Transcription
Hey everybody, welcome back. I definitely want to go through the Hindenburg omen. I want to show you exactly what you should be looking for with it. Does it show you that you're going to crash? Does it show you anything at all? When does it fire and how does it negate? We're going to spend about five minutes on that, but we have to go through a lot of other stuff as well.
As someone said to me, I always say there's a lot to go over. Sorry, not sorry. There's a lot going on now. So, let's get to it.
If we take a look here, the 55-day moving average, we have broken below it again. You can see these levels right in here. I don't think you're out of the woods. I also don't think you're in imminent danger here on the S&P. I don't see it that way. I just see a trending market. What I do see is a lot of scared little kittens out there that are just afraid of losing their year. And any hint of anything out there that is going to disrupt their sleep, they are just kicking.
So, we have XLF here today and whether or not it is due to something that Anthropic said at their conference today or whether it's because of some research report, whatever. But apparently Claude Code is now going to be eaten by Mastercard and Visa. By tomorrow, they'll be making cars. So, um, the amount of hyperbole, I absolutely love. I absolutely love when people panic stuff because it presents such an opportunity. What you want to do is you just want to let their fear just cause all that panic and everything, and then we'll just pick through the pieces. Uh, as I like to say, we'll just let it all burn and then we'll sort through the ashes and pick out the things that we want. But you're going to have to just let it all burn, and I don't know another nice way to say it. Uh, but the idea that you want to be out here trying to catch this falling knife right now is got disaster written all over it.
So, we're seeing these names come in and we're seeing them lean on everything. So, how bad can this get? Well, if you take a look at the market in and of itself, the VIX is at 21. We're heightened, but we're not really doing a lot. We're really worried about, we're so worried about the bond market that move, the bond volatility index isn't even moving. What we are worried about is growth. And I, I do think that you should be worried about growth in certain areas. And I touched base on this on uh Saturday, and I'm going to link Saturday's video at the end of this. I'm not going to get into all of it, but if you're wondering what happened with software, aren't wondering what happened with software, watch Saturday's video. We'll just do a real quick recap before we get into it.
This company right here does private credit. They have software private credit. They halted redemptions. All of a sudden, they ran into a problem. Um, and then they wanted to look like they could get redemptions. So, they sold the fund to themselves, a portion, and three pension funds. That's what happened. They sold it to their own insurance company and three other pension funds. The breakdown, we don't know. From there, it became clear that there were issues in the market. They were trying to do a $4 billion deal with Cororeweave. I also think it's important that OpenAI has come back and scaled back down what they said they were going to do. So, what you have here is you have an area with whether or not you think Anthropic and Claude Code is going to do everything from brush your teeth to build your car for you doesn't really matter. What matters more than anything is the fact that if the software private credit side starts seizing up, which it's doing, if AI's trying to get out of it, no one's going to be trying to get into it. If that's what's happening, then we have to be very cognizant that IGV and things like IGV are going to get worse. They are not going to get better. That is the first side of that.
Also, Anthropic had a meeting today at 9:30 and what you had from 9:30 to 10:30. What you have here is you just have sheer panic. And we talked about this in detail and I'm going to go through some names, but this is why Crowd was down the way that it was today. And this is why the stock absolutely imploded. This is why you saw Net come in. Now, I want to be really clear about this because I'm going to get a lot of comments on this and I got a lot of comments in the room in the community about this. If you're trying to get in the community, make sure you're on the list. I'm sending out a batch of invites tonight and then I will have another batch going out next week. Uh, we're sending out less invitations, so that's why it's taking a little bit longer, but I talk to everybody that comes in. We do an onboarding call. You're not forced to, but uh, I'd like to do it.
So, if you take a look at something like PNW or you start taking a look at some of these other names, I get a lot of people reaching out to me in the community or in the comments here saying, "But it doesn't do it now." No one cares. Nobody cares what it does now. Nobody wants to turn around and own now and watch this thing. Please stop. Nobody wants to own now and watch this thing go from 173 to 100 for no reason and be in the next one or be in the next Monday or be in Workday before it comes out with earnings. And the CEO just left right here and you're down another 30 points and you're going in the CRM this week and that's breaking the lows. So, when you start to look at what the heck is really going on here, they are puking software.
Now, I'm going to go through all this in some pretty big detail, but I really want to go through some of this misnomer out there with things like the Hindenburg omen, what you need to be concerned about, why it's a big deal, why it's not a big deal, when it negates, when it doesn't negate. So, I want to hit that. I do want to say one thing before we get to that. You have a level here and you are holding it on the NASDAQ. Like, I mean, I'm really shocked that you held today. So, triple bottoms are extremely rare. I don't know that this holds one, two, three, and you can see the breakout here from Friday at 9:30. You kept undercutting it, undercutting it, and undercutting it. And I'm just wondering if we're waiting to get through Nvidia's earnings and then they're going to open up the floodgates. And we're going to get to that tonight in some detail. But take a look at this in regards to the Hindenburg omen and then we'll go from there.
In front of you is the Hindenburg Omen. Now, why is this important? There's a lot of circulation that this is firing at random and that it's firing again and again and again right now. And that is completely impossible. And so what I'm going to do is explain why you should care about this and then most importantly why it couldn't possibly be firing as much as people are talking about right now. And one of the things that I always try to explain to people is that when you see somebody talking about something like this, always try to understand what their motives are. And most of the time their motives, if it's on social media, is just to get more clicks and present information so that you'll share it and then they can get more clicks so they can share more information which leads to wrong information and you looking at something completely wrong.
So, what we're going to do is we're going to focus on this so that people can understand how to use this, which is sparingly at best, and then understand when you use it and then when these would even negate. For example, if you just executed because this kicked in here or this Hindenburg omen kicked in here, you're literally getting out at the bottom of the market. So, the question becomes, when does it fire? We're going to look at examples of this and then we're going to look also at the fact of what do you do when it does fire for real?
Now, there are three things that must happen for the Hindenburg Omen to actually fire. And it's important to note that this was created specifically for the S&P for taking a look at the New York Stock Exchange. So, even overlaying this on the NASDAQ was not what it was created for. But let's just do this quickly. So, right here, all three are required. S&P has to be above the 50-day. So, if anyone ever tells you that you have fired on the Hindenburg Omen and the index is below the 50-day moving average, your response is, you have no idea what you're talking about. New 52-week highs and lows on the New York Stock Exchange both exceed 2.8% of all advancing declining issues reveals a split market. So, the 52-week highs and lows on the New York Stock Exchange have to both exceed 2.8% of all advancing and declining issues, meaning they have to be a split market where you have all this, you have all this kind of bifurcation.
Now, this one's a little complicated for people to do, but you need all three for this to even fire. So, we're going to just put this one on the side for a second and say, before you even go to the pro, the process of doing this and taking the 52-week highs and lows and the New York Stock Exchange both exceed 2.8 of all advancing declining issues. So, what you would do is you would take all the advancing, all the declining issues, right? And then you take the 52-week highs and then say, do the 52-week highs and lows exceed 2.8%? Right? So, before you even did that, and lows, highs and lows on both have to exceed 2.8%. All right? You have to look at the McClellan oscillator on the New York Stock Exchange and confirm that it's negative. And this is really important to get. So, what you're looking for is bifurcation. That's why this works so well because you think you're in a great market in an uptrend. You think that everything's good, but you have deterioration under the hood. And then after you have deterioration from the oscillator under the hood, which is what the oscillator does, from there, then you start getting this trigger in here that shows that that bifurcation is getting excessive. That excessive can then reset itself.
So, if you had all three of these, what does it mean? And this is where it gets really interesting. So, if you look at it, what it means, you have a split market. You have stocks making new highs and new lows simultaneously, signal internal divergence between a rising index. Do you have a rising index right now? Okay. Multiple triggers in a short window carry far more weight than a single isolated signal. Meaning if you had four or five like this, if you see it consistently going on, it's going to carry more weight than just having one out there. Long lead time possible. Weakness can materialize over several months after a cluster appears. Now, as I showed, we don't have a cluster despite what people are saying. And I'll show you exactly using those three things we just went over how you can just do this for yourself and just rule this out very, very quickly. Signal expires after 30 days after the trigger if no decline occurs. Signal cancels if the McClellan oscillator turns positive. Well, that's interesting. Let's come back to that one. When multiple signals cluster together, the index trades higher. Warning, not a sell signal and tighten risk management. All right.
And now, where was it created? And I put this down at the bottom. I'm going to put this in Substack so that you guys can just take it as a fold-out and you can just keep it. I'm just going to put it out there for free so that there's some place to get it. So, just make sure you subscribe to the Substack and I'll put it out there. And this just talks about the gentleman that created it. Uh, why they bought it, and I just think it's important to understand that. Does it have value? Yeah, it does when it's used correctly. It does not have value if it's not used correctly.
So, what we're going to do now is we're going to come here and remember, signal cancels if the oscillator turns positive. Okay, that seems like something that we should want to pay attention to. Now, before we start, let's just go over the fact that this one right in here was early February. A matter of fact, since you asked, if we look at the McClellan oscillator here, and just so we don't get it twisted, I actually used one that's color-coded. And the reason that I did that is so that there's no doubt about it. And what you're looking at is the New York Stock Exchange McClellan oscillator. If it's red, it's negative. If it's green, it's positive. So, if someone is telling you from here over, from the 12th over to here, that you have a Hindenburg omen, they have no idea what they're talking about. You know that it can only happen in this area.
Now, here's what's interesting about the graph that I just showed you. It went negative here on the 5th. So, we have the Hindenburg omen. Everyone say it with me. What happens two days later? The McClellan oscillator goes positive, which what negates it. Any Hindenburg omen that has happened during any period of this time has been negated. And just to kind of put a final suck out on this, if you are below the 55-day moving average, if you are ever below this, guess what you don't have? You don't have a Hindenburg omen. So, the idea that you had this one here was because you were above it for a whopping day, came over, and then from there, we obviously can see, and let's just go back to this so that we don't get it confused, that at the same time you were negative here. So, you met the criteria for a day, and it negated 48 hours later.
I cannot stress enough that it's so important for you as an investor or as a trader to not take when somebody gives you something and just assume that it's accurate. I can't stress this enough, especially with everything that's out there on social media and all this garbage that's being created by AI. You want to be really, really careful of this stuff and you want to dig into every single indicator. And you even want to look at the stuff that I just presented and make sure that it would fit your own narrative and go and you can go and study that and look it up. It's accurate, but you should double-check it. So, I will put that clip out, that cut out, in Substack. So, if you want to follow the Substack, there's a link in the description.
Um, in regards to what do you do now with what's going on? And I think this is where it gets really interesting. So, we started looking at the Microns of the world and you have these put walls in here like 420, which is where this one is. And you're trying to hold it, but if we really get into this area like right in here, you're not doing the best job. You're constantly undercutting and you're constantly testing it, that becomes a problem. Now, can the market be held up by memory and storage? Not really.
What we are seeing too is you're seeing a lot of people get concerned because you have a lot of the comments on the tariff side of the market scaring people. This is one of the reasons why you saw XLY drop today because people are a little concerned about the rhetoric between the EU and the US right now where the EU has said we're going to sip out on this trade agreement until we see what's going to happen. I, I can't think of a worse, worse thing for the EU, but okay. So, and I mean that like, I don't understand that logic. You have an agreement, stick with it, and then work for a better one because all that's going to happen is that we're just going to keep ratcheting this stuff up and we finally got some semblance of normality. But maybe they feel that they're in a better position now. You, you would think they are, but just stick with the plan and then renegotiate. And I do think that that is giving us a little more headline risk. But I also think that people understand that, you know, cooler heads are going to prevail now and that there is some kind of backstop to what the president can do. Uh, and that's going to hold and that's going to hold the dollar up a little bit. And I do think that gives us some stabilization.
Now, we saw some stabilization on Friday with some of the Mag 7 names, but if we start going through the Google, the Amazons, the Metas, you know, they all rolled right back over. So, whenever we see this, we have to put the brakes on again. And I'm seeing it even here where I, I thought something like we would see something like Ferrari hold or Louis Vuitton, any of these names, LVMHF. Uh, but what we're really seeing is if the rhetoric is going to pick up, then these names are probably not going to hold, to be candid.
So, where does that, where does that really put us? Um, it puts us in a really precarious position because they could have something soon or they could not. But we have to realize that now we're going to have to sit back, watch, and wait. I do think there's a couple constants. I went through them on Saturday. I'm going to link Saturday's video at the end of this. I think the best thing that I could say is give me a scenario and I want to see this in the comments. Give me a scenario that tells you that IGV is going to stop. Like, what is the reason IGV is going to to stop? And this really is where I'm going with it. I, I don't have full-on panic here. I have a bare flag that broke a major support. That's not panic.
So, when do people realize that Anthropic Claude Code is not going to do every software product, not do everything out there, not be Mastercard and Visa? Like, when does that happen, right? Are they going to build houses next? Are they going to get into the car business? Like, it's getting to the point, and I get it. It's definitely going to change things. It's not going away. You want to look at the hardware side of the business. You definitely want to look at the hardware side of the business. It's holding up better than anything, especially when you start looking at the industrial side. It's holding up better than anything. I get it. I do think that software is going to be disrupted in some format. And I do think that AI is going to eat into their profits. The function of that means two things. I have two things that are going against you right now. I'm just going to type them out so that you can see them. Right? You have private credit, right? And that is, come on, work with me. Okay. Well, it's definitely not doing that. Private credit is seizing. That's the first thing. Growth is slowing, right? And that's just a fact for for IGB. They're all coming out talking about growth is slowing down. So, the majority of them are now, private credit seizing, growth is slowing, and we could also say that growth is slowing due to AI. So, these, these are facts that AI is going to eat into their margins. I think that's, I think we could all agree on that. Maybe not. You guys can drop comments on that, too. I'm always curious about that. But I think that that's, that we would all agree on that.
What's going to change this anytime soon? I, I don't have an answer to this. I don't know why this is going to stop or I don't know why they're going to stop buying gold now. Specifically now, I think they're going to buy gold. And I do think silver is going to continue to push, too. And I, and I believe that because the tariffs and what's going on there with solar panels and the amount of silver that you need for it. But when you really go back to like the themes, like what's going to change this theme of IGV? I don't have an answer for you. And I think the street's starting to look at it that way, too. Going, well, why do I even want to own these names? Like, what is the purpose of me owning Crowd right now? You know, it's, it's earning a dollar. It's trading at 350. So, what, what are we going to do? How much are we going to earn? $4. All right. $4 with a 50 multiple puts it at 200. Like, what, what am I doing up here? And if I don't have the growth, what you're going to have is what we refer to as PE compression. That's what you're dealing with here. Whether or not some of these companies are directly affected by it or not, but there's two growth engines. So, that's even if you look at something like this, like here's $2, $2 and you go through it. The problem that you start running into is if you have no growth, it completely compresses your multiple. Or if your growth slows, it completely compresses your multiple. It's called PE compression. That's what's going on here more than, oh, they're going to take over you the entire business. I, I can't stress this enough. I think that the way to play this stuff is to stay out of the way and then pick up, pick through the bones.
I have talked to so many people that are looking at Microsoft and they keep saying the same thing. Uh, at 400 it's going to hold. Uh, 425 it's going to hold. No, we're at 384 and any one of those would be going nuts to be able to get back out at 400 or get out at 426. Oh, they're long-term investors. Okay, everyone's a long-term investor wants their stock. Are they, were they long-term investors here? Do, do they did they want to pay 300 or did they want to pay 230? And so the point that I'm getting at is you don't know when this is going to end. So, don't pretend that you do. Just follow a process. You let them all burn to the ground and you go from there.
The other thing that I would say, and I want to get this out, and I'll be real candid about this. My biggest winners today were all these, all these names. Sure. Do I think Net's entire business model is getting disrupted? But people don't think rationally. They don't think rationally on the up, and they certainly don't think rationally on the way down. So, make money and profit off their irrationality and their fear. Sorry, it sounds like a psychopath, but there you are.
The important thing that you have to take into account is what we're going into. If you look at something like Nvidia and you watch how Nvidia plays out on earnings, here are earnings. You pop up and then you roll back over, right? Good earnings, pops up. Let's take a look. Maybe it only happens once. Pops up, comes back down. Well, maybe it only happened three times out of the last four. Nope. Four out of four times you've gapped up and then come back down. Be really careful going into Wednesday whether it's good or bad on the assumption that this is the thing that's going to take you out when it could be the thing that cracks us. And I think that you have to go into this with an open mind. Meaning, I don't know that we're going to break, you know, the 600 level. I don't know that. But what I, what I do know is I do know that we are seeing things deteriorate and we have to keep that in mind. And that doesn't mean that things have to deteriorate. They have to be a Hindenburg omen. It's absurd. But things could just get worse before they get better. We've seen this in April. I don't think it's a coincidence that you have the same exact pattern you have here around the same time that you had here. And if you overlay some of the similarities, it's not really rocket science. Here's, here's the peak. Here's your peak. Here's your drop. Here's your peak. Here's your peak. Here's your drop. So, I, I would be real careful if you think that you can't get one of these again, that he doesn't have more cardboard back there that he's going to write on and show up on, who's going to get a license agreement, who's not, who's going to have an embargo, it can happen.
I want to cover a couple names. Worst management company in the world. Title goes to HIMS. They missed. It was really bad. I'm surprised it's not down more. Their guidance was god awful. Here's my thought on this. I think everyone knows this and everyone's short and I think that's why it's not down. So, I think you have a possible squeeze there. Kos came in line. I thought it was decent. I thought with all the golden dome and now that this is out, you might see this actually rally tomorrow. You know, State of the Union, all of that. So, I would keep my eye on that one. And then tomorrow morning you have CFR. This will be a fun one to watch. Home Depot will tell us how the consumer's doing. You know, this is going to be pretty interesting, especially with where lumber prices are. And I would watch this, too. I have this out there. Uh, Leonardo is a defense company that is based in Italy. That is it.