Transcription
Now, we came right to this gap fill, and this is super interesting. So, I'm going to show you exactly what that is. S&P filled right back to that contract role, and there's obviously some things there going on in the market we have to talk about, but you can see that right to where that futures contract is, and it's the same exact thing happened here, and what we have to talk about, what does this mean going forward? Now, does this always happen? No. Do futures traders always look for this to happen? Yes. But there's a lot more going on here that took place today that we are aware of that we have to dive into. And there's also this pattern that I want to just get out of the way in regards to the S&P because, as someone likes to say, "absolutely glaring." 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 is already in. The important thing is you get the information, education that you need. Subscribe. Let's get to it.
Now, what we do here is we just look at the facts and then we make decisions from there. You can see the gap up that happened on the 15th, and then you can see us here, and then we gap down. Now, why is this so important on the S&P 500? I'm just going to go to open, high, low, close because I think it makes it a little cleaner. There you can see the gap up, and you have that gap up. You have a gap down in here. That is an island reversal gap. And you have one here. And you also have one on the NASDAQ. They're not great. I've seen great before. This is not what great looks like. So, I just want to show you that there. And then we're going to go to the NDX. And the NDX, sadly, is even cleaner. And it shouldn't be surprising because of what the NDX is. So, you have these island reversal gaps. Can they just reverse and just go back? Yeah. I mean, they usually have 3 days. Usually what tends to happen with these is that they'll come back up to that break area, and then from there, we'll see how they act. But that is pretty textbook. Like if you had a textbook on what an island reversal gap looks like, that's what it is. Does that mean that's the end of everything? No. It just means that, hey, this has to sort itself out. Now, what does sort itself out look like? Well, let's just go to the S&P for a second. Sorting itself out would be a retest of lows. Like that would be the first thing that you would take away from that. That doesn't look too bad, right?
And we have data coming out this week. We have the PCE that stills to come out. We have Micron tomorrow night. Who knows what's going to go happen with Korea tonight? We'll get to that in a moment because we have to spend time on it because that was definitely a culprit for today. And now what we have is an area where that would be our first area. And so what I like to do is I like to use demarcation lines. And that's going to take you to the 55 as well. So that's going to take you to the S&P 55 just right there. If I go to the spy now and look here, where's that going to take you? Well, that level that I have drawn here, which is this close right here, is going to take you to the 55 as well. And that is going to take you to 725. You are not that far off of seeing if you're going to retest the 55. Do I think you break the 55? Do I think you have a structural issue? It's 1%. I—I'm just going to be blunt here. I don't know. Here's what I do know, and this is something that is a concern of mine, and I just like pointing out the obvious, and then we can talk about it, but it's definitely there.
So, you have a 12, 22 cross here. So, I use a 12, a 22, and a 55. And I crossed here. I have a 12, a 22 cross here. Whether you're using a 10, 20, 21, doesn't matter to me; you should use what you're comfortable with. But from that date over, if you really think about it, how did your trading go? Not, it really wasn't that great. I mean, we had, we made money. We were pretty active, but swings since we broke that, it—it really wasn't great. It really wasn't something that we had that lit the world on fire versus when we were above it, yeah, things were pretty easy for us to do, and life was a little easier for us to get involved with. So, I think you have to look first and say, do we get down to that level? Do we undercut the 55 and then do we bounce? It's 1%. I would find it very hard to believe that we don't at least test it at this point. And then we'd have to go from there in that 21 level.
If we look here, you have the same cross here, the same cross there. And these crosses are pretty obvious. Like, when they don't really matter is when you don't have a trend. When you have a trend and you cross like that, you want to pay attention to it. So, I'll give you an example. If I go back through time, and this is when we had all that winning and liberation, and you don't have a trend yet, but then you start to develop one, right? And you can say for like if you're looking for a demarcation line, you can say, "All right, well, when we're below the 55, you have a trend." So, you have the 55 break in here, you break down, you get the cross. When really was the best time to get involved, the instability, you crossed above it here, and then if you just kind of take a look, you broke here, and you're like, "All right, well, that's not great. I've seen great before. It doesn't look like that." And then a couple days later, you're hitting highs, and you have another cross back to the upside. So, it negates itself. It doesn't mean, you know, people will say, "Well, if I bought here," yeah, that's great, "but what if you bought here?"
And so, what we might want to do with these crosses, we might want to overlay something else to it. Meaning, like, it's one thing. It's not all things. Not every cross is the same, right? So, when did this cross become the most vicious? When we closed under the 55. So, what we might want to do is not get goofy because, you know, you have those levels in here. But when we broke the 1222 here and we were below the 55, you could argue that, hey, that was definitely something that we had to pay attention to. And you can see it right here. Look at it. You can see how you broke down right here coming across, and then you have a 1222 cross to the upside here, and you're above the 55. So, what do I think? I'm glad you asked. I think that you have to use them in conjunction with other tools. So, I think if you have a 1222 cross like you do here, that it is the first part of a possible downtrend. The very first thing you'd have to do is come down to this level. If you do and see if you hold the 55, is that starts coming down and you start trading around. Remember, it's not a straight line. Charts don't look that way. So, you come down, you try to figure out what's going to happen. Maybe we come down here and we bounce off of that, and then it's fine, and it regroups and goes back up like it's done in the past. This is the first sign, and so is that island reversal that, you know, makes me really want to put the brakes on.
The other thing that really bothered me today, since you asked, was the VIX, and people say, "but the VIX didn't do anything," and that's kind of my point. You were really problematic today, and the VIX couldn't even close over 20, and you're down 4% on the day on the indexes, I believe. So, let's go take a look exactly what we are down. We'll just go over here, and the Q's were down what, 32? They were actually down more 'cause you're bumping around now. And then you were that one and a half on the spy. So, the spy was hardly down in comparison to the Q's, which again, it's not unrealistic for that considering what we're dealing with, which we're going to get into right now. But I think when you frame it that way, it gives us a better understanding of what we need to look at. And so, what do we have? We have an island reversal that's very clear. We have an area here which is telling us exactly what we have to get above these areas in here. And then we have this area that we have to really watch on the Q's and see if we come back down there. And just FYI, the put wall 700. I doubt that that's going to have gone lower today. And then, of course, you have the spy which did break its put wall and is much closer to that 1%. So, if we start closing under the 55 and this is above us, that's a pickle, and we just want to be cognizant of that. We don't want to convince ourselves that it's something that it's not.
And you have these different areas. So, let, let's explain this so that we can, you know, really know how to use this. So, you have to look at the market any way that's comfortable for you. I look at it from the standpoint of I have top down: index, sector, and then stock. So, if my index looks god awful, I don't plow into things, and I wouldn't quantify this as god awful. I would quantify this as, okay, we have a pickle. Let's see what it does. But it's not great. I've seen great before. It doesn't look like this. But we're aware of it, right? So, then you'd go to the sector that you're interested in and then the stock. But everything starts for me here, just like it does macro, fundamental, and technical. And that's really going to tie us into the next part of this where you have a macro overlay, you have a fundamental overlay, and you have a technical overlay. And that's going to give us the macro fundamentals, and that's going to give us the technicals. And then it all balances the market here. And so, you have what is going on, who's affected by it, and the technicals tell us when to act on it. Meaning, if you have a macro event, nothing's going on in the market, do you really want to act on it? Do you really want? Probably not. And then you want to know who's affected by it. And then we want to know when to act. So, it's what, who, when is the way that I look at the world, right? So, you do have some events going on right now.
So, the first event we actually covered in Saturday's video, and I will leave Saturday's video; I'll pin it here at the end of the day. Okay. And I'm going to go back to candlesticks just because I want to, 'cause I can. But now what I want to show you is the dollar is breaking out. You're way above par. And you've been rallying ever since. Why? Went over this on Saturday. Worsh's statements were very clear. And I think that this is, I think it's very important. Came out and said very clearly that I don't know that I'm just go through it again, and you just watch it on Saturday, and we'll go from there. You know, there might just be an easier way to do this so that we can just knock it out. I do these unedited, so you're just going to have to bear with me here. And I think this just might be an easier way to just screenshot it and just knock it out so that you can see what's really causing the issues. And I get into this in Saturday. If you haven't seen it, I'd watch it. I'll link it.
But his statements are going to be shorter and simpler. He's not going to have forward guidance. The staff, he's kind of keeping, but he did add some people. Forget the dot plot. He's done with it. I think everyone else fades with it as well. But to me, I think that this is super important. And press conferences are no longer guaranteed. So, what does this do for us? Well, this gives us a lot of uncertainty, which is how it used to be with Greenspan. We never knew what was going to happen. And because you have that level of uncertainty, and they, and he wants to go into the background, which frankly, they should. We shouldn't even know their names unless you're in the industry. It's kind of crazy these guys are doing conferences every 8 hours. That's adding stress. So, people are buying the dollar.
When they're buying the dollar, is it causing problems with this Japanese, you know, the yen US carry trade? And the answer is, I don't have an answer to that. What I will say is, since it's happened since the Fed meeting, that trade's gone higher. You have this long bar down here, and then from there, you've worked your way back, and I did show this previously, and I'm just going to show it again so that you can see it. In 2024, you had something very similar where you came in April, and then you dropped. It's right here in April, and then you rallied back over, up, down, up, and then we cracked as they unwound because Japan had a concern. If you look at what Japan did yesterday, they had an emergency meeting with the Treasury Secretary of the US and just talking about, "hey, how are we going to stabilize this?" So, is that out there? Is it an issue? I think it's one of the issues that's out there, and I think it's something that we have to watch, but the dollar is causing issues in other spots as well.
So, if we take a look at EWI, which has just been an absolute monster, and the earnings, and I want to be really clear about this, as of now, you do not have an earnings problem. I don't see an earnings problem. Earnings look great, and they still look great, and we're going to find out what Micron is tomorrow. Remember, a lot of EWI is tied to a few things happened last night. Now, let's just go through what those things were.
You had the SKHEX that became bigger than Samsung, and this scared people. I don't know why, but that scared people. Out with the old, in with the new seemed to scare people. You also had their minister come out of finance come out and say that they were worried about the currency, and they were worried about the dollar, and they were worried about how the dollar is going to affect their currency. The other thing is they're talking about passing something that's going to tax unrealized gains. Whether this is just rhetoric or not, these three things seem to have put a lot of pressure on EWI last night. And from there, we saw these names come in really hard. And that's why they came in the way that they did. It wasn't that SKH Heinik said that they have a problem.
There was some talk of Apple and Apple saying that iPhones, you know, the iPhone 18 is going to be, I think they said, around $1,300, and they don't know how realistic that is. And people are saying, "Oh, we are going to have demand destruction on price." These guys cannot keep their product in line. So, if Apple doesn't buy it, somebody else will. I can't see Apple saying we don't want to sell iPhones. I—I just don't get that part of it. The unrealized gain, you know, these things have to go through channels. I don't get that part of it. Could Highinex have been frothy, and that's what's doing it? Maybe that's something that could have had something to do with it. But to me, I think it's the currency, and I think that's what you're dealing with here.
So, if we have these kinds of issues here, do we start seeing them everywhere? Do we start seeing them in Taiwan? Does that start to affect Taiwan Semi? And here's the thing about this that I think we really have to pay attention to. All of this is connected, as we are, you know, well aware, we're all aware that this is all connected now. So, if they have outflows, if they have outflows, then other people are going to have outflows. And so, why do you, again, why do you care about this? Because if they have outflows out of EWT and out of EWY, then a lot of our ETFs are going to get outflows as well. And when those outflows happen, you're going to see things in, like, such as DRM come in. And when we start to see those kinds of problems and they start to drop, then those names are also going to be credited with what? Well, you have Micron in there as well as you have all these other names. So, what does this usually lead to? Well, it just leads to a good old-fashioned outflow. And then the outflows trigger the algos, and then it all falls upon itself. So, if I had to say what I think the issue is, I personally think the issue is that you had a possible macro event with the dollar, and that dollar is causing strife, and it's causing outflows, and then all these other things that are out there are secondary, and that's how I see it.
Now, what do you do about that? Well, you got a couple key events that are happening, and so let's talk about those key events right now, and then we can go forward from there and kind of come up with a game plan for tomorrow. So, the first is CBRS had its first quarter. We closed at 22672, and then, of course, right now we are down. We're at 208. You have a put wall at 200, and the low is that 196. So, you're really going to want to watch this tomorrow and see how this acts. Here's the thing. The call is at 5:00. It's beginning right now. But more importantly than the call, which obviously I'm not on because I'm doing this, but more importantly than the call, the biggest thing for us to focus on, in my opinion, is the fact that this was decent, and they're still selling it down. And so, that's going to tie us into Micron, which will be up next. And I don't really see a problem with this call. Like, I don't really see a problem with the, the earnings. I thought they were decent. They were better than expected. They raised guidance. They did everything really that they're supposed to do. And then afterwards, we're going to have Micron, and Micron will be tomorrow night. Now, the couple things to go over that we should pay attention to here. Let's just start here. Micron, last time they came out with earnings, their earnings were fantastic, and then the stock went from 462 all the way down to 311. And this was obviously during when we had the curl fluff in Iran. So, is that an issue? Yeah, I do think that there might be a, a little bit of an issue there. And yeah, I do think that we want to, we do want to pay attention to that.
When the day started, to me, it was more about, "Gez, are they just trying to shake the tree before earnings?" But the selling just never really let up. As a matter of fact, they did a couple things here during the day that let me knew that they were actually looking for supply, and I'll show you one of them.
So, when you have a market like this, you have all, you're down, and then you're ripping. And we had some really good day trades today on some of this stuff. The swings, obviously, if you're swinging this stuff today, sucked. I mean, that's the technical term for it. There's no other way to say it. It was just a bad day. But from a day trade perspective, you had names. You could pick this stuff off down, breaks out, squeezes, and, you know, rips and see the little reversal right there. And then you're trying to figure out, you know, which way to go with it. I definitely think there's something, you know, to that, but I think more importantly for me, I always look at the behavior. So, if I have a setup, and that setup's working, and they work fairly decent. So, in other words, you can start seeing how we start to lift in here on the RSI. It starts lifting, and you start to push. And here, I'll just drop in the VWAP for a sec as well. You start getting me over key levels only to drop me over those key levels. When I start to see stuff like that, they are areas where I have to put on the brakes and say, "All right, are they just trying to lure you in?"
And the bottom line is, if you look at something like a Micron today, when they got you over, they were just trying to lure people in. And then from then on, it never even tested that area again. If you go and take a look at something like a SanDisk as well, and we just drop the VWAP on something like a SanDisk, very similar over, and then we never really get back to it, and it's slight, but this is the kind of thing that's going to lure people in, especially after the first couple hours of trading in the market. So, we just want to be cognizant of that. If you take a look at it and just look at it even from the perspective of the socks, and you take a look at it over, up, "you better get in over." "Oh, you better get in." How'd that work out? Not very well. So, they're definitely trying to lure people in, which means to me they're looking for supply. They're looking for people to come in there. They have supply. They're actually looking for demand. And then they're reversing off those levels. That is definitely a key sign for me that, okay, something's up here, and I need to be really cognizant of that.
And nothing was really safe today. And we saw that, like, it didn't really matter what it was. You know, GEV is a swing, and then by the end of the day, you're ripping up. Everything's fine. Industrials are okay. And then all of a sudden, guess what? They're not okay anymore. And we saw that with the industrials as well. And this is where it gets interesting because while we're just starting here, and I'm not saying it's happening, but as we're just starting here, you have a gap up, and then you have the gap down, and you're getting island reversals on what was supposed to be the new leading sectors. And it's fresh. It's new. And I'm not saying that they're definitely going to stay. You're not even below the 12. But you need to be cognizant of this, and you have to look at this and say, "All right, well, we did kind of gap fill a little bit, but there's an issue there."
So, if this is where you really have to look at this, what is going to be the next driving force? Is it going to be XLF? Is the socks going to come back? And the bottom line is for me, understanding that I've got Micron tomorrow night, we have to get through Micron. After we get through Micron, then we can look at the PCE on Thursday, go from there, and then, of course, you have the quarterly rebalancing. And we'll cover the quarterly rebalancing most likely tomorrow night. I think it would be a better time to do it than tonight. So, I don't think you're in a position here where you can just look at this and say, "Oh, that's it." I think you have to look at this and say to yourself that the probability of you coming back down to this. The way that you're set up right now, it's pretty likely that you're coming back down to, you know, or you're, you should, I'd hope you'd come back down to this. My hope is that we just don't rally up without coming back down and then have to play that little game. I just rather get it over with and rip the band-aid off. But, you know, are you oversold? Not even. You haven't even started to be oversold, like, really oversold yet. So, and that's definitely something we want to look for. Also, to just add to the suck salad of the day, if we came here and threw in this and then went here, you could start seeing that software is starting to close under its 55-day. So, if we don't have leadership, you don't have a market. And that's something we really have to pay attention to going forward. That's a.