Transcription
Well, we rallied. Let's talk about it. Let's get into it. Let's talk about why it's concerning more than making me feel all bullish as a bunch of people are feeling.
So, obviously, we have the huge gap up. And I know everyone's giddy with this. And it's it's good. You came down, you retested, and then we gapped up. And we've been talking about for some time that you're probably overdone here. We need to do this undercut. And we did. So, this is what we have so far. We did what we said we had to do, which was do the undercut, and then after the undercut, then start to build and rally. That's what we didn't really do. What we did was just gap up. And that gap up is more of a short trap than anything else.
Now, it's fun because you can make money on the long side, which we did, and you could trade that, but that's not really what you want. What you want is more of a building kind of period. Like something like this, or even if we go back to April, something like this where the volatility catches you and then you rally up, then you come back down. You didn't have some news today that would have just shocked the world and said, "Oh, we have to get involved." So, we don't have this kind of huge volume. A matter of fact, this is what you have today. And it's pretty much half of the down day. So, it's not really something that I'm I'm doing cartwheels about. You can see that you're at about three here and you're at 1.5 here. So, I'm not really doing cartwheels about this. And I know a lot of people are very excited. And um I would just I guess if the point of this video is I would just be super careful this week. You have data coming out tomorrow with PPI, some other data as well. It's going to show you what's going on with the employment. I believe ADP is tomorrow. They really try to jam it in Tuesday and Wednesday before turkey day. And I'd be real careful. And I'm going to leave it at that and move forward.
Now, the most important thing to me if I look at the ES and I just clean all this off for a second. I'm going to clean all this off and then I'm going to drop this to a 15minute. And what we're going to do is just drop to this level for one sec and drop to that level for another second. And you're going to see it as soon as I as soon as I show it. You're already back in this band. You're already hitting a level and that level is putting you in a position that's not great. Meaning you're trying to break through, try again, tried to break through. Oh, we'll gap up tomorrow, will we? Well, we didn't really have real buying today. We had they trapped shorts and then they ripped it. And that's very different. If you had real buying, you would not have done what you did at the end of the day, which we're going to get to because that was absolutely crazy. That made me more concerned than I was during the day. And and when I see that kind of stuff, it's definitely a concern. But when when we're here and we're unable to get through, just watch 6725 tomorrow.
If you take a moment and go look at the NQ, you're going to see the same exact superheated. The interesting thing about this is that level right up here, the top end of that bar is a CTA level. That's where they've been triggered to sell. And so when they sold there, that's why this accelerated. Now, what's going to convince me that I'm wrong? Because that's really all we have, right? What's got to happen to be right? What's got to happen to be wrong? And that's how you should always view the market, not what you think. But what truly has to happen? Maybe that is the bottom. I mean, I did think that we had to undercut. There are some pieces here with move and the VIX that we're going to go through in a second that are definitely leaning us towards maybe that was a bottom and maybe that is it. Maybe we do back fill. But my concern is that what we had was one level down here which right around that 243. We're just going to find that right there. Let me just find that exactly. All right. So we had this level down here. That was a pretty key level. And when we broke that level, you can see the battle right here. Once we broke it, that was it. Couldn't get back through it. Over test over held. Never retested it today, which is another problem of mine. We needed to retest this and we just haven't done it yet to see if the sellers from the CTAs are still there because CTAs, those commodity trading accounts, they have a lot. They have a lot left. Now, when I say they have a lot left, I mean long. They're long because they really haven't had a sell trigger. Well, they had two this week. Here's number two. So, you need to watch this tomorrow. And we stopped right on it. And that's a concern of mine. Uh, how did I position myself? I have puts. I bought puts here. So, I'll see how we do tomorrow and go from there.
Now, if I look at the NQ and I look at this area and I look at the undercut, I think it's great. I see everybody doing the same exact thing and drawing this and going, "Here we go. We're definitely going to break it." Um, and I want to use the bodies really. So, we're going to go from here because I don't really want to use the wick. So, I'm going to use the body that are up in here. And I get it. Yep. We're going to have this DTL and we're going to break out. Maybe maybe that is what's going to happen. And maybe that's that's going to happen sooner than later. And we're going to have to figure out what's going to be that driving force that's going to make that happen. I don't have an answer to that yet either. What I do have an answer to is some real issues out there.
Now, the first issue that we had was that people were worried about the bond market. And if we look at the bond market move is bond insurance. Bond insurance popped up and started to roll over on Thursday. And if you go and take a look at that right here, that is exactly how the market bottoms have been done before. Here's October 10th and you got to that same exact level. You got a little higher and then you undercut. Same thing that the market just did. So, you always want to look at move for the bond index and see what's going on there. Here's September 3rd and that again would mark what? Another low in the market. So again, if we were just did the simplest of things to see if there's any, you know, validity to what I'm talking about, you'll see that September 2nd and third level right here in the S&P, which if you look at the market was an issue. Here's October and here's there. So that would definitely lead us to believe that yes, we could 100% be in a position here with what that is the bottom and that's it and good. Let's go forward. That would be perfect and I'd be happy.
But the VIX is plummeting. And as the VIX is plummeting, I'm not seeing these puts move. None of these options are moving. So in other words, we have the VIX dropping, but nobody is getting out of their put positions and the call positions are not being skewed to the upside. So we're not really seeing the change. And this is exactly what I was talking about where we're not really seeing an unwind of equities or even index positions or put positions even though this is dropping. That's extremely rare. And usually what that leads to is some kind of retest up here. Now, it's possible that that doesn't happen. And there's a couple things that we could look at.
Now, what you're looking at is VVIX divided by the VIX. And VVIX is, think about the VIX. The VIX is VIX. Think of it that way. That'd be be an easier way to just kind of wrap our noodle around it. All right. When you bottom, what tends to happen? You go higher. When this bottoms, this will go higher. So, just to make this a little simple, what we'll do is just click it here, and you can really hammer home what's going on this way. So, when did we drop off? We dropped off here Wednesday, February. And we came all the way down. And then from there, April. And then we started to lift back up. And then we started to drop off when? September 18th. And then from there, you have these other peaks. And now what's happening? You're still dropping. You're going to eventually bottom. And then that bottom will turn this. But from a longer term perspective, you're seeing no sign of this whatsoever. That in and of itself is an issue. And it's not just there that you'll see this for meaning from that period of time. Now, if you go throughout history, you can't stop but see it. Like, you'll see it all the time. If you start looking at areas where the market has come in, here's July 23, and this was when we had that CPI that was negative and we came all the way down, and then it reversed because itchy said, "I'm going to stop raising rates, uh, you know, and we're going to stop, and then we went up, and then of course it follows." And if you follow these movements, it will show you inflection points in the market. It's really a very valuable tool. And when we look at this tool, it's not really changing.
All right. All right. So then we go and go SF5 FI. And what this is going to be is this is going to be stocks above the 50-day moving average. And if we go and take a look here, this is Friday, so it's not today, but you're at 38. So we still have a long way to go to get back to 50. And I don't know that we got there today. But if we take S5 FI and we divide that by ND FI, you're going to see something that every single time that we bottomed and then rolled back under, meaning we topped and then rolled, meaning that the market would have bottomed every single time, you're going to see something. Here's the ETH. You peak and then it rolls. Meaning the NASDAQ starts broadening out more on a percentage basis than the S&P is broadening out. So, what this will tell you is when the NASDAQ starts broadening out more than the S&P starts broadening out. Real simple. It's not really that hard. So, when we're seeing this, we're going, well, we're nowhere near where we were September 2nd. We're nowhere near where we are now. But, for some reason, everyone thinks that that's it and it's over. If you look at the basics of how the market even acted today, it's hard to even envision that. But, you would want this to be starting at least to point down to at least give you an indication. And that would have already started to happen. Now, it looks to me that it's telling me that this is already filled for Monday. And I don't believe that. I think it's just Friday. So, we'll use Friday, but you haven't even started the trajectory of going down yet.
And when I see things like this, and I'll show you this because it's definitely of interest. So, here we're going to go to the S&P, and then we're going to go to the five. And this is always, let's drop this to candlesticks. And then we're starting to see these rallies on Friday. And then these rallies, obviously, you have your negative divergence, it rolls over, whatever. You're grinding higher. Do you note how you're just staying higher even when the RSI rolls over? There's only one reason to do that. It's because every single dip is being bought. And you'll be like, "Oh, that's great." No, that's called short covering. When you're this tight and there's nothing else to go, that's people going, "Man, I need to get out of this market. I'm stuck. I'm stuck in the short. I need to get out." A matter of fact, if you go and look at the market now versus where you were, we're going to go to a couple examples. you'll see people that are out there right now putting back on the shorts that they had to cover at the end of the day. It it's it's definitely something that you want to be really careful of, especially this week because you have extremely light volume. And I'll show you what I mean here.
Now, if we take a look at Tesla before I bring that back up, I want to show you this. So, this is the end of the day and people like, "Oh, I don't date trade." Doesn't matter. What you're trying to do is figure out what the institutions are doing. Remember, they're the sharks. We're the remora. So, if we take a look here, 350 is when market on close kicks on. They all get their orders and then here we go. So, we pop up 3950. Well, clearly we're going higher. You have a one minute bar. You literally have a one minute bar on a trillion dollar company that goes up 66 basis points or or three. Do you think that's an institution saying that I need to buy? That is one of two things. That is some some forced buying by somebody or it's an imbalance in the market. Either way, once that happened, look how that was met. So if you look at how this imbalance was met, Tesla, which is pretty much the beta proxy to the market at this point. If you look at how this was met, how was it met? It was met with what? Rallied, drops, drops, drops all to the end of the day. One bar at 350 and then you spent the last 9 minutes working it out. If this was real buying, it wouldn't look like this. It just would have grinded higher and that would have been the end of it. So what we have here is we have this imbalance. There's nothing wrong with that. There's certainly nothing wrong with trading it, but you don't want to convince yourself that that's it. We've bottomed when you're not seeing signs of that.
We're going to get to where you can tell if there's there's a difference there. I'll give you an example with something like Nvidia. So, I am currently even recording this short Nvidia, but what I'm going to just show is this level right here. And what I'm going to show you is from get rid of the pre and the post. And I'm just going to show you the day Nvidia came out and crushed earnings. And they did. They absolutely crushed earnings. Then on Friday, we rallied right up to that peak VWAP from the earnings, right? You have to use VWAP very sparringly, really only at pain points. Earnings is a pain point, good or bad. So, if we take a look at how this is acting, bonk, bonk, bonk, and then rolls over and then that's it. All right. Bonk, bonk, bonk, and then what did you do at the end of the day? Same thing. 350. See these moves and how you acted. This is very concerning to me because this is an 8 trillion dollar company and they're moving it like it's a chicklet, right? Like they're playing, they're like looking for a skittle. like, well, which one do we want? If they can do this at the end of the day, what can they do if they really start rolling here and start selling again? And that's a concern of mine. So, for me, the brakes are on. And, you know, I did buy puts at the end of the day because I am concerned. Now, whether that concern is warranted or not remains to be seen, but as somebody that even has a stake in this WBD, and I've been because I watch this stuff very, very carefully. See this at the end of the day, 350 and they can't get out fast enough, it's possible that you start seeing some of these offers start going away. meaning, and I don't know that that's going to be the case here, and I want to preface that. I'm still long this, but here's my concern with this. Paramount goes out and says 23 and a half, and you'll be like, well, why do I care about this from a trading perspective? I'll get to it. Paramount goes out there at 23 and a half and says cash. I go out there and say Paramount's being stupid. Why would you do that? Why would you show your hand? It's very possible that the other players such as Netflix are looking at this and they're looking at the current environment on the private credit side and saying, "Do we really want to do this right now?" It's very possible that they're looking at this because this is a huge deal. And if that's the case, that means that the private credit market still has issues.
Stay with me because I'll tie it all together. So then you see AL come out today and you can Google this company. They come out and say, "Oh, well, we have these other private credit funds and we're going to combine them." Now imagine this. You're in a really good one that's only down 10%, but they're going to combine it with one that's down 30%. And they're going to freeze your redemptions. And the stock's sitting flat for some god-forsaken reason. So, okay. So if the private credit market starts doing that, meaning if I'm going to issue private credit and expect a fund like this, like Al to buy it or Apollo to buy it, I might not be in the same case. They might not have the same appetite. So if private credit does start shrinking, that would explain why you're seeing things like Oracle and why Oracle is having a real tough time getting off the ground. Even though at least we're not bleeding again, right? We're not falling apart again. We're starting to try to hold here. Now whether that does hold or doesn't remains to be seen, but I think it's pretty interesting that this one couldn't get off the ground.
What we did see is we saw the ones that they were shorting the heck out of such as Meta and these other names all start to rally. But when we really dive into these, and this is what I thought was fascinating. Let's get rid of the pre and the post. We're already neutral. So if I look at how fast and how far we dropped as we were oversold, Meta is already back to the 4hour neutral line. And all we did was go from the previous day closed from 95 to 615 and I'm already at neutral. Just to put that in perspective, just so you can understand the difference. Like if you're here at 29 and you're going to go to here. So if we're here at 29, right? And then from there you're going to go to that's 707 and then you go up here like that's $60. And I'm not saying that you're all done yet, but so far we've moved a whopping 10 15 if you want to, you know, cheat it a little bit. So that's an issue. I was watching MSTR today and MSTR is trying to get off the ground and they're actually doing a fairly decent job. But with all the news and everything, that's all it mustered. eight eight points nine points like where where is the real buyers? Where are those institutional buyers? And I don't see it.
What I do see is I still see biotech. I still see them wanting to buy biotech. That's what I see more than anything. And you'll see it with certain names. Now whether that's INSM or whether you're going to start looking at some of the other smaller names, it doesn't matter. But they're definitely looking at that space. You know, a couple of the ones that that were super interesting. Um where's that other one? ARQT. This one was all over today. But yeah, you are seeing buying in biotech. So, but can biotech hold up the whole market? No. What you need to see is a broadening out and pullbacks and then those pullbacks bought. So, you need to see a broadening out and those pullbacks bought. What you don't really want to see is the market closing and $8 trillion companies selling down after hours as people put their positions to short back on. That's not what you want to see. And you sure don't want to see this at the end of the day. That kind of stuff is really troubling, especially for these kinds of companies. When you're seeing something like Apple, which is an enormous company, just drop $3 out of nowhere. The imbalance to me was so skewed up and down. I don't know that it's an index imbalance as much as it might have just been someone that had a margin call and had to get out of the way of a bunch of stuff cuz it wasn't imbalanced one way, meaning we just didn't rip. We some some went up, some went down. But this this kind of action is very troubling.
So, as much as people are probably listening here and want to hear like, "Oh, I think things look great," I I think you have to look at this with almost one foot out the door and going, "Okay, you know, what names do I really want to hold on to? What names do I really believe in here?" And then kind of go from there and start trying to figure that out. And I'm not saying that some of these names aren't overdone. Far from it. They were grossly overdone. But they don't end like this. It doesn't end where, oh no, we're just going to rip and then that's going to be it. You'll backfill, you'll come down, you'll build a base, and then you'll go again. you know, straight up is not really a pattern. You're not even getting over Thursday's drops on a lot of these names. And that would be the second thing that you would really want to focus on is are we even going to be able to get above this? Let's start with the basics on what you'd want to see. You'd want a market that's not closing at the 55day moving average, right? That would be the first thing. You don't want a market that's going to stop right at the 55. You'd want a market that's actually going to go through the 55, not say institutional levels or support levels now or resistance levels. So, I would watch that carefully. Socks did the same exact thing. It stopped at 55. So, if you're like, "Okay, give me the first thing that you need to watch tomorrow." You need to watch to see if the socks, the NASDAQ, and the S&P can all close above the 55 tomorrow. If they can, great. We have something we can work with and then we can build and go from there. And then we can start looking to see if everything's broadening out or not. Also, tomorrow, despite all the other information that you have, you know, we're going to have to see how that plays out. You also have Dell going out there and I think that's super important.