Transcription
By looking at the S&P, you would think it was just a normal day. We hardly moved.
If you take a look at the NASDAQ, you can see the obvious gap down, which was really predicated by DRAM and how DRM's falling off a cliff. But is DRAM falling off a cliff or is it just following through by what we're seeing here, which is obviously in South Korea. The most important thing in facing us right now is what happens in South Korea tonight. But most importantly, what happens with CPI. So, let's get to it.
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So, what exactly happened today? Let's just get right into it. And this is the South Korean stock market. EW. People are pretty familiar with this. And we can see real clear here that you have this left shoulder, you have the head, and then you have this right shoulder development, and then you have a neckline. So, if I just do the simple things and draw the neckline from here, left, head, right. We went through this in Saturday's video. Um, and I'm just going to highlight it again so that you guys can see it so that you have it. But I I do think it's important to note because you broke today and you can't say that you didn't break. So, you know, you can always have a plan, but you have to trade what's actually happening. And so when we see something like this, it is what it is. You broke, deal with it.
The 55 is sitting right there and you couldn't get over that. I used a 12, a 22, and a 55. You can see very clearly that you kept butting your head above that. You couldn't get above it. You're thinking you're going to hold the neckline, but we're going to get into exactly what happened. Let's go back to the bear chart because I think it's important for me to give you a way to look at a target. So the easiest way for anyone to ever look at a head and shoulders is measure the height of the head to the neckline on a percentage basis, not a point basis. You always do it on percentages, not points, because the points obviously change. The points from here to here are obviously going to be different. So on the percentage basis, you just measure the neckline and that's going to get you 20% roughly from there. So if you drop from the neckline down and you went to here and you just say, well, where's 20% from that? It's going to take you right into that area. Right around 140 is where that would take you, right down to somewhere in here. It's not an exact science, but it's really good at like giving you an area where you could look for a target. Obviously, you have some resistance in here as well at 154. And you would think, and there I go again, thinking, but you're way off that 200. So, you know, does that become an issue or not? Do you care about that? You know, it's a good question. There's the 100. And do do we care about the 100? Maybe. It's going to put you at 164. Maybe that's an issue. Uh, you take it to the 150 level and that takes you to 145. So, there's some issues there that kind of tie and correlate perfectly with it. But I do think you have to look at this and say, "All right, well, this is definitely something worth paying attention to."
Now, if we go here and we just drop a VWAP here, you're going to see, and I'm going to clean all this off, and then I'm going to go to a bare chart again, and I'm going to do that one more time. And what I'm going to do from that swing low that happened March 31st is I'm going to drop a VWAP. And what you're going to know is the average person now that bought on March 31st, they are down. This is one of the reasons why we actually shorted this through KOU today. Did fairly well on the day with it up 20 points, but I I think you I think you're heavy here and I think you're still a little heavy with the way that this is set up. And there's a reason for that.
Now, first and foremost, they're pretty levered over there with the with the position, but you had SK Heinix that came out and overnight, you had an analyst at an investment bank in South Korea say that they're going to miss earnings or that their earnings have to be lowered because of the lower the the long-term agreements, LTAs. So, when we came in this morning, we got this suck salad, which is the gap down. Now, the interesting thing about the gap down is 149 is where this IPOed. So, it was obviously listed before, but they listed it for on the US as an ADR at 149. Another thing you might want to take away is tomorrow they're going to allow these ETFs to start kicking in, all the levered ETFs. So, that'll be fun. Um, and then I don't even think options are out then. So, then there'll be swaps which will make it even extra fun because then you won't be able to hedge correctly. But that that's always a good time.
So, what we want to do is just understand that yeah, you held that today, but what does South Korea do? And this is where I think again it gets interesting. If you come to here on a 24h hour and you look at where we were on this move and let's do it this way, too. We'll do the extended. So, that's pretty much the same. So, if we take a look here on this and like the gap down, you know, you you went to bed at one level last night. It was trading Oh, you know what it was? It was trading this SKHYV. I love when they do this. Uh, let's pull it up this way. It's interesting. They got rid of the data somehow because I guess because they convert it over to the V. So, it's not on here, but you were around 161 last night until you came over here um in the US and the US opened and then it just fell off a cliff. So, this is actually going to open lower than it did overseas. And what's so interesting about that is they've been getting margin calls in South Korea. So, this is definitely going to trigger more of them this evening. Now, do we get to the point where we get a wash out or not? There's some signs of that. But overall, these newer issues are really coming in pretty hard. So, you're we're going to want to watch this tonight and see how that goes. And you can see this on the 24 hours how it went. And as soon as we opened up that news hit and that's why we started to kind of collapse here a little bit uh clearly. And what I also thought was interesting is you just weren't even able to get to that level. But, you know, they trade at about a 1.3% differential to what we trade at when we trade the ETF. So, there's always maneuverability. I do think it's really hard to look at this and feel like warm and fuzzy. the fact that you're breaking here right now. The question is how much more is left?
So if we let me just do it this way too so you can see this. So if we go and take a look at the low here and that whole value area right here like there's your value area low and you're closing right on it. So theoretically you're supposed to stay in here but if you break that you're heading to that 154 pretty easily I think which ties you directly into that line right here which is really where I think that this could go. Um, and I think it could be fairly quickly, but you do have some things that could offset that after a after hours tomorrow. The first thing is going to be like CPI and and I think we have to get through tonight and then tomorrow, but and then maybe could reset. But I think you have some issues here. And the other thing that I'll tie it into is these newer issues. Uh, they're just they're over they're over all of it. And you can see it with SpaceX today too where, you know, I don't know how this doesn't get to that that 135 at this point. I don't think I'm going out on a limb there. If I take a look at SPCM, um I don't know why it gives me that one. Hold on one second. I wish I could get rid of symbols here. But if you take a look at SPCM, which is the the long one, and I tend to short the long ones versus just buy the the short ones. U I just find it easier. But that broke out as well. But you're taking out these new lows and these things are just absolutely creating. If you go SPC G, which is this one, take a look at this. And you can see that that's an absolute clean breakout of a little cup and handle. So yeah, I don't think it's great. And I think that you're looking at that 135 and it needs to hold there. The question is, do the investment banks support it at 135 or do they step away from it? And I I don't know the answer to that. You know, I I really don't know if they're going to feel the need to support it the same way they felt the need to support it off the open. You have all your upgrades. They shoved it down the NASDAQ's throat. So the question becomes who's going to be there to put you know to you know who's going to carry the boats and I don't have an I don't have an answer to that. So that obviously is going to spill over.
So if South Korea and DM's having a problem it's obviously going to spill over into the socks. And you have two companies coming out with earnings this week. ASML and Taiwan Semi, right? They're both coming out with earnings. And this is where it got super interesting today with the socks because overall, you know, we're not hitting new lows or anything like that. At least not yet. But left, head, right? I mean, it's there. It's And EWI has been leading now. So, yeah, it's a little more concerning today than it's been. My hope is that we can maybe clear it up with what's going on with CPI, but I have to go over that in some detail. I've did I've done some decent work on that. We're going to cover it uh for tomorrow, but I I have to be concerned about this. You can see it. I'm not going to draw it out. And we'll do the simple things and say you're sitting right on the 55. So, you've tested it, rallied up, tested it again. I'd like an undercut to flush and then close over it. We might get that on the CPI number, but the weight of this is really coming down with the DRAM. And the question becomes, is this something that we have to concern ourselves with? Here's the 55 and it's the first close under it. That usually is the breaks for me. And we'll go through a couple names here in a second.
Now, if I put a VWAP here and we look at this, test it. Okay. So, where's the first close under VWAP? Well, there it is. Now if we do something else besides look at the first close under VWAP which yeah that's an issue like I can think anything I want I can have any opinion I want but I have to trade what's happening right so even if I think that oh no we might come back down and then I want to I want to add and build I have to actually trade what's happening so if we take a look at the point of control you really haven't been breaking that you've had a little battle here and then we look at this close under it and you know this is pretty much the third close under that and it's not as bad and you really didn't go anywhere we're today. So, we'll have to watch it, but I am under that 55 and I am under this level. And so, we have to, you know, we have to be cognizant of where we are.
If we look at a sense of it from a retracement and we're just going to go from the top started from the and then we go to here and we can see that the 50% line, you still have net buyers across the board. So, as long as you're above 50% since its inception, you have net buyers. If you start breaking 55, you flip to net sellers. So, then you'd be, you know, the technical terms a pickle. So, in other words, you'd be below your VWAP. You'd be below the 50% line, you'd be below your 55day. I mean, I I've seen good before. It doesn't look like that. So, it is what it is. And what's been working, and I can show you what's been working for us, is just having a lot of patience and having core levels marked off. So, like for example, today with Micron, we did this live trade when we were live trading this morning. And hold on, let me just do it this way. I'll clean it all up. We just do it this way so you can see it. It's super clean. Um what we're doing is we're just watching the put walls and then we're just looking at how big those put walls actually are and then but then we're seeing which ones are actually holding those put walls and which ones are not and then we're using those as areas for a trade. Uh I'm finding it because of how juiced the options are. Options are more juiced now. I can grab this real quick but and show you this. But options are more juiced now um than they've ever been. Let me just show you this. Let me grab it real quick. And you just have to bear with I have to do these unedited.
All right, cool. So, in front of you is a chart that shows the S&P average stock minus the S&P index on a one month 25. And basically what it's doing is take taking the implied V spread. This is like insane what you're dealing with right now. So, like for option sellers, it's excellent. How this ends. Yeah. No one's buying puts on the VIX. Everyone's trading options on individual names. And the disparity of this is just absolutely insane. And I I think a lot of it has to do with the levered ETFs and them using these levered ETFs as vehicles and then they're using the options and the calls and the puts. And since they started just letting anyone that had a heartbeat create a levered ETF, the explosion of this has really kicked in. And so it makes me wonder how good it is as a, you know, as a vehicle looking at it for something because the game's changed from where it was 2009. I mean, you come out with a new stock symbol and then like 48 hours later, they're like, "Oh, here's like a 6x ETF and you can buy options on it, too." So, it's kind of it's kind of nuts.
Anyway, I sound grumpy, but the point that I'm getting at here is when you look at this and you come back down to these levels, then you're just watching key indicators. Like, we were just watching the RSI today and you're at a three on a one minute chart. It's like there there's nowhere else to go. There just isn't. There wasn't anywhere really for it to go. So, you're just looking for a little move. And what I did was this and I was we just sold some puts out there. Uh July 17 900 puts at 37 and 3/4. Uh and if it broke 900, I'm just going to go Audi 500 as the kids say and just kick it. But what else I liked about it too is while that was going on the NASDAQ and I cut that off. Um but the NASDAQ was actually hitting new lows while that was doing it. And this held up pretty well. And so what you're doing is you're always looking for relative strength, right? So like this did not have anywhere near the same relative strength on the bounce. So, we didn't go near it. But if you look at what SanDisk did, they moved the put wall, and this is why it's so important to prep before you trade um and not just go out there and yolo. But if you look at 1750, which was the old put wall, and then the put wall dropped today. You broke 1750 hard. It started becoming resistance. And so then it was 1650. So we I actually just waited to the end of the day and then sold puts. I'm finding greater success selling puts. Even if I'm selling them like these, I sold at the money puts and then just for the week because the volatility of these names, the way that they're moving, it's like they'll move $20 because somebody sneezes. So, it's actually working out pretty well. I think I sold these at 95, closed them at like 83 into the end of the day. Um, and you know, if it kept going, you might I might consider holding some of them, but it really didn't. And I own some long term anyway. So, the question is when you start to look at these names, where do they go? And this is my point. Oh, before I forget, uh, look for if you're on the wait list to get in the community, please look for a letter today. I think there's 72 hours left, uh, for those that are on the wait list before enrollment closes. Uh, so just please check your email. And if you and check the spam, too, cuz sometimes people will be like, I didn't get one. It goes to spam. Uh, but if you take a look here, wait, there's more.
So, if we take a look at this level here, you're right on the 55. Yeah, I think you're going to hold, but I don't know that. And I think you're setting up for some kind of flush is where my head is now. whether that flush is coming from something like, you know, margin calls in South Korea, which is, you know, who knew we had to worry about that. Um, or it's going to be this because now we have CPI tomorrow. And I don't want to spend a lot of time on CPI, but I want you to understand why you care. So, I'm going to do it this way because I think it's the easiest way to do it. So, if I go US dollar um versus the yen. And here, we'll do it this way. And we'll get rid of that for a minute. So, in here you have the US dollar versus the yen. And we have this move down and then we rallied. And if you look at it, you have this move, which is super similar to what I'm about to show you. And then it's up or it's up, down, up, breaks. The day that this broke was a negative CPI 0.1. That's the day that this broke. And then it took two weeks of this selling down. And then if you don't remember, I'll show you on the S&P chart in a second what happened. The other time that you had a negative.1 was April 10th and that was right in here. So if you look here on April 10th and you can see this huge move down that was the next time you had a negative.1 month over month and you're going into here and the number that you're looking for is.1 month over month. So what you're really curious about tomorrow is not just the stock market and how that acts, but do they unwind this US dollar Japan trade and yields are really high on this.
I'm always of the school of it's never the thing that hit us before. Like I'm a big believer in that. So when people thought, oh, we were going to lose the banks. I don't know if you guys remember this in 23. Oh, we're going to lose every bank. Every bank's going to go away. There's never going to be a regional bank again. Like no, we we went through this during the great financial crisis. We're not going to have that problem again, right? But what got me about this is how similar this is. Now, we have to see how that number comes out. But here's what what really got me about it. So, so if I look at COR 1M, which ties into that correlation chart I showed you earlier, and if you go and take a look at here, so what what is this? What are you looking at? So, you're looking at the S&P 500. You're looking at those options versus the top 50 um market cap names. And so, the disparity, so the greater the disparity, the lower it goes. So the more they're selling or the more they're uh trading those options right on or buying those calls versus or buying protection that's the difference on that. So just to clarify this again so you're basically comparing the S&P options to the top 50 market cap names in the S&P. So when it drops they're waiting heavily more on names. So when it rises like here that marks a what? It will mark a bottom and it'll mark a bottom here too. Why? Because they don't know what names are going to go, but they're going to buy the heck out of options at the bottom of a market to get exposure, right? And so when you have these little bottoms setting up like you have in here and here, and you broke this eight that everyone's all giddy about to me, and we were at three and now we're at five today. So, at least we're going in the right direction. This is a concern of mine. And so, I do want to watch that tomorrow. I think that it would be smart to watch CPI tomorrow, but not only watch CPI, but watch what happens with this trade and see if this trade becomes something that we need to concern ourselves with. Does it get worse or does it not get worse? And I I think that's a real issue for us to pay attention to.
So, the first thing we're going to want to watch tonight, or I'm going to watch tonight, you should do what you're comfortable with, is just what happens with KOU. I just want to reiterate, I think you do want to watch 135 on SpaceX tomorrow. I think that IPO price, I don't know. I'm interested in your comments. Do you think that JP Morgan and the rest of the investment banks care to defend it anymore? You guys can always comment on that stuff. I I'm very interested in that. I I the next real big one's going to be, you know, ASML this week and then we'll have to see how that goes. Is that able to hold? Is it not? And we'll see.
You know, if I look at the cues as a whole, nothing really broke today. And this is the one thing I've really been yammering on about. And I I do want to get this out there because I do think it's important. Everyone keeps talking about oh the volatility the volatility the volatility is not doing anything different than what it's telling you it's doing. So below is ATR which is the average true range and you can see that it's 1539 here. So if we just go here and measure from the top of this to where the low was today on that and you're going to see that it takes you to 1556. So it's literally one times the ATR from here to where the low was today. So it's not like you're having this huge down day. You're just really consolidating in here. I know everybody wants to kind of, you know, get going here, but when you move like this on the ATR and you get this level of volatility, this all has to work itself off. Now, has it made a decision? Yeah, I think that you're consolidating. What's going to change that? Like, what are the things you have to watch? If you start closing under the 55day moving average, you could have a problem. And the first thing that we're going to see this week is really going to be CPI. And I think we should just very simply just watch how the 10-year acts on that. Do they sell that down? Clearly, they're not doing that because, you know, so much for world peace um and what's going on with oil. And I I you know, I'm going to just my take on this because I get asked this a lot. What am I doing with oil? Absolutely nothing. Not a thing. Nothing. And the whole reason is because it could be over in a second. Meaning, you could get some news, you can get a tweet, anything. And everybody thinks that they want to be long until it's time to be long. And then the next thing you know, good news, we're having talks. And then the next thing is, good news, we're not having talks. So, I don't want to play that game. But if you're looking at that game and you see how the some of those names are going, it's the refiners. The problem is when the music stops, you just don't want to be the last one holding the bag. And the next big event for this is that they're supposed to um close Iran's ports tomorrow, Eastern time at 400 PM. So, you know, there will be an event there tomorrow night as well. That is it.