Transcription
What a day. So, we're going to go through the basics, and then we're going to talk about the leaders, and then we're going to drill into what you should be looking to do tomorrow. This is going to link into also yesterday's video and Saturday's video. As always, subscribe to the channel, click all notifications.
We're going to start with the basics. We're just going to drop a line there, and that's just an anchored volume profile. And what we're going to note is that we are closing above the tip of this. So, if we look at when this formed, which was this peak, we look at how we hit here and got matumboed, got matumboed over here, lifted, doied, and then rolled. This would actually be this close right here on the futures market is actually the first higher high close that we have had on the market since we would go all the way back to October 28th. It's a pretty big deal, frankly, to close like that.
Now, the question is, can we actually get the follow-through that we need from it? And we won't know the answer to that till tomorrow, but we are seeing some signs that, yeah, it's possible. And this is always what happens in the first five days. It's like a ping-pong ball. What's been nice about the first five days is Friday, first five days of the year. Friday, we had all those options expire. So, we got to see them unwind all their puts, showed us where the money was going, and we'll get into a couple of those names today. But then we could actually sit there and watch how the market acted.
When we start seeing this with the ES, drop this to the four-hour, and you'll see the levels that I'm talking about and how you're responding to them. All of a sudden, this is becoming support. Point of control is becoming support. That's a big deal. And this value area high, we're starting to build underneath of it. And what will happen eventually is all this stuff will start moving its way higher. But what I really like about this is you're, it's pretty clean. I mean, 7,000, you're right there, and now we're looking to see if we're going to push past it or we're not going to push past it. And frankly, only time's going to tell tomorrow. We have some data coming out, obviously, non-farm payrolls this week, and we have to watch that.
Watch this though on the five-minute, and this is really important to get. We start out on the day, we obviously have that morning where that first hour, they rush into it. Got to buy, got to buy everything. And then after retail's done in the first hour, interestingly enough, someone actually was working with me yesterday in one of the comments. We were going back and forth. I shouldn't say working where I have comments about it. I always read the comments, and I will always comment when I can. And he's like, "Oh, the whole market's algorithmic." He said, "The 100% of the market is algorithmic trading." Well, if 100% of the market's algorithmic trading, what are you doing? So, obviously 100% of the market's not algorithmic trading, right? Because we're trading in the market, and we're not running algorithms. So, to think that is what we would refer to as just a false premise. Retail tends to act pretty irrationally, and they tend to react pretty irrationally during the first hour of the market, which is why you see the major swings, and you usually see where those lows and highs of any day are going to be.
You just had a pretty decent pullback, and you can see where you flipped it right here around 12:00, and you just grinded. Once you hit that area at the end of the day, you just did nothing but grind. So, it's pretty much exactly what you'd want to see here. Uh, I can't express that any other way. It's pretty much exactly what you'd want from anything on a day to see you hold a key level, and then break through that key level, and then close where you closed. It's really impressive for us, frankly.
Um, and I think when we look at the NQ here as well, before we get into some of these names, let's dive into this. It always gives me the seed company. I'm not really sure why, but if we go and take a look at this on the four-hour and dive into this, we'll notice a couple things. And I do think that this is an important distinction because it's not the same way. Meaning, you're not seeing everything the same exact way. You're not over the value high on the NQ. You're still trying to get through point of control here. So, we're not really flipping that higher high yet here.
Now, drop this to the five-minute, the same way we looked at the ES, and you'll see it. You're, you're really struggling in this area. You've been trying to get through it, and you're really having a very hard time with it. So, I think that's super important to get that you are seeing what I would refer to almost as a tale of two tapes here. And the question really is going to bode what's, how's this going to play out? We're seeing a change in trend for sure.
And when we talk about that change in trend, let's drop this to the cues real quick, and then we'll go to the cash market, and I'll show you this, and then I'll show you what I mean by change in trend. And it's not really that hard to see. You guys will remember this 626 level. We were talking about this level forever, and we just kept running into it over and over again. It was, it's literally was months of this area. You had that one area up here at 27, but really it was 26, and you just were really struggling with it. You could not get over it for whatever reason. It really became a, I like to refer to it, a pickle. So, what do we do about that? Well, we have to watch this.
Now, if you take a look at that level, let's do this on the four-hour, and then what we'll do is I'll clean it all off, and then we'll start over. You also have a call wall up here at 627. And just, you might want to remember that. And let's just put the magnet in so we don't have to play games. And when we look at this, we'll note right here that you are trying to close over point of control, which has been kind of a bone of contention. And you are making these lows and then higher lows. And you are making highs, but lower highs. You haven't made a higher high. And you haven't made a higher high on the market since October. So, when everyone's looking at this market and going, "Oh, it's run so far. It's done so much." Has it? Has it really done so much? It hasn't gone anywhere.
And this is what I was trying to explain the other day, and I really hope you guys got this on Saturday when we look at the Magnificent 7 and we look at how that's been playing out. This is what it looks like. You haven't gone anywhere since pretty much September with the Mag 7. So, we're seeing this rotation and, and we'll just do the simplest thing today. My favorite, I think my favorite quote of the day was Meta is stopping sales of their Ray-Ban smart glasses because sales are so well in the US. It was literally just, I mean, just admit it's not working and move on with your life.
So, the other day, you, you actually broke the 55, and now you're trying to close over it again, and you struggled, but you're there. But when we look at these leading names like Microsoft, Meta, Apple, and we're seeing them crack, and let's be real clear about that. You are seeing Microsoft, Meta, and Apple crack. You are seeing these names roll over. You know, it's not rocket science how this is playing out, right? You have some of them that are really trying to like get there, Amazon, and there's a reason for that, and we'll get into it, but even Google, right? So, you are seeing some love in those names, but the majority of the Mag 7, they're really struggling.
And one of the charts I really brought up with you guys, and I would strongly suggest that you take a second and look at this chart, is the Mag 7 divided by the IWM. And what it's going to show you, I'll just leave that 55 in for a moment. Uh, but if you take a look at this, you're not going anywhere. Like, you're better off owning small-cap names than the big dogs. Now, I keep hearing this comment, um, about, "Oh, when small caps lead, that is the end. That's end cycle." No, when small caps lead, that's the beginning of a cycle. Any economic cycle turns with small caps moving. That's what drives the economics, right? And then when you start squeezing out the last bit of things, it comes down to the gross margins, and that becomes the end of a cycle. Everything turns faster for smaller caps because they are smaller. So, anytime you have like a big market move, if you go back and take a look at IWM in the 90s, IWM was ripping. Everything was ripping before.com. And then as it got better and better, then it was in small caps. Then all of a sudden, it was the larger cap names that started really plowing through.
But again, we're not really going anywhere here, right? That you would want to put yourself in a position. And I just think it's interesting. So, like if I go to September 30th, and we'll just take this for a second. Um, let's go to here. We'll just find this September 30th. And we look at that mark. So, if we go from September 30th to, we'll say December 30th, which would have got you right here, you were no better off owning Mag 7 than you were owning the Russell 2000. So, you're definitely seeing a transfer here, right, of where that money's flowing. And we've talked about this for some time, but you're definitely seeing that.
So, if we then extrapolate that out and say, "All right, well, how about like KRE, which would be 15.9% of the IWM is, is, um, financial names." So, okay, so like that's lifting, right? So, you might look at the 3x DPST and trade that and say, "All right, well, this will probably lift." Labu is biotech, and we've seen the biotech names really kind of start dragging a little bit, but I actually think it's pretty healthy what's happening with them. Really, what you've done is you've gone back down to the 55, and now you're starting to try to hold. Uh, and this is always interesting because there's two ways to play that on the long side. Now, you can either go out there and short this, right? Or go long, uh, something like this, which you just go long the LABD when it hits that, you know, level. I just think it's so much easier to, uh, to short something like the LABD because eventually it'll just, you know, I mean, candidly, it just implodes. Uh, it just keeps breaking down and breaking down and breaking down till they, they wind up actually having to do reverse splits on these things. They're pretty easy shorts if you catch them right.
Anyway, so you're seeing that with biotech, and biotech holding. So, we have those names, but we're also having those other sectors that are just absolutely ripping. For example, if you take a look at UFO, which is the space, the space area, you hit all-time highs today. So, we're starting to see that kind of trading as well. And I think that's super important for us to get. Sorry about those beeps. Uh, but we just have to run through this. Uh, we'll have to deal with it because I don't have time to edit.
So, if we take a look here, you're breaking out in the UFO. And so, then you go, "All right, well, let's go through those names and, and we can, you also have Jedi, and Jedi is another one of these, but they're different names." So, what you'll find is the AVA, AV will be in one of these, and that's closing over the 55 today. KOS, right? You're over 55, and now you've got legs, and everyone's like, "Oh yeah, I remember this name. They're the ones with the huge contracts in the government." Um, you can see the reversal here, and then you can see how it broke down, and now you're getting back over that level. And I do think that there's something to this, and I do think that this is definitely an area of course of interest for anybody that wants to, you know, put money to work. Space and drones, they're, they're not going anywhere. Of course, we're seeing that, you know, consistently now at this point, right? So, we have this theme that's playing out. And I don't think that we should pretend that this is not a theme, right? You're seeing as we, we had that big launch, and then from there, we sold all the way down. I don't know if you guys were trading this one or not, but they launched this thing in the space. Everyone's doing cartwheels, and then it goes to 70 off of that $25 on a $100 stock. Like, it was, that was no joke. And this is usually what happens at the end of the year and the beginning of the year. Like, trying to do a swing trade and say, "Oh, I'm just going to have a 30-point stop on it." Like, you're not going to have any hair left on your head. That, it's just, it's just not possible. You know, you're going to go nuts. You, you have to literally look at the timing of the year and then think to yourself, am I willing to go for these kinds of rides? It's very hard to do like longer-term swings in the first beginning of the week. What I tend to do with it, if I really want to do it, is I'll just marry puts to them. It's just easier, but I, I just find it easier just to trade them and make what I can make.
And then we saw this breakout, Rocket Labs, and you have a perfect cup and handle. This is one that we're in the community. We're doing quite well with it. I think it was up six today. So, you're, you're seeing the, the money flow really into these names, and that kind of consistency of where you're finding pockets of strength is really important.
There's obviously we have to talk about Venezuela and what's going on there. And I think that that's, uh, pretty interesting as well. If I look at the socks, you're getting diversification in the socks. So, 8% of the S&P, or maybe it's 7% now, is Nvidia. Nvidia can't really rally. There's reasons for that, but Nvidia gave this speech today, and I'm really going to dive into this, um, in tomorrow on Wednesday. We're going to do something from now on called the strength report, which will just show you which are the leading names, and what you're going to find out about this, and what I think is so important. They're names that we've been going over, you know, forever.
But what you're seeing is as things heighten in Venezuela, and I'll touch base with on this on Saturday. I got asked a lot of questions on Saturday about why don't you touch on Venezuela? It's not a, it's not a blurb. You have to understand the connections between Venezuela, China, Russia, and how that's affecting critical minerals. You have to understand why it was done. I, I mean, I can do hours on it. I, I'm going to, I'm already working on Saturday's video on it already. Like, there's a lot of moving parts, and which companies are going to benefit, etc.
But the point that I'm getting out about Nvidia or looking at AMD is what you have to understand is their compute. Compute is great, but now you have all the compute you need. Now, you need memory and storage. A lot of you guys will remember I think the thing was like a hundred bucks when we were doing it. We saw the breakout when Western Digital broke it out here at like 50. We started talking about this sucker, and obviously today, you're just completely breaking out. And the reason you're breaking out is the CES speech by Jensen. You have a couple things. Jensen's speech where he said the biggest market in the world is going to be memory and storage AI. He said it's not even a market yet. He's like, "That is going to be the biggest market in the world." And it makes a lot of sense because you need to store it.
I explained it in previous videos months ago where think about SanDisk and Micron as the bank tellers, right? And then you want to think about, you know, Seagate and Western Digital. They're going to be the banks. Very similar. Think of the Pix and Axes like who's, who's around after the gold rush, right? Wells Fargo is still around, right? They're still kicking, right? You need a place to put the gold. What's the gold? Our information. Where does our information go? Right? It goes into Seagate. It goes into Western Digital.
What's interesting about this is SK Hynix, and I'll give you a little bit, I'll give you a preview. Here it comes. So, if you look at Hynix and you look at Samsung, both yesterday, and I'll get into this in Wednesday's video tomorrow night, but you got to have a little humor. So, if you look at like, why are they going so high? I'm glad you asked. They came out last night and said, "Oh, by the way, we're going to raise prices again 60 to 70%." Now, if you look at the past, Micron has raised their prices on like one of their chips. And to put in perspective, in six months, one of their chips has gone from like a price of five. I'm trying to baseline this for you guys, from a price of five to a price of 30. They're saying right now, Samsung and Hynix are saying, "We're going to raise them another 60 to 70% by the end of this quarter." So, everyone's margins and everyone's numbers, they're just, they're just dead wrong here on their numbers. Like, they're just, they're just way, way off on their numbers. And I really think that people need to be aware of that. I really think when people look at that, they have to understand that that's what's happening. And I, I really can't stress that enough.
So, for someone like ourselves, understanding the moving parts, which we just did, we understand what's moving, where the money's going. And here's the problem with this. And if I could just give everybody when I read the comments, um, you got to drop the ego. Like, if I could tell you something, I've been doing this for two decades. Ego doesn't get you anywhere, man. It's all about, did you make money on the trades? Did your trades make you money? Yes or no? Right? That's all that matters. Not the market's wrong. This guy's out to get me. This one doesn't know what he's talking about. This one was hot. This one's like that's all that's all bush league nonsense. What matters more than anything, right, to me when I look at the market, and what matters more than anything when I, when you view all of this, is did you make money with the ideas that you thought that you could make money with? And then you build on that.
I'm going to do more educational videos on Thursday. And I'm telling you this for a reason. When you, when you went into Friday, you had a game plan. And so, like for here's a great example. I had a game plan on silver, and this is where I want to go with it. So, that's where I'm going. I had a game plan on silver. And my game plan was when I saw silver this day, I'm like, "Silver's dead. That's it. It's dead. They're going to keep raising the margin requirements on it. They're going to squeeze everybody just like they always do, and they're going to bag hold, right?" And so, then you come into that day, and that's Tuesday. Now, if you wait, and there's Wednesday and Thursday, and that's what your chart looks like. Now, it's not breaking. It's holding. Here's Friday. That's what you're getting on Friday.
Now, after that, what happens over the weekend once they did that, it was on. And the reason for that is every single country went out there and said, "We have to lock down our own critical minerals." People don't know that Venezuela, that Maduro actually went to China and Russia. We'll get into this in Saturday. Three hours before they came and got them, and Russia and China says, "Don't worry, we got your back." It's absolutely fascinating story when you really look into it. "Don't worry, we'll, we have, you know, you're part of BRICS or you're going to be a member of BRICS," because that's what they were trying to do with them. And then, you know, all of a sudden, he hears the helicopter, and that's pretty much it.
And I think that this is super important to get. So, what you've seen since then is you've seen China just put on the controls. And when they put on their controls, and they did it very clearly with Japan, saying, "You're not getting access to anything that could possibly be military right now." And then the war games start in Taiwan, and then we watch copper start to break out, and then you're going to start seeing gold start to break out, and then we're going to start watching Alcoa out of nowhere start to break out like this. People say, "Well, it was breaking out." It wasn't breaking out like this. So, I almost called you, buddy. It wasn't breaking out like this, buddy.
So, when you see this, if you don't change your thesis or you don't understand the macro event that's going on, you're going to get left behind. This is exactly why I always go through this with the stool and I try to ingratiate it in people's mind, and let's do it. But you have to understand that when you have a macro event, it's going to change the fundamentals of a company or of a commodity. Then you're going to have the technicals that are going to change, but you got to figure out which part of this stool you're going to lean on. So, when I look at this and leaning on this stool right now, if you're not leaning on this macro and you're not equating any of these geopolitical events to what's going on, there's a better way to say this. Sometimes you're the windshield.