Transcription
The S&P broke the 200-day moving average, and we are starting to see it roll over. When we see situations like this, it's really important for us to focus on where this could possibly get to. We need to dive into what not only happened on oil on Friday, but what's happening today, on Saturday, in between Kuwait, and how this is playing out while the market is actually closed. There are a lot of moving parts to this today that we're going to have to go over. We need to discuss what names are going to be at risk, what names are not going to be at risk, and why they are, so we know how to play them. And most importantly, we need to look at specific patterns in history that tell us how this has played out in the past, so we know and have an angle going into the future.
We are seeing the market go out there and buy massive amounts of insurance, actually faster than when they bought it during when we had all that winning and liberation. This is critical for us to understand because this is a driving force that no one's paying attention to. And by the end of this, you'll understand exactly why, and you'll know exactly how to play it. Let's do it.
27.5% of you do not subscribe to this channel yet. Watch regularly. Please click subscribe, especially now with how actionable things are. Click all notifications. Let's get to it.
So, the very first thing we're going to have to do is go through news and say what's actually going on here. But before I even do that, I have to look at this and show you this because it's really important, 'cause we've never done this until what happened on Friday. NQ, the VWAP from this is the NASDAQ futures, broke the VWAP from all the winning and liberation. This red zone, once we're in this, is a huge CTA sell level, and you can see that we are in that for the first time since it became that. So, two things happened here that we have to be cognizant of, and we have to go through all this news, but we need to be very aware of that.
If we go and take a look at the ES, I want to be really clear about this too. This is a CTA, long-term sell zone, and this is where they have to sell. Meaning, they are systems. They are not discretion. If we take a look here, this is your first close under that level. It doesn't mean you can't bounce through it, but the game definitely changed on Friday, specifically with the bond market and what the expectations are for rates going forward. We can't deny that, and we have to spend time on it.
Where could this get to? So, my sense of this, when we look at things like this, is super simple. What I have to do is just start looking at, "Give me worst-case scenarios." So if I look at this and say, "Where's the 200-week moving average, and where would where did that stop us before, and can we get back into that area?" And the answer is, anything could happen. But before then, we're really looking at something like 612 here to see if we can hold that area. I could always drop in these other levels like, "Oh, we're going to hold the 55-week." Yeah, we're not really seeing that historically as an area of massive support when something happens that becomes triggered. So, we have to go to that first level, which would be back in here, which is exactly what could happen.
Now, if we go and take a look at the Qs as well, I'm going to clean all this off. Can you come down to that 440? And I, I'm showing this for a reason. I'm showing this from the standpoint of, "What are you going to do, and what is your game plan if you had a 20% correction?" What would you do? And and I'm not suggesting it happens, but taking a look and saying to yourself, "This is what I would do." And when people say to them, like, "Oh, that can't possibly. How that, how would that ever happen?" And we take a look at November down, and you realize that that drop on the NASDAQ was 37%. So when you think that it can't happen or that it won't happen, and then you don't remember that it happened 12 months ago where you were down 25%. So if you went and looked at, if we had more winning and liberation and we got to that 25% line, like, where does that really put us? 473. So, is it really that unrealistic to go through something that you just went through a year ago? I don't think so. So, if you don't have a plan for it, not suggesting that it's going to happen, but if you don't have a plan for it, then the plan's going to come to you whether you like it or not.
So, my understanding of this would be to start at major support levels. You'll understand why I'm saying this when you start looking at what MOVE is doing and some of the other pieces, but look at the major support levels and then look at the major levels that historically in the past have held. I think that's the best way that you could go about this and then go forward.
Let's get to the news and some of the news that came out even today as I was recording this, and then we'll be able to develop a game plan by the end of this video. Let's do it.
Let's start by taking a moment and looking at exactly what we're talking about, what the problem is, which is clearly the strait. Now, when we look at this, I just want to point this out, and there's a little, little legend right here. It just shows you the diff, the the distance, which is 20 miles. This length is 20 miles. So that'll give you perspective when you're looking at this UAE, Oman up here. Again, this is where to me it gets super interesting because here's Iran, and Iran encompasses all this shoreline in this entire area. So that understanding the problem and understanding what we're dealing with through objectivity, not through subjectivity, is how you need to look at this. It shows you the shipping lanes, which way they're supposed to go, which way they're going. But the idea that we're, and by we, the US or a group of people, are going to get control of this. You, you really have to understand what you're dealing with. And I think that this is super important.
Now, they, they don't really have international waters. Not to say that this would be, but you can see that this is divided between, this is where the UAE is, this is where Iran is. What is most striking is where they're reaching out. And we're going to get to the fact that Iran is actually trying to get out further, and they're trying to actually get to people that are in the Indian Ocean. And this is not getting picked up enough. We're going to cover it because I think this is really important. But you can see that in regards to where Iran is, this is where Dubai is. Obviously, that has been attacked. You can see where Abu, Abu Dhabi is, which is right here. But this is what really struck out to me, these islands. So, you have an island here. You have an island here, here, here. And I'm not going to pretend that I know the size or the magnitude of these, but you can see your legend right here. So you say, "Oh, well, they're small." You don't need much on these areas to disrupt any kind of travel. So when we're looking at this, not only are you going around all this shoreline, but you're going through all these little islands and assuming that you know what's on there, what's not on there, and to me, this becomes a real problem.
So, I don't see any way that you're getting through this without one of two things: either taking control of the entire area through some kind of coalition or coming to some kind of agreement with Iran. Neither one of these seems to be on the table as of now. To me, it actually seems to be the exact opposite. This seems to be accelerating, not decelerating. And it seems from our news, and I'm saying it that way on purpose, that Iran's getting more aggressive, not less aggressive, but there, there might be some truth to that as well.
Now, this piece came out from JP Morgan, and I don't like to really get into too much of the in-depth research, but this really hammers home exactly what I'm just, what I'm talking about, and they do an excellent job of it. So, I just, I just want to cover it for a second. And they came out with this note on Friday: "Traffic through Hormuz may become increasingly conditional." So, they're not talking about, and I, I just, just the tone itself is not, uh, "The US is going to do this," or "This is how this is going to work." "Traffic through the strait has thinned further and is now overwhelmingly Iranian. 98% of observable flows with exports averaging 1.3 MBD." Just to be clear, it usually does 20. But the flows that are going through are Iranian. The US is not attacking that. Just so we're abundantly clear, Iran is reaching out. Iran is, is in an area where they are attacking their neighbors. And up to Friday, they still were, and they're reaching out. That doesn't mean that I know with 100% certainty what the US is doing. It doesn't mean with 100% certainty that I know what Israel is doing. I don't have a clue, but I have to be as objective and, and, and analyze this as, as clearly as possible. It's very clear to me that objectivity and analysis are what get me money. And it's very clear to me that ego and subjectivity gets me hot pockets. I like money. So, I'm going to try to be objective, and I'm going to use analysis.
So, when I look at something like this, I look at this backdrop and say, "The US has confirmed that we'll continue to permit Iranian oil ships to move through the strait in order to supply the rest of the world." I think this is a pretty interesting statement because it almost is conciliatory, or in a way like, "Okay, you go ahead and do this while we try to figure this out." This is not aggression. Aggression is, you hit one of ours, we take out two of yours. You hit two of ours, we take out four of yours, and we're taking out your plant. That's aggression. That's not what they're doing. Now, for what purpose are they not doing this yet? I'm not entirely sure.
In parallel, Iran appears to be allowing select vehicles to transit through the strait following verification. So, you saw those little islands we just went through, over the past 48 hours at least, and this is, came out on Friday. At least four vessels exited brief diversion through that little channel. You can go back and look at the map if you want to be, know exactly where it is. This is not a standard route for vessels. They're, they're confirming the ownership, enabling passage that are not affiliated with the US or its allies, and through three bulk carriers, an Afroax tanker reportedly affiliated with Pakistan. Most of the crew through the strait is destined for Asian buyers: China by far the largest, India, Japan, and South Korea. Together, these four countries, three-quarters of the oil shipped through the choke point. This is going to become important later because of what Trump said on Friday at the close with China alone taking more than a third of the flows. So, one-third of all of China's flows are going through there. Smaller volumes to countries like Taiwan and Pakistan, etc.
Now, I want to show this because of the date on it. This is March 20th. And so on March 20th, Iran threatens to target tourism. So, I, I want to be clear. Trump issued a statement. We're getting close to winding this down at the end. And we're going to talk about the, the movement that happened on this when he said that right at the end of Friday. Well, we're going to do this. We're going to wind it down after that statement that they're going to wind it down. We're still sending more warships there. We're still sending troops there.
"Iran threatens to target tourism sites worldwide and says it's still building missiles nearly three weeks into the war." So, they're building missiles and they're expanding their targets. Three weeks into an escalating war, the Middle East threatens Friday to expand its retaliatory attacks, including recreational tourist sites worldwide. So, this is where it gets interesting. Are you talking about a Disney World? What are you talking about?
"US announced it was sending more warships and marines to the region." I think it's very important for people to get this and to understand this, that what we're being told and what we're seeing is objectively not what's going on. And I mean that, "We're going to wind it down." At the same time, you're sending more warships, and you're sending more troops into the region.
Now, when we talk about expanding, "UK says Iran unsuccessfully targeted a British American Diego Garcia base." Now, we're going to look at a map in a moment. We're going to show you where this is on the map because I think it's very important to understand how this is expanding, not contracting. And again, you have attacks that are going on in Kuwait now with drones at the time of me filming this. They're not, they're not stopping, despite what we're being told.
So, when we look at something like this, I find, I find this interesting because of the UK's statement. So, take a look at this. "Iran unsuccessfully targeted a joint US-UK military base in the Indian Ocean." UK Ministry of Defense told CNBC, "Iran's attack was launched before London gave its final approval Friday for US forces to use bases." According to its officials, Iran's attack was launched before London gave its final approval Friday. Trump said Friday he's not interested in a ceasefire, but said he's winding down military against the country.
Here's the point. Trump goes out and says, and let's just play this out real quick, "I'm leaving the region. The strait's a mess. Good luck. We don't really use it. We wish you guys the best." I don't know that that's where it's going, but I think he's trying to draw them in, meaning draw Europe and Asia in to fix this conflict. That's where I think this is going. But candidly, we don't really know objectively what he's going to do and what the US is going to do in this situation. Are they just going to wind down? I don't believe that. By the way, they're moving more into the area. But Iran unsuccessfully targeting a US and UK military base does pull the UK into this, or starts to pull the UK into this. And this is the headline from CNBC this morning.
Now, this is a clip from the Wall Street Journal. The MOD said, "The UK has given US permission to use its RAF Fairford base in England and at Diego Garcia for specific limited defense operations. Iran fired two intermediate-range ballistic missiles at Diego Garcia, but did not hit the military base in the Indian Ocean." So, they're now firing intermediate-range ballistic missiles out of Iran into bases that are not around the strait but are in the Indian Ocean. The Wall Street Journal first reported Friday, citing multiple sources. One of the missiles failed in flight, while a US warship fired and intercepted on the other. It could not be determined if the interceptors succeeded. "Iran's reckless attacks, lashing out across the region, holding hostage the strait, are a threat to British interests and British allies. Royal Air Force jets and other UK military assets are continuing to defend our people and personnel in the region." Does this sound like it's winding down?
I think context is really important. So, you have a map down here, and you have your legend, and you can see right here that what a thousand miles would look like. And so, here we are with Iran, and here we are with Diego Garcia. And we can see that this is south of India, well into Africa, and at least in my opinion, a thousand miles away. And they're launching missiles in that direction. Here's your strait, right in that area. So, I want to be really clear about this, 'cause I think it's really important. Oh, they're trying, or it's a base, or they couldn't hit it. If they can fire missiles here, then they can fire missiles into other places, right? We, we'd all have to agree at least that the accuracy and everything. I'm not getting into that. But I think it's delusional to think that this looks like a de-escalation coming out of Iran.
So, why, why would I bring this up? Because the idea that the US is going to walk away, or the UK can't get pulled into this, or it can't escalate based upon what's happening, I think it's very subjective and delusional. And you can start seeing it in the price movement based upon statements. And I'm going to show you that next.
So, for our purposes, what we're trying to do is look at how the market's responding to it, to the comments, and whether or not they're believing what we're being told. And as this goes on, the belief gets less and less. It just does over time for obvious reasons. It's like if someone tells you they're going to do something, and then over and over, they just don't do it. You're just, it's going to get less and less that you're going to believe them. And there's nothing wrong with that. It just is.
So, if we go here, and this was our first "Mission Accomplished." Uh, that was on March, I believe it was March 9th at 3:15. "We're going to wind this down. We're getting there. Everything's great. Uh, we did what we wanted to do," etc., etc. We got a 1.4% move out of that. And on Friday, and I just want to say this is, you know, 14 days later, and we're watching, and people are actually watching what's going on in the world. Uh, we got a statement conveniently when the market was closed, and the oil market was closed, and this is 4:45. We get our statement, and we're just going to go to the top of that, and we're going to see that that is 76 basis points.
So, you have to think about it from this perspective: What we're being told, we're starting to not believe, and we're starting to get into the point of, "Show me, show me that this is really what's going to happen," because you said this before, and since your first "Mission Accomplished" to where we are now, the market's down 4%. So, people that bought the first one are not going to believe the second one. That's the first thing. The second thing is, people are watching how this is playing out, and it's becoming very clear that there's a larger issue here. You could see this in crude oil as well.
So, if we take a look here on the movement down, and we're just going to take the whole movement, you can see that that was 14.7%. Meaning on his comment, crude dropped 14.7%. Now, we can't really look at crude because this was conveniently done right as crude, you know, closed. So, let's do it this way, and just, I think it's more effective to do it this way. So, we're going to go take a look at USO, which would have had everybody involved as well. Meaning, all retail would have gotten giddy with "Mission Accomplished," right? And retail's more the cat in a hot tin roof. So, we can take this to that bar which lasted for 15 minutes. We can say that it was even greater than that, and take the whole move, which is 387. Let's call it, let's be generous and call it a 4% drop in oil on "Mission Accomplished" part two. And then let's go take a look at "Mission Accomplished" part one. And what you'll see is that got us that 14% drop.
Do people believe "Mission Accomplished"? Are people going to say to me, "Well, that's because it's on a Friday." Well, why wouldn't you want to cover on a Friday if you were short? Of course, you would cover if you believed it. I actually would argue that it should have been a greater movement on Friday than it was here because of how people were positioned after the carnage on Friday, which we're about to cover.
What this means to me, and what you should be taking from this, is that this is probably going to go on longer than anybody anticipated, and I don't see it wrapping up anytime soon. Now, anything can happen, but I think that the market, in and of itself, is starting to look at this a little bit differently. And we're starting to see that grind. And the grind for me, the, the one area that I really didn't want to get to was this. And I'll show you exactly what I mean.
So, I'm going to take a fib level and I'm going to drop a fib on the top of this bar, and I'm going to drop it to the bottom of that bar, and you're going to get that 50% line. And then what we're going to do from there is we're going to go out on the fib levels and we're going to drop them. And I'm doing this for a reason. I want you to show you something. So, here's 786, and we've been battling it over, retest over. So, what we've done with the 786 from the USO level is that has now become support. It is no longer a resistance band. Overtests over. So, when you're looking at something like this, it means to me that oil is actually setting up technically to go higher off of this.
Now, if we go into this and we do it with crude, and I have no problem, that's clean off my level, and I have no problem doing it this way where we take both of these bars. We could say, well, we're going to take this bar, but let's take both of these for a second. And you can see it with crude that's open longer. And you can see the 50% line. The 50% line, we were, we were fighting over rejects, test, test, can't break over, close. So, you got a higher close here. And the problem with that, too, is it's after the retests over and over again in this area. So, looking at this, it's telling you that crude's going higher. I don't know if it means that the energy names are going higher, but they're positioning themselves for higher crude right now. We can all see the 382 and how that's holding. The measured move is up here at 145. Now, whether that happens or not, or a litany of issues. But what we're not seeing is, we're not seeing the oil market back off. And this is where you start tying it all together.
Now, what does this mean? And it's important to understand this, and I, I want everybody to know that they can go to the site themselves, and it's free. This is the link right up here. It's CME Group. It's Fed Watch. And what this does is this tells us what's going on in the market. And this is really important because people aren't understanding what's happening. They're not catching this part of it. And they're not catching this part of the trade. So, I would suggest that you listen to this part more intently, and I would suggest that you may want to watch this part again because I don't think people are really looking at what's going on in the bond market. They're watching treasuries, but they're not watching the insurance. And I'm going to explain what's happening here and why this could really become the problem.
So, if we look here, this is telling us exactly the 350 to 375 range. And then that's going to tell us that there's no change. So, in other words, the, the probability April 29th of a rate cut right now is, uh, 93%. There is no chance or no change. There is zero chance, as of now, that they are going to cut rates. Zero. And I, I really want to hammer this home. So, if we look in this area right up in here, there we go. Got it working. Now, if we look in this area, right in this box, you can see the probabilities. There's your no change. There's zero chance of a rate cut now. And now a hike is 6.2%. 2%. So, what transpired on this week?
Now, what I've done is I've gone to the bottom of this page just so you can see it for yourself. And again, this is free, and it's definitely fascinating from my perspective to to look at this kind of stuff, but anybody can do this, and anyone can go there and take a look at it. But this will tell you where your target ranges are. Wow, that's aggressive. That's a big one. Let's get that a little too much. And so, there you go. That's better. So, now you can see where we're at. But one day ago, and that's because we're closed, but one day ago, March 20th, we're at 12%. Where were you a week ago? Zero. What was the chance of you cutting a month ago? 17%. There is zero chance of a rate cut coming. And there is a 6 to 12% chance that they're going to have to start working on inflation. Again, this is not factored in at all. And it's not factored into the bond market. Not in the way it should be. And I'll show you what I mean by that.
Now, not just in treasuries, but the market that we all trade. And we don't know that we traded. This, my friends, is a breakout. This is MOVE. This is the exact opposite of what I wanted to have happen on Monday, or going into Monday, I should say it that way. Uh, where MOVE is bond insurance. Now, the important thing about bond insurance is that you really don't want it going higher. And think about this as the VIX for the bond market. And this is a breakout. And why this is happening is because if rates, and they do a rate hike, all the underlying private credit that we're talking about, all the bonds that we're talking about, it eats into profit. So, for example, if we have a bond offering, and let's say that bond offering was supposed to be at, let's just say that bond offering is supposed to be at 7%. So, we'll go in here and we'll go seven. So, that bond offering is supposed to be at 7%. And we know that a rate hike is coming, and all of a sudden, that bond offering now is not at 7%, but it's at 8%. Work with me, not against. And it goes to 8%. Well, that cuts into your earnings because now you have an increase of about 14% in your interest payments just on something like that. And I'm just making it super easy to see.
What else does this do? It means that people that own a 7% bond don't want it anymore. So, it means that that's going to decrease in value because they know that they're going to be able to buy an 8% bond. I understand we haven't rate hiked yet. I'm getting to that. But what you're seeing is that the illusion becomes a reality. And what you want to focus on when you see this is, what is the market telling you? And the market's telling you that it's scared on what it already owns. It's not telling you that we're definitely going to hike rates, but it's telling you, "I'm afraid." And when the bond market's afraid, you want to pay attention. I don't know why I got rid of that. Let's try to load this back in. And let me say that again because that was awesome. You want to pay attention. Right? So, you want to pay attention to this. And the reason for this is because when you see it break out, that means they're getting in panic mode.
So, what we're not seeing, and this is so important to get, you're not seeing the commensurate move in the VIX. That's a real problem because that means like the bond market knows more than the equity market. It's just the way it is. It's always that way because they're looking at it from that perspective. So, what we always want to do is be cognizant of that. Now, what will this affect? This will affect everything. But the one thing it's really going to affect is growth. And this is why growth names get hit. And this is again a really important concept to get because a lot of people are going to look at this and look at the S&P right now and say, "Oh, well, we're just blah blah and we're going to test this and that." People like myself that are looking at things like here, I'll show you.
So, on Friday, one of the things, please stop. So, on Friday, one of the things I really tried to hammer home were two things. I'm sorry. On Thursday, I really tried to hammer home two things. And one of those things was that, oh, you know, the five days rolling over and maybe the new lows aren't going to be as bad. We're getting to a point here on the breadth where this is bad, and that you're due for some kind of bounce. Now, what happens after that, that remains to be seen. Just because you bounce doesn't mean that you miraculously everything's better and you go higher.
So, if we look at periods of time, and I just want to show this on the 50, uh, the 200 was where we're going to start, and then we're going to go back to that. But I just want to get this out so people get it. So, once you break 50 on the 200-day moving average, so in front of you is the S&P. And what I'm doing with this video, and you can always comment on this, but what I'm doing with this video is I'm breaking down what's actually going on, and then what's being reflective in the market, what's objectively happening, and then how that is affecting equity prices. So, we're taking the macro event, we're looking how that macro event is affecting other areas and asset classes, cross-asset collateralization becomes an issue. And then what we're doing is looking at how that's affecting the stock market. And this is important. And even when we're talking about day trading things, this is important because you got to know where you are. And where I'm going with this is that if this is the S&P and this is the 50-day, because we break here doesn't mean it's over. So, we could go back through history and look at every single break of the 50 and when we get over the 50 and how long this takes. And it doesn't mean that you don't have rallies that you can profit from. You can, you can do very well with the rate mentality in this kind of environment.
But when we look at this period of time, we have to be super objective about this and say, well, when we broke here, and I'm just going to use the past five years because I think we're better off because of all the funny money still in the market from, uh, Jerome, you know, we still have to go through all that with, you know, where the dollar is, etc., etc. So, if I look at this again, and we take this area, and when we break here, we have these little guys in here, too. And we'll take those little guys, too, because I think we should. I think we should take a look at everything, right? So, when we look at them and we look here, and where I'm going with this is on a time basis, but I want you to see how I'm getting the time basis. Touched, held, and then we're going to go to here and say, flipped here, and then fought it. And we have a little blip here, but we're way below that. So, we're not going to count that. You can count that if you want, but since 2000, what do we have here? And we, I guess we can do it both ways. But let's go since 2000. What do we have here? So, we're going to come up to this area and we're going to go, "Hey, we stayed under that 50 for a period of 146 days." Well, does that mean that you shouldn't have bought the market? No. But that told you that you're not out of the woods, right? It did tell you that you're not out of the woods until you're back over 50. And I do use that as a demarcation line.
Now, if I come here, and my thought was that Thursday, Friday, we may have seen a bounce back over 50. That's where my head was, but I have to trade what's happening. So, when this happened, we were 300 days below this. So, if you take a buck 50 and you take 300, and you put those together, right, you're going to get 225 days. You come here and you look at it and you go, "All right, well, that was roughly 30 days." Okay, so that got us under for a month. All right. And so, if you add these two together, right, that's going to cut that down dramatically, right? Whether or not you have to stay under for 300 days or whatever. And then you're going to come here and you're going to say, "All right, well, that was two months." Okay. And then we're going to do it one more time, but I'm going to go to the actual line, not what I drew. And that's going to get us 80 days.
So, what could you take from this? What would you take from this? And I, and I think that this is important. Well, we would take that. We could do an average. All right. Well, that's that's a lot of fun. We could take an average. Well, what's that going to do for me by taking an average? Well, I'm not in a pandemic, right? I'm not, I'm not working out what itchy did, right? When we, you know, when JPEGs were called NFTs and all that stuff, so I don't have to rework out the 1.7 trillion itchy ejected in the market. I don't have to deal with a global pandemic. And, and so I have these other areas that are being affected by what? By a change in trend based upon what's going on with interest rates. And then of course, we had all that winning and liberation, and you know, he got some new cardboard. It was the whole thing. But let's take a look at this and go, and that's going to bother me now. So, let's fix this before that. So, let's look at this objectively and go, "All right." So, there's that area. So, let's say that this is just more winning and liberation. Okay. It's more winning and liberation. So, that got us to this level. And I'm not saying to not get involved in the market, but to where you have stabilization in the market. That took 115 days. And I'm not saying not to look at getting involved when you're down in these levels. But what you have to understand is once you broke and you stayed broken, you have to look at what was the average on where this got washed out. Here it's a 16%. Here it's 24%. Right? Up in here it's 36%. So, whether you think that it's going to be another winning and liberation doesn't matter. What we're doing with this is I'm not going to average these together because I think that's a waste of your time. What I want you to do is wrap your noodle around what was the least worst-case scenario when this happened. So, I'm going to say that again. What was the least worst-case scenario when this happened?
Well, if we go to these little guys right here, right? And these were just, you know, little blips in March. We could measure across here, and you're going to get about 30 days. And so, that we could say that the least worst-case scenario when we've broken here in the past and stayed here in five years, and I do think we used the five years because of the amount of dollars that rejected the market, that gets me 37%. I've got to get to 37% best-case scenario before this is over. It doesn't mean it has to, but that is what we have based upon past performance. I would rather statistically have 30 of them because statistical significance is 30. This is the hand I'm dealt. This is the hand I'm playing. So, when I look at this, I realize that there's more pain here in the S&P that has to come down to this level. And then I understand that if we start getting through this level on the 37, I have to start saying we might have to get into the 20s, or we might have to have a complete flush out of this market. The bond side of the market is the part that you can't undo. And I'll explain why in a minute here.
So, if I go and take a look at this on the 50, now that we have that, we'd have to look at the 50 and say, "Well, when did all this really end in those same periods?" So, we go back to this, and just so we're clear, we're looking at these areas in here. Where did that end on the 50? Well, that got us down to about a 14. All right. Well, we're in the teens. So, we're getting there for some kind of bounce, but realistically, this at this point, it gets into the single digits. And I, I think it's important to get this because what we're saying is 80% of all names are under their 50-day moving average. And it doesn't mean that you have to accept what I'm saying here because there's times where you've hit these levels and you've bounced and you've gone higher. I would like to point something out in those cases where you've reversed here. And it's important to understand this because the way that I trade is this. And this is what I'm presenting. I'm presenting the way that I trade. And you can see I'm being trying not to joke around too much and try to be a little more formal because I think the, the time calls for it. But, um, you can always just watch me try to find the thing I'm looking for. That's always fun. All right. Okay. It's just down here. Let's just do it that way.
But here's the point that I'm getting at. When we have these levels, right, that are here, and that's blue. We'll just stick with blue. And what we're doing, did you have to rush into that? Was that something that you just had to get into? In other words, when we're seeing these areas where it's happening, were they rushed? No. You had days in here to build. That's really what I want you to take from the context of this. When this happens, yeah, it may be fast, it might not, but with what we just went over, you can't fix this. Meaning, one guy can't taco his way out of this. You just can't. You can't say, "What are you going to say? I'm sorry. I didn't mean I mean to do over mulligan." No, it's not like, "Oh, we're going to do this or we're going to do that." The other side, in my opinion, and from what I'm getting, is escalating and getting emboldened and now actually charging a fee to have a ship go through the strait. Does that sound like the US is in charge of when this ends and how it ends?
So, I personally think that you are weeks at best of seeing some signs of stabilization. That doesn't mean the market doesn't bounce before then, but understand that these levels that I'm pointing at, yes, you're getting near, but real trough valuations, like the real trough valuations were single digits on the 50. Now, if we go and take a look here on the 20, you're going to see the same thing. You had to get into single digits, like really deep single digits. And so, when we go back and look at the 200 here, and let's just use these allocations again because this is our best-case scenario that we have to show. That would tell me here that I have to be at a four. And this one would tell me here that I would have to be at a 20. Well, I'm already through the 20, right? We've already broken that. And what's important about this, in my opinion, when the 20 is breaking like this, it's telling you that when the 20 is breaking like this, what were times? And please listen to this part. So, I'm going to shrink down this again, but you all know these times and where they are, right? So, I'm going to shrink this down so that we can talk about this. When we've broken and we've broken through that 20, where did, when the 20 broke, where did the 50 have to get to in order for this to end? So, what we would do is we go to the 20 and we drop a line. And then we would say under the 20, where did the 50 have to get to? Well, the 50 here got to single digits. Where did it have to get to here? Right where that mid-teens is where you're kind of getting to. Where did we have to get to here? Well, we had to get to where we've already broken. Okay. So, how about here? And you'll start seeing the pattern over and over again. So, realistically, once the 20 broke there, this has to come down and go into single digits on a percentage basis. Not all the time, but that's what this is telling us. Whether we like it or not, that's what it's telling us.
If I go to the five, and we look at this, we've went all the way back up where they ripped it. So, everybody got lured in. Now, we're back to 18. Where do these levels really settle at? Single digits. Now, I'm always interested in your comments and what you guys are thinking about the situation. I find it very, very helpful. I would say this as I clean this up and just go to the next part of this. Let's get rid of that before someone tells me that don't do that. But, let's get rid of that again. And so, I want to show you this because I think it's really important because it shows very clearly we got to a point where when we looked at a four-hour, we started to see signs in here that we could possibly hold. How's that working out for me? Not very good. So, what we're starting to see now are the new lows are accelerating to the downside.
So, in front of you is the New York Stock Exchange. And this is what you have to understand about technical analysis. You have the stool, and yep, we're going to do it. And when you have this, you have the macro side of the trade. You have the fundamental side of the trade, and I would argue that the fundamental side is the one that people are most scared about right now. And you have the technical side of the trade. And then you, what you have is what's going on. We have the war. Who's affected by it? Well, it was the energy names, but that's changing based upon the length that this is going on. This is changing based upon the length that this is going on. And then we have the technical side. So, when I start looking at something, I'm looking at it from the premise of that snapshot. When it changes, and the technicals change, you have to change with it. Analyze and be objective versus subjective and ego. The people that will say things like, "Oh, but you said," well, yeah, things change. This is the hand that you're dealt now. And so, you can either accept that hand, or you can just say, "No, I want my old hand back." And if you play cards, that's not how it works. That's not how any of that works.
So, when we go back here and we look at this, and what we're going to do is we're going to shrink this down. And this is a really good one. I, I really like the way that he maps this out, but I just want to drop this here. And so, we'll see the new lows. And we can see that this is an area where new lows do tend to bounce us back in more generous circumstances. What we will see is that, and if we're not in more generous circumstances, this is nothing compared to what we've seen in the past for new lows to end. We've seen complete, utter capitulation on those new lows. And what I would suggest is we have to ask ourselves, is it beginning here, or does this get and need to get to something like this with all that liberation and winning? Does this need to happen? I don't have an answer to that. I could only tell you what's going on. And I can only tell you that the new lows are getting worse.
So, when I start to see that the new lows are getting worse, you have to think about it from this perspective. That means the other names that are up have to go down if the new lows are going to get worse. That means they're going to get out of the winning trades. That's what it means. When you start looking at names, like when we start going through the S&P the way that we did and you start looking...
At those percentages, this is where it gets really kind of I won't say scary because it can be awesome if you do it right. But when we look at things like SanDisk and we say to ourselves, well, SanDisk is above go to this. Well, SanDisk is above the 12 and the 22 and the 55. Well, well, if the breath of the market's going to get worse, and I'm not saying that it's going to hit a new low, but if the breath of the market is getting worse, and I'm saying that the that the, you know, they use the five and the 20, but I use a 12, a 22, and a 55. You should use what you're comfortable with. But if I'm saying that those numbers have to get worse, like your names aren't safe. So, the names that I really want to buy, like that had great earnings, they're not safe anymore. And so whether you want to hear that or not, but your names are no longer safe just because they had great earnings. When they want out of the market, they will get out of the market. It doesn't matter.
And this is a really hard lesson for people to get. And it's one of those lessons where and just I'll just explain it. You know, we have we have this understanding that if the market's great, right? Like these the earnings here were fantastic on Micron. I I really like Micron and I actually started building positions in these again over the past two days and candidly I kicked them because I'm I'm looking at this and going do I really want to be around for this and you can see the divergence starting here. We're going to start doing more educational videos too. I think I'm going to just denote Thursdays for just some kind of educational video. Um, but I think it'd be very helpful especially in this time because the way you ch the way people trade is going to have to change with the times, right? The same trading system doesn't work or trading processes don't work and trending versus non-trending. Uh, but if we go through this, people have this understanding good earnings equals stock goes higher. That's not always the case. Even though it it would make sense, you have to split it. Good earnings and we hope the stock goes higher, right? Just like bad earnings and we think the stock's going lower. It doesn't always work that way. You remember Coin's earnings here, they were absolute dumpster fire and then the stock exploded to the upside after just dumpster fire earnings. That's not always the case, but let's let's not waste the time on that. Let's focus on what do we do about this.
For me, it's pick a shopping list of names that you really like a lot that institutions are looking at and that are at the highs. And you want to know where those names are and then go through them such as your SanDisk and all those names and start looking at your 55-day moving averages and saying to yourself a couple things. Am I willing to hold that? And I I'll give you a scenario here that I think would be very very helpful. But am I willing to hold into that? And if it breaks, am I willing to sell there? If the answer is no, well then you already know what you're supposed to do, right? And I'm trying to give you information education on how you should do very quick portfolio analysis when you look at the world. So if I look at 544 right here and I look at that like am I willing to go for down to that? Like no. Like there's no way in the world I'm going to go for that ride right now in this market. So I have to be cognizant of that and then I have to trade predicated upon that, right? That's that's just the way it is. So, I would suggest that you run through the entire portfolios of names because you can only go on the snapshot of where we're at right now of everything that you're in and say, if this got to the 55, am I willing to hold? And the answer might be yes, and the answer might be no. Why I do it is so that when they get there, I can make a decision on whether or not I want to buy them. But what you saw come out of the market, I'm going to clean all this off.
What we saw come out of the market, I would also do this. So, the first thing that I'm going to suggest that you do, and I'm trying to give you actionable steps just in case this gets worse. Run through every name, every name that you own. Run through them all, right? And then what you do with that is you look at where your stop is. And then you after you do that, you look at the stop and then you go to yourself and say, "Am I willing to honor that stop?" If the answer is no, then you know what you need to do, right? You either sell it or you don't have a game plan. That's one of two things. If you're willing to say yes, you take all those stops and you analyze all those stops. You do analysis of all those stops on your account and then you say to yourself, where does that put my account value if I use all these stops? Am I willing to go through that? If the answer is yes, you have a game plan. If the answer is no, then it becomes reduction of risk. It's that simple. Don't overthink it because you're not, you know, you're not a wartime genius here. Like I I hate to say that to people, but neither are the people on Twitter that are telling you this is going to happen in the straight and the blah blah blah. You have all those little tiny islands there. It takes one guy and one RPG. It's it's a mess. And I don't think people are fully cognizant of that. I certainly I certainly was when I dug into it. I've been trading 20-some years. I never really had to care candidly until the past couple weeks. I'll leave it at that.
But like so so for me looking at these names like Western Digital and and Seagate like these names their earnings are fantastic. Is that going to go away? If you hike rates and the borrow gets higher then yes that could happen. But I don't think that that's what's going to happen here. A matter of fact if I go back through history and I look at the opportunity that was presented to us when we had all that winning and liberation. You were able to buy STX at $66. Look at Western Digital. you were buying Western Digital at 32. Look at the moves of these names and what they came out of that basis over. So the idea that this is just going to end because of this is just absolutely silly. It's just not. It's not. So what we want to do with this is just understand where we are, right? That's all we're doing is we're understanding where we are and we want to go through those names. Who benefits from all of this? Well, this is where it gets really very difficult because when they get into sell mode, nothing really becomes safe like nothing because it becomes protection of capital. And that's why it's always smart to be first. Like it's it's always smart to be first. Who would benefit from this would be any type of company is going to come out there and have energy. So something like a be. But when you look at what's going on here, they're the ones they're going after. you know, you have a $20 move or GEV, anyone doing power generation, you would think, but it will not matter what happens. They will sell what they can sell to lock in what they can. And so, even when we look, well, why would defense names be going down? That doesn't make any sense. And so, when you look at this, you'd go, "Yeah, that doesn't make any sense because we're going to war, so those names should be going higher." It doesn't matter. They will sell what they can sell.
So, I was actually even short this and then just got out of the way and reassessed. um which was a mistake and you're going to make a lot of mistakes right now, guys. I want to just be really clear about that. This environment, the way that everything's changing, you just are. It's hard. This is not an easy time. But in here, I was short and I'm like, "No, this makes perfect sense because these are going to drop." And I had my whole theory. Same thing with the industrials because I felt that that's where the money is. I still think the industrials are in a are in a real pickle here. Uh, because there's a lot of money that was made in the industrials. So, that's what they're going to hammer. They're going to come out of those names. When we bounce, we probably want to look at those names again. But you would think the energy names are going to absolutely explode on this, right? They'll sell those, too. You have to think about what haven't you sold yet because that's what they're going to sell. You have to think differently. So, I'll give you a great example. We bought LNG and I walked you guys through this trade where we bought this at like 260 when they hit the uh the one the one field and the next day we're up in here. Well, we're getting out and I already showed the time stamps. I'm not going to get onto it all, but we're getting out the last bit at like 296 and people are like, "But this field and blah blah." Like, all of us are experts in natural gas and LG now. We're not. So, I could just look at it and say, "They're already doing this. It's already factored in. I'm just waiting for this to roll over." It's no different than looking at something like EC or Petrobos and saying, "Okay, everybody's got this figured out now. I'm just waiting for this to come in."
So, what do you do now? And I'll get into this more obviously on Monday's video, but what you do in situations like this is you have to adapt to a shorter-term trading strategy or longer term. And the problem with the longer term is everyone says they're longer term until it's time to be longer term. So, something like Oracle, I believe in longer term. I've owned Oracle for a very long period of time and I'm okay with these kinds of moves in Oracle because of the time that I've owned Oracle. So, it doesn't affect me. If you're not thinking like that right now, then you're not longer term. You're just some guy that's in losing trades telling yourself that you're a long-term investor. That's very different and very, very dangerous spot to be in in an environment like this. So, what I tend to do is go to more short-term thinking until we get over key levels. Remember how we started this whole thing and I think that this is really important. You are going to have bounces and so short-term trading becomes optimal in environments like this and we can discuss that in other videos. But but when your chart looks like this and you think that you're going to bounce and you think that things are going to get better and then you're cracking the 200 which is how we started this whole thing and you're cracking the 200 here and you're like but but but yeah like but get above it because right now we're not and you know these support levels could be down here a little further you know 614 people like oh we can't get there you could get there Tuesday right? So understand that the VIX is not reflective of what's happening move is showing you how this is leading. And so what I would suggest to you through this, especially very specific parts of this, is to watch it again. But more importantly, keep an eye on move because this will tell you exactly what people are thinking. You can see it in their movements. You can see how they're blowing out of high yield. They're getting out of the bond market. When they're getting out of the bond market, that means companies cannot use debt in the same way to finance what they were doing. Is that going to be a good thing or a bad thing for software? How is that going to affect companies like OWL or how is that going to affect Apollo? Right? Are these names washed out? Are they not washed out? These are questions that we'll answer in another video, probably earlier next week. That's a