Transcription
Did we bottom or did we not bottom? Well, we had a nice move off of that bottom. We're up 3% and we're seeing the airlines rip on the news. We should really focus on this big move and why it's spreading the way that it is. But most importantly, why is it affecting the Asian markets the way that it is? Let's clean all this off and get to it.
I think it's really important to understand why certain sectors are going to move the way they are. Why industrials benefit from this news greater than anybody else. Most people aren't really looking at that. They're looking at the IGV space which kind of got its base back. It's trying to get its groove back like Stella but still having a hard time. If you take a look at the socks that did much better. There's a reason for that. But most important we need to really focus on Asia. What's going on there? Because to me that's really where I think you could do considerably much better than what we're seeing even domestically. So let's get to it.
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So, to be clear, let's just get to the news. The news is very simple. The news is that Iran is willing to talk or willing to negotiate or at least admitting that they are going to talk and that they are going to negotiate. Even when the foreign minister and the president of Iran seem to be saying this similar and there's a little difference there, they're both agreeing that there's at least communication at this point and that the strait is open to everybody that is friendly, whatever that means. So when we have that, we saw the rally. Now is the rally sustainable? This is what's important about the rally. This is where you start. We start with this. Think of it as like first principles. What did oil do on this? So when oil comes out, the very first thing we want to do is just watch what oil did on the news. So the news hits, oil drops. So on that drop, all we want to do is just mark it off. We don't want to say it's this. We don't want to say it's that. We just wanted to let it know that we're watching it. And so what we do here is just put a little 50% line from here down. 50% is not a fib level, but I use them as demarcation lines. And what you'll note is it'll tell you if you have net buyers or net sellers. Since that news came out, you have net sellers. You might not believe the news, but you're not trading your beliefs. You're trading numbers and letters on a screen. So, all you're doing is allowing the market to tell you what it's going to do, and then you're acting on it. The market's telling you now that you have sellers of oil if it escalates, and it always can, but for now, this is what we're dealing with. And you would expect something like this to continue. In other words, you would expect Asia to look for the relief rally later tonight and then we'll see how we come in. And you also have the end of the quarter and people don't want to look bullish in front of their investors. So that's where you start.
The second thing that you would start with is looking at the dollar and just saying, "Hey, what did the dollar do today?" Well, the dollar has been selling down all day. Almost as if somebody knew that somebody was going to make a statement. Wink nudge. And you can see that from that spot you dropped as well. If we go and take a look at the NQ for a minute, it is very clear where that news hit. It is very clear how they responded to that news. And it is very clear that they bought the entire day as that news was digested. So while people are saying, well, that's just them saying Iran saying that they're going to meet and they're going to do something. Iran didn't even agree that we were all on the same planet, you know, yesterday. Now they didn't even know who who the US was. Now all of a sudden it's oh yeah, we're talking, we're negotiating, and we want a fullblown peace treaty. We don't want to partial. We don't want to pause. We want full-blown peace, and that's what we're going to work towards. That in and of itself is exactly what the street wanted to hear. Okay, there's a semblance of people talking. Both sides agree that they even acknowledge the other's existence. And since then, you ripped from that rip. And we'll just take the top of the rip down and drop that. It was a 1.3% move from that. If we take the top of that and drop it down, you retraced from that peak 50%. And then from there, you just grinded all day long. And that's exactly what we're looking for. We're looking for some level of consistency. And we have it. We've been talking about the oversold conditions for some time, and this is where I think it gets really important. When you have bounces like this, you always want to look at these bars, and you always want to measure them. I'm going to show you exactly how I do it. You should do it how you're comfortable. All you want to do, I have my own settings on this stuff, but all you want to do is go to ATR. And so what we'll do here, I'll just use common settings. And then we'll go to here. We'll make this bright and we'll make it big like that. So you can see it. Yay. And then what we're going to do is just count that number at 586. The average true range is the average range that's expected on a day. So if we measure this off here, you're going to get a number. That number is roughly 1,100 1050. So if we took that number, we are almost 2x ATR. So you'd go 2x ATR. And we're just going to put that there. So the average true range on that move is 2x. Meaning what the average range is supposed to be, we are twice that move. And then if you look at it, we have the undercut, which you did perfectly. And then the encompassing of the other bar, which you encompass that body as well, which is really what you're looking for. This in and of itself is how bottoms are formed. Is this a bottom? I'm going to tell you a secret. Nobody knows. Is are you setting up for a bounce? 100% you're setting up for a bounce there. Now, does that bounce follow through? I think it does. And I don't think that this escalates. I think this deescalates, which is what people are are dealing with.
Now, what once you think about the deescalation, you would have to understand that you have to watch what's going on. You would have to understand that low breaching is going to be a problem. But this is where your life gets super easy. When you see names like Micron and they're forming these bottoms when those names break those lows. Now, if they break those lows, you know you're going a lot lower. So, from a swing trade perspective, this makes your life super easy as a trader. A matter of fact, the easiest trades that you have now just got laid out for us from 2026. life just got super easy from the way that I trade it got super easy because now you know that with this kind of rally on this kind of volume and I'll just show you if you have above average volume and you have more than above average volume to the point that the buying today is greater than any of the selling that you've had from the 1 2 3 4 5 6 7 days in a row of just sheer onslaught of selling. This buying is greater than anything that you have had. That's what you're looking for. Does that mean it's over? It means that you bounced and that you most likely have a bounce here.
Now, one of the core things we went over today, we do these public pre-markets. We do them at 8:15. We marked this off earlier today, but differently. We marked it off on the hourly. And the one thing that we talked about too, and you can't miss it when you say it, we'll go to the 4 hour and it'll be as someone likes to say, absolutely glaring. We talked about this and said, you know what, you are forming a divergence here. And my concern with the divergence was like, I don't know if they come out and start with the whole death to America thing and you're never going to get anything out of the straight again. You know, we might just run through that like buckshot. Cuz you have to remember again when you look at the stool, you have the macro side of it, you have the fundamental side of it, and we have the technical side of it. So whenever we look at this stuff, we have to acknowledge the fact that it's one leg on a stool. So if all you ever needed was just the technical analysis department, you wouldn't have an economics department, right? Investment banks would just have technicians if you didn't need anything else. Clearly, you need something else. So, yes, we saw this. Yes, it was perfect. Yes, you have your divergence and it's great, but you still don't know that things don't escalate and come past there. And I'll just draw that divergence out for you. So, what this does for us is just puts us in the driver's seat and allows us to know that this is down here and like, hey, we are starting to develop some sense of a possible bottom. and then we just see how the day continued to go from there. But this is going to be pretty interesting because you do have a divergence there. You are pushing higher and it is off at 2 ATR and you do have a macro event. Now people will say but nothing's been done it and you have more progress today than we've had. Period. End of story. And that's just a fact. And people will say but it's this it's that. Like I'm not going to get into all that. I'm just going to tell you that you had more positive momentum today towards this ending than you've had since it started. And that's what they're looking for. They're looking for something to hang their hat on. And it happened exactly at the end of the quarter. Now, tomorrow you're going to go into the rebalancing, but you have to look at this. So, the very first thing you have to do is just it is what it is and then accept it and then go from there. From my standpoint, you want to watch the 580 tomorrow and then we can see how that plays out.
Areas of interest to me hands down are EWI. If you're in the community, you already know this. As soon as this happened, we just printed it. And the reason was they are heavily leveled to oil. But not only that, they don't have any kind of real ability to generate it on its own from an energy standpoint. They're heavily reliant, but they also have your Samsung and Heinix in there. So 40% of this is trading around, I think, like a five or a 7p. You can look it up for yourself. You don't have to rely on me, but you want to take a look at that. It's pretty interesting stuff how cheap that is. And then there is this as well, which is Ko Ru, and we bought that as well today and was up 18 on that. So, if you understood the news and you followed it, you did have a heck of a day today off these trades. The question is, what happens? It's my sense that you're putting that bottom in. And there was a couple things that we really looked at with this that are kind of pointing to that or been pointing to that uh when we started looking at the breadth of the market and how bad this was.
So, couple things that you we noticed and I'm going to get rid of the 200 and I want to focus really on the 50. And one of the things that I tend to look for and you should be paying attention to and if you are in the community, you already watched me talk about this on Sunday. When you're down here in this range, anytime you break 20 and you're in this range going back 15 years, you're never down in here. The most you ever were was two months out. It was that was the most ever. And so what we're seeing is we're starting to see that bounce kind of take place. And this becomes an area of interest where you could bounce. And that's really exactly what happened. It means that anything that comes out that's newsworthy that could bounce you is going to. The other thing that I would say about this is when you start seeing this kind of stuff, meaning You're breaking and breaking lower and you see a point and a point and as you're breaking the breath of the 20-day is actually getting what? Better. That's the five, I think. Yep, that's the five. It's actually getting better as you're going down. And the 20 was getting better here, too. It just started getting better. So, this is super interesting because the five is telling you that even at every drop, we're still holding more names above the five. But here's also if you take a look at the 20 and what I'll do is I'll drop to that peak and you're always looking for edge. And then you'd look at this and say, well, how many times have we been here? And then if we overlay that with something like this, how many times have we been here and here? And then how many days later does that happen? And it's pretty thin, meaning there's not that many days. It's usually not two months. And I think that's really significant. So from my standpoint, I'm very happy with what we saw. Is it the be all end all? Is everything back? Do we not have to worry about anything? No, you have a lot to worry about. There's a lot that can go wrong here. But the bottom line is at least you have a starting point and you haven't had one. You haven't had a starting point since January 29th. If you really look at when we started to roll over, it was right around here. And since then, life got really hard for the market. And we overlay this with the RSI. You can see it when you started hitting a high and then you hit a higher high. This is why I like RSI so much because it's just so clean. even start seeing like, well, I've got a negative divergence already. We're hitting highs and we're hitting lows. Then we're trying to hit the high again, but we're hitting a low. So that's okay. We tried to pop, but you can see the curvature coming. And the curvatures usually lead to cascades. So I'm just going to say that again. Curvatures usually lead to cascades. And so what I was waiting for was more of a cascade. Now, if talks blow up or something, then it is what it is. Everything's on the table again. But right now, this is what we have. So that curvature led to somewhat of a cascade. And the thing that we talked about on Monday and it's one of the things I just want to reiterate. I always have this saying and it's not my saying, but it's they come for the generals last. Well, the generals right now are the four horsemen as I refer to them if you watch these videos. And it's the optic names. So what did they just destroy on Monday and Tuesday and that's all that was left. So they just destroyed Western Digital, right? They took that to the woodshed. Seagate woodshed. Micron say it with me. Four times earnings took it to the woodshed.
There are are notes from the community. If you're trying to get into the community, please look for an email. Those that are on the wait list. I have a bunch of those going out and you should, if you've been on there for a while, you'll definitely see a letter. Now, I just want to show something so that people can see this. When this news comes out and you learn how to read this news, I don't know if this will all fit on here or not. This is when you have to have your whole thing mapped out. So, people always say things to me, we're laughing because of something they said today, but like people always will say always say to me, "How do you move so fast?" I have it all mapped out before it even happens. So, if we got world peace, I knew that I wanted to buy TQQ as a swing. And you can see the time stamps on here and when this was all done and all these alerts go out and they all went out immediately. They don't have to be in the room. They actually get these rolls sent to them. So all my shorts got closed immediately because I know what real news looks like and I know it's going to move the market because I've been doing it for two decades. And it can you teach that? Yeah. But getting your teeth kicked in for 20 years kind of does the trick to be honest with you. Like it's not you're going to take a course and be like, "Oh, now I can read the news." No, you got to get kicked in the teeth a couple times. But you knew to buy like levered KO KU which is you know the other thing 265. So a bunch of this stuff was just absolute home runs. Taiwan semi up five. This finished up 18. Gush was down three bucks. The SanDisk at 618. I think we're at closed at I carried a little over but I think the rest we got out at like 20. And then the MU 331 was actually the stop there. I actually paid 333. So I only made like four or five on that. But overall to me, it's not just those trades, it's the positioning that you had to change. And understanding when to change position is everything. And so you're like, okay, well, how do you know that? By looking at a chart. Here's the way that I could show you instead of telling you that you have to learn how to read news. Cuz I'm like, how is that helpful? Go read news for 20 years and come back to me. That's like not really helpful, is it? So when you're down this low and you're under the 30 on a 4 hour on the index on the cash market, you want to pay attention because they could just say something like, "Bob ate a blueberry." And the market could pop on it, right? You're the market's actually like jonesing like a fiend for something to pop the market when you're down that low. No different than when you're up here. Not now, Larry. But not like even when you're up here, right? and you're seeing that and they're like, "Oh, you know, Bob ate a strawberry instead of a blueberry." And like, "Oh, Bob hates blueberries, short blueberries." Like, it just becomes a question of market sentiment, but you want to use a 4-hour chart and then look at it that way. You will find it extremely helpful and helping you judge where the sentiment is and where the sentiment is not. I hope that makes a lot of sense.
So, what do you have tomorrow? Well, you have April 1st and you're going to get the entire new quarter, welcome to second quarter, and go from there. Then you have to think about whether the next names. Well, if prices drop and crude drops, they're going to buy the airlines, right? You have to just connect the dots. Cheaper gas, they're going to buy the airlines. And now this makes so much sense cuz I couldn't figure it out for the life of me. I was watching ODFL pop the other day and I'm like, this makes zero sense. JB Hunt had a bid. CSX had a bid. It's almost like somebody knew, right? But that couldn't be the case because we all get information at the same time. So that's just got to be a coincidence. But something like CSX started moving again, ODFL. So I'm like, well, why would the transports all of a sudden get moving if this is going to keep going? It doesn't make any sense. But there it is. So what does this mean? This is the hardest part of trading for me for everybody because everyone will buy the XLP names when we start to rotate and what happens is the minute that changes the XLP names just go kaput. So I never really do those kinds of trades. What I would do is I would watch the oil services names. I think that they are most at risk. But really what you really want to do is just watch USO and you really want to see how Asia digests everything. And then tomorrow again the cruise lines really benefit from this because they just are you know they just burn gas. Like I mean obviously you can't even turn those suckers off. I guess you guys know that already but you can see here just the news. But anyway so I'd watch the airlines tomorrow which we watch Jets. U one of the most levered and that tends to move that way. But I'd watch the airlines. I would watch the cruise lines. And then you want to watch the hardware. And by hardware, I mean I wouldn't be looking at the software names. Like life didn't get any better with Oracle laying off thousands of people today very quietly. And at the meantime, why Oracle's laying off thousands of people are going out there and going KAC, we need them. We need Lamb Research, right? We have companies out there that are making hundred million dollar machines ASML that people are clamoring to buy. and places like Micron and SanDisk, there's still huge demand. So I think that that's very important for us to understand. And for me also, if you take a look at the industrial space, the industrials do really well because if the dollar drops, then all of a sudden their goods are cheaper overseas. And right now, everyone's kind of put a kaibos on spending. And then of course, if you take a look at the dollar, you'll see your negative divergence right there. That is