Transcription
Good morning, traders and investors. We got some wild movements in the markets, which is not more or less to be expected with everything going on. We had tariffs; uh, the administration came out last night and just made everything a hell of a lot more expensive in the United States, adding on massive tariffs. This is going to, uh, cost the end-user a lot more money to get stuff; uh, means sales are going to slow down because it costs more to purchase things, which people don't want to pay higher pricing. And that is going to put, probably, the economy into a grinding halt unless he reenacts, uh, all of this stuff and trims things back. He's just doing his typical kind of, um, flexing his muscles and shaking things up, and then kind of pulls it back and removes it later. But we'll have to see how all this unfolds.
Before I get started, I just want to remind everybody that Friday at 3:45 to 4:15, I'm going to do my first live stream on YouTube. We'll talk about; we'll watch the markets close; can answer your questions in the chat. I've never really done it before, so, um, it's probably going to be chaotic. I would hope it's, uh, idiot-proof, so I don't have problems. But if you want to join me here on YouTube, uh, live Friday tomorrow, let's, uh, let's jump on here, talk markets; I can answer your questions, and we'll see how the week closes. We have an end-of-day, end-of-week wrap-up with the weekly charts, which are very powerful in terms of market trends and what to expect next week and beyond.
The stock market is down. We saw the Nasdaq down over four and a half percent last night; it's come back a little bit, down 3 and 3/4 percent. S&P 500 down 3 percent; the Russell is down 4.5 percent. You can see here on our, um, 10-minute chart; you can see the news here: got slammed with tariffs, and now it's trying to stabilize and figure out what the heck is going to happen. Uh, more or less, everything is pretty much down. We're seeing stocks down; uh, the dollar is down 2 percent; gold's down almost 2 percent; silver's down three, uh, 6.4, 4 percent; uh, oil is down 6 percent. More or less, it's kind of like forcing the hand of: let's just throw the world into a recession, uh, more or less make everything expensive, and obviously everything's down simply because people don't know what to do. And when people get scared and nervous, we tend to see them bail out of pretty much every position. The VIX is up 22 percent today.
Um, I guess let's just run through some of these charts. So let's just jump over to the Nasdaq real quick. Uh, Nasdaq, similar chart as the S&P 500, huge move down and big gap; well, again, this is a news-driven gap. This market could get bought up by the end of the day. This is why we're not messing with the markets and why I would say don't try to pick a bottom. You are going to have to buckle up for one heck of a ride. This market could fall another 8 percent from where it is pretty much right now, the QQQ, or it could rebound and rally about 8 or 10 percent and make a miraculous comeback for a bounce. Uh, it is a real crapshoot, and just messing around when the markets are like this and everything is haywire; it's clearly indicating just stay, uh, clear and watch from the sidelines and, uh, not have to take it on the chin.
Uh, so we are seeing money move into bonds; it's like the only thing really moving up, bonds and natural gas. Which, if you've been following me for a long time, you know when there is total chaos in the stock market and the financial system, we tend to see natural gas move up. I don't know why; a member mentioned once, uh, why they think natural gas moves up, but, uh, for some reason, bonds and natural gas are the only things really up today. Uh, we have a pop here in in the bond market, moving higher as a flock to kind of safety, so it's naturally just driving it higher.
Um, if we take a look over at the dollar index, the dollar index is down, uh, 2 percent, so it's having a big landslide with the tariff again. Uh, we're going to have to see how all this shakes out. When we look at the big picture of the dollar, let's go to, uh, the monthly chart; it is coming down to the lower end of its range. Um, obviously very volatile, very messy type of chart; it does still have that series of long-term trend to the upside, higher highs, higher lows; it is still the key moving averages are sloping up. This is a very long multi-year trend. This is, um, uh, you know, going back; I do; I still believe we're going to see; we'll have to see how things unfold here, but overall, I do think eventually the US tends to win in the long run during chaos, and, um, this is more so a big shakeup and shakeout in price, which, uh, has got the market selling off pretty much everything, but we'll see how this unfolds with the dollar slowly coming down or quickly coming down to a major support level here.
If we take a look over at gold, gold down 1.8 percent; it's picking up speed as we speak. Of course, the markets always do the opposite of what most people think, which is why we don't try to predict, pick tops or pick bottoms. Um, most people would think all this uncertainty would send gold through the roof; instead, gold, uh, is pulling back, uh, fairly sharply, and, uh, it's there's just a lot of blood in the streets. And when there is panic selling, everything almost goes down; that's why there aren't really safe havens; that's why you need to take advantage of, move to a different asset or play an inverse ETF type of play or cash to avoid all the, all of this.
Take a look at silver, down 6.3 percent. Uh, I talk about why silver is so dangerous, and everybody is, you know, so many people want to get into silver, and they want to make more money than gold. Silver is faster moving, but I talk about how silver just always has these big red bars; you can just be on the verge of, of finally making some decent returns, and then you have a big red bar, and it wipes out things and changes. Um, silver is very dangerous, very volatile; it is great during a new super cycle, a new bull market in precious metals, but we are like nosebleed territory. Gold, silver, and miners are all at resistance levels, various resistance levels, and, uh, this is what happens when, when you mess around with things that aren't in a, a major bull market for that particular sector, um, where it's struggling at resistance.
Uh, if we go and take a look over at, uh, I won't look at miners; they'll be down, uh, as well. Precious metals is all the same trade; they're all down together. Uh, Bitcoin, same thing; we put in this major top, this double top that we've seen, this, uh, W-shaped top formation, or, or M shape; we broke down; it had a breakdown; had a bear flag; had a breakdown; it has a bear flag, and it is picking up speed. This could very easily come down; about 72 is our next downside Fibonacci target that we measured out there the other day in our mentoring session; it also happens to be this significant level right through here, which should also act as a support zone, a breakout level. Um, we did play this, this move here, and to right up to this top for a really nice gain, and we got out. And this is why when we hit targets, we step aside. We can measure potential moves with good accuracy, but once those moves are hit, after that, it's just a crapshoot. We need to let the chart set up give us a new opportunity and then take on a new trade, not hold it and hope and pray and do the huddle, hold on for dear life and hope it comes back because now everybody is going to be back down pretty much where they got it, got in and have given back 40 percent return on, from where our target said, just get out; that's where it, it's likely to run out of resistance.
Uh, if we take a look over at oil, look at this, down 6 percent; it had that pop and squeeze we talked about a couple of days ago, saying, "Hey, look at this; we're seeing a squeeze; there's lots of stuff going on; how it could boost the price of oil and all kinds of tariffs and bands from where you can get oil from and, and all that stuff." And it kind of created a little bit of a, a bit of a feeding frenzy for a day there, squeezing it higher, getting the shorts out, I think, and then bang, we're, we're back down. And of course, if we break down in oil, if we just go back here on time, there's this $65 per barrel level that if it starts to break this level, then all hell's going to probably break loose, and we're going to see a huge unwinding, and, um, I, I was mentioning before, we're probably going to see some bad economic data that's going to cause oil to break down, and I would, I'd probably say the tariffs kind of feel like that could be it. You know, we're obviously energy prices aren't going to be in nearly the same demand when it costs 20, 25 percent more to bring a car overseas, um, or the tariff fees; there's going to be a lot less products being shipped internationally, and that takes a ton of fuel. So I do think we're going to see demand for energies drop off fairly quickly here. Sales are going to slow, which means earnings slow, which means investors want to get out of companies, and all of this stuff. So, uh, there's a lot of potential downside here in, in the market, in, in oil actually.
Let's take a look at the energy sector; I haven't looked at it this morning; I'm sure it's getting hit pretty hard. Yikes, looks like it's getting hammered in pre-market. Let's just take a look at percentage-wise energy stocks from the close yesterday, which I think was right here; energy stocks down 4.3 percent. Definitely these, these stocks are going to get hit really hard, but as we already know, I think there's potential for a trade here; uh, what is it trading at? 89, 99, uh, 90 bucks, 90 bucks; where's 90 bucks on here? So in the grand scheme of things, it's right down at the key moving average, still trading sideways, but again, we're starting to lose that momentum; it's gone from an uptrend to a sideways trend, and now it needs to kind of start to have a breakdown, and it could be an opportunity for potentially a, depending on the play here; it could be like up to a 30 to 60 percent move to the downside with a 2x inverse ETF, uh, potentially 20 to 34 depending on the targets we pick. Um, we're not getting into that trade yet; we need the breakdown; we need the bounce, and then we look for an inverse ETF; as this drops, the inverse will go up. So it's all about being patient, waiting for the proper trade to unfold; you just don't jump because you think or, or I say something's going to happen; I am wrong more times than not, I think, but we don't take action on stuff until it actually plays out. So it doesn't matter if I'm wrong or right with my opinions and my thoughts; the key is we wait for the moves, the trend to change, give us the signal, and then we hop on board. And the markets always take way longer than we think to unfold; I think it could be a week or two; it ends up being two or three months later; uh, it's just the way the markets are; they drag out; it's, uh, easy to be, get excited and think it's happening sooner than it is, but I still think this whole energy trade is still a little ways out.
Um, let's go take a look; let's take a look at what else is on here; um, well, let's take a look at miners real quick. Actually, you know what I want to do? An interesting, an interesting thing here; let's just take, take a look at this; I was playing around last night [Music], and let's just do some really quick technical analysis; I was playing around with this chart, and we, if we take a look at this chart, um, this, if we draw on here, we can see, okay, well, it looks like this chart has put in a pretty massive double bottom; it had a pretty clean breakout through here, so obviously long-term trend is down, but short-term wise, it has definitely come around and started to turn; you know, it's had a really nice impulse wave to the upside; it broke, uh, a couple pivot highs through here; it broke a very significant pivot high here; it broke another high here; another one here; another one; typically, we only need to break two previous highs, two of these highs to create an impulse wave, which changes a trend, and I'm going to do a video on this, uh, in the near future. Once you have an impulse wave, that first pause or pullback can usually be a buying opportunity; obviously, this is for more aggressive traders; I don't typically buy pullbacks, u, and things pulling back; I wait for them to start to turn higher, but after this pullback, it starts to move higher, and if we take a look at this, let me just, uh, flip this to, let's just make these white, grayish; okay, so we've got this, this impulse move; let's throw Fibonacci on here, saying, okay, well, since it's had this impulse move and a pullback, we now know how far this first rally is; we know where the first pullback was, and it tells us where this upside target is, and if we were to measure from where things are, uh, as a close yesterday, you can see there's about a 3.6 percent move, uh, or a 9 percent move actually; I think this was, uh, down here, so there's quite a bit of upside potential, about 11 percent upside potential. So the trend was down, put in a bottom, now it's reversed, and the crazy part is this is, this is what the charts look like, um, and this level is going to bring us right back to, if we draw a line across here, very significant highs and pivot areas on the chart. Now the crazy part is if I flip this around to the normal way, this is the Nasdaq, this is the QQQ, and this is where the trend; it clearly shows how the bias has changed and why, um, you know, everything is kind of pointing to lower pricing, and we talked about using this Fibonacci the other day, and the downside here is about 11 percent, um, for this next target. So when you, it's funny if you take a chart like, a lot of people are looking at the, the QQQ; a lot of people are bottom pickers; they're picking bottoms left, right, and center, and of course, it is a wild ride; I mentioned that the other day, like, buckle up if you're a bottom picker because this is one, this is one crazy, you know, ride to try to do; it's a really, um, high-risk play, and, um, you know, the market has, the trend is down; the odds are it's still going lower, so picking a bottom is, you're against the trend; the odds are against you, and, um, that is the, the major problem here.
So overall, there is potential this market flushes down huge; we kickstart into a bear market because that'll be more than 20 percent, probably, to the downside; if we go from the highs down to here, that'll be 20, 22 percent; we showed this yesterday, and, uh, and then from here, this is where things start to get interesting; uh, we, we could see a bounce; we could see a multi-month bounce; could be a big bounce; some of the biggest bounces happen in bear market phases, and then this bounce, while, uh, it has some potential if you, if, if the things work out, to, to have some upside potential, it actually will eventually start to roll over, and then we'll have a down leg, another one, and this will, here, here will be one more or less massive head and shoulders formation, and there'll be a huge neckline through here, and then we go into a stage four decline where things get really ugly, where the stock market could come all the way down and potentially break those, you know, 2022 lows or beyond; we go into; takes a decade to recover for all we know.
Um, so that's kind of an interesting way to look at the markets; flip the scale and draw, draw what you see because a bearish bias; people, for some reason, always have, want to pick a bottom, but when you flip the chart around, you'll realize, wow, that looks really bullish, but in the reality is it's really bearish. Um, so sometimes you just need to like flip things, put them in the mirror; you see them backwards, and you'll be like, "Okay, uh, that is a sobering view of what potentially and most likely is going to happen when you apply technical analysis."
Um, other than that, I think that is about it. Let's just look at the VIX real quick. So the VIX is up 21 percent, so we're going to see a surge in fear this morning. When the VIX is high, they say it's time to buy; I'm not saying it's time to buy; I'm just saying a lot of downside has been wiped out of this, this move, so it's definitely removed some downside, beuh, risk before we see potentially a bounce. Uh, we're going to see our panic selling indicator; we're probably going to see a massive spike, just like the last time we saw the VIX spike up; we saw a huge selling on the New York Stock Exchange; people just dumping shares left, right, and center; uh, we're probably going to see the put-call ratio, uh, spike way over one, telling us everybody is, uh, buying put options; they're betting on a falling market, weakening economy, and, uh, this could signify that, again, this is a news-driven move; this could signify a short-term bounce, an exhaustion gap to the downside that gets bought up temporarily. The markets always do the opposite of what the masses are positioning for, short-term. Um, I do feel and think things are bearish longer term, but all this is signaling that this market is, you know, hitting one of those thresholds. But keep in mind, when we're in a downtrend and a bear market, we get these oversold signals like this and these panic waves all the time, and it, and the market refuses to rally. Um, what, when these oversold and panic selling waves are good is when we're in a raging bull market, and there's a quick bout of panic; those are opportunities that the market's going to rebound, but in a bear market, this stuff happens all the time; the market always looks and feels oversold; always feels like it's ready for a bounce, and it just keeps going lower and lower, and that's why people get sucked into picking bottoms and then losing their shirts, uh, from that.
Last but not least, I want to just touch on the cycle charts here again, um, just, just to reiterate where we are. Typically, when we get these red, uh, spaces, that is when we have a cluster of, of significant cycle lows in the market. And one thing to show here, let me, I can probably just pull a couple of these up; if I throw in here, and we had another one way back over here, and we've got one right over here; I'm just lining up my cursor vertically with the bottom red bars, um, which, um, I guess I could carry those forward here roughly, uh, so what we want to look at here is just because cycles are bottoming, and this is where, this is where most people trade cycles wrong, and they, they front-run things; they're like, "Oh, things are going to bounce." You got to wait for the actual trend to turn around before you jump on it, or else you are catching a falling knife. So, for example, if we go back over here to where this trade was, it was somewhere right over here where it, it triggered; you can see the, it was red for a very long time, and you can see the markets fell; the S&P 500 fell 17 percent, uh, before it even turned around and started to give an up signal for a nice, uh, pop and rally. Uh, so it, just because we have red doesn't mean you jump in right now. If we take a look at this other one here, the market was somewhere right about here; the market pulled back about another 7 percent before it started to turn up and generate a buy signal for a huge move to the upside. Uh, we've seen this over here, sharp pullbacks over here; if we take a look, we got out of the markets because we had the trend change, and the market is down, uh, 7, 8 percent; is actually set to open even lower, and the bottom might not be in; we could go all the way down to that level and get that 17 percent correction again before we start to see green bars. And that is why you need to be not, uh, not, you know, try to pick bottoms, but to wait for the trend to turn up when stocks become favorable, and it shows money is actually flowing in on a net, uh, kind of flow at people willing to take risk again; that's when we want to get involved, but when it's red, man, the markets are deadly, and the bottoms just keep getting lower and lower, and, uh, it can do a lot of damage. That is how I blew up my, my, uh, my last trading account was trying to pick a bottom intraday, day trading, and the bottom kept falling into the closing bell; I ended up with a massive, um, long position in the S&P 500 futures; the closing bell closed, and then I had this massive margin call and huge losses and gone, wiped out.
I have learned picking bottoms is a really stupid way to throw money out the window, and it's just a pure ego and pure excitement gamble trade, and it lacks money management and common sense; it's just, you're betting the odds are against you, and you keep stacking up, uh, more bets on it hoping it's going to rebound. Uh, so be very careful if, if you're doing that; it will eventually catch up to you and, u, cost you a lot. Anyways, that's it for now; we'll see how the market shakes out, and, um, expect tons of volatility, and thank God we are on the sidelines, kind of watching, um, this now from, from another standpoint real quick. Actually, if we go to the weekly chart, um, our long-term investing strategy, we are still long the markets; the markets are going to be opening at a slightly lower level again; we're in this topping phase right here, which is almost identical to this topping phase, so we are potentially a week or two or three from the market trend changing, and we saw that in 2020, 22; we had the bearish phase; the market sold off and then firmed up; we've been in this bullish phase, so we still are technically long with long-term investment capital, and, um, you know, we're, we're in this scenario here where the market's selling down, and we're probably getting into a point here where, uh, we could see this trend change, and we want to get out; it has been a very nice move; again, it's a long-term strategy; requires lots of wiggle room, which means you give, you, you don't get in at the bottom; it takes a big percentage rally to, uh, kickstart the trend; we also give always some back at the top because you do need price to reverse, but we're up about 34, 35 percent on this trade, still on this position; pretty simple play and just set it and forget it, you know, hold during the bull markets, get out during the bear markets, um, that allows you to really kind of navigate things from a fairly straightforward level, uh, but eventually we're going to exit here and, uh, have this probably in a couple of weeks or sooner depending on how this market unfolds. Anyways, that's it for now; talk to you soon; bye-bye.