This Rejection Looks Like 2000 Bubble - Here's Why It's NOT

Well, we've got some data that we definitely have to go over. I think the most important thing to do is talk about the major shifts we're seeing in the market. We're going to do the basics and then we're really going to dive into the Mag 7 today, which I think we need to do because there's some major shifts going on there. We need to talk about the fundamentals. I do want to just point out the basics. You're over the 55 and you flip the 55 and you're holding it. I don't think you want to think more than that right now. I don't think we want to go out there and say it's a bubble, it's not a bubble. I think that's an absolute utter waste of time. I think you're better off looking at the facts, making some decisions, and by the end of this, you're going to know exactly what you should be looking at and what's absolute garbage.

There's nothing here that's telling you that you're at the end of the world, despite what you're seeing on Twitter, what other people on TikTok, and everyone tweeting from their mom's basement are saying. If we go and take a look at the cues, you can see right in here that you are hanging in there. Does that really look like the end of the world to somebody?

Now, here's what's even more fascinating. You're starting to shape a W. and why we had this talk of data centers are slowing or maybe not not everyone's going to winner like not everyone's going to get a trophy guys. So yeah, you're going to have winners and losers but what you're seeing here is you're getting that move over the 55 again that means what to me that we have institutional support. So what happens when we flip the 55? I lean it towards us that having institutional support. I lean us towards over the 22 also means that we are bulls in charge versus bears in charge. So when we flip the 22, to me that means the bulls are in charge and we have institutional support. That's important to me. That's very different than even flipping here where we had institutional support and then got the bulls in charge. And now we're setting up for when all three are above, it becomes also a swing trade environment. I think you're there. This is the kind of area where you either do it or you don't. But if you're not looking at the data that came out, and we're going to get into a lot of the data on the fundamental side and what the Mag 7 really looks like historically at this particular time, I think you I'm doing you a huge disservice.

As always, subscribe to the channel, click all notifications. Let's get to it. I'm always reminded of the statement adapt or die. And what I see in these videos and a lot of the comments when I change my opinion or I get more data, the amount of people that have issue with it, you really need to do a little self-reflection on that. And I mean that respectfully where the whole market is dynamic. It's almost like a living breathing organism and it moves and it moves on all the economic macro fundamental data that's going on out there. So your job is to always take a look at a picture and then from that picture make the best decision you can. And I'll give you an example. If you're looking at the market here, you would have to look at that market and say, you know what, we're making lower highs, but we're not really, you know, we're not really breaking down right here, right? We got this beautiful setup. Uh it looks to me like, you know, we could really break out of this and we could really just jump to the upside. Like any technician would look at that period of time and say that there's a high degree of probability of that versus something else. Now, they might do something where they're laying in these moving averages and saying, "Well, the volume's really coming in. So, you know, we have to see how it plays out, but that's my low." And they'd walk through the whole thing, right? Okay. And then as time goes on, we get this. And then all of a sudden, their thesis from that break right here, when they get this data point, or even this one, which was a much lower close, they get this data point on their chart, they have to change their entire thesis. And if they don't change their thesis, they're dead. It's really that simple. Hence, adap or die. If you're breaking down like this and you're not utilizing this area as some kind of inflection point, you have a problem. And that would have led to keeping the same thesis and now you're dealing with all that winning liberation that we had as you remember. And the winning liberation went on for months. It was just so much winning and so much liberation we couldn't stand it. Eventually, they paused it and we reversed. But if you take a look at that, and I'm just going to stop it at random spots. I'm not going to stop it at the extremes, which of course here you would have thought the sky was falling. But when you get back to the top of this area, what would you think? You'd be like, "Oh, well, clearly, you know, that's it." Because now we've worked it all the way back and this is a bubble. We've been hearing about this special bubble for a long period of time. And then you watch it fight and it tests that level and then it flips. And then it tests that level and then it flips. And that's going to bring us back. And I'm not going to give you a whole history of the MAG 7, but then that brings you back to an area where you're at now. Not exactly similar pattern, but it's there and you could see that line.

So if we look at something like this, we'd have to understand that we always want to look at the Mag 7. And the reason for that is they're the biggest tech companies in the world. But if we are to really look at what's happening right now, the question is this is what we have. We have this W. Oh, you got a little nuts there. Hold on. Let's just slow your roll. All right. There we go. Stopped it. I'm not going to have time to unedit this. So you're just going to get You're getting all the bloopers today. Aren't you lucky? So you have this where it's starting to set up and it's a question of okay, do you turn into a W or do you break out or do you break out of that W or do you come back down and undercut and right now you're dealing with probabilities. So if anyone's like this is what's going to happen because you know I saw this and that this wave of this told me this is going to I wish you the best but that's not how any of this works. None of this works that way.

So what we're seeing is we're seeing consolidation in the mag 7. Why do you care? It's where all the growth is. There's growth in other areas obviously now with retail uh and we'll get to some of that in in a bit here but I really want to focus on the mag 7 because there's this understanding of oh it's a bubble and the bubble's popping is it because one of the themes of that bubble was Oracle and Oracle was going to have all these massive problems and you know the CDS's everyone was a CDS expert I don't know if people became a CDS expert faster uh than they became a a Bank of Japan expert in the past 48 hours 72 hours uh but when you start going on Google Trends, which I do, and you start googling CDS and Bank of Japan. Um, usually those peaks or bottoms, you know, you can actually do like social trend trading like that. It's kind of interesting. But what happened here? Well, this clearly financial situation got a lot better, didn't it? Why? Well, they've got Tik Tok essentially at a cash cow. So, people that were looking at this, all of a sudden, they're going to have to go, "All right, well, our situation has changed." I mean, if you're short Oracle on the premise that they're going to default on their debt and they just got a cash cow like Tik Tok that's going to throw off incremental revenue, you'd have to change your thesis, right? I mean, that just makes sense, doesn't it?

So, where am I going with this? Well, you have a new situation here. So, you may have to change your thesis. And that would tie us into, well, what tools do we use to change your thesis? Then, we would look at something like the RSI. And if you're in the community, you know how I feel about this. I feel that you may be bottoming and we're going to tie this all together. But if we were to look at this, we're going to have to go old school again with the stool so that people get this. So here we are in the macro side. Here we are on the fundamental side. And here we are on the technical side, right? And that makes up our stool. I should make hats like this. They sell like hot cakes. Hot cakes, I tell you. So if you have this right here, and we can say it real clear, right? We have the what what's going on. All right. Well, did we have any events that were macro this week? Yeah, we had that. I don't know how else to say it. uh messy CPI. I was going to use another word, but we'll just use that messy CPI. And so, we have a data point where they're telling us that CPI is lower than expected. We can all make this argument about CPI and what the heck's going on there. And then we have who's affected by that, right? Well, tech stocks are obviously going to benefit from that, aren't they? So, that takes us to something else. What about the technicals? Well, what's affected? Who's affected by it? When are they moving? Now, we have this divergence here that's been developing and they usually are pretty washed out on a 4 hour when you see this and we've been holding this this put wall down here for some time that 180 185. We keep trying to break it and we just we find buyers down here and so we're starting to turn. So, we have a CPI which shows inflation is coming down so they're going to cut rates. We also know we're going to get somebody that's going to be very friendly to cutting rates. I mean, we can delude ourselves. It's going to be it's going to be Bob. No, it's going to be Harry. It's going to be the guy that does the cutting of the rates. Period. End of story. It's really that simple. And then we would know, well, who's affected by that? Tech's going to be affected by that. The other sectors are going to be affected by that. And then we would look at the technicals. And you would see down here that you have this divergence. And I'll pop that divergence in just so you guys can see uh what I'm looking at here. So, I'm making that lower right there. And we could all see that. And then from here, we're seeing this, right? And that to me is something that says, "Hey, we're starting to bottom. When does it not bottom? When it undercuts it and it breaks that and then I would have to change my thesis going, yeah, it was just a rest stop. We got to the neutral line and we're rolling over." And that's how I would look at it.

All right. So, we have the what, who, and the when. And that's going to take us back to we might have to change our thesis. If you're shorting Oracle on the premise of the CDS and you're not taking into account the new data, you're doing yourself a disservice. Everybody would have to agree with that statement. Meaning, if a company makes more money and and you were trying to figure out how the CDS is going to default on that bond, and anyone would have to agree that Tik Tok makes a heck of a lot of money. Now, how they got Tik Tok and all that, well, all they're all great arguments, you know, it's the man, it's it's it's it's the people in the ivory tower. Okay, good. Good luck with that. I I'll be over here trading.

So, let's roll it back to where we started with this. When we have new data, we have to change our opinion. You have to or you have to look at that data and say, "Hey, this is what's going on. What am I going to do about it?" Let's go back to the technical side of this. And what we're seeing, we're seeing a W. Now, let's look at this a little differently. If we take this out and we look at the Mag 7 here and here and here, since it's existence, looks like this thing came out April 23rd, and we just say, "All right, well, what do we really have here? Do we have anything that looks remotely like what we want it to look like?" And then we go, all right, well, we have this and this looked like the end of the world. And then what did we do? We did an undercut. And then what happened from that undercut is then we just bounced and we lifted and we just kept going higher after a period of time. And then of course we've already gone through the other one. So we're not going to waste our time on that. We're going to go back to this and we're going to say we know that this one broke, right? So we know winning liberation. You got it. So here we are again. And then we would look here and go, "All right, well here we are. We did that undercut." And like I I love these patterns up down one two three up because whenever you see this pattern and you can there's a book out called uh candlestick patterns and it's by Bulcowsky and you can just Google his name and look the book up on Amazon but it gets into the percentages of patterns and the highest pattern recognition is really falling three rising three. Uh this is a rising three believe it or not even though it's falling one one two three up. Uh but what's what's interesting to me about this is it's not perfect. Life isn't perfect by the way. Uh so you just want to realize that this may be something that is similar to that pattern but not exact. But it does give us a real clear indication on when you're busted. So if the mags rolled over on the weekly and they break this area right here which looks like the low of that is like 6230. So a close below you know 62 on the weekly and you're busted. All right. But this is what we have now.

So what I tend to do is then look at something that would be relative in regards to this. meaning give me another basis to the market on what the mag looks like. Now relativism is the easiest way to do that. And why why is that the easiest way to do that? M relativism is the easiest way to do that because it shows you in regards to something else how something is performing. And so what we're doing here is we're taking the mag 7 divided by the S&P. Some people would say no, I just want an equal weight of the mag. And so they would use RSP, which is fine. Uh that's one way to do it. I I tend not to do that in situations like this because you're not comparing apples to apples. Uh the Mag 7, there is no equal weight to the Mag 7. Uh you're not really looking at it that way. You're looking at the market as a whole versus this as a whole, right? So I tend to do this and go mags divided by SPX or SPY. Uh I'm going to do the SPX. And so I'd rather just do the SPX just cuz it's it makes more sense to me. But um if we if we take a look at this and it's going to be very similar, but it just it makes more sense. So let's take the top here. All right. And then we're going to look at this and say all we keep hearing is that people are selling the Mag 7. They're selling the Mag 7. And then you look at the Mag 7 from September 15th on. Does anybody see anything here that's remotely saying that you were better off shorting the Magnificent 7 since September to where you're at? And I think this is super important for people to get. We're being told things and maybe those things sometimes just aren't really that accurate because we're told that there's this bubble out there, right? And there's a bubble in the market and maybe the data centers are slowing and and maybe they are. And I think you're getting into a phase of winners and losers. What I think and what I'm going to do are completely two different things. I can think something, but the data is going to tell me what I'm going to do. And you had a lot of different changes in data this week. Um, and so we have to be respectful of that. Hence the stool.

So, when we're looking at the situation, we would have to agree that you're actually even up a little bit if you were buying the MAG 7 versus buying the S&P since September. That doesn't mean that you have to buy those names yet, right? It just means that this is what you're dealing with. If we went and looked at this on a weekly and this was your chart, you would have to look at this and say, do you have anything similar to what we were dealing with during all that winning and liberation, right? You could see how you came down and then when you peaked, you could just see how they're just getting out of the mag 7. like they can't get out fast enough during that period of time. Whereas in here, what are you getting? Consolidation, consolidation, consolidation. All right, so we only really have three examples. Statistically, you want 30 for to have statistical significance. That's what you want. Anyone that's in the math, everybody knows that you don't have it. I have three. So, I can either look at what I have. It's very similar to what's happening back here in 23 than what's happening here. We would all have to agree with that, right? Whether you agree with what's going to happen right now in this analysis, you'd have to look at that and say that. And then we could just do simple things where we would look at this and we could just drop, you know, moving averages in on it. Let's drop it to the weekly again to get a better sense of it. And we would look at this and go, well, we're getting a ton of volume into this now. Second most volume you've ever had into this kind of thing that you've you've ever had before. So I I think that that's super interesting considering everything that's going on with the slow week. But more importantly, you're not breaking anything here. You're not rolling over as you did here in February. So when you were trading this and doing this trade back here and saying, "Oh, we need to get out. We definitely need to get out." And then look at this. Come on, work with me, not against me. Interesting. It doesn't look like it's going to allow me to scroll back. So what we'll do, we'll do it a different way. We'll go we'll do it old school, I think. And I think that'll help us. Let's just find a rectangle. And we'll go here with my rectangle. And yep, you're gonna have to live through this. And to the left, extend to the right. And what we're going to do is draw this over like this. And we're just going to drop you to here for a sec. And then I'm just going to block the whole thing out. I think that's the easiest way to do this. So, there you go. All right. So, see that right there? See how you're blocked out? And you can see how you've cracked these right in here. And then what we're going to do is just move this over a little bit. And you see you're in February 18th when this starts to happen. And they start to roll over a little bit and you're cracking them. That's very different than what you have now, isn't it? So, when we see that, and you can see down here, that's in March, but by then we knew we had issues, but you could see us break in that 22 week right here. Well, you don't have any of that right now at all. None of that. The matter of fact, you're actually getting stronger. And I think that this is super important. So, we can say anything we want, right, about what's going on out there, but this is holding and the Magnificent 7 is holding.

Now, if we go through these names, and we're not going to go through all of them, but we're going to just take a look at a couple. So, if we took a look at Meta, the up tries to break out down, sitting there, you have the 12 pointing down and this is a weekly chart. 22 is rolling over and here's our 55 and we've broken this area. And so, we would look at this and say, well, geez, that's not, you know, that's not fantastic. All right, agreed. Look at Microsoft. All right, so we got to the 1222 cross. You're trying to hold and then here's our 55. And we would look at this and say, well, that's not great either. But here's the key thing about this that I think people are missing a little bit with Microsoft. You're not really breaking down. A matter of fact, all you've done is given us that devil horns pattern, which is right here, and then you've come back to a level that you were on July 24 on your breakout and you held. So, where would I change my thesis on Microsoft? Well, if it starts getting under the 460s, you'd have to realize like, hey, we could be in for a lot more pain there, right? And we're taking a longer term outlook to this than a shorter term outlook, as you can tell. But we could clearly see that Microsoft, Meta, yeah, Meta probably has some issues here, and there could be some reasons with that with the Tik Tok deal. But here's Google. Does Google look like it has any real issues whatsoever? I mean, Google can't even come down. All right, so we're getting a sense that Microsoft is probably at a major support level, needs to break. Meta's got some issues, but you know, he was trying to turn everybody into giraffe and put on those stupid goggles, so it is what it is. Um, and then we're looking at this and going, "Okay, well, here here we are. And then let's just take a look at some of these others real quick. So here's Nvidia. Now, does Nvidia real is Nvidia really breaking down here or did you just get, you know, a little ahead of yourself and you're pulling back and we're now we're dealing with, oh, no one's ever going to buy a Nvidia chip again? Okay. Um, and and when we're when we're really studying this, we're not breaking down technically here. You're just consolidating in an area as we talked about, and this has been consolidating since July. Now, you tried to get out of the range, and you just got completely mumboed up there. Cool. I don't think that you could look at this and say that this is technically an absolute dumpster fire and that you're falling apart. And so what I would do with this is give it in the spirit that it's being given, which is you're not really breaking down here and you're getting new information now. And that new information is telling us that hey, we might hold and we might be getting institutional support. And I think that that's where you should be going with this. None of these things are really breaking down. And sometimes you can't do see the forest through the trees with this stuff and you just have to take a look at this and go, "Okay, well, what do we really have going on?" Well, if we just looked at it from a standpoint of a stock, we're not able to really close below that 55 at all. A matter of fact, if we really take a look at it, every time we've broken that 55, there's been buyers there. Very different than what we dealt with over here. And it's starting to get stronger. And I think that this is what you have to do if you're going to look at this and say to yourself, "What am I supposed to do with this?" Like, what do what do you do with this? You have to say that we're not breaking down the Magnificent 7 starting to see order flows and and on aggregate they are holding key levels and I think that's important and that ties you into really what you're seeing with some of these earnings and we're going to dive into that.

Now let's deal with this fact that everyone's worried about or Oracle's cash flow free cash flow and rightfully so they should be. There's there's concerns. You can see how it's creeping up and then all of a sudden we can see how we're getting this negative and it's turning negative. And this is where people are getting concerned. This is why the CDS's are going up. CDS's are insurance against bonds and we can see why this is lifting and the free cash flow is falling off a cliff. So this is definitely what we would refer to as an issue and it needs to be addressed. Meaning they're building this huge infrastructure. They're changing their model and based upon this they're tied to open AI which might not be the best thing. And this is why people are having an issue because we are watching things like open AI start to lose its luster as people are starting to use different models. We're we went over this in the past and just a quick refresher here it is where we're looking at you know open AI and we're watching how it's just fallen off a cliff where people are not using it as much on a share of usage even though that's the one that everyone's aware of and we're w watching anthropic just absolutely crush it. I mean, just speaking from experience, I I am definitely using Google way more and I'm definitely using Anthropic and I pay for all three of them. This is from Menllo Partners, and we went through this before, but market share by usage. So, by that's a pretty substantial number. Now, there's another one that gets into it a little more specific with coding market share. Um, and I do think that that's important and you can see that they're definitely leaning way more into anthropic, but and you're obviously seeing that market share just absolutely implode um with open AAI like it's just it's falling off a cliff. I I don't know that the coding side is really where we want to go with it. I think if you just think about it from a a consumer side, you think about the memory, the storage, the need for data center, etc., etc., that's kind of where my head goes with it. So, is being tied to this the best thing in the world? Probably not. It's one of the reasons why Microsoft and Oracle are lo lagging. It's also why, you know, Meta is just absolutely imploding besides the fact that, you know, he named a company Metaverse and then did nothing with it and spent, you know, hundred billion dollars to turn us into giraffes and walked away from it. But another time we'll get into that. What's important about this is this is the issue that we're seeing. I'm not here to say yes or no. This it is what it is. I I can say no, this is stupid. It makes no sense. He always he always bounces back. Blah blah blah. It is. It lost a half of its value. So whether or not I think it matters that it lost half of its value is kind of dumb. It doesn't matter. It did like it got smoked. Anyone can see that it got smoked, you know, when we look at it. So it doesn't really matter what I think. This is where we're at. The question is what do we do now? Right? We've lost half our value. Is is this the end of it? Is it did it tie itself to the wrong wagon? Is that the problem?

All right. First and foremost, do we really think that if they create this space that somebody else is not going to come along and use it? When you create this kind of space, does that mean that we're going to have a glut of data centers out there? And is that what we have? Has anyone heard the words, we have a glut of data centers that are just sitting empty and we're cutting costs to borrow, you know? No. All right. So, someone's going to use what they're creating. That much we know. Could there be a transition? Yeah. Does it matter that it came in 50%. No, we could make the argument that the people that read the free cash flow and learned how to read a balance sheet. They were right. I looked at this and said, "No, they're building out. I'm fine with it." And I own the stock and I've owned it. I've owned this thing a very long period of time. And candidly, recently, I've even added to it. But I have a very, very different outlook on what I'm doing here. I'm looking out years with that position. I think from a swing trade, you have to look at this and say, "There's nothing really pretty about this, but we might be bottoming." So, we have the technical side of it. We have them bleeding free cash flow. We have their main subscriber going out there or main possible vendor, you know, this guy with $12 billion a quarter saying, "I'm going to spend a trillion dollars." And we're seeing it go out there and say, "All right, well, the free cash flow is falling through the roof. People are buying insurance." So, we could say with this that there's some issues there. We would all we would all agree with that. All right, cool. So, then they go out and they buy this Tik Tok USA. And I don't want to get I want to go deeper into some of these other names so that people can take a a broader look at what the heck is actually going on out there. But what we have to take from this and what's super important about this is that even if they build this, you have to go on the premise that nobody else wants what they're building in order for them to do what they're doing. That's the first premise. The second one is you have to look at Tik Tok that they just acquired. I guess I think they going to they're going to spend $2 billion on the stake. Now, the structure of the stake is really very simple. It does two things for this company. They make a billion dollars a year just off of cloud. So, you have 1 billion a year in revenue that they just solidified. So, that was going to go away, but that was already in their numbers, right? So, that's kind of a net. We'll just leave it there at 1B. They own 15% of Tik Tok, right? You crazy kids are on there with your crazy dances. All right, cool. So, there you own 15% of Tik Tok. So, they're going to get 15% of the revenue, right? No, the original company Bite Dance gets 50% of the revenue and then off of that they're going to get 15% of whatever's left. If everything was staying the same way that the way it is, what you'll realize is that by next year that cash flow would be somewhere between 350 to 500 million when I ran the number. If the company grows, let's just say that it grows at a certain level uh where it grows at like 22% or something like that, this number will continue to go up. Where I'm going with this is that when you start looking at their interest payments, and I'm not going to get into all of this because of time sake and I want to cover other things, but if you look at their interest payments a year, you're looking at something around $3 billion for all their interest payments. And where I'm going with this is you're essentially by them buying Tik Tok, they're covering one quarter out of the RIP just like that. So just if you were to look at this and say, "Oh, I got to my interest payments are, we'll call it two billion, make the math simple." All right. So now all of a sudden one payment one payment per quarter of all your interest debt is covered by your Tik Tok stake and the stock moved from you know 180 to 192. So the probability of default has decreased substantially and and I don't think that that's reflective and I think that that's really where I'm going with this. That's the first thing that I I really want to want everyone to wrap their noodle head. It's it's very possible that one of the richest men in the world that's been in tech for decades and decades and is still standing might have a plan here. And I think that that's super important. Do we also think that as Tik Tok grows that they might continue to use Oracle that owns 15% of the company as their cloud provider? Probably. So then you have the other side of that where that $1 billion here is going to go up in value. Does it solve all their problems? No. They still have to figure figure out where they're what they're going to be when they grow up. But this is definitely something that is a lot better than we think it is. What I'm trying to do here is I'm trying to be as objective as possible and show you how I view these situations where what I'm trying to do is get you to understand that you're going to have to get into some of this detail. And if you don't, you can subscribe to these channels. you can watch this channel and and I do get into some of this and I'm going to do more of this in 26 where I'm going to start diving into some of these balance sheets a little bit and start explaining the things that you guys should look for because I think it's super important for people to get this. And one of the one of the things that's important about this for me is for people to understand why things are doing what they're doing. I can't stress that enough.

So something like an AVGO for example, when we look at something like this and we see it come down and we see it implode, there's two reasons for this. Number one, AVGO came down hard because you have a NDX rebalancing next week. NDX can't have anything in it that is greater than 6%. Uh if you're in the community, you already know this. You know, we've been shorting AVGO for the past couple days. And that's a short-term technical reason why we're doing that. That's this part of the stool, right? that has nothing to do with it as a fundamental company. Has nothing to do with AI. It is a purely technical I I don't even need the macro on it, but it's got nothing to do with the company itself. It has to do with a technical thing. I think it was like $17 billion that has to come out. So, all they did was wait for earnings and then they just dumped on that, right? And so, you'll actually see some alleviation of this uh next week. So, I I think you will, but anyway, what we have to focus on is what the heck happened here. So, if we go and take a look at AVGO and we take a let's go to the pre and the post for a second. And if you really go through the quarter, the quarter was great. There's one thing on the quarter that got people when they really got into it. But the most important thing about it here was just the CEO. The CEO is sandbagging and it's very clear that he's sandbagging because he came out and I would listen to this call. And if you take one thing and and people always say, "Well, what do I take from this?" You want to listen to conference calls. If you don't listen to conference calls, the one thing that I would do is you can grab these links and you can drop them into like a Claude or Google. I would actually do it in Gemini because Gemini is tied to YouTube so they can do a better transcript. What you'll find is you could just drop those links in and go, "Please read this conference call. Please give me the highlights. Please tell me the big things, the little things." Um, and it will, and you can keep changing your prompts. It's a great way for for those that don't want to listen. I I listen to them probably two or three times because I would listen to pieces of their voices and how their inflection changes or if they dodge a question. So I I get really into conference calls because I think you're getting way more data there than you're actually getting from the numbers and you can see that. I'm not the only one that feels that way cuz look at how fell off a cliff. Anyway, so you had great numbers. Stock tries to rally up gets absolutely smoked. Oh, must have been bad. There was nothing bad about this. There's one little thing that I'll point out and we'll go from there. But um if we take a look here, they absolutely crushed and they've been crushing. And I just want to take a second and again, if you're in the community, you already know this because we we've been whacking this thing around forever. But this is back back in the day where I said, "This thing's going to be an absolute monster. Blah blah blah. We got to get involved with this." And it exploded and everyone's like, "Oh my gosh, it's never coming back." There's the shooting star. And all you're doing is marking off the top of this. And you can see from a technical standpoint how this thing traded right from there. And anyone anyone would love to own this thing two years ago at 90 and now you're at 400 or 350. But this time it's different. This time it's really going to crash cuz you're smart enough to you know pick the top of the bubble. Okay.

So when we when we look at this again, you could say, "Oh, I'm going to wait for it to get up back up to this level and that's a different kind of trading." Where I'm going with it is was the drop commensurate? I would argue that the drop that happened here happened for one major reason. It happened because it was a technical thing based upon the NDX. There was also some stuff to me that made sense with the cash flow and when they looked at the cash flow that where there might be something. So when we look at the cash flow of AVGO, it's just a cash cow like no matter how you want to look at it. Now the problem for AVGO was the cash flow was off this quarter on the fourth quarter more than previously and I do think that it's something that people are looking at. So what we have to look at here is saying is this something that is going to be more of a decline going forward. Right? So what we're always doing is we're actually looking at what's actually happening and we're not just painting the rosy picture. And my sense of this is I I'm personally not concerned about it. I I think it's happening for a couple different reasons. I think the buildout of data centers taking way longer. People don't seem to understand on the tech side that you actually have to pour a foundation and put bricks and actually create the darn building. Um and so I don't think people really are wrapping their noodle around that, right? They're just like, "Oh, buy the chips and everything will be groovy." Uh it is not doesn't work that way. But I do think there's some some things here that if I want to nitpick and if you wanted to nitpick and you're like, "No, this is a problem." I'll give you what I see as a possible problem. If you look at 23, 24, and 25, and we look at the end of the fiscal year, fourth quarter, fourth quarter, fourth quarter, that's always the stronger strongest quarter for the past, right? Three years, two, it was. And this one's down. So, we can see fourth quarter here's up, fourth quarter here's up. This one's down. So, someone might say, hey, this is supposed to be your strongest quarter. This is like where everybody, you know, frontloads or whatever, and this is what we're dealing with. Is this a problem? So what would we want to do going forward thinking that way? Right? Again, I'm trying to show you how I think about the world and where I think you should be looking at this stuff from a larger term perspective. So what would be a concern to me is if I find myself where free cash flow next quarter is under 5.5 billion. So what would be a concern to me? I'll say it again, would be is if free cash flow is under 5.5 billion. And I'm not going to know that for 3 months. And you know what I'm not going to do? I'm not going to say that I'm smart enough to predict that because I'm I'm not and I'm not sure that that's the case. Now, if that is the case and free cash flow starts moving and we start getting negative on free cash flow, then yeah, that's something that we have to look at and we have to tell ourselves that's an issue. So now you have a data point where you could actually make a more informed decision instead of like watching the guys on Twitter and Tik Tok that are eating, you know, hot pockets in their mom's basement telling you that it's a bubble. you have an actual data point that you could look at 90 days from now and make your own assessment and if the free cash flow is higher and it goes back up you're like okay it's a blip or hey this is sequential decline of free cash flow hey this is not what's supposed to be happening right now and it could it happen 100% you know you have Meta going out there right now and saying hey we're in the metaverse uh we're out of the metaverse hey we're getting rid of these dumb goggles nobody wants them so do they get to a point where they flatline the capex, right? And do the winners come along and say, "Yeah, we just need more." And and it's that more to start following out what's going on. In other words, where what do they need? Like if you don't need the interconnectivity, which is really one of the things that EVJO does, right? Connects these data centers together and makes the connectivity better, whatever. If you don't need that, and by the way, I do think that this is probably going to hold this area next week. And I I have a short-term long trade on here. Uh but and you could see this end of day. Like watch this at 350. I might as well show you this. So, we actually bought this. Um, you can always see where the Aggos are at 350. And so, we bought this. Um, and I got like 37 for it. And then this that pattern I was just talking about up down 123. And once it undercut that 350, I bought more into this. And then when it traded up, I just sold it and then kept the original position. Anyway, you always watch those 350 levels. So, whenever you see a bar like this at 350, watch the volume on this. Right? That's the algorithms and the rebalancing. I'm surprised there's not more there. I would have thought there would have been way more there. Is this too low because of that wild thing that's happening at the end of the day? Yeah, there it is. There we go. There you are hiding out little sucker. Uh, so you know, you got 1.2 in a minute. That's not like Bob figuring out, you know what I need to do? I really need to buy more AVGO. That's like an ALGO or some ETF doing a rebalancing. And so you can always see these things at 350.

Anyway, if we tie this all back together, I think that you have that data point. Now, if you what would you take from this that data point? Let me know how it goes in 3 months, right? Cuz I'll be watching it as well. I do think you're holding in this and then I think if we look at something like an AVGO and you guys can comment on this video because I am I know I'm doing a more of a deep dive into like the thought process um and how I see some of this stuff but I think it'd be helpful because then it could kind of get you to understand how you might want to start looking at this stuff, how you

might want to take a balance sheet apart, how you might want to look at free cash flow and the names that you know you guys are looking at and go from there. That's why stocks like this move, right? Like that's why things like RKLB break out and you're like, "Oh, I missed it. It's a short squeeze. It's this." No, man. They just took in a billion dollar contract, right? Like what's that going to do to their free cash flow, you know, like you start thinking about it that way.

So anyway, we can get into these some of these other names later when we have the time. But that's going to take us into Micron and what Micron's doing and the difference on what Micron is doing. And I think that this is super important. Now, when we look at something like a Micron, we're looking at a completely different chart than we are when we looked at an Oracle and then when we are when we looked at an AVGO, right? And the way that I always explain this is think about, you know, the the WDC's in the world as a uh, you know, I think about those as like they're the banks. And then I and like because that's the data is the gold. Where do you store the gold in storage? They're the banks. I always think of them as like the Wells Fargo of like the gold rush, right? That's what WDC and that's what STX is, right? That's where you store it all. All right, cool. But you still need bank tellers that that know where everything is. You need their memory. That's MU. That's SNDK. That's how I see the world. And it's super important for people to understand that. That's just how I see it. You should view it whatever works for you and whatever makes you comfortable. But this is how I I view it.

So, we could see the chart here. We could see this perfect W and we can see this breakout. And and I do think that there's something to that, right? This chart's breaking out and we should probably talk about what the difference is between Micron and why Micron looks the way that it does and why you're seeing names like, you know, Oracle falter a little bit that are also quote part of the quote AI bubble or why Meta is not moving or why Microsoft's doing what it's doing or why AVGO can't get out of the same place. So when we look at Micron on a free cash flow basis and people say well how do I get this? All I did was you just go through their quarterly reports and you can get all this free cash flow data. Uh but if you if you take a look at this, you could see like this is your memory crash. This is when it starts to recover. People are like, "Oh, memory sucks." Look at the f the fiscal year boom. What do you notice about the difference in the way that those stocks are reacting when you look at something like a micron? Well, you should note that the free cash flow is going up. So, if you were to look at these three reports and say, "Well, what is the thing that I should be paying attention to the most on these earnings reports besides the earnings number?" because you always have to watch how they get to that number and you want to dive into the free cash flow. This is this is a classic example of why you'll see something like a Tesla absolutely explode to the upside and then collapse after hours. People like, well, why? Then you find out that the free cash flow is like, you know, $3 and a stick of like bubbleicious, you know, and I was like, oh god, he's not really making any money. He's just moving shells around, right? Or whatever. I'm not going to pick on Tesla, but it I guess I just did. But it, you know, you have to look at the free cash flow. what are you actually making? So when you see something like this, this is absolutely exploding, right? That's why the stock is reacting the way that it is. But there's also more detail to this. Let's I'll show you in a second here. And this is when the devil gets into the details.

So like something like a micron. Obviously, you have the initial move up, all the option, you know, all the call buy or sell. Uh the next day it abs absolutely rips. It's pretty textbook with what's going on with the algos right now and stuff like that, but you're you're seeing these what we refer to as two a days where like it takes two days for the actual move to kick in. And you've seen this pattern lately a lot. You can see how this thing's just absolutely ripping into the close as people start to realize the error of their ways. But the most important thing about this is what happened here. And what they said was right in this bar and you can go listen to the conference call right here. He said we're going to increase our capex. They're going to increase their capex and their building. Why do you care about that? Because what you'd want to do is know who sells semiconductor capital equipment because they're they just went from $18 billion to $20 billion right on this bar. They said it. Now, why why do you care about that? Because if you're at capacity, even if your free cash flow is high, I know this is getting a little indepth, but stay with me. If you're at capacity, even if your free cash flow is high, what will tend to happen is you have nothing left to sell. Like NBIS is a great example of this. Like NB NBIS killed it. absolutely slaughtered it, right? And you know, maybe maybe you're bottoming here. You know, maybe you're bottoming here. You know, we don't know yet. We're going to have to see. Um, but you know, maybe you're turning here, maybe not. But, you know, you might want to watch this. Um, I think it's also near a key level. You know, I think it's near the 200. I don't know, but n not as close as I think, but maybe you're turning here. Maybe not, but probably worth watching.

Okay, so let's get back to the idea of Micron and the fact that they're increasing capacity where other people are like, "We're out of capacity." So, how do you grow if you're out of capacity? Well, you can't. But they're saying from that point on they're going to increase capacity. And once they said that, let's go back to the Supreme Post. Once they said that, the stock absolutely exploded. It it just absolutely exploded. And candidly, I was actually in here. I was long. I actually did this live uh and and I was like long in here and I'm like, "Nah, they just want to fade it. They're going to fade everything. They want to let it burn." You could see where it dropped right here. And then I'm like, "All right, I'm out." Um, and I just kicked it. I actually went short, made a little money on the short side. And as soon as I heard that on the call, I'm like, "Oh, I got to get out of this because if they're going to increase capacity, what does that mean?" Well, they're going to increase cash their cash flow, right? The free cash flow is going to go up way higher than everybody thinks it is because the demand is through the roof. Go look up memory on Amazon right now and go try to buy memory. I wish you the best. It's absolutely insane. But that capacity increase, they're the nuances that you're looking for. And I'll give you an example of this where here we are with SanDisk and SanDisk absolutely, you know, explodes after earnings and then starts to fade. I actually bought it here and just tell you I got stopped out of it because it just absolutely imploded. Um, and you know, to just wrong time and you know, you want to see if it's going to actually break out this time. But here's the major difference. when SanDisk and this is free cash flow again when SanDisk was part of WDC you had this whole like downturn in in NAN and now it's obviously booming right again the reason that this stuff is booming is because if you think about it you need more bank tellers at the banks because you have all this memory the more that we use these things the more that we use AI you know the more that we you know like please make my email not sound as mean which is apparently what a lot of people use AI for um you can do a lot more with it by the way the more that we use it the more it stores every single thing that we're doing. Remember, we're the data, right? We're the product. They want our data. They want how we think. They're putting it all into machine. We can get into Skynet and the tinfoil hat stuff later, but this is what they're doing with it. You need memory. So, you need bank tellers. So, when we look at something like SanDisk and you're like, "Oh, wow. The free cash flow. Well, that's why this stock is moving." When we start watching all this money pour into this and all this free cash flow, you're going and and you're betting against it. You're betting against that all this stuff is just going to miraculously roll over. And I can see and tying it all together now. You can see how you're getting that with Oracle as you watch the free cash flow implode, right? All right. You can see that with that with Oracle as you're watching the free cash flow explode implode. How are you getting there with SanDisk? How are you getting there with Micron?

Now, the difference between those two names I'm going to get into very quickly here and then I'm going to tie this all together. The big difference and this is why I listen to conference calls. The big difference here was when SanDisk had their conference call, they made it very clear that they had no intent whatsoever on increasing capex. The guy, the CEO there was very, very clear about it. He's like, I don't know that this is going to last. He was not like really pounding the table on it. He's like, I'm not really sure this is all going to last. We're not going to really build out the capex yet. And that's not really what people wanted to hear, right? That's not Everyone was like, uh, well, that doesn't sound great. So, what happened here was you got to a level and you could see the level where you traded up to and then you got back to that level. You always want to watch these levels on the earnings because it'll tell you where the algorithms are and then everyone's like, "Oh, it's so hard to trade because the algorithms." No, Boomer, they tell you exactly where they are. Like I was going to say, buddy, but it'll tell you exactly where they are. So, like they're telling you where they're buying. Like maybe just mark off where the algorithm is on an earnings call or on the conference call the day that that number comes out because it's like, "Oh, we're over here." It's like playing hide-and-seek and they're standing in plain sight. It's like it's ridiculous. So, I think that this is super important to get, but they came out and didn't have the same kind of movement here.

So, what are you learning by this? Like, what what should you take from today? Right? And I know we went into this a little in depth. If your free cash flow is rocketing like microns is, and you're saying that you're going to increase capex, that's a good thing. If your free cash flow is plummeting, right? Like if your free cash flow is plummeting and you're talking about how you're going to increase capex, that's probably not great and it it's probably not going to be received very well. That's what you really need to take from this. And so one size does not fit all. And it ties it back to when we look at something like the Mag 7 again and look at this and saying, "Oh, it's a bubble." There might be pockets that need to be deflated, right? But it's definitely not the kind of bubble that people think it is. And that's why people when people look at something like Meta and you look at their free cash flow and we can see in 24 how they're making all this money and the free cash flow starts coming down. This is why people got concerned. Right? So the one thing that you're learning today hopefully from this is that you want to look at free cash flow at the end of the quarter and compare it to the previous quarter. And if you learn to do this from the previous quarter, then you're going to do yourself a huge favor on earnings in the day after because you're going to understand things that people just aren't understanding. That's why some of these bounce and that's why some of these don't. But there's more to it.

So, if you're increasing your spending, which Meta is doing, like, oh, we have to spend or we're going to miss out like you did with Meta, like you did with those dumb glasses, like your free cash flow right here, it's imploded. Like, you don't have a decline in free cash flow like you have here. Like, it just doesn't exist, right? Like, if you really look at the past three years, where's your free cash flow? So, when you start to see this, it becomes a huge issue. And I think that that's super important for people to get. And so what you what you'll get from this is you'll understand like, well, this is why they're puking the name out, right? If they're not going to make money and you're going to spend all this money from it, then it's going to be a problem. And when your free cash flow on something like Meta is back to a level where you were 2 years ago and you're out there spending all that money, that's why people are going to puke out the name. But you can also realize that sometimes people are going to overreact. And to be clear, I don't know if they're overreacting yet with Meta. I don't know that Meta has a firm foot in the ground with what they're doing with AI. I know they're not using what they want to use there. I know that's the first thing, right? They're not really doing anything. They're cancelling stuff, moving money around, trying to figure out their strategy. But where I'm going with this is now you have the Tik Tok, you can't get over the 55. Remember, this all goes back to what, who, when. It all goes back to where am I going with this? It goes goes back to the stool. So when we look at something like that, it becomes an issue.

All right, cool. Then you have Microsoft. Well, surely Microsoft's in trouble because they're, you know, they're spending a fortune, uh, and they're embed with Open AI and I think the Open AI is actually hurting them more. But wait, there's more. We keep hearing that Microsoft's not doing well and they're not getting this embedded and they don't like this and they don't like that, right? We keep hearing all this crap, for lack of a better term. What's the free cash flow say? What I mean, what's going on here? their free cash flow. They're spending like Oracle and look at their free cash flow. So if you understood that, right, when you look at this and go, "Wait a minute. So your free cash flow is the second highest that you've had in 2 years. So your spending is paying off." So instead of just putting them all together and saying it's a bubble, it it's not. It's some are going to win, some are going to lose. I don't know how sustainable this is and we can make that argument here, but they're already making leaps and bounds. like they're already lining themselves with anthropic with with the Excel spreadsheets and some of their office stuff because they see the turn coming. They're not they're not stupid people. So, we're going to find these winners and losers. But, if I was to do something as simple as this and go Microsoft divided by Meta and we were to look at something like this, right? And and just take here, let's clean this all off for a second. You'll see where I'm going with this. So if I was to look at something like Microsoft divided, you know, divided by meta and then you look at like from 25 over and take from January over, you're clearly better off owning Microsoft than you are on Meta. And then if you start to really look at this from when those quarters of earnings came out after that last quarter, which one did you want to own? Microsoft. So when we start to like turn, if the market does start to turn and go up and you start looking at things this way, it's going to give you an understanding on why some of these things are starting to base, right? why some of these names are going to start basing the way that they are. Obviously, when you have a quarter of earnings, you're going to have a move, but I think that's what you're starting to see here. I think you're starting to get the winners and losers. And I think if you use things like free cash flow, I think it could be extremely helpful to you and understanding which of these names you really want to look at.

So, to to kind of just wrap your noodle around this, you have to look at the data as the data comes in. You have to make your own decisions with all of this. And when the data comes in like like it did on Friday and from a just a technical standpoint, when the data all comes in and you see something like this and you're over the 55, you don't have to try that, but it does mean you have institutional support now. So to someone like me, I'm willing to go through what I just did with you, find the names that I'm most interested in trading, and take the the risk at the appropriate