Stocks rally as investors hope for policy pivot

Yahoo Finance's Jared Blikre breaks down the broad-based rally in stocks and crude oil prices.

Video transcript

AKIKO FUJITA: Let's bring in Yahoo Finance's Jared Blikre, who's tracking all the very latest for us. Jared, we were saying this before the show, bad news is good news--

JARED BLIKRE: Sometimes, yes.

AKIKO FUJITA: --sometimes. And in the case of today, at least the JOLTS numbers could potentially point to a sign that the Fed's policy is taking hold.

JARED BILKRE: Yes. We have been at maximum employment for some time now. And that has mean the Fed has to turn the screws even more. So if there are fewer job openings, I guess the thinking goes that the Fed doesn't have to work as hard. And so we're seeing some of the terminal rate expectations come down.

And well, to put it plainly, it's risk on here. So let's take a look at what's happening in the NASDAQ, up over 3%, up over 5 and 1/2% over the last two days. And I'll show you something that hasn't happened in a very long time. The S&P 500, up 2 and 1/2% over two days, back to back. And this hasn't happened since 2008.

And let me just show you what I've been looking at here. So this is going to be the S&P 500 over three months. And you can see, these are some pretty big green candles.

Now, I ran the history just to see where and when this has happened in the past. Ah, there we go. And here we go. So this goes all the way back to about 2009, I believe. And not one single signal here. And then here's 2008. And this goes all the way back to-- well, let's put that back another 10 years.

We do see a number of these signals clustering here. But that was right at the-- I would say-- I would say that probably 2/3 into the bear market. So that was not after the lows. And you can see there's a signal here, if you squint real hard. That precipitated much further lows.

And then we saw these after the 2000-- this was actually right at the top of the 2000 tech bubble. And then we saw another one here towards the bottom. But you can see many, many months until we saw actual liftoff.

So I went back further in history. Suffice to say, the signals have not worked very well recently, although they did work in the '60s and '70s. And arguably, that is a more appropriate comparison to today's time frame and what we're looking at here.

And Akiko, you mentioned OPEC Plus. Let me just show you what's happening with WTI crude futures because I just saw a headline pass my screen that they're now considering a production cut of 2 million barrels per day. And on the back of that, we are seeing a huge rally here. Crude oil up 3.4%. That's over the last three months.

Let me get a five-day chart here so we can really see-- here we go. Here's that lift off on those headlines I was just looking at. So all in all, it's looking very risk on. I'm just going to show you a couple of screens here in my heat map.

I had a big problem trying to find any source of red earlier today. You might find it in certain markets like the dollar. And I think that's instructive in and of itself because the US dollar index, as it's been surging higher, as the US dollar has been gaining towards-- or gaining against other currencies, that has been a headwind-- headwind-- for a lot of these risk assets.

But here's what's happened today. Chinese stocks, that's KWEB, that's up almost 7%, followed by meme stocks, ARKK, IPOs, gambling, solar, chip stocks, internet stocks, everything that's been flagging. Here's another one. Here are meme stocks.

Do you see any red on this board? A tiny little few red spots in the corner here. Clovis, it looks like, it's down marginally. But I haven't seen a board like this in some time. So you take it with a grain of salt here because we do tend to see these flashy back-to-back rally days at the bottoms in certain bear markets.

And does it mean that we are at the bottom? No, not necessarily because we saw these were several false signals going back to 2000, in the past. So putting it all together-- putting it all together, Akiko, it's nice to enjoy this rally. But we've got to take all of this with a grain of salt, as usual.

AKIKO FUJITA: Not being able to find any red, that's a good problem to have, right? We'll take it, at least at the start of Q4. Thanks so much for that, Jared.