Transcription
All right, everybody. A lot of facts are being missed about what's really going on out there. So, we're going to talk about why some stocks acted the way they did. Why the tankers actually went down today and why other countries are getting hit much harder than the US in some cases. I want to get into this. I just want to focus on the basics and then we're really going to dive into this.
But, as always, this video is actionable. There are going to be a lot of parts of these videos that you're going to want to watch and rewind again. Some people actually even take notes, believe it or not. So, let's get to it.
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Now, you have the 55 up top, you have the 22 below, and you have the 12. It is very clear what's going on here, and you have a shift. But if you don't think you have a shift, we're just going to start with the basics. In front of you is the ES. It is the futures. And all I'm going to do is go here. And then I'm going to go to this little button. It's going to take two seconds to see this. And we're going to hide the price. And then I just want to show you this.
You have the 55 on top. You have not had the 55 on top since when? Back here. And before that, you'd have to go here. And why this is so important that it's on top is because you have the 55, the 22, and the 12. This is exactly what happened previously. This is not where you want to be from a long-term technical perspective. We can get into the macro all you want, but from a technical perspective, a line like this with them pointing down, all three of them are now pointing down. This is not where you want to be. I've seen bullish before, this isn't what it looks like. What I will say is you've been in a trading range for some time. So, it is possible that these have less weight and will negate. Didn't mean to make it rhyme, but it did. So there it is.
If we look at our levels, you're unable to get below very significant levels and you bounced really hard today. Matter of fact, any swing trader that came in today was getting absolutely destroyed except for the people on Twitter, obviously. But everybody that was coming in would have gotten destroyed today on any long-term swing trades. You just would have. It's impossible not to when you're gapping down 2 and a half percent and you're net long. But we really recouped at the end of the day and got above that level. So, what we're going to do is understand where we are, why this might have happened, and then how you could use it to your advantage tomorrow.
Now, in front of you is the S&P 500, and in front of you with that are breath indicators. So, I'm going to tell you exactly what these are so that you can use them for yourself. Percentages of stocks above. So, these are percentages of stocks above and it goes from 200 to 5-day moving average. 200, 50, 20, and five. You can do this for yourself. Now, it's very simple to look at this and say, are is the breath getting sharper or is the breath not getting sharper? And when I look at something like this, it's really very important. And what I'm getting at is are we below on the 200?
So, the way to view these, and I would set this up, and I could even drop this if you have a hard time setting it up, just comment, and I can actually just even link you this one on TradingView. If you follow me on there, it's probably already linked. But you still are at about a 61% here on the 200. So that's great. What we do not want is this. And look at it. You do not want the 50-day getting below 50. 50 below 50 is a telltale sign that you're in for pain. Now, if you go back and you mark off those levels, and I'm just going to show you from 25 over for a second. We'll go to 25. You can see when you broke there on the 25, and what happened? It marks the high. Breaks here on the 25 and or on the 50 and that's it. So you break here on the 50 on the 50 breaks here and that's it and and and eventually get washed out. Now this is an extreme low reading. This is when we had all that winning and liberation and you know hopefully we don't get anything like that up here. But do we have something like that that's shaping up here? So here's the technical answer. Uh, not really. But does that look great? No, it doesn't. You can see the sloping and you can see how we're losing names. So it's not great. No. And the names that were winning are starting to rotate out. Now, why is that? Because everybody was in the energy names and now everyone's realizing that this we're not going to be there for this regime change. If you look at some of the language that was said today, my two cents of this was get in, get out and that's really what this was going to be and then there'll be some kind of deal. Uh, and if you listen to the language today from the president, that's where this is heading. Um, it looks like things got a little prolonged there, but nevertheless, we're at a 45% right here. So, we are 45% on what? On the 20-day. And this is how it starts, right? It starts with the first. So, you start losing it on the five, then you start losing it on the 20, and then you'll start losing it on the 50, and then you start losing it on the 200 in that order. It just makes sense. You're not going to lose the 200, and the 50 is going to be groovy. Like, that doesn't make any sense, right? None of that makes sense.
So, what we need to do and what I would suggest starting with, we'll get to the five in a minute, but if you're not looking at stocks that you're trading now that are getting above the 22-day moving average, then your trade is no better than anyone's. So, in other words, if you look at it this way and you're at 45% right now, and then you go out there and say, "Okay, I'm at 45% and anything that I trade that's over the 22-day or 20-day moving average, they use a 20, I use a 22. You should use what you're comfortable with. Anything that's above that has a higher relative strength than the average stock on the S&P. Well, that sounds like a good idea. So, one of the things you might want to take from this video is maybe not don't buy stocks that are not above the 22-day moving average right now, which is going to take us to a sector that's going to blow your mind. Blow your mind, I said.
And if we take a look at the 5-day, what's going on right here, you're below 35%. Now, why do you care about this? You care about the five and you use the five only when it's really extreme. It's not very extreme right now. It's kind of middle of the road, but you would say 35% are above the five. So, if every name that I'm buying is above the five-day and above the 22-day, I have high relative strength. So, for you guys asking out there and going, "Well, which names have high relative strength in the market?" Real quick way to do that is, is it above the 5-day? Is it above the is it above the 22? So, you take two variables, this one being 36%. So, if your stock is above that, we'll say 65% of all stocks are not. So, that's the first thing you'd have going for you. And then if you overlay this with the other variable here on the 20-day, then you it's a real quick way, guys, to look at your stock and say, is this something I want to mess around with or is it something that's getting worse with the market or is it something getting stronger in the current condition? The reason you care about that is this. When we bounce, the names that are going to bounce are probably going to be different.
So, we've all heard that software is dead and it's all going to be eaten by Anthropic. And Anthropic is saying, hey, you know, we don't know which ones of these jobs are going to be around. 12 to 18 months from now, there won't be any white collar jobs, right? It's just going to be this utopia. Um, apparently. Okay. So, if we take a look at this, what do you see happening here? 22-day moving average, right? Well, that's kind of interesting. All right. So, let's look at that and say, well, what else does this have going for it? I'm glad you asked. So, we're going to get rid of the pre and the post data, and we're going to flip to that and say, well, this is interesting because red on top means stop. Remember, this is the eight, the five, and the three. 8-day moving average, 5-day moving average, 3-day moving average. I color code them because I'm at the brightest bulb. And what that does for me, red on top means, say it with me, stop. Green on top means go. I'm not a wordsmith, so that's what I came up with. Here's green. Here's yellow and red. I need them aligned. Green, yellow, and red. When was the last time that you had them aligned? Green, yellow, red. How'd that go for me? Pretty well. That went pretty well for me. I'm not going to lie. So, how about now? Well, this is really the first time that you've had any structure where I have the three, the five, and the eight, and a three, five cross back here. A 5-8 cross over here. When was the last time I had it? It's been It's been a year. It's legitimately been a year since you've had them lined up like that if you really go through it. And you're always looking for these turns. And then you're getting those turns with something like this.
Now, is it possible? Is it possible that we're not going to lose every software job in the world and every software company is not going to fold into clawed code? Is that a possibility? Well, we have to tie all this to what's going on with Iran. So, we're going to jump to this and just say, is it a possibility we lose all these jobs? So, at the end of it, this is what we're saying. We have some quotes out here. I think we were going to see 3 to 6 months where AI is writing 90% of the code. AI could wipe out half of all entry-level white collar jobs. These are all quotes, direct quotes. Maybe as soon as the first half of next year software engineering is done. I think we might be 6 months, 12 months away from doing S-waves do end to end. I think we're going to start seeing title software engineer go away as early as February. Now is this a possibility? Sure it's a possibility. But here's kind of the catch. Here are some of the jobs those people are actually looking for. So the people that are telling you that you that you're not going to need it anymore are out here looking for software engineers over and over again. So, is it possible that they're not being truthful about this? Is that a possibility? And the answer is yes. It's a distinct possibility that they are not being truthful. Now, why would they do that? They would do that because they're trying to raise an insane amount of money for a company to grow. So, therefore, they need hyperbole. We've all seen the open AI and what they're talking about doing. That thing doesn't even know what day it is. So, let's just all take a step back from this and start understanding that we're all in a pendulum of fear and greed. And it's what I always refer to as reflexivity. It swings from one way to another. You know, all of a sudden, software companies are the buggy whip and this is going to be, you know, a Ferrari. Let's just try to get through the week.
So, where I'm going with this is you have a technical side, you have a fundamental side, and a macro side. We're going to tie it all together. The macro side is killing you right now because of what's going on with crude oil. And that is going to just throw everything into a really big tizzy for lack of a better term. It's why EWY is getting smoked because they're heavily reliant on what goes through the strait and they weren't able to move until today and now they're officially able to move. Uh, we had a really good trade on this and I will walk through the trade but a part of it today. Um, but it's really important to get this when you understand why this stuff is doing what it's doing then you can make a more informed decision about it. That's a 12, a 22, and a 55. It's a lot of volume, right? So, I don't think the South Korean stock market's going to go to zero. That's just my opinion, but you should do what you're comfortable with.
If we take a look and go back to IGV and the theory about where should we be looking right now, 55, 22, and 12. You're above the 12, you're above the 22, and you're above the five. So, that means that that index right now, theoretically, if I ran through all the other indexes besides energy, I'm probably going to be in pretty good shape. A matter of fact, by that theory, looking for relative strength, software is now stronger than semis, right? Now that everyone has got it in their heads that there's supposed to be long semis and short software. What do you think's going to happen? Right? And then we're going to get back into that talk of reflexivity. I should just do a whole I had a whole video on that. I'm going to do it again and just do a whole full video on the concept because by the time you think you know what you're doing and where you're supposed to be, it's two or three quarters of good earnings and then that's pretty much it.
So, where my head is is with this. So I'm listening to crowd tonight and I'm listen and that's one of the reasons why I was a little late because I have a position in this and I'm listening to this call and they're talking about how AI is actually going to ramp them up and push them through. And so then you look at the earnings and you're like, okay, so you beat on earnings, you raise guidance and your margins were good. I thought I thought we were going to lose all the software engineers. So what happened? So then you start going through CRM and you're like, oh, well CRM, they're the ones that they're it's trouble. And then you look at the earnings and go, "Well, they're buying $50 billion with their own stock back." And you haven't had a red day in software in CRM, rather, excuse me, since earnings. And so you start going through them and looking even things like Workday and go, "Well, that that's the one because the CEO left." And then you're like, "No, haven't had a red day since earnings." PW here's earnings, fell down. Guess where you closed over. Are you above the 22? No. Maybe you could use the 22 as a demarcation line. So, in other words, if IGV was above the 22 and one of the names you're looking at gets above the 22 or is above the 22, maybe that would be another way for you to sort through these and take a look at them and say, "Geez, that's the one that I really want to pay attention to because that's the one that's above it." You could just run a scan on that and see which ones there are, which ones there aren't, and it's going to limit it. And that's a great way for you to decide which one of those names you really want to play. But once again, you need to do what you're comfortable with.
How does this all tie together? If you think you're going to go into a protracted long war with cloud and and then that's going to get hit because AI and then everything else, right? So that cloud's going to come in because AI is going to come in because oil is going to be expensive. Okay. So then you would have to go and say, well, that doesn't make any sense. Well, South Korea can't get any more oil because it all goes through the strait. Okay. So South Korea is not going to be able to ever get another ship to come near them. No, they will. It just might be more expensive. Okay. Okay, well that makes sense. So maybe you could say the growth would slow because of that, right? So then you look at their major exports, which is DRAM. Well, is that going to slow down? No. See, people act off of reaction without even understanding what they're doing. And when you start connecting those dots and you overlay technicals with it, it starts making a lot more sense.
So, play endgame with me for a second. Do we think the UAE stock market's going to go to zero now because of what's going on over there? No. Do I think people are going to second guess whether or not they want to move to Dubai right now? So, are there some interconnected workings here that we have to look at? Yes. Now, let's tie it all back and take it into the Q's now. So, how you going to take all that and tie it into the cues? Simple. I'm going to clean this all off and we're going to look and you're going to see the same thing here with the 55 and the 22 and the 12. Right now, just stay with me as we connect it all because the important thing about this is that you have the game plan on what's actually going on out there.
So, the big issue is that crude's going to be more expensive because the tankers are going to have to charge more. Well, then the tankers should be going up. Will know that after the invasion or the attack or the conflict or whatever word you want to use that makes you comfortable. Um, they they peaked. Oh, well that doesn't make any sense. Well, maybe just one of them peaked. Nope. No, they all they all pretty much are peaking. Yep, that was pretty much it. Okay, so when we go through them, why aren't they going higher? Well, even Trump came out today and the admin came out and said that they're going to secure these and they'll have escorts and we'll underwrite their insurance while they're going through all this. Well, then all of a sudden the cost of of of crude stays down. It's not going to stay down where it was, but it's certainly not going to be this $100 a barrel unless things escalate. And that becomes a whole other conversation. So, what we're seeing and what's actually happening are two completely different things. So, if you're of the camp that this is going to be long and protracted, then then clearly the airlines are going to collapse. And then we would look at that and go, "Well, we gapped down today and now we're already trading back up." Well, why would why would that be? Because crude's going to be so expensive. And then we would lose the cruise lines. But we're not losing the cruise lines. So when you look at what's supposed to happen because of the long protracted side of this, that's not what's happening.
I do see people locking in profits a lot in the semis because they're looking at this and going, I'm up a lot. I'm not playing games with that. And that's a real thing. But it's possible that the pendulum has swung so far the other way so fast because of how we got information. Remember, we've had people that have gone from being a Fed, you know, expert to being an expert in COVID to then they became experts in Ukraine. They had 24 hours. I'm sure they're experts at this point in the nuances of the Middle East and Iranian politics. So, they're able to process that information super fast. That's called sarcasm.
So, what does this all do for us as we tie it back to the spy and the queue? Well, then we would go and take a look at this and go, well, how come the Q's didn't close below 600 yet again, which is the put wall, because we broke it again, right? And I'm sure it just wasn't the first hour of the market where retail panics. I'm sure we were down all day. I'm almost positive when I look at this cough cough that I'm not going to see that it was only the first hour of the market where retail panics the low of the day is the first hour. All right. Well, maybe retail had it right and then institutions wind up selling from the dentist's favorite time of day. Now, I like the 30, which is a dentist's favorite time of day, but a lot of people will use the hourly. Now, if you use the last hour of the day, you will see that you were down. But from that institutional level on 2:30, you can see that you did start having buying coming in there. Whether it holds or not, we don't know. And quite frankly, none of us really know what, you know, fresh treat awaits us on the headlines overnight. So, you could see why they would close. But, it's pretty obvious who sold this morning. And it was retail in a panic. I got to get out. I got to get out now without even looking at where the put wall is or any of their key levels. This presented a great opportunity for people that actually have their levels marked off. And I'll give you an example. I'll walk through this really quickly. If you overlay this with the cues, it was really relatively simple. And all you're doing is just watching the cues and you're watching these levels in here. I use a private cloud and I also use RSI to determine a lot of this stuff. If you look at RSI in here, mine's going to look a little different just because of exactly the way I have it calculated, but you'll see this turn in here and we're buying this bar and we're doing it actually on a one-minute chart. By the time we're doing it and we're getting in here right around that 340 level here. I'll show you the timestamp so that you can see it. And John writes it all down while I'm doing it because I can't type trade and talk at the same time. That was a scalp we did on Micron to the short side. And then uh EWI I doubled it. Uh, Kora long I maxed out ALM. All right. So this one um so Kora long 340. And so we're buying right in that level. And you can see where the timestamp is. And I think that's important just for me to show so you guys can see that we're actually doing these live. I have this recorded somewhere. I can I can should I should really do a video on this one. But at that spot, you can see where where you are in the ES. We're watching it flip and we're watching the ENQ flip. And then we're just getting involved. We're not judging it. We have the whole thing set up. What we're doing is we're trying to time a bottom because we don't believe that the Korean stock market is going to zero. And this is a 3x on that. So then all we're doing is just allowing the trade to work. And as it continues to work, all we're doing is just moving the stop up over and over again. And we're not judging it. We're just watching it over and over again. And I'll show you parts of it here where you can see it. Up 30 on the day, up 50 on the day. Let's get rid of that for a second. We'll move this bad boy over. Um, and I was running EWY with it the whole time. And clearly we nailed the trade. Yay, winning. Um, the important thing about this here, let me get to this other clip. There was other one clip I wanted to show here. Um, when we got to this level, this is important. Let me show you this so you can watch this tomorrow. So, let's say you gap down again tomorrow. How would you do this? What would be the important thing for you to pay attention to? This is where we have issues. I've got issues everywhere. But, uh, coral reverse on a 15-minute chart. I did trim up 50. I did trim up from the 126 up there. So, why did I do that? And this is real simple for you to remember. Once you get up to these levels and those people that bought in here, they start getting their second taste of, hey, do I really want to get out of this, you know, I I bought the open. I just went for a wild wild ride. You know, I'm do I really want to rethink my life choices? And sometimes the answer is yes, they do. What's great about these levels is they give you a secondary option. So they if they hold, you'll see something like this with an inside bar. You'll get something like this, which will look like a bullish harami or something. And then they'll flip those levels and then you can just buy in here and then use that as a stop. It gives you another entry, right? And you overlay that with some other things like RSI or whatever your oscillator is. And you'd want to see like, okay, well that's okay. But then you can see that divergence up here, right? And you might be like, I don't want to hold that anymore. Just kick it, make the extra money, and move on. The important part of this is as this thing trades up, you get to make those decisions because you're not telling it what it's going to do. You're just allowing it to do whatever it does. And that's how you can stay in these things and make a lot of money. I at one point I think we were up a 100 points in this. And I want to be really clear about this when I show you this stuff. This is one trade. We had other trades that were successful. We also had other trades today that didn't work. Like not everything is going to work in this market, especially in this kind of environment with this much headline risk. So your win ratio and loss ratio are going to vary greatly dependent upon your style of trade in a market like this. So the important thing about that is honor your process. Like if your stop if your stop clicks, you have to go. There was a trade I did today and I'll show it. I bought Micron and I wound up making the I actually made the money back. But I went long Micron um right here on this break and then they did the old flim flam. Oh, where you going? And then you know they gave me the old shooting star and the you know patented middle finger pattern um and then all of a sudden they undercut. I'm like, all right, well, I have to go because I don't know how that's going to go now. If I don't undercut here and just say, "Oh, it's Micron and I'm gonna hold DRAM forever." You know, I could have a really bad day here, like really bad day if you do that kind of stuff. So, instead of that, you get out, you reevaluate, and you're like, "Well, what's this actually saying to me?" And then you take a moment and go, "Oh, wait a minute. We're going to roll over." And you see that level. See, when you get out of a losing trade and you can start looking at it objectively because you no longer have that energy, right? You're no longer on the wrong side. You just look at it and say, "Well, what's really going on here?" you're like, "Oh god, this thing's a short." And you're surprised by that, but nonetheless, it was a short. So, we short in here, and then we're just scaling out into this, but I can do that at another time. Honor your stops. I can't say that enough.
We went through a lot tonight. You're going to want to watch parts of this again. Um, that process you want to stick with and understand you have headline risk, but the one thing that you have to watch like a hawk, even though it's really, really not great right now, the way that we're pointing down, you're holding 600. So until you start closing under this 600 consistently, I see the moving averages rolling over. I see all these indicators, the MLEN summation and all this stuff. I'm still holding. It's still holding. And if you look at the NDFI, I'll leave you with this. And if you still look at the NDFI, yeah, you're below 50 today. Yeah, that's not great. It's not. I've seen great before. It doesn't look like this. But it doesn't mean that it can't remedy. If it starts deteriorating, we'll talk about it. That's a