Transcription
Well, what looks like a quiet day was anything but. Let's get to it.
Now, we can just see the very simple undercuts that we had in the past two days. And it is what it is. They're trying to shake and bake a little bit here, but we're not really going anywhere.
If you measure this control bar down now, all I've done is drop a 50% line right here on that bar. So, you can see the line right here. And all we're doing is dropping it right to that level right there. Why is that important? It's important because if you take a look from that 50% since we broke down here on Thursday the 12th, you've not been able to get and close with a higher high above that level. And I think that's pretty telling and I definitely think it's worth our time to note that.
Now, some people might say, why is that important? Because when a bar becomes a control bar like this is, that's really what you want to pay attention to. And it's no different than when you can see this control bar and then you're waiting to see if you're going to break that 50%, which it did. And so this one gets negated. So if you just took this for a sack and then you came to that bar and you dropped it down. So we're measuring 50% from that bar. You'll see where it closed under it. So once you start doing that, it negates especially when you're bigger than the ATR.
So we have a level here. Now if we watch that level coming straight across, it's going to tell us exactly where we are. And you can see that coming straight across 6923. So we really want to start closing above that level.
Now you have the State of the Union tonight. You have Nvidia's earnings tomorrow night, the time of recording this. I can't stress enough that we have to see how this plays out. Tonight's supposed to be over two hours, uh, which would make it one of the longest ever.
If we measure this right here, which is another control bar, what I like here is that it's so clean, you just cannot get over that level. So, while we're seeing these internal struggles, which we've been talking about, so what we're measuring is more of a micro move than the larger move.
Remember, if we drop the anchored VWAP from the top of this coming across, then you have your value high, your point of control, there's your value low, and look at it. You can't break above that. And that's really important because it gives us a framework to work off of, right? All we have to do is watch these critical levels. You should be able to get back in here.
Now, the State of the Union should give us an understanding of where this is going to go and where we're leaning. But I think the important thing is, I think we all know where this is heading, that he should be talking pretty heavily about defense tonight. So things like DFN are going to be pretty interesting for people that want to be aggressive going into this or even names that came down like Kos recently going into this call. I find it hard to believe that he's not going to talk about his Golden Dome.
I did show this from yesterday. I just want to point this out again. If you haven't seen it, you definitely want to watch this and you certainly want to go watch last night's video on the Hindenburg Omen. Just watch the first 10 minutes. I walk through it. It's worth your time to go and take a look at that. Really important and I want to highlight that again.
Now I want to focus on what I think is the most important thing and that is going to be the software trade. So finally we're at a spot where you're not really hitting a lower low for the first time and we are right at this critical level. Now the problem with this today was that we didn't really get that full followth through exhaustive panic. So it makes me wonder if it's really going to hold or if it's not going to hold.
And here becomes the the crux of this. If you haven't seen this anthropic piece, I would go to their website and you can rewatch the webcast that happened today. And really what they're saying is we're not competing with software. We're complimentary to it. And they walk through that.
Now, this was enough if you take a look at what happened this morning to rally you up, have the pullback, and then by 10:30 when it ended, that was the high. So, the problem with this is you had a bunch of people that were short that started to panic, and then when it ended, what did they do? they put the short right back on and I think that's really important.
So you had this headline that hit because we were on the call today in the community and then when we saw it it's like okay they're going to talk about complimentary and there were some really great trades out there. One of the trades that we did today and I'll probably going to do a video on it because it was pretty obvious uh trade and then you were just really just scaling it up. I'll show you it real quick. So it was very simple. It was just CRM and all we did was just watch it flip and then after it flipped we saw it set up and then we saw that they were going to start talking about it. It was really that simple. And then we just used it trailing the whole way up. We're just using a one minute bar. And as long as you're hitting and closing over a higher high, you're fine. But you can always tell when you're going to have a problem when you hit a higher high. And that first bar, you just might want to remember this. So you hit a higher high. And that's the first bar that doesn't close over that bar. And what does that do? It starts denoting a high in there. So then we just raise the stop. And it was a fairly good trade off the open on that news. But once that news stopped, if you start looking around that 10:30 level, they all just started rolling over again. A couple of them tried to get back over that level. Some of them did a better job than others. If you take a look at Oracle, it did a much better job doing that, but the majority of them, they just rolled right back over again. PW, if you take a look from that 10:30 spot, like that's the high. And then from there, down the mountain we went.
I can't stress that enough. You're going to want to go through the IGV names, see which ones bounced, see see which ones didn't, and then it would tell you which ones they're really looking at just going to absolutely shellac. Uh, and I think there were a couple here that I was really surprised by because they really went after cyber security after this. You can see again the same exact pattern over and over again. And that's what we do. We look for patterns because they're easier to trade process, right, over everything. And all you're seeing are these higher highs. Overlay RSI with it. And you can see that the RSI is not really giving you any kind of negative divergence. It's in line, but really just the minute that that was over, that was it. Everybody just put their shorts back on and then this just ended down the day $10 from that peak. And we saw a lot of this today and I think that's really important.
A lot of hyperbole out lately, I think, about, you know, what should be short, what shouldn't be short. Um, I think we should probably spend some time on that. There was a real good piece yesterday on fantasy on what's going to go down and this is what 2028's going to look like. Just ask them if the market's going to be up or down tomorrow, you know, and they can't answer that, but they're going to tell you what happens in 28. Okay. Um, so what we what we want to do with this kind of thing is just understand what they're doing. Shorts covered. So, does that mean that you have net buyers? I I don't think so. I don't think it does.
Now, it does make me want to get into these names, but you're really going to have to see like massive massive buying in there. And we didn't see any of that in these names. And I just want to show you this. So you should see extreme extreme buying if you're bottomed out. And we're not seeing that in these names at all. There's Oracle. And what I'm showing you is just look at this area over here. When I run through these names, PW, you're not seeing it. You're nothing close to what you sold off of. Net nothing. You You want to see something like this on the buy side. You don't have to, but it's definitely helpful. And we're not again seeing anything like that.
When you look at IGV, you have it on the entire group. And I want to just be not remiss on that, but you don't have it in the individual name. So, is that enough? I'm not sure it is. I think you need a leading sub sector out of IGV to give you an understanding on what's going on here. I don't think we have that. And so, I'm still apprehensive with the group. Now, maybe we get some color coming through this with Nvidia and some of the other things, but I don't really know how that's going to affect the software space.
I didn't hear anything today. I listened to this call. I didn't hear anything today which made me say, man, you know what I need to do? I need to buy workday down. You know, I understand it's down another 10 points because they lowered guidance, but I really need to get into this or I need to get ahead of CRM before tomorrow's earnings. Um, because when I look at workday, they're feeling this.
Now, if we go back to workday, and this is a really good example of what I'm talking about. I'm going to clean all this off and we're going to go to get rid of the pre and the post. But this is the area in here where the CEO basically says, "I'm gone. I'm leaving." Um, and then it trades up and everyone's like, "All right, well, now we know what the news is. Now we're going to get out." Well, from when he left, which would have been, we'll give him this price point and we'll just use today's close. The stock went down 16% from there. Now, after hours, after the guidance and everything, what do you have from that open down? You're down 21% since he quit or resigned or whatever we're allowing him or saying that he did, right? And I think that that is super important to point out. At the time recording this, I am short workday. So, and I think that's just important to point out. Uh, but for me looking at this, it was a really bad quarter. And I I can't stress this, like this is pretty much what you thought would happen to these quarters if Anthropic was in some way cannibalizing or eating at their business or causing gross margins concerns.
Now, we talked about AL yesterday and the and the private equity side of the market, and that could be a problem. They might not be able to borrow. People are like, "Oh, they'll always be able to borrow, maybe borrow less money at higher rates, which still once again, you know, hurts IBIDA." So, yeah, you might be able to, but it just might it's not going to be the same terms. Rule of thumb, guys, if you don't understand the private credit side of the market, if you're having trouble getting out of the private credit that you're already in, there's a really good chance that you're not going to be able to get more private credit, right, at the same rate. You might get it another rate, you might get less of it, but there's a really good chance of that.
Now, today, what we saw is we're seeing that kind of bottoming or attempting to bottom here. If we go and take a look at the RSI here on the daily or go take a look at the RSI on the 4 hour, there's some signs here that you might be bottoming. We'll have to see how this plays out. I don't know that it's something where I'm overly concerned about that this cuz I'm short it that it's going to go in my face in the face, but you want to watch this. If you start seeing people come back into the Apollos, back into the KKRS, and they don't look like they're concerned, that is something that you really want to see and that might give you some stabilization. But once again, what are we really seeing here? As always, we want to trade what is happening, not what we want to have happening. So, what we're seeing here is we're seeing this start to crack.
On the conference call, they're talking about deals, and those deals are taking longer to close. Uh, in the back, I am actually I actually have the conference call on uh why I'm recording this because I am short the stock. So, I do think that this is pretty interesting and how this is playing out. And is it a function of those deals taking longer because of AI? And they're trying to see, do they need to sign those long-term deals right now or not? I don't have an answer to that. I don't know enough. And frankly, I don't think many people do. So, what we want to do is just watch how this plays out. But something like this, I mean, there's nothing over here. When you start looking at areas and saying, "Well, where where are we going here, Waldo?" You know, there's not really a whole lot out there left. You have this level right in there where you're looked like you're going to try to hold that area. Uh, which you just went through like a hot knife through butter. So, that really is going to put us back down to something like this 108 if we crack that. And that's really what we're trying to see.
What exactly are we going to get here? Well, you're probably not going to get a lot of support for a software company that's telling you that you're that they're having a tough time holding deals together right now. Right? And this is what I'm talking about. We don't have that ump that one software company that just goes, "No, everything's good." A matter of fact, we have more this week that where it could get actually worse with CRM business similar, not exact to what we've seen with workday. They're similar. And then we have snow as well that is going to be coming out.
So tomorrow when we really look at this on Wednesday, you have snow coming out. You have CRM coming out and then of course we'd be remiss if we don't talk about Nvidia and how Nvidia is coming out tomorrow night and is the stock acting better. It's not acting awful going into earnings, but it usually tightens up a little bit going into earnings in the first four or five days. I don't know if you want to hang your hat on that. I think what we want to do with it more than anything is understand that Nvidia on one, two, and we just go through them as always, three, four bids up after earnings and then just rolls right back down because of all the opex. Is that going to do the same thing? All we have is historical performance to go on.
Now, if they increase their gross margins, I think you're in great shape. I don't know that they're going to be able to increase the gross margins. I don't have enough data to know do you need these ultra high-end chips to get the compute right now or can you use the secondary chips and can you use these wonky deals because Meta is not going to get a piece of Nvidia that's not coming right but Meta can go to AMD and bully them and get a piece of their company to buy their chips which is the equivalent of me walking in a 7-Eleven and say I'll buy milk for you if you give me you know 10% of the 7-Eleven it's ridiculous so these deals that look great Yeah, I mean I I'd buy your chips too if you're going to give me 160 million shares. Like why not? Cuz what do you really lose from it? You know, it's almost like it's it's literally free. Anyway, I think if you start understanding that going into this quarter, we want to watch that.
We also really want to watch very very carefully what transpires tonight on the State of the Union. There are a lot of moving parts to this, not only with tariffs, but an understanding of the internet, the inner workings and the relationships between the video, what they say about tariffs. And going into the quarter, I don't think that we have the cleanest the cleanest runway in the world here.
Now, nothing would make me happier than to watch the leading name in AI break out of this base. And we've seen this for some time, but we're rotating into the other names. And we have a lot of people that are calling the high right now on SanDisk. Um, we had Citron come out and put a short and they're saying no one's going to ring a bell at the top. Morgan had a note on it. ND, no one's going to tell you when it's peaked. Um, you know, trying to call a peak is like trying to call a bottom. And the only person that really makes anything off of it is usually the author of those things. So, I I have learned a long time ago in 20some years of doing this, you don't do that. You look at the numbers and go, "All right, well, did the price of their product drop or go up?" And then you look at EWI and you're watching Samsung going out there again and you're watching SKH Heinix. So, you can actually look at these names if you are on here. All you have to do is just type them in for use for you guys that don't know and you don't have to get the exact you don't need the live data. Uh but if you go here you'll see that this is SKH highinex and you can just track what these things are doing and how they're hitting highs. They're trading at a discount to our names but if you go out there and take a look at look at them they associate them by numbers. They're all hitting highs. You look at these breakouts from where you were a year ago. I mean these things are just absolutely zooming. They're raising their prices which obviously is going to drive demand of other prices and other deals of other prices. and these guys are all sold out. So going out there and calling the top, I don't know. I I have a real tough time with that and I don't think that that's the right way that you should approach it from a trading standpoint. I think you trade the ranges and I get the idea of trading the range of what you're seeing here with SanDisk because it's wild and I I get that.
So one of the things again and you'll see these patterns over and over again is here you are on SanDisk and here you are on that control bar. So, as I stated before, we always like looking for control bars because we want things organized, processed, and the ability for us to put some kind of rules-based system around it because then we can just act on those rulesbased systems. So, when we look at something like SanDisk and this breakout bar from earnings, we'll see that 681 down to 530, we've tried to break out of the highs and we got matumboed. We tried to break below it, matumboed. Tried again, get above it, matumboed, right? Hit again. And I'm not knocking the piece, well, I'm going to knock that one piece that was trying to tell us we're gonna have 10% uh unemployment in in 2028. Um, and then they write it, this is pure fantasy, but but we're going to put it out there like it's research. Um, okay. Anyway, if you if you look at how this traded today, you cut some pretty critical levels, but you can see your undercut here, rally, undercut here. And so, when we're looking at this stuff, you can see those peaks. Now, some people don't want to use the pre and the post, and they'll take that stuff out, and that's fine, too. You're going to get a different outlay. You should do what you're comfortable with. Overall, you did undercut here. I did try a trade there. We traded it a couple times today. Um, that one didn't really work. I made a little bit on the on the trim, but nothing on the the part that I held. I actually lost on the part that I held because I wanted it to undercut. And, you know, mission accomplished. Uh, but Micron was a much easier easier trader today. And you know, you're just getting to these levels over and over again where you're breaking your put walls hard and then you're running right back into them. And that's exactly what happened here today and it presented a nice opportunity and we actually had a really nice trade here. Um, and again, you can just see how these are acting.
This is not a perfect divergence, but it's what we call a hidden or silent divergence. I can explain these in a video. I should really do another educational video. Um, but what what they're doing is they're undercutting these key levels. They're what we refer to as stop hunting or looking for liquidity and then ripping you higher. I don't know that you have to be in a position here and this is where I think a lot of people are doing themselves a disservice. They're trying to swing things like this. I wish you the best, but unless you're in a sector that looks like the industrials or you're in a, you know, stock market like South Korea, if you don't have index and sector lined up and you're trying to swing in this market, I I wish you the best, but it's very difficult. I can't tell you how many times uh we're trying to put swings on and unless you're going to put, you know, 15% levels on. So, until you get the cues to come out of this kind of area, I think the short-term trading of tech and then overlaying that with the lower beta stuff, that seems to be working the best for us. When I when I take a look at things like that, that's really what's working.
So, for example, even on the buildout, you can look at that stuff. So, for example, like Corning, you're more industrial despite what people think. You're more of an industrial lower beta name. We bought this after earnings at at roughly 107 and we've been in it ever since. It's doing great. COR bought this in the 220s um on the real simple pull and flip up 30 on that. So, looking at the lower betas and holding those as long as you're in the right thematic space, you know, DHT again, never had to worry about this. It continues to push. Finding the right thematic spaces is the way to go in my opinion and then understanding that you want to hold the lower betas and then you want to trade the higher beta stuff right now. You inverse that candidly. You inverse that when you're in a trending market and you're not right now. That's it.