Transcription
What the hell just happened? No, I'm not only talking about the fact that the NASDAQ was down 2% and the S&P was down 1.66%. The government reopened. We knew there would be a sell the news effect, right? But as it relates to the data that the government is supposed to release, or the BLS, which is part of the government, is supposed to release, we thought that the extent of it, or the worst of it, would be that they would release something and all of that back data, data that we didn't get because the government was shut down, would be terrible. It is actually way worse than that. I promise we will dive into the analysis of the markets and I will tell you how I'm positioned currently. But clearly, we are losing momentum here as we consolidate. It's not the end of the world. We are just consolidating here. Gaps are quickly being filled. These are typically indications of exhaustion gaps. We are comfortable spending time around the 50-day moving average. And a lot of the pre-revenue stocks or hype stocks are taking a beating. Although the AI stocks that are mega caps like Google, Apple, Amazon, they're still pretty good and healthy and haven't really sustained major drops, but some of the quantum stocks are down 40, 50%. Some of the pre-revenue data center stocks. So, let's get right into it because this is way worse than I thought.
According to a CBO estimate, the Democrat shutdown could end up decreasing fourth quarter economic growth by two whole percentage points. The Democrat shutdown made it extraordinarily difficult for economists, investors, and policymakers at the Federal Reserve to receive critical government data. The Democrats may have permanently damaged the Federal statistical system with October CPI and jobs reports likely never being released. And all of that economic data released will be permanently impaired, leaving our policymakers at the Fed flying blind at a critical period. I checked, this has never happened before in the history of the BLS. So, she said that the shutdown caused statistical, what did she say? She said the statistical system might be permanently damaged and we might never see that data. So, we might never see the October CPI data and we might never see the October unemployment data. Now, I went on the BLS's site and it said for 77 years, the BLS has published monthly estimates of America's unemployment rate. This uninterrupted streak may end soon due to the 2025 government shutdown. For the first time in over 900 months, CPS may not gather monthly information from a representative sample of American households about whether they're working or looking for work. Now, do you think if the data was good, that they wouldn't release it? Yes, of course they would have released it. So, either the data is ass and they're like, we cannot release this, so we have to say that the statistical system is permanently damaged for October, or they genuinely don't have the data, but they don't plan to release it at all.
So, remember when I said that I do expect the government shutdown to end, and I do expect to see a sell the news effect very temporarily, right? At least one or two days of a sell the news effect. The sell the news was really big, and it was because of the fact that we do not have data. And if you take a look at the VIX, the VIX was up 15% today. It was up a lot more. It did retract a bit. It was up, I think, up to 20%. Closed the day up 14% because of this. Now, you might say to yourself, who cares? Well, the market cares. If the market hates one thing, it's uncertainty. So, we priced in the government reopening. Everyone was happy about that. We priced in the fact that we would likely see data. We didn't really know what that data was. But more importantly, a month ago, it was priced in that the Fed would cut. Almost 96% chance that the Fed would cut again on December 10th. Look at what it is now. It's less than 51%. So, just a month ago, it was 96%, now it's a 50/50 proposition because we don't have data and the Fed doesn't have data to make a reliable, informed decision. So, if the Fed doesn't cut and they don't do QE come December, then all of that enthusiasm, right, because there was a lot of enthusiasm baked in here. It was the QE starting, the potential Fed rate cut, the government reopening, and the deal with China. So, we got the deal with China, we got the government reopening. But if now the market doesn't expect the Fed to cut and doesn't expect QE, then I think we can actually suffer a real correction in this AI bubble. I don't mean the bubble pop, but if you recall, as I was saying, in the late '90s, we had six corrections of 10% or more. So far in this bull market, we've only had two corrections. And if you count just from this year, we've only had one correction.
So, let's get to the technical analysis portion and I'll tell you how I'm positioned here. For one, as I instructed or as I informed the Traveling Trader Academy this entire week and last week, I'm very, very thin on swings. I'm very light on swings. I do not have many swings open. I was stopped out of one swing on BMNR, but other than that, I do not have any swings open, and I don't think this is the time to have many swings open. From May until September, really, the market was on easy mode, and you were able to just wait for retracements to the 21 EMA and long some of these names that had a lot of momentum, the data center names, the energy names, the nuclear names, the quantum names, even the mega caps. This is a different market right now in my opinion because there is uncertainty and the market is getting comfortable consolidating here. Now, if they release the data and they're like, you know what, good news, we actually do have the data and here it is, and that data is not terrible, or if they catch it and say, we're releasing the data because we have an obligation to the American people, but just know that the data is not accurate because the data collection was not conducted properly during the shutdown. So, if they do that, I think the market will be fine. But if they don't do that, remember that the next set of data will be the December 10th FOMC. And if the Fed doesn't cut and do QE, then I think we are, you know, on the verge of a 10% correction or worse.
Now, one possibility is actually releasing November's data before FOMC and say, "Hey, here's all the data that the Fed needs. We're releasing it early. Here's all of November data." The Fed looks at it, says, yes, we're going to do a rate cut and QE. Thank you very much. And then everything is back to normal. But flying blind like this and the government really withholding data, I've never seen that. And I don't think anyone that you know that's traded in the markets for a long time has seen that. So right now, as I said, I don't think it's the time to get into a lot of swings. It isn't. It's a time to start really thinking long and hard about what it is that you want to buy in your long-term portfolio in case we do get a drop. And just as a side note, I left an ungodly amount of table money on the table this morning. I left about 30k on the table this morning. I had a short on the market with S&P puts. I got stopped out on this wick, and then the market continued down. My target was 6770.
So in summary, as it relates to the market right now, nothing is structurally broken. If we break below October's low on both QQQ and SPY, then I think we are in trouble. Right now, we are consolidating up here. It's not pretty for some of the high beta, high-risk stocks. If most of your portfolio is made up of that, you're hurting. If most of your portfolio is made up of blue chips, you're probably doing all right. As I've been saying a few times, if you are very, very tech-heavy, you do want to have some diversification. We diversified a little bit into healthcare back in October. Healthcare is doing really good now. It's not a humongous part of my portfolio, but I have some diversified into healthcare. I also have SPYV, which is the value sector of the S&P 500, that's doing real well. But if you look at some of these high-flying beta names like Cipher Mining, finally at the 50-day moving average after not testing it forever. If you look at Iron, which is a stock that we did make a lot of money on, ended up taking profits at when we hit our target here at 74. Didn't get back into it, but now looking at the 50-day moving average as well. This one hasn't hit the 50-day since back in May. So, I mean, this is a much-needed correction on some of these high beta names. But as I said, in the scenario that I discussed, there is a scenario where this can turn much worse than it is now. We have now triggered five Hindenburg omens. This, as I said, is a breadth indicator that on its own isn't that accurate with regards to indicating a correction or predicting a correction on its own, but a cluster of them starts to become pretty important. So, this dotted line, these are all the times that we've actually hit five Hindenburg omens, and we did hit that today, and you can see the results are not terrible, but they are shaky across the board.
And lastly, the way I'm positioned here, obviously, there are just a few stocks that I'm interested in picking up for the long term. I talked about Meta and I said I'm not trading any short-term options on Meta, but I do think this is a buy for the long term. I did some fundamental analysis on it the last few videos. I did say that Netflix will likely have a runup into the split. Netflix's split is on November 17th, and we are having a nice little runup here. And I thought that 1080 level on Netflix was also a good long-term buy. Now, there are a few momentum stocks that haven't been at the 100-day moving average in a very long time. Robinhood is one of them. So, there are high beta names. I don't think every high beta name is exactly the same. There are high beta names that don't have any revenue like an Olo, right? And then there are high beta names that are growing companies, that are legit growth companies with really good financials that will and are seeing a correction here. Like if you look at Robinhood, Robinhood is actually down 21% from highs. So, on the high quality, high beta names, you can likely sell cash-secured puts or pick them up at major moving averages for your portfolio. And then because I do not think that this is the end of the bubble, I think that the momentum names like the data center names will have a resurgence once again. It's just there are only so many times that a data center name can bounce off of the 921 moving average before it's like, all right, that was crazy. Now, it's time to revert to a much more sensible mean that we haven't seen in a long time. So, if you look at Nebius, this is one that I actually alerted in the Traveling Trader Academy and I said that my eyes are on this one. I didn't buy it yet, but I said that my eyes are on this one. Um, and I gave my fundamental analysis on it and said that I would pick it up or look to start picking it up in this gap at the 100-day moving average. So, we are there now, and I do want to see a little bit of market strength, but you know, I still would not, in my opinion, go too heavy on speculative pre-revenue stocks or pre-earning stocks. And remember that Nvidia still has yet to report earnings. They report earnings next week on November 19th. Nvidia is the type of company where even if we don't have October data from the BLS, if Nvidia guides, because we know they're going to beat earnings and they're going to beat revenue, that's a given. But if they guide much more than the street expects, Nvidia can single-handedly stave away AI bubble fears. Like, single-handedly can do that. So, I'm not going to be playing Nvidia earnings because if you look at Nvidia earnings, they actually don't beat the expected move most of the time. They miss the expected move almost 70% of the time, which would actually warrant an iron condor in this case. But if Nvidia guides really well, Nvidia can single-handedly uplift the market and resurge the momentum, the momentum names that are tied to AI. Of course, all my analysis will be in real time in the Traveling Trader Academy. If you want to trade live with me every day, we've actually had an awesome week despite me getting stopped out today, but the rest of the week has been great. This volatility is great for traders. So, if you want to trade live with me, sign up. Link is in the description below. If all you care about is long-term analysis and long-term stock picks, that subscription is aptly much better priced, or much lower priced, I should say. Not better priced, they're both great. Wanted to give you guys a quick update. What do you guys think about the data? Do you think that we are going to see that data? Do you think that the data is bad and they're hiding it? Do you think that there's nothing nefarious going on and they just don't have it? What stocks are you interested in picking up if you see it dip to the levels that you guys are watching? I want to hear the stocks that you're interested in. I want to get a sense for are you guys looking to get back into high-risk momentum stocks or are you looking to position yourself into more quality stocks? Subscribe to the channel. Hit that notification bell. Stay safe out there, traders. This.