Transcription
Well, we had a pretty wild day, to say the least. I'm sure you've all seen it. What we have to do is understand why it happened, where it leads us.
The very first thing that we need to understand is why we reversed. And we reversed because of some pretty critical news that came out right around 12:30, 1:00. We're going to get to that. But I do want to show you something before we go any further. You still have the 12, the 22 pointing down. And I'm not trying to be a party pooper, but I just want to point out the obvious. If you take a look at the NASDAQ here, we had an absolute monster day. But if we take a look at where we were Tuesday, we're still not really above anything critical, but we're sitting right on this level.
Now, take a look at the socks. And then what you want to do is drill down into that. Most traders are reacting to the institutional levels. What we're trying to get you to do here is to know what they're doing ahead of time. Subscribe, click all notifications. What we go over here is timely by hitting the bell. You don't get it after retail is already in. The important thing is you get the information, education that you need. Subscribe. Let's get to it. Show you what I mean by that.
So if you look at the socks, everything that we do here is index, sector, stock. Right? So everything that I do when in investments is there is an index, then there is the sector, and then of course there is the stock. And that's how I trade. Index, sector, stock. I am top down versus someone that would just look at the stock and say "stock good, stock bad" and then act on that and not care about, of course, the, you know, the macro, the fundamental side of it, and of course also the technical side, right? So again, it warrants us going through my childlike drawings of just understanding top down and then macro, fundamental, technical, and that's how I see the world, right? I almost drew that crooked, which is pretty much how I see the world. So again, you have what's going on, who's affected by it, and when do we get involved? Long or short?
Now, obviously, you had the Iran news today. There's a deal this morning. We were taking over an island. I say "we" because I'm in the US. Today, no island. Today, great deal going on, and all the deals, the best of all the deals. And so, now we're up. But you will note a very big movement between the socks and what's going on in the cues.
So now that you understand how I see the world, index, sector, stock, and then macro, which is what, who is affected by the macro, when would we get involved, long or short on that, and then we could get into where we are in the food chain, but we can do that later. So if we take a look at the socks and we can see how that moved, why is that significant? I'm glad you asked. Go back to the Qs. Qs are not above the 22. Socks is above the 12 and the 22. The fastest way for you to determine if you have relative strength or not is moving averages. It is the cleanest and easiest way. If you are above your 12-day and 22-day moving average here, and you are not above it on the Qs, and let's say that you think the market's going to go higher, you would go and take a look for those names. That just makes sense, right? Keep that in mind. I can't stress that enough. It's a super easy way to look at that.
Then you can go into these from subsectors. And I'll explain what I mean by a subsector. You have ASOX, and if you look at that, you can see that you're above the 12 and the 22 as well. But there's a little distinction here. If you note that distinction, and I'll just mark it off, we'll use our little magnet here, and we can see right in here that is 25.92. And then from there, then we can go ESOCS and see how that's going. And then we could say here as well, and then we would mark off here and see, well, we're closer here on the equity weighting versus the ASOX weighting. That's some huge. See what I'm saying? So, you're a little higher there on the equity side or the equal weight side. And then if you start going through the names, it starts to make a lot of sense. ASML breaking out, all-time highs.
So, what did we do there? We went index, then we went to the sector, and we found the socks. And then we went to the subsector of the socks, and then we found the name. And that name's hitting all-time highs. KAC, all-time highs. So, what you're starting to see here is you're starting to see new leaders emerge. And you did that by very simply going index, sector, stock. People will come out and say, "Well, don't you think that this is going to happen, or what about this, or what about that?" Index, sector, stock, macro, fundamentals, technicals. Right? Answer the questions and then go from there.
After you answer those six questions, index, sector, stock, macro, fundamental, technical, then ask yourself where you think you are on the food chain. Meaning, how many people know what you're looking at? Right? It gives you a road map instead of sitting there, "I think this is going to happen." Good luck with that.
So, if you look at these movements, it's very clear that we're getting money in there. And then we can go and take a look at some other things that happened today, such as Sandisk, which is absolutely unequivocally breaking out. Really interesting exchange between Western Digital tonight and Sandex, where they're doing a stock swap on a small percentage of stock outstanding. I actually think it's a good idea for SanDisk, so they don't have to, you know, have some sellers out there. Really makes a lot of sense, actually. But you might want to look that up. The point that I'm getting at here is by looking at this, and then you looked at Micron. Well, what names would you be interested in now? Like, what are the names that would make the most sense to look at, right? Well, everyone says, "Oh, you got to get involved in Micron. Look at ASML breaking out. Look at KAC breaking out." So, they're going after the capital equipment manufacturers. Lamb Research. 39% of Lamb Research comes from ND, which is going to be your memory names, right? Interesting to know that.
If we go and take a look at something like IGV, well, IGV is below the 12 and the 22. So you using your fancy index, sector, stock, macro, fundamental, technical, what does that do? Well, that's not really the one that you'd want to look at. If you look at UFO, for example, you might look at UFO just from the standpoint of, oh, I see where we are. I see how this is tra, you know, how we're trading here. And then based upon this, yeah, this is somewhat interesting to me because, you know, I held the 55, flipped it, and everyone's going, "Yay, SpaceX tomorrow." And we're going to, we'll talk about that some detail on the SpaceX side. But I want you to understand that is how you should be viewing the market as a whole. Other than that, this market made a man out of a lot of people and put hair onto your chest, even if you didn't want it. It's really pretty intense what's going on out there.
So, what I want to do is go to this on a one-minute chart because I think that this is where I can add the most value. So all day we were told, "No deal. We're going to go out there. It's going to get worse." And so what we're looking at, let's get rid of the pre and the post for a second. So what we're looking at here is pretty much a complete meltdown in the market, right? That's what we were all thinking. PPI came out. It was a dumpster fire. It was a really bad number. But we look at the close and then we get to our open here and we just kind of see what's happening. And then out of nowhere, good news. We have a deal. And you know that deal just happens to coincide almost perfectly with waiting for the market to get to one specific spot. But that we'd have to, you know, put on our tinfoil hats for that. But you're literally at the lows.
And what this does is a couple things. Number one, we could always just throw on the RSI and you'll see that divergence right here, right? The higher low and the lower high, right? You can see that right there. That's definitely something we'd want to pay attention to. But out of nowhere, we just ripped because, yes, once again, world peace. So now we have a deal. Maybe after hours you're getting some hedging by Iraq and you're getting more hedging as they say other things. We'll see how this plays out. But this is really what we're dealing with here, you know, and so what happens, the market just absolutely rips.
This is where this gets super interesting because the market actually had a huge imbalance on the ETFs and levered today, which actually tells you that you were going to push later, or that you had a higher degree of probability of pushing. I should say it that way. So you see this huge spike up. This huge spike caught everybody off guard. And I'll just explain why. If it didn't catch you off guard and you were long, you have other issues because the market's hitting lows and you're long. But it caught everybody off guard. Not only that, but because of what was said and how strong this wording was that it was getting done. And it, it had some teeth to it. So when we moved like that, you had everybody trapped. And you can see that.
And then what we're always looking for with these moves is real simple. You're up, and you always wait for that next bar. And you can see by the next bar, you have a confirm move. That was pretty much it. If you take the top of that confirm move coming across, you can see how you're holding right in there, right? Look at it. And that's telling you a story. It's telling you like, hey, yep, we know here, but we're still buyers here, and we've retested that, and here we go, and we're grinding higher. All you always have to do with these kinds of moves, too, whenever you have a news move, and obviously you can see that it leaked. You could probably look at the volume and see that it leaked, right? Yeah, that must just, yeah, I'm sure that's a coincidence.
So, if we go there and just mark that off. All we always want to do with that bar, and I'm going to use the bid bar, is just go and take a look here and see how we acted at VWAP from that particular news event. Held, broke, tried to break through, that flips back over, test, fails, test, goes, and then we just ride the lightning the whole way up. That's really what you're looking for.
Take a look at the Qs. The way the Qs did it as well. If we go and take a look at that, and all we're going to do, we're not going to put it here where clearly it got out. We're just going to put it here. And you can see the same thing. Test, tries, fails, breaks down. Even if you get stopped out, you're like, "All right, well, we're back over. It's back on like Donkey Kong," and then they just push in the end of the day. And what they did was they started getting into what? They started getting into the semis, and now, now we know which semis, and it just follows the same exact pattern. So even if you're looking at this and you're buying into this, "Oh, we broke the VWAP from that area." It's a great little mechanism to use. Also try to get back in over retest, holds. Well, it's given you an area to get in, and then you can see from there, even at that point with the news, you push.
The reason I'm pointing this out and why this is so significant is even if you're in this and you, you're like, "I missed it." You can go back, grab these little guys, and drop them here, and then just watch the VWAPs from the news event, not on the day. From the day might be similar, but it's not as exact usually. Let's just test this one out. I haven't done this yet. No, it's not even close, is it? So, if you're waiting for it to get back to that VWAP to do it, you got nothing. But if you wait till the event, which is basically like having a new day, you had a couple spots here where you test, broke. And even if that stopped you out after being in it, who cares? It flips again. Even if you're like, "I want to make sure it holds." It held. And now you're getting involved. And now it, here we go, and it pushes. This gives you another way to get into these trades. And I think that's really important.
So what happened? You had a good old-fashioned short squeeze. Very simple. You had a very good old-fashioned short squeeze. What happens now? That's a really good question because the question is going to be what happens overnight. Does Asia believe that this is going to continue?
So, this boils down to exactly what we want to see. And I'll show you. Here's the 12, we're above it. Here's the 22, we're above it. We're sitting in this area. Now, if you're long and you're in Korea and you went home and you're, you know, 78, and now you're at 99, are you holding or you getting out of the way because you don't know what fresh what waits for you tomorrow? It's a really good question. I don't have an answer to that. The way that I could answer it is we have to get through obviously SpaceX and then see how that goes. Now it's supposedly oversubscribed, and we can get into that, but I think our time is better off spent looking at how this actually went today.
So I can give you a couple examples of things that I noticed today. Whenever you have an area like this, they're they're called imbalances. So here's where they got involved. And if you put an order out there, do you ever put a market order out there and then you can't get filled right away? They just won't fill the order, and so they sometimes they'll mark it and tell you that, and then you go back to it. That's a buy imbalance. You have a lot of ETF trading going on. And so what tends to happen is these imbalances have to work themselves out by 3:30. So whenever you see something at 3:30, you can usually see movement in those ETFs if there's some kind of buy imbalance.
Interestingly enough, if you go and just mark that off at that 3:30 level, you can see that you constantly were holding that area over and over again from there. And it's not just like SOXL, but you'll see it in most of these names. Like here's TQQQ. That's the buy imbalance, meaning that they have to go out there and buy whatever names they're not levered into. There's a whole like market on how to do these trades. But when you know there's a buy imbalance in the market, you can understand that.
Now, without getting too technical, but I can do a video on it. I know I'll cover it in the community, but just for our purposes, whenever you have moves like this where it's like three minutes and you are rocking and rolling like this, it is very common that these levered ETFs are going to have buy imbalances. And you can always tell that by the 3:30 because that's when they have to act. That's why you get these huge moves which also move the indexes. There's a reason for it. But when you look at something like this and you're up 4.5% in three minutes, it is very hard for them to go out, despite the algorithms and everything, to have the exact measurements of everything that they're supposed to be in. That's why you get these jutted movements.
So this presents opportunity if you know which names the largest are. Micron's one of the largest names. So when Micron does this and people are looking at this and saying, "I missed it." What I tend to do is go, "Okay, you know, the very first thing I had to do when this happened to be candid was I was short a lot of things. And I, before you ever do anything else, and you're like, 'Oh, I'm going to fix it.' Don't fix it. Get it, fix the thing that's broken." So like if you're in shorts and they're in the face, just get out of them. That, that's what I do. You should do it. You're comfortable. But I get out of them and then I reassess. I'm like, "Well, I didn't really want a short world piece," so I'll get out of the way and then I'll reassess. It's the very first thing I do. I get a clean slate so I can think about it, you know, protect your energy, all that. I'm not going to get too earthy, but it's there. There it is. I said it. So, get out, reset, and go from there.
You watch these kinds of pushes and then you look at these levels. And for me, it got really simple. So, I'll just throw this here. Once you got through that level, you had nothing up here. You had this gap. Now, this gap is from these areas right in here, and you can see them, but there's nothing there because we all know who trades the first half hour of the market. It's retail, right? They're the ones that panic. So, what do they do today, right? They come out there, they panic on Tuesday, got to get out. Goes back to what? That Wednesday level of those people, what do they do? Retail, they panic, they get out. What happens later in the day? Institutions, world peace. So, you know that these are weak resistance points just by pointing that out, right? This is a pretty strong one because that's the end of day. End of days are much stronger. But you know that this is pretty weak. This is weak hands, right? Because this is retail getting back up there and said, "I've had enough." So you always know that when you get through these, that they're going to be weak.
So this presented a scalping opportunity for us by understanding that and also by understanding that you're in a situation where you most likely have imbalances. And there were some real clear ways to determine those imbalances. And they always have to settle those imbalances, or else the leverage ETF is not doing what it said. And that's a real pickle for them. So then we just set up here and this becomes our area. Let's, you know, let me do this really quickly this way. So this is me typing out strikes canceled, strikes are canceled, shorts are trapped. And I'm just putting it out there as fast as I can. I pay a lot of information for new services. So I tend to get things pretty quickly. And, you know, Twitter's just as good, candidly, but this does tend to get me like one or two minutes. And sometimes it makes a difference. Did today.
There are a lot of imbalances out there to the buy side. So I spotted the buy side imbalances. I said it again because I saw that they still were having issues. SOX bounced off a key level. They're still buying it. They're back to buying it again. Hit that level. And then I'm looking at option order flow and the notional, the call notional on SanDisk was through the roof. So that put us in a position where I can show this. I'll show it this way. I just had to do these raw and unedited to get them out. But there's the SanDisk and you can see the flag. You can see it's setting up right on that key level. And then we had all that option order flow. So we did an option trade there. End of day two, but I'm showing that level that we just went over. That's literally right here. And I'm showing you ahead of time. And I like doing this because I can show you the time stamps and you can see where they're at.
And so what I'm showing is just a scalp trade. But in the 9, what was it? 9:58. We could see 9.90. Very little resistance. It's late, but aggressive traders. So when I say that it's late, you have to know like, as I say, where are you in the food chain? There's some other stuff there. But 9.65, you're trimming into it. You're moving the stop up to break even. And what you're trying to do with these is you're trying to pull money out just in case you reverse back down so you don't panic. And then you're just constantly trailing it. So in other words, when it breaks down like something like this, you pop, comes back down, pop, comes back down. All you're doing is just moving that stop up over and over again either on these wicks or whatever you have. And let's be candid about this. Nothing's perfect. Like you're never going to get perfect. So that's why you're always, when you set these targets, you always trim. I always trim into those targets, right? That tends to make the most sense to me to do things along those lines. And you can see later on the day that clearly played out and I'll show you that right here.
So, stop. I just keep raising the stop over and I'm trimming, raising the stop. Got 9.82. I thought I was going to get 82. I got 81.86. Move the stop to 78. 3:30. And so we know at 3:30 if you look at the 3:29. We know at 3:30 the. And if you have a buy imbalance, it takes place right at 3:30. Like you'll see those movements. You can't miss it because it, they have to. They don't really don't have a choice. And you can actually look at that. There's actually research on people that trade these things religiously at 3:30 and the last five minutes based upon the imbalances. And there's me spelling imbalances wrong. So, it is what it is. But again, the trade worked out really well. And it also presented an opportunity to get into SanDisk as well. We did an options trade there which did very well. But these were all mapped out. Why? All those trades were mapped out because we understood that there was a buy imbalance and then we understood where they were going to go with everything.
So, give me one second here. I can just try and grab this very quickly and show you this as well while I'm here. Why not? And so, what this is doing there, it is. It's presenting how we're trading these things. So, this will just show you the SanDisk. I bought the 2000s next week and a 50% stop. A lot of people, I paid 5.30 for the ones and 5.038 for the others. And then I just moved the stop up to under 1,800. So, what I'm doing here again is I have the flag, I have the pattern, and then I'm just watching this get tighter and tighter. And as I get closer into that 3:30, if I'm not pulling back, I just know that they are going to have to step in. It doesn't mean that they're going to carry it overnight, right? Because then the buy, those buyers go away, and then the sellers are wondering what the heck happened. Well, that's what happened. And then we're just trimming them up, and then by the end of the day, I think by 3:30 the calls were up 150%. And the other ones were up 40%. So they worked out pretty well, and if you carry them, if you don't.
But what does this mean? What do you do tomorrow? I, I'm going to lean towards the same kind of trading tomorrow. I think one of the key things that you have to look at pretty religiously here, and this is just my opinion of this. I think you're going to have to really watch UFO and what happens here and how much of this these people actually get. How much SpaceX do they get? Do they have to go in the market and buy more? If SpaceX opens up more, are they going to chase it with the money and allocation they put aside? You know, as is, the minute that this stuff came out and this news came out, everybody short covered this. I was short this and I was a genius until that happened. But in all seriousness, like as soon as that happened, they couldn't get out of that stuff fast enough. And I think that's very telling. And I, you know, I was really surprised by the strength of that. But shorts couldn't get out fast enough on a key level here on Rocket Labs. You might want to watch that one tomorrow. SpaceX, they'll find out their allocation and then we'll go from there.
Do I think you're out of the woods? I think you need to close over some key levels. I think you have news tonight about another peace deal that's supposed to be signed any day now. Maybe Friday, maybe Saturday, maybe Sunday, or it just turns into the same thing it's been. The one thing that we want to make sure of is that we're actually closing above key levels. You're not above the 22. The SPY is not above the 22. They're still pointing down.
If you go and take a look at crude oil, I'm sure that fell off a cliff, right? Well, it's down from 92's high to 87, but it's not in these nosebleed down $10, $15. So, does oil really believe that that's going to end? And then if we go and take a look at something like the VIX, did the VIX completely fall out of bed? No, it made a lower low, but it's not like it's not, did not have capitulation. Like, this is definitely it. To me, this was more, "Oh boy, I'm short. Better cover and I better get out of the way and I don't want to hold anything overnight in case this gets better than expected." So, we'll deal with tomorrow and then on Saturday we'll do the deep dive. That's it.