Transcription
S&P dropped precipitously, down 2.5% on Friday. We're going to get into exactly why this is happening, why the NASDAQ was down over 4.5% in a day, and we have not seen a move like that since April 2025. Most traders believe it's got something to do with oil, but we can see that oil actually dropped on Friday. Does it have something to do with the bond market being over four and a half percent? Or is it more linked to SpaceX's IPO and liquidity issues as Tesla drops 9%? For all the excitement about SpaceX, it's important to know that these ETFs that follow space stocks are down 20% off their highs.
By the end of this, you're going to know exactly what I think, and you're going to either agree or disagree with it as to why the NASDAQ's completely falling apart here. We're going to discuss where it could wind up, and I want to explain the mechanisms behind it, and I believe it's linked to SpaceX. Let's go.
Most traders are reacting to the institutional levels. What we're trying to get you to do here is to know what they're doing ahead of time. Subscribe. Click all notifications. What we go over here is timely by hitting the bell. You don't get it after retail is already in. The important thing is you get the information, education that you need. Subscribe. Let's get to it.
Welcome back, everybody. All right. So, we have a lot to cover. Short time to do it. So, let's pack it in. We all saw the NASDAQ completely implode. And I think that this is a really important part of this. Once we see something like this, when we start to see like that kind of speed, there's something more driving this under the hood. And a lot of people are looking at this and saying a couple things. The first, the thing that we're hearing more than anything is going to be the simple thing, right? Oh, it's got to do with Iran. It's got to do with oil. We're going to cover that and why I don't think that's what's doing it, but it's not a good thing. We have to just go through the basics. This is a 12, this is a 22, and this is a 55 SMA. If we look at this, we have closed under the 12, which we have not done since we began this. We have closed under the 22, which we have not done since we began this move in April 7th, getting above everything. It's really important to note that this is a complete change in behavior of the NDX. It does not mean that you cannot get back over it. Of course, you can. But to think that this is going to happen on a Friday and then miraculously everything's going to be okay is called delusion. They don't simply sell and then change their mind and then buy the next day. They follow a process. And that process is whatever really happens on Friday is really what they're doing. And I can't stress that enough. So whatever you see them do on Friday, you need to pay very close attention to. Specifically when you start seeing us break key levels. If you broke one and you have like a doji on it and you flip that doji and then you go back over, that's one thing. But when you open at the high and close at the low, and you're breaking key critical levels, the best thing that I've learned in 27 years of trading is you get out of the way, as I like to refer to it, you AMDville horror. You get out, and then you look at the house and decide if you want to go back in the house. Right now, I don't think so. I think you want to see this settle down and understand what the mechanism that's driving this.
So, let's take a look at some things. Let's take a look at the day just to start so we can say what the heck happened. So, here we are. We open up, and everybody's talking about non-farm payrolls. Non-farm payrolls were strong. We have a lot to cover here with order flow today. We have a lot to cover with what's going on with SpaceX, how to position yourself, what names are going to move, which names I think are going to absolutely fall apart here. And we're going to get to that in some detail today. It's going to be very specific. You're either going to agree or disagree, but you're going to know where I stand, and you have a clear, concise picture of what to watch next week because next week is going to be a lot of fun, but it's going to be extremely volatile.
So, if we take a look at this and just chop it up, we would see that well, in the first half hour, you really don't have a lot of movement. And then you can see here in that first hour, you really again don't have a lot of movement. So, we know historically what happens in the first hour. That is what retail is doing. Then what happens? We get our trend. Now, this isn't rocket science. We can see the break right here, right? Right from that doji. And we see the break in the S&P. Once the S&P breaks there, we come down to a level. And then what do we do? We can't hold that level. And we break there as well. So, if we were to look at this from a timing standpoint, what do you see as we get to the end of what the end of the end of the week? What happens? You start to see us sell down. Now, from 3:00 on, you never got above. So, if you don't get above from 3:00 on, and we'll just mark that off. What does that mean? That means you have institutional sellers. Point. End of story. You have institutions selling stock. To me, the acceleration of this kicked in after 2:00 on a Friday. So, it is very clear to me that this was not just a retail situation where retail's panicking on a Friday, but that you have institutional selling. And that was very clear with what I saw in the market through order flow and pretty much everything in the options market as well. This is pretty brutal. And you can also see that it accelerated. If you look at the NDX, NASDAQ 100, you have a very similar pattern where right around 11:00 it broke. And then from there, that was pretty much it. And if you don't like candlesticks, you can just always look at the open, high, low, close because it just seems to tell like a cleaner story sometimes. We take a look and we mark that off as well. What happened? 2:10. This is systematic selling. You're selling at the same exact price point over and over again. And if we go and take a look at this, you'll note a couple things. So like here is Tesla, and let's get rid of the regular and just look at that for a second. Does that look at all like this was not programmed? Does this not look at all like somebody just knew that they were going to get out? Whenever you have selling and you're selling looks like this, that is not retail. Now, retail can't move a Tesla. It just can't. It can sell it. It can whack it around off the open, which is what it did here. But this is 45-degree selling. This is people selling and large institutions selling pretty much a certain amount every single what period in time. And because of that, it stays orderly. And there's your channel on Tesla. This is going to become really important later as to why the market looks like that. And the market of this is going to look very different than something else that might not be as institutional. So, if I looked at something like a Rocket Labs, you're going to see that it's way more kind of, let's call it janky, where you're going to have more highs and lows. Something like a Tesla, you really don't have that. You might even see that more in something like a Marvel, right? Because you have some a lot of retail in there. We're going to have to talk about the names that retail owns. But you can see something like that where we've come back down. We tried to rally. And this actually presented some pretty good opportunities for, you know, short-term long trades, uh, until reality set in around 11:00. And I think that this is really important for us.
So, we're going to go back to something because I want you to stay with me and pay attention to this. Right around 11:00, you saw us break in here. And right around 11:00, you saw us break in here. Now, is that non-farm payrolls that's doing that? Is that going to be what you're seeing in the street? No. It's it's none of that. And so, let's let's go through these pieces of it very, very clearly because to me, it was so obvious what it was. But if we take a look at crude oil, because crude oil is supposed to be the driving force of the market, and it's because it's coming home to roost, and this is really it. Now, people are truly understanding what's going on, uh, in the street, and that's going to drive oil prices higher, and that's inflationary, right? Okay, oil's down. So you could put the kibosh on oil being an issue. All right. So, do we have other issues that it could be? Well, yeah, there are there are some real issues out there that we could talk about. Well, one of them would be the bond market. So we could look at the bond market and say, "Well, what's that little suck salad?" Well, that's when you came out with that hot, and I refer to it as a really strong non-farm payrolls number because now jobs are bad, right? When we don't have them, right? Then people say, you know, not having a job is bad. So no matter what this data comes out and says, you're seeing these kinds of movements. But when you're seeing the tenure do this, it's telling you one very specific thing. And that specific thing is very, very obvious to me. It's telling you that you have an environment that you have that's inflationary. So you could look at this and say this inflationary spike in the market led to the bond, the bond market led to the stock market selling out. So all right. So let's just take that for a second. Let's play with that for one minute. So in front of us, we have the S&P 500, and then we have the 10-year up here, the yield. So we can see the yield absolutely jumps around 9:30 and then it sits there and it doesn't do anything all day. So, does this look like it's correlated? Not really. No. You could say that we jumped up so that we had some selling, and then that selling levels off, and then something happens right around 11:00. We're going to get to exactly what happened at 11:00 because if you don't know what to look for, and and a lot of people didn't have a clue, and we're going to highlight it because I think it's really important because if you understand why you dropped, then you can understand what you're going to do about it, and then how you should be looking at the market going into next week. So, that's very important. But, we need to kind of rule some things out here first. So we look at we look at the bond market and say that's not it. We know it's not oil because oil went down. Well, it's the it's the threat of oil. Okay, I don't agree with that because the market moves based upon that. So if oil spikes, then the S&P is going to spike. Oil is not going to drop, and then someone's going to tell me that it's because the street's going to be worse and that's going to be a problem. Like it just doesn't make any sense. So when we start to see that, we have to pay attention to it, right? So it's got to make sense. If it doesn't make sense and and you can't connect the dots, then it's probably not true. Oil's not dropping. The street's getting worse, clearly, or it's not resolving itself. Let's leave it at that without going down that little nightmare.
So, what does that mean? Well, something else triggered us at 11:00. That's pretty obvious, right? Okay. Cuz that's when we broke 11:00, and then you can see the acceleration into this. Cool. And I understand the question, what does this all have to do with SpaceX and UFO? and why are these things dropping the way that they are? We're going to get to that. But I think there's an important part of this that needs to be understood first. If you understand exactly what the issue is, then you have to go and take a look at a couple things. So the first thing is to understand what the issue is. Like, what is the issue truly? Once we understand that, we can just mark that down. It doesn't mean that we're right or wrong. It just means that this is what we think. This becomes our thesis, right? Then after that, we have to kind of rule out what everybody else thinks the issue is. And then we have to understand where we are in the food chain. And by food chain, I mean this. So once we understand these three: what the what the real issue is, what everybody thinks the issue is, and then where are we in that assessment, once you get that, then you have to look at that and say, all right, how far off are we off expectations versus outcome? Right? That's that's where we're going with all this, and we're going to get there. We do have a dichotomy going on, and I just want to point it out where you're looking at city economic surprises to the upside, and we're seeing these surprises, and they keep pushing and pushing and pushing, and we keep hearing about this bifurcation, and why is the consumer so strong? I think that we have to spend a second on this just to go over it. When we look at the City Economic Surprise Index, you can clearly see that we're on an absolute tear, and we've been, and that's one of the reasons why the market's been doing what it's doing. Earnings have been fantastic, and I want to get that point out now. I don't believe that anything of what you're seeing has anything to do with earnings yet, anything at all as far as a correction of earnings. And I've heard a couple of these talks. We'll get to that, but let's let's take a look at what could be an issue under the hood. But from an economic surprise standpoint, we're just not really seeing it.
Now, from our standpoint, here's XLY. And XLY is the Consumer Discretionary Index. and retail. Think of it, retail, but it also has into it. You have your cruises and things along those lines. Okay. All right. Great. So, we could see how we're trying to break out here. And then we can see that we're dropping. This is where I think it gets really interesting because I don't think that it does a good enough job just looking at it this way when we compare it to what's going on in the world. So, the best thing we can do is to look at these on a relative basis and just see what the consumer actually thinks relative to the S&P 500. So, how's consumer discretionary doing relative to the S&P? Not great. A matter of fact, you're falling off a cliff, and it's not really getting anywhere that it needs to be, is it? So, in other words, you're at a key critical point here where you're either going to hold in this area or you're going to break down, and there's another level to it. So, if I come here, we'll just make these bars so that it's easier to see. If we turn this now into a weekly and you take a look at this, it's very clear where this could head to. And this is just again opinion, but you have a major level down here which you fought back in 2010 and then lifted and broke out, and everybody had to be in retail. But where does this really put you? Put you down in these levels, and then you have to see if you're going to hold in here or you're not going to hold in here. That remains to be seen. But when you look at the retail side of the market, you can see that retail is obviously not holding in here and not doing a very good job. And this tells us a little bit about what we're seeing with the Michigan consumer sentiment data, which I also think is extremely important for us to just touch base on. Michigan consumer sentiment has been awful. So, has this come home to roost? And this is why the market's dropping the way that it is. I don't believe it's that either. I believe it's directly related to what we're seeing with SpaceX. And I I don't think it really has anything else to do but that. And I'll show you now. At exactly 11:00, you had a line that came out. And the line is the SpaceX IPO is said to draw more orders than there are shares available. And this is me laughing. The SpaceX IPO, or any IPO, is 10x, 20x, 30x oversubscribed. So, without getting into all the other nuances here, but I think it's important to just get this. Robinhood has dropped it and said, "Oh, accounts with $2,000 can buy SpaceX versus I think it was half a million or 50,000, whatever. Whatever the number was, it doesn't matter." To the point now, anyone can buy SpaceX IPO if they want. That's what they're doing. 30% of this IPO is going to retail. It is an astronomical amount that is going to retail. They actually had to hold about 10 or 15% back to give to friends and family, which is a huge swath, as much. Why? Because people don't want it. Despite what everybody thinks is going to happen here, people on the institutional side don't want this because the math does not make any sense. And I'm going to get into this, but once this came out, anyone that's been trading for any period of time can read between the lines. And this was the exact statement: SpaceX IPOs to draw more orders than there are shares available. CBRS was 20 times oversubscribed, and it was one of the single greatest shorts out there of 2026 for me. Every big deal is usually 10x oversubscribed. The market actually dropped on that headline. I think the market's concerned about supply issues. This is exactly what your issue is, in my opinion. The issue of the SpaceX IPO is the fact that there is way more shares out there. The argument is, oh, it's only $75 billion. Well, all that has to go somewhere, and the valuation of this thing is absolutely insane. The market's concerned about supply. We have to then see if it's going to be a real issue. And I'm going to give you a bunch of timestamps today while I'm doing this so that you can see how to position yourself. And I and and I want to just go through this part of it. Let's let's wind this back for one second and let's just mark something off because I marked it off in the room because I thought it was super important. That's when that news hit. Now, people will say correlation's not causation. That's fine. You're you're welcome to think that, and you're welcome to do anything that you want. But in this area, from that period on, all you had was selling. It's not a coincidence that that's what happened. When people start to understand that the street is not going to eat this up, you have people coming out there and talking about 2040 expectations of this company. You're in 2026. So people and institutions are not buying a company for the next 14 years. So retail might buy it and sit with it forever, but you know, retail bought a bunch of stuff that we're about to go through. And I'll show you how that went. What we have to do, and I'm not knocking the company, there's a huge difference here, but you can knock the valuation of something, right? You might like, you know, someone might like their Toyota Corolla, but that doesn't mean you should be paying half a million dollars for it. So, if you look at the situation from that period on, all you did was sell. Any rally just led to more selling. Why? Because the street understands that supply, that money has to come from somewhere. And retail does not have all this money they're just going to pull from. And I'll explain in greater detail.
Now, there's a difference between whether you like the company or whether or not the valuation makes sense. But what I did here was I took SpaceX's revenue trajectory and I went from 2023 all the way to 2026, and what the estimates are, and what you're going to see at '23, they estimate that their pre-private estimates were 8.7, and then Starlink surpassed launch as a primary driver. So all the revenue of this company and all the profitability is Starlink. That's one of the reasons why AS was moving the way that it was, but we'll get to that some in a little bit of detail here. So, what does this mean to you? Well, it's 63% growth. All right. Well, the growth from 2024 to 2025 is now 32%. Okay. So, the growth is slowing, but the S1 reported included the merger of XAI. All right. Well, we'll get to that. 27 to 30 billion. So, 44 to 60% growth is the analyst consensus, and that's how they got to this number. So, just so we're clear where that puts you, you're trading at 65 times revenue at that number, right? And I get it. SpaceX is going to have data centers, and they're going to mine asteroids with robots. Let's just get some cyber trucks and some cyber cabs throughout the cities first before we start talking about how we're going to mine asteroids. All right, let's just start there. I'm not knocking it, but you have to look at the difference. Yes, you can have rockets come up and down, and you're catching them with chopsticks, but the actual execution of this on any kind of scale seems to be a real issue. And so when we're coming out there and saying we're going to double our revenue year-over-year growth, it raises some questions, but there's a lot more questions about these numbers. So when you break these numbers down, here's SpaceX revenue trajectory again, and we're breaking it out. So I'm going to zoom in on this, and then we're just going to look at it. 2023 private. Here's the breakdown. So if we take a look at 2025 as it's reported, you have 32%. Here's the issue with this. If you take out the company that they bought, SpaceX grew by 9%. So year-over-year, SpaceX grew by 9%. The reason that they're jumping the revenue the way that they are in this model is because they added XAI to it. So by adding XAI to it, yes, you increase the operating loss, but everyone's like, "Oh, well, they're going to lose money anyway." But what you're doing, and this is super important to get to, for them to come up with $3.2 billion in revenue, they have to lose $6.4. So, for every dollar they spend, this is what they're getting. Like, like it's it's kind of crazy when you look at it this way. But here's the part of this that I think people are missing. And institutions aren't missing this because they've done this kind of work. Because they're going to put real money to work, and they've responsible for that money, right? That's why I always say you're playing against the smartest, most disciplined people in the world. Act like it. The reason they're here is because this is where all the money is. So, 155. So, you have 9% growth if you take that out and you look at it from just that perspective. But the analysts are telling us that we're going to grow at 44 to 60%. So, in other words, we're going to grow from here, but we're somehow we're going to get 6x revenue as soon as they go public. Well, why? Well, data centers in space. Okay, now let's take a look at the timetable that was prepared for us by BNP Paribas, and these are estimated dates. So, we're supposed to trade next week, June 12th, on SpaceX, entering buyback blackout window the 15th. SpaceX options are supposed to be out on the 16th. And then you're going to get ETFs listings, etc., etc. And then you're going to get S&P inclusion, S&P TMI inclusion 18th. June regulatory expiration June 18th. And then you're going to get inclusion into the MSCI the 26th, and then month quarter end the 30th. NDX includes by July 6th. These are all dates, right? And then by December, it's supposed to be in the S&P. Here's the problem with all of this. It's twofold. The first problem that you're running into is this: the people that are being given this don't want it. Meaning those investors that are in passive income or passive investments, I should say it that way, that are in the S&P, they don't want this. That are in the NASDAQ, they don't want this, and it's being forced down their throat. They're changing all the rules to make this happen. And I think that that's a very important distinction. So, you have a whole group of people that just do not want SpaceX in their NASDAQ. They and so those people are selling because they're looking at this and saying you're trading at 65 times earnings on an absolute pipe dream here. And I'm all for tech. I'm all for investing in tech. And we're going to get into this and the semiconductors and how this whole thing's changing the landscape. But the important part of this is you're taking a company that's really growing at 9% saying it's this huge growth engine. It should trade at 65 times earnings because someday they might actually have something in space that might be a data center. I you don't even have anything ready or out there for that. So we have a dream, right? And that's great. It's nice to have dreams, but you also have to pay for them. And that what they're doing is they're paying with retail's money, and they're paying with passive investment. So that so they're looking at that, and that's the very first mechanism that you have here. People getting out of that.
Here's your second mechanism on this. Your second mechanism, and this is the one that's more immediate, more than more intermediate. So the more immediate one is the supply, and everyone's saying the same thing. It's only $75 billion. No, it's $75 billion down retail's throat. That's very different. Meaning Google, and let's go through this because there's a huge difference when people look at absorption of something in the market, and people are saying this like, oh, well, Google just raised $80 billion. Okay. Did Google call Robinhood and say, "We need to raise $80 billion?" Or did Google go to institutions that want to buy bonds from them more than they want to buy treasuries? See, the thing that people aren't getting about this, and I'm going to tie it all back to the bond market. Why is the bond market doing this? The bond market's doing this because of the credibility of the United States and its ability to pay its debt. That's one of the reasons why the 10-year is doing this. Nobody really wants to talk about it. But if you took a look at something like this, right, and here's the 30-year, and the 30-year jumped up as well. But if you look at the spread between the 30-year bond and corporate debt, and I'm not going to do it because it's going to take too long, and you looked at Google and you said, "Well, what's the difference between their bonds and the Treasury bonds?" And we looked at the spreads, you're going to note that the spreads are extremely tight. Extremely tight. Meaning people have more faith at sometimes within basis points that Google's going to pay them more than the US government. That's what's starting to happen here. To think that you're supposed to look at Google and say, "Well, Google raised 80 billion. Therefore, SpaceX," and I have to use Tesla as I'm talking because I don't have another symbol yet that's that I can show you while while I'm talking. But Tesla, what do you think's happening here? Well, people are selling this, but institutions are also selling this. So, the the it becomes a self-fulfilling prophecy. They have to get out because retail wants to use that money to buy the next big great thing, right? And then institutions realize that that's what's going to happen. So, they do it as well.
Let's let's just take a look at a couple things here so you can understand what the real what the real issue is here when you're trying to evaluate this. You have major supply. You're being forced to to buy something whether or not you want to buy it. You know, no one expected the NASDAQ and everybody to change their rules. And quite frankly, they shouldn't have. And it's a real issue. Now, let's take a look at this. This is the valuation progress of SpaceX over 24 months. And you have a secondary sale in 2024. And this is not as clean as I would like it to be. So, I'm going to blow this up. Look at it. And and what you're going to see here is this is July 2025, and you have a $400 billion offer, right? Insider liquidity event as well. If they wanted to get out, uh, they could have. And then you get into December. So this is the part that that you have to really pay attention to here. So in December, the AI narrative reprices the company because now they're an AI company. All right, $800 billion in here. So from here to here, we jump 800 from $400 billion right in a quarter because now they're an AI company, right? They're going to use AI. All right. So then you go here, and then you're like you're going to merge with a company, and you're buying the XAI. So let's be really clear about what happened here. They bought XAI. They're calling it a merger, but they bought a company that loses $6 billion, and they paid $400 billion for that company. Like this is what happened between the 2025 and 2026 in February. They bought XAI, and they bought it at a level which looks like about $400 billion. Now, you could also say that some of that is going to be the increase in SpaceX. Okay. So, what exactly happened between February 2026 to June 2026 that added another $500 billion in value? So, was it some of the the glossy photos that are in the S1? Like, what what got us here? And so if you really look at this from my standpoint, this is not it's not good. And the street realizes this. So, and and here's the thing about it. If people are willing buyers, that's great. But when they're being forced to buy it, that's where the problem comes in. So if we take a look at the inclusions, right? The S&Ps basically blocked their their thing about there. They're not doing any changes. The NASDAQ's like, "No, we're going to come out with something new called Fast Entry." Uh, index can temporarily exceed 100 was called the NASDAQ 100, but now it's something new. Forced removals on inclusion, passive QQQ funds must buy mechanically whatever price SpaceX trades on rebalance day. So, let's be clear about this. You're in the NASDAQ 100. You don't want to own this thing. Guess what? It's now going to be a top five holding, right? Well, it doesn't matter because it's only going to be this percentage. No, it's the market cap. The market cap's going to dictate how much this you have to buy. Billions of dollars of this are going to go into the NASDAQ whether you want to own it or not at this level. Congratulations, you do. So, this is becoming a really big issue, and that's why you're also seeing pressure on the NASDAQ going forward, especially at this valuation now that it's been priced.
The other part of this, let's grab this. The other part of this that I think that you should really be paying attention to is it all started around that 11:00 period where if they came out and said, "Hey, we're 20 times oversubscribed, blah blah blah." This is not. It's very clear they're having an issue when they have to wheel out Jamie Dimon and Elon's got to do a roadshow, um, and start talking about what's going to happen 15 years from now. Fast entry, five trading days, just come on in space, staggered lockup releasing shares in tranches, first post-earnings appears decided to satisfy 12-month float carve-out, earliest inclusion of any major index. So, one week out of the gate, come on in. So anyone that's in the Russell 1000, the IWM, come on in. Guess what you own? You own this forced buying, 15 to 30 billion in estimated mechanical demand across all index trackers, small float impacts. So when you say you're only having 75 billion, they're going to shove 30 billion down everybody's throat. So you don't get to choose. They have to buy when they rebalance. And I think that this is a problem. I think this is a real problem, and it could create a huge disassociation in the market. And I don't think people are getting that. So, what are retail going to do, and what are institutions going to do? Well, retail's going to sell because they want to own this thing, right? We're seeing that, and they're being offered the opportunity to. So, they are piling in both fists. And what's that going to do here? That's going to cause more and more pain on the names that they're selling in order to get what into these trades. That's very clear what's what's happening here. Even something like Tesla, we were able to take advantage of it once you start figuring it out. And the point that I'm getting at here is once you understand what it is, you can disagree or agree. But once you understand what it is, like, for example, you can think that SpaceX is going to be the greatest thing ever and it's going to open at 300. All right, cool. People still need money to buy it. So whether or not you think SpaceX is going to be the cat's pajamas or it's going to be the next Rivian, it doesn't really matter, right? What matters is they still need the money to buy it. They're being given the opportunity, and they're chomping at the bit. So where are they going? Are getting into or out of? Well, let's get out of Tesla, and we'll buy the next one because Tesla made us so much money, so this one's going to make us so much money, and that's what you're seeing happen here. And this is really important to get because what else are they going to sell? Right? Well, they're going to sell the names that they're up the most. So, what's what levered fund in the US has the most assets under management? Well, Micron has the most under management, 864. And all right, so here we are at 864. And what happened? Like once we broke this, that was it. And you can see when that happens. And here's 12:00. Here's 11:30. And then here we come in. At what time does this thing start to roll over, right? Right around 11:00. And the reason for this is not because retail is going out there and saying, "Oh, okay. I better sell my Micron." What starts to happen is institutions understand exactly what's happening here. And they move on that.
So, if we look at that opening price, you can see here we are. There's our doji. and then we break down. From my trading perspective, I like Micron a lot. We traded this like we traded this down, traded it out. But when we saw the news, you have to take a different perspective, and you can allow that perspective to play out before you take advantage of it. But this was super, super easy to see. Let me show you this. And I want to show you the difference between looking at this stuff and information and knowledge and then application. So, when you start to understand this, because there's a huge difference there. So, if we look here at 12:00 yesterday, I put out in our community, hey, MU can break here. There's can be 30 points of downside. If that breaks, it really needs to hold. The puts were super expensive in my opinion when I looked at the pricing of it, but it can cascade down fast. And I realized that it could cascade down fast to 900. And then that became another level. You could see once it broke, there's your cascade. Then they give you the doji, make you think everything's okay. I'll use my Morgan Freeman voice. Everything was not okay. And then you rolled over and you imploded. Now, what I tend to do in situations like this, just from an intermediate trading standpoint, I don't predict where this ends. Like, that's not what I do. I I think that's a fool's game. And the reason is because the irrationality and getting out of the market is something that I've seen over 20-some years of doing this that you can't explain the irrationality. You just have to get out, you know, as I call it, amnor. You got to move because you don't know where this is going to end. You could say, "Oh, well, it's trading at eight times earnings." And it is, but that doesn't mean I can't buy it at 700. Right? So, I and I can give examples of this, and I'll I'll give you a great one. So, here is Bank of America. And Bank of America, and you're going to say, everyone will say the same thing. Oh, that's different. Right? Here's the great financial crisis. Bank of America was trading at $5 a share here. Their credit card, just their credit card business at this spot was worth something like $10 a share. Just their credit card business. Forget the fact that they own all the banks and everything else and their loan portfolio. So when you think that it can't stay irrational for a very long period of time, you always heard that saying, "The market stays irrational more than you can stay liquid." That's the truth, and there's a reason for it. So when everybody's in something and it looks like this, you know, you got to move. You got you got to get out of the way. So we had a great swing trade in this where we bought it at like 680, and I was real clear like, hey, you start cracking it, it I have to go. I I can't sit here if I if I break the 12. I can't be sitting here. I'm not going to go lose $300 in gains because Micron is a great company. It's still going to be a great company at 770 if it gap fills. It'll still be a great company if it comes back to 650. All right. Oh, that can't happen. Uh, okay. All right. You you can go with that theory. Let me know how that works out. Or I'm just going to hold it. Okay. Again, there's different schools of thought here. If you're swing trading, "I'm just going to hold it" is not valid. If you're a long-term investor and you're looking out years, that's a very different story. But if you're trying to understand what happened in the market today, and that's why you're watching this, and then what can happen, to think that that's going to stop because you had one day of selling is called delusion, right? You still have the whole group of people that don't, and and this is my opinion. You're going to read it in the comments when I put this video out. They're all going to have their beliefs, and please comment on what really happened on Friday and why we sold down this way. Majority of people are probably not going to agree with what I think, and that's okay. It doesn't make, you know, them right or wrong. It just is. I think they're wrong. They think I'm wrong. That's fine. But this is what happened. So, I can either trade what's happening, or I could come up with some excuse on how the market's bad and how the market hurts me, right? You know, okay.
So, if you look at SanDisk, same thing. But SanDisk, in my opinion, didn't get hurt as bad. And there's a reason for that. And I think that there's some things here that we should talk about. First and foremost, SMH got hit. and it got hit pretty hard. Well, why? That's where all the growth is right now. That's where everybody has the majority of their money. So, what does this mean for us? It means names like anything that's in SMH is probably going to have a bad day. So, if I had to go out there and say, where are we seeing the issues? Like, where are the real issues? And I'll tell you where I think they are. And and you can see it coming because Micron, nothing changed on the earnings front. Nothing at all. So Micron, in my opinion, you're you're coming in because it's a source of funds for retail. It's one of the biggest net flows in retail in a month. People that bought this in a month over from May to June are up something like 80% from the highs, right? It's insane what this thing has moved. So if you come here, nobody wanted to own it, and we'll go to May 1st, and then we'll just go to the peak. Well, where are you? 100% in that period of time. That's something that people are going to look at and say, "Hey, I can pull money out of Nvidia." Everybody liked because of earnings. They're going to use that as a money source. Tesla, they're going to use that as a money source. See, when you start looking at these as the way that I'm showing these as a money source, it starts making more sense which names are getting hit the hardest. So, if you were to do something, and and I do this kind of work, I just don't get into it because it's super boring and specific, but like I'll go and chart that retail cash flow of these names and seeing who's got the most retail flows into them. And it's pretty interesting because they're the ones that are that are that are absolutely getting crushed. You know, when I was looking at this, I'll I'll give you one, but I think that this is really important. So, if I if I look at something like Tesla, and to my sense, when I was looking at Tesla on Friday, if you look if you know how to evaluate options the correct way, this made so much sense to still get involved later in the day. And I I'll show you this. Hold on.
So, when the market breaks down, I'll show you the NASDAQ here. So, when the market starts to break down, uh, it's 11:00 a.m., and that's what I'm hanging my hat on here. And I'm just telling people what I would do. They they need to do what they're comfortable with. But at 1:00, I'm saying there's no way in the world you should be bottom fishing here. I'd let it all burn, as I like to say. Uh, it can get a lot worse. There's levels to it. So, once the NASDAQ is down about 3.5%, there's a higher degree of probability, more than the coin toss candidly, that you're going to get to 5% in certain environments. Just like when you break 2%, there's a really good chance once you break two, there's a really good chance you're going to see three. So, there's levels to selling. And then so what I'm doing in understanding that is I start going through this and looking for opportunity. And once I've nailed down what the thing is, and because you have to know, you have to have a thesis on why it's doing what it's doing. And I'll show you. So, once you understand this and you have a a clue about what it's doing, I'll show you this here. Let me put this out and drop this in so you can see what we've done or what I did, and then they can do whatever they like. But at 12:48, I was looking at this, and you'll see the area right here where we did this trade. So, we're doing this trade like right in this area. And I'm looking at this going, I've got three hours left in the market, and these options are trading at a dollar, $1.50, $1.25, $1.50. They're like bouncing around, and I'm like, wait a minute, I'm a dollar away from this, and I've got three hours. So, a lot of people think that options don't get mispriced. Options get mispriced all the time. That's my opinion of it. And as someone that's been trading for a while, I truly do believe that. And it's there, there's reasons why some expire and some go to zero and some do exceptionally well. But we can do that in another video. But I I've said this many times. To me, looking at the way and the volatility that the market is imploding, and thinking that a dollar or a $1.50 before you're in the money, it makes zero sense to me to think that you can't come down. Now, if you were at a put wall or something, you would think differently. But all I was telling them was like, hey, this is what I'm buying. And then I'm just watching them. I'm not doing anything.
And then when it finally got to four bucks, um, I'm get to that point where I want to trim. I'm also want to trim around 100%. You want to start pulling out up 200%. So, all I'm doing is scaling out because I know they're going to pop me end of day and I don't want to be in that, uh, end of day. So, trimmed the most at 300 and then, well, not the most, trimmed the highest profitability was 300. Uh, then I was down to about a third, then move the step to 200%. We called it a day.
The function here is if you understand this, that you understand what you're supposed to do next. And and I'll explain. And this is a really important concept too, because nobody that's swing trading didn't have a draw down on Friday. It's it's literally impossible to say that you're trading semiconductors and that you didn't have a draw down. Your goal as a trader or an investor when this happens is that you must understand that you're going to have a draw down. And the first draw down that you take is the cheapest. It just is.
So when I see something like the socks and I look at what's happening. So here's where my head is with this, and then I'll I'll get into this. They are still, meaning retail, have not sold everything that they're going to sell for SpaceX. They also are in a situation here where you're looking at the market like IGV coming in or Oracle coming in, which everybody just bought. Why did they buy it? They all bought it because they're going to go into earnings. And now everyone's looking at that and going, I don't care about that earnings play anymore. I'm I'm all about that SpaceX life. And so now they're all, they're all shifting.
But if we're to look at something, let's take a look at something like ARM and this enormous move. Do you think that they used ARM for cash? Yeah, they definitely used ARM for cash. Did ARM really break down? No. You hit the 12. Like it's not the end of the world for this thing to go to the 22 at 284 and rebuild. If you are a long-term believer in this stuff, like I am a long-term believer in AI, nothing's changed. You're just getting the opportunity if you can get in the right position, sit, let it burn to take advantage of it all. And that's what you want to do. That's what I want to do. You should do what you're comfortable with.
But to think that Tesla, all of a sudden, no wonder he wants to merge it with Tesla, right? I mean, he's not a dumb person. And I'm not saying that SpaceX isn't going to be the greatest company in the world, but you have to look at this and say there's only so much money that retail has versus institutions. And they are using these for sources of funds. So going through these names, you'd have to look at like Micron, Tesla, SanDisk. These are all retail darlings. Let's clean this off. And yeah, I'm hoping you hold the 22 here. But you might not. And you might start coming down to levels that are way, way more vicious. So I want to look at this stuff and understand that I need to get through SpaceX and that IPO before I even start looking at this stuff.
Because when you look at names like Marvel and everyone's all excited that it got added to the S&P 500. Okay, that's that's good news. I I went from 300 to 260, right? How did it act when it got added? And I think that this is really important to note. Take a look at this. So, I got added to the S&P that night and then what happened to it? It was up for a minute. Why? Because they sold it. So, the people that are still looking for sources of funds, this is what they're doing.
Whenever you have situations like this, you have to realize that nothing matters. Like it's just complete irrationality. So I'll give you an example of this. So if I go and take a look at the cues and you guys will remember as I like to say, we'll clean all this off. And we had all this winning and liberation here. We had so much winning, we had to pause it for 90 days, right? All that winning, all that liberation. You remember that Nvidia was trading at like $80 a share here. Did anything trade change about the company between here and there? No. But it's reality versus perception. And so we have to we have to understand what it is. So if you see this and you come into the market and you've got this hanging chad here, you can't be looking at this and saying, "Oh, everything's great."
Now, there was an actual interesting tale here that someone picked up in the community. It's one of the reasons why I I really like the community a lot. U I'm really glad that it's working out the way it is, frankly. But look at this here. I'll pull up the ball. This day you had a huge order placed. And it's so interesting because like if I mark these off and you look at them after these orders are placed, like a couple days later you have these pullbacks rallies, but they tend to mark something. I don't know if somebody's using this as a huge hedge or not, but I thought that was really interesting and worth sharing.
Where I think you go with this is the following. I think you need to understand that these can come in a lot more. I think if you're looking at the cues and you're thinking that this is over, this is day one, not one day, right? So understand that. Consider that they're going to go to whatever their big retail names are. The names that I think are in the most trouble that people are still looking at, in my opinion, are names like RKLB or ASTS. You know, you have these names and everyone's getting super excited about them. But the valuations of these names over, like to me, the valuations of these names over SpaceX, they're more expensive than SpaceX. So, if they're going to feel that way about this, then they're going to take the whole thing down, right? And that's where we're going to go with this. And I think that that's a very important part of it.
So what do we do about it? I'll tell you exactly what I'm doing about it. I'm staying out of the way. I'm staying out of the way until it figures out what it wants to do. And then my bias on all of this is going to just be net short until this settles down. I'm going to do intermediate trades like I always do or very short-term trades as I always do. But when I start cracking like this, you have to look at this and say to yourself, you know, do I want to be the first one in? Like I I'll be the first first in the water. No, thank you. Put Let someone else go in the water first to make sure it's going to hold going forward.
What else are you saying? Well, they're trying to buy healthcare, but that faded. Go take a look at XL Pay. They're not really buying that, but everyone's getting excited because Walmart kind of went up and it can feed upon itself. And I want to be very clear about this. So, there's names like STRL that have absolutely killed it. You're breaking out. But if you take a look at something like even this kind of name on a random, you know, Friday, this thing's down 12%. Like these, some of these names were getting absolutely destroyed, right? You can even see things that I was buying that were buying clean breakouts. I bought this clean breakout on Caterpillar. It doesn't matter. What people start doing is they say to themselves, I need to protect my capital and then after I protect my capital, then I'm going to step back into the market. Maybe something for you to consider. That's it.