Smart Money Just Got TRAPPED - Here's What Happens Next

S&P futures continue to climb a wall of worry between smart money, dumb money. Comparisons to the dotcom boom and bust. It leaves investors wondering what their next move really is.

Certain sectors are clearly breaking out. Biotech at three-year highs. Robotics and automation back to all-time highs. But what about Meta cutting cap X on the metaverse? Is this a thing that we need to worry about or a thing that needs to be rewarded? Or Sam Alman's Open AI Code Red?

With Oracle's earnings coming out on Wednesday, AVGO's earnings coming out on Thursday, we're going to get a clearer picture here, but what about now? Now, we're seeing a lot of signs that the breath of the market is actually getting better, but there is some conflicting data. Let's get to it.

Hey everybody, welcome back. We have a lot to cover and a short time to do it. So, let's get to it.

So, the very first thing we're going to do is the basics. I stripped the entire so that we're just looking at the candlesticks for now. And then we're just going to add things back so that we can really dive into what's going on here because this is pretty classic stuff. And so we have that October 10th drop where I believe at this time we had double secret, you know, tariffs that were coming out on China and then all of a sudden we do this the typical thing here where we go and we do the undercut, right? So we do this undercut right here and that's pretty textbook stuff. So from any trader's perspective, you know, you always know that wherever your stop is, they're going to stop hunt. uh and they had the mother of all stop hunts right here.

And so if we take a look at what do we really have? Now I always start my base from where we test that low and that gives me the bottom of the base and then this becomes the high of the base. So from my standpoint when I look at something like this I'd come across and say all right well that's roughly my base and some people might do it differently but the important thing is that you're comfortable. So from this point on from September 3rd and you remember we fell down here and you know September 1st something else some other you know thing that was going to completely derail the market and since then we've undercut that level and then we lifted up and so now we have this base and we're trying to figure out what to do with it.

So the next thing that we're going to do is look for pain points. So and by doing this it's kind of giving you a little bit of education on how I see the world. So, if I mark off that pain point and I drop a VWAP on it and I drop one from that peak VWAP, you will see that they come in line. And then I would just do the third one from this undercut. And you'll see that they all tie in here. So, it's pretty clear that you have a ton of support in here should you come back down to that level. And then the next thing that we would look at is just take the volume profile from that peak and just take a look at it. Now, this is where it gets somewhat interesting. So, if we open this up, you will see, and let's just go through again exactly how I did that so you can do it yourself. So, I took this peak and I just dropped an anchored volume profile on it. So, it will move with it anchored to that spot. And this is where it gets to me super interesting because what we've done there is we ran right to the top of it and we've rejected that area. And that area was rejected on I guess gez at 10:00 on Friday. And then so that's the panic, right? Oh, we rejected. Oo. Well, maybe maybe that's it. Maybe it's not. This is where we rejected before and then we're going to go from there. But this is what you have right now.

So, I think that what we need to deal with here more than anything else is to get people to start dealing with what's called reality. So, you've undercut here and you've held and now you've rallied up here and you're rejecting. That's all you know. So, the idea that we're going to be able to determine that we're going into a recession or a boom, you're not going to get this from what happened last week. What I would say is that if you look at the street and what the street's saying, everybody's taking their earnings estimates up. Everyone's raising their GDP. A lot of these retail names are absolutely crushing. So the idea of a recession, if it's coming, it's not there right now, right? So it doesn't mean it's not going to come, but for right now, you're not really seeing signs of it except the weak labor market. If you go back and look at the labor market in 2000, uh, which we're not going to do, uh, you'll see signs that it was very similar to an environment like this where you have a new technology that disrupts, uh, and websites were supposed to make everybody unemployed, too. Let me know how that worked out. So, if we look at how this is happening in this area, I think it's important to note that you have an issue there, right? You do have something to look at.

But, if we start rolling this out on the weekly, and this is where we're going to start switching the switch it up a little bit. Let's take the S&P and then we're going to look at the S&P. We're going to look at this on the weekly and then we're just going to do the simplest thing. We're just going to go here. We're just going to mark the top of that and then we're just going to have to admit that the S&P closed at an all-time weekly high. Right? So, despite everything out there and despite all the rhetoric and despite everything that we're hearing, what's really happening? What are we really seeing right now? The S&P closed at an all-time high on the weekly chart. Not that it's hit an all-time high. The S&P has an all-time high close. Why is that important? Because we know when institutions buy. We know when institutions sell. We know on Fridays pension funds if they didn't get out of what they were supposed to be out of during the week, we know they get out on Fridays. That's why everyone's always so, hey, what's happening on Friday? That's why whenever you see Fridays and Fridays are bad or you have those weekdays like here, you have those that three crow pattern when we had all that, you know, winning and liberation and you can just see like, hey, it's just get me out, get me out. It actually was getting worse, not better. So that lets you know that you have problems and of course you just have that week of just absolute winning and liberation and just flushes out all the winning and liberation and then we bounced because they paused it.

So now the question is what do you have here? Right? What do you want to focus on here? And I think that that's really important for me. I'm focused on the fact that we closed where at an all-time weekly high. If I go and take a look at the NDX and this is again where it gets super interesting. The NDX is starting to lead and broaden out. And I'll show you that later in this video. But what do you have here? You know, you have a pattern where you tried to break down for 3 weeks, completely flushed out, closing at a high, but you're not closing at an all-time high. No, you're at the second highest close that the NDX has ever had. This is not really like looking like the end of the world. Now, if we take a look at the NDX, for example, we'll just use 2000 because that's what everyone loves to say. This is just like 2000. And it's far from looking like 2000. A matter of fact, if you really go back and you mimic it, you're actually looks like you're at 97 or 98 to be candid. Um, and that's any metric that you're using, whether it's PE or anything along those lines. But let's just take 2000 and what we saw here. All right, you just up every week. We're ripping. Uh, we have these absolute moves where you're just falling apart. Like falling apart. That's when people say, "Oh, it's just like that." Well, let me know when you get to your 12% down week, right? Because you haven't had one of those. And what you started having here, just FYI, and I was trading during this, um, so back in the day, but you would have here like, oh, here's 13% on the week. Wham. Oh, okay. Well, you know, that's not good. And then you rally up and you're like, "Oh, we're taking it out." And like, "No, here's another 13%. Wham." And that's what they would do. You did your little undercut, rallied you. You hit new highs and you can see all the wicks. And then all of a sudden, you just have, you know, the death bar and that was it, right? But there's ways to to look at this stuff.

So, I'll give you one. So, in front of you is I'll give you two because I'll give you one that you can make for yourself. Uh but if you look at this, this is a private cloud system I use and it's really simple. But the cloud system people like, "Oh, it's EMAs." There it's it's actually tied to rate of change and also volatility. So it's not just an EMA. So it's going to be hard to replicate, but I just want to show you it because it took me a while to create it and it does a really good job of just telling you where you're at. So what you can really see here is that you're above your longer EMA cloud as I'm going to refer to it, even though it's not. But for those that are going to say that, let's just call it that. Um, and then here you're going to see that you're above your minor one. And you can see where that flips and changes colors. And then they start to play with it. And then all of a sudden it just gets wider and wider, right? And then from there you can see what how this goes from that green color to the yellow and breaks down. And then you can see that level.

Now let's look at something else. Let's look at 2007, 2008, and 2009. And you can see that we're staying above the green and then we crack it and then we crack it and then we roll over and then that's pretty much it. And you can see how this shorter term one is giving you signals like hey maybe this is a problem but as long as you're above the longer term one you're fine and then finally it cracks. And for context here is the uh COVID level and you can actually see that the green never flipped. You never ever changed in the green but you can see that it did it right here. And this gives you an indication like, hey, the long term's okay. And what this does again is just so we're clear. Does it take into a point? Does it take into account the high, low, open, and close? Yeah. But it does it based upon the rate of change of something moving and also the volatility and what's going on. We can see it right in here as well where you break down in May 22 and then you can see it right in here where May 23 you start to lift back over as the cloud flips and the shorter term one. How about now? Do you have anything like that that you have to worry about? Well, here you are in the weekly when the weekly changed colors and you can see the damage and then you can see how it's flipping here in April after all that winning and liberation and we're back over it. Did it ever change colors? No. Okay. What's happening now to that cloud? All right. The cloud's actually getting bigger and wider. Does anything like this from a technical standpoint look at anything like any other correction? No. But this time it's different. Okay.

Now, this is another one that anyone can use. Again, it is just this is just the Ichimoku cloud. Um, this t this does fire a little later than what I just showed you, but if you're seeing this and you're below this cloud, if you're ever below this cloud on a weekly, you have a problem. So, whenever you're below this cloud on the weekly, you want to understand like, hey, we could have a real problem here. So, instead of waiting for this, now also understand that this is out 26. So, from that point on, you're going to get this reading 26 ahead, right? So, you're going to get that reading here. you're going to know that this flipped on the weekly here, right? But if you're waiting for it to actually start to expand, change colors, it's going to be late. So, you're actually letting it lead forward. It's one of really the only predictive, you know, probability things out there, it's actually really good. It took the guy 30 years to create. So, maybe give it more than a weekend. Um, but again, if you went to that where it flips over here and you went down and said, "All right, it was 26." I actually did a educational video on um this. It's actually the most watched video I ever did. It's funny, too, because I get people that will be like, "That's not how you use it." You know how you use a tool, how it makes you comfortable and how it makes you money. So, if you watch this right in here, you'll see that kind of stuff. All right, but let's keep going here and go take a look at, well, what about nine? What happened in here? Well, you flipped and then it went back through the cloud. So, is is it a be all end all? Nope. Nothing is. And then if we take a look here and you counted 26 over and you're going to see this again and there you are. And you can go, "Oh, okay. Well, that's kind of interesting. It kind of did change colors here. You are below it. couldn't get back through it. Tried again, rejected, and then it flips over and then when it flips over, you kind of get a sign that like, wow, that's pretty interesting. So, let's go back to this again and look at something as simplistic as what? Let's just take COVID. Oh, so you got into the cloud and you never change colors. Nope, you never did. All right, so you broke here 26 over in 22 or 23, right? And let's go back to that 26 bar. It got into the cloud, bounced back up. It cracked the cloud, and then that was it. When did it change? Well, when you got back over the cloud. Do you have anything like that going on right now? Anything at all. Now you have it flipping on the weekly back here during that stage of winning and liberation and then you have it flipping back and then you broke above it again on the weekly. So once this happened, that was it. Do you have anything like that going on right now?

Here's a combination. And this combination is of eight moving averages so that you can create this for yourself. And it starts with the 10 and it takes it all the way to the 300. And this is the NDX and this is on a weekly chart. Right? So here we are weekly chart NDX because it you don't see it up here. And then I'm have from the 10 to the 300. And what you're looking at is 99 2000 2001. So we look at 98 99 and we can see these tests of some of these averages. And I can bring this down right here so you can see where they are and they're all colorcoded. All right. And then you can actually here I'll do this. You see the style. So there's your colors and everything. So when you're trying to look at this later, you can actually see where they all are. All right. Yay. So now you can see that we're lifting up. Um we broke. Okay. Well, nobody would really care that you broke there. Comes down, tests, tries again. And they start rolling all in this area in September. And you can see that now I'm not trying to predict tops. I'm trying to predict trends, right? And I'm trying to use it through probability, not certainty. That's going to be like the key if you want to know what today's lesson is. Today's lesson is probability and certainty. and nobody knows anything. Remember my key phrase. If someone says with certainty they know something's going to happen, run away screaming. So you can see this and how you're starting to turn. As always, I try to make red my trouble line. And you can see when red's on top, that means what? Stop. Yay. So you can see that that's going to execute sooner than the green. All right, cool. So when you see that kind of area in here, it becomes an an issue.

Now let's see if we could see another time in history. And this is always really cool watching you flip these like longer term ones. It's always super cool to watch. And you can watch the flips like right in here too. But uh and again, all this is is moving averages. Well, let's go look at this suck salad and see if there was something there that would have told you that this was becoming a problem. And you can see how these moves start to happen, right? All of a sudden we're up, some start breaking, you can't really back up, and then they start overlaying on one another and start pointing down. Well, that's definitely an issue. And this is a really good way to just kind of take a look at the market and see what's going on because this looks like an absolute mess, doesn't it? Now, you're over some bigger ones, but the longer term trends, you can see how you're still fighting them. You know, this one's still pointing down as of November 200, what I think to November 2006. You were still pointing down and didn't even cross in a line to get back into position, right? The long-term position didn't even change until 2006. And then you can start to see after that how this stuff starts setting up to move and align itself. So then you go through 2009 and you look at where you're at and you can see us testing back here in 22 that major one and that is major. Do you have anything that looks remotely like 22 or anything like what's happening right now? And the answer is no. You don't have anything like that. So there's three different ways that you could look at the NDX and make this decision.

But wait, there's more. What we're going to do is we're going to dial out to weeklies and then we're going to drop right back into dailies to get something more intense and I think that that's more important. Then I want to show you smart money dumb money and what's happening there because there's some really interesting developments and then we're going to tie it into moves for next week. So let's rock and roll here.

But if we take a look at move and how this is playing out. This is the weekly and this is bond market option volatility estimate index. And one of the things that everyone's become an expert at over the past, I would say two, three weeks is repo rates and CDS's. Repo rates, obviously, everyone's talking about repo rates because the government was shut down and how bad it is that the Fed's got to inject liquidity in there. Um, and they know as much about that when they're talking about it as they know about CDS's and bond insurance. So, here's move and this is bond market option volatility estimate index. And we can see this really clearly, right? These spikes are I need insurance on my bonds. My bonds are going to zero. And that's what happened in '08. If you go and take a look here, this is March 2020 and this was oh gosh, the end of the world, right? We're in that whole 12 monkey scenario. And here we go. And then here we go. Boom. All right. I need insurance on my bonds. Then we were going to lose every regional bank in 2023 and I need insurance on my bonds. How'd that all work out? All right. Cool. Now look at where you're at. Does any of this remotely look like something that I need to be concerned about when I look at the larger scale of what's going on there? Does anything about this scream recession or that people are afraid that they're going to miss a bond payment right now?

So what I was trying to get people to understand with the these moves is even the smaller ones you want to pay attention to. But you have the October 24 November where all of a sudden we had high bond insurance coming into the election which is pretty typical no matter who you know wins or doesn't win. They always want to hedge out their risk. That's just simple stuff right and then the election ends. uh market obviously, you know, the market for bonds insurance obviously plummets and then we come back in because we all that winning and liberation and we take it out and then we pause the winning and liberation and then all of a sudden they don't need it. All right, cool. But even these little moves from September 4th or even here October 10th, which should ring a bell to you cuz that was the bottom and here's your undercut. And you'll remember that I walked through this about two weeks ago and said, "Hey, this is a really clear sign that you might be putting a bottom in." See how that's acting here and how you're back down to all-time low levels. I I believe they're all well 20-year levels. I mean, it's it's certainly a level here. Like, watch. Hold on. Let me drop this down on this for a minute. And come on, work with me. Let's get rid of that little magnet. And let's drop this level down and see where we really are because I got to go to the weekly now. All right. So, this gets you back to that kind of 18 level. But if you really go all the way back, it only goes back 20 years. Like, this is insane how low you are right now. Like, it's actually as if this is what I really what I wanted to show you. It's actually as if you're coming out of the.com bust. That's how low they are with insurance. And I do think that you should not sleep on that. Now, again, back here in July and September, no one was worried about bond insurance cuz the government had their back. So, this is a really weird time to kind of worry about, you know, the bond market. Remember when they injected $1.7 trillion in the market and JPEGs were called NFTTS? So, remember Jerry? So, that's something that we have to pay attention to. Um, I I tend to rule out a lot of that nonsense of that period of time because unless the Fed's going to inject another 1.7 trillion in the market, it's hard to utilize that data because it was so skewed. So, this is telling us very clearly that they are not concerned.

Now, in front of us is the VIX, the volatility index for stocks. And you would think about the volatility index for equities like you would think about move. Move is to the VIX as bonds are to stocks. Just think about it that way. It's simple enough, right? And if we just kind of went to this area in here and this is 1998. A lot of people don't know Russia defaulted on debts. It was going to be the end of the world and they bought bonds. People private equity companies were trying to figure out how to hire mercenaries to get, you know, take their ships. It was crazy. And then you have two right here and you can kind of see these levels. And then obviously the great financial crisis and then you have these little blips that are there all during time and then obviously the you know the All right. So then we just keep going through this and we see it over and over again. This was obviously when you know Japan and the yen that was the end of the world too and you know that that they're going to just crush the US economy because they're going to raise rates. Um, and then this is when again you know in April with that liberation and winning. All right cool. So you can see over time how you've acted after these periods of time. So when we see what happened last week we really don't have it as this huge level, right? It's like we rallied up to there to 30. We tried again and now we're back down and we're at a 15 handle. So there's nothing really here that's telling us that anyone is afraid of anything going into December in the bond market or the stock market despite, you know, all the experts on Twitter with their repost stuff now and how they're explaining the CDS's of Oracle, right? So we don't really see anything like that. So that's that's something else to take into account.

Let's just look at the breath of the market. Now in front of you is S5FI and we can see that that's at 54.27%. And this is all the stocks in the 500 S&P 500 that are above their 50-day moving average. And you will note historically that institutional buying always happens over the 50. So that institutions buy over the 50-day. If they don't have a 50-day and you're not above it, you don't have institutional support. That's how I look at the market. You should do what you're comfortable with. So if we look at this level right in here, we can kind of see how we're just like lifting over that level. Well, what are we doing? Well, we washed out, right? Usually, I mean, a real big wash out could be it could be painful. Like, you know, you go back to 23 and you were at six. You know, you went through the winning liberation phase of 25 and you were at four. So, if you start looking at some of this stuff here, 54, 27. All right, cool. Over 50 is where you want to be. Over 50 means that you have institutional support for the entire market. Now, I don't do something as silly as like put moving averages on these and say, "Oh, we're back above the 50-day moving average on the 50-day moving average thing." You could do that. I I just don't do it. Maybe it's too meta for me. Whatever. But, um, you could do it. I just look at it and I want to be above 50, right? Cool. And then if we go to the NDFI, we are back above 57%. That means out of the 100 stocks that are out there, what has transpired was what? Well, what transpired is pretty clean. I think it's pretty clean that you're back above. You came down here 28% of all of these names were below. Now you're at 57. So, both are net of the 50 line.

Now, if we do this combination, which I do because it's very helpful. I always want the NASDAQ to be leading in the percentage move. I don't want the S&P to be leading because the S&P has defensive sectors where the NASDAQ is just all octane all the time. And if we look at how this plays out, if you go and take a look at July until we peaked in here, you will note that when you start rolling over and coming down, that downward move is when the market really rips. And then when it peaks, like here in December 18th, 24 or troughs, I should say it that way. Apologies, and you start rising, you'll see that the market started getting weaker. And then the market starts getting weaker into March and April until April 8th. And then this starts start to what? Coming down again. And that movement is telling you that this is probably a bottom. And if you go and take a look at your charts, you will find that this is very good at marking bottoms in the market. It it's not going to just give you a clear indication all the time, but you can see here November 3rd, November 4th, and you can see here on 18th like these were tops on the market. Now you start to rally back up and that means what? And again, it's not just commensurate with the move that I have to hit a high. It's commensurate with the movement. So, it's not a number readings per se, even though when you really look at it, it's kind of interesting. I I thought this was kind of interesting, so I'll share it. But like if I look at July 24 and up to that August 8th level, flipping over it here, and then you kind of got up there in September, like those kinds of skews, the S&P skew of the 50-day versus the uh NASDAQ skew of the 50-day. I think it's kind of interesting that it gets so far over that it's like a rubber band, pulls itself back a little bit. But anyway, you could see how you were dropping here and that this was a great time, right? And then all of a sudden, wham, November 4th. And then you start selling down till about when? Well, what's the high of this? Uh, the 21st. Okay. Well, that really marked, if you realize where that is, that marked what? That marked your bottom of the market. And then, of course, we're starting to come down now. So, this is a really good sign to me that we're starting to really put in that bottom. And I think so, more of a longer term way of looking at it. This would be much more longer term than some of the other stuff, but I think that's important.

And you're also seeing some developments in smart money dumb money. Now in front of us is smart money dumb money. And you guys will recognize this from before clearly, but we just recently did this and we talked about this one particular area right here where we were actually flipping over and then from here undercutting and then lifting up. And so I want to go through this very quickly and just give an update because there's been a development. I think it's worth our time. As always, we do not refer to this as smart. We do not refer to this as dumb. We refer to this as retail and we refer to this as institutions. So institutional money versus retail money. Real quick synopsis. Remember retail moves very very fast. They get skittish. The sky is falling. Everything is fine. We're going to the moon. We're going to moon or we're going to zero. Right? That's really where retail is right now with that crazy social media stuff. And then you start looking at smart money and they're just taking their time and they move like a tortoise. Just remember that as we go forward. Really important. And I would suggest that retail has actually gotten to the point with everything on social media and how much access they have to information where they don't have to do a lot of critical thinking. They just act. They just are completely way more reactive than they've ever been in the past. And I you can start to see these kinds of movements. And so what we're seeing is here is oh we got to get out. Oh, we got to get back in. And it's very rare to happen this fast. And I talked about this last week.

Now, if we take a look at this over a just a year, we're just going to do a year here real quick before we dive into this. And you can see that you flipped here. And once these flip, since retail sells so much faster than institutions buy, the market tends to go down. So, since retail sells so much faster than institutions buy, retail just lets, you know, they just get me out, get me out. I'm wrong. The sky is falling. And institutions are just a let it all burn. Let's just let them panic and we'll pick up the pieces later. And that's exactly what they do in the community. You hear me say it all the time, just let it burn. And then you can see the same exact situation starts happening over here where now let's clean this off so you can get this cuz I think this is really important. So if we take a look here, you can see that what who was buying down here? Institutions, right? So this is why they get the moniker smart money. Um, and so they're buying all in here. When do they start selling? They start selling to retail right here, right around that crux. And let's just mark that crux where it happens where it flips. And so they're buying all in this area while we're puking it, while retail's puking it, right? Let's refer to myself as retail. So if you think about that, was smart money smart money and was dumb money dumb money? Yeah, in that case they were. But what else also happened? Retail didn't do too bad. Retail really didn't do too bad at all. If you really think about it, retail's been more overinvested in this area till here for that period of time. So if you really think about this, and what we'll do is let's take this off for a second. We'll click right on that. That should erase it. Right there it goes. And what we'll do is we'll just draw that line again from here up so that we can see it. So we would say from here over that's really been where we're at. It's not going to be perfect, but that's what you get. So if we look at that and go and actually we can just draw the line straight up. That would have been easier, wouldn't it? But if we look at it from this level, cuz I'm not redrawing that. We can see that retail did just fine. Why institutions had a very low level of ownership during this whole thing and we climbed that wall. Worry. So I don't that's one of the reasons why I don't refer to it that way as just dumb money because retail killed it during this where institutions you would say we're selling trying to get out and they bought in that October level and we can see that and then they puked it out again up in here. We'll clean all this off now.

So why why is this important? It's important because you need to understand the monikers but when retail moves it's like a cat in a hot tin roof. So if you mark from here over, this is when they just panic and they all the fear sets in and oh I'm going to be in my mom's basement eating hot pockets, the whole nine yards like right in here, right? So when they change their mind, they get giddy because what happens to them and you can say it like everybody else, they lost money and had to draw down here and then it reverses. So now they got to get back in because quote, as you guys have all said to yourselves, especially beginner traders, oh, I got to make my money back, which that money's gone. It's never coming back, right? You just have to get into the process that you're going to have draw downs and just go forward. So what we have is we have a flip. Now if you look at that flip historically during that flip historically you tend to do well. What's even better is when you undercut that and then go right back to it because it's that jerking motion that just sheds so much dead weight that all of a sudden people panic like I can't believe I'm out of this and it's and it's reversing.

If you talk to anybody, if you look at the comments that are in these videos lately, the amount of people that are telling me that we're setting up for a recession or a crash or something along those lines without looking at this from a standpoint of probabilities versus certainty, it's crazy. And that usually is a really clear sign to me. I can always tell from like either the community or just from the comments on YouTube videos like how irritated people are with the movement in the market. And the more irritated they are, the more it's going to wind up moving one way or another. I could actually probably come up with a better fear and greed ratio uh than the one that exists because I I see it all the time. But it's absolutely fascinating. So what you have here is you are seeing that you're setting up to break out.

Now if we strip out the smart money part of this and we just look at the dumb money part of this. So what I've done here and I want to be really clear about this because I think you have to give credit to people. So this is not mine. This is Sediment Trader and I have a subscription to them. I have no affiliation with them whatsoever and I want to be clear about that. So, what what's really important to me here and what I really want to say is that there's a lot of data that I present to you guys and I pay a lot of money for data. So, when you guys are asking for things or seeing things that you're out there like how do you have access to that? I pay for it. I pay for a ton of data. A ton of data, a ton of research. So, that's how I have access to it. Um, it's not it's not some crazy thing. I just that's how I get it. I pay for it. So, just FYI. Um, some of the stuff's not readily available. Some of it is, but just going forward. Understand that. All right. Cool. So, that's who has this graph. Here it is in 20 years. Got it. Got it. Good. Okay. You're going to notice a trend. So, if we go to here, and I always reach out to those guys if I'm going to present their data and ask because some people just will say, "No, you can't present it." Um, but if we look at something, every time, and this is 22 to 25 that I just snapped here. So, I'm taking snapshots of that 20 years to show you something. Every single time that you are at a level where this starts to rally, every time that dumb money starts buying, the market goes higher. It has a derivative with it, meaning it might not go as high as you think it's going to go, but every time, as long as dumb money keeps buying, retail keeps buying, you're going to see the market go higher. Now, people will say, "Oh, well, it needs to be down here. It doesn't have to do that. If you bounce an undercut on dumb money and you lift up, if you look at that over the past, yeah, three years, I think that's what the snapshot is about 3, four years that I took. Anytime that that happens, yeah, you might be able to catch a bottom maybe, but not always. What you're looking for is consistency, right? So, if you can see that consistency, and this is where I'm going with it, just because dumb money confidence is going up, for example, you'll see that we're marking off these bottoms. But if I clean all this off, and then we just do some something super simple like, let's just take this mark here and say, "Oh, it broke above. Market's going to rip." We don't know that. We know the market's probably going higher, right? We work in probabilities, not certainties. We work in probabilities, not certainties. Anyone that says that they're certain or they they don't and they know for sure, run away screaming because nobody knows. All we can do is assign probabilities to it. So if we look at this move from that point 2 line, you can see where I'm going with this right here over here. But if you mark from here over and you looked up, like that's not like the greatest rally in the world. So just because you're going higher doesn't mean that you can understand the magnitude of the move. Like that's all you that's all you that's that's what you got out of it. That was it. That little move right there in July 22nd. So if you're like, "Oh, this is it. This is going to be the cat's pajamas." If you start looking here, you'll see something very similar. But then you have a move like this, which obviously was super extreme. But if you look at from when you lifted over and you kind of lift up with it, that's what you got there, which is substantially more commensurate with a move like that than this. So then you'd have to start saying, well, what why does that happen and what makes it? There's there's other things to measure the magnitude of which a move is going to go and the velocity in which that move is going to go, right? So obviously you would think about the magnitude like how big of a move you're going to get out of it. And then there's also things to look at. They're going to talk talk about the speed in which it's going to happen. Using this chart, the easiest thing to do is how fast it's going up. So, you'll note that this is going up slower where you'll note this one is just get me in or this one's just get me in. This one is like I'm up, I'm down. It's kind of like milk toast. It's still going, but it's taking its sweet time where these are just get me in. And I think that's a very important distinction.

Now, if we take a look here on the dumb money confidence side yet again and we just mark off these levels and what I'm doing is I'm taking different snapshots of time to show you how you've acted during those periods of time because it's not a function of oh well we're definitely we're definitely going to rip and go to the moon. No, what it's telling you is that right now you're getting buyers and you can see this in 2013 2014 and it doesn't matter when I do this. You'll say it. You can't miss it. Here's 2010 and you can see that oh there's your bottom tries to come back down. What's this do? Bottoms and then starts going higher and then slowly starts to build. Every single time that this happens, every time that you have buying coming in and dumb money is buying or retail is buying, the market goes higher. Period. End of story. Why would you care about this? And how could you chart this? How could you get a benefit to this if you don't have something like this? You could look at ETF inflows. So if you start seeing ETF inflows back into indexes and into the market, if they start going from net outflows to net inflows, that's one of the ways that dumb money's calculated. One of the things that makes it calculated. So you could look at ETF inflows. If they ever go from out if they ever go from outflow to inflow, that little nuance, and you mark it on a chart, it's one thing. It's not as good as this, but it's a thing. There's other things that you could do as well. I mean, I could actually we could actually do a video on them, but um really what you're looking for is are they flowing into bonds? Are they buying gold? Like there's there's all kind of nuances, but for our purposes, what we're showing is that at this particular time, this is what's happening. You have bottomed. And people would say, oh, well, I you know, it's got to be at the low. And as you know, from low to high does not matter. Just like here in November, January 8, and you know, this this could be people say, well, this is what's going to happen right now. Okay, let's just say that you're right and that we're going to go through a great financial crisis maybe, but it's not happening next week. So, for next week, if you look at this and you realize that this is the kind of the situation that you're in, that's what you have to get through right now. Not your, you know, not your pipe dreams, right? You have something called reality and a visa bill you have to pay. So, you kind of have to get through the week before you talk about the next great financial crisis or the.com bust. And, you know, that's 25 years and you're going to call two of them. I mean, you could be like Mike Barry and call the last 12. Um, but you know, you were right once. So, you have to look at this and say to yourself, you know, what exactly am I doing here, right? You're looking at data and you're making a decision based upon probabilities. There are no certainties to what we're doing. You can get mispricing of assets. That's for sure. You can certainly have a mispricing of assets and mispricing of a stock. That that happens all the time. Look at what just happened with Warner Brothers, for example. But in regards to this, you have to understand that you don't know when this hits at 2007 in July. You don't know that that's all you're going to get. You can

Tell yourself that because, but you don't know that, right? So, please understand that there's a huge difference here. And there's a huge disconnect there with understanding the magnitude and velocity of a move versus saying, at this particular point in time, we have a high degree of probability of going up for the week. And that's really where I'm going with this.

And if we see this right here again, this is who referred it out. But here we're going to go again and just show you the lows. And this was 2001, and we bottomed, and then we've come up. And it's not a huge move. I'm not going to measure them all off for you, but it's not, it's not a huge move. So, it's a move that is higher, and maybe we take out the highs this week because of Oracle and AVGO coming out with earnings. You know, maybe that, that peaks us, and then that sets up a top. We don't know. We don't have an answer to that yet.

But this is what we know right now. That dumb money confidence is going higher, and when that goes higher, the market goes higher. So that's what I think the focus point of this should be. Because people always say, "Well, what are we supposed to take from this?" What are you supposed to take from this right now is if that you're climbing this wall of worry, which everybody is, instead of looking at the facts, right? You're doing yourself a huge disservice. You should be looking at this from a standpoint and assigning probabilities to what you're doing instead of coming from this place of certainty.

So now, I'll give you my opinion on where I think this is going. I think you're in the stage where you're getting winners and losers. And I think that that is becoming very clear on who they're going to be or who they have the potential to be. The first thing to start going through is all the news on Meta this week. The news on Meta is bigger than what they said about Microsoft. And we're going to get into this, but the bottom line is nobody wants to look like this. Nobody wants to walk around with these enormous goggles on their head. And what we're starting to see is that reality is starting to really come to fruition.

Now, they're delaying this. This came out two days ago. They're delaying these mixed reality goggles or glasses. We're going to call them glasses. Sure, why not? Uh, to 2027, and the next generation is called Puffin. I don't know who names this stuff, but whatever. So, if you look at this, he's definitely pulling away from this. It's very clear that he's looking at this and going, "Okay, nobody wants these. I couldn't get people to want to be a giraffe. I can't get people to walk around with these goggles. What am I going to do because I'm getting crushed?" And he is, to an extent. There, there definitely is going to be, in my opinion, a reckoning here for people that are spending recklessly, but we'll see how that goes.

Now, he has come out and stated that all the metaverse, they're talking about 30% cuts across the board. And why is this important? Like, why do you care about this? Because it's very clear that he's like, "Hey, they're, they don't want this. They don't want that. Nobody wants to walk around like this. So, what, what are we going to do?" And this is going to get super interesting because I think that this is where you get the winners and losers, and you could have cuts or movements to caps, and then you're going to get different winners and different losers. And I think if you broach it like that, you'll do yourself a huge service.

So, for example, if we click off all my nonsense for a second and just look technically at this and go, "All right, well, we got down to that 580." You have to remember this is a cash cow. I mean, $7 a quarter. All the ads, you know, all the things that they show us on Instagram or WhatsApp or Facebook, whatever. But they, they are a cash cow. They just are. And instead of doing that, he's trying to get into this innovative kind of process. And he's bombing, for lack of a better term.

Now, if you remember back in '24, what did he do here? He issued a dividend for the first time. And everybody got super excited because they're like, "Oh, finally. He's going to become the cash cow that institutions can buy. They leave it in their pension funds. They don't have to worry about it. It's going to be like another Apple." And and you guys have seen me do this before, but I, I'll walk through the exact playbook on what these guys do. And it's when these things become, you know, legacy companies, and this is really what they, they should be doing.

But if you go back and take a look at Microsoft, and you can kind of see in here, and then go take a look and tell me when Balmer got out of the business and when the new gentleman came in, and what he did in here was pretty simple, right? What did he do in here? Well, it was very, very simple strategy. He came in and he said, "We're going to buy our own stock back and we're going to start giving a dividend." So they did stock buybacks and bought a dividend. Every pension fund in in the world was like, "We need to buy this because now we have consistency." Pension funds go on assumptions. So if they can get consistency, that's what they're looking for. And that's why the stock's done what it's done. You can actually look at from when this gentleman stepped in and did that. That's what happens.

The same thing that happened when you start taking a look at something like Apple. If you take a look at when Steve Jobs died, and then the founder came in or the new gentleman came in, Steve Cook, and what did he do? He changed exactly what he was going what was the company was going to do, and when that happened, the stock has exploded because the cash was going back to who? The cash was going back to the shareholders. Right now, some people don't like that because they want the innovation. Institutions look at this stuff a little bit differently and say, "We want the cash. Right? We want the dividends. We want our money to make money." So when he did that in here, that's when the stock went wild. An institution stepped in. It wasn't just because the earnings were great. It's like, "Wow, we're finally going to get a return of this cash."

And then he's like, then this quarter happened. He said, "Just kidding. We're going to, you know, we're going to keep doing what we're doing." Um, I know we said we're going to do dividends and cashier, but just kidding. We're not going to do that. So when people look at these earnings and they say, "Well, you're up 10% that quarter and you were up 10% or 9% this." What's the difference? The difference is he said, "We're going to keep the cash and we're going to burn through it and we're going to change the name of the company to the metaverse because metaverse forever. Yay." And now here we are two years later, and there's no such thing as a metaverse, and nobody wants fake land on the internets.

So where does this leave him? It leaves them with a situation here that was a boondoggle. Now we have glasses that are a boondoggle. But what's next? Does he go out there and try to create something to compete with Open AI or or like that? I don't think so. I, I really don't think that's where this is going. What I see him doing here is circling the wagons and saying, "Bring in all our cash again. Let's regroup and go from there." And that might be the smartest thing that he does. And what you're starting to see here is if he does that and he's starting to reduce costs, as he's reducing costs and withdrawing, the stock's going up. And and so when we talk about winners and losers, sometimes winning is just saying, "I'm not in this race anymore."

Like, for example, like the best thing that Apple did, while we're on the topic, stay with me. While we're on the topic, like the best thing Apple did, and I thought it was a huge mistake, shows you what I know, but Apple not getting into creating Siri as a large language model and saying, "Oh, well, we're just going to do this." What Apple did was sit back and say, "We're going to see who wins, and we're not going to spend a dime on this." Who won? Well, it looks like Google's going to win. Let's partner with Google. Absolutely fantastic strategy, and then we'll just pay them fees. Absolutely brilliant strategy, and it's working. It's going to work. And then it also gives them the flexibility if somebody else comes out and they're better. I think that something like that is smart, and I didn't really get that before.

But with Meta, I think what he's doing is looking at this going, "None of this is working. We're circling the wagons." And you're also watching the other side of this that people really aren't getting. And so we'll touch base on that. But when I look at how they're playing this, for example, like with Microsoft, Microsoft hitched their wagon to Open AI, and this was sickly brilliant with that investment. But hitching their wagon to something, and then you start looking at the reasoning models, and we went through this not last Saturday, but the Saturday before, you start looking at these reasoning models and the visual models, and you start looking at these tests with Gemini, it is very clear that Google's won. Now, whether or not someone comes out and takes them out, but Google, the Gemini is just go play with these things and ask Gemini a question, and then go ask ChatGPT a question, trying not to laugh. Uh, and then ask Claude a question. It's, you're going to get different answers. And I know you guys use this stuff for different things, but you have to think about what is going to be the major way to do it.

Go look at your ChatGPT and try to cancel it and watch them give you like two months for free or 50% off, right? Why? Because Google's come out there and said, and this is really important. Google has very deep pockets. We all know this. I'm not telling you anything you don't know, but Google's basically like, "Oh, they're charging you [laughter] thousands a month. How about $3? Do you want to pay $3?" Like, it's insane what they're going to comp, how they're going to compress the margins of this entire business and have everybody go to them. And they're the only one that is completely layered. There's four different layers. They're the only ones that are layered out of all four layers.

And I, I, I'll give you an example of what I mean by this so that you can say, "Well, what are you talking about, Willis?" So like, if I grab a link from YouTube and I drop that link into Open AI, it looks at me like I've got four eyeballs. And I say, "Give me a transcript." I do that with something like Claude, and it, it's pretty good. I do that with Gemini. They're like, "Here's the link. Here's the bullet points. Here's the transcript." And they kick it all out. And that's one thing. So, just wrap your noodle around that. It's really very impressive.

On the Claude side, I think Claude's fascinating because they embedded themselves on the business. They said, "No, no, we're going a completely different way." Claude, Anthropic basically came out and said, "We're going a different way. We're embedding with Amazon. We're AWS." Sickly brilliant move for Anthropic. And and AWS is very, very happy if you go look at their earnings that that happen here. So you're getting winners and losers that's tied all together.

So that takes you back to something like Microsoft, and I've been using this comparison of, you know, Alta Vista or Yahoo, which you guys will remember, you boomers will remember for sure, and saying, "Hey, that's where I think OpenAI is." Now, I'm not saying he can't come out and do something better, but here's the problem with this. [clears throat] Pardon the voice. We're just going to roll with it. Here's the problem with this. He's behind, and he's been out here like, "I'm not behind. We're, we're leading. We're going to cure this. We're going to change education." Right? This thing, it's not there, and we all know it's not there. So if we understand that it's not there, then you have to be smart enough to understand that a business is going to know that it's not there. Remember, we deal in probabilities, not certainties.

So if you see that, then that means that the companies that have tied themselves to this are going to have an issue. But Microsoft's already come out and said, "Hey, Anthropic, uh, that's going to be embedded in Excel." Now, why would you do that? Why would you embed Anthropic into Excel if you have billions tied up into ChatGPT? Right? Just think about that for a second. So, we're watching this kind of devil horns pattern here with Microsoft. We had that fake news that hit on the Information, but that was just absolutely ridiculous. We could do a whole video on that. But what does that mean to us and what does that mean to Microsoft? Microsoft's got some issues here that they have to figure out because what they're dealing with is not leading. It's not cutting edge, and it's going to be an issue going forward because people are looking at it and saying to themselves, "I don't want that. I want this other shiny thing for my company right now." And until that changes, this is what you're dealing with. And so we have that massive devil horns pattern.

Now, I've been trading this, and I think that we can get back up from a trading standpoint to retouch the institutional level of that 55. But if you're looking at this and you don't see the declining 55 that's pointing down, then you have issues. You know, here's your 12 pointing down, your 22. Like, maybe I'm going to rally back up to that 500 by the end of the year. Maybe. That's what I'm looking for. But we're going to have to see how that goes. But this ties us into the fact that you're going to have winners and losers.

So, for example, Oracle comes out and they've got, you know, $350 billion dollars for, you know, Open AI. And Open AI can be lucky if they can buy a can of tuna right now with the way that their margins are compressing. So people are like, "Well, that's, that's bad. We have to go buy the CDS's on Oracle." Like, I, I just, everybody just needs to relax a little, a little bit. Like, do you not think that Oracle can't find a place for its capacity? Are you watching what's going on out there right now? So, what's happened is this stock's come all the way down, hit that 185 perfectly, comes down here, does the undercut from two quarters ago, and everyone thinks that they can't find anything for capacity. Then you're coming into earnings down here, and you're 100 points off of earnings. Like, I, I just think that people need to really, and I'm glad that they don't do critical thinking because it's just more for me. But if you really look at this, it's absolutely crazy.

And if you go and take a look at this, and we'll get a little tin foil hat here for you, and you have your put wall level right here, I'll wrap this up, but if you have your put wall level right here on Wednesday, when you had that stupid in uh Information article hit, what did they buy? They couldn't get an Oracle fast enough. They literally could not get an Oracle fast enough going out five days for that. And I think that's super important to get. So, you have that this week coming up, and that'll be nice. We have that going for us. AVGO with the TPU, guess what? They have earnings this week. Thursday, Wednesday, Thursday. And everyone, of course, knows that these TPU orders are going to pick up. Where's the money coming from? Well, from Meta, right? This guy's come out and stated that, "Hey, I'm going to start buying TPUs. I'm cool, too." So, all of a sudden, you know, Nvidia, maybe they have margin compression coming in. So, what? So, it goes to 150 or 12? Like, who, who cares if you're looking at this stuff long term?

If you start realizing that, you don't think AVGO is going to talk about orders next week and what they're possibly seeing on the order front? So when you start tying all this stuff together, you start seeing who the winners or losers are going to be. Google. [clears throat]

But if you really dive into this, and we start dragging this stuff out a little further, I don't remember the last time that we had a real market correction and the biotech was breaking out of three-year highs. I don't remember a time where we had a huge market correction and the socks had an all-time close. And I certainly don't think that you're going to see something like that when you have sectors like robotics and automation out here breaking out of 21 highs, set certainly setting up to. And I think when you tie this all together, it gives you a very clear picture on which way the probabilities are leaning. And that's it.