Transcription
So, we finally got that higher high we've been looking for. It happens. It's exactly what you want to see. The question everyone's wondering is how long can this possibly last. We did make a higher high here, which is actually much bigger than you think it is because we've been struggling with that 724 for some time. If we look at the close here, it's really important. And then just watch this on the weekly. Even if you go to the close here, you finally did an undercut, grabbed, and then ripped higher.
Now, I think it's a period of consolidation that's going to lead to some really big winners coming out of that consolidation. We're going to get into that, but there's some things that we really need to talk about that people are trying to understand. Like for me, when people are looking at what's going on in the investment grade bond markets and how they're selling down, people are concerned. People are concerned about the Japanese yen trade. I think there's an issue there. I'm going to show you exactly what the issue is and how to watch that issue because if you'll remember back in the day that was something that absolutely clobbered people and they weren't expecting it. Nobody was expecting that and it got really ugly really fast. So I'm going to show you how you can monitor that today.
And then we have to talk about not just SpaceX and what happens with SpaceX as it's falling back to Earth. Get that? It's falling back to Earth SpaceX. So what we have to focus on here is not the IPO VWAP, but its relationship to the other rocket names and why that's so important and how that matters when we look at something like an SKH Highix. Like why would you care about a rocket company in regards to what happened here? We're going to explain exactly how it ties together and how those are not two separate things. They are the exact same thing. They're just different. Same but different. Let's get to it.
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So, we're going to start with the basics and then we're going to really drill into this. But we can all see the breakout, right? We can all see the DTL and then we can all see the breakout of the S&P. We'd be remiss to not see that. We can see them getting less defensive, not more defensive. And I do think that's important. I would be remiss to just not start at the basics. If we go and take a look at the NDX, you have some key levels here. I'm going to break this down super simple. We're going to go to just basic chart and we're going to talk about this island reversal that's still there.
So, if we look at this, work with me, not against me. If we look at that island reversal there, gap up, gap there, gap. Have we filled that gap? No, we have not. Is that still something we have to pay attention to? Yes, it is. So, when we got up to that, you can see we rejected. What we did perfectly here was undercut and then rally. And we did a really good job of that. And we're getting through some key levels. But this is definitely still on the menu. It's definitely something we have to pay attention to. If we do the simple things, which I find it's best to start with, you still have a level here you have to pay attention to. You still have a level down here that we have to pay attention to, but we're getting wedged in. And if you look at this, it's starting to look like one big pendant. To me, I think you break to the upside. If I just going to jump ahead and tell you where I think this is going, but nobody really knows for sure what's going to happen. And there's a lot of moving parts that we're going to get into today.
I do think there's some really interesting developments. If we take a look at like here, I'll show you like watch New York Stock Exchange highs and we'll drop this down. So, if we look here, the highs, the New York Stock Exchange highs, look at what happened on Wednesday. I mean, they just fell off a cliff. And I thought that was super interesting. I'm like, "Oh boy, this is going to be really bad." But historically, if we look at those levels, when things get that bad and you get the new highs that bad, it usually I'm just going to mark it off. It usually becomes an area where you're getting washed out. Not so much like it's so bad that it's so bad that it can't go but another way. So if you go and take a look at December here and you go and take a look at it over time, this is where we had all that winning and liberation, it actually marks off an area where you might find yourself bouncing because of how bad it is cuz it could only get to extremes. If you look at the new lows, and I thought this was so interesting, you weren't hitting new lows. And so I thought that was really important as well just to point out before we go any further.
If I look at the simple things again like NDFI, which is NASDAQ 150-day moving average, you're actually curling up and setting up to break out of a breath indicator. So, meaning these are the stocks that are above the 50-day moving average. Look at how you're holding this area down here. And look at how you're starting to curl up and you're broadening out. If I look at SDFI, I'm sorry, S5FI, which is going to be stocks above the 50-day moving average, they're just ripping. So the broadening out of the market is 100% happening and that's not something that tends to happen that leads us to an area that we have to concern ourselves with. Meaning that's usually not when you have to go out there and say, "Oh, hey, we have a problem."
If I look at the RSI and just get a sense of it, you're actually not overbought. You sold down. You never really got to that oversold level, but you did get to a level that we kind of had to watch here and it held and now you're starting to curl back up. If we look at the NDX, it's very similar where we came all the way back down and we're nowhere near overbought anymore. This gives you a lot of room to the upside, but I think there's a lot of analysis that needs to be done on the market. Everything from what's going on in the bond market to what's going on in high yield to what we're going to do about things like SKHix and SpaceX and how it all ties together. So, let's jump into it.
In front of us is defensives divided by the S&P growth. And I like to show these here so that people can do them for themselves. But XLP divided by SPYG. And this is defensives divided by the S&P growth. And when we look at this, we can get a clearer picture. I'm going to show you different time frames, but I'll show you what we really want to look for. We always want to look for are we seeing anything? Let's get rid of that magnet. Are we seeing anything that looks like something that we've seen in the past that could lead us to what we're going to deal with? And this is actually really helpful. So not just from picking a peak and drawing but just seeing the trend. So instead of just picking the peak and going well look what you want to do is you're looking for change in trend and you know what we can do here is let's put this here for a second and let's change the color of it. And again I do these unedited because I find great value. Let's we'll make this green and doing them unedited so you can actually hear the ramblings. But we're looking for change of trends.
So if we look from September 24 for example until we get into 25 and then we can see the breakout of this January February and then of course we have the winning and liberation and then we explode to the upside and why because they're getting more defensive. This is where obviously we had the tariff issue. You can see the pullback where we thought it was fine. We got a little bit more cardboard and then we peaked and that peak does what? That peak marks a bottom. So, if we just took into account here and we marked this off, we're going to note real clear that is a bottom in the market and that is April 2025. And then I'm going to show you something else that you can do with these. And if I go here and clone this and grab it, I can just go here and you can see that you have a peak and then you have another peak. And then we could just do it again and clone it for a second and then just grab it again and just look over here where we have two peaks. And these peaks are February 13th, 17th to March 30th, 2026. And that's going to give us a pretty clear indication of what's going on.
Now, looking at these trends and then these reversals of trends, and I'm not doing it just from, hey, this is when we should be buying spy or where we should be buying anything, but what it's going to do is just tell you, are they getting defensive or are they not getting defensive? I myself as a trader do not like doing this flip. And by flip, I mean buying the XLP names or the XLV names and getting defensive. I, as a trader, rather just go to cash and keep it on the sides unless I'm seeing a strong fundamental trend because by the time I get in and out of the defensives, there's not enough meat on the bone for me to trade Clorox and those kinds of names. But a lot of people do that. As always, you should do what you're comfortable with.
Now, what I've done is I've overlaid the S&P with this so that you can see is there any value in what I'm showing? Because if there's no value in it and it's just cool, who cares? So, if we go back to the 27th and 30th of March, we can see that this peak was very pretty clear that that was the bottom. And then we can go back and we can see here this bottom, this double tap that marked the bottom. And I saw some behavior Thursday and Friday. And we can see it here as well. And I saw some behavior on Thursday and Friday that really stuck out that reminded me a lot of what happened in April. And we'll get to that. But if we were to use this, we can see pretty clearly here that yeah, this is very helpful to understand, hey, are we getting near a bottom? Are we not getting near a bottom? And it's not a function of where we are in the chart to be clear. It's a function more of, hey, are they getting more defensive or less defensive? So if they're getting more defensive, then we probably want to stay out of the way.
And then we can look at this on different time frames of course and it's those different time frames that I find most valuable because they will mark off areas of interest. For example, if you peak here and then we're getting less and less defensive, well that's a really good sign here for us going forward with what we're dealing with right now. It doesn't mean that it holds, but right now they're getting less defensive. They're getting more aggressive in their buying. We could try to figure out how much by looking at different indexes and different oscillators and indicators and we're going to do some of that. But when we just drop this to a 4 hour, it gets a little clearer on what they're doing here. Now, if we drop this to a weekly and go out and you're only going to go to 2021, but you'll note that these peaks and then when you start coming down and again, this is a weekly chart that we're looking at right now. You they're marking bottoms. Like here's 2009 and you can see it marking there. You can see in here 2016 from those peaks and then as you start to travel down it's marking bottoms. It's not a function of just oh this is where we're at in this number. It's a function of what are we seeing relative to defensive and are they getting more defensive? And what we can take from this and what you should take from this is that they are not getting more defensive now. They are getting less defensive. I like looking at them at multiple time frames because those multiple time frames can then give me more indication on what I should be doing. If this was we're hitting a low here and then we're hitting a high here and they're getting more defensive, that would be a divergence and that would mean, hey, this probably has a better chance of not holding or less chance of a holding. And we're not seeing that. So, what we'd want to take from this is they're getting less defensive and they're getting more aggressive. Now, what we might want to do is see if they're starting to get even less defensive and start breaking down in here. But for now, this is a really good sign for us. And we always want to look when we look at these relative, we're looking at them from different time frames to see what we're going to to get from it.
Let me explain this. So, take XLK divided by the SPY. So, what are you looking at? You're looking at technology relative to the S&P. So, if you're a weekly investor and you're one of those guys that is looking out multiple years, you might look at this and say, "We have a problem." And the problem might be we're back to all-time highs on technology because XLK is the tech sector. Technology versus the S&P. You might look at this and say, "Hey, we might have a problem." And on a weekly basis, if you're going out and thinking about this from a year perspective or two-year perspective, you might be right. Th this might be something like a year or two from now where you're looking at this and saying, "Hey, that might be it. We might have an issue." I don't know that. And frankly, I'd want to see more structural damage than this. Meaning, I'd like to see a rally up like we had another attack of that area and then maybe a lower low. and you had something like this very similar back here because when you're doing weekly charting you have to understand that it's going to take time to develop. You can't look at a weekly chart and then say Monday we sold off. I better do something about it. But if you look for example relative to March 2000 which was the peak in tech and I don't think we're at a peak but I'm entitled to my opinion. You're entitled to yours. And for those of us that traded back here, we know the difference between what's happening now and what you know is happened back then and I was very young there, very naive, but it is what it is. Anyway, so you can see how we rallied up and then we took out that lower low. So anyone on basic charting would say, well, we hit a high, we hit a low, we hit a lower high and then we hit a lower low and we fell off. So you really could see in September like, hey, September 2000, hey, we have a problem. I don't know that you can go and take a look at this on a weekly basis right now and say, "Hey, we have a problem yet." I think on a weekly basis, you can say, "Hey, we're back to the highs relative of the S&P."
So, does that mean that we're going to see some rotation into different sectors? And 100% I'm in that camp. Like, some of this stuff went way too far. Meaning the percentage of movement that you've seen here, if you marked it off, is probably one of the single largest moves you've ever had. But we've also had the single greatest growth since I've been trading. And I've been trading since back here, back in the day, since this happened. So, in other words, I've never had earnings growth like this in semiconductors ever since I was trading. I don't know if we've ever had earnings growth like this in semiconductors, period. End of story. I can't remember where people were in like street quarters going, "Hey, got any of that DRAM?" Like, it it's pretty insane what's happening right now. And the buildouts are suggesting that. But let's just stick on the tech leg of the stool. So from a weekly standpoint, someone come to me and say, "Well, I think, you know, I think we peaked technology versus the S&P and I think, you know, a couple years from now, you're going to have a real problem." Or a year or two from now, I think you're going to have a real problem. Maybe they're right. Maybe that happens in 28 29. I can't look at this chart on a weekly basis and say, "Oh, well, you know, Tuesday is going to be really ugly." So I have to look at the time frames that make the most sense.
So, if I look at this on a daily chart, I may look at that and say, "Well, that's interesting because we hit a high, then we hit a low, then we hit a lower high, and now we've hit a lower low." So, I could be seeing structural changes here relative to the S&P that says, "Yeah, we might want to put ourselves in a position here where we're looking at this and saying, "Yeah, maybe that's happening." And we'd have to be real clear about this. And I want to be very clear about what I'm saying. I personally think that we swung too far and they did get some of these names way too far ahead of the rest of the market. But I also think that you've corrected a lot. A matter of fact, momentum has dropped to some of the fastest levels as far as a decline that we've ever seen. We've actually dropped in momentum as fast as we did during CO. A lot of people don't realize that because of how fast we moved, but let's just look at some simple things and see if it adds any value.
Now, what I like to do is I like to show you exactly what I'm doing so that you can do it for yourself. I don't believe, and if you're in the community, you already know this. I don't believe that anyone has a handle on everything. So, I always when I show people how to do this, they'll say, "Hey, I did it this way and this is what I got. What do you think?" Charts are a science, but there there's also art to it. And if anyone ever saw me draw, they'd be horrified. But other people have different ways of doing things. So when I show something to me, this is how I view things.
So if I took this low of April 2025 and I dropped it here, the first thing you're going to notice is that on the fib levels, that's going to take us to 786. And you're going to see how we hit that 786 right here. Then we undercut it and we're holding that. So from a longerterm perspective, if we start taking out this lower low relative, I would have to be of the camp that hey, we could really come down here. And I know these look small, but these are really big moves when you start measuring them out. So I could say, hey, this could really be something. And when I say that they're big moves, let me explain what where I'm going with this. So if I took the peak and I went to where we are now, that's 6%. That means in this period of time, the S&P is actually outperforming TAC and has outperformed TAC for the past 95 days by 600 basis points. That that's a lot of outperformance of the S&P versus technology. That's not a small amount. It's very rare for you to see something in that short period of time. So, I'll give you another example of where I'm going with this. So, if I took this peak and I went to this valley, you're going to see that that's 9% and what that took that took a long time. like that took a really long time to do that. And so it it's something that when we understand where we're at and we look at this versus 37 days versus 90 days to get a little further, it's a lot. If we took a look at this and said, "All right, from this peak to here, that's 20 days to get 6%." So this is obviously something to me that is pretty substantial, and I think that matters.
So, we had a huge runup and let's take a look from this runup. But even better yet, what we can do is just take the low of that runup, which is February 26, and see where that puts us. So, now on the chart, we have our green line from 2000, which was that peak, and we can see how we got over it, under it, over it, and how we're fighting that. And maybe that's going to be a level for us. Maybe it's not. I put it there because I think it's worth paying attention to that this is where we started running into an issue that maybe we did swing too far relative to the S&P in tech and we have to be cognizant of it, right? But here's the high and then here's that 618 retracement that Fed low which we're marking off and that's telling us a lot like hey we got the 61.8% retracement. This is where we started to have a problem before. We held that retracement and we're bouncing. So are we getting a period of consolidation? drop it to a 4 hour and we're getting a little bit of a different story. So from looking at this, we can see that 618 is definitely an area. So I would want to watch this. I would want to see does it get worse. So putting going out there and adding an alert to something like the fib is probably not the worst idea in the world, right? And just saying, hey, if we did roll over and we did break this, that looks like it added at the wrong spot. So we're going to move that. But yeah, let me do it this way because this is going to just drive me. Just remove it all. I've had enough. I've had enough. And then we'll just go here and we'll drop it back. And then we'll go right back to that level and we'll add the alert back. All right. Cool.
So then what we want to do is focus on this little area right here. I'll set this up later. It's driving me nuts. Come on. Work with me, not against me. It's too early for this nonsense. If we go and put this here and draw a DTL downward trend line, and then we're just going to clone it. And we're going to just see if it fits anywhere. And then we can look at this and say, "Well, it does kind of fit in there." So to me, when I look at something like this, I kind of have a a pendant. I kind of have a bull pendant in here where we're pulling back down. We're consolidating, and then we could actually be setting up to break out. Now, I don't know that that's where this is going again. And I'm not here to tell you what's going to happen because nobody knows what's going to happen. But I do think it's super interesting that you're at this level right here. And I'll draw the other part of it, too. right here underneath of it and that this ties directly into an area where you are from 2001 where we peaked relative. But at the same time, it also looks to me like it's trying to consolidate here and then may start pushing higher. Even if it goes flat, it just means that tech is going to perform as well as what we've seen in the past, right? You can always drop the time frames down on this stuff and take a look at it and say, "Oh, well, look at this lower low." And then we could always go into indicators and oscillators that we use and then see if we're getting any value from that.
Oh, okay. So XLK related to the spy, we made a low, tried to rally, came back down, and then we made that low. And then from there, we could go and say, well, from July 8th, relatively speaking, we actually have a divergence. And if you've watched any of these videos or you're in the community, like I love a good divergence, and you're aware of that. like I'm always yammering on about them all like oh there's divergence but there it is there's that's what I sound like and so like you can see that one pretty perfectly in here. So I like this and I do think that coming to something like this and then marking off where I even have more structure and saying hey this is definitely something that I want to pay attention to because if I broke that divergence I'm going to have a problem. So if I have a core level like that and then I break it I definitely want to be aware of that 100%. And this is certainly something that I'd want to be aware of if we broke it. But for now, I think that you could look at this and say, "Hey, speaking technically, you might have bottomed and tech might have bottomed relative to the S&P." And then someone say, "Well, why would you think that, Big T?" And then I would say, "Well, look at this divergence here in the 15-minute." That's why I would think that and it doesn't mean I'm right, but that's a data point, and I'm going to use that data point, right? Again, we're fighting for inches here. We're playing against the smartest, most disciplined people in the world because this is where the money is. So, we just have to understand that we have to use everything that's available to us.
Now, if you're a short-term trader, you're going to be looking at this stuff and going, "Why do I care?" You care because it tells you what you're standing on. Am I standing on quicksand or am I standing on concrete? Right? What's the floor underneath of me? You know, it's really important. I can't stress it enough. Like if if you're in an environment like this where they're selling BK LN, which just FYI is, you know, private credit and credit lines, if they're selling that stuff, you might have an issue, right? Like that that's not good when they're scared of credit. It it's not a good time. I've seen a good time before. It doesn't look like when they're scared of credit and they think that bad things are going to happen. You want to look at what the credit markets are doing and you want to look at what the bond market's doing because it tells you what's really going on. The majority of money that buys yield is substantially bigger than buys equities. People don't think of it that way because they look at the ETFs and everything else, but the bond market in and of itself, like that's where the real players are. Like they take down swaths of capital and they do it for very long periods of time. They're not going to be in and out. Like they're not buying a levered ETF for like a day. They're making commitments of years.
So in front of you is BK N. And this is just credit lines if you think about it that way. This doesn't end with credit lines breaking out to new highs. That's not how something ends. So if we were to look at this over a period of time and say, "Oh, well, this is credit lines absolutely imploding, and I don't think this goes back way too far. Let's see how far back this actually goes to 2012." So, and then you'll see obviously credit lines imploding. And then you'll see, you know, a concern about credit lines when Itchy decided to stop injecting billions and trillions of dollars into the world, right? Once that decided like, hey, maybe that's a bad idea. And you can actually mark off this level of the 22nd with where bond market actually held. And then you actually can mark this off. And then we can just do it here. Watch. And you can actually just see it like, oh, hey, this is where the bond market held. And so you can actually use this stuff again even as a divergence where the bond market does not hit a new low but the stock market does hit a new low. So if the credit market's out there buying and they're not buying equities, what do you think you want to do? You want to buy equities when no one else wants to. If you remember right around here was peak what? Inflation. And then everybody said, "Oh, you know, we got through, you know, little nightmare and now we can get back to it." Right? So I think that is important and these are tools that you can use as indicators. So not only you're looking at the charts but then you can turn those into as I do you can turn them into indicators. I also do think it's interesting that this stopped right around the same exact time on that July 8th that we had the divergence on the XLK and the SLP. I do think that that's pretty interesting. So I thought it would be worth pointing out.
And we can see this in high yield. For example, if you're concerned about the market, buy high yield cuz you're concerned. For example, you'd be concerned about Oracle's bonds for as an example. And I'm not saying that some of these things don't blow up. Of course, something's going to blow up. Something always does. You know, that's the reason for high yield. But when we look at something like this and say, hey, we're completely dropping down and high yield's getting weak. And then we come here and mark this off and you realize that the low of high yield was the low of the market. Meaning the market stopped on March 30th. And then what happened? Well, then they got out of that and then they went long high yield. Well, you don't hit highs on high yield when something's going to end. Meaning, if people are concerned because we hear about Amazon issuing all this debt and we're supposed to be concerned about it. Oo, it's a trillion dollar company. They issue 28 billion in bonds. Like, who cares? So, when you see something like this, to me, it's hard to look at that and say, "We have an issue." Now you again you can look at this over time and see well this is when this is April and this is when we had a big issue because of all the winning and liberation and then you can just kind of go through periods. Let's do it on a weekly just to speed this up so that we're not spending turning this into like a whole bond thing. But you can see these drops over time and how those drops are going to affect us, right? And then you can see where those drops stop and then why do you care about this? Because if they're worried about the market and they think that all this is going to stop, they're selling bonds. They're not buying bonds. And especially with everything you have going on with the new Fed chair.
Now, if you look, this is where it gets super interesting. And maybe I need a life, but I think this is super interesting. This is investment grade. And if you look at investment grade, and we just mark the top of that, and we mark the bottom here, the investment grade side of the market, it's not really breaking out. If we look at that and say, "Well, the investment grade side's not really going anywhere. That's super interesting. Maybe they're worried about that." My argument to that is no, they'd rather buy high yield. That's how little worried they are about the market. So, when you're worried, you're going to buy investment grade because you want safety. When you're not worried, you're going to buy high yield because you want the extra yield because you're not as concerned. So, if we go and take a look at high yield versus investment grade over time, and this goes back to the great financial crisis, you'll see when you're really when they're really worried, they absolutely puke high yield relative to investment grade because they want safety. And then when you bottom in the market, they're back to what? Buying high yield. And you can go mark the S&P off with this over and over again. Here's August 20. And then what do they start doing? Buying high yield. What have they been doing? You have your blips, but what have they really been doing this whole time? They're buying high yield. They're continuing to buy high yield. So, when we go and drop this down on a daily, and I just drew this crudely, but you get where I'm going with this. Hopefully, they're still being very aggressive in the bond buying. So, if we were worried about the market from a longer term perspective, you wouldn't see this. And I I'm going to explain why I'm bringing this up because of Thursday and Friday, and I want to equate this back to the winning and liberation. And we're getting there, but we need to understand the footing of this because it makes a lot more sense when you do.
If we look at it relative to the S&P, you can look at it yourself and make your own decisions. Now, it's not a beall end all. It's a data point. But after what we just went through with the correction in the S&P, if we take a look at this bottom that recently here and how we bottomed here in high yield versus investment grade, well, we hit lower lows, but we held. Then we hit a low and then we rolled. we hit another low, undercut that low, and at the same time they bought more high yield versus buying investment grade. That's not a sign that you have an issue. And it's not perfect by any means. This is why you use a lot of different tools, right? I mean, you can see here where high yield and investment grade actually peaked and that we still rally. So, it's a tool, but what I'm looking for when I'm in an environment is I'm looking at the right side of the chart and saying, is there something here that's telling me what's going on? Right? So, it's not a beall end all, meaning do I not want to buy here because high yields rolling over? No, I'm trying to just understand what are people doing. If I can understand what people are doing, that makes a lot more sense. And I'm going to give you an example. If we think it's the end of tech and tech's going to blow up and no one's going to buy a DRAM chip again, the whole nine yards. They're not buying high yield, right? So, different tools, different times in this specific period of time. You want to know what they're doing with high yield because that's how they're financing a lot of this stuff. And so what we can see is they're still buying it pretty aggressively.
Now let's look at semiconductors for a second because there's a lot going on here. And we can see you have a left, you have a head, and you have a right shoulder. And I'm sure you can see it, but for our purposes, why don't we just put it in right here. And then we'll clone this. And we'll grab it. Put it there. And then we'll clone it one more time. And then we'll just put it right there. And we'll make that one a little smaller. All right. That's getting That's too much. So we can see that, right? And then we would have to say, well, where's our neckline? And then I'm glad you asked. It would be right here. So far, we've hit the neckline. We've bounced and we're tending to hold that gap fill and hold the neckline to me. Yeah, it's there. Did we hold for now? Yeah. Could we break? A lot of things could happen. I don't know that it's going to. But it's my sense of this that really what we're going to see is that we're going to see this actually consolidate and some names are going to go higher and some names are going to go lower. But from an index standpoint, I don't see anything or a sector standpoint that just gets this to blow up, that gets us to really undercut. Unless we really accelerate what's going on in one field, meaning if you have a macro event where we start seeing, you know, boots on the ground in Iran or something like that, then maybe you have a macro issue. On the fundamental side, you'd have to say these companies have to start missing earnings. And from what we've seen this week from the announcements, they're actually going to start ramping up earnings. It's the exact opposite of what people think is going to happen. So, or what people have been saying is going to happen. We're going to discuss that in some detail on what's really going on out there. So, especially with Nvidia, but what is this telling us? Well, it's telling us that we have a neckline and we came to it and then we held.
All right. Well, that's something. Let's look at this a couple different ways. We could always look at the basics and say we hit the 55. I use a 12, a 22, and the 55. And the 12 and the 22 we hit, we rejected. And then we're trying to trade up. What we want to take from this besides the light volume to me I always look at the extreme selling versus the extreme buy. And what I have in an environment like this is just extreme selling that is way above all my metrics. And the buying was really mutant and we still went up. So most people will look at the buying and say well that's not a lot of buying. And what I always and it's not and what I always say is well let's get this straight. Everyone was scared like a cat in a hot tin Ruth because of SK Heinik and we're going to get to that and it's over like all right they're here they're public get used to it. So like now what do we do and you know cuz we were thinking that you're going to have this huge supply issue and that was really tricky on Friday and we're going to spend some time on Friday but I I look at it and say like all right well let me get this straight. Nobody sold and even that little bit of buying got us to close above the open. So, to me, it's relative. Like, do you not want to buy down here because, oh, the buying's light. Like, that's just stupid. Oh, I can't make money cuz the buying's light. Okay, let me know how that goes. You can use it as a function to give you an area like, hey, look at the huge buying here, but are you going to really just load the boat there at the beginning of the quarter because they're going to buy? So, I do think it's important to understand this and I do think it's important to grasp what's going on here. When I look at this, I think it's telling us a very clear story that hey, you're going to go through a period of consolidation and I do believe that that's what we're leading where some are going to have leaders, some are going to lead, some are not going to lead. And I think it's becoming clear which ones they are, but we'll get there. The more important thing about this is to understand where we are in semiconductors before we go to the next part.
In front of us is the socks divided by the S&P. So, we're looking at relative performance and we can see how big that relative performance has been. And we can do a lot of things with this chart. We could look at this here and we can see that it's setting up pretty relative to the S&P itself, right? And it's doing pretty much the same thing. You have the 1222 cross, which is not great. But you held the 55 here, relatively speaking, which lets me know that institutions are still out there buying semiconductors versus the S&P. And this gives me pretty much what I think that hey, we're in this trading range. Now, how deep can this get? And I think that the way to look at that is to just kind of look at fib levels and get an understanding of how we correct it. So there's two ways to do this. The first is to look at where you are on the year by finding what I would call a pain point. So I want to look at where I'm at on the year, but I just don't want to find a spot and say, "Oh, here's January 1st." I want to find a spot of pain. So a spot of pain is going to be to me right around here. And the reason that spot of pain's there is because we tried to break, relatively speaking, we couldn't. Tried to break, we couldn't. tried it one more time. We couldn't broke out. So, this is a level where a lot of people that were getting out of it saying, "This is it. It's over." Missed this huge run. If I look there, you can see where your 786 is, but you came right to a 61.8% retracement on it. So, you came right to that, which is the exact level where that one would have been when you came back down to here. Right? So, in other words, if you didn't have that part of the chart, you would have marked this off here. And that one, it comes back, it retraces. Why am I showing you this? Because look at where the fib level was on that breakout. It took you right to the target. So fib levels I like a lot, especially on longer time frames. Why? Because fib levels essentially chart human behavior. But when you're looking at this and you're watching this break rally, we got right to the target on where that fib extension was on the S&P relative S&P to the semiconductors and then you hit it your target and then you backed off and then you came back to the retracement of that breakout and now you're holding relatively speaking and the rest of the world is sitting here telling you oh you better get out of semiconductors. Okay. So now if we look at the next stage because now you've retraced you've come back you're holding 618. So again, we just want to watch this area because if you roll through here, this is where you would have a problem. This is where you would say, "Hey, we might really have a problem here." But for now, we're just not seeing that.
So people ask me all the time, they say, "Hey, Big T, what does scare you?" And besides heights, a couple things. But this in particular, you need to watch. So if we look here, this is July 24th, right? 2024. And this is the 9th. And this is CO1M. And this is where we are now. And let's explain what this is. This is the S&P 500. And it is the top 50 stocks. And it is the difference in how options are trading versus them. So when you're this extreme, you have a variance. That variance can lead to pullbacks. Now, you could make the argument we've already had that pullback, right? So that this is kind of late leading. But there is kind of a an issue here that I think is just worth pointing out. So, if we take a look at this area here and we take a look here, well, we're definitely below this eight level where we're all supposed to kind of like panic. I think you have to look at this a couple different ways. You know, if you look at the extreme moves up versus the peaks, they actually mark these peaks actually mark lows on the market, right? And then you come back down. But when they get this extreme, people get a little concerned. And I'll show you this because it does concern me a little bit. Like, hey, what's something out there that could go wrong? Now, we have a lot of uncertainty with the dollar, the new Fed chair, and what's happening out there. Now, whenever we have an issue, this has always been what I've been using for decades, but like whenever we have an issue, we never seem to have the same issue because people get smarter, right? We do. We adapt. And we actually even saw it in a smaller time frame with, you know, Micron and SKH. We'll get to that versus what happened to people with SpaceX. So, we'll get to that. But when we see something like US versus Japan, which did send the market down, if we go back to that that chart that I just showed you, CR CO1M, this here, you started
cracking that level right around the same time. Then you rally up and that low of that CR1M right here is the same exact level that you're at right now up here.
What really bothers me about this chart and why this why I bring it up is because you can see here how we had this huge drop in it and then we rallied back to the highs. And you can see this here as well. You have this huge drop and then we rallied back to the highs.
I don't really feel like we repeat the same issues with the same people if they're aware of it. So the people that are doing the yen carry trade where they go out and they borrow money in Japan. They come back here and they buy US equities which is what happens what they do with this carry trade because they can borrow cheaper. I and that's it's a trade has been going on for years and they lever the heck out of it. I would think if you got clobbered here you're probably not as levered as you are now here. But there I go again thinking. So I don't know that that's the case.
But if someone said to me, give me the thing that's a concern that no one's paying attention to. I think we are paying a little attention to this, but this is something that I am monitoring and I am watching that situation and it is something that you might want to pay attention to. That's kind of that, you know, black swan kind of event and I don't even think it would be that bad. I think it would be a sell-off, but I don't think it's the end of the world.
Let's get to stocks. So, first let's just talk about SpaceX and what happened. So, SpaceX goes public. When SpaceX goes public, what's it do? And there's your IPO VWAP. And then once you broke your IPO VWAP, that's it, right? You never really got above it. There's the reversal bar off of it. You tried a couple times and now you're closing at lows. And that's because you have a new kid in town, SKH Heinix.
But I do think it's important for us to understand the mechanisms that happened here to then so that we can see if these are the same mechanisms that's are going to happen with SKH. And you'd be like, well, why would I care? And you would care. And let's just mark the date. So this is June 12th. And so let's go look at that sector and see how well that sector's done since that date. So then we'd go here and go Monday and you'll be like, "Oh, we're definitely selling down so that people can get ahead of this and buy SpaceX." And then on the 11th you're like, "Oh, it's over. So we're going to get involved." And then you get involved. And then you get kaibos. I actually bought this. It did not work. Um then we just got out. But what was so interesting to me about this is that level has now become resistance for that name.
So, is this something that's going to happen to semiconductors the same way? I'll say get you to the end. I'll spoiler alert for those. No, I don't. And I'll show you why. But we had this huge issuance and when it came in, they couldn't get out fast enough. Tries to rally, pulls back. When we look at this and then you look at these names and the carnage that has taken place, the absolute just horror that is that space and we all thought like, hey, they're selling ahead of this to make room and clearly they've made room. So now these things should go higher and they're going to push. No, it was the exact opposite. That has been the high. And all of them, if you go and take a look at them, those levels, that's it. Like I don't know when we're getting above these levels. I don't know if it's going to be anytime soon for any of these. You've got guys that are in Rocket Labs that are insiders and they can't blow out of those names fast enough. So these areas are becoming bones of contention for sure. And if you just look at them, they're just absolute carnage from SpaceX.
So a lot of people, including myself, were like, I don't know if that's going to happen with SKH Heinix because you've had access to it, but you really haven't had access the same way, right? because you've had access, but not everybody wants to go out there and buy a stock that is on a different exchange out your currency, hedge your risk. So, what did you do? You went out there and you bought EWY, you bought Kora, you bought those names.
So, I do think it's important to note that here's your IPO VWAP and you broke your IPO VWAP here and you're not above it since. So, is this a different scenario that we're dealing with? In a sense, yes. And we're going to do a comparative analysis. And I just want to show you this because people would say, "Well, why would this matter?" You know, people want to buy this one. It's the fastest growing. Yes. But if you notice something about this, we were shorting. Well, I was shorting. They're doing whatever the heck they want to do. But I was shorting Micron into this. So this day I went out on Thursday and I bought a bunch or I sold a bunch of calls. And I sold a bunch of calls because selling options right now is probably the most lucrative it's been in years. It's absolutely insane selling calls, selling puts. It's ne it's never been this lucrative and it's coming to an end in a couple weeks. I'll get into a little bit of that on why it's going to come to an end and then it'll it'll go back. It'll revert. It always does, but right now it's just absolutely insane. So, I came in, I sold a bunch of calls against it or just sold a bunch of calls period. I didn't even own stock. It drops and then what we're doing is we're actually getting out into these drops and we're watching these core areas.
So, I'll go through this real quick. So, and I do want to cover why I think this is an important time for people that are selling options. But on 79, you can see this at 345. I think that this is going to be similar to SpaceX. I think it has the potential to be where they're going to sell those other names to make room for supply to put that name in. And I'll explain why it didn't work the same way. It worked out really well, but it didn't work as it wasn't as much carnage as I thought. And I'll explain why.
Mike, I'm taking a short position. 1050 was the stop on the whole thing. And I just put out other ways to do it. And then these are a bunch of calls that I sold and I went out in different strikes, different time frames, etc. And I used 1050 on the whole thing. The whole purpose of this and then I'll give you there's too much to type and I think I drove the guy that types it all out yesterday. I think I drove him mad with how many trades I did. I did a lot yesterday because of the reversal. But then at the same time, as soon as that stuff comes out, boom, you could see it. So we short I'm shorting the socks. I'm shorting Coro. Uh shorting the socks. I'm trimming that down. trimming core and then at the same time I'm covering into that drop. Right? So what you're doing because there was a level there at 1055 that was just as someone likes to say absolutely glaring. So, we're just watching the key level and then we watched it bounce off that key level and then it became pretty clear and then 1068 was our flip and there's a lot of different ways you could have marked off 1068 but or I'm sorry 968 need more coffee but as soon as you could see I mean it's not rocket science hits it rejects hits it but there was some other stuff there too and then that was like all right well do I need the last dollar so everything else that I put on here I got out of and then all the other options I just marked them at the high that everything else I sold because they just got completely crushed which is what I wanted.
This is one of the reasons why I don't think we have to worry as much. So if you take a look at Micron like why would you sell Micron versus and buy? So from a valuation standpoint when he was going on the US stock exchange and if you wanted access to it this would be SKH and this would be Micron's PE. I could probably just have cloned those but now we got to spend more time together. So this is Micron's PE. And so when Highex was going public 140, that puts you in a position where you're buying a company that's growing faster than Micron and it's cheaper. So when it gets to 170 and you're up 20% and the difference was like two 10% was the difference in the pees. Micron, if you take the last trailing 12, I think it's 22 and Highix was 20. So you're actually able to buy a bigger a faster growth company that controls like 57% of the HBM market cheaper than you're buying Micron because but now it's listed. So when this goes up 20% that 10% is gone. So what happens is Highinx got more expensive than Micron. So Heinx got more expensive than Micron. When that happens you start to see them say well it doesn't make sense for me from a fundamental standpoint anymore. Remember institutions look at the world differently and that's going to be our fundamental leg of the stool right so once we saw that we started to see that money go back into Micron go back into SanDisk go back into these names and I think that that's what we're going to see here I and again I think you're going through a period of consolidation but I don't think we're going to go through what happened with SpaceX.
So, if I went and I did this really quickly and I took SpaceX and we'll drop it like it's hot to a five and I want to get to this one point before anything else because I think this could really help you understand what's going on in the market and what you need to watch. But here's SpaceX. So, let me go SpaceX. Then we're going to go UFO. We'll go as ESTS. Go Rocket Labs. We'll go PL. And we'll just drop them in here for a second. And now what we're going to do is go back to the beginning of this and we'll turn this into a line. And now if we turn that into a line, we can see that well you definitely have, you know, the 800 lb gorilla. And you can see that even when we went higher on SpaceX, all the other names were dropping. Why? Because they were buying those.
All right, cool. Stay with me. In yellow is SKH. And when SKH hit a high, note the difference on what happens here. they're still buying those names. So as SKH Highix went higher, they were still buying. So when SKH Highix hit a low, these names were going lower. So they're trading in tandem. But when the dust settled, you'll start to see that SKHENX comes down. And then if we go and take a look at the day right here, you'll actually see Nvidia, AMD, they're buying the compute names. We'll get to that in a second as to why. But SanDisk and Micron versus when this went public are trading higher than DRAM and SK Hinx is trading lower. And the answer is well why is that happening? It's because of the premium. The risk premium actually flipped during the day. I hope that makes sense. You can always comment on this but it's a really important part of what's going on and I want to go through three things before we wrap this up.
All right, let's go. Number one, the biggest event that nobody is talking about right now, and I do believe it was the biggest event was that China has come out and said that the high-end chips that are being offered to AI companies, certain AI companies in China are going to be allowed to buy. And I don't think anybody truly got this. I think this got overshadowed by a lot of people, but none of China's numbers on these chips are in Nvidia's earnings and revenues. None of them. We put a swing on this. Let me see if I can grab it. I hate when I see things in the So, like we put a swing on this on July 8th. We're like 10 bucks on it. Ask me the last time I put a swing trade on Nvidia. It's been a long time, but they're going to have to take these numbers up. There's no way around it. China is an enormous market. And if they start allowing this to happen, it's going to be absolutely unequivocally huge. And the way that this acted on Friday with everything else going on, the low was what? The open, the high was the close. You have a white marbuzu pattern on a Friday, which we know institutions love wet day more than anything. Friday to jam it in there. So, it's perfect to me. Your 55s right here. I could pop that in. That's the first thing that I would say that I think got grossly overlooked with everything else that was going on there. It was like a oneliner and that was it.
I'm going to tell you why I think the selling I'm not saying that selling puts and calls is not going to be lucrative, but it's not going to be like it was. And I just want to show you why I feel this way. So this is ATR. This is the average true range. And the average true range of a name versus the S&P has just been at a huge disparity. So the VIX is not going anywhere as we know. But the average true range on these names has just been absolutely insane. The movement that you're getting in names is very similar to what you had in April of 2025. It just is. We come down, we back fill. It's the way the pattern is. People don't think it's over. They think you're going to crash again. You don't crash again. You wind up going higher. People start getting whipsolved. That's why swing trading is so hard now. It's either short-term trading or very long-term trading that works. But because people just going to get they're just going to get turned up as this goes through. But here's the point that I'm getting at. The average true range of any of these names that you're going to go through, they're all dropping. And so when they drop, people think like, oh, that means that these names are going to go lower. No, it just means that the premium on those options are going to come out. So much to the bane of everyone's existence, I've been in the community, I've been selling a lot of puts. I've been selling a lot of calls because it makes so much sense. It's been year It's been years since it's been 84 years. It's been a long time since it made so much sense to do this. But it's coming to an end to be this lucrative. It's coming to an end. And like everything else, this is what you deal with. But what people will look at is they will say and look at this stuff and these are big drops. I know it doesn't seem it, but they are. You know, like something like this, the average true range, you're dropping what, 15% in a period of time over like 15 days or 10 trading days. Like it's a lot for that to drop off. It's not normal. And you can see where you went with this, right? Like here it was 75 and at the same price now you're back to what, you know, 100. So like these are huge moves in the average true range. It's why people doing swing trades are just like, you know, write a check to St. Jude's. It's cheaper. But the bottom line with this is when you see this happen, you want to take advantage of it. But that is coming to an end. And also when you see this, it means period of consolidation, right? You're going to go through some periods of consolidation when you see this because the ranges are going to get tighter than what they were.
Below is ADX. And I could do a whole video just on ADX alone. But you have peaked and you're dropping. And what this means, it doesn't mean that you're going up or down. It just tells you are you trending or not trending. See how like when you're down here you're not really trending and then it starts lifting and you're trending. It just it's not a function of are you going up or down. It's just like hey is there a trend? So when you're going up there's a trend. When you're not going up there's no trend. The trend's going away. So you can actually see when these things break how they become trendless. It doesn't tell you again the direction but it's telling you whether or not you're in a trend. A lot of these names, if you go and take a look at them, they're getting completely trendless. And that doesn't mean that they're going to fall apart. It just means that they're getting trendless. And you can go through them all and see that. And that's why people that are doing swings, again, it's not a swing environment. You can see where the trend peaked. Like that's peak trend. Doesn't mean that you're not going to hit a high. It's just telling you where the trend is, right? It works both ways. You could actually look at it on names that are actually dropping as well and you'll see that they'll trend that way. So, you're getting trendless, which means to me a period of consolidation and at the same time you're watching the ATR collapse, right? Those two things.
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