Facts vs Feelings Sep 21, 2026 1h 3m 44m saved
With Jay Woods, Chief Global Strategist at Freedom Capital Markets · Scott Brown, founder and strategist at Brown Technical Insights
Sixteen of the eighteen dots in the Federal Reserve's own projections point to another quarter-point increase before the end of the year, and there are two meetings left to deliver it.
The market read that meeting as hawkish and then rallied the next day. Sonu Varghese, Carson Group's global macro strategist, says the projections show the opposite of a hawkish Fed: not one official wants to give back the insurance cuts made last year, even though inflation has risen and unemployment has fallen since.
"Not a single one wants to take away the entirety of the insurance cuts that they made last year."
Jay Woods, Chief Global Strategist at Freedom Capital Markets, on Facts vs Feelings, works across the street from the New York Stock Exchange, writes a weekly newsletter with well over 5,000 readers and teaches technical analysis to graduate students at Fordham's Gabelli School of Business. Scott Brown left LPL Financial four years ago to start Brown Technical Insights, publishes four research reports a week for financial advisers and sits on the CMT Association's board.
The full episode is covered here so you can skip it. 63 minutes of audio, 19 minutes of reading.
Here are the 9 calls that matter.
Key Takeaways
16 of 18 dots point to another quarter-point hike with two meetings left, and four officials want two
Woods says the chair gave no forward guidance and no dot of his own
The Fed is still dovish on its own numbers, because nobody wants last year's 75bps of insurance cuts back
Core PCE for 2026 has gone from 2.4% to 3.4% since those cuts were made
The White House is the variable nobody can model, and it is why one strategist expects a washout before the year-end rally
Fed funds futures went from about 60% to 85% odds of a hike and the market rallied anyway — a market that wanted the long end calmed down
Consumer discretionary broke when oil went through 93, taking the travel and leisure names that had been holding up
Dow theory is not confirming a market 3.5% off its highs, with 49% of the S&P 500 below its 200-day average
The Magnificent Seven ETF broke a year-long downtrend against the S&P 500, which is the bull case for the fourth quarter
Gold and bitcoin were the week's two leading asset classes, which both guests read as a message about the Fed
Sustained rotation lasting six to eight months would mean the AI boom is over — that, not breadth, is the signal to watch
Oil's base points to 112, and above that nobody likes what comes next
1. The Dot Plot Says Hike
Ryan Detrick opened by asking both guests whether they were bullish after the Federal Reserve's meeting. Woods was not.
The projections, not the press conference, were the news
And to me the dot plot was the telling thing because we had 16 of 18 dots that see a quarter point raise between now and the final meeting of the year.
Jay Woods
Two meetings are left, so four of those officials are asking for two increases. What the chair gave, Woods said, was a demonstration of independence and a restatement of the 2% inflation target, and very little else: no forward guidance and no dot of his own. He read the inflation problem as gasoline, war and diesel fuel, and their effect on everything downstream. His own base case is one more increase, probably in December.
A hiking Fed and a bullish market do not go together
I thought you're not supposed to fight the Fed. I don't understand the bullish sentiment.
Jay Woods
Brown's takeaway came from the Friday before, when a data print pushed the odds of an increase in Fed funds futures from about 60% to 85%.
The market rallied into higher odds of a hike
After the print, they pretty much moved up to 85.
Scott Brown
Equities went up on that, which told him the market wanted longer-dated yields calmed down more than it wanted cheap money. Central banks can always go too far, and he pointed at 2022, but he thinks the reaction to no increase at all would have been worse.
Varghese, who publishes on Carson Group's research blog, had spent 48 hours on it and titled his piece around the claim that this Fed is still dovish. His case is a comparison of the September projections against the ones from 15 months earlier. GDP growth for 2026 has been revised up from 1.6% to 2.3%. Core PCE has gone from 2.4% to 3.4%, a full percentage point above what the committee expected. The unemployment rate has come down from 4.5% to 4.1%. Against all three of those revisions, the 75 basis points of insurance cuts made last year are still in place.
Nobody wants the insurance cuts back
Not a single one wants to take away the entirety of the insurance cuts that they made last year.
Sonu Varghese
The committee now expects inflation back at target in 2029, which he expects to become 2030 by this time next year. His conclusion is that the hawkish talk is talk: if the Fed genuinely wanted to hold inflation down, he said, the policy rate would probably be 6%.
2. The White House X Factor
Woods called the data good but incomplete, because the variable he cannot quantify is the administration. A headline crossed his screen during the recording that the president was banning news organizations from the White House.
The risk he cannot model is policy, not the Fed
I am troubled by the consistent pattern of reckless self-inflicted wounds on the economy.
Jay Woods
The timing makes it worse. The war is pushing oil and diesel prices up, it is an election year, and the market is in the gap between earnings seasons — Micron, Nike and Costco report next week, but the large banks do not start until October 13. He reached for 2018 as the analogue: after those midterms the administration started a trade war with China, and this time the disputes are with Canada and Europe.
His conclusion is not bearish, though. He expects fear and a washout first, then a strong fourth quarter, and he is buying the dip when it comes. Varghese agreed with the diagnosis and separated it from the trade: he thinks the inflation problem persists, driven by the war, tariffs and AI bottlenecks, and Carson is overweight equities anyway.
3. Neutral, At 60% Equities
Brown said he can argue both sides, and his models have already taken the argument out of his hands.
He is at a neutral allocation, exactly
We're at exactly 60% equities in our balanced model.
Scott Brown
Breadth has collapsed and, as of the recording, nothing says it is improving. The sector he keeps returning to is the one that is supposed to reflect household spending.
Consumer discretionary is the weak spot
Consumer discretionary really really looks rough, especially in relative terms.
Scott Brown
The break came with oil. Discretionary names that had held up buckled when crude went through 93, hotels among them. He had tweeted a chart of the travel and leisure ETF looking strong shortly before it collapsed — a call Detrick said was cited on Animal Spirits, and which Michael Batnick picked up. Equal-weight discretionary against equal-weight staples hit a three-month low in the week of the recording, which he considers damning given how badly staples have performed. Discretionary against energy has been one-way, and that ratio looks to him like it wants to break in energy's favor.
He shared a chart of discretionary and staples as a share of the S&P 500, attributing it to a fellow technician, and Woods made the obvious objection: both sectors have shrunk so much as a share of the index that it is fair to ask whether they still matter. Brown's answer is that they are still a signal even when they are not a weight.
The case for buying it is seasonal and structural. Fourth-quarter seasonality turns bullish, credit is still holding up, and breadth peaked at the same time as the index rather than well before it, which is not what a major top looks like. He reads it as a routine correction rather than the end of the bull market, and is cautious only tactically.
4. Dow Theory Rolls Over
Brown admitted he has never understood Dow theory and asked for the explanation on air.
It is the things that make against the things that take
This goes back to Charlie Dow 1908. And when they are making new highs together, it's confirming a bull market.
Jay Woods
It is not an index and not tradable, Woods said — it is a read on the trend, built from industrials and transports. The usual objection is that it is outdated and semiconductors should stand in for industrials, though he notes the Dow itself now holds more technology than it ever has. What he sees is divergence: transports weakening first, industrials following.
The tape underneath it is doing the same thing.
The market is bending, not breaking
We are dancing around the 50-day moving average, holding on to a support level around 7,600. And every time we rally, we're making a lower high.
Jay Woods
Half the index is below its 200-day average
We are seeing breadth deteriorate stocks under the 200 day moving average now in the S&P 500 at 49%.
Jay Woods
Within technology the leadership has swapped: the software names that were hated are now loved, and the semiconductors that led are lagging. Cybersecurity charts are his favorites. The number that bothers him most is the gap between the signal and the price — the index is three and a half percent from an all-time high and Dow theory is not confirming it. He expects a quick flush, a reset and a strong close to the year, and his own line in the sand is lower: the bottom of the neutral range at 7,200 to 7,250. "Sideways is a direction," he said, and neutral trends take time.
He also mentioned, in passing, that a viral chart he posted in April put him in a public argument with Morgan Stanley two weeks before the recording, which ended with his account restored.
5. The Mag 7 Turns Up
Detrick asked what happens if the Magnificent Seven finally comes back. Brown said that is the bull case for the fourth quarter. The ratio of the Magnificent Seven ETF to the S&P 500 has broken a year-long downtrend line and moved above its 200-day average in the week or so before the recording. He was careful about how much to make of it: it is not a screaming uptrend, but it is real improvement from a group that had been lagging.
The chart he did have was the Nasdaq-100 ETF, which he reads as a base, or, in his words, an inverse head-and-shoulders pattern, with a breakout above roughly 730 to 735. His argument is that the market has chopped sideways through what is usually the worst stretch of the calendar, and that holding here into the bullish seasonal period would leave a lot of room on the upside.
6. Gold And Bitcoin Lead
Woods does not hold bitcoin and said Freedom does not touch it, but he follows the chart, and the chart is set up for a trade: a higher low, a broken downtrend and a price above 81,000 as they recorded. He framed it as risking 13,000 points for a move back to the highs over 18 months. Brown, who follows bitcoin but nothing smaller, put the level slightly differently.
A double bottom that measures back above 100,000
It's like a major double bottom that looks like it measures back well above 100,000.
Scott Brown
Detrick disclosed that the team he and Varghese run, about $8 billion alongside Barry Gilbert and Grant Engelbart, holds 1.2% to 1.5% bitcoin in its tactical models as a diversifier rather than a conviction position, and a little more gold than bitcoin.
On gold, Brown noted the two leading asset classes on the week were gold and bitcoin, against a market where only technology and healthcare were up, and said that is itself a message about the Fed. The metal sits near a flat 200-day average, came into the week at a big support zone, and bounced.
He bought gold and it turned on him
I got long gold two weeks ago.
Jay Woods
The trade reversed immediately, but he says the intermediate downtrend is broken, MACD gave a buy signal about a month ago, stochastics have turned and RSI never got oversold. He wants the 50-week moving average around 4,409 to 4,410 reclaimed, and thinks the worst is behind it.
Varghese tied gold back to the Fed, as he conceded he ties everything. Gold rallied hard after last year's Jackson Hole meeting and stopped in February, which is when he thinks the market started to worry about inflation; it then fell as pricing moved from two cuts in 2026 to hikes. His rule follows from that: an easy Fed is a positive for gold, and a Fed genuinely willing to take rates to 6% or 7% would be a reason to sell it. Neither he nor Woods has been able to correlate bitcoin with anything: sometimes it trades like a software stock, sometimes like gold, and both treat it on its own.
7. Nothing But Tech Matters
Varghese put the breadth question directly: if breadth is bad, does it matter? Brown's answer was that it does not, because the index is the build-out.
One person's spending is another person's revenue
There's no end to the spending and one person's spending is another person's revenue.
Scott Brown
He cited a New York Times piece published that day reporting Anthropic's compute going from 1.5 gigawatts last year to 5 this year and 10 next, and said, half-blaming the Negroni, that "nothing else matters other than tech." The arithmetic behind it is weighting: if the Nasdaq-100 goes up, the S&P 500 goes up, whatever everything else does.
He is not buying the semiconductors, but he has stopped being negative on them. The memory names showed every classic bubble sign near the top and fell 30% to 40%; since then they have chopped sideways, which he called the bull case a while ago and now thinks is more likely. His analogue is Nvidia in 2023 — a huge move, a year of nothing, the 200-day catching up, then another leg. Within the group Apple is near its highs and Meta has been a dog but is improving, and he does not think the Magnificent Seven works as a theme any more because each stock is acting on its own.
Woods agreed and added the memory names to the same pattern: after a parabolic run, Micron and SanDisk are going sideways while their moving averages catch up, which he reads as constructive. On small caps he was blunt — the last 15 years have shown this market does not need small caps or good breadth to go up.
8. What Would Worry Them
Woods turned the interview around and asked the hosts what would change their minds, given the divergences the two technicians had laid out.
Detrick, who had warned in February about a selloff into what became a 9.1% peak-to-trough correction, listed three things. The share of stocks above their 20-day average recently broke below 20%, which is close to washout territory but not there. CCC-rated credit spreads are rising, even if that is a small part of the market, while high-yield spreads overall show no stress. And the level he is watching on the S&P 500 is 6,710, the early-June peak, which is roughly where the 50-day sits; the index broke it two weeks running and had climbed back above it as they recorded. His base case remains inflationary growth, and the risk to it is a genuinely hawkish Fed, which he does not think has arrived — in March the market priced a zero percent chance of an increase this year, and there has now been one.
Varghese's worry is different and he named the trigger precisely. Everything running hot is capital expenditure rather than AI showing up as productivity across the economy, which he thinks is five or ten years away. The danger is the Fed deciding to cool the capex boom; he listened for any concern about it in the press conference and heard none, which he read as tolerance for now. What he watches instead is rotation. If it persisted for six or eight months, he said, "I'll worry that the AI boom is over."
Sustained rotation is what ends it
So if you see sustained rotation, I would be very worried. I would say that's the end.
Ryan Detrick
Detrick's evidence is 2000: between March and December of that year money rotated into financials and other non-defensive sectors while the market as a whole was already finished, and it took people a while to understand the boom was over. Neither host thinks the market is near that today.
9. Oil's Path To 112
Asked what else to watch, Brown picked the unglamorous answer.
Oil is now setting the tape
I mean, I think the least sexy answer to watch is oil.
Scott Brown
Every morning, he said, what oil does is what yields do and the inverse of what equity futures do — a relationship that was not there four or five months ago even when energy dominated the headlines. The base built above 93 to 94 gives him a near-term target of 112, which is the year-to-date high. It would not be a breakout, but through it he expects "something uncomfortably high that nobody is going to like." He continues to like energy stocks, and Woods agreed: energy is making 52-week highs while discretionary makes lows, and the stocks have led crude the whole cycle.
The escalation risk sits on top of that. Woods declined to guess what the administration does after the election and would not forecast a worst case, but named the one that would matter.
A ground war is the scenario that breaks the market
God forbid we escalate and we bring boots on the ground. That would be devastating to this market.
Jay Woods
He also said the recovery of a soldier from behind enemy lines removed the scenario of an American hostage on television, whose market reaction would have been disastrous.
What has kept the damage contained so far is the pace of the move in yields.
The 10-year has risen slowly, which the market has absorbed
It's gone slow and steady. In the days where it spikes, we get those negative reactions. It digests. It stays around 5%.
Jay Woods
A break above 5% would be a major one, and Detrick has floated 6%; the speed of it, Woods said, is what would do the damage rather than the level.
The last risk he raised is political rather than financial. He argued that opposition to the AI build-out is the rare position both parties share, putting it at "70% Republicans, Democrats say the AI bill needs to slow down," and that candidates will use it because it wins votes. He already sees it in the picks-and-shovels names — Caterpillar and Applied Digital have pulled back, and he thinks Caterpillar long term is giving investors a good entry point, while the rhetoric could cause more panic selling into November 5. There are no easy trades in this market, he said, pointing at a post from Joe Fahmy making the same point: this has been a frustrating tape in which technicians can argue both sides, and a technician who claims to be ignoring Washington is not doing the job, because the fundamentals coming out of Washington are moving the market.
Bonus Insights
Both guests came up through the CMT Association, and both are recruiting for it
Brown speaks at the association's symposium in Bethesda, Maryland, on September 30, and the Tampa event falls on his birthday, January 13, 2027. He sits on the board, and his stated goal is to bring younger voices in — "we have too many old people like myself," he said. Cathie Wood spoke at the last Tampa event, which he liked precisely because she is not a technician. He named David Keller, Dan Russo, Mark Newton and Katie Stockton among the presenters. Woods said the exam is "a nightmare from hell," that you have to pass it and then be sponsored, and that he will be more involved in the association's leadership without saying how.
Woods teaches the subject as a spring-semester course
He teaches introduction to technical analysis and market behavior to graduate students at Fordham's Gabelli School of Business, calls it a passion project, and says several students have gone on to take the CMT levels. He also uses Nike as his teaching example of a long-term downtrend.
The worst call he ever made was on his best television appearance
At the Future Proof conference he did a charting segment on Power Lunch with Tyler Mathisen and Kelly Evans with no charts in front of him, working from memory. The stock was FedEx, he had the bullish case and a stop-loss, and it fell through the stop by 20 points after earnings. He described charting on live television with nothing on screen as terrifying and one of the best things he has done. On an earlier Yahoo Finance hit with Jared Blikre the on-air kit failed and he drew with his hands instead.
Detrick lost a rental car key and got money off
He lost the keys to an Avis rental after driving his daughter to college, had the car towed from a parking lot at his son's football game, and expected a bill north of $1,000. Enterprise then called about a car that would not start and took $200 off.
Brown Technical Insights just turned four
Brown and Detrick started at LPL Financial on the same day in January 2016. Detrick left seven years later, Brown about a week after that, and the first Monday Morning Playbook went out four years ago. He publishes four reports a week, top-down technical strategy plus equity research and a stock list with entries and exits.
Woods writes a weekly newsletter for Freedom Capital Markets
It goes out Sunday night to well over 5,000 readers and previews the week ahead — which, he said, is why he knew Micron, Costco and Nike report next week. Both he and Detrick are CNBC contributors, and Morgan Brennan, who was booked for this episode, could not make it, which is how Brown ended up on it.
The show's own metric
Detrick said the podcast's last few episodes have all cracked the channel's top 10 and one was its second-most-viewed video, then quoted Phil Pearlman's line that "the higher the VIX, the higher the clicks" — volatility is boring right now, and views come when the market is down 10% or 15%. The next social hour is on October 30 and will be about AI and China.
The bottom line from both technicians is that this is a bending market rather than a breaking one, with weak breadth, a Dow theory divergence and a consumer sector that broke with oil set against fourth-quarter seasonality, intact credit and a Magnificent Seven that has just turned up, and that the things most likely to settle it are the price of oil and what comes out of Washington rather than anything the Fed says next.
Products, Companies & Tools Mentioned
Freedom Capital Markets (Woods's firm, where he is chief global strategist and writes the weekly newsletter; it does not trade bitcoin)
Brown Technical Insights (Brown's research shop, four years old this week, four reports a week for advisers plus equity research)
Carson Group (The hosts' firm, about to cross $70 billion, whose research blog carried Varghese's dovish-Fed piece)
CMT Association (The technicians' professional body; Brown is on the board, Woods is taking on a bigger role, and both promote its symposiums)
Anthropic (Its compute is going from 1.5 gigawatts to 5 to 10, per the Times piece Brown cited as evidence there is no end to the spending)
Nvidia (Brown's template for the memory names: a huge move, a year sideways, then another leg)
Micron and SanDisk (The memory names that ran parabolic, fell 30% to 40% and are now going sideways while their averages catch up)
Apple and Meta (Named inside the Magnificent Seven — Apple near its highs, Meta a laggard that is improving)
Caterpillar and Applied Digital (The picks-and-shovels names pulling back on AI-build-out politics; Woods calls Caterpillar a long-term entry point)
Exxon Mobil (The energy call Woods wrote up at the end of last year and considers the kind of easy setup this market is not offering)
Nike, Micron and Costco (The three reports before the banks start on October 13; Nike doubles as his teaching example of a long-term downtrend)
CNBC (Where both Woods and Detrick are contributors, and where the FedEx charting segment went wrong)
Morgan Stanley (The other side of the public argument over a chart Woods posted in April)
Travel and leisure ETF (The chart he posted looking strong days before the group collapsed)
Books & Resources Mentioned
Carson Group's research blog (Where Varghese published the dovish-Fed argument he walked through on air)
Animal Spirits (Cited Brown's travel and leisure call; Michael Batnick picked up the chart)
The New York Times on Anthropic's compute (Published the day of the recording, and Brown's evidence on the scale of the build-out)
Joe Fahmy (The trader whose post Woods cited on the absence of fat pitches in this market)
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