Transcription
Well, you definitely have some developments today that are worth going over. That's for sure.
On these slow volume days that you have, you never know what you're going to get, but we definitely have something worth going over today. So, there's a pattern here, and that pattern didn't complete. You got the exact opposite, which is really what you want. What I'm going to do is I'm going to clean all this off and I'll show you exactly what I'm talking about.
One of the most predictable patterns are rising three and falling three patterns. And you'll see them, even if they're not exact, you'll see them in certain places. Now, I'll give you examples in a moment of of where you can see them on this chart. Uh it's pretty clear where you can see some of them, but and they're not always exact, but this does a really good job. It's from Trading View. Um I'm going to put a link down. I really don't tell people to ever look at something, but that the Black Friday sale on Trading View is ridiculous. It's like 80% off. So, I'll I'll link it. It's good till Black Friday. If you want it, it's there.
Um falling three five candle bearish pattern signifies continuation of existing downtrend. First candle, long red, three short greens, body range, first yada yada yada. The decisive strong bearish candle. Bulls could not reverse the downtrend. Okay, so you can't reverse the downtrend. They're trying. This is where it gets interesting to me because that's exactly what you had today. Down up one, two, three. You always want that third one to be in that area. When you get above the control, it's negated. Do you got above the control here today?
Why I like bringing these patterns up, either the the falling or the rising, either one of them, is you're never going to really find them as you do in a bulk, but you will see them and it's hard to miss like down up one two three down. You'll start seeing them all over the place if you really start looking for them. Um, and they are they're pretty obvious when you see it up down 1 2 3 holds. It's not textbook where you ripped up, but it's the the down and then you have the what people would just call the three black crows, but then it stops and then it reverses. So, it's very similar to what we're going over, but inversed, right? And that's like, for example, here's a dogee, down three, up, and then that marks a bottom. You'll see them if if you look for them. But when you have down, up one, two, three, and then you're taking that out, you always kind of pay attention to those like down up 1 2 3 and then wham, you got destroyed, right? That kind of stuff you always want to pay attention to. And we we negated that today. So, that's a start.
You know, you're getting a lot of new data coming out in a very very quick period of time. And just to go through this and look at the volume, you don't really have any. So, you have to take that into account, too. We still don't have any. But just as quickly as you could have down volume, you're having up volume. And I think that's really important to note. There's a couple things here that are worth our time to go over uh and really zoom in on here. But if we just take a look at the day as a whole, you're coming in very clean, rising up. They take you all the way back down to the opening price, shake and bake like we like to refer to it. And then they just kind of hang you here all day at that 80. What was it? 6850 and then from there you're retesting the levels and then of course they're just going to go flat into Thanksgiving because God knows what's going to happen over the the Thanksgiving holiday I guess. I don't know. But you are seeing rotation in other sectors and there are three sectors well two in specifically that we're going to go over here in a second that I think are worth mentioning.
So if you look at the ES you are flipping and if we go and take a look at the S&P you can say anything you want and you know it's so interesting because I always appreciate your guys comments. the amount of comments where I'm here saying, "Oh, well, you said it was bearish and I'm saying that, hey, you're negating here. You have some information." Guys, you have to realize the market is completely dynamic. And as new information comes in, you need to change. You need to adapt. If you don't adapt and you stick, you're going to have a really bad time trading. And the sooner you learn that, that as information comes in, you you always go and look at the new information, say, "Does my thesis make sense?" Like literally, you ask yourself that, "Does my thesis still make sense?" Sometimes the answer's yes. Sometimes the answer is no. But you have to be honest. It's not about ego at all. It's about being right. Right. And being right means you made money.
So you would see the undercut here. And now from there, we're just lifting. We're over the 55, the 12, and the 22, which is what I use. And this is just in a really important time for us to review. What does that mean? Because people like, okay, that and what? Well, when you're above the 55, for me, it means I have institutional support. That's how I view the 55. That's why I always put on the brakes on any name when I break the 55 and why I'm always interested when you cross back over the 55 because it means we're getting institutional support in the market. That's what it means to me. It could mean whatever you want it to mean to you. The 12 to me means do I want to be swing trading this or not? So, if I'm above the 12, swing trades are more likely to work. If I'm below the 12, swing trades are less likely to work. The 22 for me is a cut off on the bulls and the bears. Above, are the bulls in charge or are the bears in charge? If I'm below, the bears are in charge and above, the bulls are in charge. So, for example, yesterday or two days ago on that Monday, I shouldn't be swinging trading. Institutions are not interested and the bears are in charge. And then the next day, you're coming in. You get all that new information. And now what do you get? You get institutions are saying, "Okay, maybe we want to buy. Maybe there's some swing trades out there, but the bears are still in charge." Now that's reversed. It's negated.
Now, at the same time as that, does that mean that you're just going to go straight up? No. But it does mean that things are flipping. So what I tend to do in these kinds of environments is also just look at where you are and very very simple just going to draw it so you can see it. I use the bodies. You should use what you're comfortable with. But what I try to do is I try to get as close to the body as possible and you can see you're sitting there. Sometimes it's even easier for me just to do it this way and just do it with the open high low close so I can say it. So we tried to break out and we failed. Does that mean we are out of the woods? No. You might not get through this next level. You 6875 might reject again. It might take time to build and then make another decision. You could always flatline in here, come down, retest, but for right now, this is what you have. So instead of going out there and saying, "We're definitely going to come back down or we're definitely going to break out." This is what the hand that you're dealt right now. So when you come in on Friday, this is what you're dealing with on that low volume day. And you know, don't get it twisted. None of us really know what's going to happen.
So if I clean all this off and look at it again, you would say, "Oh, we have we have institutional support. We have the bulls or the bears are in charge." No, the bears are in charge, but I can swing. So it means that S&P is doing a little bit better. Now, if we start taking a look here and we start looking at the DTL and the downward trend line, this is where it gets super interesting. From this tip to this tip, we're above it and we're above the higher high. Not only are we above all that, but I think this is super important. when we drop from the peak, this is your first close over peak VWAP since it broke. And I think that's significant. We'd want to stay above that. And if we got under that 610, then we might look at it and say, "Oh, hey, we have a problem here." This is how I'm viewing the market right now. And there's some other things out there, but wait, there's more.
So, if we take a look at the VIX, the VIX is completely imploding. That is, there's no indication whatsoever that we're going to be in a position here where we're going back to this level. This is the signs that you're bottomed. Now, you might not like that. It might make you sad. I don't really care. It's just what's happened. So, here you are. You were at 20. You broke 20 and now you're trading back down. If we go back to move again, I would strongly suggest that you look at this. One of the comments I read yesterday was like, "Oh, it didn't get to the same level as April, therefore it doesn't matter." You had a completely different set of circumstances. You had the president standing out there with a piece of cardboard saying winning and liberation. Very different than what you have going here. Here you have great earnings and a bunch of people that are all of a sudden out there reading the repo market and CDS's, right? They're all on Twitter telling you that the end of the world's coming. How's that working out for them? So once again, you've reversed. You you're ringing back down and that is doing what? That is marking once again a level that is giving you what? A bottom. All right. So the VIX is collapsing, move is collapsing. You can either look at this and accept what's happening. Or you could sit there and say, "We're definitely going to roll over again cuz my my buddy Bob that lives in the basement eating hot pockets told me." So either whatever works for you. You need to do what you're comfortable with.
If we go here and take a look at S5FI and we divide that by NDFI and just look at how that's setting up once again, we're getting tired in here. Now, I don't have Wednesday's data yet, but we're starting to get that area in here where it's starting to stop going up. And when that starts to happen, it's definitely something that we want to pay attention to. Remember, all these peaks are all marking the S5FI, NDFI, and we remember what that is. But for those, it's stocks in the S&P that are above their 50% and those here that are above their 50%. And we want to see the NASDAQ outperforming. And right now, the S&P was, but it's stopped. It's hitting this level. Down, still hitting that level. And that's definitely important to us. If we really wanted to get into it, we can go S5FI and view it by itself. We could then come here and look at the candles and the number that hit yesterday, which is what? Above 50. Okay, so that's a 50 close for the first time since November 11th. And that could be seen as, yeah, we're back over the 50 and you want to pay attention to that. Now, people could say, "But it's deteriorating and then you're going to roll over again." Maybe, but right now, you're 50% of all stocks in the S&P are now above their 50-day moving average. Not exactly a bearish environment anymore. It's more bearish, frankly, in the NASDAQ where 60% cuz only 40 are above. And if you are out there trading and looking at that, yeah, that's definitely something that's an issue and certainly something that needs to be addressed, that could once again continue and roll back over. But right now, when you look at this market, it's very hard to see that happening, specifically when we start looking at what's happening out and the broadening out of these sectors.
Again, I deal in facts, not fiction. If you want to, you can go read a Hardys Board book, but for me, I just want to look at what's happening and make money. For example, we kept hearing about the end of the consumer. That's all we kept hearing about the consumer. The consumer is in a lot of trouble. Here's ANF disclosure. I have positions in these. Um, you know, I just say it just so people know where my head is. But I've had position building in this thing since back in here, back in the day, back in this day. And the whole reason I was doing it because it didn't make any sense to me. And it was just based upon the earnings. If you historically look at the earnings of this stock, and I've gone through this before, you earn 360, a$1.50. I'm at what? Five. Come to here. All right. I'm at two and a half. I'm at seven and a half. And you come into here and you're at 2 and a half. You're at $10. The stock was trading at six times trailing 12 earnings. The S&Ps at 22. Like it made it made no sense. Were they never going to make another thing ever that they were going to sell for a profit again because of tariffs? It just what happens here is a great example of reflexivity. And we're going to get into it in greater detail in some of these videos where I explain it. But you swung so far to the other side, it was crazy that when they came out and just did what they said they were going to do, the stock exploded to the upside. Now it's at 95 and people are going, "What are they what are they all thinking?" Oh, I have to get in retail. Retail's hot right now. I thought the consumer was in trouble, right? Always do your own research as much as you possibly can and always understand how this stuff is really playing out. And what's happening here is that no, the consumer doesn't really seem like they're in trouble.
If you take a look at Ross Stores, does the consumer look like they're in trouble? Is the stock's absolutely ripping? And then you sit there and you take a look at this on a weekly basis. Does that look remotely like anybody's in trouble at rest stores? No. How about Walmart? We're closing at all-time highs on Walmart on a weekly chart. Alltime highs. That's not what a recession looks like, guys. Just for the recession heads out there. That's not what it looks like. And so when we start to see this stuff, we have to understand that this is actually what's happening. And you can either take advantage of it or not. That's up to you. A lot of this happened yesterday with the Fed chair, too. And that's why we saw the housing market move. We'll get into that in Saturday's video if we have time. But this was a great example, Kohl's. We started playing it in here. Actually, we actually bought it previously and actually were fortunate enough to hold it into here when Reddit tried to turn it into a meme stock. What they really overlooked was you got a new CEO in here. They have their kitchen sink quarter. He says, "Look at me. I can do it." Nobody really believes the first quarter and here you are. Now, what's so fascinating to me is the tangible book of this company is $33. Meaning, if somebody bought the company, tangible, not intangible book, there's a difference. intangible. You could say what the what the company's name's worth, but tangible. A actual assets versus liabilities. Tangible. If you look at that, you're at 33 bucks. You're at 24. It makes it makes zero sense. When people actually went through the earnings and looked at it and said, "Okay, well, there's a dollar. All right, you missed here. There's another dollar." And now you have that turnaround, right? So, what do you really have? All right, so you're 20 times earnings. Okay, it's not really great, right? But going forward, they doubled their earnings. So, they were looking for 70 cents and they're going to do a $140. Does that look like somebody that's struggling? No. They're buying with their coal bucks, I guess. Well, who knows what those crazy kids are doing, but they're certainly there and and it's all the rage apparently. When you see this, just accept that it's happening, right? There's no real reason to deny that the consumer is doing better. And it doesn't mean that every single one's just going to explode, but when you look at it there and here's Urban Outfitters, right? Earnings. Then you go and take a look at this. How'd they do? They beat exceeded expectations and they raised guidance. Okay? See the theme? Then you just you're better off going out and finding out what the next one's coming out with earnings, right? Which just happens to be the one with that Susan Sydney Sweeney girl, her special pants, right? So everyone's going to want to buy her special pants for Christmas. What do you think's going to happen here? This was last quarter. You never know how it's going to play out, but probably should be a fun one to watch next week.
So you have the retail side of that, and then you go and look at XBI, which is just ripping. And the only reason people don't want to buy XBI is because it was the only thing left when the market was dropping. Now that the market's stabilizing, it's biotech and then it's biotech and then it's more biotech. Why? No tariffs. So you don't have to worry about winning and liberation for one, right? And you don't have to worry about what's happening geop in geopolitics. You don't have to worry about any of it. You're not dealing with interest rates, although it does matter with interest rates with those kinds of companies. And so we're seeing some of these names that have just absolutely exploded and they're extremely volatile names. And then you look at names like INSM and what has this really done since it got that drug approved back where was it on the 16th back in here? all it's done is completely ripped. So you have those themes and if we start overlaying that and saying all right well where does that put us with you know Google I thought that you know tech was done AI is done no it's just rotating winners and losers as we're starting to learn we're going to learn new terms like TPU now apparently we're all going to be experts in that by next week so when we start to see this again is does that look like the end of the world for Google how about AVGO no that hit all-time highs today that's not how this ends that's not how any of this ends so if you're looking at this now and understanding why a trillion dollar company is out there putting billions into a product that was the architect was AVGO and they're buying it through Google and you're not understanding that they're just rotating the assets into where the money is actually going and how they're allocating it to make it more efficient. Again, that's not how any of this ends.
So, we can see these rotations happen and those rotations can take a toll on the market and drop it down. But, as I stated last Saturday year, I think it was every year from 91 to 99, we had a 10% correction like it was nothing. And we're watching these little things happen where you're coming down about what what what are you really down? You didn't even make double digits. And everyone's like in panic mode calling for a top, you know, a bubble. I would just take a breath, actually watch what's happening in the market, read it daily, and then make the best decision that you possibly can. That's it.