as you look at these charts now?
John Roque:
I think the S&P works lower, Jim. And my first target was 5733 and we're just about there. And then my second target is around 5500, but I have a sneaking suspicion that the S&P will get down and retest the carry trade unwind from the summer of 2024, and that's just under 5200. So it would not surprise me if we got there. I have a sneaking suspicion we will. But the next level of support beneath where we are right here is 5500.
Jim Puplava:
You mentioned that you thought maybe the 10-year could get down to 3.6.
John Roque:
Yeah, I think that's a reasonable expectation. And I'm going to say the following. I think there is so much noise around the President and proposed tariffs and whether or not they're going on or whether or not they're in abeyance or delayed or whether or not they're going to be less onerous than they were initially thought. I think all of that is very hard to figure out. And because it's hard to figure out, I think it's another reason, aside from the poor performance of stocks, to reduce positions—either have fewer or make your positions smaller. Because I think while we're trying to figure out what the effects of those proposed tariffs might be, a stock we own might be down 20 or more percent. And I think it's hard to come back from such losses. So I'd rather reduce my risk with respect to the stock and I'll wait to see what the finality is with respect to those potential trade decisions.
Jim Puplava:
Yeah, I think as you mentioned, there's so much noise and these tariff positions almost change daily. One day we're slapping them on, the next—
John Roque:
Exactly.
Jim Puplava:
—exemption, and then the next day we're taking them off.
John Roque:
Exactly. I think it's very difficult to make heads or tails out of that. And I think the information is coming at you kind of, you know, machine-gun style—rat-a-tat-tat kind of thing—on a daily basis. It's hard to be able to work through it and have a cogent view without us making more mistakes on a day-to-day basis. And another reason I think we should have, you know, our exposure should be lower.
Jim Puplava:
You know, it's interesting because he's put some very sharp people in his cabinet—Vested at Treasury. You've got to wonder if some of these advisors are telling the President, you know, this on-again, off-again daily basis is very disruptive. You know, businesses are trying to think, you know, how do you manage in an environment like that where it changes daily?
John Roque:
I'm not going to—well, I'm going to answer your question as follows. I'm not sufficiently learned enough about the trade practices and, or what he's trying to do, to offer my opinion on that. But here is my opinion, which I think is at least something to consider. In his first go-round, Trump 1.0, he was adamant and vociferous and repetitively so about the state of the market and how he tried to buoy it up at any turn. And he did that, you know, during his first go-round, Trump 1.0. So far, in the nascent stages of Trump 2.0, he's not doing that at all. He seems quite determined to get these tariffs or changes done so as to affect either a major change with respect to outlays, government revenues, budget deficit, the security of our borders, et cetera. So I think his modus operandi is different and I think it's important that we identify that and pay attention to it. It's entirely different from Trump 1.0. So maybe, you know, if the market comes in a percent or half a percent—I know the S&P is down 5% from its highs—but, you know, in—he might argue, this is my imagination talking, that, you know, I'm looking to create some longer-term changes here. And if the S&P is down 5%, that's not enough for me to get overly concerned. I know that we're not used to seeing this happen, but I think his modus operandi is entirely different than it was the first time.
Jim Puplava:
And you know, as we mentioned, we have this anomaly, the difference between oil and copper. And even though the economy has slowed down a little bit, it's still there. I mean, although today's Wall Street Journal is talking about the recessionary trade is coming out.
John Roque:
Yeah. I wonder, Jim, if it's all kind of coming from the weakness in the dollar relative to the Japanese yen. So I want to be long yen relative to the dollar. I've wanted to be long that for a little while now—long yen relative to the dollar. And when the yen usually outperforms the dollar, then it is thought to be some sort of a risk-off kind of trade. And so maybe that's the message we're getting here. Maybe it's just a, you know, kind of a liquidity situation across the board. It's affecting stocks that worked nearly monolithically for a few years and perhaps as long as dollar-yen stays weak—dollar weak relative to a strong yen—then we should believe that the risk-off or poor-performing asset markets are likely to continue.
Jim Puplava:
Is there any sector within the S&P that stands out to you as an opportunity?
John Roque:
I'm going to say right here, I think it's better to not be aggressive with respect to trying to look for longs. There are sectors that have outperformed—certainly staples have outperformed and healthcare has outperformed. There's no doubt that they have. Even utilities had outperformed until, let's say, today, when it looked like they're coming under pressure, down 2% or so. I think this is not the opportunity to put money to work. I think you can wait and I think you'll be able to do it with lower prices.
Jim Puplava:
Sound advice. Well, listen, John, as we close, if our listeners would like to follow you, how can they do so?
John Roque:
I work for 22V Research in New York, which is a macro research shop, so you can try to contact us there. You'll see my email on the chart that I sent to Jim, or you could check our website: Home - 22V Research. And then I'm on Twitter/X at @dachartlife—at "da chart life." So I'm from Al Vernon, went to school in the Bronx. So maybe that's why I chose "da" instead of "the".
Jim Puplava:
Okay, well, listen, John, it's always a pleasure speaking with you. Be well, my friend, and we'll talk.
John Roque:
Jim, thanks for your time. Always a pleasure to talk to you. Be good. Bye.
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