Transcription
What a wild week. We finally got non-farm payrolls data and CPI. What's most impressive are the sectors that are moving because of this, and we're going to get to that for a second. But I just think that we should look at this for one second and just understand what happened. You are really absolutely just collapsing here on the CPI. So, as we keep thinking that inflation is going to get higher and higher, that is very simply not the case. And this is exactly what the Fed would want to see, that they're actually doing their job. And with this break, they've hit their level. Remember, they wanted to be in the 2%. And then in front of us is just non-farm payrolls. And I think it's super important to look at this on a three-year basis and see this number after all those revisions and understand that you're starting to see it start to get better now that the data is starting to come out more effectively and more accurately.
But what does all this mean for tech, as we're watching software absolutely plummet? And we see GLD on the weekly actually close at a new closing high, which a lot of people tend to miss. And it's really important to understand what's going on with gold versus the bond market because it'll explain a lot on what's going under the hood. But there's some relativism here we have to look at as well. For example, if the gold trade is coming to an end, or we're starting to see tech not fall completely apart, why is Numont continuously to outperform something like Nvidia and breaking out of a two and a half year base? Why is Google slicing through its 55-day moving average with record earnings, record revenues? Microsoft is trying to hold the 400 level like a greased pole at one of those carnivals. Yet other software names this week absolutely doubled. And we're going to talk about a bunch of those names that you're starting to see rotation into that are breaking out. But it's really important to understand what's going on under the hood. And there's two things that we're going to do in this video that you'll know by the end of it: where the inflows of capital are actually going and why it's happening. So, let's get to it.
Now, if you've been following us for some time, you know all these videos are linked together. And this is super important to get because we start on Saturday with a deep dive and then we go through the week just connecting what we thought was going to happen. So, let's just start. And again, they're always unedited and they're always just to the point, and you're going to just have to deal with some flubs along the way if you're new here. But let's get to what I think is most important. If we look at the S&P, I'm just going to leave that 55-week in for a second, and then I'm going to go to an anchored VWAP and we're just going to drop one right there. And this is the period of winning and liberation, which we're all very aware of. Now, we can see how these two are starting to tie together. And I do think there's something to that. And if we have time, we'll get into it. If not, we're going to cover it on Monday. But I just want to show what's actually happening. So, we're just going to take these lows and see that this low from '22 stopped dead here, and then we stopped along these areas previously. So, realistically, we could come down to the 6,400 and it would not be the end of the world.
So, let's just start there with, "Is the world ending?" And I'm going to just go with no. Um, and this is really where I think a lot of people start to lose it. You're in a trading range and you're rotating, and you have sectors that are absolutely breaking out. You have stocks that are breaking out. We're going to go through a lot of it today, but I we would need to understand why it's happening. And the one term that you're going to learn today, yay, learning. You're going to learn a term about gross leverage versus net leverage. Really important to get this because it'll explain a lot on what's happening and what's going to change. But are you really breaking down here? And the answer is no.
Now, if we go and take a look at something with the Qs here, and again, we're going to do the simple and then we're going to get into it. But just to start, so we're going to take winning and liberation and mark it off. So, where would you have to be concerned that the average person or the average volume from this date is going to be affected here? And that gets you to that 570 level. And what we always like to do in these videos is give us levels that are actually actionable. So, if we broke here and then we came to here, which would be 541, that would be something that we'd go, "Oh, geez. Well, that's really a problem." Is it? Because really, what does that get you? A 4% or 3% correction? Like, that's not really the end of the world, guys. Just to put it into perspective, it really is not the end of the world. A matter of fact, it's pretty common. Matter of fact, every 18 months, you used to have a 10% or more correction. That's what the market used to do before it was so engineered. But if we look at that 8% level, I don't think it's ridiculous to think that you could come down here.
Now, the problem with this is most people are not familiar with the rule of three, which means if I drop 8%, that a sector is going to absolutely drop at least three times that, and stocks are going to drop three times that. So, you could have stocks that get absolutely trashed on it. You could have sectors that get absolutely trashed on it. And if you're a long-term person, that's not a bad thing. So, the question then becomes, where are they putting their money? Now, what I always like to do is just start simple when we say things like, "Well, where are they putting their money?" And in front of you is growth versus value. If you find value in this video, if you could do me a favor and share it. I purposely do not run ads so the algorithm doesn't pick up because of the mid-roll. So, you sharing counterbalances that. Thank you if you find value. If you don't find value and you think it sucks, don't share it. But if you look at these levels and you could just see you've broken a trend. Like, that's not a small trend. And no one seems to be talking about the value side of the market. And I think that you have to start looking at that because growth, that's a break. No matter how you look at it, that's a break. So, what does that mean for you? If you're not looking at value names, if you're not looking at things like metals or defensive names or interest rate sensitive plays, I think you're doing yourself a disservice. Oh, does that mean that you should be looking at bonds? No. Not I I don't think. I think that they might rally a little bit, but I don't think that's where this is going. I think this is going into the underlying assets that are going to benefit greatly from watching money come into the market that's a little bit cheaper.
But we would take this level and we'd mark that off. So, what we did was just drop an anchored VWAP at this level, which was January '23, which is going to be the growth versus value low. And what's that going to tell you? Well, it's going to tell you that maybe you're going to break or maybe you're going to bounce. But this is a very critical level. Now, you'd have to go on the assumption here, if we drop this back in, that value versus growth has broken. I don't know how else to say it, but you would have to look at that and go on the assumption, here's the break, and here you are. So, we have to get back over this. If anything, we'd have to go on the assumption that this is hands down going to be an issue and that growth is not a foregone conclusion. Therefore, we should be looking at the value names, which would make sense on why some of these names are breaking out, especially with the great de-risking that you're seeing going on and gross leverage coming in. But I do think that there's more to this. For example, if we took a step back and said, "All right, well, here's winning and liberation. Okay, well, we broke here and we're starting to get a weight on that." And that, of course, is going to be an issue. And as always, when you go through these periods, whether it's down here, November '18, where we had the first 1.0 of winning and liberation, and we mark these off and we see the flips of those areas in here on the 23rd or wherever you're starting to look at those, but you always look for the pain points to see where everybody's at and you start getting into these levels and saying, "All right, well, you you might start having some issues in here, right? Like these are areas of interest that we would have to look at." Here's August 20th, and you can see how this is playing out where you're getting all these levels that are in here that could be places. But you know, that's a 222 reading. So, that would mean that when you get into here, you know, that's another 10% drop of value versus growth. That's definitely something that we have to be on the radar.
So, instead of us going out there and saying, "Oh, we have to look at the socks or we have to look at this." We have to look at where the value is. Now, value is a a a word that you can use to describe a lot of things. But when you look at certain pockets that have been ridiculously cheap. So, when you see things cheap, in other words, this is trading cheap relative to the S&P, this is trading cheap relative to its historical performance. That's where you're starting to see areas of interest. So, if we look at something like here, this is European banks, and on a weekly, we just divided it by the SPY, and we can see our level here where you've just been basing coming straight across, and then we have that base, and it's only a 5-year base, up, down, retests, and then starts breaking out. Does it continue? Does it not? You know, the answer to this is we just want to look at the structural stuff before we go any further. Marking the high of that right here, which is from '17, about 10 years ago, you can see that we're hitting and we're quitting. So, do we have to run into it? No, I think we want to watch this area and see what happens. But there's other areas too. So, in front of us is FNDF, which are value plays in Europe, and really globally, but really mostly in Europe. And if we take a look at this area, and the best cash flow companies, best increase of dividends, very value-oriented names, and all I did was just take that pandemic area and drop a line. Now, what we can see is every time we've been getting over this historically, that this is something, and this is an area that we have to pay attention to, and I do think that that's important. I also think if we look at XLK versus SPY, that we can see on this weekly chart from '24 over, and now we're breaking that level. So, in other words, are we seeing tech really break out here? And the answer is not really, no. What you're seeing with big tech is it's trying to get back over and lead, and it's rolling over. That's that's really important.
Now, again, if we just take the spot from winning and liberation, you stopped right there. We would come back to this 23rd level and say, "All right, this might be an area of interest, but it's actually deeper than that. We could look at growth versus the S&P." And this one, this gets prickly. I don't know how else to say it. So, we're just going to stick with the word prickly. But where you're looking at this actually coming down to a trend line where you've seen that trend line before. And again, here, just watch this. So, if we overlay an RSI with this, and this is just growth versus the S&P, then we can see how, you know, we're acting in here. And to me, this is this is not great. So, you're losing growth. But what does all this mean? And this is where I think it gets interesting. If we look at the market, is it growth or is it US growth? So, in front of you is a global AI fund that has exposure to other areas besides the US. And then on top of that, we just have the XLK. And if we look at these areas in here, we're just going to take that peak. And we can see from '23 over the spike in '23. That's going to become an important area as this video goes on. And then we're watching right now. We've had names that are up considerably this week. We have some software names that are up 100%. We have some REITs that are breaking out that were up 20% on the week. We're going to get to that. But I do think it's really important to note that what you're seeing here from February '21 over, that AIQ is taking out XLK. And this is really going to tell us how to position. See, once we understand what to look for, we can see AIQ versus software, and we can see that you're having this huge breakout right in here, and it happened in September '25, and since then you've just exploded. So, it's not that just growth or large caps coming in. It's that domestically is where the issue is. We've all seen this, and we we're all seeing these areas where, you know, if you look at the bottom 5% year-to-date on what's going on. And just to put this in perspective, like here's TEAM, and obviously anything software-based is going to be an issue because what's happening with AI? Is it going to be disruptive? It's going to be as disruptive as a car is to a buggy whip, or a fax machine was, or email. It is what it is, and the game still goes on. That's where my head is with it, but I'm not going to spend a lot of time on that. I want to spend what I think is really actionable.
So, if you look at something like TEAM, obviously that's just completely imploding. You look at something like a after earnings, um, and they just couldn't really wait to get out of these trades, right? So, we can all see this. And then AI is going to wind up doing our taxes for us now. Um, and then of course, you can just see how we're imploding into these areas. And these are not small levels that are coming up, guys. They're big, big levels. But at the same time, we're watching names like Western Digital completely explode. And then we're trying to figure out, did we miss it? Did we not miss it? I think that the answer is actually both. And so, let's let's just dive into it a little deeper. Best thing for us to do is just start with the basics and then drill into it from there.
So, I just want to talk about how we really finished on the week, and you can see our level, how we're unable to get through anything up here. We keep hitting the same level that we've been hitting literally since the beginning of the year, and we keep rejecting. The problem with this week is if we mark that off and we look at the close, if we see that close, and what we'll do is we're just going to zoom in on it real quick so you can see it, and we understand that that is the lowest close that we have had on a weekly candle in 2026. And that's not really what you want to see. You actually want to see a stronger kind of close than what you have here. You don't really want to see that, even though it's inside and where you are in the weekly, because it does take a deterioration to do that, specifically on a Friday. If we did the simplest things and just got rid of everything here and just dropped it here so we can see that level and that close, and you came all the way across, you're back to roughly December 15th and those areas before you even get to anything in here. And here we are again, and we can see these massive reversals. We have to pay attention to this. Now, we haven't exactly broken this 12-week and not bounced before. We've done it here and then we've bounced, but this is also very similar to the cracks that we had previous. And it's also very similar to the crack here. So, I just want to point this out that we broke it once back here, and that was in Jan, and then we broke it again at the end of February. And you can see that we're breaking it November, and now we're breaking it again here. One major difference in here was that you broke the zero line on rate of change. Now, I don't know if you can see this clearly or not. So, what we're going to do is drop a line there so that you can see it. And let's make that line a little bigger. And as always, you're just going to have to deal with the unedited version of this. What we'll do is we'll just make this green. And, um, we don't want to make that green. We're going to make the zero line green. And we're going to blow that up. And then what we'll do is go back to the rate of change and just make that white so that you can see the dotted line. Pretty clear there, right? So, we're starting to break there a little bit, but what's happening right in here is we're not fully below it. So, we have to be cognizant of that.
Now, there's a couple other things here that I just so we can get a sense of what's going on in here. We started cracking, and this is MACD. And I don't use this all the time, but I use it when I look at the four horsemen, which are those four charts that we're about to go through. And I don't really even have to pay attention that much to stochastics here. So, we're going to get rid of that one. But, I do want to just talk about this because I do think it's important. This is getting worse. And so, when I see this, I want to look at the McClellan summation index. And we're going to get to that in a second here. But what we're seeing is that this is deteriorating. We could say anything we want. We can argue about it, but it's clearly a deterioration. And if we look at from when we crossed back here, we've just never really been able to recapture it. And we've had this weight. So, if we're trading in this market, and we're trading like we're in a trending market when you're not in a trending market, this is when people really rush into an an issue.
So, let's get rid of that for a second. And now, what we're going to do is bring in the RSI. And now this is where to me, again, super interesting, because you've broken your level in here where you broke your moving average, and then from there, you've never gotten over that. So, if we close over this and then just drop a pin from where you broke that level, and you just look at it, you're just not really able to get anywhere since then, and it's deteriorating. Now, this is super important to me, anyway. And so, I'm going to point it out to you, and then what I'll do, I'm going to get rid of the 12 here for a second, and that's what I was using, a 12. And then I'm going to get rid of this line. And I just want to show you some comparisons. Now, these comparisons, they've been there, but they're deteriorating. And by deteriorating, meaning that you're rolling over. So, let me show you what I mean by that. I haven't really been highlighting it because we're not getting anything clear, but you'll you can see this now, how this RSI is just rolling over. So, all I've done is I'm just going to pull this up so that you can see it. So, this is the RSI, and we can see very clearly in here that that's rolling over. Now, RSI determines the magnitude of the move. You don't have to use it. You can use something else. I use RSI. As always, you should use what you're comfortable with. I find it very helpful because if the if you know how this stuff's calculated, you would know that you care about this. And the reason that you care is because it determines the magnitude. But it really tells you positive and directional movement. That's how it's calculated. And that's why it's so important to me because if I've got real a lot of negative movement, even though I'm going higher. So, you can't really see what the the actual volume is under the hood, and as far from a directional standpoint, what that volume's doing. But that's what RSI actually charts, and that's why it's so important to me. But if we mark these levels off right from up in here, we can see it. We could see it super clear, and we could see it here too. And you're getting the same kind of pattern here that you were getting up here.
Now, I don't know that we're going to get any more winning and liberation. I don't know that that's coming. You never know what's coming. Maybe we're going to finally get a ruling on the tariffs. Maybe it's going to be, we're not going to go with that Fed chairman because he's not going to do what I said. I I don't know. Or maybe it's nothing, and we're just going to hold here and work it off. But we're constantly de-risking. And we saw that today. So, now we've gone weekly, daily, and now what we're going to do is clean this all off. And I'll show you what I mean when I say, and you can see it for yourselves, where here's that 930, 935 area, and what do they do? They gap us down, and then they rally us back up. And again, it's the same superheated, no matter what that time frame is. If you look at the levels right in here, and you can see we tried to hit that higher high, and at the same time, what happened? So, this was pretty telegraphed today that, you know, we're hitting a level, and that level's giving up already. It was pretty, and you could see that spread out everywhere. All we're really doing, if you look today, which part of this is being recorded on Friday, sometimes I record a little earlier if I have some things on my mind, and I I did. So, I wanted to get them out while they were fresh. So, I'm recording this part of the video. When you start to see this, you have to ask yourself, what's actually moving? So, if we take a look at something like the Qs, and we see the same kind of movement here. Before we get into this, it's important to note when we're looking at the S&P and saying, well, if this is what's happening, what's driving it? And again, the movement today was really short covering. And we're going to talk about why this matters and where this is all going. But if you really look at today, like FSLY, great. They had great earnings. It was it was it was a really good quarter, right? Way better than anyone anticipated. But you're up 100% in two days. Coin was a dumpster fire floating down the river. Like Coin was an absolute dumpster fire, but everybody shorted it. You missed earnings by 350%. You were supposed to earn a dollar, and you lost $2.50. 50. It was really bad. You can make an argument that it was grossly oversold. You know, you had a break in here, and ever since that break, it's just been deteriorating. And and we see this. We get it. What do we get? Everybody short the same names. We talked about this short back in here, and then it started really breaking down, and we actually bought some puts, some deep in the money puts. I saw a trade that was super interesting, and I took it, and I did well with it, but I I got out way before its time. But I had a a short on or a put. Well, I was short going into the call because I'm like, man, this is going to be a disaster, but everybody knew it was going to be a disaster. So, everybody's trying to get out, and it's like a golf ball through a garden hose, right? And then it just doesn't work. But what you're seeing is de-risking. And I'll show you what what I mean by this.
So, if we take a look at something like CRM that bounced today, Microsoft, if we take a look at that, you can see that actually even held today. Workday. And what I'm showing you are the IGV names. And if we look at this, the IGV names did not take out a lower low. They actually bounced, and some of the software names continued to try to find some semblance of being able to hold. Whether that was CRWD that was reversing here that sold down, or PW, those names are all bouncing. So, why are those names bouncing? We don't have to talk about CPI right now, but why are these names bouncing? Because they're grossly oversold, but they're unwinding. And this is the important part of it. They are unwinding their short position. Why do you care about that? Because as they unwind their short position, what else are they doing? Well, when you see things like MU, and today we had like a really some really great short-term trades in this stuff. When it finally got together and lifted, um, I thought they could gap fill. I didn't think they would get further than the gap fill, candidly, but they did for a period of time, for about an hour. Then, of course, you see these divergences, which are are great to play on the short side if you're a short-term trader. If you're looking for something for like a couple hours, it's pretty clean. Anyway, so what we're looking for here is we're looking for an understanding of what's going on. Well, if you had real buying today, like real buying, you don't do this. You don't just go up on a 45-degree angle and then go, "Oh, end of day. All right, it's time to get out." And lose $30. What does this is people that were short and trapped, or people that want to get out, and you could see at the end of the day, these people want to get out. So, you have two kinds of exposure in the market. And this is important to get because this will explain why this is happening.
Now, I'm just going to mock this up for a second and show you this because I do think it's important for you to understand, and it's just two quick concepts, and I'd like to work these in. But the concept really is gross leverage, and then the other concept is going to be net leverage. But we're going to talk about gross leverage first. So, if you have $100,000, let's just say out of that $100,000, you have 50,000 short. We're just going to say 50,000 short. And then you have 50,000 long, right? And so here it is. Then out of that 50,000. And I could make this bigger, I think, so that people can say it. What's that? Ants. All right. And so we'll make all this bigger. Take me a sec. There we go. Who can make things bigger and has two thumbs? This guy. All right. Here we go. So, here we go. All right. So, you have 100,000, and then you're 50,000 long and your 50,000 short. All right. That is long for L and short here. Okay. Your gross leverage in the market is 100%, even though you can see that you're you're just paired off, right? Your gross leverage is $100,000. If you have $100,000 and you want to delever your gross exposure, whether you're getting out of longs and shorts doesn't matter. So, if you took this number and then said, and I know it's not perfect, but if I said, here's we're going to take out 40 long, 40 short, and then you're going to have 20,000. What does that do? And we're going to call that, we'll just call it cash. You delevered your gross exposure by $20,000 on $100,000 account. So, you delevered your exposure to the market long and short. All right? Now, just understand that and why that's important because this is exactly what they're doing. They're de-levering their gross exposure. Who? Large institutions.
Now, if I take this gross and I just make it net, work with me, not against me, computer. You know how I am with them internets. Work with me. All right. So, here we go again. Net leverage. Okay, there it is. Yay. And now if I went here and I said I have 50,000. Well, we'll do it this way. I have 90,000 and I have 10,000 short, right? And we'll just go up here and make this L, and we'll go down here and we'll make this S. Then you would go and say, well, my net leverage, right, is what? Out of that 100,000, 90% of it or 90% of that number is long and 10% is short. So, your net leverage is very different than your gross leverage, right? Just understand the concept. We're going to talk about gross leverage here, but understanding the difference between net and gross because you could have $100,000 in the market, be 50/50, and have no net leverage. Theoretically, everything's a pair trade. Long one, short another. Why do you care about this?
So, let's get back to it. So, we're going to remove this for a second. We're going to go back to the concept of gross. So, if I have gross leverage, okay, okay? So, if I have gross leverage here and I look at that and say, "All right, here's my gross leverage and I'm going to de-risk my gross leverage." What What does that mean? I have to get out of shorts and I have to get out of longs. So, what exactly is happening to the market? Well, as the market drops down, I'm not going to get out of my longs. I'm going to hold my longs until they rally. Okay? And then when my longs rally, then I'm going to sell them. Okay. Well, what are you going to do with your shorts? Well, I'm going to wait for my shorts to drop, right? and then I'm gonna cover my shorts. Okay. And then you're going to get out of your shorts. Yes. So, what you're seeing is you're seeing the short side of the market. This is a really dangerous spot. And this is what a lot of people aren't getting about the market. They're trying to say, "Oh, we're rotating into this or rotating into that." And what I've been saying in the community for a couple days now is no, you're rotating. You're doing rotations of like bearish rotations where they're reducing their gross exposure to the market. Because what's happening is people are saying, "Well, IGV's, you know, it's finally stabilized." Is it, or are they just reducing their their short position? Well, that's the same thing. Is it? Not really. Because eventually what happens is the short side of the market stops covering because they've reduced their gross enough, and then what's left is you either have net long or you just begin to suck out again and you roll over. Now, this is from somebody that's long IGV, but that's what the market's doing. And that's why people are getting frustrated because they're watching these names and they're not want they're not understanding like, well, why is CBNA doing this, or why is CRWD all of a sudden ripping like that? It's very important to get this, or why are the real names, the ones with really good earnings, not having follow-through? And I don't know if you've noticed that or not, but like HWN or HWM, I'm sorry, fantastic earnings, and people like, "Well, you don't, that's a great move." It is. Where's your Where's your next day follow-through? Where is that? 252% bookings. Where's your follow-through? You don't have it. You came up. You you you you reversed, and now we got this this little doji thing staring at me. Undercut, and here we are. And this is what's really important to get because you're seeing this more and more. Look at Google, you know, essentially running the world. And what did it do? Oh, 1222 cross up here. And on top of that, we broke the 55. Now, we had a really great trade on this. Oh, earnings must have been bad. No, no. The earnings were fantastic. Oh, and they increased guidance, and they increased their capex. Okay, Amazon. No, we rallied up, and I got this. The capex was pretty crazy, right? And I can see why you could make the argument that this should be penalized for what it's doing, but it is what it is. So, if we understand that, then it starts making more sense. So, the concept isn't we're beating earnings. Now, this there's two sides to this too, right? And and here's the other side of it. You still want to focus on the names that are beating earnings, but you have to wait until they're done de-levering the portfolio. And you'll know that because the shorts will stop squeezing, right? All of a sudden, people are not out here going, "Good news. Coinbase missed by 250% and has one of the biggest losses it's ever taken, and they have to lay people off, and they have to do all these different things, and they and blah blah blah blah." You know, just giving you an example of this. Oh, well, what's Oh, it must have got smoked today. No, it's up 20%. Oh. Oh, okay. And oh, well, these other names must be ripping too, the ones that had great earnings like Google. No, they're getting smoked. And so, what's happening is what you're used to buying predicated upon this isn't working. And this all goes back to the Qs, and you're going like, "All right, well, how you going to tie this suck salad together?" All right, stay with me now. This part's really important to me, and I'll explain why I've been a big proponent of stating something, and it may have changed a little bit, and I just want to be super clear about this. In front of you, I have four circles, and they are the circles where you've broken that 55-day moving average, and I've been saying for some time, when they read like an EKG, you don't have to pay attention to them. It is my belief that we are de-leveraging, and I can actually see it when I look through research pieces, that you are reducing gross leverage. That's the first thing. It's factual. It's not up for debate with that de-leveraging. It's not just US. It's also global. And there are two things that are super super important. Number one, if you break down like this, and then you rally back up, break down like this, rally back up, break down like this, rally back up enough times, you're going to think that it doesn't matter. And then I'm out here saying, well, you're going sideways. So, should we really be concerned more about support and resistance? And the answer is yes. But the pattern starting to change. And what's starting to happen here is now you have this H where we've tested this level three times on the 55, and we can't hold above it. Tested three times. No. Tested three times. Yes, you could say that you did in here, and then you broke through. That's not what happened. You tested three times, and you broke like an egg. Tested three times, and you did push through eventually, right? You're not doing that. Doesn't mean you don't do it yet, but you're not doing it now. And there's a reason for this, in my opinion, and stay with me because this is going to all connect, and then we're going to come back to it.
So, why is this happening? And this goes back to our gross leverage argument. So, here's DXY and the dollar. And if you look at the dollar, since we started having winning and liberation, and then we did the super secret pause because we had too much winning and liberation, Europe did not say, you know what, we're still going to own dollars because we stopped all the winning and liberation. What Europe did was say, okay, this is what's happening, and based upon this happening, we need to start investing in our own what currency and country and start diversifying away from how we're hedging. Not only are hedging, but where are we putting our assets and where are we putting our bank assets? What people don't realize when the dollar broke here was a lot of tech names, the big tech names, were owned by Norwegian banks, for example. When the top 10 holders in Nvidia, and a lot of people weren't aware of this back here, was Norwegian banks, and they were doing it because it was a place where they could put the dollar and also in treasuries. And that's why people are having a hard time understanding, even with the bond market now, the bond market is starting to look a little bit better. But what a lot of people aren't getting is that, geez, well, back here we were at what, like a 28? Yeah, you at like 4.28, and then you broke down, and then you were still at a 4.28, and they keep cutting rates, and then at the same time, the bond market's not moving. Well, why? Because they're selling bonds. They're selling the long end of the bond. You're going to get moves like this. You're going to get like you're going to get moves where they're going to put some money to work in the bonds, but it's not going to be like it was. For example, if you go back through '25 on the bond market, say here's February pre-liberation, right? And then then we had all the liberation winning, and then we have pause liberation, and you're like, well, we keep cutting rates, but it the bond market's still at the same. We're still roughly at the same level. That doesn't make any sense. And then you go back and go, well, wait a minute. What's changed? Well, the dollar's changed. All right, so the dollar's changed. Why does that matter? Because the people that are buying bonds are not mom and pop going, you know what I need? 4%. That's going to make my life so much better, right? With all the tariffs on everything and guacamole being $72. So, then all of a sudden you hit another point and go, well, if they're still getting out of the dollar and they're getting out of treasuries, what else are they going to get out of? And that starts taking you back into the Qs. So, if you're getting out in here, and you're getting out of stocks, you're going to get out of some of the bigger names. And that's what you're seeing. And that's why all of a sudden I've been saying this in the room in the community. By the way, if you're trying to get in, please make sure you're on the list because I'm sending out shorter invitations, um, because it's it's just a little harder to get in there right now because of demand, but I also talk to everybody. Uh, but make sure you are on the wait list. The link is in the description, and I I also pin it. Um, and I am cycling through them. So, just uh, bear with me, guys. So, fast forward, that's adding to this, and the weak dollar is adding to this, and all the uncertainty is also adding to this. How does this end? Well, it ends two ways. The de-risking and the gross leverage is going to continue to drop. As the gross leverage continues to drop, just stay with me. As the gross leverage continues to drop, it's going to affect the NASDAQ. Where's the money going? Italy outperforming and just starting to break out. Italy is changing their entire tax structure to go after wealthy individuals who are, I think it was the Danish today that came out and said 36% on capital gains, unrealized capital gains. The policies that are going over in the UK, I'm not going to get into all the policies, but Europe, there's issues there, and they're all trying to do their own thing and still stay the same, and it's just not working, and you're starting to see cracks there. Well, you're seeing Italy break out versus the S&P. How about Germany? So, we take a look at the DAX, and we take a look at this, and we go, "Okay, well, how does this look?" Okay, well, that's interesting. I wonder why. I wonder why we're seeing that. Let's take a look at the DAX. And there's the DAX, and then here's the SPY again. Here's the DAX. Okay, and then here's the SPY. Well, what's the difference here between these two, right? And then, so you start looking into, well, what are the policies that are going on in Germany versus the policies that are going on in Italy right now? What are the policies that are go So, here's Poland in front of us right now. And I think that you hopefully you're getting where I'm going with this. You're starting to see breakouts of different countries, and not they're not all the same, and they're not all exactly lined up perfectly yet. But here we are versus the S&P versus in Poland. And we're going to show this on a weekly chart. And of course, we have, you know, that level which we all remember what that's from. And we can see these levels before, but where you're at from the pandemic over, you're starting to see breakouts like multi-year breakouts of these levels. And the question is, why are you seeing this? And the answer is because of the gross de-leveraging that's going on. And the reason I'm bringing this up is because it's twofold. Number one, you have to understand it's not domestic de-gross leveraging. It's global. And so when you understand that you have this going on, and you understand that it's a global phenomenon, it explains why you're doing, and then I'll also say where where I think you should go with this going forward, or what you should look at. But you're setting up to break out. If anyone was looking at this, they would say, I'm a cup, I'm a handle, I'm a little teapot, whatever. But you can see the breakout right here. And what's important about this is who's the number one buyer of gold right now? See, this is what people aren't getting, and and it's so important to get. You're not going to run into things that were causing the problem. So, in other words, here's Spain, and you can see how Spain's breaking out. Why? Well, if you go and look at how things are moving over in the UK, or how things are moving in other parts of the world, where are people moving to in Europe? They're moving to Spain. They're moving to Italy. Why? You can go and look into that for yourself, but if you go and take a look at this, you're going to start understanding that this is probably not going to stop. So, you're seeing this diversification out that way. And this is breaking out already from that level. And then if you equate that out to what we just showed you with Poland, let me go and take a look at that. You can see how certain areas are going to break out, and other ones are not going to break out. So, in front of you, and we'll tile this together, but in front of you is the FTSE. And you can see this on the weekly. So, then if we take the top 100 names, which is what this is, and here, just let me just show you real quick. Work with me. There it is. And then we divide that by the SPY. And so, oh, I need to diversify. See, this the relativism of what's going on here is what's important. There's certain areas that are going to do better than others. So, the important thing is to understand why. And I'm giving you and saving you a bunch of time here by saying, hey, maybe look at Spain. Hey, maybe look at Poland. Hey, maybe look at Italy. And then don't forget, by the way, you have these other places that are just absolutely killing us. Like look at what's going on here, EWY, and these breakouts. Like these are multi-year breakouts that are happening. And are they going to stop? Are they not going to stop? Well, I don't think that they are. And I think that there's certain reasons why other areas are going to do better. But you have to tie all this together. It's that de-risking or de-grossing that's leading to it. And so this is what I was trying to get people to understand where, oh, before it was the long bond. It's no longer the long bond. This is gold versus TLT. So, and this was something that people always used to look at and compare and say when it gets to a certain level.
Oh, it always, it always reverts, right? We're always looking for that reversion to the mean until something changes.
So then if you come back to this level where you're looking at gold, I'm just doing gold. I'm just doing the ETFs. Gold divided by the 20-year. And then you come back here and you look at June '23 and you go, look at what happened during this period of time. Well, we did inject $1.7 trillion dollars into the market and then unwind it. And right in this area, if you ever go and look at what exactly happened in here that caused this, there are two events that actually really triggered this in April of '23.
Now, there are two major events that took place here that changed why they were dumping. Now, with it escalated because we started using, we, I'm in the US, started using the SWIFT and the dollar as a weapon instead of a reserve currency, which was probably going to go down as one of the dumbest things in history, but nevertheless, that we can do another video on that. So right in this area in May, we have what happened in Ukraine. We have sanctions that are placed on Russia, Ukraine, and all of a sudden all their money's frozen. Russian money's frozen. SWIFT, they're locked out of the banking system. It becomes a whole thing. They're locked out of the banking system, but at the same time, what are they allowed to do? They can still sell oil and gas to whoever they want, even though we say there's restrictions. We all know, if you've been watching this market, very far and few in between. And to this day, it's still going on.
But then you have another event that happens right around here as well. And we have a regional banking crisis. So what do they do here? They inject money into the system. So this is right around that time when it started to happen. So two things really engineer this. One, you have a regional crisis in the banking system. That scares the bejesus out of people that are investing in what? The banking system. And then two, you also have every country in the world going, "Okay, so let me get this straight. If I have a problem, you're going to lock my entire country out of the global banking system." That's not going to happen. So, we're not going to hold your treasuries. We're going to hold gold.
And then if you go and take a look at something like gold during that period in time versus treasuries, well, when did it really start breaking out? Well, here's '22. Then you follow up a year later with the banking system. And then from there, it's been like this. So, not only are they selling dollars now, and so now you have it again. Understand the cycle of crap is now complete with not only now are we going to do it with the dollars, but now we're going to tariff you if you don't give us Greenland. We're going to tariff you if you don't go along with what we want. So people are just going to keep getting away from the dollar for as long as this continues. It's not good nor bad. It just is. And this is what I am leaning towards and what I think you should be paying attention to.
When we start looking at what's going on in the world and you start understanding the big moves that are happening in technology, you understand the deg foreign companies. They just are. So when you start looking at some of these names and you'll see them like here's Taiwan Semi. Someone should tell TSMC that text coming in because it doesn't have a care in the world. You have this move and then all of a sudden you're back up and now you're sitting in this area and it's always been a wild name to say the least. But it's really important that you're understanding that these kinds of companies, they're not really undergoing the same movements. In other words, they move up and they move down and you're seeing it again with TSMC. ASML, which is in the Netherlands, but they're not having the same kind of volatility that they used to have. If you go back and take a look at something like ASML and you look from '23 to '24 at the volatility, it kind of mimicked what everything else was doing. But if you take a look at that versus some of the other tech right now, it's not moving the same way.
Well, why is that? Well, it's not moving the same way because of what you're dealing with. So, take take a look at this. This is Samsung. And a lot of people can't buy Samsung or don't want to buy Samsung because it's on the Korean stock market. But look at how that's moving. Now, they're in the same industry, but look at how Micron moves. And people are saying, "Well, the HBM on Samsung's better than Micron." Whatever. They're not even selling it yet. But what happens here? 458 to 363. Why? We don't have depth of book. Same industry, SK Hynix. So, when you understand why this is happening, that's why things like AWY are closing at all-time highs today, which is 40% of those. Right? So, this is something if you're in the community, you know, we own this and we've been playing it. We actually, time recording this is Friday. We actually added to that trade today. And the reason for that is because we understand that that de-risking or de-risking of leverage, meaning the de-grossing of selling the dollar and selling US equities is diversification into their own currency and their own stock market. That's what you're seeing and it's all predicated upon that.
So it's not like a rally in bonds is not going to lead to a rally in bonds, but it's not going to be anywhere near as commensurate as what you're seeing with gold. Central banks are not going to go, "You know what, it's going pretty well over there and he seems pretty reasonable right now. Let's go buy dollars and inject a bunch of capital into the market." Like that's that's not where it's going. But when you understand that, then you can overlay this and go, "All right, well, how else do you benefit from a weak dollar?" Well, industrial names. Why? Because our goods are cheaper. So industrials will go up. So then you look at names like John Deere that are breaking out. You're like, "Why is John Deere going up?" Because if you're buying something from overseas, it's cheaper now. Caterpillar, all those names. Why are they pushing IR? Why is it breaking out? TSCO. I think even this pig's moving a little bit, right? So, what we're getting here, even though bad earnings.
So, where am I going with this? When you understand what's actually happening, you can make better decisions. I also think people should be looking at things like, sorry, AIQ, anything like this that has exposure, global exposure overseas, that's going to get you something like that. And this has global exposure overseas to tech companies. You and you can always drop in the comments the ones that you're looking at, but this is really what you want to focus on and this is really where it's going. So now you can see how this is all connected.
Now this is where again I think it gets super interesting because if you do the homework and we look at the growth versus value and we look at gold and everything we just went over. When you look at something like EQIX that's absolutely unequivocally breaking out, what do you see? Well, you see money flowing into there because they're talking about the growth of data centers and how big they're going to be, which goes into all the memory names like, you know, Western Digital and, you know, STX and we're not going to spend time on this because you've heard me talk about these names ad nauseam and we're seeing these bounces and obviously they're they're huge. It is what it is. If you're not willing to go for a 100-point move, probably don't play them. But I do think that there were some things that are worth mentioning as you go into the week.
So, for example, AAT absolutely crushed and talked about growth and expansion of growth. Now, does that mean that you're going to go up and explode to the upside? No. And that's a little bit disheartening, too, because we're watching names like AMAT crush, VRT crush, and we're not seeing the follow-through. We're seeing the exact opposite. So, this does point to me where we are seeing that rotation into like the EWY or the EWJ, that kind of thing. And I think that that's where your head has to be. But that said, you're remiss if you're not looking at these names and then watching how they're acting. I do think there's some interest in understanding where the money flow is going.
So I I it is for me when I look at something like a Costco, I'm like, "Okay, well we're breaking out and oh well names, nothing's moving. No, the names that you're buying aren't moving. Walmart's at all-time highs. Costco's rocking, right?" So then you start looking into the XLP and you see that this is exploding. And then you go, "All right, what else could benefit from that?" It gets you back into the Philip Morris's of the world, right? The Altria's, the Philip Morris's, the BTI's, all those names. All right. So, you got that part of it, but there's also this fear that's out there and I think that this is really worth paying attention to where you're seeing names just unravel to unravel.
So, Expedia is a great example of this where you came out with earnings and earnings were fantastic and everything was great, but the stock's going down because AI is going to become your booking agent. I I mean, no one's seen any signs of this yet. No one's talking about it yet, but all of a sudden, this is what we have to worry about. It's it's like we had one guy that got his taxes done in Germany by Intuit and then all of a sudden, or I'm sorry, by AI and then all of a sudden everyone's like, we're not going to need Intuit ever again. Now, is that the case? Could this come? Oh, there's definitely going to be disruption. If you don't think there's going to be disruption, I think that's delusional. But I do think we have to look at what's really taking place here. And what's happening to me is that they're using great earnings to get out of these names, not to get into these names. And that's very different than what you're seeing in some of the other sectors. Do we have to pay attention to that? If you if you don't pay attention to that, I think it's going to be a huge a huge problem.
But then we also have to look at things like Toll Brothers and go, "All right, well, you're breaking out. Why? Well, you're breaking out because they're eventually going to cut interest rates and everybody knows this and this is why you're moving the way that you are." But we don't know that that's coming. So, you have a lot of things here in my opinion that are cheating. In other words, you have a lot of things that are cheating that the homebuilders are going to get better because something's going to happen because they're going to cut rates or we have a lot of things that are cheating ahead of Intuit, right? So, oh, no one's ever going to use TurboTax again. I think that this is really one of the key things that I see different about this than I've seen in other areas where people are moving so far ahead of this.
Now, it falls back into the Microsoft that we talked about earlier today. Is Microsoft going to be disrupted by what's going on? I I do. I think it's grossly underestimated. I think it's super interesting that the Workday CEO quit, um, and that this thing can't find any footing. I think it's super interesting that CRM can't find footing. But does that mean all software names are dead when you start looking at things like CrowdStrike? Like all of a sudden, I don't think we're going to give our security to Skynet or PW and so they present opportunities where you start going, okay, were we really going to do that? I I don't think that that's what's going to happen. But I also think on the other side, if you look at what EQIX is doing and what they're saying about the growth, well, you're going to need heating, you're going to need cooling, you're going to need electricity into those places. So then you see something like, you know, IX start rocking and that become one of the biggest movers, uh, on on Friday and you start looking at like from a point perspective. Of course it is because it's it's up where it is, but when you start thinking about it from that space, it starts to make sense.
So, do I really want to plow into the homebuilders right now? The answer is with the way value and growth is looking, it definitely becomes something of interest. I also thought this was super interesting where TPH got bought and TPH got bought and and I do think that that's super interesting because people are trying to possibly get ahead of this homebuilding movement that you're seeing because interest rates are going to come down. Okay, maybe that's what happens. Maybe that is what we see. But then at the same time, we have to look at things like NVR that absolutely are imploding, which is a huge homebuilder. So, I don't I don't think it's that clean. And what I would take from all this is I don't think anybody truly knows. And I think that you're going to see this stuff swing one way too much. So, I think that you people are all going to pile into the homebuilders assuming something. And I think they're going to all blow out of the, you know, the IGV names when there's going to be some value of some of these names blown out. And I think when you see these pendulum swings, I think that that's where you could really benefit from.
But we've always seen this where they throw everything out the window with the FSLY and then all of a sudden this little company comes out and, oh, by the way, we doubled earnings and no one's paying attention to it. Everyone blows it off as a short squeeze instead of spending some time investigating that. It's also like Rivian, which I thought was super interesting even though it really couldn't get going, but I thought this was really a fascinating quarter with it where they're coming out and saying, "Hey, we have huge demand." And if you look at the look at the volume, "Hey, we have huge demand out here and we're expanding and we're coming out with some cheaper models." That's the exact opposite of what we heard with something that's a much bigger than like a Tesla.
So where where does this really put us? It puts us with a huge amount of people that are on both sides of the market, right? But what you in front of us is the Mag 7 versus homebuilders. And if I told you in November or September that the homebuilders were going to be the ones that are going to absolutely crush big tech, nobody would have believed that. But that's exactly what's happening. But I do think the pendulum's swinging too much one way or another. And it doesn't mean that it can't get worse. But I do think that going through all of these different sectors and then drilling into them, you're going to find value. And and that's the key for all of this.
So, if you're like, what's the takeaway from from all this? It's that you have to look for the value. If you're not going through value right now and understanding that value is absolutely destroying growth and that that value is being found not only in the US, but it's also being found in other parts of the world, that's your problem and that's what you need to fix. That's it.