Transcription
Another all-time record high. And talking to people, I can see why people still feel stuck in the mud. I'm going to cover this in detail if you feel stuck in the mud and what you can do about it. I think it's really going to be an important concept.
You would think, by the way, the S&P acted today and you would think, by the way, that the NASDAQ acted today with movement. You would think that people would be somewhat happy. Yet, they weren't. And you almost had that feel today that the new highs and new lows were going to be worse and the breath was going to be worse. I sure thought that, but when we took a look at it, well, let's just get into it.
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All right. So, the very first thing that I'm looking at here is I was under the impression that the breath of the market wasn't going to be that great. So, if we go and take a look at the breath of the market, and I think that this is just a really good spot to start. And again, we're just going to go to this trusty chart. And I just want to show you something.
Now, if we go and take a look here, this has Monday's data in it. And I was kind of shocked a little bit by this, not so much from the 200, which is it's the 200, the 50, the 20, and the five. For those that are new, welcome. And I do these rolling unedited. If you are new to these, it's just easier for me to do it. If you're stand if as long as you're above 50, you're good. And guess where you're sitting right now. And this is an issue. And I just want to point it out because I think the breath overall, even though the new highs, new lows are where they are. We don't really want to break below 50 again. Every great move that you have below the market, every time that you're going to have any kind of pullback, it is below 50. And what you're starting to do here is you're starting to waver just a little bit. Not that we broke it, but we're right there. And it's going right into when Itch is going to speak on Wednesday. It's going right into earnings this week, which are absolutely insane. So, we just want to be cognizant that this is where we're at. It doesn't mean that you're going to fall off a cliff, but it does mean that if you crack here, the foundation that you're dealing with does start to get legs, right? Meaning that it will still build build a little momentum. It doesn't mean you can't bounce right back off of it and go higher, but it does give us a demarcation line that we have to look at here and say, "Okay, we might have an issue."
If we take a look here and we look at what's happening on the 20-day, that hasn't broken yet. And this is where I thought it got super interesting why it just might hold is because the five actually was turning up. Meaning between Friday and Monday, more names were actually above their 5-day moving average. So that is a demarcation line. And you definitely want to watch that. I just want to give you a couple more real quick that I thought were super interesting. NDFI. Come on, you can do it. NDFI. There it goes. And if we look here, you're still above on the NASDAQ. Meaning, and we like to do this, we take SF S5FI and then we divide that by NDFI, right? And then we come here, we turn it to a line. Yay. And all we're looking for is to make sure that we're still dropping. Right? Remember, when we start pushing higher on this, that means that you're getting to more of a bearish. When it's dropping, you're getting more of a bullish. So, it's still dropping, which is what we're looking for.
While we're here, if we just flip to the VIX real quick and look at it from line, you're going to get an 1863 reading. If I do it this way, it's even worse. Like, nobody's panicked. Nobody's worried about anything. It really seems like what they're doing is they're just buying oil as the hedge and saying, "Yep, we're buying equities and we're buying oil." And we saw that with OIH actually hitting all-time highs again today. And we saw that with some of these oil service companies just starting to try to break out. Super interesting what's happening in the market.
But if we take a second and just flip to this and just go, let's do it this way just easier. And we take a look at new highs on the market. Turn that into a line just to make my life easier. I would I thought for sure that I'd come in today and the new highs would have been taking at a lower low. It didn't do that. If I go and take a look at the lows, it didn't do that either. Meaning that no, this is where the new lows are. And yeah, we're not at the peak up here, right? So, you're not hitting new lows and the new highs are actually a little stronger than I expected. So, when we look at this and we go back and take think about it from like a breath perspective, get back to the S&P. Yeah, I do have some issues here. Yes, I do see them. But the bottom line is we're still grinding. So we just want to watch that indicator and we'll watch that tomorrow. But it does start popping off tomorrow as the kids say with GLW. And then the big one for me tomorrow night is going to be Seagate.
I do want to go through a couple things here that I think are super important specifically on how you should be dealing with this kind of environment. And it really goes down to how you're going to put yourself into a category or how you're going to put that trade into a category. And then I'm going to give you some examples. So let's roll.
I want to take Micron for a second because it's a really good example of what's going on out there. So, if you take a look at Micron, just grab a fib level and we'll just mark it all off. So, you have here's your high on the day and here's your low on the day. And let's fill it in. Uh, and we'll just going to use these demarcation lines. So, if we as well color the whole thing in so that we can mark them off. All right. And what this is going to do for us a couple things. Let's just move that all the way up. Cool. So this is going to show you your range and your range on the day of this name is 531 to 509. And the question you're going to be is why are you showing the range? Because this is what you're going through daily. And so people are having these kind of epiphies. The first epiphany they're having is they're calling the top.
So the very first thing that I can offer as advice, and this is just general advice, if you didn't call the bottom, don't call the top. If you didn't call the the exact bottom, don't call the exact top. Just trade it and it is what it is and have your stop in place and it is what it is. Just don't tell it it's wrong. Don't do anything with it. It's really that simple.
We did a trade today right in here. And it was a very simple trade. And you'll note when I show the live trades that I do that I don't really even have anything else on the screen. All your indicators are pretty much garbage in the first seven, eight minutes anyway. What am I going to look at? The volume. Oh, I'm going to have high volume. Why? Because it's the beginning of the day. That doesn't really add a lot of val value, right? I already know what names I want to look at before the day starts or by the pre-market volume. I don't really need to look at it. So, the less I have on my screen, the better I I I do. You should do what you're comfortable with. But once you broke out of this range, you can see the liquidity grab right here. And once you break out of that range, then from there, you can just tell, oh, it was a liquidity grab. All right. Inside bar inside the body's inside. Not one bar is done. What? Closed under what? The open. Cool. Real simple trade, right? Wicks are what? Price rejection. Break above the wick. I might want in. Broke above the wick. Bought. And then it was up. Where's the first bar that breaks? That was right here. And what's that do? Mark the high. I don't need anything. I You don't need anything to do this after you've been doing it forever. So like these this is like really simple pattern behavior. And then oh, we failed. Okay. So, I guess there's going to be a divergence down here maybe on the RSI. You try again and then by the time you're here in a half hour, you can start looking for stuff like that because it's a half hour later and now you have a data sent. Oh, look, now you have a divergence. So, you have another trade there.
Why am I showing this? So, I'm showing this because you have to think about who you are as a trader and are you someone that wants to sit here and pull money out all day? Are you someone here that wants to follow that what's going on in the market? And let me show you this trade and then I I want to show you something else because I think that this is really important for people to get. You're going to push. I bought it. If I'm wrong, I'm going to kick it out at 517. If it doesn't, I'm going to kick it out right there. I think you're going to go What are we up two? Yep. Cool. Trimmed. If you go back to break even, I'll kick it. You should not go back to break even, which is 519. But it shouldn't do that. Don't do it. Don't you do it. We were having such a good time together. Don't do it. Looks like you're flagging, but it's going to watch it. Form a flag. Perfect. Welcome to the party. We're up $6 trimmed. What are you doing, buddy? What are you doing? The day trade's busted when that undercuts because now you go back to break even. That's a day trade. Day trade's over.
Now, I want to preface this with something like this. This is not rocket science, right? This is really simple stuff. And again, I guess I make it sound too simple because I've been doing it forever, but like all I'm doing is waiting for the first lower low. There it is. I got out. It very well could have turned and and pushed 20 points. I could have cared less. my goal was to make money and get out of the way. And the reason for this and the reason for showing you that is just because look at the volatility on what you were dealing with today. So if you know that if you're going to buy this breakout and you know that if you undercut that lower low then you're going to get out of it in an environment like this, you have to take the meat of the trade when you have it. So you might want to listen to that part again. You can't play around in a market like this when you're this overbought.
Like if you're in an environment like this, let's take a look at the cues for a second and let's look at the cues on a 4 hour and we'll get rid of everything and we're just going to look at where we are. So when we're this overbought, your volatility goes up a lot because everyone's calling the top, right? Oh, it's flipping this, therefore it's going to break. Didn't break. Here you are, right? All-time high close. Cool.
So then we look at something like Micron again before we get to the longer time frame and we're going to tie all this together so that you actually come up with a game plan. And one of the things about this that's so important for people to get is they'll look at this and go, "All right, well yeah, I get it. Here's the divergence. So that's where I would have shorted it, right? So there's the trade. Well, is that what you do? Do you fade trades?" See, when you when you're trading, it's up to you to quantify what kind of trades you're doing. Are you trading? Are you counter trend trading? What are you attempting to do? Because somebody could have traded this so many different ways. They could have waited to the last hour and said, "I bet you they're going to buy semis again." Like they did for the past 18 days. Like it wasn't really rocket science that semis ran into the close, right? I mean, it was pretty obvious that was coming to anybody that's been watching the market for the past what 17 18 days or again, as I said earlier, are you going to call the top?
So, I mean, all we did right here at the end of the day was just watch the term and I put out an alert to buy the SO XL. Hold on one second. Let me see if I can just grab it real quick and I'll show you. So, and I want to be very clear about this because I'm going to hammer this point home because I think that this is really important. The way that I trade is I run multiple portfolios, but I try to keep it balanced in times like this. And I'll explain why. So, there's the SOX, uh, there's day trade and then 121. And all I was looking for was they're going to push it in the end of the day. We've had Nvidia swing on since like 200. It's 216. We move the stop up and we have a day trade that we're carrying over in that too. I have a bunch on here and candidly the reason that I do is because the market looks like this. If I come in tomorrow and the market looks differently, do you know what I'm going to do? I'm going to change what I think. And this is really just a real super important concept that seem some people seem to miss. I get comments all the time and it's one of the reasons I'm doing this. I get comments and I love the comments. Keep them coming. But it's, "Oh, hey, well, you said Tuesday the market's going to go down." It didn't go down. No one has a clue. Nobody. You come in, you deal with the hand that you dealt. You don't know what kind of tweet you're going to get. But what you have to do is look at this and understand that you had a stock here, simple stock, right? Not some volatility, but not crazy. But you're having a lot of volatility like this.
If you look at AAOI and I had everybody that wanted to be in this stock because they saw this breakout, this move, what's it do? It comes back and retest that level because GLW is coming out with earnings, right? And what's it do? Oh, we're just going to gap down $20. Okay. Well, that's a sucks coming in the morning, isn't it? Right. But what do you have here? Well, you have a range that was established today from 153 to 141. It's just a normal Monday and we're getting these ranges so you can take advantage of it. But here's the point that I'm getting at. It's up to you to decide who you are as a trader. It's not up to me. It's not up to someone to tell you that this is the way that you're supposed to go. It's up to you. And that's a very important concept.
So like if I look at this chart and I just said to myself, "All right, well, I'm breaking out and I'm hitting the highs at 487 and that's a swing trade and the market's breaking out, so I'm just going to do a swing trade. I'm going to buy that and that's my stop." then me showing you 30 point ranges is immaterial to how you trade. See, once you understand who you are as a trader or what you're going to do, and let me even take that a step back, what you're going to do with this specific trade, then that's what you do with this specific trade.
So, here's a here's another example just to hammer this home. So, this is something that we went on over Friday. We bought a bunch of calls and I'm going over this because I think that this is I think this is really important for people to get because they're missing the forest of the trees with what they're doing and they're jumping around like a cat in a hot tin roof and that that's about all the different sayings I can get in 60 seconds. So when I came in here, let me see if I can drop this here. No, I have to open this up. So I came in in Friday, we saw the gamma dropping like big time on SanDisk, like the thousand level. And I said, "Hey, they're going to run this thing or they're going to try to push it on Monday." I don't know that they're going to do that. But that was my sense of it. You have this flag. The flag looks like it's going to break out and all the gamma just evaporated on Friday. Meaning all those options that expired. So the leash is off. Think about that. When the gamma goes away, the leash is kind of off. It can do whatever it wants to do. Up or down. It can be good or bad. I went with good. So we bought the 1050s and they were up. They were up decently. I don't think I got 100% on it, but there it was darn close to it. And all I did was roll them up.
So, if I'm looking at this trade, and by rolling them up, I'm going to do an options video on this because I I got a lot of comments on this. I'm just looking at this chart. So, if you came in on Friday, you bought this and you're just in it and you're like 984 and I bought the 1050s and you're like, "Oh, I paid 60 for them. They're at 95 or wherever." Okay, great. There's your trade. You're done. Like you don't need to be sitting here watching every freaking minute of the bar and saying I'm going to do this and then I'm going to do like you don't have to do that. And this is a concept that that's lost on people. All I did was take the profit and everything and roll them up. And when I'm in environments like this, that's what I tend to do because I don't know when the music's going to stop. So I'll just keep taking out the profit and rolling up the principle over and over again. I did it with car options. We came in uh with the 200 puts on car and then all we did was get out of the way like oh make money on them and then rolled them out to I think I did the one think I got which ones did I wind up doing here 180s because I think it's going to crack like an egg even more and I don't know how people aren't getting this but whatever you know it has no business being anywhere near here and there and you can see they're starting to unwind the short too if you look at the short interest but the point of where I'm problem with this is that if you're looking at this trade and you're a swing trader, then what are you doing, right? Like when you look at these charts and they're breaking out, like what are you doing?
The option volume in Nvidia today was absolutely insane. It was on Friday it was seven of the top 10 option contracts that were traded over the SPY and over the queue. Seven of the top 10. It was freaking nuts. So, it's telling you that they're betting one way. Whether that happens or not, we don't know. All you're just trying to do is stack the odds in your favor. Nobody knows.
So, understand that right now you're all leaning one way. I have access to some really great research and all they kept telling me over the weekend and and there there's people that I really respect and you know what they were saying all weekend the names that were going to move because they had the smaller market caps and the CPU bottleneck and it's going to be huge. Two names, three names they gave, right? And they weren't alone. One was ARM. That was the one that was definitely going to follow through today. How'd that go? These people were paid a lot of money for their opinion. AMD was the other one that was going to rip today because of this, right? And Intel was going to follow through because of the CPU bottleneck, right? And they were saying, you know, the larger cap mega caps probably aren't going to see the volume. And then look what happens. These people people paid a fortune for their opinion. You can say, well, their opinions don't matter. Wall Street doesn't matter. That's not accurate. They had an opinion. Their opinion wasn't accurate. That's going to happen to people that do this for a living.
So when you're where I'm going again to follow the vein of thought is there's no need for you to be looking at a one minute chart or a five minute chart. If you're telling yourself, hey, I'm going to hold micron because I think DRAM prices are going to keep going up, then just follow a string a swing trade protocol and you'll self save yourself a lot of aggravation versus but if you're going to get in there and you're going to bang, then you got to get out when the getting's good. If you're going to get in there and day trade, you just have to you can stay in for a long period of time. I was in ARM today forever in a day and it just didn't work right. I wound up taking a loss on the trade. So, and it's that it that's the game. It is what it is. But understand when you're looking at something like this and you think that you're going to be the rocket scientist that's going to call the top, it's not going to work that way. It just it's just not.
You're better off looking at it and saying, "Is this better or worse?" So, like for me, I look at at this and I'll go look at a 4hour chart and I'm just giving you something that I would use and go, "Oh, all right. Well, I'm still above way above here. We went to 94. We came down to an 82 and we crossed the moving average, which I really don't use that much, but we crossed that moving average and now I need to be made aware of that. So then I would look at my input and say, well, that's an EMA. Let's go take a look at what the SMA did, right? Just get a different perspective. Okay, well, the SMA is still pointing up, so that makes it even worse. So looking at this, that might be an issue or it might be that I tend to use when it breaks the 70 level as my issue. So am I really that concerned because I have the single greatest 4hour bar down that we've had since this one? Probably not. No, I really don't think that that's the end of the world that stocks go down sometimes, right? Despite what people think. So be cognizant of that. It's definitely something that's been on my mind and watching people try to deal with this.
Don't call the top if you didn't call the bottom. Like it's kind of pointless. And also I see where you are. I see that we're overbought. I see you. Right. And then where is that 70 start here? So if I can't buy because it's overbought. All right. So what did that get you? You missed 20% on the S& on the stocks. So you probably miss stocks that are up what 50% because of that. And then you're looking at these charts and saying I'll buy them when they dip. What if they don't? What if they don't come down?
From a swing trade perspective, from a day trade perspective, you're seeing it, right? You're seeing this movement. But there's a reason why everybody out there is upgrading uh Seagate and upgrading Western Digital before earnings. Now, tomorrow you're going to go into this and we're going to get to take a look at what happens with Corning. Corning will be coming out tomorrow morning. That's definitely one to watch. Best Buy came out tonight or Bed Bath and Beyond, I'm sorry. Bed Bath and Beyond came out tonight and actually it was pretty good. A bunch of people in the room are trading it, doing quite well with it. If you're trying to get in there, link in description, just get on the wait list and I do pin it sometimes as well. But then again, you also just want to realize tomorrow night it's go time and it starts and it starts to me it starts really with Seagate and seeing what's going on. And then we're just going to tie right into Wednesday night.
There's a really good chance, make sure you subscribe to the channel. There's a really good chance I'm going to be live Wednesday night because there's four conference calls that I want to listen to. You have Microsoft, you have Meta, right? You're gonna have Google, you're going to have Amazon, and I'm going to have to listen to Well, I don't have to. I want to listen to them. I'm a nerd. I enjoy it. So, I have four conference calls I want to listen to that night, and then I have to do the video, and then I have another call I have to do that night. So, it might just be easier for me to just do this live and just trade with you guys. So, just subscribe because that link, we're going to figure out how to do it, but that link might only go out to people that are subscribed. So, that's it.