Transcription
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I had uh mentioned a few things in regards to the internals. Number one, that the dollar was stabilizing right here on this 979 area. Let's just call it 98. and was moving into the next line which was 9878. And now we need to push into that 9940 again. That was the level where we had the ceasefire headline back on Wednesday, April 8th. And you know what happened to the markets and then of course earnings and you know what happened to earnings expectations ratcheting up the AI trade. So we've had a very momentous earnings season. It's not over. Nvidia reports next week, same day after effect where we get on May 21st, potential Samsung strike, which is a massive memory player in South Korea and has heavy heavy heavy waiting in lots of the DRAM ETFs that we've been tracking. And we also have the verdict between Musk and Altman also on May 21st and Nvidia reaction. So, we'll see how that goes.
In the meantime, Trump is back or coming on back and has uh said lots of soft, nice, pretty words, but got no hard reaction of resolution on any issue. And I went through the five issues yesterday. So, there really wasn't anything to write home about. Iran's oil, which Trump is blockading, which China depends on, isn't being stopped. But uh definitely there was no resolution there of China helping Trump get to Iran to succumb. Definitely definitely nothing related to Nvidia's H200 chips. Also, China continues to claim they don't need them. Absolutely did not touch the red hot button which was US arm sales to Taiwan. And then basically all the talk of US tripledigit US tariffs on China which prompted China's rare earth ban and exchange also went nowhere fast.
So the dollar is starting to escalate a little bit more and that has caused precious metals to sell off as warned. I was very very focused on the dollar and also focused on the internals which is repeatedly the call mania that is chasing gamma squeezes right now. And then of course the fact that my internal indicators had warned that breath was starting to roll over hard this week and selling underneath the surface had picked up speed uh starting last week. Now, yesterday we had a little day of stabilization and you can kind of see it here where the Q's up here. They got back above 7:15 from the uh Monday high and then looked oh so pleasant and we have a gap down below 7:15 and in fact 707 was tagged this morning in the cues and it's not because of applied materials which had earnings after the bell. It is just getting above its skis. That's how it works. But we also had in addition to the breath breakdown I warned about and the selling underneath the surface that I warned about which creates an air pocket of risk. We also have a global yield rise not just the 10-year but you can see the 10-year very very much a macro headwind. So we uh closed in this kind of 4.45 area. This morning we're hitting 4.57. You know winner winner chicken dinner. This is global yields. The guilts the Japanese we've been tracking just is hot fire flame. So this is very much a yield story. This is very much an inflationary story. Even if even if oil has not changed. So oil right now is just the crude is just under that 100 handle. I had mentioned it had on the 2hour anyway some softness coming in. We did gap down to about 97 pushed back up to 101. But the point is oil is not the instigator. It is definitely the swing play. as I mentioned in my writeup. So I said careful careful crude oil is a swing variable but I am very focused on dollar and yields to a degree yen.
Basically Bent through one of his and this is what happened uh Mike when you saw the the big move in the dollar yen. Bent hinted again this is not his first rodeo that the bank of Japan should raise rates to boost the yen and that's what shook the currency markets yesterday and uh basically it was not an intervention it was sent pushing them to do an intervention to hike by June and the bank of Japan has basically pushed back and said we don't want to so we'll see how that goes but in any case in this little gap down on options expiration into next week we can still chop in this grind sideways. But as I mentioned, watch that dollar. It's moving higher. Likely on anticipation that as soon as Trump returns back to the US soil, he and Netanyahu bomb Iran again. And I referenced a particular post where that looks very, very much in play. Also, rising yields. Oil as the swing variable has not fallen, but the dollar moving higher has definitely helped equities come on down. And I even mentioned if oil collapses for whatever reason, be it the Hermuz opening, China opening, haunt virus, then gold, commodities, EU catches a break, all squeezes higher. This is not, however, my baseline bet.
So anyway, we've got um definitely a start to a potential backdraft in the AI ecosystem to basically remind or burn complacent bulls, especially into this Friday. And uh long story short, we have volatility that is starting to want to move higher, but it's a lot easier after the earnings season winds down. That's when VIX can wind up. All that stuff is just a review of everything that I already talked about. Wasn't anything that was particularly impressive as it relates to new stuff, but I have also reminded that gold I see coming back down to this 4,200 handle for continuous. And then I referenced a speech just the day before by Gunlock who is very much expecting the same. I also showed how we have this mania of 1999. No question about that. And in fact, I would also warn that this 1999 playbook isn't just in the call screaming higher, but it's also in the fact that the semis that socks index is up more than 65% year-to date and 50% above its 200 day moving average. And so that socks index is what is creating the mania and the hype.
So let's take a look at that. This is again, here's your gold coming on down. That's in play. We've got dollar percolating higher in play, yields, the reason for the season as a macro headwind, cost of financing, etc. Big big big issue. And then of course, a little gap down on this Friday options expiration ahead of weekend risk. This was 2023, November 1st, Fed Paw and Yellen Yatsi. Anyone who's been here for a while knows what I'm talking about. And then we had the May 2025 which was just after the um April low in markets as well when the bond market freaked out. And now here we are May 2026. Check that out. May 2025, May 2026. We've gone nowhere fast and we're sitting on this monthly support and yields are saying, "Okay, now what? We need an intervention. Where does this go? Can you believe 8051 for TLT is literally where we started with this index or I should say is the low from this index back in May of 2004. Not kidding. So this would be target for potential support and then I don't know because we don't have any history but it's a thing.
Anyway, you know I'm a bond bear yield and inflationista. I think dollar still rises up and markets come under distribution between now and summer. I'm much outside of the consensus. Consensus is this is 1999 and we're going to have a meltup. So, we will need to get defended then pretty darn quickly right here, right now. If it's going to be defended, market's going to move higher. Yields are going to come back in. So, place your bets.
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