JD DURKIN: Good morning, Action Alerts Plus subscribers. I'm TheStreet's JD Durkin talking with Bob Lang here from the floor of the New York Stock Exchange. Bob, good morning to you. Now, before we dive into the technicals-- and there's a lot of technicals to talk about-- I think it would be a bit of a disservice to ignore last night's midterm election results or the lack thereof in at least a few high-profile closely watched cases.
It still may be days away until we get the full scope. The dust will continue to settle. But any initial takeaways for club members?
BOB LANG: Well, JD, I think seeing the response from the markets yesterday with so much volatility-- I think from at one point, we saw the markets, the S&P 500 up 50 handles, 50 points, to dropping, literally within minutes, to minus 20. So that's a 70 handle move, more than 2% from high to low literally in minutes. It was quite astounding to see.
But certainly, there's a lot of angst, a lot of uncertainty yesterday before the results of the midterm elections were released. During election time, we usually see this sort of volatility coming around and settling down a little bit after the elections are over. If you recall back in 2020, of course, right after the pandemic got underway, we had that long period of exhaustion right after the election, and we rallied right back up in 2021.
So it looks like-- historically speaking, though, if you look at midterm election history, we usually see markets rallying sharply afterwards, and maybe even a short time afterwards. Yet when you have a dark cloud hovering over the markets like we do right now-- and I'm talking about the Fed and hawkish Fed policy-- there is only a perceived amount of relief that's going to happen. And of course, today we're seeing the markets down a little bit this morning.
They're off their lows, of course. But remember, tomorrow brings another CPI number. And we can't lose focus that that's what the Fed is paying attention to. I'm sure they have one eye on the elections. But right now, they're focused in on inflation. And the CPI number is going to probably give us another hot read, probably the hottest read that we've had since spring.
JD DURKIN: How is the portfolio prepared for the inflation numbers tomorrow?
BOB LANG: So we have a lot of cash right now in the portfolio. And we do have a lot of money dedicated to inverse ETFs. We have some defensive plays as well too. But where we've really made the transition, JD, is out of technology names and out of the high beta names. And that's paid off really nicely for some stocks that we've been in more recently.
Last night, for instance, Axon Enterprise, which we'll talk about a little bit later on, shooting higher today on terrific earnings last night and guidance. We had recently Lockheed Martin, we talked about that one last time we got together. Elevance, the Cboe. The one common thread here, the one common theme with these names is that they're not related to technology, first, and second, they gave some good guidance for 2023.
So we're continually looking at the landscape there. Do we have some technology? Sure. Not too many, but some legacy positions that we had when we took over the portfolio in October, 2021. But still, we're looking for some new names to add some more capital to. And we're going to be doing that pretty soon.
JD DURKIN: All right. Now moving on to the world of markets. A little birdie tells me here that you believe the markets are a bit overbought. What are you seeing this morning?
BOB LANG: Yeah, JD. So yesterday, we had a run up to the 3,850 level on the S&P 500. That's an area that I had recently talked about. And we know 3,900 is going to be a very difficult hurdle to get over if the S&P 500 gets some buyers in there today over the next couple of days. So that 3,850 level was rejected. And at the same time, we did see some extreme overbought readings at that moment.
So I'm a little bit concerned and worried that the markets are going to flop as they did back in the summertime twice and then in the spring at these levels. Now, the Dow industrials hit the 200-day moving average. And that's been an area where it's found some heavy selling occur in the past, certainly in the past five to six months.
So at these overbought levels, what tends to happen is that we do get some relief to the downside. And it needs a catalyst, whether it's the midterm election results or whether it's the CPI, next week's PPI number, or retail sales number. We're going to see probably a little bit more selling happen. We're going to test that 3,800 level sooner or later and see how the markets respond to that.
JD DURKIN: Yeah, of course, we'll continue to follow what the S&P does. At least this morning, right now, down about 3/10 of a percent. We also saw earnings from Axon after the bell. That stock zooming higher on strong results. Can it keep heading higher, however?
BOB LANG: Yeah, so we did see some analysts come out upping their price targets on this name, upwards of $200, $220. So we like the name. And we got a really nice price, probably in the $130s, $140s. And we see it soaring today, more than 15% at one point in time. So we like the name. We think that it's got some room possibly up to $200. We're going to up the price target on this thing as well.
But no, we do we do like Axon. Again, it's another name that is away from technology, and it's away from the area of the markets that have higher beta and that have been whacked severely due to higher interest rates. But we like this name, and we think their business is going to be strong in 2023.
JD DURKIN: And this is a company that's largely connected to military defense spending. That's more or less the sector or lane that Axon tends to be affiliated with. Am I correct on that?
BOB LANG: Yeah, so they do send weapons, so forth, to the military. But if you remember, back in the early 2000s, JD, this is a company formerly called Taser. And they socially sell a lot of their machinery and weapons to police departments, and also states and facilities and so forth, that need these taser weapons. So they also sell software. So that's a big part of their business as well too.
So yeah, this whole Axon Enterprises thing is very interesting. It's fascinating. The stock really took off back in the mid-2000s. It ran as one of the strongest moves I've ever seen back then, squeezing the shorts all the way up. And it went up to huge levels back in-- I want to say back in 2004, 2005. So this is a name that has been around for a while that we think is going to do real well.
JD DURKIN: Yeah, a big player in the world of police scanners as well. I do want to now do something a little bit different while I have you and talk about these really huge-- the major announcement with regards to layoffs at Meta. This came out very early this morning in the 6:00 AM hour here on the East Coast. Meta said it's laying off approximately 13% of its overall workforce. The portfolio obviously no longer owns Meta, as members will know. But what does this news tell you about big tech and even the company itself at large?
BOB LANG: Well, I think it's signaling that a lot of other big companies in technology have realized that they can do better by taking a lot of-- tightening their belts a little bit, taking some costs out of their budgets and so forth. So I think that it starts with layoffs. Nobody ever likes to get laid off, especially as it's coming around the holidays.
We had that time back in 2008-2009 where a slew of layoffs hit right around Christmas. It's a terrible time for you to lose your job, but companies have to pay attention to the bottom line. And when they realize that they can't cut any more around jobs, they have to take care of this necessary evil here and start cutting.
So I think this is going to be a common theme we're going to see, JD, over the next five to nine months. We'll see a lot of companies starting to cut jobs. We heard it from Amazon. We heard it from a couple of other technology names. Some other companies came out with poor earnings over the last four or five days, and they also announced job cuts as well.
And we're going to see it more from the banks as well. So I think this is difficult to see the economy moving really strongly forward with so many job losses, but something we have to watch over the next several months.
JD DURKIN: Absolutely. And we certainly will. Bob Lang, thanks a lot for taking the time. Happy morning after the election. I appreciate your perspective on that and all of the top stories that matter to people in the portfolio. And as, finally, a reminder to all of you at home watching, please keep sending your questions to email@example.com. Thanks a lot for joining us.