J.D. DURKIN: Welcome, welcome, welcome, one and all, to our final members call of the year 2023. We have a ton planned for you today, with the great Helene Meisler joining us in just a few moments for a look at some of the charts catching her attention. But first, of course, given the time of year that it is, I do want to take a little bit of time to take a look at the portfolio as we leave 2023 behind with the great Chris Versace. Chris, you ready to rock and roll today? It's a big one.

CHRIS VERSACE: It is. Let's do it, J.D. . I got my holiday reds on.

J.D. DURKIN: Let's look at this, reds and greens, as it should be for the holiday season. Chris, let's kick things off here on a high note and talk a bit about some of the biggest wins of the year. We had to do a little homework. So let's begin our conversation in the world of infrastructure and united rentals. Infrastructure, Chris, such a focus of yours heading into this calendar year. And united rentals up 40% year to date, certainly something to celebrate. Chris, what did you get right here?

CHRIS VERSACE: Well, we identified the big push that would be coming and unfolding just beginning in 2023, continuing into 2024-2025 for non-residential construction. There's a variety of things that are powering, it everything from the Biden infrastructure law, the Inflation Reduction Act, and we're going to see some other things come on stream in 2024 as well, including what we saw earlier this week, which was the first award of the CHIPS Act.

And we expect that to accelerate, again, in the coming quarters. And there are some other things in the background as well. But I would say, J.D. , it was really recognizing that big pickup in non-residential construction.

J.D. DURKIN: Given the time of year, Chris, we've spent an awful lot of time talking about the consumer and retail stocks. Let's talk Costco, Chris. What stands out to you about that name?

CHRIS VERSACE: Well, I mean, first off, Costco is a great, great company it's got a very differentiated business model. Not only does it sell stuff at great prices and in bulk for cash strapped consumers, but it has that membership business model, very high margin. And that continues to grow as the company expands its footprint.

But I think for us, the greatest thing about Costco is not only are we at the AAP club consumers at Costco so we get a lot of first-hand boots on the ground view on what's going on at Costco, but the strategy behind the company's retail facing business really plays into what we were seeing develop with the consumer.

A lot of inflation built into the system. Consumers taking on piles and piles of credit card debt, feeling the pinch, if you will. And just looking for ways to extend the shopping dollars they had. And that's right in Costco's wheelhouse.

J.D. DURKIN: Yeah. The stock is up 40%, year to date. I'm a big fan of the Costco churros, as you know. And I know I'm not alone in that. Chris, it's been a while since you talked about Axon in a video. So let's talk Axon. Not necessarily a bad thing, given the fact that it has been a bit of a silent sleeper success story. Chris, what is that story?

CHRIS VERSACE: So there's really a couple pieces to it. First and foremost, when we identified Axon for club members, we were talking about the incremental spend for public safety. There was a big bill passed by President Biden in 2022 that was going to start to come on stream in 2023. But there's also state and local spending. There's also spending outside of typical law enforcement as well that really speaks to the adoption of, not so much tasers, but body cameras and the cloud services behind them.

That's been the bulk of the story. But what we're seeing now as we start to move into 2024 is the incorporation of AI into Axon's offerings. And what I like about this is that we've heard a lot about AI over the last year, certainly with the Magnificent Seven. But when we look at how Axon is using it to drive real productivity, I think it's just a great example of the potential promise for AI.

J.D. DURKIN: All right, Chris. Let's conclude the highlight reel portion of the members call with a name that's not even any longer in the portfolio. Chris, how did you know when it was the right time to exit Ford and what has happened since?

CHRIS VERSACE: So if you look back when we exited Ford, we had been telegraphing to members that, wow, we certainly have a big win in this particular name. But as we look forward, there were a lot of things that were really flashing signs that were-- sorry, warning signs that were flashing. Everything from the UAW contract, which looked as if it was going to be a big item that, not only Ford, but General Motors and Stellantis would have to deal with. But we were concerned about EV adoption. We were concerned about the company's ability to deliver its targeted margin improvements as it continued to invest so much.

And there were some issues about the consumer that we were concerned as well. So when you put all that together from our perspective at least, we're sitting there with a big win, hard to see much incremental upside in the shares. A lot of potential downside if those things I just mentioned went wrong. We said we're better off taking the win and moving on. And I'm glad we did because when we sold the stock at around 1,360, 1,370, something like that, again, big win for the portfolio. The shares haven't touched that level since.

J.D. DURKIN: Chris, to be fair, we can't exactly let you off the hook entirely. Let's move our attention over now to at least a few of the things that maybe did not go the way you would have liked them to go. Let's talk AMN Health Care and ChargePoint, both difficult names for both you and members alike. But I'd like to turn it maybe into a bit of a learning opportunity. Did you win or did you learn? So let's talk about what we learned. How did the losses in those names impact how the portfolio is managed going forward?

CHRIS VERSACE: Well, it really-- so AMN happened in the beginning of the year. And that was a bit of a disappointment. And ChargePoint, look, we certainly took our lumps with ChargePoint. I held myself responsible for that. There's no way to get around that. But what did we do in response? We really doubled down on risk management with the portfolio. So much so that we opted to implement panic points for each position. We share them with members in every roundup. We share them again in a table that we publish every week.

And it's just a reminder that sometimes you have to know when to throw in the towel. I think we talked about it, you and I, J.D. , recently, when said, look, past a certain point, it's going to take a lot to get back to where you were. Sometimes you're better off, ripping the Band-Aid and moving on.

And instilling these panic points let's members know what those levels could possibly be. When a stock hits a panic point, we're going to double down our efforts on the fundamentals story, double down on what the technicals have to say. And if it comes time to make a tough decision, we will so as to limit further losses in the portfolio.

J.D. DURKIN: As the great Kenny Rogers would say, Chris, you've got to know when to hold them, you also got to know when to fold them. Let's talk about Universal Display here. Its performance since your exit at the end of October tells a bit of a different story than Ford. What have you been following there and what do you think is important for members to know?

CHRIS VERSACE: So Universal Display shares hit our panic point. And as that happened, we had multiple warnings about the market for the end of the year during the big holiday shopping season. And we were very concerned about that because while we all talk about smart phones and the adoption of OLED displays, the reality is that from an actual usage perspective, large format TVs are a much, much bigger end market. But what happened?

So we exited the position, and all of a sudden, the market took off and it pulled Universal Display shares with them. So we're left scratching our head a little bit on that one. We knew at the time that there was a decent short position in Universal Display shares. And I think the lesson here is sometimes we have to be mindful of when the market might be oversold, when we might see a turn in the market, maybe not be so quick to exit a position. That's the lesson learned.

J.D. DURKIN: There we go. Chris, we will conclude our review of, let's call them learnings, things we learned with the one that got away. Chris, what did you miss with Builders Firstsource?

CHRIS VERSACE: This is one that I am kind of kicking myself with because we put that in the bullpen at a much higher level. We saw it fall all the way down to 106, 107, something like that. And we were just concerned about the housing market, not so much the interest rate market, but the housing market given affordability, given what we were hearing from home builders about prospects for deliveries in 2024. But we also weren't seeing folks sell their existing homes and trading up.

So the picture for us was rather cloudy. What happened, stock took off. Why? Because the market has been fascinated and fixated on not one, not two, not three, but potentially four to five rate cuts in 2024 by the Fed. Now we'll learn this afternoon how realistic that could very well be.

I don't think it is. And I think it's going to give us an opportunity to buy builder shares-- excuse me-- Builder Firstsource shares, ticker symbol BLDR, at lower levels. It's one we're watching. Shares are overbought. Would love to see a pullback so we could start nibbling at the right level.

J.D. DURKIN: Yeah, a lot of market participants here, Chris, expecting that March 20th 2024 meeting to be perhaps a cut. We will see. What good timing we get to have this conversation, you me and Helene, on the day of the Fed meeting. OK. With all that now in the rear view, let's get to today, and more importantly, let's get to what is tomorrow? What is next?

Helene Meisler joins us now. And of course, as always, she has brought some charts. Yes, I love Helene Meisler charts so much. Excited to have you here and part of the conversation. You love looking at the down and out names. And I know that this time, you had to approach it a little differently with so many AAP names at or nearing their highs.

Nonetheless, let's get things kicked off with a name that has made a push back near its all time highs. And that of course, is Mickey D's. I'm loving it. McDonald's, I know the answer is certainly not at these levels. But when would you be a buyer of McDonald's, Helene?

HELENE MEISLER: I would take a look at it somewhere at the intersection of those two blue lines, which let's call it right now, is 265-270. You can see all that resistance overhead. So I don't think it's getting through, that 290, 295, 300 area without some sort of correction. And certainly, if it came down to where all that support is near those blue lines, you'd have to have another look at it.

J.D. DURKIN: Chris, a more selective consumer has been such a big part of your reason for holding onto McDonald's. I wonder, could the potential challenges to the Goldilocks narrative that we've seen so closely, we've been watching them so closely, could that-- you think could be to the benefit of McDonald's?

CHRIS VERSACE: Yeah, I do think we're going to continue to see consumers trade down, look to stretch their dollars where they can. We continue to follow restaurant traffic and quick service casual dining, as well as fast food. And the shift that we've been looking for appears to be playing out. But the other thing I would talk about, J.D. , is not only the continued benefits of previously instilled pricing, but we also want to pay close attention to the input costs on food as we start to see more, not slower inflation, but potentially deflation. That's another lever in the margin profile for McDonald's as we head into 2024.

J.D. DURKIN: Yeah, currently at 293, good enough to make it the fifth most weighted name out of the Dow 30 components. Let's stick the conversation. Let's continue it with the consumer, Chris. You did add to PepsiCo just last week. Any concern, I wonder, that tomorrow's retail sales report could dampen sentiment just a bit as it pertains to consumer spending?

CHRIS VERSACE: Well, I think we got to be careful. Whenever we look at a report, we need to understand that there's-- what does the headline numbers say, especially retail sales. And then what are the individual line items say? So what we'll be looking for in the November retail sales report, at least as it relates to PepsiCo, is what does it say about grocery sales?

And again, this is the time of the year where consumers are continuing to spend holiday shopping. But we know that they're cost conscious. We know they've been looking for deals. We know they're trying to save where they can.

And other recent data that we've shared with members says that they are gravitating back to the grocery in order to keep their budgets in line. I think that's going to be a great thing for PepsiCo. And remember, the fourth quarter is the strongest quarter of the year, not only for the high margin snacking business, but also for the beverage business as well. So I think that seasonality is going to continue to play out for PepsiCo.

J.D. DURKIN: Helene, let's talk about this chart for PEP. How should the chart play into our thinking?

HELENE MEISLER: Well, first of all, you've got the wrong chart. There we go. I like PepsiCo. I think that low we saw in October when we had, just everybody hated the consumer staples stocks and they were just terrible and awful and Ozempic was going to put them out of business, I like that kind of low. We had a high volume sell off. That big top measured right into that area. And now we had a nice rebound and now we're just sort of creeping around. I think that 175 area is going to be resistance now.

But I tell you what, I am looking for a pullback in the first quarter in the market. And I think that PepsiCo comes down and it holds and it's probably buyable back down there again. If it even gets down that far. But I just think it's going to start to base now.

J.D. DURKIN: Yeah. An interesting note there about a potential resistance level. Chris, before we move on, any updated thoughts I wonder, you know we had to fit this in, about the so-called Ozempic effect. We've talked a lot about it this year. I know we got more than a few members wondering, wait, how does that whole Ozempic thing play into some of these consumer facing names?

CHRIS VERSACE: So it's actually kind of interesting. There was a lot of-- back when we were first talking about it, J.D. , I'd said to you, wow, this seems to be this latest new thing. A lot of buzz. We'll have to wait and see how it all plays out. But based on the forecasted numbers, the number of people that would be on the drugs, on these weight loss drugs and/or the impact overall calorie consumption, way overblown in the stock prices.

And lo and behold, what are we seeing now? More and more companies are coming out saying that, no, we're not seeing any impact from these weight loss drugs on our products. And it also appears that if you go off the drugs, well, guess what?

You start to reverse and start putting the pounds back on. So I think, yes, these-- just a lot of overdoneness, if you will, in that. And I think that the pendulum is starting to swing back to something that's a little more rational. And we've seen not only McDonald's, PepsiCo shares rebound, and I'm sure we'll see others as well.

J.D. DURKIN: All right. Let's move on here. Chris and I spoke a bit about United Rentals. But it was fellow infrastructure play, Vulcan Materials, that actually stood out to you here, Helene, if I'm not mistaken. Helene, why are you liking the chart from more of a long-term perspective here?

HELENE MEISLER: Because again, we've got-- a lot of charts have that spike low in October. But this didn't come all the way down. It could have come all the way down to the spring lows and it didn't. It essentially bounced off that uptrend line. So I like that. I think there is resistance overhead now. As you can see, what I've drawn in is the pattern I would expect and like to see, which is a little bit more up into that resistance area.

We come down. I've drawn it down to that 205, 210. But anything down into that area where that uptrend line comes in. Now remember, I only had so much chart space there. So if that uptrend line gets tagged in February, it's going to be probably a bit of a higher number than I've drawn in. But that's the pattern I'm looking for. And then if I'm correct in that, the market pulls back in the first quarter, makes another low, and we make another rally attempt again, then I would look for if it plays out that way, I would look for it to break out.

J.D. DURKIN: Yeah. It's up about 25% or so year to date. So just outpacing the broader market. But Chris, along with United, you upgraded Vulcan's price target this week as CHIP Act funds begin to get dispersed. We've covered the Capitol Hill implications over some of these names much throughout this year. Chris, I wonder is that the biggest potential catalyst to watch as we move forward?

CHRIS VERSACE: I don't think it's the biggest catalyst. I think it's-- I would say it's yet another catalyst. Remember, we only started to see the funds flowing for the Biden infrastructure law and the Inflation Reduction Act in 2023. So 2024 brings a full year of those programs. And to that, we can add on the incremental non-residential construction and spending tied to the CHIPS Act. And J.D. , there could be one, maybe two more as we exit 2024, head into 25.

That could be the recently announced Biden $8.2 billion passenger RAIL initiative. And at some point, hopefully, the states will start to release the funding that's been tied to the EV infrastructure charging network build out. That too would be yet another positive catalyst for Vulcan Materials, as well as United Rentals. And then one other thing, J.D. , is that if we see the Fed perhaps cut rates, again, two, three, we'll see how many times in 2024, we're going to start to see mortgage rates come down.

That could be an incremental positive for the housing market. That could get new construction going. That again would be a positive for not only United Rentals, but also Vulcan Materials.

J.D. DURKIN: Chris, a quick follow up, if I may. I don't know if you've heard, but in 2024, we're expecting a pretty substantial election. Not just all the seats in the House, one third of the Senate and of course, the US presidency. How does the election play more into your thinking about that name or any other that you closely follow?

CHRIS VERSACE: That's a larger question, I think, J.D. . Because I've written and shared this thought with members that, one of the reasons I rather doubt that we're going to get four to five rate cuts next year, and aside from the fact that the economy looks poised at least right now to be in slow growth mode, it's the fact that the Fed is not going to step in front of a presidential election. That tells me-- and again, if we follow history, any last rate cut before the election is likely to be in their June, July meeting.

And then they don't have another meeting until afterwards. So they have a September meeting, but they won't do anything there. So the next meeting they could do something at is the year end meeting in December. So that's one reason why I'm a little scratching my head a little bit on those four to five rate cuts that some folks are penciling in for next year.

J.D. DURKIN: All right. Fair enough. Well, speaking of the government, I mean, oftentimes, people make a connection between this next company and the government. Helene. Let's talk Lockheed Martin, one of the-- if I'm not mistaken, you're ready to call this one of the most frustrating-- and I laugh when I look at the chart because I know what you're talking about, one of the most frustrating charts out there. But you are, dare I say, a bit optimistic that a breakout for LMT is possible. Helene, what are you seeing here?

HELENE MEISLER: Well, first of all, the stock is the same price it was a year ago. I mean, that's the ultimate frustration. And if it wasn't for that big rally in April and the big decline in October, I mean, it would look like it had flatlined. So I just keep thinking, either there's just no lack of-- no interest whatsoever in the stock, it's just going to keep moving sideways. But maybe we can get some interest and it can break out because it certainly feels like if you got a little interest going, it could go.

But anyway, either way I tell you what, if I'm wrong and it turns around and it breaks 440, that's that short little line I put down underneath, then I'm wrong. Then it's going to come probably all the way back and fill that gap from October. So in terms of a risk reward, I think it's pretty good. I mean, if I like the market better here, I would think it was great.

J.D. DURKIN: So let me ask a quick follow up there, Helene, on that chart, if it's possible to pull up LMT again. If it does fall before that 440, you kind of eyed that previous support level that we see there in October. It looks to be about 390 to 400?

HELENE MEISLER: Yeah, 400 would fill that gap. Think of a gap like a big air pocket. And generally speaking, when you get down that far close to it, it sucks it all the way down into it and then rebounds.

J.D. DURKIN: I mean, it's a fascinating, maybe a bizarre chart. You could call it that with the sideways movement. It's certainly something we'll continue to follow. So thank you for allowing me that follow up there, Helene. Chris, I feel as if we haven't really talked much about Lockheed since earnings in October. We see that gap up there on the chart. Is there anything you're watching that could help it make that move past 460?

CHRIS VERSACE: So there's a couple of things that we always pay attention to with Lockheed Martin. The first and foremost is going to be its backlog. It seems as if every week, there's additional programs or program extensions that are being announced, whether it's from the Army, the Navy, or other aspects of the military. We also continue to watch for foreign government sales as well. Look, we know that we've got some issues going on around the world. Israel-Hamas, for example. And of course, the ongoing Ukraine-Russia war. So we're continuing to monitor what happens in DC as well with incremental funding for those programs, or not.

But to be candid with you, J.D. , I think the big issue that everybody's waiting for with Lockheed Martin is the resumption of F-35 deliveries. When we look at the chart that you have up on the screen, when they reported their-- they pre-announced their September quarter and they said that they were dialing back deliveries because of some complications in production. And they target having that improved first half of the year, let's call it really, the second quarter of 2024. So that's what everybody's waiting to see. And I think that helps explain some of the sideways movement back and forth.

J.D. DURKIN: All right. Over now to a recent fascination of mine, which is, of course, beloved oil stocks. Helene, as sentiment has turned much more bearish on oil as of late, you've been advocating bottom fishing in XLE. Of course, the spider select ETF for energy. How do you like it now, trading just over $81 as of this morning?

HELENE MEISLER: I'm not going to change my view.

[CHUCKLE]

I mean, sentiment is so poor that if it goes down any more, it'll just get more poorer, I guess-- poorer. And in my view, back in the beginning of last summer, in June, I liked energy. And nobody liked energy. There were a million reasons why you couldn't like it.

And then we rallied. And in the middle of the summer, everybody loved energy. And at $90, all we did was-- all we did was hear calls for $100 oil. And now, of course, we've come down. And I feel like we've certainly shaken out anyone but the true believers at this point.

And now I just saw yesterday, someone's now calling for $50 oil. Well, that's the kind of stuff that you tend to get closer to low's than you get near highs, obviously. $90, no, we're going to get $100, $110. And at $70, we're going to get $50.

And so in the meantime, it holds that line, that support. I follow a sentiment indicator called the Daily Sentiment Indicator. It's at 14. It runs on a scale of 0 to 100. So if we fall much further, what are we going to go to, single digits? And single digits, it's a buy. Because I got news for you, the NASDAQ with single digits at the end of October, in case you're trying to understand how that works.

J.D. DURKIN: Definitely grateful for all the contacts there on XLE. It is down just more than 7%, year to date, making it the second worst performer of the major sectors in the spider select, only trailing utilities. And so, Helene, just a quick follow up, if I may, if you see it fall below the low 80s, is there another potential level of support you would be looking at, somewhere in the mid to low 70s, or is it sort of--

HELENE MEISLER: I mean, the bottom end of support then is 76. And you know, I do not imagine that we are breaking those spring lows. Call it the mid 70s, 76-78. I just don't. I mean, I think if you got down that far, you'd have capitulation.

J.D. DURKIN: All right. Thank you for that. Chris, you picked up shares of XLE just a week ago. Is there a spot you would consider picking up even more?

CHRIS VERSACE: Yeah. I mean, we've got the flash PMI numbers for November coming on Friday. And we're going to be watching those numbers closely, what they say about how economic horsemen are going to start off 2024. But right around here, we would look to pick it up.

And if we see that the economy surprises to the upside in Friday's numbers, we will definitely be picking up some additional shares of XLE. And remember, J.D. , that the whole reason that we picked up some shares last week is because we see the fall off in oil, but I agree with Helene that it's overdone, especially when we start to think about the incremental production cuts that will only start to happen come the start of 2024. I think we're going to have another rethink about the supply demand imbalance in the next couple of weeks.

J.D. DURKIN: All right. Certainly all good bits of information to continue following. Let's turn our attention now, my friends, to the newest holding in the portfolio. I know you both might be in a little bit of slightly different camps on this one. I want to start with the look at the chart with you, Helene. Would you have started a position in WM Waste Management this week? What do you think?

HELENE MEISLER: No. But again, I don't like stocks when they're all the way up at their highs. I mean, look at every single chart we've looked at, either I like them when they're down and out or I like them when they pull back. And this one obviously, hasn't pulled back. I can measure a target in the 173-175 area, which is pretty much kind of where we are. That's a little short-term one. I can get another one around 185-188.

But my inclination is that while it looks like a breakout, it's not going to act like a breakout. It looks to me like it might act more like it acted up there at the July high, where you see it made a higher high. And I don't know because I don't follow the stock very closely, but perhaps people got quite excited and then there was no follow through.

J.D. DURKIN: Chris, let's chat some of the fundamentals on this. The potential themes in the year ahead that led you to move forward with an initiation right around 173 for this name?

CHRIS VERSACE: So there are a couple of things. I mean, first and foremost, I think most people recognize what they consider Waste Management's core business to be residential sanitation garbage pickup, if you will. They've got great pricing there. And the company is expanding its use of automated garbage trucks that will not only reduce its headcount, but should really drive some nice margin improvement, especially in the second half of 2024.

The other part of the business that I think gets less attention and love is the commercial side of it. And we've talked several times already today about the impact of non-residential construction and how that is expected to continue to ramp throughout 2024 and beyond. When you do that type of construction, there is waste. And that's the other aspect of Waste Management's business.

So we see that business rising very, very nicely. So when you put those things together, we wanted to start a position in the shares. And look, we recognized that the shares have upside to our price target of 195, it's not the most.

That's why we actually opted to start with the two rating, which says that we would be a bigger buyer on a pullback. And for us, that's probably going to be in low to mid 160s. If we see it get there, boy, we would be buying Waste Management shares double fisted.

J.D. DURKIN: Helene, you were also kind enough to take a look at a few of our bullpen names for us. So let's talk LH. What stood out to you about Labcorp?

HELENE MEISLER: Well, first of all, this is, as opposed to all the other charts, this is a three year weekly. Because what struck me when I took a look at it is how perfect it would be if it breaks out. I mean, that would just be really, a lovely chart. But remembering that it's a weekly chart and remembering my view on perhaps a first quarter pullback, just think if you pulled back and you tag that line, that uptrend line or you didn't even get all the way to that uptrend line, the next time up, it would be yet another high or low.

And it's been a series of high or lows for over a year. It would seem to me by then you would break out. I would point out one other thing. If you took your hand and you cover the left side of that chart, what you'd see is that as we move forward two months from now, let's just say, that ramp up is going to fall off the chart. And the chart is going to look a little more compressed, which would make the breakout look better. I don't know if I explained that right.

J.D. DURKIN: I mean, it made sense to me, Helene. And as you were talking, I'm sitting here doing this for the better part of the last 30 seconds, which I hope many of our members are as well because I think it's a great way to take a look. And it's also interesting, like you said, we're looking at a different time horizon for this year, the three year weekly, as opposed to some of the other names.

So context always matters, bigger picture context always welcome for the conversations as well. Love the chart you pieced together there, Helene. Thank you. Chris, would you treat that kind of pullback, if we have a pullback, as a buying opportunity for this name?

CHRIS VERSACE: You know, I do love it when the fundamental work that we do and the technicals line up to reinforce one another. And in this case, they absolutely do. We had said that we would be looking to call up Labcorp shares to the active portfolio if they retreated let's say it closer to the $200 level. So yes, if we saw some retreat in the shares towards the lines that Helene has laid out, you bet.

J.D. DURKIN: All right. I've been very excited for this portion of the conversation, mostly because how do you not love a good Wendy's frosty? The illustrious search for the beef is here. What stood out to you, Helene? What is going on with WEN?

HELENE MEISLER: I must say, if I've ever eaten at a Wendy's, I'm not quite sure. But my mother does love those frosty's. OK. So with a penchant for stocks that are down and out, I take a look at Wendy's and I can see it perhaps starting to bottom. And if it can map out something like I drew in blue, the first thing it would have to do is cross that line, that downtrend line, and then come right back to where the same price it is now.

But that would give you a better idea that the stock is no longer in a downtrend, that it's retested the breakout and it looks like it's good to go. So I would say that I think Wendy's should be watched here for that kind of action because then you could take a look at buying it. Let me just do one other thing here.

And this is a one year chart. And again, if you put your hand over the left side and you kind of move yourself forward and you think about if we get a first quarter pullback, so let's say in the next couple of weeks before year end, we get a little move up over that line and then we spend the first quarter coming back to the line, and then you don't have, let's say, those first three months on that one year chart, the chart starts to look a lot more like this than it does now.

J.D. DURKIN: Yeah, that's great context. Appreciate that. Chris, would you ever consider owning Wendy's and McDonald's at the same time? That might be a blasphemous question for people who are choosing which one to eat at, but we are talking the technicals and fundamentals of the two stocks. What do you think?

CHRIS VERSACE: I think that's a bigger question, J.D. . I think that's fries versus frosty's, don't you?

J.D. DURKIN: Well said.

CHRIS VERSACE: I mean-- so look, it's easy to be flipped. The hard part here is that they're, essentially, similar businesses. So you'd have to understand which one is better positioned for the road ahead, which one's going to deliver greater revenue growth. But really greater EPS growth, in my opinion.

We know that McDonald's, over the last few years, has reinvested in its restaurants driving productivity. This is going to be key. Because remember, that starting April 1st, at least in California and may spread elsewhere, we'll see, fast food workers are going to be paid $20 an hour, starting. So that's going to be a big pill for a lot of California fast food companies to swallow.

We know McDonald's is not only driving that productivity I just mentioned, but they're starting to flirt with some other configurations, really shrinking the footprint so they don't necessarily need as many people in the locations that they start opening up. I'm not as familiar with Wendy's, to be honest. So I don't know that they have the firepower to make those investments and continue to deliver margin improvement, but it's something we'll be looking into.

J.D. DURKIN: Well, I for one, am certainly very hungry, however it is not time to eat just yet because we do have a little bit left to go. Before we leave, I do want to get both of your general thoughts on what to expect next year, very general. And in fact, we have now tapped the entire team to do so. Let's start with the great Sarge Guilfoyle.

He and I sat down a few weeks ago. He shared his take on sentiment as we head into 2024. Let's take a listen to what Sarge had to say. And I'll get at least a few thoughts from both of you on the other side. Here's Sarge.

STEPHEN "SARGE" GUILFOYLE: I think if you've been cautious as I have been, I think you want to maintain that posture going forward. We are enjoying something of a seasonal rally here. I don't know if it goes away through the first few days of January. Typically, it gets really red hot towards the very last few days of December and first few days of January. And then we go off a cliff a little bit.

J.D. DURKIN: Chris, I'm going to kick things off with you here, my man. Are you with Sarge on this one?

CHRIS VERSACE: I mean, look, we've been building up the bullpen. We've been getting ready for the potential pullback. We've seen a very sharp and quick move in the market over the last several weeks. I've been paying attention to the other AAP team members. Increasingly, this looks like a complacent potentially overbought market. So I do think that we could very well see this rally run out of gas, call it as we get into maybe early January.

I also have my concerns currently about S&P 500 consensus earnings expectations for 2024. They're up at around 11.5% still. And remember, J.D. , it's only once we really get into January and companies start to report their December quarter guidance-- sorry, December quarter results and issued their first guidance for the coming year that we'll start to see those EPS consensus numbers for the S&P 500 get adjusted. That's a lofty target. I would say there's more downside to be had in those forecasts than there is upside. That could be another reason we start to see current market valuations get questioned.

J.D. DURKIN: Helene, even aside from what Sarge had to say, I am really curious how sentiment overall plays into your thinking. How do you approach sentiment in terms of things that you understand that maybe could be explained in a way to help our members better understand as well?

HELENE MEISLER: Well, I watch a lot of sentiment indicators. And I'd be hard pressed to find one that's not bordering on giddy right now. There's one or two that have a little bit more room to get people more excited.

And obviously, they can always get more excited than they are. But my sense is we are just about there. I mentioned earlier, the Daily Sentiment indicator for oil. And I said that it was at 14. And I explained that we had gotten to single digits for NASDAQ at the October lows.

Well, let's take the other side of that. Last night, it was 85 for NASDAQ. Now usually it takes a lot to get from 85 to 90. But once you get over 90, you're in nosebleed territory. So that's what I'm focusing on, is that sentiment is getting a little too frothy for my taste. I've got a lot of indicators that are overbought, not all of them. I'm one of these people, I like every box to get checked. And we don't have all the boxes checked yet.

I've been thinking that all the boxes would be checked sometime as we enter 2024, or in early 2024. My only fear is honestly that we may not make it another two weeks, just because we're so stretched. And I would point out, consensus is-- I'm in consensus is that we're going to stay elevated to year end, which makes me even more nervous.

J.D. DURKIN: Wow. OK. I appreciate that context very much. Now that we're almost somehow already halfway through December, I swear it was just the spring. I don't know how we're here already on the calendar, but we are. And it also means it's the season where firms all across Wall Street, for good or for bad, they are delivering their expectations. Chris had a bit of a word of warning during a recent Daily Rundown. Let's take a listen to that.

CHRIS VERSACE: The market is starting to shift back and say how likely is this given what we're seeing with interest rates, what we're seeing with the economy, not just in the US, but outside of it as well. And the big rethink is afoot, J.D. . And as that happens, people are going to start to question earnings multiples put on that overall S&P 500 EPS target for 2024 in terms of earnings. So there's a lot of dancing back and forth. And candidly, while there are some expectations for the S&P 500 and 2024 at 3,500, there are some that are 4,200, 4,500, 5,100, and as high as 5,400.

In short, they're all over the freaking map. What I would tell members is think of it this way. We do not buy the market, but we have to be mindful of where the market is and where the market multiple is as well.

If anything, this conversation has us doubling down on focusing with companies that are poised to deliver superior earnings growth, i.e. faster than the market because when that happens, we tend to get multiple expansion. That combination drives, historically, superior stock price performance. That's where our head is going to be.

J.D. DURKIN: All right. I thought that was a great break down there from Chris. Helene, as you know, we look very closely at this time of year for what people across Wall Street has to say. To me, it seems like the most bearish of the bunch over at JP Morgan, Marco Kolanovic, of course, and company, 4,200.

On the much more bullish end, you got Citi, which has a target for the end of next year at 5,100. I'm curious, any thoughts you have even over the overall moment that we have this time of year, where I think a lot of this conversation is aimed at helping create a more informed investor. The average viewer who is watching, just to get some sense on the challenges, the headwinds and tailwinds, Helene, what do you make of this seasonal conversation we have this time of year?

HELENE MEISLER: I don't like to participate in them because I find them an exercise in futility. However, I would say that 75% of the time, markets go up. So to look for a down market next year, especially if you think the Fed is going to cut at some point, is not where I would be. But I would just say for now, I think, as I have said for probably two years now, the market has been doing a lot of this, up and down.

Sometimes we make to a lower low, sometimes we make a higher high. But in general. And I would look for that continuation in the first quarter, i.e. I'm looking for some downside in the first quarter. And then I think we probably shake everybody out, who got too bullish now? And then we swing back up again.

J.D. DURKIN: All right. Absolutely. Chris, now when you are confronted with headlines ranging from, as we just said a moment ago, very bullish, down to very bearish, how do you sort through the noise? How do you find the signal to determine what is actually consequential in terms of the portfolio?

CHRIS VERSACE: Let me say two things on this, J.D. . The first is, what do we do? We always pay attention to the data. The bread and butter of the business, right? We have to keep our head down, let the data talk to us, not get so wrapped up on what we want the data to tell us.

We've talked about this before, that's a recipe for disaster. But the other thing is when we see these bullish or bearish headlines, we want to understand what the logic is behind it, assuming that there is some. Sometimes there isn't, but we want to understand the thought process behind it. Because as we do that, it starts to clue us into what the market might be thinking.

And as much as we want to be right on our individual picks, we have to understand what could go right for the call, as it relates to the market, what could go wrong, perhaps what the herd is missing. That allows us to rethink where we want to be, how strongly we want to be it, or maybe if it's in times like this where the market might be getting out over its skis, maybe it's time to perhaps call some profits back, something that we've been doing over the last couple of days in the portfolio.

J.D. DURKIN: Chris, is the central bank the biggest potential challenge to any prediction, or is there some other catalyst to watch as we turn the page into 2024?

CHRIS VERSACE: The easy answer on that would be to say, of course, it's the Fed. Because they're going to be driving whatever happens with interest rates. But it's more than that, J.D. , to be candid. We're going to have to understand the vector and the velocity of the economy, not just here at home, but outside as well.

What does it mean for exchange rates? And then some folks will try and pinpoint, oh, the presidential election, we'll have to see what happens. As I think as we've come to appreciate, the election year tends to be a lot of noise. We'll see who wins. But the reality is that's going to be more of a 2025 impact. So I would say, I had to strip my answer down, it is going to be the Fed, it's going to be the economy, stupid.

J.D. DURKIN: (LAUGHING) It's going to be-- it's the economy, stupid, in the words of James Carville. Yeah, we'll be hearing that an awful lot the next year, there's no doubt. Speaking of noise, Helene, I can imagine how you might feel about something like a Santa Claus rally, but I do wonder if there are any trends, Helene, that you see playing out as we soon leave 2023 in the rear view, turn the page to the new year?

HELENE MEISLER: Well, I just-- I want to follow up on Chris's comment. Back in January of 2017 when everybody was concerned about Trump becoming president, I went back and I took a look at how much politics affects the market. And I can tell you that it was very hard pressed to find-- and I went back about 50 years, maybe a little bit more, almost 60 years, and I can hardly find a time when anything political, even JFK's assassination, really affected the market. So you might get a short-term this or that, but mostly what affected the market when I went back and I looked at it was taxes, earnings and the Fed. So just commenting.

J.D. DURKIN: Oh, love that long run context. So important, especially for all the conversations about how market performance may look during a presidential year. Obviously, we're not dealing with a traditional set of economic conditions, overall. But fascinating to watch, nonetheless. OK. Here we would be remiss not to share Carley Garner's predictions for the upcoming week that she was kind enough to share with me last Friday. Here's Carley.

CARLEY GARNER: If we're talking about in the next handful of weeks for 2023, I still believe that my projection of 4,730 is in play. And I come up with this using technical analysis. The top of the trading channels that we've been decisively in, in addition to upward seasonals, tells me that we're probably headed for 4,730 here in the next couple of weeks.

But I think we most likely will be a little top heavy at those levels. And so I would expect some sort of pullback once we get into deep January. And that pullback could be as low as 4,300. And the S&P maybe 4,400, somewhere in that ballpark.

So you want to be prepared. Markets don't go straight up or straight down. That said, if interest rates remain stable and the dollar continues lower, as I expect it to, I think overall, by at some point next year, we're probably looking at somewhere around 5200 in the S&P. So I'm pretty optimistic.

J.D. DURKIN: Helene, I'm going to keep this question over to Chris to avoid perhaps a bit of an exercise in futility. I know how you feel about it. But Chris, I do wonder where you see the S&P in, let's say, the first half of 2024. Do you have a target that you're eyeing, Chris?

CHRIS VERSACE: I kind of go chips in with Helene on this exercise in futility. But let's game it out, shall we? So I think the consensus for the team is we're going to see some pullback, potentially, sometime in the first quarter, let's say. And then maybe market rebounds in the second quarter. If we game it out though as well, we'll have a better sense going into the second quarter as to how many rate cuts we're likely to get from the Fed. We'll have a lot more economic data, particularly inflation data.

We'll also have one more quarter reported. And then we'll get the first quarter reported in April. Again, better sense on what earnings expectations are likely to be for 2024. So I could see us rebounding during the second quarter, whether or not we hold that through the back half of the year, we'll have to see. If I had to put a pin on it, J.D. , I would say probably 5,650 to 4,700 is my best guess at this time.

J.D. DURKIN: All right. Well, I, for one, I'm going to save that clip, Chris, so you and I six months down the line can take a look and see where we're at. No, no, I'm kidding. Thank you both for being willing to indulge me on some of that. But listen, I don't know if either of you heard, there's quite a bit of consolidation in the S&P 500 these days.

Of course, if you're talking the markets in 2023, folks, you begin with the Magnificent Seven. The outsized importance of these names made its way into a recent rundown with you, Helene. So let's take a quick reminder for our viewers about what you had to say about this very crucial issue that moves markets just a few weeks ago.

HELENE MEISLER: Well, I think that they absolutely are, what I call them, the index movers. Without them, just take a look, NASDAQ was down yesterday. And as a matter of fact, most of the day, the S&P spent in the red, but the breadth of the market was positive most of the day. So you can see what happens, is that they pull the indexes either up or down.

But I prefer when they're flat and the money can go into all the other stocks. And so I would like to see that continue into 2024. At this point, I don't know because I have to wait and see what sentiment looks like. I have to wait and see if we actually do get a pullback in early December, and then what a subsequent rally would look like. But from my vantage point here a month before the year end, that's what I'm looking for.

J.D. DURKIN: Helene, we are at least a little bit deeper into the month of December since you and I had that conversation. Any update, I wonder, to that thinking?

HELENE MEISLER: Well, those Mag Sevens have been doing a lot of flopping around. I don't know I feel like I should take a look at them. And I imagine they're like, you have a bucket of fish that are in water.

And you took one out and it's just flopping around on the floor and you don't know if you should put it back in the water or kill it. You know, I think they're OK. I don't think that they're doing anything to warrant so much attention right now, quite frankly. The other 493 have really played quite a bit of catch up, which I think is healthier for the market.

J.D. DURKIN: By the way, not the most consequential question I'll ask either of you, how do we like the name Magnificent Seven? It's certainly what's caught on Wall Street. Is that the best way to describe this power class of stocks?

HELENE MEISLER: No.

CHRIS VERSACE: I would say it's lazy because it clearly borrowed from two great movies. So one was the Magnificent Seven that we know here in the States for the Cowboys. But there was also the one, the samurai movie that was, I believe, translated to the Magnificent Seven. So lazy.

HELENE MEISLER: And I would say there's more than seven names.

J.D. DURKIN: Now we're talking, more than seven names. OK. We're going to put a pin in this. We will revisit this because a separate conversation for our members is going to be what-- if we were to expand the Magnificent Seven, what other names might we include, not for today, we're going to tease our members with that for a future conversation.

And it's certainly one I'm looking forward to. Chris, outside of general market implications, the club does have positions in a few of these Magnificent Seven names, Microsoft, Apple, Amazon, Alphabet. How are you thinking of those names from the fundamental perspective into 2024?

CHRIS VERSACE: Well, you know, they're all kind of cobbled together. But the drivers for a lot of those are different. So for Apple, we've got the rebounding smartphone market. But for us, it's a two rated stock, right? It's had a great run. Would we be chasing it here? No, we wouldn't. For Amazon, folks are talking about the inroads that they're making into AI.

But for us, we really need to understand the dynamics of cloud far more than we have to, AI, at least for now. I can make the similar comments for Google. But we also know that Google Cloud is 20-25% of the company's revenue stream. Search and advertising and YouTube advertising is a far bigger driver of their revenue profits and cash flow.

So I hate to paint them all with the same brush because they have different drivers, but I will say this. They've all performed admirably in 2023. I think that it would be wise not to expect that to continue to the degree that we saw-- that we should not expect that-- sorry-- to continue in 2024 the way we saw it in 2023.

I do think, though 2024 will start to show some potential promise on what AI really is. We've got a lot of conjecture about it. The companies are investing. Now the rubber has to hit the road. And I think if that surprises to the upside, we could see these stocks continue to move forward, especially those that are more tilted into AI.

J.D. DURKIN: I mean, even getting a base definition of what AI even is, I watched this debate rage on Capitol Hill. I'm not even convinced everyone knows what it is, or can define it.

CHRIS VERSACE: Well, wait, wait, wait, wait wait, wait, you cannot look for insight in intelligence on Capitol Hill on something like AI. You have cut--

J.D. DURKIN: Fair enough.

CHRIS VERSACE: I know in the past-- I know in a past life, you've covered this. And I am sure, J.D. , you have sat there in meetings and in press briefings and listened to the questions that our elected officials ask about these cutting edge technologies. And much like myself, you have scratched your head and said, good God, do they even know what they're talking about?

J.D. DURKIN: That's fair. As it pertains to the potential regulation of the space, they will be important voices to watch, certainly a conversation for a different day. Helene, I'm going to wrap things up with you here. Do you have a favorite name in the portfolio or even one outside of the portfolio, I wonder, that you are closely watching for 2024?

HELENE MEISLER: Well, I went through all the charts. And again, remember, I like a down and out stock. And if we wanted to find a stock that is like Lockheed, but has a different pattern, I don't know if-- do we call it Elevance? It's the old anthem. Elevance, Elevance, I don't know. Anyway, look at that face. That is just beautiful. I don't know, to me, that should be on the radar for breaking out in 2024.

J.D. DURKIN: All right. Elevance, on our radar according to the great, Helene Meisler. We need to leave it there. My special thanks to both of you, Helene Meisler and Chris Versace, for their expertise, their insights, their context perspectives and lots of good natured jokes thrown in along the way. My special thanks to both of you. Thank you so much for taking the time to do this with me today.

CHRIS VERSACE: Thank you.

HELENE MEISLER: Thank you.

J.D. DURKIN: Folks, our next live show will be in February. Yes, February, but we will have lots of exciting videos, new alerts, information and key insights you need along the way playing for you. In the meantime, we will see you again soon. Thank you, as always, for taking the time to tune in.