Transcription
Okay, we might be finally getting there. It looks like we've awoken the giant. It looks like the S&P finally has decided to play along and understand that it's supposed to go down like the rest of the market. And that's exactly what we're seeing here. We're starting to see the S&P actually crack today. And this is a pretty decent move where we have broken the put wall. We have a solid close. We don't haven't had a close like this since June 10th. And so, we're starting to see this participate. And this is really what we need to see for this to come to some kind of end.
Now, right here you have that 695 level. Can you come down that far? A lot of people think that that's maybe too far. Just to put that in perspective, that is a 5% drop from where you are right now. So, I don't really view that as the end of the world. I'm going to give you my opinion on what's going on here. There's a bunch of earnings I have to go over as well. There's some things here I think you really want to pay attention to. I think that you do want to look at things along the lines of percentages off of the 50-day moving average on the index and when you may see a bounce predicated upon that. But most important, what's going on under the hood? And there's definitely three earnings that we have to go over. So, let's get to it.
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Now, I really want to spend a lot of time on the earnings and strategies for tomorrow, but there's a couple things I think are worth pointing out here. So, on the 4-hour RSI, you can see right in this area that you have finally broken through. So, you're starting to get like a 25 reading. When you start seeing these kinds of readings where now you're at a 24 where we bounced here and we're at these levels where you're at a 26 and there was a bounce. I'm not saying that you're just going to miraculously go up because you hit a level, but you want to be cognizant of hitting these levels and realize how much lower you could go and what the market and what the carnage look like. So, and where my head is right now is not so much just the bottoming process, but are you setting up for a bounce? I think you're getting really close to one with how oversold you're starting to get here. The good thing for me is the fact that when you look at the spy caught up really quickly, if you take a look at the socks and where the socks is historically, when this starts to happen and we're this oversold, it's really important to pay attention to this because you can get way more oversold here. If you take a look historically, but you're getting there, you're getting to this level where at some point you may have to have a bounce. Could you come all the way back to the 368? You could, but I mean, you're talking about absolute carnage even from these levels. And the question you have to start asking yourself is that you know Micron's now trading at five times earnings five times. The high on it was 12. So at some point people are going to start looking at these names and have to ask themselves questions. And DM prices are still not dropping. They're actually still going up. So these are questions that we're going to have to ask ourselves. Does that continue? Does it not?
When I start looking at things like S5FI and I divide that by NDFI and I start looking at these bottoms that we're putting in, you know, and I'll just show you this because I do think it's important and I do use this. When you start getting to these levels in this range and you start reversing and you can play here for a little bit and it takes a while for the market to actually catch up, it does tend to mark a bottom. And again, bottoms are ugly. Like it's not it's just not one two three we bottomed and then all of a sudden it just stops. So please understand that you know you can bottom and still say in the bottoming process and still say okay well we might come down another 3.7%. That's a far cry from where you've been, right? So, what I'm saying is that would be a 15% correction and I'm saying that you might be near the last, you know, 10% of that or 15% of that.
Now, there's a lot of factors outstanding such as what happens with Asia tonight? What do they do? How do people digest Microsoft? How do people digest meta? Specifically, Meta, which was a dumpster fire. We're going to get to it, but how are they going to digest this? And I think there's some real questions here. And that's one of the reasons I actually think that you actually saw some of the memory names get a little weaker. So let's jump into it.
So Ma, let's start with this dumpster fire. And you can feel however you want about the company. I I have my own issues with the privacy and everything else, but revenues are okay. Earnings missed, gross margins missed, what they're spending on is not working. There's so much demand for compute that they're selling it to other people. So they don't have the demand, but there's so much else other demand for it that they're selling it. And the on the conference call, he actually uses the line, which is crazy. He actually uses the line where he says, "We're actually able to get it out there for more than what we paid." And I I just think there's more issues here that people are going to start understanding. And out of all the names, I think this one was just an absolute dumpster fire tonight. You can see how it's acting.
This comment as well, I don't think people are really getting this. Um, and I'm just going to pop it here. And a lot of this stuff's being done informally tonight because I'm on conference calls and trading as I'm actually presenting this information to you guys. You just have to bear with me. But CFO 2.4 billion on the side for US trials that could impact youth related issues could result in a material loss. So does this become the new tobacco? And everyone will say, well, no, that's not going to be the case. They have a real problem on their hands. There are several lawsuits that are out there right now. The other thing that seems to be very clear on this call as I was listening to earnings and listening to these questions, number one, they are doubling down on these glasses. There are ads already in the UK for how pervy these things are are. The privacy lawsuits that could be out there with these things and the access to information that people that are, let's just call them not scrupulous are going to have access to everyone's information that's on Instagram and on Facebook by looking through glasses. that that's a real privacy issue for when people are now on the street. I don't know how that's going to go. But for the guy that wanted to turn you into a giraffe and change the name of his company to Meta and just lost what do you lose there? 68 billion for this might be the nail in the coffin for them. You can hear it on the call and you can hear it tonight. We have puts that we did I'll clean all this off. We have puts that we did at the 550 level. I thought they were pretty cheap. You know, obviously whenever this happens, I wish I did more. But I also have stock that I'm short and I shorted more after hours. You know, this 519, if you break that, that's pretty much it. But I think you're hit perma short level here. I think they have a real problem on their hands. And they should be a cash cow. They should be throwing off a lot of cash here. And they're not really doing that.
Take a look at these two slides. So with Meta, there are two slides that really stood out to me that I think are really important. So when we start looking at net income, we have to think about all this capex that's being spent and then where is that money going. So when you start seeing some of these net income numbers and they're absolutely rocking, right? We can see that and we can see that where you're at now. We all know that the earnings per share are way lower than where they were supposed to be. But this is somewhat of concern for me if I was a long investor. I mean I have a short position on right now. So I'm obviously happy. But the issue that you have to ask yourselves is where's all this money going that they're spending? And on this conference call, they made it very clear that their goal is to build this thing out and then rent it. So, it's not like they're building this for themselves. They made it very clear that one of their plans is to build this thing out and to rent it, which turns into a commoditized business. I think this is way worse than people think it is, but this really bothers me.
Now, this is their ad impressions delivered year-over-year percentages. So, we know the majority of people that are using any of these things are US-based, right? Like, that's really where they're at. So if we take a look here, but we can even do the world. Doesn't really matter. So they're spending billions and billions of dollars to drive ads that you want to see so that you have more ad impressions delivered to you year-over-year, right? All that money that they're spending. Okay? So you're going up, you're going down, up, down. Every single one of these people are saying, "Yeah, they're growing. The growth is declining. They are spending billions and billions of dollars on capex in order to make ads more efficient so that you get the right ads delivered to you and that's declining. You can say it's growing. That's fine. That's great. Lots of things are growing. But you actually have a decline in the growth with all the money that you're spending. This is really bad. The other thing that was bad, and I can't even believe I have to that that they're even saying it, but they're doubling down on these glasses. There are so many issues with these glasses. I don't even know where to start.
To me, this was really the big one for the memory space. And the reason is because Lamb Research, 39% of their revenues comes from memory. Taiwan, Samsung, SKH Highix, all the big dogs, Micron, and they came in really solid, I think. So, the EPS 230, the estimate, the low end was jumped. C's first quarter EPS 2 to 230. I think that's a lot better than some of these other companies that came out. It's definitely better than KAC. our revenue 77 to 85. Fourth quarter came in 672 228 EPS coming in at that 182. So that you're talking about a fairly decent jump of 10% there. Also, if you go and take a look at the revenues of coming in at 672 versus 668 and then you're beating by 12 cents. So overall, this was a really solid quarter for the first quarter revenue. You were looking for roughly around 7 billion. So it's a 10% bump on the low end. It's acting very favorably and this is exactly what you want to see. This is exactly what you're looking for.
Now, this is what lamb looks like and lamb looks like an absolute dumpster fire. And candidly, I still like the memory names long term, but they look the charts look like dumpster fires. I mean, you have when it's a pig, you have to kind of call it a pig. It just is what it is, guys. So, when we're seeing this tonight, when you saw those earnings, they were fantastic. So, if Meta presented like that and then the stock was down, well, I get it and I would say, "All right, well, maybe look at it." But when you have earnings like I'm showing you and they're talking about growth and they're taking their numbers up, yeah, they might take the stock down because you still have the insiders that are selling.
I have a whole prep for Saturday's deep dive, too. So, make sure you subscribe because you're going to want to watch Saturday's deep dive. I really get into what's going on here and what's going to change and how this is going to flip eventually. But you have to look at this. They take a look at at STX today. And if we take a look at STX, this was a fantastic, unbelievable quarter. I mean, they absolutely crushed the quarter. The gross margins were up, the revenues were up, the guidance was up, everything was up. And frankly, at the end of the day, they still cleared from where you were previously, and you were still up on the day despite everything. But right now, not now, Larry, but right now, they don't want to own TAC.
Now, for how long that goes on, I'm not sure. You're starting to see these patterns develop where you're having these H's, and whether or not these H's break, that's what we're going to have to see. So when we go and look at like 4-hour charts, I'll show you this. You're starting to hit these levels where and I'll just kind of drop it like it's hot right here. You have your little undercut and then this doesn't go as low as this. So I am starting to get these divergences, but bottoming is an ugly process. And so that means I could come all the way back down and I could hold in here and then I could rally back up.
I'll give you a great example of what I mean when I say this. So like today we had this short on in the community. If you're trying to get into the community, the weight list is in description and I pinned the comment. So, we had a really good short on SpaceX and we shorted the break and then we just wrote it down like we do. But in all seriousness, I saw this move here on the 4-hour and I'm like, "Okay, that's a liquidity grab." And then we grabbed right here and then we lifted up and I'll just show you this bar. And you can see how your step bar is still in control of that entire area, right? And so control bars to me are real simple. Anything that's like onex the ATR. So, I'll show you this because this is going to tie directly into what you should be focusing on. And this is what's working right now. And it's super clean to do. It's like it's not that complicated. It's really simple to do. But here's the ATR. So, if I clean this off and I look at the ATR, that bar is supposed to have a six ATR. So, when I go and measure that bar, you'll see very clearly that I have a 10. So, almost 2x the ATR. And you're not getting a lot of those, right? You're getting something similar here. But really here, that emphatic undercut bounce. And then at the same time on the 4-hour, you're up over my moving average. At this time in a fast market, I did flip the moving average to an EMA versus an SMA. I'll do that in fast markets. And you'll note that my settings are different probably than what you're using. But anyway, the important thing here is I've got a setup here. So, but bottoming is an ugly process. So, I can still come back down, retest this, I could undercut it, and then go from there. So, it's really hard. It's not an easy process.
What tends to be working fairly well when we look at something like a Let's clean all this off. But what tends to be working really well is looking at where the levels are and then trading those levels. So, like for example, today we knew SanDisk up here. We knew that this was that area where they were kind of having issues. And it's right around this here. I'll show you this. Let me pull this back to this area. And then you can't miss it. But I'm going to drop it like it's hot, like the kids say, right here for a minute. And then what we're going to do is I'm going to show you this area right here. And then what you're going to see right here on the 29th to the 30th, which obviously is today, we're going to go here and take a look at this. So they give you this what? Long down bar. Now if you measured the ATR of that bar, even though it's off the open, you're going to be around two something. So they've already picked a direction, right? So you've already picked that direction. You already know what it is. So if I went looked at this just off the rip and we'll drop it like it's hot here for a second. But if I grab it here and just look at that bar at that specific time, that bar is supposed to be around $10. Well, does that look like it's $10? No. Right, that bar is $40. So, I have a control bar like right off the open. So, once I see that, and I can eyeball them. I've been doing it so long, but you know, in fast markets or when you get used to it, you just want to use this. But all I did was just watch that setup. And then all I'm doing, and it's very helpful in this kind of market, is just watching how I act at the previous close. And then the minute that I hit here, try to rally and break, I have a control bar, I'm already rolling over and I'm already rejecting the previous level. This kind of thing will give you an excellent opportunity to get into these names and then you're just trading them down and then you're just watching the previous closes, right? You're just watching those previous lows and then how you're acting there. And this one gave us like 50 points at one point today.
Here, watch this play out live. >> You're getting heavy, too. All you've done is come up to the top of this and can't even rally. What's that? 20 bucks. 30 bucks. See if you can rally here. Cuz if not, it's like a great spot to just put the short on. I'm going to short it. It's not going to cost me much to put that on. And then if it doesn't work and it takes out the high, I'll just get out of it. If they're going to keep dropping it, the whole bar, the whole move is that move. If I undercut here, then I should be able to get down to here. Up 12, trimmed. And now I can just leave the rest at break even. Up 30. I trimmed more of the Sandis. It's the level I was waiting for. Trimmed more. Up 40 bucks. Move the stop down to break even on the rest. So, I'm up $50 on the SanDisk short. So, I've trimmed. I'm 100% out of the SanDisk. I made 40 bucks on the last piece of it. So, you have to take what the market's going to give you and you have to watch your higher levels on these, especially on these Fed days.
When you have this kind of thing, everybody's playing this game where they're like, "Oh, this is it. We're definitely going to bottom." You have to understand something. Forming bottoms is really ugly. And I showed you some stuff earlier on how we're getting there. And I'm really going to get into that on Saturday. And that's why I keep saying you definitely want to watch Saturday's video. But like when you start to see this, everybody's watching this breakout and they're saying that we're going to rally. Oh, we're going to break out. We're going to break out. Like in what universe? Candyland. If you look at the market, like here's where here is literally where the FOMC ended. And you can just see us just absolutely imploding from there across the board.
Now, why are you imploding from that period in time? And I'll show you something here that anyone could have picked up on if you listen to me the thousand times I keep telling you to use RSI. But if you look at the RSI here and then you look at the RSI here, you can see the divergence. So when you're hitting that, you can already tell that you have a massive divergence. You're breaking the EMA as well. And guess what? You'll end up losing a lot, right? I mean, you got smoked. The market got absolutely smoked there. So why do why am I hammering this out? Because there's tools that you want to use during these periods of time. And so I'm going to go back to this. We're going to go old school back in the day. There's your 55, your 12, and your 22. You were below all of those. They are dropping your put wall $20 a day, right? We started at 700, then they went to 680, now they're going to 660. And somehow miraculously, someone thinks at two, you know, on a Wednesday at 230, you're going to time the bottom. Like, you have to let this stuff build. It'll always go back and retest. And if it doesn't, it's going to be such in the face rip and so much volume, you will not be able to miss it. So, when you have this kind of setup, you have to do the kind of trading that I just showed or stay out of the way because trying to go out there and say, "I'm going to stop this or I'm going to get involved." It's very difficult.
For example, I would like nothing more. I was telling the guys in the room today, I'd like nothing more than to start selling deep out of the money long-term puts on Micron. I don't have a reason in the world to do that. Like, there's no reason. This is day three. Every level's being broken. They keep knocking it down. And I have other names like this that I really like. I still like SanDisk, but I'd be a fool to rush into it to go out there and buy that until this starts to settle down. Like, why pay 982 when I could be paying 750 in 3 days? You know, when you carve these out, the tail of the dragon on the end move when you get washed out is the worst part, right? It's not like death by a thousand cuts. It's like getting whipped by a freaking dragon's tail, which is why I said it that way. I think it's pretty, how do you say that? I think that's pretty good. So, we're going to leave that in. Not that I edit these anyway, but there it is. There it is. Breaking news. New saying, tail the dragon.
Anyway, so if we take a look here, like take a look at March. Was that pretty? It was a freaking dumpster fire. People were holding up pieces of cardboard saying we're going to charge them 300%. People thought they were never going to come back. It rips up. Everyone's like, "That's it. I knew I need to buy." Everyone bought the high. 5 days later, they get this. Another piece of cardboard comes out and then wham, it rips. Right? So, they're ugly. They're not pretty. There's nothing pretty about them. If you go and take a look at this, even when you had this one where the Japanese yen trade, oh, it's over. It's definitely over. And then, yep, yeah, that might be the bottom. And then wham, it just gapped down on everybody, flushed everybody out. Everyone's like, I'm done. And then what's it do? Goes back to all-time highs. So, you have to have patience in here with these names. I cannot stress that enough. And you have to be using shorter term strategies. Or you have to tell yourself that you are longer term and there's nothing wrong with that. But just understand what longer term is.
Longer term means that hey if we come down to that 635 which is major support which if you asked me 3 days ago I would have said there's a 25% chance of that. I would say it's a coin toss. I think it's a coin toss now whether or not you come to there. And people say well that's not a bottoming process. Yeah that is a bottoming process. You just wanted to say this is the bottom and that's it. And that's not how any of this works. That's only 3.8%. We probably did that today at one point, I think. Didn't we come close to that? Let's go take a look at that. I love when we could do stuff together. Hold on. Where were we down? 2%. Okay. So, that's just that's a flesh wound compared to what could happen. It's nothing. So, understand that this is where you're at.
Now, you had bright spots and you are, in my opinion, you are getting winners. Now, Microsoft, who knows what the CFO says, but I'll tell you that the cloud sales were supposed to come in the high 30s. They came in the low 40s. So, they're killing it. Their sales were absolutely fantastic. And I do think you're getting winners out of this. People seem to have forgone everything that happened with Google and Google came all the way back to where it closed on earnings. And so you are seeing some stability here, but you have some other things that need to stabilize. You know, we've all become experts in EWY. You know, and today this got all the way back up to where it almost triggered a buy signal and then reversed at the end of the day. And what's so interesting about this is now you're going to go into South Korea tonight and we're going to have to see what they do.
On top of that, you have Amazon. And Amazon clearly is not holding up going into that quarter. I think you have to watch that tomorrow. And the one that I that is just mind-boggling to me is everybody wants to be in Apple for earnings. But if you really look at Apple for earnings, and this is I'm really curious how this plays out. Maybe I'm wrong. Maybe it's cuz it's the only one that's not really spending on capex. But if I'm to look at this and how this is playing out right now, this is really simple to me. You're up 23% on the largest company in the world since last quarters of earnings and it's not like they knocked the cover off the ball, you know. So, I think that this is I think there's a lot of risk in Apple, but you know, we'll see how it plays out tomorrow. For now, I think you just have to watch again what happens tonight. How do they digest the news? And if we take a look at how that news was digested so far today, it's not signaling that this is over. Far from it. But I would like to see some kind of like major wash out. And maybe, you know, maybe that's coming Thursday, you know, Thursday or Friday.