The Chart Whisperer: Markets in Motion

Join Andrew Wilkinson and Tyler Wood of the CMT Association as they decode today’s market momentum and uncover what the charts are really saying. From mega-cap leadership and small-cap struggles to commodities and Fed cuts, this episode reveals how technical signals shape market moves.

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Summary – IBKR Podcasts Ep. 294

The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.

Andrew Wilkinson 

Welcome to this week’s podcast. My name’s Andrew Wilkinson with Interactive Brokers, and I am delighted to have back in the saddle here after, I don’t know, almost a year’s absence, Tyler Wood. Welcome, Tyler. How are you? 

Tyler Wood 

Hey Andrew. Great to see you. I’m doing very well. Thanks for having me back. 

Andrew Wilkinson 

Good, good. It’s been a long and hazardous year for you, I know. And congratulations on the newborn, which happened very recently. 

Tyler Wood 

I am back. I highly recommend a little general anesthesia—it’s the kind of vacation that really brings mental clarity. So an outpatient surgery, it’s great. Of course, I do have a newborn, and so net-net, I’m probably just as foggy as I always am. But it’s nice to get back and chat with you. 

Andrew Wilkinson 

We’re gonna try and make things a little bit clearer now. And just for the benefit of the guests: Tyler Wood is with the Chartered Market Technicians Association, or the CMT, which means he knows how to read a chart very well. That’s what we’re going to concentrate on today. 

We’re recording this Wednesday, the 10th of September, and the market is just putting in another all-time high. So that’s a great backdrop. You know, when this recording goes out, you never know. 

Tyler Wood 

That’s alright. 

Andrew Wilkinson 

Things could be at a new 52-week low, but we’ll deal with that. So Tyler, you disappeared off the radar just after the end of the first quarter. All the fun hit with Liberation Day and the Rose Garden and so on, and then the market just took a huge swoon. As you get your feet back under the table, give us a sense of how you’re seeing the overall health of the stock market. The market—particularly on the tech side but also the core indices—is making new all-time highs. What does it look like to you? 

Tyler Wood 

I think that’s one of the beauties of trend-following investing, or momentum investing, or even just using charts and data visualization—you can keep things simple. I talk to a lot of smarter folks than I, who have this four-dimensional chess, macro strategy, scenario planning about how tariffs are going to impact things, geopolitical conflicts, and all of that. 

My sleepy Midwestern roots keep things pretty simple: take a look at all the major indices and just check—are we still trending higher? Is there a series of higher highs and higher lows? Are we above moving averages? In all technical analysis work, you tend to take that top-down approach. So, start with: where are we? And my answer is yes. Those trends are largely still intact. We’re holding moving averages. All of the volume trend indicators, things like Chaikin money flow, are still healthy, constructive evidence that it’s not all doomsday—at least not yet, right? So knowing where you are is a very helpful starting point to decide how you’re gonna react to where you might be going. 

That doesn’t mean markets are going to trend in a straight line upward and to the right. Certainly, a lot of the analysts I talk to are looking out for some seasonality. The bottom line is that the uptrend is intact. We keep testing—or, as we are today, making—new all-time highs. And we’ve had some breadth appreciation, some improving breadth statistics, and some broadening of the market. That is really helpful. I read from Bloomberg that over 64% of the Russell 3000 are back above their 200-day moving averages, so that’s a healthier backdrop than the narrow leadership we were worried about earlier in the year. 

Andrew Wilkinson 

So I want to jump into the big-picture conversation here with yields—bond yields—for a particular reason. Very recently, economic weakness has brought to the fore the idea that the FOMC will resume monetary easing next week, in the middle of September. And it’s the job of the stock market to discount the future, including lower interest rates. 

How much of where we are today is predicated on the idea that rates will come down? How does the technical situation look? 

Tyler Wood 

I don’t think it’s a radical view to think that the next move is lower. But it also depends on your time horizon. Not knowing every single listener here—if you’re thinking about what’s going to happen over the next five years, ten years, or if you’re a sovereign wealth fund looking out 25 years—I think we’re in a rising interest rate environment. 

We had 40 years of downward trends on the US 10-year, and those broke after a massive V-bottom during the pandemic. But yes, weakening data off the jobs report and a couple of folks losing their jobs—we will see that rate cut. And I’d say a lot of it is already priced in. Futures in the FX market are already discounting a really high probability of that September cut. Market-implied odds are around 90% for a quarter point, 25 basis points. 

But what the equity tape is reacting to is what the path of cuts might be. And that matters more than whether this first cut happens. 

Andrew Wilkinson 

So one burning question on everybody’s lips is the health of the tech sector today. Narrow leadership for the first, I don’t know, six months of this year—2025—the big players still serving to lift the overall market. Or are investors gravitating to specific industries within tech now? 

Tyler Wood 

When you look at indices on a cap-weighted basis, we definitely need mega-cap names to maintain their anchoring of this trend. We need those to keep working if the indices are not going to falter. 

I’d point out that the technology sector—or growth equities—has a lot more diversification than what most people think. Most people look at Nvidia or just semiconductors as an industry group. And I think it’s worth noting there’s been a major change of character for individual names like Nvidia. We’ve had weaker and weaker momentum readings since the June highs. All of the moving averages that were holding in each pullback are now broken. 

In my own trend model, it’s in a “no-go” configuration right now. It’s having a little bit of a retest, a counter-trend rally, on a daily basis. So there are certainly some stretched trends that are now looking a bit toppy. So when we think about seasonality and headwinds that might be coming in September and October, I think there could be a lot of rotation happening. Money coming out of some of those big names that served investors so well during this last rally, and maybe looking for other opportunities—perhaps things at slightly lower valuations or more attractive from a technical setup as well. 

Andrew Wilkinson 

That actually sounds quite positive when you’re not relying on that single-name growth or value, which is currently looking healthier. 

Tyler Wood 

Growth still leads. And in all of our relative strength work, you’d see growth across all categories outperforming value. But that gap has narrowed on those falling yields and broader participation. Things like healthcare and materials’ outperformance in August hint at a little more balanced market rather than a wholesale regime change. 

It’s not that tech is done and we’re going straight back into materials, building supplies, and infrastructure. So I wouldn’t call it a regime shift, but perhaps a more balanced market. What we’ll be watching is if real yields keep trending lower—that supports growth and growth equities that have a duration premium. If it’s steepening driven by improving activity, then you’ll see value and cyclical sectors start to come back into leadership positions and outperform on a relative strength basis. 

Andrew Wilkinson 

So large cap or small cap? I can’t quite get my head around why small caps are having a hard time keeping up. 

Tyler Wood 

Yeah. They did have a strong August, but they’re struggling to keep that follow-through as we get into September. So they’re lagging again. I know the technical analysis community has been talking for 18 months, two years, about when the heyday for small caps will arrive. When are we going to see this massive catch-up for all of those Russell 2000, Russell 3000 names? 

I think debt load and sensitivity to growth have been keeping a lid on that momentum. The valuations are really compelling. So to each investor, you’ve got to follow your process and know your own stripes. But right now, we’re still seeing large caps continue to lead. I think the trigger for a durable small-cap run is going to be clearer evidence and some re-acceleration with easier financial conditions. We need lower short rates, looser credit. I think it really comes down to liquidity. 

Andrew Wilkinson 

Probably a flattening of the yield curve. 

Tyler Wood 

Yes. 

Andrew Wilkinson 

Yep. Any red flags that you’re seeing that might prompt you to just raise a word of caution across the stock market? 

Tyler Wood 

Yeah, in the broad context of how the market is doing, I think breadth measures are critically important. A couple of good friends of mine and fellow CMTs just wrote a white paper recently showing how breadth can be a really good bellwether—the canary in the coal mine—ahead of drops in the indices. 

You want to have a deep bench. Bench strength in a market rally is important because you’ve got to be able to pass the ball and see that healthy rotation. Ralph Acampora always said, rotation is the lifeblood of bull markets. When you have very narrow leadership, then you’re on much weaker footing in those index-level rallies, because you’re just talking about a few mega-cap names. 

The other thing—and I hate to be outside my technical expertise—but I think earnings leadership fatigue could be a problem. The whole AI complex, the expectation of what those firms are going to be able to achieve, is just meteoric. Broadcom’s beat was certainly helpful. But a reversal in those earnings releases could mean that some of that outsized sentiment for the AI complex gets a bit of a reversal. 

Andrew Wilkinson 

What does the commodity world look like to you at the minute? Lumber’s hit its lowest point year to date, hasn’t it? 

Tyler Wood 

Yes, down about 20% since early August. Lumber is certainly signaling softer housing demand and tighter construction margins. It’s a good barometer for the real economy, and that is certainly flashing caution. 

But I love the commodities complex. Even though the data is hard to pin down sometimes, when you see a crisis happening in equities, there’s usually some alpha to be captured in the commodity space. Gold—we’re at 3,550 to 3,600 an ounce. Every technician in the world looked at the big broadening cup-and-handle formation, à la William O’Neill methodologies. And once we broke above that 2,000 level after testing it 12 times, it was off to the races. 

That really sticks to some of our principles: when there is no resistance level above a major breakout—when you’re at all-time highs—there aren’t other sellers sitting ready to sell. And certainly, we know central banks have been pretty voracious buyers. 

Andrew Wilkinson 

On a sector level, back in the stock market, are there some that are really appealing and some that you think are likely to lag from here, Tyler? 

Tyler Wood 

I still like semiconductors. I’m just a helpless trend follower—until it’s not trending higher, I’ve got to stick with what’s working. And certainly beyond some higher volatility and seasonality in September and October, I think we could see really strong rallies through the end of the year. 

They have pretty resilient uptrends when you get into the individual names. From a contrarian point of view, I don’t know how often you dig into the industry groups in the healthcare sector, but biotech and pharma have both made really nice basing patterns. They had some breakouts in August, and their very deep underperformance certainly makes them a strong value play. 

Value investments turn into something trend followers really love once they break out and start working. So those are some things I’m keeping an eye on. Certainly materials and industrials—if the tape is broadening in this way and there’s potential for re-acceleration of those August leaders, if the new regime continues, then I’m paying attention to those as well. 

Andrew Wilkinson 

Very good. So what’s next for the CMT? Are you going globetrotting anytime soon? 

Tyler Wood 

Yeah. Despite my spine surgeon’s best pleas to keep me off long-haul flights, the CMT Association is hosting our 2025 Global Investment Conference in Dubai. That’ll be September 30th through October 2nd. It’s getting chilly upstate New York, which means I need it to be 105 degrees in the shade, and I’m headed to Dubai to get that done. 

But yeah, it’s going to be a great global gathering. We’ve got folks coming over from Singapore and Hong Kong and all of Latin America. And I think the third runway at Heathrow is now being built in Abu Dhabi—like half of Britain lives in the UAE now. So it’s a very dynamic place, perhaps like New York City was in the 1920s. It’s just a really dynamic environment. 

Andrew Wilkinson 

Brilliant. Tyler, thank you for joining me and best of luck with the travel plans and with the conference at the end of the month. 

Tyler Wood 

Thanks so much, Andrew. Great to see you, and I’ll talk soon. 

Andrew Wilkinson 

And don’t forget, to the audience: if you liked the episode, remember to subscribe wherever you download your podcasts. Thanks, Tyler. 

Tyler Wood 

Thanks, Andrew. 

Andrew Wilkinson

Bye everybody.