Transcription
S&P did make the higher high today. Obviously, the story is the NASDAQ and the blow-up of a huge hedge fund. So, we're going to get into this, but I think we just start with the beginning. We obviously saw the rip and now we have to see if we're going to have some follow-through or not. You're getting some signs that you are going to have follow-through and we will get to that today.
If you remember yesterday's video, we went into some great detail about this. Really, what they did an excellent job of today was just absolutely trapping shorts. There's no way when you're seeing moves like this anyone is going to expect you to just roll right over. Like in other words, you think you have another day. By roll over, I mean like it's just going to reverse on you. No one's going to expect that gap. But you got a couple pieces of news that hit this morning that were definitely good for the market as a whole. I do think it's super interesting and bottoms are ugly. But this really stood out to me and it's something we went over yesterday. So, let's get to it.
Most traders are reacting to the institutional levels. What we're trying to get you to do here is to know what they're doing ahead of time. Subscribe. Click all notifications. What we go over here is timely by hitting the bell. You don't get it after retail's already in. The important thing is you get the information, education that you need. Subscribe. Let's get to it. Tonight will be unedited and raw. I just got to rock and roll with this. But I do want to say something. I can see when people share the videos and people shared last night's a lot. So, I do appreciate that. The reason I create this content is so that you have actionable information to use and these videos roll from Saturday's deep dive. This Saturday's deep dive is packed, so you're going to want to watch it. But yesterday, I went through this with everybody. And it's not this is not proprietary. I learned this a long time ago, and it works really well.
So, you take S5FI divided by NDFI. And what you're doing is you're taking the 50-day moving average percentage of the S&P and you're dividing it by the NDFI. And it gives you these peaks and valleys. And the point that I was getting at was yesterday and we've been watching it start to roll is that this has historically marked bottoms in the market. And this did an excellent job of marking that bottom yet again. Now the question is, did we bottom? It's a really good question. And the bottom line is nobody knows for sure. I have some really good signs of it that I will go through tonight and some of the concerns that are gone. And we also had a major hedge fund blow up and that's usually a sign as well that it explains a lot of the exacerbation that we saw recently. And people will think that just one little fund won't do it. I say little was billions of dollars, but it's important. But if we overlay this and we do something as simplistic as just see if it actually works. All we have to do is just take the S&P and I like doing these live like this and showing you how I'm actually doing it so you can do it for yourself. But if we take a look back here in July 24 when we had the US dollar Japanese yen blow up. You can see it marked that off perfectly. If we go and take a look here, April 2025, I think this is when we had all that liberation and winning. And then you can see here September and you can see right there marks a bottom even though it really wasn't that bad. And then of course you have that March 2026 sell-off. Um and then you can see where we are right now and here we are again marking that off. So I find great value in this.
I do want to stress something. There is not one thing that always tells you everything. And when you formulate a bottom it is very ugly. And I want to be really clear about this. It doesn't mean that when you bottom you just go up. And so if we do ourselves a favor and just go and take a look at the S&P. Let's go and go to a bare chart for a second. Bear. There it is. Nope. Hold on. I can do this. I can do things. I'm smart. Let's clean all that off for a second and go take a look at this. Even when the news changed in here, we had this huge bar. And that bar, they paused, right? And that was I don't think that's going to get me where I need to be. I think this will. Yep. That bar. This is when we paused all that liberation and winning because we just had too much liberation and winning. And what happened in here was paused, absolutely rips. Everyone's like, I have to get involved. And then we rolled back down to 50%, undercut it like we were going to break, and then from there we just reversed and lifted. It's very possible that if you look at the cues and you look at something like today that you could see something very similar. And so what you want to do is you just want to mark those levels off.
Now, this is different. And it's different because you trapped people. You completely trapped them. In other words, nobody looked at this last night and said, "Boy, I really better buy." Now, there were some signs here where the low beta names were not moving and the high beta names were moving. And I'll show you how you can create that for yourself in a second. And these are things that you might just want to save and your trading view, whatever set, you know, whatever you use, doesn't matter. But if we take a look here, no one's going to look at that chart. I mean, if you come here and you go here and you look at that, no one's going to say, you know what, I really want to go long. Like no one with a brain is going to look at that and say I really want to go long there. You might say hey this is getting exhausted. We're seeing some signs of that. Even yesterday, the day before you'll remember me saying Tuesday, Wednesday, man, I really want to start selling puts, but I'm not seeing any reason to start, you know, selling puts to open because the premiums are crazy and I'd like to capture some of them. But instead, what you do is you gapped up today. So the gap up traps people and so that's going to put them in a different position. And it does mean that you did get short covering today, too. not just long buyers. So, you do have to be aware that when they clean up, you could come in. But that 50% takes you to the low of there. So, if you can't break through that, it's called 673. Then maybe we should say, "All right, well, we have to see if we're going to get through that or not."
You've had three major earnings that I think really tell you what's going on here. And I do want to cover that. And we should, and it was from last night and tonight, and I think it really sets the stage for what what's going on here. But just remember to mark this off. Remember, forming bottoms is ugly. It's not pretty. If I go and take a look at the RSI, yep, you're turning there. But the 4 hour gives us a better indication. And if we really look at the 4 hour, you did it perfectly. You've undercut right here. You came to that 26. And we talked about this last night where we said, "Hey, you know, when you get down to that level, it's pretty darn rare that you're going to get to something like that." And what we did was we just marked it off and said historically when the last times that we were there, and you can go through them as well. It's going to fit in perfectly with that ND FI F5 FI chart, right? It fits in perfectly with those areas. So, you had some semblance of that, but you really need it to formulate. Now, you can always come down, undercut, and then you'd have to watch and see what that does. But this does give us some signals that, hey, this is setting up. You still need more time to confirm it. If I show you the three, the five, and the eight right here, you can see you're not able to get above the eight. you started getting above the, you know, the five here. But just so we're clear, this is day one. And so we have to come in tomorrow, realize the options are going to expire. You're going to have different, you know, rolling of options. And then, of course, you have Asia tonight and what's going on there. And I think that can throw people off. And I'll explain why I think that can throw people off a little bit.
So EWY today was up about 11%. That's what it was up here. That doesn't mean that you have that level of follow-through over when they have access in Asia. So, in other words, when they went home last night and you can just go and take a look at this by going to the 24 hours on Trading View and we go and take a look at this and we can see that when their market was open and what happened. Well, they sold. So, from where we are from their open to where we are now, just so we're clear, they're coming into a stock market that's up well again there's also a premium in the ETF of about 1 and a half 2% dependent on how they, you know, it settles, but you're coming into a stock market that's up 11%. Let's just call it. They could just sell the darn thing and be like, "You know what? I had margin calls. I want to get out." They could also run it again, but now you're going to get you're going to get the trading halts on the other side, you know, because they just had massive trading halts this week, more than they've ever had on record in a row, and they're looking to stabilize. So, it should be really interesting to watch that at 8:00 tonight and see how that plays out. You have something else that you really have to watch here. And I'm really surprised how the market's just reacting to it.
So the US dollar Japan that yen trade completely imploded. Now there are times where it's blown off the equity markets where the equity markets haven't paid attention here. It didn't really pay attention. Didn't really pay attention here. There are times when that yen trade unwound in here that it was a freaking bloodbath for US equity. So if you go back and look at this August 5th and you went to a look at the spy during that period in time. Let's clean all that off and we go and take a look here. So let me just find it. should be gl very obvious absolutely glaring. So from here down you can see that and that's when it happened. So you're not getting that here. And I I found that really interesting today. It actually threw me off a little bit cuz I kept waiting for that to catch up. But there was no correlation when I put it on a chart today. Very little correlation. I was like stretching to find a correlation with it. So you have that out there that you have to deal with tonight. But overall, before we even get into the earnings, there's three things that I think that were really important that happened in the past, let's call it, two earnings days. And this is a word that you're going to have to become familiar with, and you're going to see it all over Amazon tonight as well, but backlog. They have hundreds of billions of dollars in backlog. They don't have enough product for the backlog that they have. This is very different than what Meta said where Meta said, "We're creating, we have all this demand. We have huge demand. we have so much demand that we have to sell our supply. Like it doesn't make any sense, right? And I'm not going to waste our time going through that little boom goggle last night, but that this is a key word. And so tonight, Amazon comes out and Amazon stock is trading up considerably and it's trading up considerably. So this would be number two. Number one was what Meta said. Number two is what Amazon said. So if you have the product, if you have the actual product that they want, your backlog is insane. Now, I don't remember Google's backlog, and you could put it out there, but I don't remember looking at that number and being astonished, as I was by Microsoft or Amazon's. Amazon's backlog is $500 billion dollars. That's how much they want to build out. You know, they were talking about them eventually in the next three years doing like a trillion dollar capex buildout. It's absolutely insane the numbers these guys are throwing around and the numbers are there. So, when you go and take a look at the growth here, they were looking at 31% for their AWS. It came in at 37%. It absolutely unequivocally crushed everything. So the only way that these servers and all this stuff works, there's only one way that it works. And I'll explain it. I explained this like 6 months ago or actually it's probably a year ago at this point back in the day. That's number two.
Number three was Lamb Research that nobody paid attention to. Now Lamb opens, comes down, whatever. People were probably thrilled to death to get out of that after that, you know, getting the absolutely smoked. And I get it. But their clients, Taiwan, Semi, Samsung, and I know that's not how you spell it. We went through this publicly pre-market today. For those that don't know, we do a public pre-market every day. Supposed to start between 8:15 8:30. It gets there. But anyway, so Samsung and then you have SKH Highix and then you have the K name which is supposed to come out with earnings very shortly. So that's in Japan. It's here. I'll type it out cuz people are like what's the K name? Kx I A Y. So there are your names. What are they? They are memory, right? It is just pure memory and foundry. And why this is important is Lamb Research took their numbers up immensely. 39% of their revenue stream is ND that side of the market memory DRAM their buildout is that and their numbers were through the roof and their guide was through the roof. And so when you overlay that with what happened with like STX and their numbers were phenomenal. You remember that here you were when you came out with earnings and then it ran up came back down filled and now you're capping up again. So what you need if you're going to build out is you need storage and memory. And the way to think about it and the way that it works for me and it doesn't matter which way you think about memory. But I always look at memory as this. And I found this very helpful. So if I went here and I just said that you have STX and Western Digital and you think about them as storage, which they are storage. And some people could actually say that with SanDisk as well, but we're going to do it this way. So if you look here and you say that these are the banks, this is where you're going to store the information. And then you go here and say, well, how do you pull things out of a bank from a bank teller? So if you think about Micron and SanDisk and the other DRAM names, I'm not going to list them all as the bank teller. So these are your banks. Then when you need something, you have to remember where it is for that. You know, if it's checking, savings, whatever, you get where I'm going with this. None of this exists without this.
So what you're seeing happen tonight, if you go and take a look at Micron, it's still pushing. It's up another $25. And the reason for this is when you look at the backlog that's being created, the buildout that Lamb Research is saying, the idea that this memory side is going to go away, this is not going to go away. Now, I personally think it's going to take at least another quarter for you to get back up to something like these levels. And I don't even think SanDisk, which comes out with earnings next quarter, is going to have a shot at getting up here before you're 3 months out. I think you have to go through three months of that. But the idea that SanDisk is going to have a bad quarter now, they could still sell it off, but it's kind of delusional at this point when you see and they're talking about the buildout that they're talking about. And so I think that is really important. So there are the three companies that came out. We on Saturday's deep dive, I'll really get into this, but where I'm going with this is there's a side of the business and you're starting to get the winners and you're starting to get the losers. And I think that this is really important.
So, one thing that you will notice if you take a look at DRAM today, DRAM is still pushing after hours. And again, these charts are broken, guys, like you're not looking at these charts and saying, "Wow, that looks fantastic." So, it's not like you're going to get that, you know, quote middle finger chart where you're just going to go like this. No, you're going to come up, then you're going to come down a little bit, come up, then you're going to go, "Oh, I knew I should have sold." And then you'll get stuff like this. And that's a really crude drawing on what you're going to get. But when you understand what these companies are saying and that backlog, there's no way that this doesn't grow. The problem for people came in with Google and when Google came out and they flipped to negative free cash flow, I don't believe we saw the backlog the way that you're seeing the backlog here. And I think that's one of the core things that happened. And I think that's very important for us to remember going into opex tomorrow. And the other thing that I would say to you is this, and I said that I would show you this.
So this is VUG divided by VTV. And again, we showed this morning, but I'm going to turn it into a line because I think it's easier to read that way. And you have a level down here. This is growth versus value. And if you look at this down here, this is just when you had that US dollar yen trade again. And then you have that right down here when we stopped all the winning and liberation. And here you are again in March. And guess what area you just got into? You just got into the same exact area. We always want to use these over a couple years because they change, right? you're going to get different levels predicated upon that. So, you don't always use the same levels. You have to think about it from a relative standpoint, not an absolute standpoint when you're doing this. And what this is telling you is the same thing. They're going back into growth. If you go to the 4our here, and what I'll do is get rid of the 24hour. We're just going to use a regular chart for a sec. Come on, keep up with me. There it is. And I'm going to put that there. And then I'm going to show you the RSI here. And then what I was showing guys today in the public pre-market was just, hey, you're flipping. So you have a positive divergence and they're buying growth over value again. And we're starting to see that start to happen in here. And I think that this is a very important development as well. And it's certainly not something that I'm going to sleep on. And I think that that's also very important for me to point out.
So why you want to align like the three things I just went over from S5 and the NDFI, why you would be looking at the RSI on the NASDAQ, why you're lining these all up is because you're fighting for inches. So, when you start seeing them all align, it's like stacking a foundation, right? Like you're building a foundation. And that was a really bad example or analogy. You're building out this field, right? And then I don't know, that's even worse because you're not building a field. The field's already there. All right. Here's what you're doing. You're looking at this and you're increasing the probability by every single way. Forget the analogy. Every single thing that you can stack in your favor that's objective is what you're trying to do. You're trying to look objectively at these and then say, "Okay, well, this is stacking my way. That's stacking my way." And you're going through those different and that is extremely helpful.
So, I do want to touch base on this and I will get more into this on Saturday. You had a massive blow up of a hedge fund and it's this Leopold guy and nobody ever wants to see this happen to somebody. You know, I would tease about it when Leopold would buy something and I'd show a photo of him with like his hair and go, "This guy," and nobody wants to see this happen to anybody where they get completely eviscerated and Citadel comes out and buys their entire position book. Here's what I'm going to say about that. When the street, and you don't have access to this, and I don't have access to this because I'm not on the street anymore. So, like people that have access to this would know that Leopold had a problem and that Leopold was having margin calls. And so what they do is they short his names. They go after him. They don't go, "Gee, we better not short that. We better help Liupold." No, they go, "We can make a killing cuz he's got to sell." So when you see something like earnings come out on BE and then it gets destroyed and you find out it's one of his largest positions, that's why these things are starting to bounce the way that they are. That's why NBIS did what it did and completely fell apart. That's why NB NBIS is so strong today. So these are names and we'll go through some of this on Saturday, but it's important to understand that. And people will say things to me like, well, that's not, you know, that's not why we were selling down. That's 100% why we were selling down. It's 100% a correlated move as to why us selling in the NASDAQ was down because people know that he has to sell and they are piling on every single thing that he has. And then all of a sudden, you get a buyer and there's Ken Griffin just saying, "Oh, I'll take everything you have." Now, do you think that he's going to blow out at discounted prices or do you think he's going to hold those names? That's up for you to connect the dots, but I pretty much just did.
What you want to take from this is the following. I've seen this play out before. When this is, you know, I'm very old, but the thing I would say is I watched this happen with long-term capital when I first got into business, and I would watch mergers and acquisitions literally go to levels that you couldn't believe that it was actually happening. And I'll give you an example what I mean by this, cuz people will say, "Well, that can't possibly be be the case." when they when long-term capital had this huge position in Sienna and everybody knew they had to get out. That was the day of Sienna and everybody shorted Sienna. Everybody because you all knew like, oh, they're screwed. That's their largest position and so you just piled onto it. It didn't matter. Didn't matter if they, you know, if they made potato chips or diapers, you shorted the living heck out of it. They did the same thing with a company called Safeguard Scientific that I don't even believe is around anymore. So, yeah, it does happen and that was much stronger than what you're dealing with now. But that's the reason why you saw this exacerbated move. The thing for us is to watch the new positioning in the option market tomorrow and see how things go. Do you still have some things out there you have to be concerned about? Yeah. Does it look like we're getting world peace? Not anytime soon. Is it a concern? It is. Is US dollar Japanese yen a concern? Yes. But here's the bottom line that I would say, and this is what I would go into with the thought process tomorrow. If you're a long-term guy and you've just watched these things absolutely implode, you have a shot here on some of these names. And the way that I've done a lot of these names is either in the money call so I don't have the overnight risk or I just waited for Amazon then just added to positions to be candid. But you just want to watch the key levels. So the next level you rejected at was that 55. So you'd watch 950 tomorrow if you got up there. But really what you're looking for now is okay, I finally have a floor a let me rephrase that. I finally have a possible floor they're putting in. And so you want to go through your names like Micron, SanDisk, Seagate, Western Digital, and start marking off those levels and seeing if that's the case. Do you really have a floor here? And the answer might be, yeah, you actually might have one.
Take a look at this. But wait, there's more. I'm I was going to save this for Saturday, but like it's like a teaser right now, but if you take a look at Western Digital, God, I'm funny. Are you funny if you have to tell people you're funny? I don't know. Maybe not. So, but if you take a look here, you're building this huge divergence down here going into earnings.