Transcription
We came right back to it again. This the 740 put wall and we held. Take a look at this on the cues as well. This was absolutely perfect. We undercut the 55, bounced through it and we all know what's there and it is that put wall at 700.
The most interesting thing for me today was how telegraphed this entire move was. And by just using a couple key things, you can actually outline this entire thing for yourself. I want to go through this first so that you can use this tomorrow because I think it's going to be the same playbook tomorrow and then I want to talk about the structure I see out there. Let's get to it.
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So, I want to show you what's working. And I think that this will be really helpful to what's going on out there right now because different tools, different times. So the one thing we did publicly pre-market was just really hammer home that 700 has been this put wall. And this is when I say index sector stock and I'm top down. This is exactly what I'm talking about. So we come back down to that 700 put wall and we've been hitting that for some time. And of course we all know right here is also that 55, 12, and 22 are here. But we know where these are. So, we know that this is going to be an area of contention. We also know that we opened right on the low right here. So, we know that these are the areas to watch. And then what we do is we're going to go to this.
And so, in one chart, usually on my screen, I'll have the index or I'll have the futures markets just marked off where the put walls are even on the futures markets just so I can go and look at them. And then what I like to do besides this is usually I'll have something maybe I'll have RSI just to see where I'm at. And what was pretty obvious to me here was the fact that lower here and then you can see where we are here. A matter of fact, I even put that in the in the room I believe at one point today. Let me see if I can just grab it real quick. Yeah. Uh and I'll just show it really quickly here. Uh but I posted this in the community when it happened um just to kind of like hammer home like hey this is what's happening. Not only did we get to the put wall, but we have this massive divergence. And the way that RSI is calculated is it's calculated based upon directional movement. And that's why it's so powerful. So if the the magnitude of the move going down is not powered by the same amount of negativity that you had over here, the chances of it staying down there not having some kind of bounce are pretty remote. There it's better than a coin toss. I'll leave it at that. But and there's more to it than that, but that at least helps you understand the methodology on why I I'm so big on RSI. I use the histogram on MACD uh for certain times. Right now is one of those times. Um if we have time, maybe we'll get into that. If not, I'll do it on Saturday. But again, you have this level right here and this is not commensurate coming across. And we know that this is the area that we need to watch.
So what we do after that is just drill into it. And we're just watching it in this area. We're not telling it what it's going to do. We just know this is an area of interest. So we could see it start to drop. And then you just start seeing it lift in here. So that's when you find the index. And then of course you go into the sector and then of course you can go into the stock. So if you look at that area right here on a chart and then you go and take a look at the SOXL for example, you'll find that that area will show up the same exact way. Right? This is why you care where put walls are. Especially when you're in a trading range because you still don't have direction. You have nonsense where we're going back and forth and people say the sky is falling and then other people say the sky is not falling and whatever. But I'll be over here trading. So you can see that area there. But it doesn't matter. But wait, there's more. It doesn't matter. It's completely irrelevant. It just becomes a function of how much risk you're going to take. Are you going to take SOXL risk? Are you going to take SanDisk risk? You'll see the same setups and then you'll see derivations of those setups everywhere, right? And it'll be the same exact spot at the same exact time. So index sector stock, we know semis are the hardest hit. So we know they're going to be the most volatile. And then it just becomes a function of which name you want to take the most risk with and which names don't you. For me with where we were and the headline risk today. SOXL made the most sense. So, we put on an SOXL trade in here. And then what we're doing is we're allowing it to work. We're pulling money out. And what I tend to not do when we're near these put walls is I tend to not move the stop up to break even. I allow the trade to play out. So, it trades up, trim, then you let it come back down, you let it work, and then as it goes through these different levels, I'll be trimming into that. Hold on one second. I think I can uh grab this really quickly. And Yep. And I can pop it right here. You can actually see the timestamps as work. And I can drop this down so I can blow it up. But the whole purpose of this is to understand like what's working now. And this usually does work u in any environment. But can you just see right here 162 with a 160 stop. And then as it goes up, we're trimming trimming trimming. And then we just get up to a point. I think it was like the most I got out of was um something around like 172. Something like that was like the highest. And then eventually popped to 175. Had to put the stop behind it and that was it. But it was a great trade and the reason that this worked was because I'm going index sector stock. So when you're doing that kind of work, that's how I trade and that's how I do it in the we do it in the community that way.
So when I'm looking at something like this, I can start seeing that higher high and we're starting to get some kind of structure, but you still have this huge weight on you. And if you go and take a look at this RSI on a 4 hour, like it's not that you have this gross oversold like you did March 30th, you're still kind of flapping in the wind. So, we do need to be cognizant of that. But you do have a lot of structure that's starting to change here. And I'll show you the different structures that are that are starting to happen. And because I do think it's very important, but this is what works in this kind of environment in particular because you're not really having breakouts. Like if you're buying breakouts in this kind of market, you're probably getting slaughtered. Uh because the market's not breaking out, right? So index sector stock, it boils down to the same thing. Like CIBR was a swing and then it broke out and then all of a sudden that was the end of it, right? Now maybe it still goes, maybe it doesn't. But now look at this divergence that I'm getting. And it's the same thing with everyone's got to be in cyber security including us. And that lasted for a whopping day. Same thing with PW. It ran right into its call wall up here at 360, blew through it. We actually trimmed some of it and then just moved the stop to break even. But this is what you're getting in this kind of environment, these kinds of failed breakouts. And then the other side of this trade where you need to be super careful in my opinion is you have people that are starting to look for the same name. So like you'll see something with XLP for example, and remember it's looking at the XLP name. So they pile in those. Well, when the rotation happens, you're not to me, I don't make enough on the XLP to do those trades that when the reversals happen that I make any money. So, I tend to stay away from them. And then if one gets populated, it gets crowded. So, I was actually looking at this SFM because it was breaking out and it looked really good. But if I start seeing a lot of other people put things in a newsletter or in Substack, like Barry was talking about this and how he's getting involved. So what tends to happen with that is everybody that's home retail says, "Oh, he's buying." Not realizing he's buying like 5% of his portfolio in it. And so they all get in and then the moment it turns, they just all puke it out. So you're actually sometimes better off waiting for these things for retail to pile in for them and then they realize they own a, you know, a farmers market and then they all just get the heck out of the way. And I believe that's what you're starting to see with these kinds of names. So I tend to not want to chase into that stuff.
If you look at the rotation today across the board, do we have a rotation? Yeah, I think you do. I think they're getting I think they're getting out of health care. I think that that's what they're doing. They're certainly getting out of financials after today. Um, and the reason for that is obviously what's going on with the 10-year and the spike up because of what's going on with oil and what's going on overseas. And I do think we should spend some time just talking about the the structure of the market. So I don't tend to chase when we start hearing that the rhetoric and it's not a political statement so everyone can calm themselves a little bit here but when we start getting the rhetoric of well we did this and then we're going to do this again and then we're going to do this again like when the rhetoric starts heating up that's when it's an issue. So, for example, when there was an attack yesterday or a reprisal, whatever you want to call it, it was not telegraphed and there was something like 80 missions ran or something insane yesterday. Um, it was something pretty aggressive by the US for that region. And I'm saying it that way that it was much bigger than we were told what it was. Nobody knew. So, when you're coming out today and you're telegraphing, oh, we might do it tonight, you know, and maybe we'll do it tonight. And then you hear like they're doing things. It's very choreographed and it's very told what they're doing. I don't know that I want to be out there going long oil into that to then come into tomorrow morning and then hear good news. We have a peace deal or we're going to put a peace deal to understand the memory of understanding that we already have. So it it puts you in a very precarious position.
So I think that if you had to look at this, you have to ask yourself some questions. And these were the questions that I asked myself today because I started legging into some of this stuff. And I I'll get through some structure here in a moment. But I think you have to ask yourself, does this escalate? If so, how much? And I think they're they're the questions that people were asking themselves today. So if we look at the VIX, does this escalate? Well, they don't feel it escalates when you look at the VIX. If I go look at VXN, does this escalate? Well, they certainly don't think that it escalates. And I think it's super interesting that the VXN closed at the same exact level as yesterday, but the VIX is a little higher. So the question of does this escalate? We're not even over a 20. Could it could it happen? Could we get over 20? Of course it could. Are we over 20 right now? No. And we're watching the 10-year rally. And I do think again, you had a data point today where this could have gotten really ugly today. Let's just blow this up so that you can see and you can all see the turn of what happened. So here's your 11:30 and what do they start doing right ahead of the 10-year bond auction. Well, they start what? Buying bonds. So they're buying bonds ahead of that auction. And I do think that there's something to that. And I do think that's important. Tomorrow you have the 30-year bond auction. And you're probably going to want to watch that at 1:00 tomorrow and see how that goes. But again, if we're looking at this stuff and we come back into that, you know, 11:30, from then on, they did nothing but what? Buy bonds.
Now, this is interesting and it's one of the things why I always go over this with guys in the community. You had a 17week at 11:30. So, the 17week bond auction went really well. So, at that 11:30, when that went well, they must have had a read on it. I'm not a bond trader, but they must had a read that the the 10-year was going to go really well. And so then if we take a look at this, you're going to see how this is like all tied together again. Look where the S&P hit at 11:30. It hit right on its put wall right at the bond auction. Look at the Q trades that we did today when we were talking about buying the Q's and the trades that we did on semiconductors. So when people say things like, "Oh, don't worry about what's going with the bond auction. I'm not a bond trader." you're like, "Well, the 17 week called the bottom on the NASDAQ today and I was able to put a bunch of semis on because of that because I knew what to look for." See, if you're watching the bond auction here and all of a sudden this starts lifting and the equity risk premium, right? Because you're going to buy if premium goes higher, if yield goes higher, you're going to buy yield over equities, right? Because you're going to get more money. That's why that the thing rotates. So, when you look at it, it's pretty damn clear what happened. So yeah, as someone that whacks around Nvidia for a couple dollars a day, yeah, you do want to know where the bond auction is if if you want to win. Or you can just kind of wing it and listen to Freddy fingers on Twitter, but real money is looking at this stuff and making decisions predicated upon it. And it fits perfectly with the narrative on what happened in this area. So between the bond auction where you are the put wall, you're fighting for inches. So you're constantly stacking this stuff.
Let's get to some charts here and show you some structure. So, when we talk about structure, this is really what we're talking about or what I'm talking about. If we take a look at something like the Q's, for example, and then we go to a daily chart and we just clean all this off. We just leave it open, high, low, close, you're going to notice the same areas over and over again where you've had an undercut. And then from there, we haven't really been able to break that. And now we're holding that area. And we can kind of see how you're building in here. What you are getting is you are getting these lower highs. That is true, but you're not really getting lower lows. You're undercutting and ripping. Undercutting and ripping. Now, anything can of course happen. And the question really is, do we need to undercut 685 one more time to snap us back? Maybe, maybe not. Maybe all you had to do was undercut Friday and last week's low and that'll be enough. So, for now, this is the hand that we're dealt. When we look at this, and I do think it's important, just take a look. You the daily is not really falling apart. You are sloping down. you look at in the 4 hour, you know, all this rhetoric and you're not getting oversold, which means you have a real battle going on here. You know, you can actually argue that the lower end here for here versus where you are now when you hit a low that you're actually starting to get some kind of divergence there. And when you look at this on the hourly, you actually see the divergence. I also think it's important to note this when we look at this because if I look at the higher high here over that, so here I'll show you what I mean by this because a lot of people will do this. I'm not a big fan of this, but when you're looking for and you're reading tea leaves, you tend to look at things that I think are secondary or tertiary. I tend to just to get a better sense of what's going on. So, if you took the top of this, you drop it down here like it's hot and you're like, "All right, well, you know, we are kind of flipping here and then if we took the post here and the way to always look at RSI and the way that I always look at RSI is really simple. I always look at it from the standpoint of trying to understand what it's doing. So you have negative and positive momentum and that's what causes this to move, right? That's what really does the magnitude of the move is through RSI. When you understand what this stuff is, it makes your life easier. So if I have something here where I'm flipping a higher high, well, it usually means that that's where we're heading one way or another. And it doesn't mean that you're going to do anything more than that. But I think that you could look it's trying to get up into that 715, 716, 1%, see what it does from there, and then we can see if we have follow through.
If we go and take a look at semis and we're spending a lot of time on semis. See the same divergence here and you can see the same break here. I don't have that higher high here though, but I am making these but it's nowhere near the same. If I go to the 4our, it's really not great yet. Like it's just not. So I I'm kind of there but not in the same vein. So go take a look at IBB and see what's going on. So IBB's been ripping and then we had this massive break on the hourly today and look what you did. you just came back and worked off the oversold in a day. That entirely hourly oversold, the same here, but just didn't get as far is over in an hour. It's kind of crazy when you look at it. Now, if you look at the 4 hour, you're up there. And so, there's a reckoning coming here where this probably has to work this off. I I don't know that you're there yet, but there is some kind of reckoning coming with IBB. Watch when we look at MAGs. So, if we look at MAGS, we can see the higher high right there, and then we can see this 4hour divergence that's right in this area, which marked perfectly that bottom, right? So, what are we getting here and what are we seeing? I actually think that they're getting tired of the other names and they're going back in the semiconductors a little bit because of what we're seeing with where all the growth is. Now, you might not believe that they're still growing. And that's okay, I guess, if you're if you want to believe that. I don't know what else to say, but um no one's come out lowered guidance. A matter of fact, Amazon came out and just raised $28 billion in bonds to increase capex. Right. Menag just said, "By the way, I don't know why everyone thinks that we're going to cut capex. We're building a10 billion dollar plant, the first one in Canada. So that doesn't really sound like a capex cuts coming either, does it?"
So again, if we look at all this and we connect the dots, then we get back into, as I was saying, structure. So what we see today is if we take something like SanDisk and we do the simple things. We don't have to get crazy, but we don't have to get nuts. I see the 1222 cross. Uh same time you hit a 1222 cross and you're below it here and then you hit the 55 and then you reversed. This is what 638 looked like and this is when everybody said it was over for SanDisk. But this time this time it's definitely over for SanDisk. Okay. So what's happening at this level? Well this level is you guys remember how I look at this when we're talking structure. The 12 is can I do a swing trade or not? Is it right at 22? Bull or bear? Who's in charge? Then if we're here do I have institutional support? That's why 55s are so important to me. Now, there are different times where I will get away from that. I'm trying to tie education into this as well as information. You're always welcome to comment on it, but I think the education works great when it's through applied knowledge. That's how I learned. So, I just figured it'd be helpful. That's what I've been doing with these videos for a couple years. I'm sure you guys picked it up. Uh but but anyway, um when I see something like this, I I almost am remiss to not get involved. Like, if I don't get involved in some capacity, I'm just going to be annoyed. So yesterday we got involved and we did quite well with it. Today we got involved and did quite well with it. Of course we had the bounty that was on Trump in the middle of the day that kind of knocked us down from that 10:30 level. That'll wake you up especially when you're short a ton of puts. Um that'll put air in your chest real quick. So end the day just absolute monster. And I did uh did add to the position. But the point that I'm getting at if you look at the structure you're holding here. Now this doesn't mean that you're going to do this. And this is where people always get themselves into issues. You got to realize that you're going to do something like this and then it's going to undercut. You're going to say, "I knew it. I knew I shouldn't have bought it." That's what people sound like to me. And then eventually, I do think that you're going to build a structure in here and then it might take 3 months to get back to this level. I mean, is that really the end of the world? If it took It's just devil's advocate, guys. Like, if it took three months for you to get back up here and 36%, is that like the end of the world? I know. I don't think it is.
If you look at these names like MU, new high, couldn't even get over. DRAM, if we take a look at that, higher high, couldn't even break the 55. Now, people will say, "Oh, it's definitely, but you know, it's still early. It's definitely going to break." And the only thing that I always look at when again when I'm looking at structure, and I like to try to keep it simple, but that's the second most volume I've ever had in DRAM, and it just happened yesterday. And I'm followed up by another buying day. So, when I start to see that, I do think that you have to then take a look at stuff like this again. Index sector stock, right? We tie it all together and now we're going to roll it all back. Uh, but if I look here, what do I have? Well, I'm starting to get a divergence and it's not the it's not the greatest divergence. I've seen better divergences. Like this one was fantastic, right? But I'm still into the gap. I could still get up to 65. So, I still think that it's there and I think that is something that we need to pay attention to because I do think that you are seeing money roll back in the DRM. One one thing that I did note today that I thought was super interesting and somebody else pointed it out as well. Yeah, Micron lifted and they're down because we're going to run another mission and we've already telegraphed it. And the interesting thing about these missions is you telegraph them exactly at like 4:15. So, um do it that what you will. But what's so interesting to me is yeah, we lifted but at the end really what did they have to own? They had to own SanDisk. Like if you look at SanDisk's higher high on a percentage basis they had to be in SanDisk. SanDisk gap filled and then from that gap fill it just pulled back. But you know a $1,700 $30 stock and you're down 20 bucks after hours. What? Like whatever. Um that that's the game. You're going to have to deal with it. So if you look at that structure of this trade but but wait there's more.
So, this was another name that people have just written off because it doesn't make any sense and a lot of people don't even know it exists. But this is a fantastic company and I've been scaling into this because it's in Japan. So, you get these kind of moves. But what I do when I scale into these things is I just pick at them. Like just if you thought about adding 10% a day, I mean, you should do what you're comfortable with. But, um, today you're hitting that level and it's very clear obviously that you're starting to develop that structure. And I have no bones about this that we're out of the woods. But the way that I look at this is that if you're on these levels and you're looking at this and you're saying to yourself, "Man, I really want to buy the dip." And then you see names like STX and you're finally o back over that 55 and Western Digital and you're over the 55. Right? If you're not looking at doing them now, then the question is when? like when you get back to the 800 or are you in the camp that no it's over and I missed it because we have to go back and I'm going to do I have one up if not I'll just draw the damn thing.
So again with the stool here it comes. You have to think why are you dropping now? Because yesterday you were rallying at the end of the day we really started to rally and then it came out that uh we're going back in and that we're going to pull the waiver and all that. Right. Okay. So but what do we have here? Do we have a fundamental issue? Has anyone changed anything fundamentally? No. And technically we had weakness, but then the weakness started getting stronger, but then we had an escalation. So what do we have? We have a macro issue. So when the macro issue gets solved, what's going to happen to these names? They're going to lift. And so the question becomes when you look at something like that, see if you identify what the actual issue is, let's clean all this off. Then it makes your life a lot easier, right? So like when we were back here and we were dealing with this and what did we have to do? What did we have to understand? We had a macro issue, right? We had a piece of cardboard and we were going to show we were showing all the winning and liberation and then we paused all that and then the market lifted, right? So when you know what the issue was and they get rid of the issue, you no longer have an issue. So if you come into a situation here and all of a sudden good news, we've got a great deal and everything's fine now. And I I don't know when that's going to happen. But this is the question you have to ask yourself cuz I don't have a crystal ball. They're not going to call me before they sign a peace deal. They're not going to call you either. But you have to understand that that's the problem. The problem right now is a macro issue. That's why oil spiked. That's why the tenure did what it did. Not for any reason. There was nothing fundamental that has changed. There's nothing technical that is moving the market on a fundamental basis. So if we go back to it, what we do is we have the best performing index pulling back to an institutional level and getting support. That's it.