Transcription
Crude oil is collapsing over the past four days. We're down about 18%, and a lot of people don't realize why it's down, and we're going to have to dig into that a little bit. But people are missing the other side of this trade, and it started really clicking for people on Friday that they were missing something. We're going to get to that.
We have had one of the largest winning streaks, meaning seven days in a row we were actually higher highs, which is not very common. And considering that it's happening now, I think people are missing this and what it actually means going forward. Meanwhile, we're watching smart money sell into the rally. We're going to talk about why this might be a contrarian signal and how you should play it. And in the midst of all this, we're watching global data centers, semiconductors, and transport hit all-time highs. At the same time, software is imploding, and financials can't get out of their own way. We have a lot to cover. Let's get to it.
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The best thing for us to do is start with the basics and then drill into smart money, dumb money, some of these indexes, and then of course the stocks that are setting up to move and have already moved, and then the sectors that they're blowing out and why. But let's just jump into the basics.
So, the S&P 500 is finally above its 55-day moving average. I use a 55. You should use a 50 or whatever you're comfortable with. But if you take a look off the bottom, you had a huge move up, and then from that move, we got right to that level and then we flipped it, and now we're sitting up here. And a lot of people are debating whether we're going to hold or not going to hold. And here's the real truth about it: no one really knows. But there's a lot of signs here that you are actually bottoming. It doesn't mean you can't come back down, gap fill it back in, and go back higher, or stay in a stagnant range. There's a lot of macro parts here that have to play out perfectly for us. But there are some things here that if we just look at the basics, are hitting home pretty well.
For example, you definitely have the RSI undercut here on the daily chart where you are below 30, and that usually can be a washout. You can undercut and then do the double tap. It's pretty rare for the index to do the double tap. It's not very common. You would need an event. Back here, we had Itchy doing the two shuffle where he said, "Oh, we're really going to stop raising rates because it's absolute insanity what we're doing." And then in here, this is when we had all that winning and liberation, and we had all that winning, and then he said, "No, we're going to do more winning, more liberation." And then we had to pause it all, and you can see the double tap there. So that's common to see if you have this huge macro event. I don't know that we have this huge macro event right now. Like, I don't know that it's a huge altering thing that they can't unfix fast. So, in other words, here's the pandemic, and you can see the undercut how it was just absolutely trashed. And then of course, you have in here when we had to work out all the goodness that Itchy did, right? And so you get those rallies and then those taps. I don't really see structure like this. I see more structure where we fell apart like this because of something that someone did, and then all of a sudden we're trying to undo the thing that everybody did. That's very similar to me to what happened in April of '25. It's also very similar to what happened during the pandemic. Something happened. We shut everything down, and then all of a sudden they said, "Okay, the thing that we did, we're going to fix." All right, cool. The thing that we did, we're going to fix. The thing that we did, we're going to fix. Okay, great. So, when we see that kind of pattern behavior, and it does take two to tango, this, I mean, we all know that, right? Like, he can't just undo what he did. That's becoming very clear to everybody. Not political statements, but it's just a fact. Here, you could do that. You could say, "Hey, too much winning, too much liberation. We need to stop." Where here, like there's another side that has to agree that it's been too much. So, and then what the remedies are, and that's going on this weekend. So, I expect a lot of information to come out this weekend that could be very helpful.
If we look at this from a weekly perspective, we'd have to look at this and say we did not get to those levels. We did not get to that trough level on the weekly. We did not get to that trough level here. So, did we have enough? And then you'd go back to the pandemic. And the answer might be, you know, you might not have. Someone could make the argument that you might not have had enough. But I've got some other indications here that this is probably going to hold, and a lot of it has to do with just the fact that the earnings are not bad. So, in here, you had earnings destruction in '25, meaning all the earnings were going to go away. It was going to be a disaster because the economy was going to slow. And then in here, if we take a look at it, we obviously had all the earnings going away. Why? Well, all the earnings went away because nobody was going outside. Nobody was doing anything because we had no idea what was really going on. And that was a problem. And in here, we had a tariff situation as well. And this was tariff.1 winning. And so what happened in here is you had a threat again to all the earnings that were going on. So, what does this mean for us? And how do you play this? You don't have an earnings problem here. Far from it. You have the exact opposite of an earnings problem. And you know, for me, this reminds me a lot of, you know, what happened in '98. So, back in the day. So, a lot of people don't know this, but in '98, Russia defaulted on their debt. Now, why do you care about this? Because it scared the heck out of everybody from an oil standpoint. We had private equity guys that were trying to figure out how to hire mercenaries to go get the money from their bonds back by seizing tankers. It was absolutely crazy. If you ever go take a look at it, the official date, I think, was August 17th, '98, when they actually did it, but it was an absolute, I don't know, we'll call it a suck salad during this period of time. And what was going on? But the one thing about this area that never changed, ever changed, was the mere fact that you were in a situation where earnings were fantastic. And people remember this because then it just led to all this winning, obviously, the dot-com. But earnings were fantastic here. So, what wound up happening is the market came down, and then before we peaked on the S&P, you went up another what, 67%? 60%? Time for Lassic. So, about 60%, you went up. And I think that's really important for people to get. You know, they don't understand the carnage that went on here. Believe me, you don't understand. So, when we look at something like this, I think it's really important to get, like, when you really look historically on where you are, and when you look at, like, the drops that are in here, and then you look at what you're dealing with right now, like this is a blip on a nut. Like, this is really nothing. And it's very similar to that area.
The other area that I thought was worth just pointing out was, let's say you get to that boots on the ground area, which was really in 2003. Well, if you take a look at what happened during that period of time, right in here, all you did was just kind of bounce around. You had your washout, and then we knew it was coming, and then yay. And then all of a sudden, that was it. Because once we get to certainty, that's all we need. Even if they, even if it's boots on the ground, the market drops and gets hit. Okay, this is what we're dealing with. Now we know what to deal with. When we don't know what to deal with, that's why you have the uncertainty, and that's where the problem comes in. And you get clear indications from this by what are really put products on large swaths of asset classes.
So, let's tie it together now. So, when we tie this together, the first thing we do is look at the VIX because we want to look at risk and how the world is looking at risk. So, what the VIX is, it really just tells us exactly what is going to happen over a 30-day period, and it gives you a range. And if you're in the community, you've seen me do this educational video, but I'll just explain it. You know, if you're around 20, think about it as 5%. In 30 days, you could move 5% up or down, right? If you're at 25, you add seven to it. If you're at 30, you could move 9%. That's just a back-of-the-envelope way to look at it before someone drops a comment in that says they're not exact numbers, but that gives you an understanding of why you look at this. So, it's not just that when this drops that it means that they're not buying puts or protection. It means the volatility is actually decreasing. That is not subjective. So, when this decreases, it just means that the volatility of the range is going to change. So, if you were looking at a range, and let's use, for example, if you're up here at 35, you have to look at this and then say, well, my range that could be on the S&P would be this size, right? And I'm just giving an example of how you would look at it from a size perspective. That's all. So, you don't comment on the size of my square. So, if you take a look here, or rectangle, before someone comments that it's not a square, all right, I get it. It's a rectangle. As this drops, what happens? My rectangle gets smaller and smaller, right? And then eventually, it might actually be a square. And the reason that's objective when you're trading, why you care about this is super simple because it's telling you that, hey, if we're not up here and we're doing this, then the volatility is less. So, it's okay to start adding back to the market because the volatility is dropping. So, that's the purpose of the VIX. Everyone thinks the purpose of the VIX is to put it on Twitter and tell everybody how smart you are because it broke 20. The purpose of the VIX is to tell you how much volatility is going on in the market. Like, it's not rocket science that when you drop from here to here, whether you bottom or don't bottom remains to be seen. Usually, it does. I mean, historically, if you ever want a level to know, and you can just, you know, jot that down, but if you ever want a level to just know, so you go to 40, right? And then institutional investors will just start buying equities at 40. They just start. So, if you ever come across here and you ever are fortunate enough to get to 40, and most people will be like, "Oh, the end of the world." Yep. Go ask when Warren Buffett bought the most amount of stocks he's ever bought in his life, it's always when this is over 40 is when guys like that are stepping into the market and saying, "Talk to me in five years," because they know it's going to happen. And if it doesn't happen, it means it's the end of the world. So, either way, you're okay. So, if we look at this and we start looking at those levels, it's pretty clear that there were times that you should have bought the market, right? Okay. So, as that drops down, it actually provides more opportunity. The higher it goes. People need to think differently about the VIX as a mechanism for opportunity. The higher it goes, the more opportunity there is in the market. The lower it goes, the less opportunity it is. Right? How much opportunity did you have here in January? Everybody was a genius. Now everyone, Right. Okay. So, what does this mean? It means that they're, it also means that they are not hedging, which is really very important.
But the one that I use the most to determine this is really MOVE. And the reason that I use MOVE is because bonds, the bond market is way bigger than the equity market. It is so much bigger. So, when we look at something like MOVE and we see that they are completely imploding, and this is how they buy insurance on bonds from their volatility. If this is imploding like this, and we can't even get up to a certain level where we were in April, they're not worried. They might be worried about Oracle CDS bonds, and everybody's freaking out about Oracle CDS bonds. I know it's crazy. There, there's actually a 12% or 15% chance they're going to default. I know it's nuts. So, but that's called sarcasm. So, if we look at something like this, what is it telling us? They're getting out and they're unwinding those positions. Oh, so they're buying high yield. And then you go and take a look at high yield over the week, and you're like, "Oh, well, we did make a higher high recently on high yield." And then you would just kind of go through that and say, "Well, what about IEF?" Right? And IEF is just the 10-year and seven-year treasury bonds. And you're like, "All right, well, they're buying treasuries." And I mean, you can go look at LQD if you'd like. And LQD is going to show you, "Oh, they're buying bonds." Well, are you buying bonds into an environment where you're scared that they're going to raise rates? Well, no. Okay. So, what's that telling you? See, the equity markets, they can screw around. You can screw around in the equity markets a lot more. You can be like, "I'm in. I'm out. I'm in. I'm out." The bond market, no. It's like, you know, you can't leave now. You're in. And so, welcome to the party. So, once you're in, go ask the people that bought the Oracle Converts how that's going, right? Like, once you're in, like now you're like, "Oh boy, I hope this really works out." And we're going to get to that. But I want you to understand where I'm going with this. If people are concerned, if people are truly concerned, they're buying insurance on bonds. They're selling their insurance on bonds, right? They're telling you the volatility of a bond, the bond market's going to go down. They're telling you the volatility of the equity market's going to go down. It's up to you to listen to it.
Now, you might think that this is going to pick up and this is going to be a disaster. I have my own sense on this, and since you asked, and so what we're going to talk about is crude. And I think it's really important. The crude market is probably one of the largest, most liquid commodity markets out there. And I think that when we think about it, we have to understand that there are some really savvy players in oil and gas, like very savvy. You know, that's kind of a killer-be-killed market, isn't it? When you go out there and take a look at it. You've had the greatest move that you've ever had in crude oil in one day, and it happened because we exploded to the upside on that Monday, and everyone was an oil genius. And then the next day, the admin comes out and says, "Don't worry about it. We got it all fixed." And then since there's been so fixed that we're up about 50% again on oil, right? Something like that. Maybe it's less than that. Maybe it's only, I forget, what was it? 50%? Yeah, there it is. Yay, math.
So, what does this mean to us and why do you care about this? Well, I always use these dojis as these kinds of dojis. They're just trading ranges. And so we can see what happened here. We stayed in that range. So, all we're really looking to do from there, and this is the simplest thing in the world, guys, and it's called 10 different things by 10 different people, but I'm just going to tell you the easiest way to look at the world. When you have something like this, when you have a 50% line, drop it, right? As the kids say, drop it like it's hot. And the reason that you want to do that is super simple because it tells you if you have net buyers or net sellers. And people are like, "Well, no, it doesn't." Okay, so let's go take a look at this. Every time you couldn't get over that 50% of that doji, what happened? They sold. Like they sold. As soon as it got above that 50 and held, where's the single greatest move it's had since this silly little doji was here? When did it break here? When did it close below the 50%? Right on Wednesday, April 8th, and then the 9th, and then the 10th. So, it's telling you, whether you want to believe it or not, it's telling you very clearly that, hey, at this particular moment, with the amount of information that we have, and we can only go over what we have, right? I can only take this snapshot in time and tell you how they're responding to it. Now, if you're a negotiating genius and you know that the talks in Islamabad are going to blow up, well, then you're smarter than I am. I can only look at this chart. I can only look at what's going on. And with the US, I think they unfroze $6 billion. Let me see if I can grab this. So, the US is denying it, but they're saying that they unfroze $6 billion and they had it moved to a Qatar bank, and the sale is from Iranian oil of all places to South Korea. So, there's a lot of moving parts to this, but whether that money is unfrozen or not frozen, it that's clearly where this is going. And so they're not going to be doing things like this or saying that they're willing to do things like this because this is on the table, or Iran won't even be at the table. And Washington's not going to say this if they're not going to do it. So, whether we hear that it's done or whether we see that it's done is going to be a completely different story as whether or not it's done. They might do it and then deny it. You know, just like the strait might open and then they deny the strait's open. I'm not really sure why they have to play this game instead of just getting things done. But it just seems like they do. I don't know. My point on this is that crude is clearly in a stage right now where people think that crude oil is coming down, and the fact that they're talking is leading to that. And so what you're starting to see here is you're starting to see the dollar come in. And why the dollar is coming in is because people are no longer feeling the need that they have to own the dollar in the same way that they did before.
At the same time, we're not going to spend a lot of time on the dollar. We're not going to spend a lot of time here on the 10-year either, but we have to understand that the flight into these has all of a sudden changed. Now, CPI and PCE came out, they're rearview mirrors, but we have to also understand the context of that just for a moment here, and I'll show you why we have to understand the context of that. But if we take a look at what are they doing in the bond market, well, they felt the need that they had to buy long-end just for protection. And now they're getting out of that because they don't really think they need the protection anymore. And that's very telling.
But I do want to just go through gasoline futures just to show you something because I think it's very important. 75% of CPI rise was gas futures. And you're seeing this, and I don't know how long gas takes to drop. I don't have an answer to that. If someone has an understanding of this and how long it's going to take for gas to drop, please drop it in the comments because I'm not an expert on this and I'm really curious about it. And I'll show you why. If we take a look at the end of February to get a gallon of gas on average. So, I take the beginning of February to the end of February, and that's going to give me the absolute average price of those 30 days. And I just click here. And then what I do is I go, promise not to make that noise again. And then we go to here, and we can see, okay, that's a 31% increase in price. And that gets me to $2.83. So, we went from $2.15 to $2.83 in gasoline. I didn't even, you know, I don't drive that much. And so, I filled up the other day. It was six bucks. I'm in Florida. And to me, I was like, "Oh, wow." Like, it's going to cost me $100 to fill up my gas tank, and I don't, again, I don't drive a lot. I can't imagine how that's hurting the average family. Like to think about that you have to fill your tank up every week to go drive for work, or you're driving the kids around, all of a sudden that difference, it's huge from where you were a year ago when you really think about it. So, you know, $50 to $100. And if you're driving more, it's even more than that. Some people are probably spending $500 a month on gasoline right now to get to work. That starts wearing on people. And the longer that goes on, maybe if we have time, we'll talk about what stocks are being affected by that, but the longer that goes on, that can weigh on the market. So, there is a long-term cost to this. I don't want to pretend that there's not. Before we go any further, but we have to understand this and then say, okay, well, what do you do about it? Well, there's names that benefit from this actually. There's names like Casey's that just got added that they really benefit because they're able to control their gas and how they do their contracts. Murphy's benefits from it as well. A lot of these things are starting to get toppy because of it. You know, they probably shouldn't stay toppy because they have the ability to maneuver the gas a little bit, meaning their contracts. So, I I'm very interested in those two names. We'll get to more names in a bit.
I think it's important to go over what smart money and dumb money are doing. Now, before we tie it all together into the sector movements, so let's get to it.
Now, in front of us is smart money and dumb money. And if you've been watching this for some time, we don't really refer to it as that. We refer to this very simply as retail and institution. And there's a reason for this. So, when you look at smart money up here, it's again, to me, it's very important for people to understand why we do this. And I know people that have seen this before are like, "Oh god, he's going to do it again." But yep, I am. Especially for newer viewers. So, smart money and dumb money, we don't refer to it that way. We refer to this as institutions and retail. And there's a reason for it. The way smart money is calculated is on an institutional level. And the way dumb money is calculated is on a retail level. And it's done by order flow. The importance of this is to understand that smart money moves slow, dumb money moves fast. Institutions move slow, retail moves fast. Not also because they're more emotional, but because they're, they have the ability to. If you ever talk to an institutional investor, they might have a position that's $50 million. Like, you can't get out on a random Tuesday at 10:00 because you want to. You'll move the entire market. So, you have to kind of, you know, slow your roll a little bit. And I think that's very important for us to understand. Whereas, think about this as a huge cruise liner that has to turn, and think about this as like a speedboat. And if you think about it that way, it makes a little more sense.
Now, a couple things I just want to point out in the chart. This is not my chart. This is Sentiment Trader. I have no affiliation with them. I have talked to them in the past, and they're fine with me using these charts. This is a three-year time frame. And what we're going to focus on are a couple key things here that I think are very vital to tell us what's going on right now. This is the time frame that we're dealing with at this particular time, right in here. And we can see that retail is getting back in the market, and smart money institutions are selling. Okay. So, if we look at periods of time before where this has happened, you can see that when institutions are actually selling, retail's piling in, you want to get involved. That's very important. And it doesn't always mean that retail is right when they're getting out. If you look at retail here when they're getting out of the market, and institutions are kind of legging into the market. Same thing here. If you look in '23 here, they're getting out of the market, and then institutions are getting in the market, buying because they don't have anything left. The difference here is the speed in which this is done. The speed and difference, the velocity in which institutions get out, and the speed and velocity of when retail gets in or out is really what makes the difference. And so they have a way of looking at this, and it's through a spread. But before we get to that, I just want to hammer this point home. If you looked here at this very simple cross, and I like looking at these, you'll see if you mark this off, and this was, I believe, May '25 to the date right down here, that yeah, that little cross that solidified that you were pretty much where you thought you were as far as a bottom. So, when you see them and you see to the upside, it tends to mark a bottom. Now, it doesn't mean that you're going to go to the moon because it depends how fast that you're going to see institutions sell and how fast you're going to see retail buy. If retail just holds its positions and it's not really adding, then you're not going to have the demand, right? And then you're going to have a supply issue until you start getting back into it. And then if institutions aren't buying as fast as retail is selling, you're going to have a supply issue. So, what you're looking for is you're looking for the inflection points. And I think the inflection points to me are the most critical because if you go and take a look here, that what happened in early Feb or late February, early March, well, that's all you needed to see. We actually went over this. It's why I tell people that, you know, subscribe because all the videos are connected, and you'll see that we literally just follow it day by day on what's actually happening so we can make the most, you know, most effective decisions that we can possibly make. But right now, what are you heading for? You're heading for a cross. So, how have those crosses fared in the past? But there's a way of looking at this through the spread. So, let's take a look at that.
So, while past performance is no guarantee of future performance, it is literally the best thing that we have. And the answer is, well, why is it the best thing you have? And I'm glad you asked. It's because you're in a situation where human behavior. People are like, "Oh, the algorithms are this, and they're going to change everything." Okay, they're not going to change anything because the algorithms and all the AIs are written by people. When AI starts writing AIs and they start having like Skynet walk around and actually do something. Until then, I'm not worried. Elon's still trying to get a car to go around Austin, right? We keep hearing about cyber caps. So, if we take a look at how this is playing out and we mark off these levels, what are you noticing? Excuse the voice. It's allergies. I think it's just scratchy today. What are you noticing when you get up to this level and you roll over? Up to that level and you roll over. Can it get worse? Yeah. Depends on how much winning and liberation you have, right? Sorry, that was out loud. But like when you see this, it comes down to one key metric. And that, and so what I always try to do because I'm not the smartest bulb, is I try to come up and say, "All right, well, how can I tell when this is going to end? Is it the decline?" Because I, I'm not, I don't need it to happen at like 10:00 a.m. on a Wednesday, know the exact time. I just need to understand the trend so I know which way I'm going with this. I hope that makes sense on how I'm using this. If it doesn't, comment and I'll explain it in greater detail. But I'm not looking at this so that I can trade off a 5-minute chart. I'm trading off this to give me my bias. Should my bias be long? Should my bias be short? Right? Should I be short-term trading? Should I be long longer-term trading? You know, there's a difference here. And you guys should know this. Like, there's a time to put on swings, there's a time not to put on swings. There's a time to put on long-term trades, and there's a time to put on short-term trades and get what you can and get out of the way. These little areas that I have marked off here, 1, 2, 3, 4, have all given you an indication. And you could say, "Yeah, you had a false positive here." Right? You did. But, you know, it still wasn't the worst idea in the world to get involved there if we look at it. And nothing's perfect. You can even go into this and say, "Well, there's little mini ones, too." And that's true. But what we're looking for while we're doing this are like, "Give me the big ones." And they're the big ones. And if you looked at this and said, "Once I'm over and I break under, I'm getting involved." Even if you got involved here and you start taking a long bias, you know, a month or two out from when it did the double dip, you're still okay. It's the fact that you go over that level and then come back down that's significant. So, I wanted to go through with this chart and just give you a couple historical references so that you could look at it as well. And again, I do run these charts on this channel so that you guys can see it. And I have talked to them in the past. They're fine with it. But if you just mark these little levels off, you'll see it. And I'm trying to cut out what happened from '21 because the amount of money that flowed into the market was just stupid, and it really affected all the charts, right? That's why you had NFTs that were JPEGs. You don't really hear from people anymore, do you? So, anyway, if we take a look at this, I mean, you can't blame the guy if someone was going to be willing to buy something like that for that amount of money. Why would you? I just think it's super important to get the significance of this. And where I'm going with this is what about when you break under? This is super interesting because when you're under this, you're good. It's when you break back over this that you're bad, and it meaning that you're bearish. So, keep that in mind going forward. So, I want to take some different signs here from some different times. So, here you have, you know, what you're looking at is 16 and then 17. And you could just see these areas and then how you acted in them. And it's not saying, "Oh, you're going to explode to the upside." That's not what it's saying at all. Right? What it's telling you, and here's 19. What it's really telling you is like, "Hey, we're probably done with the pressure." That's what it's really telling us. This gives us a sampling from '14 to '15. And again, I'm just going to mark them off so that you can see it for yourself. And it again, it doesn't mean that it's always going to work. But when you have just kind of this environment, which is super easy to see when you have an uptrend, which, by the way, you're still in an uptrend, long-term uptrend. I'm just marking them off so you can see them. It's good. Now, if you have a macro event like when we had, you know, all those mortgages where you didn't need income and people were putting a gazebo in their backyard and then adding another half a million dollars to their, you know, house and the home equity line of credit because it was the best gazebo ever. Yeah, there's kind of issues there, right? So, if you have a macro event like that, it might hold for a little bit, but that's a very different story. And and so, we just need to be cognizant of that. It's still marked the bottom, by the way, but it's it's still giving you areas where you might want to try. But then again, you also have to use your brain. If you have a market that kind of is rolling over like this, you still have to look for the higher highs. And you really didn't have one to 200, you know, I think it was really 10, but you kind of have one here, don't you? So, you kind of broke out ahead of that probably around, it looks like September. So, keep this in mind. I definitely think it's something that is adding significant value. I do think that we are in a situation where it is telling us that, hey, we might have bottomed. Now that we have that lay of the land, we can do a little more digging and because now that you understand like where the players are, some of this might start making a little more sense.
So, when we look at something like semiconductors, we're seeing this huge rally in semiconductors. And there's a reason for it. Now, that reason is relatively simple. Why are we seeing that breakout? Well, the earnings. And this is what I was saying earlier in the video. The earnings are just fantastic out there for semiconductor companies. So, what did we do? Well, we pulled back. And now people are starting to realize that companies like Micron are trading at eight times earnings or five times earnings. I think it's five times '27. But you still have these geniuses out there. They're saying, "Oh, it's cyclical." Yeah, everything's cyclical. Everything has a cycle. Okay, now what? Now what's the problem? So, I get people want to say that it's cyclical and somehow that's going to make it okay to miss something that's going up 100 points. I don't really get that. I never really did. Right now, this is what's going on. These are the names that people want to buy. That's why you're seeing things like SanDisk get added to the NDX100. A lot of people didn't catch this because they did it Friday at 8:00 p.m. And now you know why overnight on Sunday night it's going to move, and why it'll be active on Monday morning. They're looking at this and not getting the fact that there's a reason why Bernstein and Caner upgraded this to a $1,000 target and a $1,250 target. We've been talking about this for some time. They're way off on these numbers. So, does this mean that you should be getting back involved in something like this and the way that it's acting off that 50-day? It's really difficult at the time to do something like that because of what you're dealing with. So, you put these trades on, and maybe they work, maybe they don't. A couple people in the room were doing that, those kinds of aggressive trades into these areas. The bottom line with it now is you have to start looking at what you have. And this is where it gets super interesting because you really haven't seen a lot of these moves. But I just want to show you this because, and I don't use the, I don't use the wicks. So, and I don't use dojis, but I want to just show you this because this is super interesting. So, when people break out of a channel like this, you can always clone these and just see where they fit. See if there's an area in there where it might actually be a channel. Oh, look at that Christmas miracle. So, when you pop out of these areas, two things will happen to a chart. Number one, it will go and move exponential. It'll come out of it. If you pop an upper channel, there's two things that happen. Or it will come back into the channel, and then it that will mark the high, and that would be the end of it. Very similar to here, how you're hitting those upper channels and then it just kind of comes back down. What you're seeing in here is that with that NDX, it could make this thing actually start moving parabolically. And you might want to watch this one on Monday. That's for sure. I I certainly am going to watch that from a trading perspective. I find it very difficult to be out here saying, "Oh, just buy these things and hold on to them." And I'm just going to show you why very quickly. And I'm going to just drop this in. This is Average True Range. And this will tell you exactly the average range that you can experience on any given day. And what we're going to do so people can see that is we'll just make that a lot bigger. And let's make it bright green. Yay. We'll get rid of the V for a second. And what we're going to do, let's get rid of the 22 and the work with me, not against me. And so then what we're going to see here is, and this is why I'm saying that, because people are like, "Oh, I'll just hold on to it." Okay, let me know how that goes. So, when you have names like this that are like 60 points, that's telling you on any given day I can move 60 points up or 60 points down, and nothing about the company has changed. I don't know how you're doing that with any size, to be candid. And this is someone that I run different portfolios. Some are very aggressive, but I don't understand how you're taking, you know, 8% swings and just saying, "Oh, it's okay. It'll come back." Because eventually, they don't come back. And I'm not saying you're there. To me, they're breaking out and they look fantastic. But then you look at something like Micron, and what we're seeing here is we're actually seeing like, "Oh, all right. Well, this is having a $20 swing." And people are like, "Well, it's twice the other name." Yeah, but on a percentage basis, you're down to about 5% versus an 8% swing. So, you're actually by trading Micron versus trading SanDisk, you're actually taking less risk per unit, right? So, you always want to look at stuff like this because then it tells you which ones to trade. And you can do this for yourself. All you have to do is just take the ATR and then just divide the ATR by the name out there. And that's telling you what the average true range is on a percentage basis. You might want to watch this part of the video again. And then it tells you like, "Oh, that's the one I should be trading." Even though you want to go out there and say, "Oh, I want to be in Light because I want to be with the cool kids at the cool table." Yeah, that's amazing, right? But meanwhile, you're moving 75 points a day on a $900 stock. So, when I look at trading something like Light, and I get it. You know, he's the one out there making all the comments. And then I look at something like GLW, I just have to go and look at this and go, "Okay, well, this is a $170 stock." And this thing's moving nine bucks. So, I get that you want the higher beta and you want to get in there, but the long-term way of owning some of these optic names to me, it's like a no-brainer. Even something AI, when I look at something like this, like, okay, it's $14, right? Versus where we are. Yeah. I know when I'm trading this one that I'm in like a high V area. So, I know that I only want to trade it after the ATR comes down pretty considerably. So, like for example, if you look at the ATR on this, which is 15. Going off on a tangent here, but I think it's an important one. So, I look, all right, 15 bucks. So, then I go, okay, so let's just mark this off for a sec. And we go, all right, well, we closed here at 135 on that day. And no, it closed right there. Looks like that's the close. Let's get the exact price here because then I'll get the comments. All right, so the close was 133. All right, so then you're at 133 there. And now we'll open this bad boy up, and then you can see exactly where I'm going with this. And I think it's important. So, there's the 133 area. So, that we know the ATR was roughly 15. So, we know that we could go from here, and you could go up $15 from that close. We know that that's an average move on any given day, right? So, that would be one ATR. Let's just get to it. One ATR there. And anything above that is just above average. And then you know you could come to one ATR down here on average, right? Just on any given day that could happen. And then you would also know that at seven and a half of the ATR, let's get to that seven and a half. That would be roughly half, and then seven and a half would be up because that could also get you to an area where you could say seven and a half plus seven and a half gets you to 15 ATR. So, by putting that out there, what you're going to get is you're going to get these ranges. So, when you start cutting into half of the ATR, that's kind of one of those areas where you might want to look at. You might want to listen to that part of the video again where you might want to start looking into that like, "Oh, hey, I'm starting to get into that half of the ATR area."
Now, this is Andrew Left, and he came out and said, "Oh, AI is a pig." You know, I've been watching him come out. Sometimes he's like dead on. Other times he's dead wrong. I'm gonna go with the dead wrong on this one. You know, I have people in the community that know this stuff like cold, and they like the name, and they've been absolutely slaughtering it in the name. So, that's the one good thing about the community, the people in there. Like, it's not, there's people that actually understand some of the stuff cold because you can't be an expert in everything, right? So, you're better off surrounding yourself with people that actually know their fields. It's super helpful. But the optics side of the market makes a lot of sense to me, and I could see why that, you know, why that could continue. Now, I don't think it's one of those things where you have to rush into them, but you want to be trading them. So, when I look at something like here again, and we'll just do it. When I look at something like CO, and I'm like, okay, well, you're at 23 and you're at 307. You know, you're starting to come into percentages. Those percentages add up because, and and you might not be looking at this because you're not looking at it from a portfolio analysis standpoint, but what you're constantly trying to do is you're trying to constantly get the most amount of return per unit of risk, like a Sharpe ratio. And this
will kind of keep you there and say, "Oh, okay. Well, I understand that if I buy light, like I might catch it, like grab the tiger by the tail, but I could also have like a really bad day." And so, understanding that's huge.
But these names like COR, like they're setting up to break out. And so when we look at the stuff from on the optic side and the memory side and the storage side, which by the way, the storage side is completely breaking out, but they're not the easiest names to trade. The question you have to ask yourself is one, why are they doing this? It's earnings driven. So that's why the socks is going higher.
The other thing that's going to drive the socks higher, and you can just go read Taiwan Semi's report. Excuse the voice. If you take a look at Taiwan Semi's report, and Taiwan Semi always fades. We had calls coming into this actually did really well with them. I think we paid three for them, sold them at 12. But the thing about it is with this and what's important about this is they're telling you record revenues, record earnings, record gross margins, backlog's getting bigger. Okay, so people are going to say to themselves, okay, well that's good.
And then you have to tie it all together. Well, they have to put this stuff somewhere. All right, well where? Data centers. And I, you know, one of the guys in the room was just talking about this and said, my New Jersey bill is 20% higher. Which is insanity if I if it really truly is data centers. Let's just say he's right. Maybe it is. So then what does that mean? Well, they're not going to not put them in. They're just going to put them in other areas where they're going to have more lax regulations. One of the areas they were talking about was Malaysia. Then another area was Singapore. Like they're going to put these in the desert. They're going to put them anywhere. I know Elon wants to put them in space. We're still waiting for cyber cabs in Austin. So, you know, that's slow roll before we launch into the stuff, you know. Meanwhile, I'm tormenting the guy that's actually launching rockets into space and then catching them on the way down.
But anyway, if we take a look at this on the data center side, I really think this makes a heck of a lot of sense. Now, I own the the ones that are US-based, and I don't see any reason for these things to even think that they're going to have any chance of like, you know, coming down. I just don't see it. And if rates start dropping because of the consumer, you know, there's a whole thing here that people have to start looking at, too, and understanding that the consumer is going to have problems. Like, one of the guys in the room just nailed this. Like, absolutely just crushed this. Um, and he's been on me for a while on it. I actually do own it, but you know, pawn shops. And there's another one too, CFP. I own FCFS, but this one's more also global, but it makes a ton of sense when you go back to the other side of this. But anyway, that's one of the cool things about that place. Like, I really do like it's super rewarding to me to watch people get better.
Anyway, let's get back off the tangent because I'm going to run out of time here. I do think that you have to look at semiconductors. I think if you're not looking at capital equipment manufacturers, you're doing yourself a huge disservice. LRCX 40% or 39% of their revenues comes from ND. You might want to look at that. That's memory. You're going to need that.
Let's get into where some of the issues actually are. In my opinion, for me, this is separated into a couple things. And I do think that this is super important. When we look at something like the socks and we see that this is breaking out, it's really hard to look at semiconductors and say, "Oh, the market's in a lot of trouble." If we start looking at transports and transports are doing what they're doing, transports don't break out in environments where we're going to collapse. They don't hit all-time highs. And so, you're getting this really bifurcated market. And I don't have another word for it. We can talk about the breath a little bit, right? But, and I do think there's some things there, and I I'll touch base on it. Transports don't go higher if we're going into a bare market or recession. So, that's super interesting what's happening there.
where I think the huge disconnect is not with transports and not with semis and we can get into software which we should what we really need to focus on and this is the one that like I'm trying to wrap my noodle around is financials because financials should not be doing this right like financials just should not be this bad so that when I go and overlay financials here and we'll just drop this daily like we got to the 55 and we completely utterly rejected complete utter matumbbo there right so then when we start Looking at this here on a weekly basis, like I don't really have any love there in financials. I'm oversold here historically. I'm way oversold here more than I was on a weekly basis when we had all that winning and liberation. I need to let it go. And then here March, right? Pandemic levels. When we going to have the first amount of winning and liberation, but when we see this, like it's bad. And I don't know what's really going to get that going.
Now, it's so bad and you're going into earnings week with some of the banks. And this is where it gets super interesting. Do they start are they so beaten down that people are going to start wanting to get into them? And so what you started seeing on the weekly basis was JP Morgan starts turning on the weekly basis ahead of this, right? And if we start to see that like here's Goldman and we're starting to see like, hey, people are starting to try to get into these ahead of earnings. Super interesting because they're way off where they were last quarter. And this is not usually a great time to buy them. They he he's pretty negative. Jaime's always negative on earnings like he's just like, "Oh, things are so bad. Don't buy our stock, but we're doing a billion dollar buyback, you know, and so it's you have this huge disconnect between reality, right?" And I think that there's something there. So maybe you get some relief on that. And I do think that there might be something, you know, something to that.
But where the disconnect for me mostly is when we start looking at energy and commodities and things like that. I'm going to touch base on it. I don't didn't really plan on it, but we're going to have to tie it all together. I think that where people are going to get really hurt and what's going to keep some of the NASDAQ down, but the NASDAQ's singledigit percentages of software. I think that IGV is in a lot of trouble, like a lot of trouble. And people seem to think that it's over. I don't think that this is over because they don't care what the name is yet. They're not even looking from a valuation standpoint of what the name is yet. And that's really where people run into trouble. So, I'll give you a great example. FSLY benefits greatly from what's going on with Agentic AI. And this went from a call wall of 35 on Wednesday to oh, it's a software company. Get me out. Akami hanging on by its fingers. They ran out of puts. They literally ran out of put strikes. 91. If you broke 91, you would have witnessed what it was what a gamma squeeze would have looked like to the downside here. This thing would have fallen apart because you there was no hedge after 91 on Friday. It was we actually bought puts on it. I made money but not what I wanted. I wanted it to like completely implode because if you don't have strikes there, you can't hedge it. So the option market makers are absolutely hosed. But they're not just breaking down to break down. They're breaking down because they're in a field. So when you see that, it's just I don't want to own that. Why? It's a software company. And you're at a point yet where they're not even going through them. you're at the stage where you go through these stages where the investment banks finally catch on to what's really going on and that's not the end stage. The end stage is when they're super negative even with good earnings and you're not there yet. So here's where you have the CEO saying I'm Audi 500 as the kids say here's earnings on now here's here comes the downgrades and the downgrades are just starting on software. So going out there and if I have a very large trade on where it's a pair trade where I'm long semis and I'm short IGV against it. So you can always comment ask me how that's going very well actually.
So, but here's the point that I'm getting at for you with these names before you start sorting through them and say my name's special. Microsoft just had this meeting and it hit the tape where they're issuing a a code read on co-pilot because it's not going well. I think that's very important because that can weigh on the market. But as they come out of software, they're starting to realize that they need hardware and that hardware is the semiconductor space. It's also going to wind up being the CPU units. And I think that that's how they're tying this together with Intel and things along those lines. And that's why Intel's doing what it's doing. I also think that feeds very well into Dell. I also think that feeds very well into HPE. You know, I think it feeds into those industries. I really like the Aentic AI space. I'm wondering, you know, and this where my concern always comes in, do we run into an issue here where they just start killing some of that too because they think that they're going to eclipse that. So capital intensive versus non- capital intensive is where all this is going where everybody was so great about like their 80% gross margins and their thing that they built. These things are going to just fall apart, man. Like and I don't know where the bottom is on software right now. I don't know what these models are going to trade at because some people think that some of these companies actually are just going to completely utterly go away. You had companies like Monday and you can remember when this happened when they literally took this company and somebody made the same exact company or similarly made the company on claude code and that kind of thing is only going to get bigger and bigger and now we see them going after names like PLTR which you thought were safe. Now, I think it was super interesting that we got an infomercial from the administration on what a great company PLTR was. These are the options right here, and you can screenshot this, that Barry was out that day saying, "Hey, I still have these uh I'm still investing in this, and I do think that there's something to that."
But while we're talking about software and that industry coming in, that doesn't mean that the market's going to just fade, right? Like, you're just not going to fade because of that. So, if we look at things like XLE divided by XLK, I do think that this is important. XLE divided by XLK. Work with me fingers, not against me. And then we're going to go to the weekly. And I just want to show this because I do think it's important. If you look here, and we always want to look at that. So, what we can do is take a period of time. And I think the most interesting period in time is going to be right here. It's going to just be to take the VWAP from here to here. Come on, work with me, not against me. And you'll see that 50% line. you're not able to really get over there on the XLE and whenever you get up to that area, you're really fading. So, I think that they're getting out of energy and into tech. I think that has peaked.
I also thought that this one was super interesting looking at growth versus the S&P. So, you just take a look at growth. That's VUG divided by the S&P. And you have this range up here that's super interesting. And you held and I'm trying to pack this in so you can see as I tell you that I think software is in a lot of trouble. And I do think sulfur is in a lot of trouble. You have this range right here. Just going to clone that up here for a second so you can see the other part of it that's developing. And I'm thinking that you're going to wind up holding into that. Now, if I look at this, you might look at that and say, well, maybe that holds, maybe it doesn't. But wait, there's more. If I take a look here, I'm starting to get a positive divergence on growth. Where's my head at with all this selective growth? I think you have to really look at capital intensive selective growth. And I do think that that's the area that makes the most sense right.