Transcription
It's a massive swings today. We do have a setup here on the S&P 500 with the way that we closed. I'm a little concerned about the NASDAQ and what we saw today, but I think there's some reasons for that. We're going to spend some time on that so that you're prep for tomorrow. I do think it'll be kind of wild.
You can see your close right here. You really don't need me for that. 75144. I do think it's important to note that you have really can't even get back to that put wall here. Take a look at the NASDAQ. This is a pretty perfect setup. You came to the 55, you held that level. You're now closing back over the 12 and the 22. They are declining. So, it's not great. But here's what's interesting. We've done this in the past and then we've just reversed right back over it. The question is, does that happen again?
I think the most important thing we can do is talk about the big event for tomorrow and then we can dive into it from there. Those 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.
So, in front of us is the symbol for SKH Heinix and they are the ones that are going to have an ADR tomorrow. Now, it's not exactly a public offering. It is an offering to the US and listing in the US. So they're looking at doing it. I believe it's right around $149. This is really interesting because it's only going to be onetenth of each share from Korea. But SKHENX is a DRAM company. It is one of the biggest DRM companies. And we're going to have to unpack what this means. And I'll tell you where my head is with it. And then you guys can always drop in the comments and give me your opinion. And I I'm definitely open to opinions on this one because I think it's going to be pretty wild. And I think you're going to see a lot of volatility tomorrow.
So the first thing about this is when it goes public, people are going to get access to it. That access is going to be overs subscribed. So those people will either have an indication on where they're going to stand today. Most likely they'll know exactly tomorrow, but it's like 28 to30 billion is what they're looking for. And it was completely oversubscribed. The symbol is going to be SK. I think it's SKHY. SKHY. And you'll probably see nothing yet on there. Uh but then of course you'll see it tomorrow.
So what does this mean for us? Well, the first thing is I think that money is going to flow very differently because of this. So the first thing is a lot of people are buying EWY because of Heinix. It gives them exposure to it. So the question is are we going to see domestic inflows slow down into South Korea? Because now you have an ADR over here. Remember you have Taiwan Semi over here. Taiwan semi-trades at an enormous premium to the actual underlying stock that is over in Taiwan. And the question is like why? So that people don't have to deal with the currency and and whole other litany of issues, right? Also access. Not everyone can go on their trading platform. Most people can't go on their trading platform and buy a stock that's in Korea or in Taiwan. So EWT, yes, it moves, but it doesn't move the same way. and people don't feel the need to have those inflows because TSM is such a huge part of EWT of Taiwan.
So then if you go take a look at EWY, well these two companies are anywhere between 40 to 46% Samsung and SKHEX and SKH Heinix actually passed for a period of time. So the first thing is the way that I'm leaning is he should go up when they get the money and the way that they're going to price it because they're going to price it over whatever the close is on the market today. But the interesting thing is what happens to domestic inflows tomorrow and I do think that there may be an issue there. So I think that EWI and KOU are definitely worth paying attention to tomorrow. This is the 3x bull and are we starting to see is that why we started to see this because it's coming and frankly EW if you really think about it since this was announced EWY KOB obviously you as well have not been able to continue to rally well why is that does it have something to do with that are we starting to see that rotation early is that one of the reasons I I'm not in that camp but I do think that domestic flows slow down if you could buy an ADR here versus that that's the first thing.
The Second thing that's sticking out to me, and I'm trying to just wrap my noodle around it because it's not every stock that's like this, but you have semiconductors, right? The stock semiconductors. So, what did we do today? Here's the 12 and the 22 and the breakout. Here's today where we got to the 12 and the 22. And what did we do? We hit and we stopped dead. And you're obviously going to have a cross. So, we rallied up today. And I'm not overly surprised by today's rally considering some of the news that's out there on capex. And we're going to get to that. But if we take a look here at semiconductors, you ran right to this level, the 12 and the 22, and you stopped dead. And then at the same time, you hit the 55. So you don't have to have on there's not like an on andoff switch. It's not either up or down. You can consolidate for a period of time why we see rotation throughout the sectors. And I truly do believe that we're seeing rotation throughout the sectors. So I am in that camp. But we hit a critical level today and we stopped dead.
So then if we take a look at some of the names that moved today, you'll note that the socks really ripped on semicaps and we'll get back and tie it on to Heinx in a second and KAC ripped all the way up. Lamb Research ripped all the way up, right? And then they hit the 22 and they stopped. Again, doesn't mean that I have to take out a bottom. You can consolidate for a period of time. These things have had huge moves. But if you look at the semicap names, they all rallied up and then what did they do? Well, the people from the gaps were able to get out. So they take them. These are names I actually bought the other day and I'm not really doing anything with them, but they had like monster moves today. There was nothing really to do.
So then what we're starting to see is then we have the other side of the trade where we're hearing that capex is done. So everyone's going to cut capex. You remember Meta, I think it's this week they reinvented themselves. Well, let's give them two weeks. I think in the past two weeks they reinvented themselves probably three times. We had the glasses, right? We all we all were going to walk around with those glasses and be like Kylie Jenner. It was going to be cool. And then no, now we have excess capacity and we're going to sell the excess capacity. Today we're going to have a large language model and we're going to increase our capex budget.
So very quickly, there's a really interesting way to look at this. When you increase your capex budget, for every gigawatt that you increase these data centers, it equates to like 20 billion roughly. It's between 15 to 25. But it gives you an estimate. So when they come out today and they said, "Hey, by the end of the year we're going to have seven uh gawatt." So you're like, "Okay, well that's $140 billion. Oh, by the end of next year we're going to have 14. Okay, well that's a quarter of a trillion dollars." Like when you start just equating the numbers that way, you're like, "Wow." And so today today's new thing was, "Oh, we're going to turn this on. We're going to have a large language model and we're going to sell subscription services on it." And then the other day they're like, "Oh, we're going to be like clawed or what was it? Open AAI and we're going to do imaging because that went so well for uh you know chat GPT. I think they lost 16 billion. Anyway, so that was today's move and you can see the reversal here and I'll show you the reversal on Meta and it was just a monster move. You gap down because they're essentially stating that they're going to have to increase capex. So when they increase capex, we get a certain move. The move we get are in two very specific names. Those names are Samsung, right? So the why Samsung because they signed an agreement with Samsung and they said, "Hey, we're going to sign this long-term agreement. We want access to what you have." All right. So Samsung does what? DRAM. All right. And then they also signed an agreement with SanDisk, right? Which does ND. All right.
So let's go take a look at what happened today. So we gapped up huge and then if we just look at the simple things again, we ran right to what the 12 and the 22 on good news. So the idea that capex is going to go away is the exact opposite of what's actually happening. Meta actually inc is going to increase their capex. That's why it gapped down and then after they trapped everyone they said by the way we're also going to do what AWS is and we're going to model ourselves and yada yada yada. And then you had this huge squeeze on the move. Now whether that continues or not remains to be seen but the capex argument for capex cuts coming from Meta who's supposed to be first with the capex cuts. That's where everyone's money is. Doesn't look that way. And then you have Amazon that came out and just raised $28 billion in bonds. Why? To increase capex and they're expected to increase capex because AWS is selling out pretty well. They're doing very well with on their model. So it does make sense. So what we had here was a decrease in capex reverses to at what an increase in capex actually. And we'll get into that when the numbers actually come out. We'll see it if it's accurate or not, but that's where I think this is going. And so then SanDisk rips and Samsung rips and everyone starts buying what? Semis again because they're like, "Oh boy, we shouldn't have gotten out of that trade because that trade's going to be the one that, you know, really works."
At the same time, you get the flip side of the trade. See what Micron did? Ran up here. At the time of recording this, I'm actually short Micron now, and I'll explain. I'll get into it. But if we take a look at this, what exactly happened? What transpired? All right, we ran right to the 22 and we rejected. And we're seeing this over and over again. Whether we look at the socks or whether we look at SanDisk or whatever name that you're looking at, you're seeing that you're getting to these critical levels like the 22 and then you're just hitting them and you're rejecting. And it doesn't really matter what name it is, but they're all getting to the same level and then they're all having cells there. I use the 12, the 22, and the 55. What's been happening and what's been working really well is this has completely these kinds of moves has completely inflated the volatility. And so a lot of people aren't aware of this, but if you take a look at the VIX, you'd be like, "Everything's fine. The VIX is at 15." If you say, "Well, you need to look at the VXN." Then you would say, "Well, you're at 26." Right? Like, there's no problems here. There are no droids here. So, if you sit here and look at this, you don't really have an issue, right? That's how you would look at this. And what people tend to miss with this kind of stuff is actually understanding the volatility. And that's why I always try to get people to look at like the ATR. Now, the ATR on these have peaked and they're starting to go sideways. That doesn't mean that you're going to roll over. It just means that you're setting up for a period of consolidation. What tends to work really well in these periods and if you go and look at the implied volatility of the names I'm showing, the implied volatility is like in the 99th percentile. So, selling puts in these environments is actually very lucrative if you know how to do it in comparison to actually just even owning stock because the implied vol will just collapse on any, you know, on any contradictory move even going sideways. the envi uh the implied V will just collapse. Just takes time, but it will collapse and we're seeing that besides the theta decay just that you'll get that you know you have all that gamma that just kind of goes away. So you're starting to see that. But what this did was it presented a huge opportunity for us as traders to understand this. Stay with me because we're going to tie this all together.
So here, let me just show you this. So yesterday on the move and we started to see it push and I I'll get to this but yesterday we sold to open right at the close the 1680s or sold to open sorry uh the 1680 puts uh at 70 and I have others out there at the on the 17th and the 21st of August um that are obviously doing very well but they're they're a little longer term clearly but these things imploded. So you have this huge gap up off this move just to kind of put it in perspective. So you close here at 1730 and we were able to get in there was actually like 1680. You could see the move on it. We I'll get to it. Um but there's like 111 points but out of that move were able to cap, you know, capture that. So they went to 55 by the close because the way it moved, but they were at 570 today and that's what's happening here with these moves. So you're actually able to stay in them longer and then as long as it trades sideways, you really don't care because the time is collapsing, right? You're losing the time value out of them. But you're also the the gamma is just like it's just going away because you're not going up or down 200 points, which is what you're already expecting it to do because you're looking at like the ATR, which we just went over. So these kinds of strategies work really very well. But if you don't want to do those, then obviously just being long or short obviously makes sense, too. But there's a lot of edge in that. So even something like this where people are getting chopped up from like 1,800 to 1860 where they're trying to figure out what's going on. If you're short puts, you're not really worried about it. You're just kind of like, well, let's see what it does in an hour and then we'll make a better decision. And meanwhile, the time is just going away and the volatility is collapsing, especially when you're doing more of the shorterdated stuff, right?
So anyway, so where this where does this lead us? So that when we start hitting these levels and we can't break through them, and there's a huge one right here at 1894. I can actually show you this while we're here so you can see it. I'll show it on the hourly because it's even clearer there. Uh but you can see the neckline. And here I'll drop it like it's hot right here so you can see it. Left head, right shoulder, neckline. So we wanted to see today like, hey, are you going to get above that or not? So what did you do? Left head here. I'll draw it out real quick so that you can see it. And then I can just go here and we can clone that. And it doesn't let me clone the right way. I wish it would just let me grab it so I don't have to like make it stretchy. But there it is. And yep, I said stretchy. So, let's just do it again. Clone since you've already had to endure that. Oh, look at that. That worked. Huh. Learned something new every day. There it is. Left, head, right. All right. Neckline. So, you broke the neckline and then you drop down. And you can always just measure these out, right? And see if it's complete. You just take the percentage. So, you had a 21% move from the high down. So when you break the neckline, it should be 21%. Where that one go to? 20%. It's not an exact sign. So you actually completed the head and shoulder pattern, which is kind of interesting. Anyway, you're back to the neckline. You broke over it and now you're kind of sitting right on it. So you need to make sure that you hold that. But I think that this was super interesting because it allowed us to stay in the trade. So I've been doing a lot of these kinds of trades lately. I I walk through them, but the point that I'm getting at with it is I'd rather do that and have that kind of optionality than own stock here with something this volatile because I don't know what's going to happen tomorrow. There's a lot of people thinking that these names are going to move up because he comes out.
So now we're going to tie it all back together, right? See, when I buy something like KAC or those kinds of names, like we bought those yesterday and they were super technical trades because you came down, you held and then there were some other key indicators and oscillators that actually held on shorter time frame charts that told us that, hey, this is probably a bottom and it fired on all three of them at the same time. And you can see that, right? And then they just all happened to gap up and just miraculously, guess who came out with capex increases today, right? You know, it's not rocket science that, you know, you're seeing that these names move as Micron comes out and says, "By the way, for the next 10 years, we're going to do this trillion dollar buildout and 40% of all DRAM is going to be in the US from Micron." Like, it's not it's not rocket science why those names would move. You can't really build out without four companies and these are those four. We just went through them. All right, so let's get back to this.
So, this ties us back to where we're at right now. Before I forget, if you're trying to get in the community, please look for an email. A bunch went out yesterday and more will go out today and then enrollment will be closed uh until September. I think there's four days left or three days left on uh this batch that will go out. I do onboarding calls with everybody that joins if they want. So, it takes me time to to get through everybody. Anyway, um links in links in description. All right, cool.
So, here's Micron. We rally up and then we come down. Well, why why are we weak and why are we closing at the low? Why do you basically have a shooting star essentially here on something like this ahead of coming out? And I'm going to tell you why I think this, but I'm going to just tie it to SpaceX, which is completely different in a way obviously, but the thing with SpaceX, when SpaceX came out, everyone thought that UFO was just going to absolutely explode. All the space names were going to explode, right? So, if we take a look at SpaceX and we see how this is moving, this is June 16th was the peak. June 17th. Go take a look at UFO and you can see right in here, May and that's when it peaks. Why is it peaking there? It's peing two weeks early. Why? Because they're getting out of this because they realize that you're going to see pressure because they're going to make room. This is what we're thinking. They're going to make room for SpaceX. And then you start looking into where this actually came out. Right in here is where it came out. Everybody got excited. This is it. We're going to hold the 55. Then we popped over and then wham, that was it. It's never been back. It's never been able to get back there. A matter of fact, this is really crazy. But if you went and looked at this with open, high, low, close, and you just drop it here like it's hot to that bar, you rallied to that bar and that was it. So, you've never been able to get over that level. And the reason for that is you only have so much money. Meaning these institutions, they only have so much money. And the hedge funds and the pension funds, they only have so much money. So if they're going to allocate to a name and are they going to buy Rocket Labs? Well, clearly not, right? What they're doing is they're buying what they think is bestin-class. And best-in-class to them right now is SpaceX. So why go out and buy AS? Now people are going to argue with me because you don't understand. I got it. I don't understand. But AS is getting smoked. Rocket Labs is getting smoked. UFO is getting smoked. Like it just is. They're just facts, right? They're not feelings. Get over it.
So when when you look at this, you have to understand what's happening and why it's happening. And then you have to just remember why it happened. See, like the biggest thing that I think people miss with trading and investing is that when you can unpack why it happened, then you could just put it into a box and then when you see it again, you could say, "Okay, well maybe that's going to happen again or maybe there'll be a derivation of this." So what I'm thinking is happening here. And there I go again thinking, right? That always works out. I actually believe that they're getting out of Micron and I think they're getting out of Micron and we'll find out tomorrow to make room for Heinex. I think they're getting out of Micron to make room for it. And I think it's really very interesting because if you have, let's say that you're Kalpers or you're this trillion dollar fund or you your billion dollar fund, whatever, and you can allocate 10% to these names that and you're looking at this and going, "Well, we can only have 10% memory. Well, what's the best memory name?" Well, Heinix is growing faster than Micron and it's cheaper because it doesn't have the multiple that Micron has because Micron's in the US and those names don't have it. That's why we were buying EWI. Those names are trading at six, seven times earnings. So now you're looking at saying I can go out there and I can buy Heinix and I don't have to worry about currency exchange or anything else. I think that's what you're seeing. So I think that you're that's why we're seeing pressure. I don't know that it's going to be at the same level of the entire semiconductor space that we saw with something like UFO. A matter of fact, I don't really think it will be because you have very different kinds of companies out there, right? Like Nvidia and all these companies are very different. But as from an allocation standpoint, if you were allocated to memory and you were allocated to memory through DRAM, so I think it's also important to get the difference between DRAM and ND. But if you were allocated via just DRAM, well, why do you want to own Micron? And I'm not arguing whether or not you do. But you might look at it and say, well, we're going to sell our Micron and lock it in and we're going to buy Highex because that's what we want to do. And we think it's a better we think it's a better valuation. And I think that's why these names are coming in. And I think that's why some of these this stuff's at risk. And you're going to see that tomorrow with DRAM. DRAM has a lot of these other names in it that are overseas. So, I do think that you could have a supply issue tomorrow and you're going into obviously an option expiration tomorrow as well and then the long weekend. So, once we get through that, we'll be able to get a better sense of what the socks is doing.
I do want to wrap with this because I think it's very important for people to remember this because it keeps happening over and over again. Number one, and we went through this publicly um in the video public pre-market live that we do every morning at like 8:15 to 8:30. 8:30, who am I kidding? So, if we look at these levels, 724 has just been your nemesis even before like the 12 and the 22 got here. It's just really been a level. You can see that right now. I do like that you're over and I do like that we undercut and I do like that we held and it's quite possible when this is over that we just do see some stabilization and maybe this is the last thing we need to see on Highix before we see stabilization. We rejected that pretty hard today and it's over and over and over again. So when the market's telling you something, you need to listen to it. So when we came back and gap filled here and then we rejected and then we hit this level and we can't get over it, you don't want to just convince yourself like this time it's going to be different. Just look at what the market's telling you. Get through the event, trade what's actually happening, and then go from there. That's it.