Bob Lang on De-Risking at Record Highs; Bulls Flood NVDA, AVGO, MRVL Options

good Friday morning and welcome back to Openi Bell right here on Schwab Network. I'm Nicole Petallides. We want to continue to discuss the mar action in your portfolio. Bob Lang chief options analyst and founder Exe Options, is with me right now. And we've had a theme in the last couple of days of folks trying to de-risk a little b You're doing some of that. How so? Good morning Nicole. Great to see you. So I'm taking money off the table.t new all time highs the S&P 500 an Nasdaq on Tuesday. It was a nice it was a nice moment for for the bulls especially during a the start of a seasonallytrongd right in front of earnings season. But you know, the problem is, is when you when you hit these new highs and you don't get any folrough like we did on like we didn't get on Wednesday, it means that there's ulnerability and there's some trouble for the markets. It could be peaking and could be toppi this, at this level. It's a little bit too early to tell about that. But I think de-risking right now is probably the smart thing to do even in front of earnings seaso your notes, you wrote about the endless war, and that was somethi was going to ask you regardless, that with oil elevated, that keeps rates elevated, is this more of a war and oil story than it is about the market fundamentals and earnings? I think it is. Nicole and I, unfortunately, you know what we've been tol along. And look, you know what, when when when policymakers make these decisions and choices about war and about what they're going toe value. And when, when, when we're told tha war is going to end in a couple of weeks, well, we have to believe t's going to end in a couple of weeks. And so far, it's that that hasn't come true. And the market's been somewhat confused. I think there's less confusion, of course, about AI and about technology and about the growth there. But for the rest of the market, there's a lot of confusion there and worrying about, you know, how much longer this is g k that, you know, there's any in sight here. And certainly oil prices are going t clue us in as to when this war is going to be over. And I think that that we're getting those those those clues right now. And certainly the correlation, Nicole, between high oil prices and higher rates has been very strong. And it's, you know, higher r and higher oil, anathema to, to stocks. It's it's pus for stocks. And we've seen that weakness happen in the small caps 6% rates likely. Do you think on the ten year bond yield. Certainly you know if we blast through 5.3% that w a level that we we peaked in around 2002. Certainly if we get through that level, there's there's a chance we can get up to 6 I don't know if if inflation is is at th level right now, but certainly elevated inflation is to bother the bond market. People don't like to have inflation when they're buying bonds, when they're buying fixed income. Fixed income investors abhor inflation. So if if there's a lot of supply coming online, if there's some sellers coming outelling bonds, and there's a lot more supply coming from the Treasury, you know, it all makes for that basic, simple economic princiess demand, more supply means prices go down. So and yields areoing to go up. So I don't really don't know where it's going to end. Certainly 6%e is is in the is in the cards. Yeah. It makes sense when y look at this at this point. Now when you think about supply and demand, right, the bas going back to the basics of our macroeconomics classes, let's think about also, you were looking to the financials next week. Yd maybe we'll get some clarity or information or was the word you used clues. What clues? Well, I'm looking to see where where the consumer is spending. We get some some wordsrom JP Morgan and Bank of America. They talk a lot about the consumer and whaty're doing with their with their spending habits and their credit cards and so forth and loans. I really think that we're going to get sme of where, where the consumer is at. We've had some good readings in retail sales. We've had some good readings in some of the, the datah,with jobe consumer and spending and so forth. So I think they're going to say some positive things. However, I do have to believe that the higher interest rates is going to make it much more diffic for lenders to borrow, to lend money out to, to consumers or businesses. Six, six and a half, 7% the on the mortgage rates is a very, very high number. And I think it's going to be very difficult for even somebody who has had ad get a get a loan for a car, get a loan for a house. And that's just, this is just the, the lifeblood of, of a bank. This is the basics for what they do, lending money out and then investing it at a, at a higher interest rate. So I think that if we get some clarity from the banks as it relates to that, and also with investment and also with M&A, it's going to help us give a get a clue of where the rest of the earnings season can be hadd in the fourth quarter. You said you know, the VIX isot really telling us enough of the story. What happened to the there. Well the VIX is sitting around 15%. And it's dangerously low level here for me. But what I found integ Nicole is this is that if you look back at the last 4 to 5. Midterm election cycles we had theIX futures up sharply versus where the VIX cash and the futures were at. So so in other we would see the October November and December futures sky high. But we don't see that right now. So it tells me that theket for volatility and the market in general is rather complacentwite midterm results are going to do or what thets are going to be after the midterms. So that that's a little bit troubling for me. I don't think that the market can can run higher unless the a good sized wall of worry up and there's really not a wall of worry up right no know sentiment is really poor. You talked a little bit about this earlier with with another gentleman about consumer sentiment. And and that is moree weakness. But, you know, spending habits arending ts are . We're coming up into the holidays and we're going to see a lot more a lot more robust spending outo, into 2027. But I certainly think that, know, the, the midterms are going to be a game changer for everyone. So I think about the tech andiotech and semiconductors. Those are some of the areas that you like ified financial services. Because I think about the buy the dip mentality. If the VIX is not telling us something nervous and you said usually'llt wonder if if you buy the VIX in anticipation that it may g higher. You could tell me. But the areas that you're still looking to for sectors are somewhat related to technology. f the semiconductor names you could certainly be selective here. This is a st pickers market Nicole. And if you can be selective and find theames re that are getting the good strong money flows, the charts are strong, options flows. We've had some good option flow lately. And Marvell, which had some n over the weekend over the early part of the week. Excuse met theyhad any guided their numbers higher. You know, the stock went close to $300 a share on Tuesday, backed away a little bit. We saw some really good action, Nicole, in the November in M. We saw some reallycalls good action in the Broadcom 400 calls out into January. They have earnings coming out in December. Always have a lot of of of positive bullish flow in Nvidia all the way oo January and February of 2027. That those strikes are only up to 240 to 250. So somebody is lookor some large large moves in in that stock as well. So semiconductors are driving it. Even the data centers, Dell 600 calls have been he been hot lately for November and December. So know, certainly there's a there's been some money flow coming in and some in coming in to some of these names. And again, biotech as well too. And back to the highs. The S&P 500 just qu near term long term. When do you see the higher highs coming in the S&P. Well I see the higher highs coming in. If we i get the other indices participating the Nasdaq has been participating. Well it's been actua been leading. But the Russell 2000 has been dragging along. And the reasonhat is because of the higher rates for for for the treasuries. And people don't like to to buy small caps. And al industrials have been lagging as well too. So oncese indices the small caps and industrials start catching up S&P 500 and the Nasdaq. I think we're going to see higher highsu know earnings are going to be a big story this quarter. We're looking for about 22 to 27% growth in earning quarter. Much of it coming from being driven from technology. I heard the other day that Nvidia and Micron are going to be responsible for close to 40% of the earnings growth in in this quarter. So that's a big number. But you know, the rest of the market seems to be lagging behind. Yeah Nvidia micron. And last quarter it was Goo and Amazon which really contributed a lot to the earnings growth numbers. Bob Lang