Transcription
S&P breaks out to all-time highs. NDX NASDAQ 100 follows suit. So, why does this seem so difficult?
On Friday, they announced that the strait is opening and we saw oil crash, but then it started to get tighter into the end of the day. We need to talk about why this is happening and what to do about it. Institutions seem like they don't have a care in the world. We're watching the VIX completely implode. The bond volatility index has done absolutely nothing but collapse since early April. And while gold is ticking higher, we don't really see that panic for a safe haven. Even with the dollar dropping, we're still seeing some signs here of what we would refer to as irrational exuberance. Shorts are getting squeezed. We have a car trade on. It's up 132% or 285 points in less than nine trading days. We're watching the IGV explode to the upside, but then we're watching things like this where trillion dollar companies are just dropping 6% and the bids disappear.
Well, why is that happening? We're going to get to that. Subscribe and click all notifications. These videos are linked together. I purposely do not run ads in the middle of it cuz I find that super annoying when I'm watching a video, but the algo doesn't like that. So, you subscribing, clicking all notifications, and also making sure that you like the video if you like it. Also, please share it. What we're going to go over here is extremely timely. If you know somebody that's struggling, this video will help them. You don't want to be this guy. You want to be this guy. If you're new here, we do these unedited and the reason for that is I like the flow of them and I think you'd learn more that way. So, let's get to it. At least you learn my thought process or you think I have issues. One or the other. Either way, here we go.
So, when we look at something like the S&P and we see these breakouts, right? I think it's really important to get this. It is literally impossible for someone with any technical benefit to look at this chart and say to themselves, you're not going higher. It's just it's not realistic. Like, you could come out there and say, I missed it. You can come out here and say this and the blippity bloppity bloop is doing this, right? Like we can all say that where oh RSI is breaking out and it's overbought. We can stay overbought for a period of time. What concerns me is not the breath cuz the breath is actually getting better. It's the speed of the moves and the names that are moving and that does become a concern of mine and I'll show you what I mean by this in a moment.
So if we go and take a look at the NDX, it's the same exact thing and we're watching us break out here. If we go to the weekly and we look at this level, it's absolutely huge on this breakout. And one thing that I really want to point out is everyone's saying, "Oh, this is like, you know, what happened back here when we tacoed here." The problem with this is the speed in which it's happening. It is significantly faster, albeit stronger than what we're dealing with here. And the reason for that is because of global supply of stock. And that might be something we'll touch on in a moment. But I want to stay on the vein. You're not overbought on the weekly. Far from it. A matter of fact, you just crossed over. So, can this continue? Well, there's a couple things from a technical standpoint before we dive into what the issues are that we should address. Number one, when you look at this bar, the open is the low, the high is the close. It's almost what you refer to as a white marubozu, which is actually the open is the exact low, and then the close is the exact high. It is an extremely rare pattern. But if I look at something like that and then we go to the value area here and we just look at this, the value is actually increasing. Like as we're going up, the value they're actually as the value is increasing, the volume's increasing. Let me say it that way. It sounds cleaner.
Now, let me just give you a real simple concept and then you know, we'll get into this. I'm going to get rid of the candlesticks for a second. And all I'm going to do is just drop the bars. As the kids say, we're going to drop it like it's hot for a second. And I want you to forget that that's the NDX. Just forget for a minute. All right? As you know what? Let's just make life easier. See, now you don't even have to think about it. So, if we just looked at this from open, high, low, close, you would look at this and you wouldn't be saying the blippity bloop is going to do this. It's this. But you would just say to yourself, okay, what we did was we did a liquidity grab. They got everything they could and now they're ripping it in the face. And that's exactly what's happening. So, we have to look at what's happening. We can say it's this or it's that and everything else, but this is what we have to deal with. And this is making it really hard because people are out there trading in this kind of environment and they're not doing as well despite what you you're going to see on Twitter where everyone's a genius. You're not doing as well as what this is portraying. And the there's a couple reasons for that and we're going to touch base on those. But the most important thing is to understand this is what you have and you have a six-month base roughly and you broke out of it this week. So you can sit there and say, you know, the strait of her muse is going to do this and that guy's going to do that and because of this then that's going to happen. Or you could just kind of take a step back, look at this and say, you know, when it comes to the technical leg of the stool, as you guys all know, we have the stool where we have the macro side, we have the fundamental side of the market, and then we have what? The technical side of the market. So if we're looking at our stool, and that one's a little crooked, but it is what it is. I should actually make mugs with this stool. And I did not go to art school. This is just a general talent. So when we look at something like this, we have to understand that this leg of the stool, make that one straight so he doesn't walk crooked that you have a position here that that's just a breakout.
Now could something fundamentally because the tail doesn't wag the dog, right? If there becomes a larger issue here with the strait, then there's an issue. If we have an issue on the fundamental side, then the technicals will deteriorate. But right now, this looks great. The fundamentals on these companies. If we just take a second and just we're going to divert here for a minute and look at the fundamentals on what's going on out there. It's very difficult to say that you have a fundamental problem with this market. You keep hearing about this fundamental problem that's going to happen with the software space. We'll get to that. But the macro really becomes the issue where the strait's open. We have a blockade in the strait. We have a a super duper blockade. I'm going to blockade your blockade. Right? So we have that issue, but we could all say looking at this, at least for the moment, it's calmed down. So what we have is we have an undercut. We have strong fundamentals on a market and this is what's happening. And I'm not saying it's going to be rosy. I'm not saying it's going to be a straight line up. But the question then begs, why are you struggling or why are people struggling? Because people are struggling and the only people that aren't are the people quite frankly that just aren't being honest about this market. It's a very difficult market.
So when we look at one of the big drivers, one of the big drivers is AI. We're going to go off on a little tangent here and we can look at these numbers that came out on ASML and what ASML said on that conference call and if you're into this kind of stuff learning you might want to listen to this conference call and the reason for that is simple and I'll save you the time. You can also go to the transcript. They're on Twitter. They I have no affiliation with them but they'll listen to them actually give you a transcript of these things if they listen to it. But here's what's interesting about this and I think it's important. If you listen to that conference call they're talking about that their customers are getting behind. So you have a supply and demand curve, right? And we all should have a general idea of what a supply and demand curve is. So here it is, right? And so that you have supply and you have demand. And what's happening here is that demand is increasing. And as demand is increasing, you're expecting supply to increase as well. Right? So you would have supply over here and then you have demand down here. Or you could flip it. Doesn't matter. But my mind this is what we have. But what they're saying is happening is as demand is increasing, right? They're saying that you're increasing demand, but that the supply is running into a problem. So they're actually giving you a situation here where they're saying demand is picking up, right? But as demand's picking up, the supply is getting lower. This is a real issue and it's getting to the point where people are suggesting that they might even get to the point where they're not going to make certain devices because of that demand. So when we see companies like ASML say things like that, it becomes a problem. And the problem becomes that people don't understand that. So what they do is they foolishly go out there and say, "Well, we better get out of Micron because they say demand's going to slow instead of actually listening to the conference call and doing something that's I don't know what you kids do these days, but it isn't critical thinking." So when we see something like that, we want to pay attention to it. Like Micron is perfect here, right? Inside bar and then it breaks out. Like it's not you shouldn't be making a Pikachu face when you see that. Like that's pretty obvious what's coming, right? Deogi bonk something's going to happen. So you rejected there and we're going to cover Micron in a second. Or if we take a look at something like a Sandisk, it shouldn't be surprising that you know you're kind of flagging here, right? And whenever you can't really see the forest of the trees, one of the things I like to do is just go there and just do the open, high, low, close. And I find that very helpful. It's very helpful to me at least to kind of look at that and say, "Oh, okay. Yep. We're all in that area and we're just kind of holding that breakout bar and we haven't really done anything." Sometimes it's just easier to just get rid of everything and just look at it that way.
So, where am I going with this? Because we were just looking at the NDX and talking about the flag and now we're going into names and I'm showing you charts. And so, we're going to bring it back. And then we're going to say, well, what did Taiwan Semi say? Well, Taiwan Semi said that they're going to grow faster than anticipated that the supply that they have is nowhere near going to meet demand and they're falling behind and they need more equipment. And so, that equipment comes from, you guessed it, ASML. Well, all right. So, we need that equipment. These guys are all saying it's ramping up. So, what's the problem? And this is fascinating. When we look at something like ASML, we have to understand and we look at what Taiwan Semi said and everyone's like, "Oh, but they're down. They're down on earnings." All right. Well, this was just at 313 at the low, went to 380 and I'm supposed to be upset that it's sitting right where it was 2 days ago. Like expectations on what's going to happen versus what does happen. Sometimes people need to kind of chill out a little bit, right? So, when you have a name like that, in 2 weeks you're up 21%. If you look at ASML and you realize what's transpired, the gap that you had before the move and you look at something like this and then you realize like, okay, you know, from soup to nuts, you're up 23% from that bottom in 2 weeks and you're going to be upset that you're in a position that it didn't work. All right, that's one way to go. Or you could look at the conference call and say like, geez, this thing's just going to keep kind of grinding, right?
So, where do we see happen when you see these kinds of things? How do you make money off of this? Well, you start looking for the second tier stuff. And we're going to bring this all back to the indexes, but we're on this tangent, so let's just go with it. So then what we start to see is this. So we have the SOX, and everyone would look at the SOX and go, "Oh my gosh, we're breaking out. This was the easiest trade in the world, right? Whatever." We actually had a trade in this, and I actually closed the SOXL because I think you're better off playing the other names, but we might get to that. They're diversifying out of the SOX. And I'll show you what I mean by this. And this is where doing the research actually makes a lot of sense. So if we look at SOX, everyone's going to get giddy and excited and go, "Oh, SOX is breaking out." And that's looking at the semiconductor index and you break out the AI portion. Look at ESOC and what ESOC is doing. ESOC is the equal weight. Let's shrink this down. ESOC is the equal weight. If I take ESOC divided by SOX and we take a look at this and I just want to show you that this is so important. The equity weighting of semiconductors is outperforming AI. So people don't get this and from a technical standpoint, you need to understand what's happening. We're watching the breakout. We're going back to where we started back here with the stool. And we're looking at this and we're saying to ourselves when we looked at this on the weekly, well, this is going to change and that's going to happen because of the blippity blue and blah. All right, cool. Right? The strait this that, you know, Sunnis, whatever. Like it's a whole thing, right? And 90% of the people that are making these comments have absolutely no idea what they're talking about. So when you look at like what's actually happening and you go back and look at the SOX, you're like, "Well, that's going to stop because of this and that." And then you go and look at something and going, "Well, that's AI. This is equity weighted and equity weighted's breaking out." So if equity weighted's breaking out over the theme because you're going to come out and the next thing that they're going to say is go, "Well, AI is not going to work. It's going to be like Clippy and Microsoft and blah, right? They're going to be the next people that come out." Okay. So then we go and take a look at this and go, "SOX, ESOC." And then you see that the equity weighting of the index of the sector itself is breaking out over AI. And then you start looking at it, right? And say, well, what would those names be? Well, they would be semiconductor capital equipment manufacturing names. All right, cool. What else would they be? Analog names. And you're like, well, the analog names, they're like computers and things, so they're not doing anything. No, they're not doing anything at all. They're just ripping everyone's face off, right? And closing your highs, and no one's paying attention to it, right? No one's talking about Texas Instruments. No one's talking about AD. Like, no one's talking about these names. And what's starting to happen is that you're seeing a broadening out of increased productivity in the market. I'll say that again because it's important. You're seeing a broadening out of increased productivity in the market.
Well, you you you can't because they're shutting down data centers because of everyone's energy bills. And I read this article on YouTube and blah. Okay, so there's data centers, right? That's what global data centers are doing, right? AIQ, global artificial intelligence, just hit global. I'm saying it on purpose for a reason. I personally think that the US is going to have a problem overall putting these data centers everywhere. And I think people are getting that. And I think they're going global with it. Singapore, Malaysia, other places are going to just be say, "Wait a minute, come over here. Energy will be cheaper. You can store whatever you want here." You have Elon talking about putting them in space even though he can't get a cyber truck to go around Austin, but we'll get to that later. So, I think it's really important to take a look at this and understand this is not going away. When we look at these names, these are names that we in the community own. If you're trying to get in the community, please look for a letter next week. I'm sending another batch out. If you're trying to get on the wait list, links in description and I pin it sometimes if I remember. EQIX was something that we bought. DLR was the other one that's in the space. And you can just see ever since those earnings breakouts, ever since they just popped on earnings, actually, I forget that one popped on I think it popped on this. Yeah. So what's interesting popped on that earnings funny. You're watching these things just constantly rip and they're constantly just grinding higher. Like this is just not going to stop. So when you start looking at these data centers, you need all that stuff. So what people are starting to understand here is not only are you going to go back and need all of this, but then you're going to need the space, but then you're going to need all the stuff again. So you're going to need all the analog names, right? Then you're going to need the semiconductor capital equipment names to put all the this stuff together, right? So then you look at your AAT, your KAC, your Lam Research. I know I'm going off on a tangent, but hopefully you're following the vein, and we'll pop back in the vein in a second here. So then we look at the Lam Research, the AAT, and and we look at those names. All right, cool. Well, what else do you need at a data center? Well, you're going to need optics. You're going to need these cables. You crazy kids are going nuts for these names, right? I mean, I think these things are going to give me an aneurysm the way they move. But if you take a look at them, you know, there's a lot to them, and they there's a lot going on with AA or light. To me, these have to be trades at this point because the volatility of them, you just it's very difficult to stomach this or you just blend it together and call it a day. You know, even these other little ones I was looking at like optics, all this stuff makes a ton of sense. But you can't really be going heavy on this stuff because the volatility to me is I can't stomach just losing 20% in a trade because somebody sneezed. Like it just doesn't work well for me.
So, how you tying all this together with where you started with? Cool. I'm glad you asked. You have to start looking at a data center and thinking about what that data center is going to do. That data center is going to create jobs. Whether or not those jobs are created here in the US or not, it's going to create jobs. I remember back in the day, I'm very old. When I started trading in 2000, Y2K, they were going to lose every single IT specialist because all the clocks weren't going to know how to reset. And it was panic, right? Everyone's going to lose their jobs because of them internets. So, the game changes just like you had, you know, the buggy whip. Oh, no. This time it's going to be different. Okay. Every time it's been different. What? The whaling industry. Oh, well, they're going to get rid of all the whalers. So, now what? Okay. It all seemed to have worked out, didn't it? Cuz now we have electricity. But what are you going to do with all the whaling industry? All right. So, when you start going back through history over and over, the one thing that we always do is we adapt. And that's what you need to think about here. We'll all adapt. We'll all figure it out. We'll all go from there or we won't. And then we don't have any concerns. But if we take a look at data centers, they're moving. So, when we dive into those names, you have to think what else goes in there. Well, Dell. All right. Well, this makes perfect sense. Why? You need CPUs. All right, go look at Dell. Go look at HPE and what's going on there. All right. Well, why is HPE breaking up? Because they bought a company called Juniper. It's growing at 150% year-over-year and it's now a third of their revenues. But what do I know? So then we tie that together with All right. So this is data center. Other stuff has to go in there. What goes in the computers? Well, Intel goes in the computers. Okay. Well, that just hit a high and has earnings next week. AMD goes in the computers. All right. Well, that just hit a high and that has earnings coming out. Nvidia goes into the computers. All right. All right. Well, that finally closed over 200, which it's not been able to do.
So, then we go back to here again and we start taking a look at the NDX. And then we start listening to these morons, for lack of a better term, that start trying to explain the strait to us. And the bottom line with this, I don't know what else to call it. It doesn't matter. Like, at the end of the day, when the strait's behind us, and that's what the VIX is telling us, right? And that's what MOVE is telling us, then it's behind us. Like, it's not up to you to decide that it's not behind us. Like, no one's going to call you and say, "Oh, the what do you think? Do you think that we should buy stocks or not? They're buying high yield, right? So you start looking at this and they're going, they're buy they're buying the investment grade bonds. So when you look at the whole picture, it's becoming very clear that it's risk on again, right? And we're seeing that. Does that mean that you're not going to have blips on the screen? No, you are. But what you're doing here is you're getting caught between the like you can't see the forest through the trees. And I have this concept and I I'll go over it really very briefly. And it's up to you, you know, to be first with these kinds of concepts. So, let's get to that.
So, if you are in the community, you've heard me talk about this a number of times, but the concept that I use a lot is reflexivity. And I don't have time to make this fancy. So, here we go. And what you're looking at here is just you're right here, and you're just looking at this. And what he's referring to it just straight out is, okay, money, time, cool. And this is Soros. I'll get you the link to this, but if you want to remember this, it's just if you go to george soros.com and he wrote a piece and the piece that he's referring to is on January 13th, 2014, reflexivity and the human uncertainty principle. This graph alone is something that Duck Miller uses like lit legitimately like all the time and he'll even talk about it, but it's the simplest graph in the world. As earnings are going up, the stock price goes up. The stock price will start to drop when the anticipation anticipation of earnings are going to come down. So the stock's still going up and earnings are going to go up. When earnings start rolling over, by the time they roll over, you're it's too late, right? So you have a reflexivity that's taking place in here. The expectations where people aren't understanding why the stock's dropping while the earnings are going on. And you might just want to watch this or if you're really that interested, I'd go grab the article. But why am I showing you this now? Because this is exactly what starts to happen with people. And I'm going to give you some examples of it. But you need to understand where you are in this food chain. And you can look at this very differently where, and I'll give you an example of this in a minute. But if you're looking at something like this, what's going to happen is eventually earnings are going to break on something. The exact opposite is true. Earnings are going to explode on something and you're not going to believe it and the stock prices are going to go higher. Meaning if you're here or here, you have to look at that. So for me, this is super interesting because if you really look at how the simplicity of this graph and you said to yourself, is the stock price moving faster than the earnings are growing? And if the answer to that is yes, then you need to really take a look at that and go, okay, well, why is that going? That's why PEG ratios are so important to me because I look at them and just go, well, if the earnings, if the stock's growing faster than the earnings, then I don't really, you know, that's something I need to watch. So, like when I see names like Nvidia trading at certain levels, I just kind of laugh cuz well, inevitably it's going to go higher. It has to, right? Same thing with something like a Netflix when you look at the growth, but now the growth might be in question. So, then you have to look and go, where am I on the food chain? See, you have to look at every stock. And now I'm going to get rid of this, but I would go and look at that. And I I could care less about the dude's politics, but I've read all of his books multiple times. All of his papers multiple times. And if people are like, "Okay, what's your cheat code?" Yeah, go get your teeth kicked in for two decades. There's my cheat code. But if you want to get ahead, I would go and read those books. I would go read anything by him. Victor Niederhoffer swear swears by it. And you go read all his stuff, too. It's really good. And that's how that's where Taleb came from with the black swan, all that. He he was a disciple of actually Niederhoffer. Anyway, so let's get to this so I can give you an example of this.
So, let's take something like Apple for a moment. So let's just look at this for a second so you can get that. I'm going to give you real examples right now, but I want you to just get the concept. So Jobs dies October, was it October right here? I think that's when and a statement's issued and that statement is when he passes, hey, you know, that's it. Larry Ellison comes out, Apple's never going to be the same. That's the end of Apple yada, right? And then we get this kind of pattern. And so, okay, well, why does this happen? Why do we break out? Well, what happens in here is that it becomes a financial engineering machine. And so, well, what do I mean by that? Let's go to the weekly chart. Well, when this passes and you look at this chart, you have a guy by the name of Tim Cook. And Tim Cook has a meeting with a guy by the name of Carl Icahn who comes out to him and says, "You need to change the entire company. You need to start doing buybacks. You need to start issuing dividends so that pension funds can buy your stock and start working on their assumptions. You need to do what? What Microsoft did. So when you start looking at what Microsoft did after Ballmer, it's not really rocket science when things changed and when Ballmer's out on the company and when you started doing what the thing that Apple did. It's the same thing. If you ever go look at what Microsoft did to change to turn themselves around was subscription model basis and then they started doing buybacks and dividends. It's the same soup reheated. That's why when Meta did it the one time when he was coming out of trying to make everybody a giraffe, everyone got all excited because they're like, "Thank God he's going to start doing buybacks in the dividend and then he's like, "No, just kidding. We're going to try to make everybody giraffes still." So, all right, let's get back to this. So, when we start looking here at something like this, you would have to look at that graph and saying, "Well, wait a minute. That's the end of this, right? And then what have you missed?" If you thought that and you look at this and go, "Well, what have you missed?" Well, all right. Yeah, it's been a long time. Whatever. Okay, well, you missed 20x on your money since that date. You're down 20x, but I'm sure that runs over, right? So then when we're looking at this, we're trying to understand, well, where are the earnings? Where's the growth? Why is everybody right or why is everybody wrong? And it doesn't have to be and take decades for this to happen. You have many reflexivity moments all the time. Like literally all the time. And I'll give you a great one. See, when people ask I'm going to do a full video on this, by the way. I've been talking about it for some time. I've been threatening you with it, but it's coming.
So if I look at CAR, right? To me, I saw this coming and the way that I did was really simple. It wasn't beforehand. Someone could have seen this beforehand on the earnings and got involved but I knew the real move was going to take place when all the hoopalheads saw it. And so when do they get involved? Well, here's that added level right here. Right. So I knew when we broke out that day I'm like no I'm at least going to get a push out of it because it's going to hit everybody's scans on 52-week highs. Then they're going to go run and they're going to go look at who's in the name, how many what's the percentage short, how many days to cover. And that's exactly what they did, right? They ran through the gambit. They went what's the percent which was, you know, I think it's 54% we're at now short, right? So I think we're at 54% short of the float right now. And then I think it's still like 9 days to cover still. I'm still long this thing. I've been trimming it. We bought it at We literally bought it here when we trimmed it up 100% and we had calls and now I have more calls in stock. Anyway, so you have my reasoning, but I was at 14%, but they're getting shorter as it's going up for some godforsaken reason. So, good luck with that. There's a way to short and that's not it. So, you need a catalyst like this. I had a catalyst on when I was shorting this VCX and everyone was telling me I was crazy like cuz you have an NAV behind you. We can get into that too. That might be another really good one to use for reflexivity. But let's go back to this for a second. Stay with this. Don't go to the light.
If we look at this, right? All right. So, then you have to figure out and go, "Well, where am I in the food chain?" Well, now if you're going to look at that graph and you have to go, "All right. Well, where are you as far as what?" Well, it's not earnings. So, where are you? Cuz now you have to change the money staying the same, right? And the earnings are going to change. So, you have money over here, you have time over here, but what what are you changing? What's the currency if it's not earnings, right? So, you always have to think about what the variable is. So, like in our thing, the variable was here. Let's just drop it in again so that you can get this concept and we're going to bring this all back home. So, what was the thing? Earnings per share. All right. Well, we don't really have earnings. It's just let's call it what it is. It's just a short. It's the mother of short squeeze cuz the company's a pig. Like, I'm not going out there and saying CAR is the greatest company in the world. Everybody needs to own Avis's Brena car. No, I'm saying that a bunch of people decided to short the same name and didn't learn a lesson from GME. How do we take advantage of this? Well, you have to realize that earnings per share number. Instead, you have to realize that the stock price, which it's doing, the next one that you have to look at, is going to be people. So, it's like, okay, well, where are the people and how many people know about this thing, right? Versus where we are. So, in other words, as more people find out about that, the question then becomes when does that start to change, right? So, does it get to the point where less people start knowing about this or not? There's got to be a spot here for me to lift this. This shouldn't take that long. Or when people start losing interest in it and that we get to that max peak. Well, when that starts to happen, this is going to start rolling over. So, instead of my currency being what? Earnings per share. My currency or underlying variable, I should look at it that way. It's like what's the dependent variable, right? You know, physics or math nerds. So, what's the dependent variable? Well, the currency now is knowledge. Who knows ahead of someone else? So, do you ever hear the statement be first? Yeah, be first, man. You might be wrong, but be first. So now that everyone's going to go out there this weekend, oh, did you see this? It moved again. And then they're all going to get in and blah. Why do you think that Bitcoin always pops at Thanksgiving and then goes away cuz everyone gets together and tells their mother and grandmother to buy freaking Bitcoin. All right, cool. So if you think about it that way, then you can go and look at it differently.
So this was one that we did, what is today? Saturday. Cool. This is one we did on Friday. And so when we go through this super simple trade here, this is a great way to look at this. That this is one that we put out in the room as an alert and it was a super really simple trade and I'm going to walk you through it in two seconds. So, let me just show you the time stamp. So, I go out there put these alerts in the community. This is what I'm doing. You should do what you're comfortable with. I put this out there at 12:00. I'm buying at 23 and 1/2. The stops at 20 and the stops down here. Why? Because it I So, why is it important that it IPOed? We'll get to that in a second. And what I'm doing with this is I'm understanding the game. And the game is this, and I'll show you this, where you have I'm leaning towards holding over the weekend and moving stop to 23. I put that out before the market closes cuz sometimes I'll go live into that. And then this hits and I put this out at the end of the day, 7:45. I'm up 50% on the day or $10 in a swing trade at break even. Moving the stop and I trimmed. It got cut off. It is. I don't think that's there. Is that there? No, I just cut it off. One, why am I trimming? Two, what am I doing? All right, so here's the thing about this name. It's a drone name. Now, everyone's going to come out and tell me that this is the drone name and it's the cat's pajamas drone name and that's why you have to own it. What? Whatever. I don't care. I don't care if they make widgets, right? Why did I do this? Because right now, everyone cares about drones because of what's going on in the strait. So, if I'm going to use those tools, there's a couple things that I have to do. One, I have to quantify the risk, right? The risk is that this thing goes back to the IPO price. All right. Well, it didn't do that. All right. Cool. So, what did it do? It broke out. The minute it broke out, we're watching and then we're getting involved. Like literally like that minute like, "All right, just buy it and then use the low of the day if it breaks bid because most of these names won't break bid if they gap up. It's very rare to gap up and then break bid, which is your IPO price. It's just not going to happen because then the investment bank and the trading firm wouldn't do that. They wouldn't gap up to screw themselves, for lack of a better term. It they just don't do that. It It's not that it can't happen. It's just that the investment bank is in your favor. So why would you bet against them? So what where are we and how does this fit into like Reflexivity and what the heck's going on in the strait? Well, you have a catalyst, right? The catalyst is drones are the cat's pajamas right now. Everyone knows everything about drones. We know what's going on in the strait. We know all that about this company. We also know that no one has any idea what this thing is. And the majority of people if we are to look at this on that graph that we had that ABC graph right we would look at this and say to ourselves like well on our graph where are we meaning if we look at this see like also that this graph also has all these different variables like the stock price doesn't have to do this the stock price can go up here the stock price can be down here right I'm only giving you one of the outcomes there's several different outcomes and levels to it but so if you're looking at this thing at like a and and you're watching it you'd have to also understand that Yeah, time is a variable. Yeah, the money and the price is the variable. But the earnings in our case, that is not what our dependent variable is going to be in regards to this, right? What is that going to be? That's going to be who the heck knows about this thing and then how is that going to play out, right? Back to our, you know, Bitcoin Thanksgiving dinner. So, and you can just go look at a chart on that. It's actually pretty funny. So, if we look at this, we'd have to understand that the minute that this comes out, you have a bunch of people here that are going to know about this name. And why are they going to know about it? Because they got invited to the IPO because they have access to a Bloomberg when it opens or they have access to a new service that's expensive when it opens. They looked at the IPO market. They know that it's going to price. Okay. Well, how many people That's the wrong. How many people is that? Like, what percent of traders, First off, you have to think that you're dealing with traders. So, what percent of traders knew this thing was IPOing? What percent of traders out there knew that it opened when it opened? What percent of traders knew what the heck it even did or how oversubscribed it was? Do you think it's 1%? I would say it's probably less than 1%. So, that that's where my head is with it. Most people that are trading aren't even going to care about it until it's too late, right? And then that's when it moves up the range. So, what you're always trying to do with this stuff is be first and get involved if you have your work done. So, as this goes on, what starts to happen? Well, end of day. Oh, it hits a high. Everyone starts looking at their charts. End of day, more and more people are getting involved. I hope this makes sense. So, as they're getting involved, oh, what's moving after hours? Oh, this is moving after hours. What do they do? Oh my gosh, it's a drone name. They're going to buy this on Monday, blah, blah. What are we doing here? Have some, right? Because we're in here. So, the faster that you get in this and the more that you can understand that concept, the better that you're going to do. And then it just becomes a question of what that outcome is, right? Like I don't know that that's going to go to 32 any more than I know that could go to 45 on Monday. Like I have no idea. But I understand the concept and I understand why I'm on the food chain. So I'm not really trading price. I'm trading people, right? If you think about it that way, I'm trading well where am I? All right. And I I understand here that I now have these other people that are involved. Well, who do I have involved? Well, I've got retail that's involved now because they're watching the after hours market. They're starting to talk about it on Twitter, blah blah. Reddit's picking it up, etc. So, I understand where I am. So, then by Tuesday, who's going to be buying this thing? The retail guy that just learned about it on the water cooler that's watching it go up and then that'll be the end of it, right? It's no different than when Swarmer came out. Like, it's literally no different. Like, the company didn't change what it did between these two days. Or what was the high? Oh, well, it came out that day on a Tuesday and then everybody learned about it and was all like, "Yay, Swarmer. We're going to make millions." And then what? You have those people buy it and then the water cooler people come in the next day and then what happens to them? They still have water coolers, don't they? Right? They get crushed. And then you have these people that think it's a real company, so it's going to break out in here. It's not like if they IPOed here, right, at 11 and you're at 60, you really think that's going to hold? Like come on, stop it. Just stop. So understand that. Where are you in the food chain? Do you think the people that had access here are looking at buying it there? Like it doesn't make any sense when you think about it that way, right? So, you have to understand where you're at.
Okay, let's just wrap it up so you can understand how you overlay this whole thing and that concept with what we just went over and what semiconductors are doing. Let's look at crude oil and we'll follow the vein on crude oil right now. So, now that you kind of get the concept or at least understand the basics of that concept, when you look at this, what do you see? You see crude oil. All right, cool. What's been going on since January? A bunch of people that knew this crap was coming. A bunch of people that are more plugged in than we are because you can just start seeing out of nowhere. It just starts creeping and then it pops and everyone's like, "Ah, it'll come down because of midterms and elections because everyone's, you know, a pundit. Everyone understands politics. So, it'll come down because of him and Yep. D. Okay. And then what happens? Oh, all-time highs. Biggest move that we've ever had in oil. No one's predicting it, right? Okay. Because it got real fast. This is when we were told it was going to end. Don't worry about it. It's only going to take a week. We're We already won. We destroyed the Navy. We did this and all that." And then you have a variable that nobody predicted that they were going to shut down the strait and start bombing their neighbors. Oh, okay. Well, we didn't predict that. Well, how many people predicted that here on that bar and understood that this was going to escalate? They're the ones that made money, not the people that were just following what the lemmings were doing. They didn't make money, right? So, you have to understand again where you're in the food chain. So, right now, we're in the food chain of where where do you think we are? I think we're in the food chain of disbelief. Like where people are thinking.
To themselves, "Oh, this has got to get worse. It's definitely going to get worse. He's got boots on the ground. Everyone's a military expert now, right? Oh, he's got boots on the ground and this, you know, this ship does this." And my friend said, "Okay, meanwhile, what's oil doing? It's dropping. So, where are we here?"
I think the entire energy trade's completely played out. I'm not saying that these companies aren't going to make a killing, but I think the volatility side of this, barring boots on the ground, is over. And it's very clear that it's slowing down. And it's very clear that people in the know think it's slowing down, or the VIX wouldn't be doing this, and the move wouldn't be doing this.
But that also answers the question, or or begs the next question of what does that mean for us and what's moving in the market? Because when we started this whole conversation, it started here. It started with IGV and all of a sudden this thing exploding. This is where I think it gets super tricky because people are looking at the names that are moving, and you have to start thinking to yourself, are those names moving because people are being squeezed on the short side, or are these names moving because they're cheap?
And when we start to really dive into it, I think that you have to understand that you might have a little bit of both. But you're going to have that panic in here, right? We have that absolute panic on names like NET, for example. And what we see with these kinds of panics is we see that you can get overdone and then you rally back up. But does that mean that this is something that we have to get involved in? Probably not. You know, probably not. Maybe there's a trade there.
The larger issue for us is looking at something like IGV now and saying, is this going to hold? Is this not going to hold? So, I always tend to use the 50 as a demarcation line, or the 55 rather, but I'm saying 50 'cause that's what you guys are going to use. You should use what you're comfortable with. And the reason for that and why I think that's super important is a couple things. If we start losing institutional sponsorship, then we know we have a problem. If institutional sponsorship remains above the 50, then we will be paying attention to that.
There's a reason why people look at S5FI. Let's do S5FI. And there's a reason why people look at that stuff, right? Because it works. They wouldn't look at it if it didn't work. You'll remember two weeks ago, we talked about this level and said that this was like a bounce area historically over time. If you get into there, it's an area you want to look at playing. These are all the dates. I did I actually did a whole research piece on this in the community, but there's your dates on when it's actually gotten through there.
All right, cool. So, when we start to see this, that's why I use the 55. They do a 50. I use a 55. You should use what you're comfortable with. And so, when we start looking at this, what's it telling us? Well, it's telling us that maybe we got completely overdone. And maybe AI is not going to run the world, since AI doesn't even know what day it is. If you ever ask it what day it is, half the time it gets the year wrong. So, understand that, right? And understand that, you know, a lot of this stuff is just gimmicky to get people to put more money into it.
You know, I think that the cleanest thing that I've learned about AI is how fast they keep saying these models are better and better. They're really not. They're actually slowing down. Like, I read a really good piece on this. They're not making leaps and bounds on it for what they have to spend anymore. So, now it just becomes a function of who's going to spend the most amount of tokens to make this thing like Clippy, right? Is there going to be use for it? Yeah. Are we going to lose every software company? No. We're probably going to lose the ones that we should have lost a long time ago, um, that were charging, you know, a ridiculous amount of money for what they did.
But, you know, you start looking at names like Microsoft and them getting above their 55. So, the question really always is, is the are these the names that we'd want to look at? I think they're there for trades. You need to do what you're comfortable with. I think the one thing that we could view here is that everybody's in the energy trade. Everybody was in the energy trade and everybody was an expert on the energy trade. And by the time everybody got in, people were still trying to be the hanger-on for the energy trade. That's what made shorting this so simple. And we shorted this in the community. It was like it was such a simple trade. Everybody's talking about what's going to happen and how we're going to, you know, they became the experts and boots on the ground and blah blah and then we're going to need all these companies. Yeah. No.
And so what happens with these kinds of like levered ETFs is they always take the brunt of it, right? And you can just see this was like it was literally just a perfect short because everybody's on the other side of this stuff. I think when you start to look at that, it becomes super interesting because when you look at like oil services is falling, and then you have something like GUSH again, which is oil and gas exploration, and you can see that this stuff in its 2x, you can see the stuff's just collapsing. And so that you've already seen it like VLO that tried to collapse, maybe that holds the 55. MPC all of a sudden people are getting out of these things, right? I don't know that that's the right move either because these guys are going to print money. So longer term, maybe that's not the right move, and maybe that's why these names are holding that 55. Maybe the people that were were here were that, you know, the straight's going to be closed forever and this is a 20-year war. I think the people that are here are trying to think that all of a sudden these prices are going to drop without understanding that it's going to lift for some time. So, I'm not so sure that that's the right move either, right? So, that's the other side of this that I think's super important to get. I'm not so sure that they're 100% right on that. So, that is another thing where you where I would look at like the reflexivity of the move and say, I don't know that makes sense. You can always just look at, you know, the crack, which is the oil refiners, and just take a look from there.
If we look at the other side of this and we start talking about like reflexivity, and we got back into the socks. The other area that's going to be super interesting that I think is being completely misread, and I think semis are being completely utterly misread from a CPU standpoint, from a productivity standpoint, from an analog standpoint. I don't think people are fully grasping what's going on here. I think they're looking at their I think they're looking at it locally and not looking at this stuff globally, which is why I brought up DTCR.
I want to go through another example of this because I think it's super important. When we start looking at things like UFO and we start seeing these names, you know, break out like this and they're hitting highs. A lot of this stuff you have to understand is why is this getting so much attention? And it's getting attention because of SpaceX. Is this going to have the same amount of attention after SpaceX is public? Probably not. It's probably not going to. So, you have to understand where you are in the food chain with this stuff.
You know, this as looked to me like it was going to go the other day. And what did it do? Got right up to the key level and then it just rejected that key level. I use a 55. You should use what you're comfortable with. It couldn't get past it. It just hit it, rejected, and formed a flag. And this was where again, reflexivity is like it it such a great tool when you get the concept. And I'll explain where I'm going with this.
So, we break out here. Again, this is something that should have turned in here and just retested. It didn't. I tried it didn't work. But and I want to explain it from an example of something not working. Why did we fall apart here? Well, we fell apart here because everybody thought that when GSA got bought that it was going to be something where AS was going to step into that valuation. And what they're not understanding is that AS has been going up because people thought AS was going to get bought, right? They thought somebody was going to accumulate it. It wasn't because Bluebird 7's coming or things like that. So when they come up at the launch, I think I have the potential for this to move up and over into the launch. And what happens? It hits the 55 and it rejects, and we get a ton of selling. And then also you start seeing major insiders. Someone sold like 150 million shares. All right. Well, where am I in the food chain on that trade, right? I have to realize that I'm probably not where I thought I was. And now the insiders that are closer to the trade are getting out, right? Or they're starting to. All right. So that means that the way that I'm viewing that's probably not the right way.
So then I look at something like Rocket Labs and everyone's excited because they have a new thruster, and everyone now knows what thrusters are. All right, maybe this goes, maybe it doesn't. But what happened on Friday? All that excitement went away. Okay. When we start looking at getting closer and closer to the SpaceX story, you start seeing names like SATS, which has a stake. We'll have a stake when all this stuff closes. Well, that's hitting highs, right? Oh, okay. Well, that's hitting highs. This was something we bought here and we've been riding this thing ever since because of the valuation. Just something you might want to look at.
But when we see things like GET get bought, and that, you know, this is $90 cash and it's sitting at $80, and people are saying, I don't want to wait a year or a year and a half. Does that make a lot of sense? Probably not. That's probably ridiculous that people are not willing to wait a little over a year to make, you know, 12.5%. It seems kind of silly. I mean, to me it's silly because that's a lot of money that's just being left on the table.
So, how does this all tie together? You have to realize that the peak on something like UFO or on these space names is going to be the day that SpaceX goes public. Like, that's going to be it because we're going to go back to our water cooler theory. And then if we tie it all back together, it takes us back to the NDX. Where are you on the food chain?
So, when you look at the NDX or you look at the S&P, like where are you? Are you in the camp of everybody else that thinks that this is going to explode to the upside, right? Like if you were to if you were to take the temperature of the world right now, right, and you're looking at that market, do you think that everybody thinks that that's going to explode to the upside? Do you think that everybody thought that we were going to Let's get rid of the lines. Do you think that everybody thought we were going to explode to the upside here? Like when you looked at this chart back here back in the day, but when we looked at that chart, was that it? That was it? We're definitely going to explode to the upside because he paused. No. What did the experts say? Oh, these are going to take years to sort out and it's this and he doesn't understand and yada, right? Remember all that, right? How'd that work out for us? Right? And then we saw this speed this up because that's just way too long. So, how'd that work out for us? Right? Okay. We took out new highs in two months and then they told us that we shouldn't be taking out those new highs because we didn't understand, right? Okay. It was them that didn't understand.
So, where are you now when you look at this? Are you in the beginning of this or are you of you know when you look at like people like here's the move and then you would go here and you would look at the second variable and go all right well where am I like where am I on that variable am I tied into this am I here on that are we up here on that and that's really up for you to decide it's not up for me to tell you but you can t take the temperature I purposely will look at sometimes when I put titles out there just to watch how people respond to the titles of a video to understand whether or not that rally is going to exist or that rally is not going to exist and then where I am on the food chain.