Transcription
Well, it finally happened. We did flip. Take a look at this.
Now, for you that have been following us for some time or you haven't, one of the things I've been showing is just this volume profile. And the important thing about this volume profile is we're taking the peak. We're going to get into the indexes. Then we're going to drill into what's been happening for the past two days. I didn't do a video on Tuesday because I wanted to get the half day in and then we can talk about this because now we have a whole subset. And then we'll go through and do Saturday's video, uh, in long form in detail, but this will give us a broad view of what's going on.
So, from this level, we just dropped that VWAP, or rather, we just dropped the volume profile. It's just down here. It's anchored volume profile. Anybody could do it. Uh, obviously, that is different than the VWAP, which is the volume-weighted profile. What this is showing us is point of control, value high, and value low. Right? Okay. So, we haven't been able to get over that value high at all. I mean, mumboed, matumbode, and then finally, we're through it like a Christmas miracle. Right. And here we go.
So, let's take a look at what actually be able to get me there. All right, good. So, they tried earlier on Tuesday, and then we wind up coming back to it. And then you can actually see the battle in here. Pulls back again, pulls back, and then you just form a beautiful three-bar pattern right there. And you can should be able to see this. But let's just really zoom in on it so that we get it. Blow this thing up. So, here we are. And then one, two, three. The great thing about these patterns is once you see them, they're really hard to kind of ignore. And I'll show you what I mean by this. Uh, it's a pretty typical pattern we use in the community a lot, and it's I've used it for years, but it's pretty simple.
And here, let's get rid of all that. So, all I did was just drop a 50% line. That's all that's there, but you're over. And what you'll note is once you're at that 50% line, this bar never closes below that 50%. This bar tests the 50% and stays in there. So, you get a three-bar pattern in here. And basically, what it means is this whole range is just getting tighter and tighter. And then there's your breakout bar, right? Pretty textbook stuff. And then you would just use that low. Or some people would actually buy the inside bar here in the premise that it's going to get over since you held the value high, right? You could do either one. But the bottom line with it is you're through. Now that you're through, we're going to have to see how this plays out.
And this is really where people run into a long, a long problem. Like a long, long problem because they'll start with Monday and say to themselves, "Oh, well, it's light volume. It's a slow week." And then Tuesday, "Oh, well, it's only a half day." Tomorrow. And if they did that, and this is why you don't do that, you play the game. You play the hand that you're dealt. This is what you have. You're up one and a half percent in three days, and you're literally breaking out in what people are viewing as, "Oh, well, it's that Christmas week, so I don't really have to worry about it." Well, the scoreboard is the scoreboard, and the price is the price. If you don't want to participate because it's not the volume that you want, I, I don't know what to say to you. No one cares about what your equity curve looks like if you say, "Oh, I made all this money, but it was low volume when I did it." Right? Right? I mean, that would just sound ridiculous. Nobody would care. So, I think that that's important for us to get.
But you are setting up here. And if you look at this close, I think that this is important. We're going to drop that anchor right there. And we're going to go right to it. And you're going to see you're at that 69.8250. Now, if we go up to that bar and we look at this one, you'll note that that closes 69.8375. So, it's not a new all-time high close, but nonetheless, you are up there. I would have liked it if it was, but it, it just isn't. So, again, that's the hand that we're dealt.
If we go and take a look at the NQ here, you'll see that you are struggling a little bit more. Here's your VWAP. I got here the same exact way. I'll do it super quick. And again, I really truly Let's do it this way. I truly really don't care about the late volume. I know people say it doesn't matter. Um, or it matters. It doesn't really matter. If you broke out, you broke out. I mean, maybe you fade because of it, but you're still there. You're just going to want to watch that point of control here. You could see that that's been an issue for some time.
What I do think is important about that, if we dive into the cues, I'm going to take this all off for a second. It's easier to see from here, but we had a level up here where we just got completely mumboed over and over and over again. It's that 626 level. And we started hitting it back here in early November here as well. And then, of course, in here, we closed over it once. We thought we had it. We had nothing and liked it. Uh, and then here we are again.
What's interesting about this week, to me, this was super interesting, is that we got through the call wall. Now, for those that aren't option players, and that's okay. You don't need to be, but a call wall, you usually don't break them. And when you do break them, I'll show you where it was. When you do break them, you want to pay attention to it. There's like an 80% chance, and this is just on indexes, but there's like an 80% chance you're not going to break a call wall. And when you break them, you want to pay attention to them because it just means that people are out of position. It means the big guys are out of position. So, you could see earlier in the week, I, I, I thought we would not break it. Just candidly, if you always take that coin flip, and the coin flip was 80% you tend not to break them, but hit it, rejected, and then we couldn't get above it. Hit it again, rejected. It was like a great spot to sell into your trades and get out of the way. And you can see we flipped it here. And what they did now from that level is they raised the call wall. Now the call wall is up here around 625. Now, what happens on Friday is anybody's guess. Obviously, you have a lot of options and things that are going to change, but this was very constructive that we got through that level.
And I think that what's happening here is we're starting to see winners and losers again. And what we're really starting to see, and I thought this was just again amazing. If you watch Monday's video, one of the things that I said was going to happen is that we were not going to get through two levels. We were not going to get through 185 on Nvidia, and I said we'd not get through 500 on Tesla because of the amount of options. You got through 185. And when you look at this and you watch where it happened again, and there was a call wall here on the video. Now, call walls on stocks, for those that don't know, that you can go through those a lot, a lot quicker. But they are levels. They are big levels of interest that you want to pay attention to because if you think about a call wall, that is an area where retail is buying the heck out of the calls. Let's think of it that way. And that means that the option market makers on the other side, right? Every contract has to have a buyer and a seller. So, they really don't want to pay those because that's where there's a lot of money for them to be made on the calls. If those calls expired, they get all that money. Just think about it that way. It's more complex than that, but it's an easy way to think about it. Breaks out, pulls back, breaks, and then just goes off that level. From there, that was it. And you just ripped on it. So, this was pretty significant.
So, we're seeing Nvidia, of all names, break out this week. And again, we're going to have the naysayers and the Grinches, I guess we can say that because of Christmas, say, "Oh, it's late volume. Nobody cares." So, you're breaking out. But the other thing that was super interesting was if we drop this all down and we get rid of the 12 and the 22. I use a 12, a 22, and a 55. You should use what you're comfortable with. You will note that you flipped the 55. You broke it here, couldn't get through it, and now you're over it, and you're forming a little flag or beginning to form a little flag right on top of it, which I think is pretty interesting. And you're making a higher high in that area.
A matter of fact, if you did, again, simplest thing, and just go to a bare chart here, and all I did was open, high, low, close, drop this down, clean all this off again, and just do super simple, go right to this level. And that should do it for us. And look at that. Now, we don't have to close above that. You opened on it above, closed, closed. So, you're closing above this key level. And I think that there's something to be said about that. Pretty textbook stuff, right? Here's your base. Anybody could see that base and all you'd have to do is just highlight that base right there. And you can see the breakout of it. So, when we look at something as simplistic as that, you know, it's 8%, 7% still seven and a half percent of the S&P and it's moving.
But the, but wait, there's more. You have the SMH that you could look at. And if we took a look at the SMH and we take the SMH and we divide it by the socks. Now, this is get kind of weird, but watching going to flip that back to candles and then we're going to turn that into a line. So, we would say from here over that the SMH has been underperforming the socks. So, when we look at the socks and we see that the socks from here over and we could see how that's performing. Now, the other way that you could always do this is just go socks and then you could just go SMH and overlay them. Right? Now, once they're overlaid, turn this back into a line and you can see that, right? And they look like they're pretty standard, right? Until you start coming far back. And then when you start coming further and further back, you're going to see that they're not. So, let's just go to 25 for a second. And when we go to 25, what you're going to note from here is that the SMH has been outperforming and the socks is here. Now, the difference between these two is Nvidia. Nvidia is highly concentrated in the SMH versus the Socks.
There's another way that you could look at this too and we should be able to get some data out of this and just go escalate on the socks and then you can go ack and so now when we have those four we can actually change this to an hourly and if we drop this to an hourly and go take a look at something like just December you're going to see a huge difference here and what this is telling you is a couple things the first thing that it's telling you is that the AI names or what we think are the AI names are grossly underperforming And then we could start looking at the ESOCS and realize that the ESOC has been keeping up with the socks in the SMH. If we got even more into this and looked at it over another period of time, like let's just take two weeks from here. We'll go to the 12th and just pull that randomly. Doesn't really matter. 12th or 15th, you know, let's go to the 15th so that you can say and that gives us from that time on. So there's Monday and so SMH all of a sudden's leading again. The socks is here. Here's the ASOC and here's the ESOC. What are you noticing about this? It really doesn't matter, right? They're all in a pretty tight race. But when we start doing it on a daily, look at the difference now. And again, you're going back far, but let's go to the TW. Let's go to 25 for a second again. Look at the difference here. It's an enormous difference when you start extending this out over a longer period of time.
And what's starting to happen, and I think it's really important to get this, is you're finding yourself, get rid of the pre and the post here. You're finding yourself in a position here where yeah, you're definitely going to have breakouts on the ASOX when you start seeing Nvidia move like there's no doubt about that. But if I go back to like the 15th again and here's the ESOC which is equal weight every semiconductor name and here's the ASOC you're not that far apart and this is going to lead me right to what I'm trying to the point that I'm getting at. But this is a really simple way to see what's going on. A matter of fact, there are times where I will leave this up and why the day is trading. Like you can just say it from here. Like you could just literally watch this as the day is trading and leave it on and you'll see what names are moving, what names are not moving, which part of the semiconductors are leading. I do this a lot because it'll help you differentiate between where you should be putting your money and where you shouldn't.
All right, let's get to it. So, what I'm trying to get at here besides giving you that tool, and I do use these tools, and I strongly suggest that you do it. You can even do it with other sectors and throw them all in and just watch the sectors as the day goes by. Um, but you know, maybe you have a life. I don't. I just trade. So, if you sit here and watch the socks and what's going on there, you watch the SMH, what's happening here, right? One thing you have to notice, and hopefully you have, is that you're getting new leaders in semiconductors. So, it's no longer, "Oh, we need to buy AMD," even though it's a pig and nobody likes it, right? Those people, they've kind of gone away and come down to what we like to call reality. But what are you really, really seeing here? You're seeing the microns of the world right after that earnings call. This thing's just been an absolute monster and it was a fantastic call. There's really no other way to say it. It was just an absolute unequivocal fantastic call. Look at SanDisk and SanDisk trying to get above that level today. Still under this control bar, right? That's still there. But you are seeing that take a look at ASML, right? You ran all the way up and now you're pulling back a little bit. Look at Lamb Research. Just I own Micron. I own Lamb. Look at Lamb Research. Why is that moving? Because 39% of their business is ND and semiconductor capital equipment. They're the dominant one, uh, for those that are building out memory, right? That's who you would call. You'd call Lamb Research. Anyway, the point of this is semiconductors are now broadening out and I think that that is very, very important for us to get.
So, we're broadening out on semiconductors. You're setting up, oh, look, a three-bar pattern on XBI. So, that's setting up to break out. So, again, we can say anything we want. We can think anything we want. We can pontificate about anything we want. This is what's happening and we can either trade what's happening or we could tell the market why it's wrong. One way will make you money. The other one will not. But you know, you should do what you're comfortable with.
If you take a look at the XLF here and we see how this is going, we can see very clearly that you pulled back, right? And we got the old Jamie Diamond two-step about, what, two weeks ago, uh, when he came out here and said, "Oh, the consumer, real bad. Really, really bad." He always does this and everyone sells down. Goes consumer bad. And then what do they do? They institute their buyback. They buy back the stock. Now the stock's at all-time highs. If you go back to Wednesday and Thursday's video, we were actually talking about how we were buying this in the community. Uh, because it's just it's so typical. "Oh, everything's so bad. It's so bad to be us." And then wham, in comes the, you know, 10% move in two weeks. So, it's very difficult to look at this market and say that we have a problem right now.
Now, how does this shape up with January? We're really going to have to see. If we look at things like XLP, um, they're not really running into these names. Now, there's a lot of issues with tariffs and bulk sales apparently more than any other items, but are we seeing any issues? We're going to get into more of this on Saturday, but are we seeing an issue here with retail? I don't think so. I do think you hit the same level and you reject it. I do think some of this stuff has gotten absolutely shellacked and it really shouldn't have. I've been saying this with ANF for a very long period of time. Uh, this thing was trading at six times earnings. Six times earnings when the S&P is trading at 22. Okay. Okay. Uh, so when you see stuff like that, it does make you kind of go, hmm. But again, AEO, all this stuff, when these things start to pull back, you are seeing buyers in them. You know, it does make you wonder, you know, how much does RH rally if these tariffs go away? And it makes you think about that with Wayfair, too. But I think that staying with the apparel makes sense. But again, if the consumer's in such bad shape, why are we seeing CCL reinstitute its dividend and come out and say they have record bookings and their gross margins are up? Like it just, there's a huge disconnect between what we're being told, how bad the consumer is, and then the consumer. We keep hearing that it's the K recovery, right? And I don't know, does the K recovery mean that they take cruises? Is that part of the K recovery? It's a really good question. If you have an answer to that, I'd like to hear it.
The other thing that I would do here is just very quickly go over what I think were some key moves today. Uh, the first that I would just point out was this as I was actually long this when the day started. By the end of the day, or at the end of the day, I'm actually net short now. Um, here's the, here's what I think's going on here. They had a fantastic launch. And I'll cover some of this on Saturday because I think it's a, a fascinating topic because they launched this thing into the air and then when it's, it's in space now, they have to assemble it in space. And I think that that was kind of left out of everybody. Like everyone thought it was going to be like a Bond villain where the thing just kind of pops up and all of a sudden, you know, it's, it's good. I don't know if everyone remembers Christopher Walken or not as a Bond villain, but believe it or not, he was. Anyway. So, everyone's like, "Oh, giddy. That's it. It's up in the air." And then when the more people start to read into it, myself included, um, you started looking at this and like, "Oh, they have to assemble this thing and it takes three weeks to assemble it in space." You know, I'm sure that's easy. So, I think that there was a lot of excitement and then I think reality's coming into it a little bit. It does also feel really heavy, like there might be an issue there, like that we could not rally at all. Um, I tried three times long, even here, like that's all we got out of it. It was like it was like a bounce for ants and then all of a sudden you can see we rolled back over and we're actually lower into the day. Uh, there is some support at 75. We'll see if that holds on Friday. Usually these are two days. What means what I mean by two days is you have people that own it and then after they own it, they hope and dream that it's just going to miraculously bounce for them. So, we have to get rid of the hopes and the dreamers, right? And then when they get washed out, we probably find some kind of bottom. But I think this one was definitely worth spending a second on to talk about because I do think it was an interesting day for that name. And it wasn't all those names that sold off. Like Lunar hit another high today, which was super interesting. Rocket Labs is just sitting right up here. So, it really didn't have anything to do with the space in general. It was very stock specific and I wanted to point that out so people don't think that it's spread. A matter of fact, if you looked at UFO and then you looked at Rocket Labs, you could see like what name is the most dominant one into, you know, that that ETF. And I think that's super important for us to understand. So, when we're looking at these names, I do think that that's important.
Something else that I did mention, um, and you guys maybe if you watch the public pre-markets, CIM had an offer for 19 from the CEO, CFO, and you know, they just basically the guy basically got laughed out of the room, essentially, and they have multiple offers and they turned down 19. So, that's probably telling us at this point, candidly, uh, that one, they're going to take something and two, it's going to be considerably higher than that level. And I do think that that is definitely worth our time to pay attention to. Just disclosure again, just I, I don't have to, but I'd rather just tell you guys that I, I do have a position in it. Um, and I do want to play it and I think there's something to it.
Uh, in regards to Tesla, you're not really going anywhere. And I don't know that that's the worst thing. What I would say, I had a nice trade in this today, but this is what I've noticed. They're working things up and they're making them super tight. So, you have a major support level now at this 475. Uh, if you come back down to that area, you can't miss it anymore. Look at it. Um, and then from there, I don't think that you're going to see this 500. Maybe, maybe you will with the 401k money that comes in January. You know, everyone in January tries to get fully invested as fast as they can in January, which is like the worst thing you can do if you ever look at the, at the data behind that. Uh, you always want to try and get it out like February, March, let everyone pile in and then you just reallocate February, March. But again, uh, just something to look into. It's, it's crazy how that works. I, I do think that's super important and I do think that these names that are hitting new highs that are in the same sectors that we're looking at, we're just rotating into the new thing. That's what you're doing and I think that's super important to get.
So, we are broadening out. We'll take one quick sec here to take a look at this so you can see it for yourself. And this is the S&P with the 200, the 50, the 20, and the five. And if we look at these numbers, you can see real clear here that you're 60% of all names are above their 50-day moving average, which is what you want. 60% are above their 50, which is what you want. And you're not overbought here, which means you're rotating through as the longer-term trend gets stronger. If you were all the way up and why this one was up, right, these were sloping down as in the past. See how this like pops up and they're sloping down the whole time? That's why this starts to come home to roost. Anytime you break that 50 line, you can say it, especially on the 50-day. And I'll just point this out so that you guys can go and take a look at it for yourself. Drink that one down. And I'll show you the level. And you can't really miss it once you say it. And institutions watch this like a hawk. And you always want to find out what institutions are looking at because they move the world, not us. So, when you flip that 50 right here, you see how the market just absolutely rips. Test that level and then it bounces off of it and you're good. Look, see where it breaks right in here and you start to see that you're starting to break. This was one of the reasons like I started to see the deterioration of this as we were going higher during this period of time. A lot of people asked like, "Hey, on the 7th, if you were in the community on the 7th, I went to cash and a lot of people were asking why." And one of the things was literally I'm just watching these lower highs as we're hitting higher highs. I'm like, "This is completely unsustainable." Like something's got to give, you know? So, that was one of like several different things I used to to go to cash. Uh, let's leave that. But it's super important. And then you can see you flipped it here. And then if you look at the flip, tries to flip it, fails. Okay, clear as day, right? Hits it, goes higher, lower, high, unsustainable, comes back down, tests after that, continues to push higher. So, you know when you're dipping and this is getting stronger, you know that that is going to be pretty short-lived. And that's one way to use it. That is it. Merry Christmas everybody.