Transcription
We have a lot to go over and it is packed. So, let's just get to it. I'm going to cover what's going on in the AI space. We need to talk about why you need to look at stuff like AIQ. We need to talk about why you need to look at stuff like EWY and what's going on in there. We have to talk about what's happening in software and why that even the funding here is starting to dry up. This is a really important concept. We have to talk about why the dollar is actually rallying, why that is good for the MAG 7. We have to tie this whole thing together. And on top of that, we have to talk about tariffs. I don't really have a choice in it. I have no, you know, nothing in this game, but we have to talk about it. It's super important.
Before we get into any of that, I want to just do the basics because I think there's a couple things here that are really important. But this is going to be really specific, really micro. I mapped the whole thing out. We have to dive into what's going on in Anthropic. But I just want to cover the basics here for just a couple minutes and then we're going to just dive right into it. Again, as always, subscribe, click all notifications, but there's parts of this you're going to want to watch again for sure.
If we take a look at the S&P, we're in that trading range. So, I'm not going to spend a lot of time going, look at it. Look at it bonking around. I'm not adding any value there. I'm not going to point at this or I'm not going to point at that. It's pointless.
If I look at the cues, what I'm seeing is a stair step down. And I'm seeing a stair step down on the 55 that is starting to decline. I am getting a declining 55. How do you know? See the numbers right here? All you have to do is start watching the numbers. And there it goes. 618 46 47 37 21. Now you've broke it. See it? So you can always just go here and start looking for the decline. Is it a slight decline? It is. It's still a decline. Declines start somewhere. This had to start somewhere. And the one thing that I keep pointing out, I trade what's happening. I do not tie myself I'm going to make that brighter for us. I do not time I don't like that's too close to the other one. Uh, that's a 22. I do not tie myself to any theory. I tie myself to what's going on. I'm really not digging that color. Not gonna lie. Not not a fan. Okay, I like that. We'll we'll deal with that. We'll figure that out. We'll have a vote on it. But if you have the yellow and then you have the 22. So the 55 22 and the 12 is what I use. You'll see why in why in this video why I use the 12. It'll become absolutely glaring as somebody likes to say. But you can see that you have the same pattern here. And now you have that pattern here. Does that mean that we're going to get new cardboard because he just got told no even though he was quote a good boy? So, I do think that we have to watch this and pay attention to it, right? It is of significance.
Let's take a look at this though because I thought this was fascinating. This is NextG. Look at QQQ NextG. Look at the difference here on how you're holding the 55. I thought this was definitely worth pointing out. So, if we did something simplistic and said, is it the Q's that are the problem or is it a part of the Q's that are a problem? And I think it's possibly a part of it that we're going to dive into. Software is 18 to 20% of this index. Just FYI and we're going to dive into that today and also into the tariffs in great detail. So again, you're going to want to watch parts of this again.
So we're going to go QQJ and I'm going to take my time and show you how to do this so that you can do it for yourself. Then I'm going to click here and we're going to turn that into a line and then I'm going to get rid of all my nonsense and we're just going to take a second here. And what I'm showing and I think that this is really important is are we losing the NASDAQ or are we losing the old guard? And and I really spent a lot of time thinking about this because I need a life. But like I really think you're losing the old guard more than we're losing just the NASDAQ. And I think that that's where the frustration is coming in for people because we're waiting for this huge roll over. And maybe we do get it because there's signs of that, right? I'll show you one chart here in a second that is mind-boggling. But I'm looking at this and going, "All right, well, the new guard seems to be holding up." Now, what are what is that new guard? It could be anything out there. But if we took a look at this chart for a second and say, "Okay, the new guard's going out." But where's that new guard coming from? It's coming from industrialization. So if you take a look at XLI, it's the industrialization because of whether you like the big beautiful bill and the money that people are getting back. I mean, obvious obviously people don't care that people getting money back, right? The depreciation, the 100% depreciation for farm equipment, everything is absolutely huge for everyone and specifically for these companies. But it's the buildout. It's watching the buildout of data centers. It's not going away. No matter what you think, it's that part of this is not going away. A matter of fact, it's even going to get stronger.
You know, we should just talk about this real quickly. EW, which we've been talking about this channel for months, you just had BlackRock go out there and buy 5% of SKHEX, which is 15 or 16% of of the South Korean ETF. I mean, just in the open market, just like, oh, hey, we want to own five 5%. They did at the highs. Micron, remember we had the ex-Taiwan semi CEO go out there and buy open market just like that. Didn't even think about it. And so when you look at this stuff, they're not they're not doing this cuz they think they're at the highs. So we have to understand that part of it because when we look at the cues, we keep waiting for this 600 break, but are we just rotating? So then you look at the rotations and and I've shown this a million times. You know, the trade since the beginning of 26 has been long semi short software and we're going to get into why this is probably going to continue, right? And you can see the breakout from there. I mean, if you just bought the socks and shorted IGV this year just for the on the year, it's 50%. So, is it the NASDAQ that's in trouble or is it the fact that the the old guard's coming out? And this is really what I'm wrestling with.
Now, let me just show you this one chart and then we're going to dive into it. So, I'm going to show you how I build this chart because a lot of people say, "Hey, how do you do this?" So, I'm just going to throw the Q's up here real quick. And then what I'm going to do is I'm going to overlay IGV for a second. And then I'm going to overlay Bitcoin because these things trade in tandem or they used to. And so what you're seeing is you're seeing this huge diversification outside of that. So then you just go here and you move this to new pain below. And then you go here, you just click on those three dots and you just go move to new pain below. You can always comment on this too. Um, I think it's good that I show how this stuff's done. I think it's helpful to people. So, we have the NASDAQ up here and then we have Bitcoin here and IGB and they all used to trade together pretty clearly and we're just going to go back to the pandemic, right? Because I think it's a great spot to kind of start with. And so, let me just get to that real quick. And what we're seeing is we're seeing Bitcoin roll over and we're seeing IGV roll over and then we're seeing where we are up here. Now, the question becomes, does the NASDAQ follow as it's done through time? I mean, they've all marked the same bottom over and over again. They've all marked the same top over and over again. Or are you going through a paradigm shift? That's really the question here.
I'm going to give you a lot of information today with tariffs and what's going on with AI, specific agentic AI and how it's disrupting industries, but I'm wondering if you're going to go through more of a rotational shift and that we're getting rid of some of the old guard with the new guard coming in. I'm leaning that way right now. Just being candid. I'm not sure that I'm right yet, but I'm starting to lean that way the more that I start to look at things. So, let's get to it.
Now, I went through a bunch of research today, and I wanted to share six names with you. If you're in the community, you know, I do this every week, and I go through a litany of notes, but I just think that there were two major events this week, and I want to just give some semblance of what I think you need to be focused on. And you could see this in front of you right now, six names. But what what you have to do is look at the two main events that happened yesterday and really look at this and say who's affected by it. I always find it's best to just take a step back and recalibrate. It works for me. You should do what works for you. But by doing that and almost going to the point where you're looking at your account and going, "Okay, if I had to start from square one knowing what I know now, what would I do?" So, I'm just going to repeat that statement again. If I had to start from square one knowing what I know now, what would I do? And if your portfolio doesn't look like that, then that's what you know you have to focus on.
So I have six names here. ELF, Restoration Hardware, Black & Decker, Crocs, Deck, Williams, and Sonoma. I thought UBS piece was worth pointing out a couple quick things here with you. I'm not going to get fully in depth, but I just want to go through this very, very quickly so you have a framework going into next week. Now, manufacturers are almost entirely out of China. The EA tariff removal slashes and puts costs on cosmetics and personal care products overnight. One of the highest China exposure consumer brands on the market. And I think that this is important because when certain names move, you need to understand why. Because if we get more cardboard coming at us, we need to know is it going to affect us? Is it not going to affect us? And I think that you could look at this and say, "Oh, okay. Well, the removal of these slashes their costs. Cosmetics come in, personal care products, all that pricing comes in. You have huge exposure to the consumer brands market, they would benefit. And these names are all going to have a little different when I went through them, they all had a little different slant to it.
So, Williams and Sonoma, how do they benefit from what happened? Williams absorbs that cost. So, Williams gross margins is have been absorbing that. So, it flows directly to the bottom line. But here's what's interesting about that. Does Williams lower the price or does Williams just take in all the extra money? So, next quarter for Williams could be super interesting because their gross margins and everything might just go up and the price point might stay the same. I thought that this is the kind of thing that you're looking for because then when you see that wacky quarter, you're like, well, why the heck did that happen and where would we be without Crocs? I actually got bullied into buying a pair of Crocs in the community. They were all over it. It was a couple years ago. It was pretty aggressive, not going to lie. Footwear supply chain runs through Vietnam and China with EA tariffs gone per unit. Cost relief is immediate. Croc's volume makes even small savings significant. Yeah. I mean, if you're saving 10 cents to a dollar, whatever that number is, it does add up and it goes right to their bottom line. And a lot of people don't know that Deck owns UGG and Hoka, which I just thought was worth bringing up. And the theme that I noticed here were goods, specifically footwear goods. But you know what they didn't have in this group? And I'm just going to save you a bunch of time. Spoiler alert, they didn't have Nike. So then when I dug into where Nike does the majority of their business, it's really not China. Uh, but again very similar theme here with the footwork hardest hit categories. So footwear was among the hardest hit categories and I saw a bunch of people say oh look at uh Birkenstock. I mean who wears Birkenstocks like four people. So if you it it okay I get it. Everybody wants to like wear their Birkenstocks and eat but people actually go to the gym. So if we if we think about it from that standpoint you know Uggs all the girls with their boots I'm different and then Hoka I see a lot of those at the gym. So, if you start thinking about from a volume standpoint, this makes a lot more sense to me. I think the lower import costs and the margins already being where they are. Are these corporations going to lower the pricing? And like, think about what did what did CMG do? Did they lower their pricing when PCE or CPI dropped? No. The price of a burrito or a Chimmy Chunga, whatever you crazy kids were getting there, same same price, right? They just made more money. Uh, Stanley Black & Decker tool giant sources components globally. Tariff relief on imported parts and finished goods directly hits the P&L. Management had flagged tariffs as a top margin headwind, that pressure eases. So, if they're saying like, "Hey, we're topped out," which you can be. So, if you know anybody that works in their industry or works with their hands or is a day laborer, construction, however you want to phrase it, price point's a real thing here. Like, that's a that's a real thing and it's definitely something that people want to pay attention to. So, I I can't stress that enough. Looks like when I screenshot this, that little sucker is right there. That's going to bother. And you guys probably wouldn't have noticed it if I didn't point it out, but there it is. There's one of my imperfections. All right. So, I mean, if you know anyone that's in that industry, them going, I'm going to spend 500 for this or 800 for that. It it hits their pocket. You know, that's a day or or a couple days or a week of that tool that they have to work off. So, I think this is super interesting, too, because I don't think a lot of people are going to think that way. Restoration Hardware. Now, Restoration Hardware is heavily sourced from Asia. And we saw it pop up and then roll back down, but directly reduces COGS on high ticket items, expanding already thin margins at price point where consumers are most elastic. And you know who else didn't move was Wayfairer. They really didn't move as much. Like they popped and moved and a lot of these names rolled over. So, I personally think the strategy of taking a look at everything right now, I'm just going to speak strategically for a second, then we're going to look at six charts. I think strategically looking at these, you have to think to yourself, am I set up for what just happened? And what just happened was like a 1% chance. Nobody had all of this being thrown out. All of it was thrown out. Not a piece of it, all of it.
Let's get to it. So, what we're going to do is I want to spend a moment to just go through these six and take a look at them very, very quickly from a technical standpoint and then also look at how they acted after comments and before comments. So, we can see earnings coming out on Crocs. And there's a couple what I think are really cool interesting things about this one. The volume. You were obviously greater here, but look at your close. You're starting to close above the previous close right in here. These particular patterns up down with the higher high. I love patterns like this. They're so they're so easy to see and they're so easy to just figure out where your stop is. And and just I'll just do spoiler alert. I tend to just use the breakout bar. I don't even need to use that because when you start making these lows, lows, like lower highs, you have these inside bars right here like this double inside bar breakout. I would like to have seen more volume. If we drop this to a 5m minute just for a second and we're not going to do, you know, full analysis on all of them because we'd be here for hours. But this is pretty clean and you can see that you're just sitting at that 100. I would watch this. I'd watch this next week because a lot of people are going to do what I've done this week that I'm doing with you right now and digest all this news, read all this research and then really take a hard look at these and say, "Okay, who really benefits from this?" And you also have to think about, you know, and I I make light of this to some extent, but you have to think about who can he attack? Meaning, if you're going out there and saying, "Tariffs didn't do what I wanted them to do or they did this and and I don't like them." Um, and now I'm going to do this to show them. All right? And I'm just, let's just paraphrase that because it is what it is. So, so for me, are you going after footwear? Probably not. Like, footwear is probably not your thing. And I wonder if that's why UBS looked at it the same way that I'm looking at it, going, you know what, we need to attack. We need to attack footwear. Like, I I don't think that that's where they're going with this. So, this is definitely on my radar.
Now, Deck I felt the same way about, but I think the more pressing matter for me on deck and why this one just didn't really I would just say it wasn't as exciting. You can see the breakout bar. You can see when we tried to get over, but the thing with deck that really bothered me on this was the following. And you could see some buying at the end of the day. Sure that. And you always want to watch your market on close, especially when you have stuff like this. But if we take a look at the breakout bar from that day, yep, you got back above it. Yep. But you took out the low and if you had all this information, you still can't get back above the open. It's on the list to watch. But if you had to go and you had to rank them so far, which is, you know, what we're attempting to do here, I get the undercut, the flim flam, and the ability to go out there and see what you can grab. I get the holding the open, and I get the retest of where you broke out like you did on Crocs. I don't get the fact that you are looking at this and saying, "Yeah, I don't I don't know that I really want to own this over that level." So, we have to understand that this is one mechanism, but is there other things that are wrong with with the organization that we're not getting? We're approaching it from one area, right? We're approaching it from tariff bad, tariff gone. It is what it is. And so, are they going to come back with it? I think he's going to come back with something else, of course. And we already saw what that would be. But a lot of this after 150 days is going to be Congress. So, it is what it is, guys. Um, and I'm going to get into, you know, three other names that I think people are not paying attention to that I think you should pay attention to as well.
Now, this is where it gets super interesting to me. I've had someone in the room that kept talking about Estee Lauder, too. But if we look at this kind of level, this this kind of stuff to me is the cat's pajamas. Like, this is the bee's knees. So, and I know the kids are still saying that. So, you see how you broke down here. And so, what did you have? You had a bad day, right? All right. So, why did you have a bad day? Well, your revenues were off. Why? Well, people probably aren't buying your stuff. Why? Because it's too expensive. Well, why? Cuz tariffs, right? Let's see if we can get that a little bit stronger. Yay. And so what we're seeing here, and again, guys, I just have to do these raw and unedited, so you're going to have to just put up with some height a little bit. Sometimes things bother me. All right, so if we're if we're looking at this, we broke down. All right, so we broke down. So that's what we refer to as a control bar. And the majority of activity stays in that bar, hence the name why we would call that the control bar, right? We popped out of that and they said, "No, we're more comfortable up here." And then we said, "All right, and now we're back to this level." I think that this is super clean. And I think that if you really look at the volume, the way that you popped out over here, I I think this is really interesting because you had two really bad quarters where earnings were good, but revenues down, and then you come in here and you're crushing and they're kind of blowing it off probably because guidance was gross. And I don't think guidance is going to be as gross. Because if you're looking at it from the standpoint of like a beauty product, it's a low it's it's I don't know what the margins are on beauty products. Let me just say that. But I would believe that with ladies that buy a lot of this stuff, obviously that there's a price point. And when you hit that price point, they're like, "No, I'm buying this one versus that one." Even though they might want this one versus that one. And the ladies can always comment on this stuff, cuz I'm just speaking at a turn. But to me, from a technical standpoint, you have this wedge right in here that is just fantastic to gap fill. So, if you were to look at something like this and just drop it like it's hot and all I did was drop an anchored volume profile down to this level. So, we could look at it and you're already over that volume. So, you have all this support down here and you tested it and you flipped it. You're setting up in here. And I think this is interesting.
Today's video is going to be a little more specific, stock specific, as you can tell. Do I like that we're below the 200 day moving average? No. But I think you have to look at this and say, do we have a fundamental shift in the story? And the answer is yes. Now, if you're a stickler and you're going to say, "I only buy companies that are above the 200 day moving average and I want everything aligned and so we're going to just pop everything in." So, everything's aligned, right? You're above the 200 clearly as well. And we looked at this and realized, well, you're cooking with oil or however they say cooking with Crisco. Isn't that the same? There's Well, something like that. Anyway, if you look at this, you're already pushing through and and I'm just going to just do open, high, low, close for a sec. If we go to that bar and drop it, well, that's where you close, but here's the open. All right. So, we go to the top of this and go, well, that could just be a 225 or some kind of level, some kind of call wall up there. Let's go take a look at this on the weekly. And I think that this is to me where it got like really interesting going, okay, let me get this straight. We're at highs and you're one of the biggest beneficiaries out there, right? So, I'll say that again. You're at highs and you're one of the biggest beneficiaries according to UBS of what just transpired. And I think that if you really look at it, we can see the cup. Here's the handle and the little teapot, right? So, you're probably setting up to break out. Um, how do you measure stuff like that when it breaks out? I tend to use just straight up and just use fib levels. I find it helpful take the swing high the I try to find the more previous swing high. Uh, they're usually pretty darn close obviously and then just go from there. And then all I really want to do is just drop it like it's hot and come up with the first one. And that gives me an understanding. So really, you're at like that 275 later. I'm going to save this for later because it's so nice. Not nice. Let's take a look at it. Look at it. I think that this one makes a lot of sense because you're already at highs and investors will look at this and say, "All right, things are already firing." And so all you're doing here now is juicing the returns. You're juicing your gross margins. And so then you look at something like SWK. I'll go back to candlesticks and we'll just look at that on the weekly. And we can see the breakout here in the flag and how you've been turning. So we can go back to here and go, okay, this is where we had all our winning and liberation. And let's just mark that bar off because this was that flip right here. And we can see the undercut from there. And then of course we came down to this area and we backfilled some of that, right? And we can all see that backfill area. Then if we come across to here, we can see the test, the retest, the breakout, the retest of that area and the push. So I'm just going to show it again so that you can see what I'm saying. So we break down, right? Pulls out the cardboard, comes down here, pauses the cardboard, breaks out, retest that area, grinds up to that area of interest. From there, we break down again and test and test. So this is a really big support area. Then we break out again finally after about a year of that and then come back test that area which is the really the top of this control bar from that move and then start breaking out and flagging. Now if we look at this you're doing that ahead of what just transpired. So are people getting ahead of this? Maybe. Or maybe they're looking at the earnings and going okay well the earnings were fantastic right? So not really. No revenue was here and the earnings were still up on the gross margin side. So no revenues really weren't fantastic. But you know what you do have? You have a scenario where they're blowing all this off and you're setting up to break out of those highs and you have a little bit of a gap filled up here. So I think this one's as interesting as well. I think that if you had to rank them so far, I think we'd have to look at that Williams and Soma as the best looking one, but I also think we'd have to go back and say to ourselves that ELF has that gap in there. This is super interesting as well because of the amount of volume that came in. So this means that to me that that's on everybody's radar.
If we go and take a look at Restoration Hardware, and these were the ones that I thought were interesting. I thought W was too, even though that's not on the list cuz this looks gross. Um, you had earnings and from that earnings you haven't broken down, but that's because I think everyone and their sister short it. If I take a look here, we completely ran up and then we came all the way back down to this level. Here was the earnings. Here was the rally. So, are we forming a cup? I I don't have an answer to that. What bothered me about this was the lack of follow-through and the lack of people that are short that were concerned. Like if I if I was short and I got that moment, that's the moment that I would panic. That's the moment that I would say, "Oh boy, there it is." And that would have been the wrong move. So where where I'm going with this, and this is really what we did Friday uh when this when this happened live and we were trading live was I just stopped and said I'm I'm a net seller. So, whenever I have an event like that that happens, I just become a straight out net seller. I'll sell into these rips and then I'll come back and then re-evaluate the situation per idea and then want to really look at it. So, I don't know who's going to be affected by it, but I know that I don't want to be around and miss that opportunity. So, I'll give you a great example. I really didn't want to be trimming this EWI. We've been in this for a while and this all ties together to just theory on just trading theory and everyone's trading theory is different, but we're out there. Let's get rid of this pre and post cuz it disgusts me right now. And so all of a sudden we're out there and we see this move. Well, we had an additional that we added to the original position and really good news on the on the stock market in Korea and obviously with they're very strong in memory, but you're selling into these because you don't want to be selling into these and you say, "Well, I I wouldn't have sold." Okay, all right. You're special, but you're not going to panic. But you want to get out when the getting's good and then reevaluate the situation. So, if I get out here and then I just get back if I get out in here and I just get back in on the breakout, did I really lose anything? Not particularly, no. I just protected myself and you can always put it back on. And I tend to find value, and this is why I always trade liquid issues. I tend to find value in that strategy because if you look at something like a Nike, and this is where I'm going with it, oh, I, you know, Nike is going to benefit from this, and you sell into this, you never came back. Now, that could be because people started to realize that Nike is not the one. And that's that's okay. But having a framework on how you deal with these issues, if you can listen to that part of video again, probably be really helpful. If you have a framework with how you can listen and look for this stuff and go, oh, it's one of these. See, people will say to me like, man, you move really fast when something happens. It's because I've I've already categorized it. I've already said, oh, if this, then this. So, when we knew tariffs were coming, I knew like if tariffs hit, it's going to be good and then I want to get out and then I want to reassess. And that allows us a lot of flexibility. And that flexibility is really where you want to be, especially for what we're about to talk about next.
Now, before we go to the next topic, I just want to point this out because I do think it's important. China's share of US imports has fallen. And this is from the Census Bureau. And the reason I'm bringing this up is everyone's like, "Oh, China's going to benefit greatly from this." Here's the issue. China never really went away with their percentages. If you start going through this graph and look at 17, 24, and 25, you're just going to notice some really significant changes in a couple areas. And those changes really started happening around 24, 25. And really, it's Mexico and Vietnam. And you also see this quote unquote other, which is really also other places in the Pan Pacific area. Um, and really what China has done is just used intermediaries. So they've been using intermediaries as Mexico and as Vietnam. There is this huge disbelief that they're using Canada in some way and you can see things with Canada are not going great. So, which is actually sad. Um, but I they really need to fix this. Anyway, uh, side note, but if I look at if I look at China and the US needs to fix it, not Canada. So, if if you look at China and you look at Vietnam and what's happening there, I think that this is a real um I think it's a it's a real issue because a lot of people are going to look at this and say, "Oh, China is going to benefit the most." China never went away. China just said whatever boomers, we're just going to use intermediaries like everybody knew that they were going to do anyway. And I think that's a very important distinction.
What the heck happened on Friday? And this is really important to get and I can add a lot of value here, I think, because I've been I've seen these cycles before and what I've noticed with the community and I'm sure a lot of people said too is, "Oh, this doesn't affect my software company." Yeah. Yeah, it does. And I'm going to I'm going to explain why. And we're going to dive into this a little bit. We're gonna have to go through what's happening on the private credit side too to really understand this. Making Frontier cyber security capabilities available to all defenders. February 20th, 2026. I'm going to say this and I may have said it earlier in this video because I do record different parts of this even though I keep it raw and unedited. Share these videos. I specifically do not run ads purposely because it's a pain. I hate when I watch something and they're there. There are parts of this that people are going to want to get. And I really want this one shared as much as you possibly can on social media or buy the water cooler wherever because people need to understand the shift and I don't think people are getting this. So let's get into it.
So we've all seen software names and we've all seen them start to come in really really hard and you have these AI agents and we all all of this part are all aware that there are these AIs whether it's Claude or Gemini or Grock. We're all hearing all about them. And so this is from Anthropic. And what I would suggest that you do if you really want to get up on this stuff is go to Anthropic and just get their news articles and just go there and read their updates. They'll tell you exactly what they're doing and how they see things playing out. But what what's happening in software is not going to go away. And you know, it was interesting. I was talking to the one of the guys I actually coached last night and his comment and I agreed and I echo the comment. This is not going to get dumber. This is going to get smarter. And and so what you're seeing here is like here's software engineering. 49.7% of what these agents are doing these agentic AI is how they refer to it. What are they doing on this quote clawed code? 50% of it is coding back office automation. 9%age of tool calls meaning what you're asking it to do is engineer a piece of software. So the dramatic drop that you're seeing in software is significant. Now this is where it gets interesting. You're only asking it to do 4.3% in sales and CRM, but you're creating software to do that. So, how does that tie into it? And if you really go through this, it points some things out that I think are just fascinating. Like e-commerce operations are really only 1% of this. Like how how much automation is coming in e-commerce? Probably a lot, right? Or gaming, customer service. And this is the one that should just wake everybody up because I don't think people got this. Customer service. Yes, cyber security was only 2.4%. But this was point put out before that article that I just showed you. Now that headline hit Friday and this is what it said. Claude code security a new capability built in Claude code. So you have Claude code and now you have Claude code security that is in there. And Claude code security is what is scaring people that are in cyber security. And I just showed you that it's only 2.4% right now. Do you think that cyber security tools and requests for tools are going to go up or down? Just think about it that way. Are those requests going to go up or down now that Claude code can do Claude code security? You can comment on that, but please make sure that it's the answer's up. Uh, it scans code bases for security vulnerabilities, suggests targeted software patches for human review. It scans code bases for security vulnerabilities and suggests targeted software patches for human review. Allowing teams to find fixed security issues that traditional methods miss. Okay. Security teams face common challenges. Too many software vulnerabilities not enough people. Existing analyst tools help but only to a point. They usually look for known patterns, find subtle context dependent vulnerabilities. Requires human researchers who are dealing with ever expanding backlogs.
So how is it going when people are using Claude code? Do they like it? Auto approve rate experience. So this is what's so fascinating to me. The more that they are using it, the more that they use Claude code, the more they are auto approving the rate by experience, meaning they're just allowing the thing to do the thing. So it seems to me that you start an inflection point right around 100 sessions where just whatever it wants to do, you're basically allowing it to do. And then you have the variance. What I thought was really fascinating to me was the increase in variance the further that you went out where some people are just like yeah whatever it wants to do yeah that's the way to do it and other people are kind of pulling back from that. So the variance was why obviously you can see the trajectory the variance of the trajectory was kind of interesting to me and I don't know really what that's saying why why we're seeing the variance. You would think that it actually might get a little tighter but it's not because you would think that you'd get more to an average but that's not what's happening. So, I don't know if this is something for us to keep an eye on, but people that are using it, they're using it more and more and what they're doing with it. Claude code pauses for clarification more often that humans interrupt it. So, I just want to say that the the thing's evolving. Humans, of course, I call it the thing. Humans, of course, aren't the only actor shaping how autonomy unfolds. Practice Claude is an active participant too in stopping to ask for clarification when unsure how to proceed. We found that as task complexity increases, Claude code asks for clarification. So, it's asking for clarification more than humans are interrupting it.
Now, I just want to take a second and go back to this so that you can see where I'm going with this. So, we have cyber security at 2.4% right now and they just rolled this out. And I just want to let you be aware of this that on the 24th and you can go to the website yourself and pull this up. They're going to have a conference on the 24th. I think it's at 9:30 uh New York time. I think it's free and you can go to their website. I can't imagine it's going to get better for these names. So, this is where I'm going with it. We have to understand that software is anywhere between 18 to 20% of the NASDAQ. We just have to rip that band-aid off for a second and then we have to look at how this is going to shape everything. So if I look at IGV and we're sitting in here and I am holding this area, there are a couple things to point out. And again, I'm not saying it's it's everything's going to fall off a cliff. That's far far from it. We what I'm saying is you don't know how this is going to act. But I said something earlier where I said I get out and then I re-evaluate and then I make a decision. And the reason that I go risk off and then or now what now what's really going on is for clarity. It's not my idea. It's how I learned. So the way that for those that don't know me like I've been trading a pretty long period of time over two decades and I was trained institutionally to look at things from the perspective of how an institution would look at a growth thematic area whether that's technology or industrials whatever. So, I understand how these people that have very large swats of monies think. And the very first rule of thumb is don't lose money. Period. End of story. If you don't know, when in doubt, get out. There's a reason for all these sayings. So, when we're seeing something like this in this area, I think you could hold. But there I go again thinking, so when I start looking at this and how down we are and I keep waiting for it to turn, we're still not doing that. So then when I go and really dive into this and we'll just pull up the four horsemen really quickly in here. And the four horsemen are rate of change, MACD stochastics. And if I look at this, I don't really have anything there that is telling me that I'm ready on a weekly chart. Your your MACD is rolling over still. The rate of change is still not even remotely showing any sign of giving up. And the RSI, I get that they're all washed out. I totally get that. And if you really go through it, these are excellent periods historically to start looking at some of this stuff. But we don't even have anything building. So at least when you're returning in here in December, if you look at stochastics here, you can start seeing, all right, well, we're going sideways and then we didn't hit a lower low and then we undercut here. But at that undercut of that lower low, at least the MACD was higher. Uh, you know, you could kind of point to that and say, well, the RSI was going higher, too. So, okay, so we have something to work with. I I don't have any of that here. Now, you're talking to someone that's actually long IGV from a long-term trading standpoint because we stopped at the 200 and I did the trade. You You have to really reevaluate this stuff sometimes and go, "Okay, is that right?" I actually think that that when I look at this stuff that we might be setting up for more pain, not less. And I'm trying here on the daily. There's a couple spots here where I'm really trying where I'm trying to flip on the MACD. I'm trying to flip on the rate of change and it's not really getting there. So to me the very first thing if I got rid of this and said okay well get me through it walk me through what's really going to do it because this looks like exhaustive selling and this is where we are and there's a couple other things but for our purpose let's just find a demarcation line that has worked in the past when we're this down and the very first thing that that we would want out of everything is just to close over the 12 SMA. So if someone said to me what what would convince you that you have a shot here just like so so there's a chance I need to at least start closing over that 12 SMA and I'm trying to be more micro sometimes we do these videos and I'm pretty I'm pretty macro right and I'll give you 34,000 ft up and then other times I'm just like these are the stocks you need to look at. You always can comment on that but there's a reason why I'm doing that because specificity sometimes is really what we need. And so what I'm seeing is I'm seeing people try to wind their way through this stuff and I'm just going to give
You, you know, my two cents and you can do whatever you want with it, but when we start seeing things like Microsoft and the fact that Microsoft can't get over these levels, it's a problem. And the funding of all this is going to be a problem, and you're going to have to listen to that part of this to really understand it in a minute because it'll explain why Oracle tanked the other day and why you need to start caring about this one side of the market.
Um, it's a it's a small thing that's going on and I don't think people are are fully getting it, but unless you're really into this, so I just want to point it out. But if I look at Microsoft, all right, so we're trying to hold the gap fill in here and that's obviously a big portion of it. And then we look at Oracle that rolled over and this is I'm going to clean off my million levels. And I just want to show you this. I need to get above the 12 and stay above the 12. Have I had closed above the 12 once yet? Like let's just look at it once really, but never made a higher high. So no confirm. And then what did it do? It roll. It rolled over again.
Now, I keep a very I actually shorted that for the day on Friday, but I keep a very long-term position in Oracle, like with a multi-year kind of time frame, and you might not know that I do that kind of stuff by looking at some of these videos how fast I'm I'll move, but it's compartmentalization. And um I'm fine with it, but I realize that like this can get much much uglier. Like you could we could be looking at 118 pretty easy here and faster than people think. And I think that that's part of the problem that people are understanding.
But I want to tie this together to the anthropic news and then I want to tie it together to the more broad-based problem so that you can understand what the what the more structural issue and please listen to these words what the more structural issue is going to be going forward because if this seizes up what we're about to go over it really does become a huge problem. So if we look at Oracle and we go all right and then A which was the one that started to get you know close over the 12 and they're going to do their own uh social media which I think is fascinating and it's definitely on my radar now this name um that they're going to do that they came out with that statement and then you know conveniently the SEC came out the same day and said oh we're still investigating the company. No real understanding of why that had to come out that day. Odd don't you think? So um you know always watch the names that they're trying to suppress. Anyway, if we take a look at that, you're like, "All right, well, you came in because you went up and then no, you had that piece of and you might want to look at that news and the timing of that news."
So, then that takes us to, okay, well, where are we going with this? So, we know the CRM names are rolling over and they're coming out with earnings. And then we know that the CEO of Workday resigned uh here and that we know that we're down from that peak here, we're down another $20 in like 2 weeks on this. So, they are still getting out of what they think are the problem names here. And that's what they're doing, right? They're getting because because there's certain names that are going to get hit harder than others and there's names that they're getting out of like now, right? So, if we take a look at something like now, everyone thought it was over. And again, I'm just giving you like a 12-day moving average on these charts to look at. So, you can kind of get a sense of why I use a 12-day sometimes, but you should use what you're comfortable with. So, we're seeing these names continually break down. You're like, "Thank you, Captain Obvious. I can say it." What's going to turn that around? Is AI going to get dumber and less efficient? That's not going to happen.
I mean, look at the amount of money, you know, when we when we we talk about where all the money's going and you look at Black Rockck just bought what 5% of Heinix at the high. We all know this. We're going we're going to touch base on it in a moment. And you know, we watched this the the ex CEO of Taiwan Semi go into the open market and buy almost eight figures in the open market for himself at 337. And you think it's this is over. Nothing is over. Nothing. So, let's get back to this. Thank you for reminding me of that a thousand times. So, if we get back to this and go, "All right, well, where you going with this?" None of that's going to get better, but cyber security was supposed to be safe. So, then you go, "All right, well, cyber security is going to be safe until Friday." Now, do you think that these people are going to wait around until they can get until they get work? Do you think that that's what they're going to do? Do you think that people that are in institutions are going to sit around and go, you know what, I'm just going to go for a 40 or 50 point ride and see if PaloAlto can figure it out? Like, let me tell you what they're not going to do. So, they're going to get out of these names whether they think they need to be out of them, whether that's a thing that I just went over or it's not a thing. They don't care. They're just going to puke them. And that's what happened with Crowd Strike. I don't know why you gave me that one. Work with me. So, that's what happened with Crowd Strike. That's why these things reversed the way that they did. Everybody was like, "No, cyber security is fine. We can buy cyber security because they're not going after cyber security." Myself included thought that. I'm like, "Well, this might be an area that we might want to start buying." I started thinking about buying P&W longterm. that article hit, everybody's going to puke these things. I was talking to one gentleman that's actually an expert in the room and he was explaining to me why Net, and I'm not a software expert. Far from it. Far from it. Look at turn this thing on. But he's explaining, "Oh, well, no, Net's not affected because of blah blah." Like, bro, no one cares. No one wants to wait for the next patch or the next thing that's going to destroy their company. Like, you you have to think about it that you're these guys are in defense. They are playing defense now. And if you understand that, they're not going to care. This is going to present an enormous opportunity to buy software companies when this is done. This is just starting and we don't know how deep this is going to go on the cyber security side. And so when you have this weight on you, you have to understand that you have to deal with this weight. I want to explain the other part of this, but to me looking at crowd or looking at net and say, "Oh, this doesn't affect my company." That is not you. You don't want to talk like that first, but second, you don't want to think like that here. You have to think in your head like if I'm an institution and I'm getting my butt kicked in software and memory and storage and semis are going up and then we start looking at this and going, "Well, what's happening?" Well, here's the socks. Here's the IGV. I don't know which one you want to buy, Rocky. You want to go out there and pick out the software name because you know better. Meanwhile, you don't know what the next anthropic patch is going to be and what that sucks it's going to do to your stock. Like, why play that? You know, there's a lot of things that really got thrown off this week and I think if you spend some time on it, it would be very beneficial and this is the one that I don't think people are getting.
Now, this is just FYI, I am short Al and I'm short a lot of these kinds of names. I'm also short uh Clara. So, I just want to go through this. I actually think this is a zero. Sorry, not sorry. With Al, why do I care about this? AL has been in problems because they have taken a private credit and they have turned that private credit product into something that retail can buy which is always a disaster because if it if the products are really really good institutions just eat you don't have to go find a separate market. So you just you just don't because there's so much capital out there that's looking to deploy and make you know alpha. So if we take a look at Allen and how this chart's set up you can obviously see the break in here from earnings and how we broke down and then the bounce whatever and now we're down here and you can see where this is probably heading. All right. Why do you care about this little company? Like, why would you care about this? This is why they came out and said they're going to do slow down redemptions on one of their funds. One of their funds that has what in it? Software private credit debt. So, to be clear, smaller companies, and I'm just going to pick a name and you're going to tell me no, but I'm just going to pick a name. Small companies such as doesn't have to be net, but such as net or now or Monday, okay? any of these companies all of a sudden they have to go and raise private credit and they'll raise private credit meaning borrow money privately instead of doing a secondary to dilute their shares or something along those lines where they're going to go buy bonds whatever they'll just go give me private credit I have to pay 50 basis points more or 100 basis points more but it's done right think of it as like if you have a line of credit against your house versus re a refi you get a line of credit it takes you like a day or two that's it versus the other way around All right, cool. So, you understand, you have an understanding of it. They froze redemptions and then when they froze redemptions, all of a sudden, you know, everyone was up in arms over it. Wait a minute, this is supposed to be a retail product. What do you mean you're freezing redemptions? And then all of a sudden, I don't know if you saw the tape. Warren Buffett or Warren Buffett, Elizabeth Warren comes out. I need more coffee. So, Elizabeth Warren comes out and again, these are just going to have to be rolling edited because I because from part stake, but she wants them in front of Congress. So, I actually think that the guy was like, "Oh, for God's sake, now now I'm now I got to do the perp walk." Like, "No, no, no, no, no." So, what does he do? He realizes, "Okay, well, this isn't working." So, he goes and finds buyers. He found three buyers. Four buyers. Out of those four buyers, one of them is their own insurance company. All right? So, out of those four buyers, one of them is their own insurance company. All of the debt that they sold, they're selling at a discount. So, not a big one, but below par. So, the rest went to pension funds. So, just just think about this for a second. You either couldn't find a buyer, right? or you decided to sell it at a discount to your own insurance company. Either way, you get a bad taste in your mouth. But do you think that the market right now is looking for more private credit in software? Do you think that right now the market is saying, you know what, we need more private credit and software. And the answer is, and you don't have to comment on this, is no.
So, what does this do? This is like this is so important because if they can't go to the private credit market and the private credit market for software starts seizing up and let's say it doesn't seize up let's say it stays the same or slows all the growth of all these companies that you're talking about goes to pretty much nothing and actually starts reversing because they can't finance it whether it's crowd or paloto it doesn't matter and then who wins right then you have to think about well who's going to win well the mag 7 are going to win why they don't need private credit or which is dropping And Oracle is dropping because Blue because of what happened. They're like, "Oh boy, they're not gonna be able to fund the market." Oracle just raised 25 billion dollars and was oversubscribed. Google just raised billions and was oversubscribed. So if you tie this together, and I'm going to leave you with this one last piece in a minute, that's a real problem. If private credit seizes up for software names, and it benefits the big dogs because they don't need private credit. They are private credit. They are their own bank, the metas of the world, even Microsoft. But I think that you're just going to have to deal with the overhang. you might want to watch those parts again because that's what's going to start happening and you're going to start seeing deterioration and the people that didn't watch this video or don't understand that aren't going to get it.
Now, I want to tie one more piece to this whole thing. When you start seeing the Mag 7 and you're trying to understand why did the Mag 7 go up, like why would they go up? All right, this is why the Mag 7's going up. If you have tariffs and all of a sudden no more no tariff for you, right? Good, bad, indifferent. I don't care how you look at this. I only care about how do we make money off of it. And so you have to think about it from that standpoint because that's what we're we're here to do. If the dollar stabilizes and if countries need more dollars, then the dollar will stabilize. If we don't have tariffs in the same format, you need more dollars. Period. End of story. It's just that simple. One of the largest investors in Nvidia, which is coming out with earnings, and we'll cover this Monday. Um I'm not going to cover today, but you're coming out with earnings. I actually think there could be an issue here. And I'm just not going to we're not going to put it into this and turn this video into a 4 hour, you know, epilogue. If you if you think about this, one of the top 10 shareholders in Nvidia was a Norwegian bank. So when we had all this winning and liberation, they weren't selling Nvidia. They were selling dollars that they were parking in Nvidia. Well, where do they park dollars? They parked dollars in Microsoft. They parked dollars in Meta. They park dollars in Google. Why are these names going up? Because two things. One, private credit is seizing or at least slowing down. And so that gives an edge to the big dogs, right? Big always wins over small to an extent. We pretend that it doesn't in stories because it's nice, but it does. So if we look at this, it becomes an issue. And then if you think about the dollar and the amount of money that's going to come into the market in the dollar, the dollar, they're not going to buy the long bond. They are not going to buy the 10-year right now. They're going to buy gold as the hedge. And you can see this breakout on gold right here. Hold on, let me just do it this way. You can see this breakout on gold right in here where it's breaking out again. Per I mean like a perfect breakout right in here. I'm actually long gold short silver. Ask me how that's going. Not well. If you and and that's the other thing the critical mineral side of this whole trade with the tariffs could change and I we're not going to have time to do that. But that whole thing can change because of the tariffs and the price points on critical minerals could come in unless it's very specific critical mineral. We should do a video on that. Comment on that because I think we should do a video on the critical minerals and how that's going to affect things. Let's go back to this before I go I go off the rails. So, if we look at the dollar and we'll go to a bare chart here. You're going to need more dollars. If you need more dollars, that's why you're seeing the metas of the world go up. That's why you're seeing the Googles go up. I covered a lot of topics today, guys. Specifically, there are parts of this that you might want to watch again just to get the concepts. That's it.