Is Smart Money Buying Oil Now?

Well, it's official. We have a correction in the S&P and the NASDAQ. What's interesting about this is what sectors are actually still holding and what's it going to take to turn this ship around.

Crude oil has one of the largest moves in history in a month. And it's not just the US. It's also all the emerging markets as well as the all-world indexes collectively are down now. And this is something that we really have to talk about because we have to figure out what's going to turn the ship around. There's a lot that we have to look at, especially on institutional order flow as well as smart money and dumb money. Energy is up over 42% on the sector since the beginning of the year, which is one of the largest moves it's ever had in that short period of time. How sustainable is this? And when we dive into this, we see a couple key things. Not only the breadth of the market, but why is the stocks not taking out a lower low when the NASDAQ is? Because software has no problem doing it. By the end of the video, we'll have a clear lay of the land and we'll go through some very specific names that are actually holding up very well and those countries that can benefit the most when this starts to stabilize. Let's get to it.

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Welcome back, everybody. Now, the most important thing that I can say about today is this. When I look at the S&P on the weekly, we have a level right here that we really do not want to break. And that level is going to be from February 25. And we can see in here that we're at that 6163 level. The issue that you're facing from my standpoint is every rally where you tried to get over the previous level is being rejected and it's starting to come down pretty hard. There's a pattern called three black crows. This would have to be fuller for that to be complete. But you start to see what we refer to as a cascade. What's interesting is this is not very common. Meaning it is not common to go down past four weeks in a row. Historically, there's a lot of data behind this, but 1, 2, 3, 4, and then you get a reprieve. 1, 2, 3, 4, 5. It's really rare if you do five to not do six. So, just keep that in mind as we go into the short week. Historically speaking, it's just not very common. One, two, three, down, and then you get a bounce. It doesn't mean that it can't happen. But when you see the patterns, they're there. One, two, three, and then you get a reprieve. We're getting anything but that. One, two, three, reprieve. One, two, three, reprieve. Doesn't mean that you can't keep dropping. You'll have periods where you'll see it. 1, 2, 3, 4, 5, 6, 7, right? But it's not very common. It's very, very rare to do to get no one to find a level. And the reason for that is because they're de-risking all asset classes at once. And this tends to accelerate the situation. The problem is it's been like a frog on boiling water, and we're not getting there. So, we have this level in here. Here's the problem: is that the futures market to me is a precursor of what the market's really going to do. And what I mean by that is if the ES breaks, then usually what happens is the S&P 500 breaks as well. Now, I know one's a cash market, one's not, and people will say, "Well, that's not really how it works." If you go back historically and look at it, it's pretty much exactly how it works. Hence why it's called futures.

But what's important about the ES on the weekly and what I want to focus on here are a couple key things. We have a level here which is the anchored VWAP tied directly to where we are supposed to hold. We did not hold. We went through it like a hot knife through butter and we broke it on the weekly and then we're trying to get above it and it became resistance. So this gives us an understanding that we are below that. Now, the other thing that this does is we have to put a weight on this and drop it like it's hot and understand that now you also have these weights that are sitting on you. You had a CT sell level right in here and we went through that as well. That was two places in here. 6512 was the big one. We opened right on it on the week and then we just went through it. The good news about this is that they may be close to being over. Um, I read some news on that this weekend, but we'll get into that probably Monday. I don't think we'll be able to cover it today. That is absolutely huge. But if we do the simplest things and we look at the ES on the weekly and then say to ourselves, "All right, well, where does this really put us?" I I think it puts you in a a little bit of a precarious position because you'd start looking at the market as a whole and saying, "Well, here's October 22nd's level." And October 22nd is really the bottom of the market after they injected all that liberation, freedom, and free money into the market. And then what by the time we worked that out, that level became an area of interest where we have held. So a major area of interest that we've been tested on the futures market really puts you at 5716. Tie that to this, put you right around that area where you've also held before. Um, are we getting back down here? You know, time will tell. The bigger issue is the crack here and that becomes a problem. Does this get resolved? We have to look at the oil market for that. We're going to get to that in a second. But I think overlaying these charts and then going back and then doing some of the simple things, which I think you really want to do here. You don't want to get too esoteric. Just look at what's going on. And you can see that the RSI is completely utterly broken. And the problem here is that there's no safe haven. And this is what people are starting to realize.

When we look at gold, for example, and we go take a look at the gold market, you'll note that gold peaked. And I'm showing weekly for now, but we can drop it like it's hot to daily. And if we just do simple things, go there and go, "All right, well, here's March 2nd. Here's the 27th. That's when this all started." And we can see from there that gold can't get anywhere. Okay, you could do it with silver, too. And the reason that I think that this is important is because what it's showing you is that with no asset class that's safe, they're just getting out of anything. If you go and take a look at TNX, even there, and say, "Well, what's going on there?" Well, where's your safe haven? Well, it's certainly not the bond market because all they've done is sell bonds. A matter of fact, if you look at treasuries from the 4%, we'll call it, to make it simple, to 4.44, you would realize that you're over well over 10% more yield in a month. And this overlays even when we start looking at crude oil futures. And again, we had one of the greatest moves out there when we were told, "Hey, this is probably going to end real soon, blah blah blah." Well, that's not the case here. It's not really ending very soon, is it? A matter of fact, what we're seeing is we're actually seeing this start to lift. And this was really critical for crude oil on Friday. And I I'll show you this. And what my plan to do here with today's video is to give you a lot of objective fact and then you do whatever you want with it. That's really the plan here. But there's a lot of moving parts between smart money, dumb money, what institutions are doing the last hour of day. And the equity risk premium is not really going to save you here because it's actually getting worse as the market's dropping, which is not great because then you don't get institutional support. You also have a blackout period right now for corporate buybacks, but hopefully that's coming to an end on this short week.

If we take a look here at crude, look at the close. That close right there is the highest close on crude that we've had going into the weekend. So when we say things like, "Oh, can this continue?" Well, we're working off this control bar. Candidly, we can say it and comments are no longer helping the market. Meaning just saying, "Oh, well, we're going to end this is going to end soon." No one wants to hear it anymore because of what's going on worldwide and we're watching what what's happening out there and it doesn't look like it's going to end. What what we would say and what we do think is important is that when we look at the VIX and we see that the VIX is in a position here where it's actually starting, meaning we're seeing the VIX actually start to participate in the market. Thank you very much. You're at a 31. Historically, a 31 is not really where you need to be for this to end. When we start looking at liberation and freedom 2025, that was a 60 handle. I'm not suggesting that you need to get there, but when you start getting into the 40s, it gets wild and it gets wild pretty fast. And we want to be cognizant of that. And I'm not suggesting that you have to get up here, but you need some kind of capitulation because you're not having any leadership at all. Matter of fact, you're having the exact exact opposite of leader where they're just literally whack-a-mole leaders. I was talking to one guy in the community this weekend about this and exactly what's happening is they're breaking out new sectors that were leading sectors and then after they break them out they're triggering people into those names and then they're playing whack-a-mole with you. You're seeing more and more of that behavior and it's not just that it's in leading names where you look at things like GEV which is a huge institutional favorite. They break you out of all-time highs and then all of a sudden you're down 18% in two trading days. This kind of behavior traps traders and it's usually not an end. It's usually the rotating through those sectors.

There's a couple good things here from a more breadth perspective that we're seeing that it gets it's gotten so ugly in some areas that there's only so much uglier it can get. And I'll show you what I mean by this. Now, by understanding the breadth of the market, this will make life a little easier for us. So, in front of us is NDFI. And NDFI is just the stocks that are above the 50-day moving average on the NDX. So, when we're at a 14 here, that means that we're in a position where out of those names, 86% of all names are below that day. And if we go and take a look at this area historically, and I'm going to go to 22 and just drop it right there on that low, we will see that the probability of getting below here and staying below here is days, not weeks. So I'm going to say that again. So the probability of getting under here is pretty low. And then the probability that you stay here is days, not weeks. So how many days on average are you below this? And you would argue that maybe it's a couple here in here is like three or four bounce back over couple more days in here. You maybe you were down here a week and this was October 22. And down in here you were down here a couple days as well. That doesn't mean that the bottom comes in, but it does mean that there's a bounce out there and it's coming. So we need to be cognizant of the difference between a bottom and a bounce. A bottom means this is the bottom and it's definitely in and let's go and then we want to put on our long-term trades. A bounce is on the short-term side, oh, we're going to bounce. Okay, so there's some names out there that I want to buy and then I want to go take a look at them. The question here is out of those names that are in the NDFI, like what names tend to hold? What names, you know, don't tend to hold? And we can get to that, but we'll do that a little bit later. But if you know, you start looking at stuff like a um and a when we look at this, I'm not really sure that we need these kinds of names to, you know, to break down. But when we roll this back, let's roll it this way and then we'll jump into this. Uh if we go to the breadth of the market here on the S&P and we look at this chart, we'll see that we haven't really taken out the lows on some of these. And we're going to spend a little time on this because I think it's really important. Um, when you start seeing again that like this is the five, the 20, the 50, and the 200. But when you start seeing this kind of stuff where all right, we're back down to where we bounced three times, like there's pro it's probably out there. What I think is really compelling is the 50-day. And again, we'll get to this, but when we look at this as a whole, the breadth of the market is just awful. The argument that I'm almost making is that it's so bad that at some point you're going to have to bounce. Now whether that bounce leads to anything that is a bottom that remains to be seen and you have a lot of moving parts to this. So we're going to discuss that in a minute here starting with smart money dumb money. But when we look at these levels and say okay well where was trough valuation where the low was in on 20 October 23 or with winning and liberation day you know you're you're not there. You're you're just not. And so we'd have to look at like how has this played out in the past? Well, historically when we were getting to those levels, if we just drop it down to here, we would note that when we were here, the 50-day was already where it is. So, I think that's somewhat interesting as well. But take a look at it from this perspective. And I did think that this was super interesting on Friday. And when we were going through all that carnage, um, you didn't make a new low on here. So if if if you're trying to find some semblance of are we bottoming and that's really what you're looking for here. So there's 17 and we didn't make a new low. I don't think many people would have thought that and more names did not drop below than did last Friday, right? You would think that because you'd look at the S&P and you would say, "Well, based upon the amount of carnage, the breadth of the market had to get worse." And if you use the 50-day as that breadth level, no, it didn't. And then again, if I take this level, that is that low. And I think that's the best way to do this to show you this. And we come across here and just say to ourselves, all right, so let's take this level and let's drop this over for four years. And I'm not saying that everything's going to be fixed and rosy and the straight's going to open up and that we're not going to roll back over, but from a from a bounce perspective, which I think that finding some semblance where you bounce is the way that a bottom starts, then you come back down and you retest that, right? But if we look at this area and you come back to 22 and I'm just going to take the five years, we can go back to the pandemic. Doesn't matter. But I I don't think that this is as extreme as a pandemic unless, you know, it really escalates, which of course it could. Um, none of us here are, you know, experts at uh, you know, global warfare, even though we we might play that on Twitter. Um, okay, that's aggressive. Hold on one second. Let's come across. There it is. And let's drop it here. Perfect. So, what is this showing us? I mean, how much time on the 50-day are you actually spending in that area? A few days, right? I mean, like this is 22. This is October 20. He put the bottom in. This is when it changed what he was going to do with rates. This is when we paused all that winning. All right. So, what does this mean? It means that you could be near the tail end before you see a quote bounce. But if you go back in history and look at these times, this is vicious. I just refer to it as think about the end of a dragon's tail whacking you, right? It's the whipping of it that's going to kill you. And so, and it does it for two reasons. One, this is where people are max short, which is a huge mistake, right? Because when it zips, you just won't move fast enough and then you'll think you're wrong. And we've all been there. And then two, you still waiting for the end of the world and it's already happened and it's just not glorious enough for you. And that's that's really where the rub comes in. So, you know, keep that in mind. But getting into this, I don't think you can look at this and say, "Oh, we're going to bottom because of XYZ." If the VIX was where it is, then I would look at this and say, "Oh, yeah, you're at a 40 here, but not where we are." Now, the emerging markets VIX when we get into that, which we will today, that's giving us some signs that are worth paying attention to.

But let's jump into smart money, dumb money. This is a great time for us to take a look at smart money, dumb money because of what's going on there. And we're going to have to spend some time really diving into what these institutions are doing because they're clearly driving the ship right Now, I mean, it's it's pretty obvious, right? But I just want to start with the basics for people that are newer here that haven't seen this before or seen us do this up here. We don't refer to this as smart. We don't refer to this as dumb. How we look at this is very, very simple. We look at this as smart money being institutional order flow and we look at dumb money as being retail order flow. And that's very important to get. So, just so we say it again, smart money is institutional and smart money, institutional money moves very, very slow. Dumb money retail and retail moves very very fast, very irrational, jumping around, very reactive, institutional, smarter, but they tend to move slower. And so by understanding how this is actually calculated, you can use it differently than the mechanism of like, oh, smart money's buying, so therefore I should buy. Um, yeah, not so much because if you really look at like your peaks in here on smart money, right, and where they're at and then what they're doing and how they're flush and they're out of the market here and then the market and and retail's still in the market. So, I don't really want to be out for this, right? So, I don't really view that as a as a genius move. You know, that's not really like a big move to me. So, I I want to understand that, right? And I mean that, you know, I just don't think that's like the best move. Um, but you always want to watch because of that reactive nature. Like this is, you know, peak retail and not that not like we're the brightest bulbs and I'm in retail like everybody else, but not like we're the brightest bulbs in the world. Like, oh, this is it, man. We got to get out and like obviously we're going to pause too much winning. So, that leaves us in a different position here. Well, what do you do with this? Well, what you really want to do with this is look at the relationship between what institutions are doing versus retail. And that's why it's so important for you to get the name. Now, this is 5 years. And what we're going to do is we're going to drop it to three. And then we're going to zoom in on this sucker. And we're going to make it and because I think we need to and just get to one year. Let's clean that off for a second. Yay. I can do things. And let's go and click here. And what we want to focus on again is just we can see that three-year. All right. Cool. What are we seeing here and what's transpired? Well, the one thing that we've talked about in the past with any of these levels are the crosses. And when you get them, you want to pay attention to them. So right in here, we had this cross. And I believe we actually even pointed this out and said, "Okay, when you see this stuff, you have to understand that retail is going to sell faster than an institution will buy because retail moves fast, institutions move slow." If you want to buy something, let's say there's a car you want to buy or or watch or whatever, something you want to buy, right? You're looking at it. Maybe it's a magic pen for you. Who knows with you? But what you want to do is you want to see how fast that price is going to drop. And if it's going to drop more and you can buy your magic pen for a dollar versus 10 bucks, well, that's going to make sense, right? Okay. So, when we see these crosses here, we understand, oh, well, that's that's why that happened because institutions are just like, ah, just let retail puke and we'll pick out the pieces. In the community, you always hear me say this statement, but just let it burn and then we'll just sort through the ashes. And that's really because I the way that I was trained, that's what institutions do. They're just like, ah, just let it all burn down. They'll panic. They'll get their margin calls. They'll panic. We're sitting on the side with cash and we'll come in when we want. And so what that tends to lead to is when institutions start to sell, they don't really have the same issue because retail's more than happy to take them out of their position. It's very different than saying smart money, dumb money. Because as institutions are getting out, retail's like, "Whatever, boomer, we're going higher." And then retail's getting flush up in here and capturing this whole move versus institutions that are like, "Wow, I probably should have held all that, huh?" Right? See the difference? And it's really important to get that because once you get that, you understand why you want to call it institutional versus retail order flow. And I like the way this is calculated candidly. I think they do a really good job of it.

If we look at this, we have to say, well, what's it really telling us? And I think that this is where we're going to dive in and and get into the the yearly. And what this is telling us more than anything, and I waited for it to happen before doing this, if we just take this section here, we can see that what happened Friday. I'm laughing because my niece says that all the time. What happened? Uh, but what happened in here is that institutions are buying again. And what happened on Friday is that retail is starting to panic again. This gets super super technical. But I do want to point something out. We're going to want to watch this. And this is why I always tell people to subscribe because what we go through here is super important because if we don't take out that low and the market takes out a low, that means that retail is bottoming. So, I'm just going to say this again. If you don't, and we're going to, you know, we should dive into these piece by piece. The more I'm thinking of it, um, if you don't take out that low and and this stays where it is, and the market takes out a low, and if you don't take out a high up here, specifically here though, then you have something that we have to pay attention to. I'm going to tear this apart piece by piece, and we'll get into it. So, in front of us, we just broke out smart money confidence by itself. And I just think it might be easier to do this. And here's the point that I'm getting at. If you see us hitting a high, hold on one second. Hold on. Hold on. If you see us hitting a high right in here and then we take out a lower high, that's interesting. So, if you take out a high and then you take out a lower high, that's an interesting spot to take a look at, right? If you take out a high and you take out a higher high and a higher high, you can see that that's not the cat's pajamas. But the minute that this started to rotate, what did you get? A bottom. Now, obviously, you have a catalyst and an event. And you can always get a catalyst or an event, but understanding that, I think, is really very important. So, if we look at this, what is it telling us? Well, it's telling us that we peaked maybe, but we could always it could it could always get worse. So, we have to be cognizant of this that yes, you're starting to form the beginning of it. But to be perfectly honest, you really need to get above the line. Now, whether or not we do or not, we might not. And sometimes you just didn't need to, but it also boils down into looking at this and compare and doing comparative analysis. And let's let's break down the one part we really want to look at.

So, I started this this whole thing with wanting to talk about this. And really, what we're looking at here is going to be dumb money. And the point that I'm getting at here, I'm just going to use a three-year for time sake. But if we look right here, that's the low. Then we hit a high and now we're here. So, does this make a lower low? And that's really what we want to focus on because if you do make a lower low and we take out a low like you did here, if we did, okay, that's not helpful at all, is it? So, if we take out a lower low here, that's pretty interesting area considering what happened in there. I do think there's something to that. Also, just the fact that you're not taking out the lower low. Even if we don't get a divergence, we want to pay attention to this. But you could also look at this from a different perspective. And this is probably the easiest way is to also look at the spread. But instead of waiting for the spread, here's the thing about what I'm doing. Instead of waiting just for the spread, by watching to see if this takes out a lower low, it can get you ahead of the spread. So when we look at the spread here, and this is the spread between uh smart money and dumb money, which we refer to as institutional. All right. When we get up into this level on the spread, what tends to happen, and again, this is doesn't mean it can't go higher. I mean, you thought it was over here and it wasn't over. There was way more, you know, and so if we look at this area in here, what is this telling us, right? And so, these become areas of interest. And you don't always need to get up there, but here we are again. So, if we look at the past three years, every time that we got up into this area, this was an area where we did see some type of bounce if it started to turn in here. Now, why would it turn in here? Well, if we made a lower low on what? Dumb money, right? Then that might negate this and you might push higher. So, we have to watch that, but it's going to give us that opportunity. The same thing with watching the pieces. So, you take the pieces apart and you watch those. And I I'll keep following this. This is why I always tell people to subscribe to this because we follow through on this stuff and then we just kind of see how it goes. If we go back historically and just look at this stuff over time, um, and you see here from like 16, you can see these peaks as well. And those peaks tend to mark bottoms. You don't always have to be in there, right? Like here's 11. And then you can see where you're at. And again, it doesn't always mean that it's going to happen, but it does mean like, hey, I want to pay attention to this. Uh, this is going to be after the financial crisis. And you can kind of see your peaks. You get a little levitation. Doesn't mean you can't roll right back down and have to focus on another one. And you can start seeing how we're dropping here and the curvature of what's happening. And then you finally put that bottom in. See, when we look at smart money, dumb money, and then we go back and look at the VIX, and it's really important to get all the pieces because you're you're looking at this saying, well, how do we know when this ends? You'll know, but it's not going to be until then, and is it going to be some kind of announcement?

If we look at what's going on with the straight and you look at what's going on with crude oil, you have to look at this and say, is it getting better or is it getting worse? My sense of it is that crude's adjusting to the new normal and that if you start looking at how some things are getting through the straight and how Saudi Arabia is moving oil around because you are seeing some signs of that. There was a a note today on this and they they actually update this site. You can go to it it's worldoil.com but Saudi Arabia is ramping up the Yaboo I'm going to butcher it. It is what it is. Exports towards 5 million, which is means that they're ramping up. I think it's at seven when they updated this article. Um, this is big because they're going to start diverting tankers and everything out of this out of the region. Uh, you know, you look at this map and wonder who thought it was a great idea to have everything, you know, in a cul-de-sac, but, you know, I guess that we'll have that conversation in another day. Um, but if if we look at something like this, this is really what's going to drive us. And I think the de-risking that we're seeing, I don't think it's going to stop. So when we look at smart money, dumb money, and we're saying like, are we there? You're looking at it and you're saying kind of, but it could get worse. But are you near the tail end? Are you near the beginning? And I think that that's really how you have to start looking at it because you know, as I stated, it's going to accelerate like everything does into a curve, right? Like into the curve, everything accelerates. And then what happens? Well, then it starts to drop off. That's where I think this is heading. You can see some of this in the last hour, like the last hour of trading. There's actually a really good metric for this. Let's let's take a look at it.

So, what I'm constantly trying to do in these videos is I'm trying to give you the tools that I actually use to make decisions, whether those decisions are long-term or short-term. And I think that with what you're dealing with right now, you need more of a barbell strategy. So, some of the things I'm going to show today are going to be long-term. Some of the things that you're going to see today are short-term. Just understand it's mixed and match. As always, I just want to point out what the source is here. You can see it down here. It's Sediment Trader. I have no affiliation with them, but I do like to point out when I use sources. So, they actually do a pretty good job with this kind of thing. The last hour. Now, why do you care about this? It's important for us to always understand when we're looking at something what the heck we're actually looking at. So, we can see the chart and you're like, "Okay, Rocky, what's this do for me?" Let's just take a sec and just go through what it is. So the last hour, it's an indicator of AD line for the last hour of trading of the SPY ETF. So that's what we're measuring, the AD line of the last hour. If the last hour of trading is up, it gives it a one. Add it to the AD. If it's down, it subtracts a one. Uh the model moving average, you put a moving average on it. That's not what we're doing. And I just want to be clear about that. Um, because they're saying, well, that's how you get your trend change. That's not how I use it. But I want you to understand the calculation. And I'll show you how I tend to use this. So, if we just go right back to it here, you're going to just see these little peaks and valleys and then you'll go, "All right, well, we're peaking here. We're peaking here." Why this is important is because it's much more longer term. And what we just want to look at is what what is it currently doing in this environment. So, if we took from this environment over and we just look at that area up here and that is drawn god awful. Isn't that bad? All right, let's redo this and we'll come over here. Come on Rocky, you can do it. So if we if we look at this you can see that for the last hour they have just been selling and selling and selling. This is important to get because it shows us that institutions are not alleviating this and that's something we want to pay attention to. So what I tend to do with this is not so much look at it and say oh well I need it to be this over this moving average because candidly just by looking at it it's not going to be over any moving average that I want and I'm not going to really use that as a change of trend. What I'm going to suggest is that when this bottoms, it tends to mark a bottom. And you can see that very clearly here where that's it. We're done going down and they're buying the last hour. And what you'll see when they start buying the last hour, even from this peak right here, when they start buying that last hour, you tend to put in a bottom. I don't really use this from a top perspective and say, "Oh, because of X, then why, right? That we're maxed out here." Because there's a whole litany of reasons why they could continue to buy for a very long period of time. But what this is showing us are a couple key things. And I want to use 10-year because I just really want to get this out and just show it very quickly. But if we come to here, which is where we're at, and just draw this line across, and we look here, we would have to denote that over 10 years, this is pretty much a low. Like, you don't spend a lot of time under this line. So, we're going to drop it there for a minute. And then what we're going to do is we're going to come here, and I'll show you what I mean by this. And you're just going to have to deal with my awful drawings for a moment here. and how the crooked they are. But if I drew a box up here and then I went over and I drew a box below, you would have to say over 10 years, where have you spent the majority of time? Well, you've spent it above that demarcation line that you drew. And that's a valid statement. So, what we want to do is we want to watch this area. And this is again longer term. I'll monitor it and then I'll just post it because it's important. If they continue to sell the last hour, that tells you that they're still getting out of the market. Now, over 10 years, what we'd want to do, and this gets really hard, too, because you're looking at this area, and you have to remember, I almost want to take this area out because this is when they injected $1.7 trillion in the stock market. So, it throws everything off, right? Because you had all that money that's floating out there. So, it it kind of throws it off. But if we look at this level and say, "All right, well, let's say that it doesn't throw it off." And let's just use the behavior of where people are, meaning what is their behavior during that period of time. Well, you could get down to this 520 area. All right. So, we can get down to that 520 area and then back here in 2015 16, we probably got to let's call it 510. So, if we look at where we are versus where we spent the majority of time, this is probably getting to a point where it's getting pretty close to being over. That is a long-term statement, not a short-term statement. So that means that you could start to see this coming down to this area and then people looking at this and saying, "All right, well, I've got nothing left." And again, think long term when you're looking at this because what I'm suggesting is, yeah, you could definitely 100% accelerate to the downside. 100%. You always can. But the question here is how much more do they have in the tank to get rid of when we start looking at stuff here. And this is obviously very different than when we look at smart money, dumb money, but it's certainly worth paying attention to. And if we zoom in on this, and what what I've done is I've just taken a snapshot of three years right here. And what this is going to do for us is it's just going to give us an indication on what's going on. Let's clean all that off and say to ourselves, all right, well, where are we? So, if we'd come to this level right down here and just draw that line across and drop it like it's hot, cuz I know the kids still say that. That's going to tell us something. That's going to tell us that they started to re-buy at the last hour and then something happened. And we all know what happened, right? But we can see this here. and they started dumping again. And since then, they've been dumping pretty hard. And if you look at this, they're not really stopping. And if we really want to get technical about this, which we do, I what I've done here is I've highlighted exactly when this last hour has started to fall apart, which is 22726. That's when they reverse course. And since then, the last hour cumulatively has not changed. So what what again does this mean for us? Understand the event that caused the selling. understand that it's going to take some part of that event to get this to come back and a lot of this really has to do also with what's going on in the bond market and we should talk about that.

So the old adage when to get out or when in doubt get out actually is the old adage and and what we want to focus on is go all right well what does that mean? It means that when they don't know what's going to be affected they just get out of everything. Matter of fact had a statement actually I can just show you. So they it's called the great disconnect. BlackRock downgraded US equities amidst Middle East energy, but it wasn't just the the equities and that this is important. What they've done is they've dialed down risk across everything. So, it's not and this is what people are understanding when they're looking at the market like why isn't this rallying? Why isn't that rallying? And the bottom line is when there's this much uncertainty, when in doubt, get out. And that's exactly what these large firms are doing. And that's why this ties directly into what we just showed you at the last hour. So you can start seeing how these technicals or these indicators are actually connected to real moves. What we're doing here is we're just looking for crumbs. And the more crumbs we find, the better decisions that we can make. That's all this is, right? You actually want to trade what's actually happening, not what you think is going to happen. So when we look at something like high yield and if I took this, and what we'll do is we'll turn it into a line. And then over that, if I drop in LQD, which is going to be just corporate, just straight out corporate bonds, you'll see that they are also selling down. And if I type in IEP, well, let's do it this way. IEF, sorry. And we get the seven and 10-year Treasury bonds, they're also selling down. So, when we're seeing this and we go to that date again, it's the same exact date as the last hour. And hopefully you see that. So, what does this mean for us as we're watching this actually? And these are really big moves for bonds, by the way. If you own a bond and you're getting 5% on it and then all of a sudden that that bond loses 4% of its actual principal, it's a problem because now you've just all you're getting in your interest payments, you have to hold the bond or wait for it to come back and god forbid you're levered. And do you think these institutions are actually levered in the bond market? The answer is yes, they are. This becomes a problem. But exactly what's the problem? Because it's all asset classes. It's not just equities. And that's what people, this is what I think people are missing. See, if we take a look at gold and we come to this March 2nd date, we can obviously see that you have a peak in here. And people would say, "Well, this makes no sense. You should be buying gold." When they don't know what to do, when in doubt, get out. And if you go and take a look at these dates from February 27th tied into the last hour, that's exactly what they're doing. They're just derisking everything. And the question becomes, for how long? Well, when you take a look at what's going on in crude oil and we see this enormous spike here and we go to the 27th again, it ties directly into, let's clean off my thousand lines for a second, directly into this date. So, if we can pull the thread and we say, "All right, well, we know that this is what happened. We had a 77% move. This was the greatest move we've ever had in oil, by the way, in a given day, ever." Um, you know, I think it was going going back to when it was on record. It was kind of crazy. But anyway, the the important thing about this is no one's going to look at this chart right now and say, "Well, that's that's the high." And and we don't know when this ends, but we know how long this has played out in the past. We could do that. We could also say we also know what the catalyst is going to be when oil starts to flow. And that means what? Well, that could be the straight opens. That could be other ways that they start getting it to these different countries. It could be a mix of things, but oil prices need to drop or else we're going to have a problem. And that problem is starting to show its head and it's also going to become a problem with inflation. So, we we know what the issue is and we know how to deal with the issue. Right? When in doubt, they're getting out of everything. And I I want to make that really clear that you're not seeing this huge safe haven. A matter of fact, you're starting to see it accelerate, which is really what you want because by the time it accelerates, it starts to it starts to end. But you know what it is. That's the important part of this. So, we want to focus on that. So, what what would you use as an indicator during this time? Well, if this crude oil is the thing that's driving everybody nuts to de-risk, then when oil starts to come back down, then that's going to put us

In a position where, oh, okay, well, if oil starts dropping, that's going to alleviate some of the ass crosset selling. And it's not just going to be in equities, it's going to be in the bond market, it's going to be in gold, it's going to be across everything.

The only two constants since this started, there's only really two constants that you could hang your hat on. One is a stronger dollar in this environment because they have to go and buy oil and they all want to control, obviously, you know, oil. But that's definitely what we want to watch. I, I really don't want to be over 100 here. I don't really view that as a, as a great thing here, and this starts to become a problem for the market because of the reasons why the dollar is rallying. So, we would look at the dollar as well to make these decisions.

See, we're not seeing a safe haven. And I just want to point this out before we go further into spec specific names. But if you look at Germany and what's going on there, it's from this date again, what are we saying? Complete capitulation. They're just, get me out of everything. If I show you Italy, you'll see the same thing. If I show you Poland, you'll see the same thing. There's only a couple different areas that you're seeing this. One of those areas was Norway because of how they're set up, um, and their, their country in regards to to energy. So that's pretty much it. It's one big trade. And right now, the majority of asset classes are just being derisked and unwinded, and they're just literally just buying dollars and sitting on the sidelines waiting for this to get some kind of clarity. Whether that comes soon or not remains to be seen, but this is really important.

So, when we understand that it's one big trade, which is really what I'm getting at, but you can see it through the different asset classes. Let's take emerging markets for a second. And if we look at emerging markets, we can see right here that we had a support line back in here, and we can see that we broke that. Some would argue, well, can you have to come back all the way to this level where we had all that winning and liberation? And no, I don't think that that's where this is going, but it does become a thing where not only is it the price of energy globally, but for emerging markets, it's the stability. Now, you did see some end pass there reached where it looks like India did reach out and when they reached out and said, "Hey, we're sending ships to the area," which they did do. We're sending ships to the area, um, we're adding, I think they're sending seven ships, and Iran said, "Yes, we're going to allow this for humanitarian aid." Um, what, what Iran doesn't want to do, and I'm just going to give you my two cents on this, and you can do what you want with it. They don't want to annoy the entire region. Not everyone. They don't want to alienate everyone because that's not really the game plan in my opinion. But it does become a point of contention where if you start, and India has a relationship with Iran, it does get to a point where it's a problem.

When you start looking at this kind of thing, I think it's super interesting to look at emerging markets that are actually below our winning and liberation levels and then understand, yeah, they're really tied to energy and oil here through Iran. But when this settles, these kinds of moves, I, I do view these as things that you're going to want to look at a little bit longer term. If you even go and take a look, just to go off on one quick tangent before I go back to my point. Even if you start taking a look at UAE and and what happened here and how this dropped, you're getting to this point again where it, it's kind of crazy because, yeah. All right. So, you have energy stability, and so you're not really falling apart, right? But what is this doing for us? See, see some of these things are actually starting to get to hold, and I'm going to go through some of these that are actually starting to hold. Some of these names and sectors that actually gripped pretty strongly on Friday, and we should really spend some time on this. But I, I have to look at something like energy here and go, well, is it because some countries have actual energy that they don't have to deal with this as much as countries that are reliant on energy coming out that are going to have to deal with it more? So, who bounces first, right? And to me, when this ends or as this alleviates, I think it's going to be the emerging markets. But this is where it gets to me, super interesting.

So, let me clean this up. This was, uh, this was our trade plan for the week on this name, uh, in the community. Actually worked out pretty well. Uh, but if we go and take a look here, you can see that exactly what you wanted to happen, didn't want to have happen, unless you were short, happened, uh, and you broke here. And so, like the easiest way to short this, I'll just show you real quick. Um, if you have, you know, the guts to do it, uh, is Ko Ru. Um, and you can see right in here that that is completely broken. And that this will start trading sideways, you know, when this starts to happen. But they're very reliant, right, and very reliant on energy. Uh, we broke here. And so when these names start breaking, you have to start looking at this and going, "Okay, well, how bad does this really get?" That's a question. That's a great question, but you have to look at this first and what we just did with EM and understand that these are the leaders in your emerging markets, and they're breaking their 55-day moving average. So, is this just getting started? Do they support this level in here, or do they just get out of the way? My sense of this is that every major fund like BlackRock is literally looking at this and saying, "Get me out." Which is really good for us if we have patience, because that means the names that you're going to want to buy, you're going to get opportunity on. And I'm going to go through a bunch in a minute here on areas that I'm looking.

But to, to connect the dots. So, like let's get to it. So then when you look at EM for a second, right now, take a look at this in front of you is VX EM, and a lot of people don't look at this. Why? Because they don't have to. Now, I'm just going to zoom all the way down for a second so you can see how crazy this can get, right? Because this is obviously the pandemic. But now that we see where the pandemic is, what we're going to do is we're just going to drop a line at the high, and we're going to drop a line at all our winning and liberation. And what we're going to see here historically is that they are huge outliers over the past from 21 to 26, call it five years. And what you're looking at is the emerging markets VIX. And a lot of people really, they don't look at this. And for rightfully so, like, like, okay, now I need to, now I need to look at the emerging markets VIX. Like you don't have enough on your plate. What I think so interesting about this is if you kind of take a look at what we saw on Friday, um, you actually saw it back off. And I think that our understanding of this might be what's driving emerging markets to have a problem. Well, it's energy and oil. So if they, for some reason, start to alleviate that, I think this VIX backs off fast. And if this, and again, that's a big if. Like you need this to happen, but you need a game plan. So, in other words, what you want to do here is like a playbook. And this is what I've done, and I've done it over decades, and it's really helpful. You want to spend five minutes literally writing down, "If this happens, then this should happen." Right? So, in other words, you'd be like, "All right, so they're going to open up the straight, therefore the VIX EM is going to drop, therefore the ones most tied to energy are going to benefit from that. So there, I would go long INDA EWY because of the memory sector, unless you think AI is dead, which it's not. And then I want to go long Taiwan as well." All right, cool. Or maybe you want to stay away from that. But the thing is to actually write it down so you have a plan so that when it happens, you just act on it. I would watch this because I think that this is going to give us signs before our own situation. And by own, I mean the US.

Now, in front of you is EM, and then I put the VIX below it. And so I wanted to show you so you can see how crazy this got with the pandemic. Well, I mean, everything was shut down, so clearly. And in here, you're going to see a lot of spikes. I have a tough time with this because of the amount of money that was shoved down everyone's gullet. Um, and then the problem with that is it really just throws off everything. So, if I realize that, okay, if I get rid of this part of it, because of, again, you just go look at what the, the Fed balance sheet was, you can go and see here that, okay, well, from getting rid of and puking all that out, what's, what's been a guide? All right. So that if we've gotten over this 40 handle or up to this level that we just hit, we really have only hit that from 22 on after this ended, right? We got done that selling. What have we hit here three times? All right. So if we've hit here three times, what happened during those three times? Well, we hit here, and then we got kind of limp wristed and bonked around a little bit. All right, cool. What happened in here? Well, we had winning and liberation, and then it was so much we couldn't handle it all. So we had to pause that winning liberation and take a breath. And then what happened was the market bottomed, and then we lifted from there. And then we can kind of see from here that you're in the same spot. Now, does that mean we're going to miraculously lift? No, you have a catalyst. But understanding where you are and how this played out in the past is hugely important to you, especially when you start combining this with some of the other pieces that are going on.

See, when you combine this with what's happening in the bond market, which we're going to roll this all back to, it'll start making a lot more sense. So, now that we understand this and we understand where we're at, I'm just going to do myself a favor and copy that because I really like this chart. So again, I have to do these unedited just for for time's sake. So you just get to listen to some of the ramblings, but let's go, let's go to this because I think that this is really important. See, what, what people are trying to understand too is like, why are you going to buy bonds versus buying the market? And this is where it gets super hard because you're looking at something like TNX, for example, which is obviously the 10-year yield, and you're watching it rally. Now, people say, "Don't, don't chart yield. Never chart yield." I, if it moves, I'll chart it. Like if you want to be like that way, then go and chart the, the bond price. Cool. Whatever makes you happy. But if we start looking at these areas like these peaks, you're not really breaking that area. So then if we came to here and we looked at the shorter term, yeah, you definitely broke out. And where would that get you? Well, that would get you to about 460. Well, that's not going to be great, by the way, for everybody, uh, considering what's already going on with gas and everything else. So that, that's not going to be fantastic for the mortgage industry and everybody else. And that's why when you go and take a look at this stuff and and people are saying, "Oh, you know, well, let's just buy long-term bonds," like nobody wants to own long-term treasuries here. Like, that's not where this is heading, right? This kind of stuff, you could just see it's going to absolutely implode. And and you don't want to, like this is a 3x bull. You can actually short this kind of stuff. Well, you should do what you're comfortable with.

When we start to see this, we have to understand what this is doing. And it affects like the, it, it affects the equity risk premium of the market. See, if the bond market would start holding, which it's not doing, just be really clear about that. We just started this whole discourse on looking at the market, right? So, if the bond market's holding, then then equities don't drop as much because of the equity risk premium. And I've gone over this in previous videos, and I think it'd be a good time to just grab it real quick so that you can see the mechanism that drives this because it's a real mechanism with pension funds. They look at equity risk premium. And if the market's dropping and bonds are doing what they're doing, then the equity risk premium of the market, it's not getting better. It's saying stagnant. And so that becomes another little suck salad that we have to deal with. You know what? Let's do it.

So, in front of you is the equity risk premium. And we should probably go through what, what it is. Okay. So this shows the earnings yield on the S&P 500 minus the interest rate on the 10-year Treasury note. The higher the risk premium, the more attractive stocks are relative to bonds. So, this shows the earnings yield on the S&P minus the interest rate on the 10-year. So, if the earnings are going to be, let's just call it 50, and the interest rate on the 10-year was 4, and then it goes to 450, the only thing that's changed is what the treasuries are doing. The higher the risk premium, the more attractive stocks are relative to bonds. Well, what's that curve actually doing now? So, when we look at the risk premium back here in 23, it made a lot of sense because you're up at the higher end of it. If we look at it now, people are watching the market drop, but the equity risk premium is not going anywhere really. A matter of fact, if you really look at from the 27th on, the equity risk premium's actually gotten worse because it's better to buy bonds than it is to buy equities. So, pension funds look at this, and until we see some stabilization in the bond market, the equity risk premium is not going to be a driver for large institutions.

See, it's, it's, it's all connected. And once you get this, then you'll understand why you're going to get some level of support, right? So even, even here when the market was dropping fast enough, you got to a point where they're looking, say, "Well, the equity risk premium of me buying a bond versus buying this makes way more sense." Now, do we have to come to some kind of level like this in order for the bottom to form? Not really. But it does show the huge disconnect here between the equity risk premium bottoms in the past and what we have right now. So if we need this, yeah, we have a real suck salad on our hands if that's what we need. And hopefully that's not the case. And I don't believe that is. But I do think it's important to understand that you're, you're going out there and saying like, this is, this is why I'm showing this because if you look at the market and saying things are getting cheap, the PE of the market is X Y and Z. That's cool. That's great. That's a great conversation to have against what? What are you comparing that to? Because institutions are comparing it to the 10-year. And if you're thinking about it that way, you need to do the same. If that's the rationale behind that. So this leaves us with understanding that you have some opportunity here, and that's where my head is going with this.

So, does that mean I have to rush out there and buy everything or anything? I, I personally think that when I look at this, you're seeing opportunity in the same areas that you would think that you would see them, and you're seeing it in the areas that you think you wouldn't see them. I think it's really interesting that semis didn't break down. Now, if we look at Nvidia, yeah, that broke down, but your correlation to the market is extremely high with something like Nvidia, right? So you would understand like, geez, that makes sense. Or if you look at something like AVGO, you'd be like, okay, well, that makes sense. Here's where I thought it was interesting. When I look at something like KAC, you're nowhere near breaking down the same way. When you look at Lamb Research, you're not even close. AAT, not even close. Like these guys are like, whatever. Like there's, you know, they're not really doing a lot. Now, ASML is interesting because you're tied to the index and you're tied obviously to, um, the Netherlands and their index. So it's a very big part of that. So that de-risking is what's affecting it. Same thing with Taiwan Semi. But you look at something like a Taiwan Semi, and here we'll just do the simplest of things. Yeah, we, we are an absolute dumpster fire here. But is capacity utilization slowing down here? Well, no. Okay. So, capacity utilization's not slowing down. We're not below the 200-day moving average. And that's going to become your new cutoff, by the way, the 200-day, right? Because if the market's below the 200, and that, and a stock's not, then that might be something you want to pay attention to.

So, I, I thought it was super interesting that maybe you're losing it on this side. Like even here, um, we had a great AMD short that I walked you guys through, but what really happened with AMD on Friday? Because it must be a blood bath, right? And, and the answer is, well, no, not really. Actually, it finished pretty flat, and you have a doji. So, you know, if you're looking at this kind of stuff on Monday, and you're like, well, there's a doji here. Okay. Well, your life got super easy if you're like an AMD lover, which of course I'm not. Um, but your life got real easy here on watching those two key levels and like, all right, well, if I flip, then maybe I can get back to the highs, and if I come down here, maybe I need to see if I'm going to hold. And I think that that's very telling, meaning we didn't fall apart. If you take a look at ARM, ARM fell apart even though they had really good news, but it's the ones that are breaking out that they're just smacking you down, right? And that means that there might be something to that later when they're done. Like Dell had really good news, and then all of a sudden they smacked it down. HPE had really good news, but they smacked them down. So what you're looking for, not the ones that are breaking out like that. You're looking for the ones that when the market dropped 2% didn't go down. And I also think it's super telling that other sectors are like, "Yeah, we're, we're a disaster. We're a dumpster fire. Like, don't come near us." Like, like this has pretty much as many red flags as like, uh, you know, I'm not going to say it, but like this has a, has like a ton of red flags. And so I really think that when you look, when you look at something like this, um, you have to ask yourself, like, why would you run into that? Oh, because it's beaten down. Like that's cracked, and that's cracked hardware is cracked hard. Semis aren't doing that.

Even waiting for Micron. And let me clean off our levels from the community. If you're trying to get in the community, look for a letter this week. There's another batch going out. There'll be a link in description and a pin comment to get on the wait list. Um, but if you, if you look at something like Micron, like you didn't take out the lower low, you didn't break your level. Your put wall was 350, you didn't break it. Okay. SanDisk, which is extremely high. Clean off all our, our trading plan from last week. That SanDisk opened at the low, held its put wall by some miracle, and is hanging in there and is nowhere near getting through, you know, those levels. But what's, I thought was so fascinating was that 27 level you're holding. So the doji from, let me just find that area. The doji from that 27, you actually held. So to me, if we rally, if, if we bounce, which I do believe we will someday, it's semiconductors that are holding.

The other sign that that makes me think that the global markets know things that we don't is if we watch something like FRO and TNK, and we look at these names, and we look at STNG or DHT, which is these are some of these companies I just went through were called VLCC's. They're very large, uh, crude containers. They're starting to hold. Well, they really haven't been able to move. So, if they're starting to hold, what is that actually telling us? And that might be something else we have to look at. That's it.