Transcription
Well guys, it's happening again. Risk markets and credit default swaps are blowing out in some of the biggest stocks in the world, and not enough people are talking about it. But what could the AI trade and debt have to do with 2026? And with semiconductors going absolutely ballistic over the last month, when have we seen this before?
Well, one thing's for sure. When you're taking a look at RSI, it hasn't been since 2017. But maybe we need to dig deeper in today's video to really look at history and what that tells us about these current moves. With Berkshire Hathaway entering into a new all-time high when it comes to cash holdings, why is there such a big difference in the markets? Join us today as we cover everything that you need to know about stocks, commodities, and cryptos. This is going to be a good one. Don't go anywhere.
Well, welcome back everybody to one of the largest daily shows on the planet when it comes to everything to do with markets. It was good for Google, it was bad for Meta, and there were many things in between over a week that we saw massive macro, of course, Wall Street's huge earnings, and now a couple of big darkpool trades. But we'll kick today's video off with some of the big storylines going around. And one of those, of course, shared here from the Kobassi letter over on X. And you can see source filings down here which shows that Berkshire's cash pile has hit a new record high. Quarterly cash and short-term treasuries has gone now into almost $400 billion sitting at $397 right now. And it suggests that there's some kind of difference of opinion right now between some of the biggest players in the markets.
Now, it's not unusual for Buffett to cash up. If you actually take a look at his cash holdings before the global financial crisis as a percentage, which is the most important way of looking at it, percentage of over assets under management, you'll actually noticed that he cashed up around 2005, which was multiple years in front of the eventual crash that led us into, of course, the global financial crisis.
Now, times though, we've been seeing this for a couple of years, and this marks, of course, an important point as we're in what we call a midterm election year, which does tend to be quite volatile. Speaking of volatility, we're starting to see credit default swaps rear their ugly head again. And this comes off the back of Meta with a big announcement that guess what? They're spending tons of money in AI. Now, why are credit default swaps so important? Well, it all has to do with, of course, the basic facts that markets are starting to look for insurance when it comes to overall debts. And this is what this chart really represents. Effectively, people that have risk and they're taking risk or debt on these companies are starting to say we might need insurance against potential defaults in the future. And this is something that we saw in Oracle later last year into this year, which has sent the stock basically cratering, losing hundreds of billions of dollars and of course putting everything at risk on that particular stock.
Now, are we about to see the same thing with Meta breaking to new highs? Well, if you're a follower of trends, which we often look at in this chart and this market, you can see here that coming off the base of last year, it's clear to see that the market has been smelling this risk for a little while. And they do not like the idea of meta- spending big when there's no clear path to profitability. And that's one of the big storylines that we're talking about right now. Where is the AI profitability? Because guys, while everybody is selling the picks and shovels right now, which is a great way of thinking about it, is there going to be, you know, a golden pot at the end of the rainbow? Because one of the things that's happening at the moment is everybody is all in.
Kobe sharing this chart here from Goldman Sachs as well that basically shows that three times levered semiconductor markets are going absolutely ballistic. And this is both from the retail side and the institutional flow side. of course with massive earnings that we'll see later on leading into a lot of frothy trade. But remember that is leverage. So that means that just like this what can go up can come down. And the activity that we're seeing in both the short lever and the long lever right now is kind of worrying which means that risk management needs to be at the front and focus of every trader and investor's mindset especially over the next coming weeks as we're entering into May which some people believe is a sell in May and go away. and we'll talk about the structure of that a little bit soon.
Now, when it comes to overall sentiment reports, most of them are coming in very mixed nowadays. It was that everybody was really bearish about a month ago, but now people are turning more bullish and the bears are starting to go away. The importance in these charts generally though lies in the idea of when you start to see more neutrality or way less bears. And do remember this is just a sentiment report which we've already talked about have really been broken since around November of 2024 and we're seeing this kind of playing out quite a lot in these sentiment reports including the University of Michigan ones and others. While they were great before all of that, they've kind of broken since that point as people have very strong opinions on these markets.
Now a big strong opinion has been that we've seen this log linear trend line for a long time. And this one here from Blue Kurdic Market Insights over on X kind of shows that we're starting to move a little bit too far away from the general trend line. Now, have we been up higher? Yes. During the dotcom boom, markets moved a lot higher in terms of standard deviation from the trend, but the markets are back now to a pretty important point. And we haven't seen this in well, pretty much any point since the global financial crisis. The same thing for the NASDAQ. You can see one time we hit it back in as you guessed it around that period before we saw the sell-off of 2022. And now the markets are getting back up to those points. So it's clearly that while we haven't absolutely detached from reality like the dot boom, we have started to see a market that's getting very feisty and that's because upgrades from the buffins are going wild.
Now we always want to look underneath the hood at markets. One of the things that we talk about all the time and you hear everyone talking about is breadth. Well, one of the good ways to track that, and we've done it for ages, has been advanced decline lines. And they're continuing to make series of higher highs and higher lows for now, which basically signals that the market itself is going up with quite a lot of breadth. Now, is this important? Well, generally speaking, if we see, let's say, a market coming down and this line continues to go up, then that generally actually represents that the market itself is actually quite strong. And while we have seen pullbacks in the overall advanced decline line, it doesn't look like we've got a breakdown of everything to do with breadth just yet on these markets.
We're also seeing that in a differing opinion when it comes to rotation. Now guys, we talked about energy stocks about 2 weeks ago. And the reason why was because we saw the largest transaction ever recorded on XLE come through from volume leaders. We can see this chart here from Koin basically shows that over the last 5 to 6 days we've seen a very different market. Both energy is increasing and semiconductors at the same time. And this means eventually someone's probably going to be right and someone's going to be wrong because these two markets don't tend to go up together at least with everything that's going on geopolitically.
Now could that bring us a sell in May and of course go away? Well, one of the things we often like to look at is structure. And the structure coming into this May is not as bad as people may think. Blue Kurdic actually went through and took to took a look at all the structures and it tends to lead into while sometimes weakness at the beginning generally speaking a pretty strong average path across the board. And although this is no guarantee and of course we do not know that's going to happen, it is kind of like that frothy market where everything is dull and everything is just slowly increasing kind of like this, which makes it a very tough market to go against, especially when it's led by the most important sector, which is semiconductors.
Now, speaking of semiconductors and big tech, we just had one of the fastest rallies ever recorded. And as you guys know, that's pretty rare. Well, of course, it hasn't really happened before. So, why is that important? Well, there have been a couple of charts going around and this basically shows that when you get monthly percentage change on both the semiconductors and XLK so fierce and so quick, it does tend to lead into potentially a little bit weaker gains after that point as the market kind of gets ahead of itself. Now, this all has to do with generally repricing and sometimes pricing above its overall risks. And the risks really right now, of course, what exactly is going on with food? what exactly is going on with energy and what exactly is going on when it comes to the overall geopolitical sphere because we're not really hearing about that much in the news anymore in comparison to what we did just a few weeks ago and now everybody has gone back to everything's normal everything's good but as we know this problem over here tends to lead into the economy later on and with Jerome Pal of course mentioning that he also still thinks and the Fed still think that tariff costs are going to hit the US and other countries around the world very soon. That is a little bit worrying as well. Although they are macro reasons and obviously you want to be following the flow which we always talk about here on the channel more than anything else.
When it comes to quarterly EPS estimates, you can see here Duality Research has put together an excellent chart which basically shows that this earning season, well, it's absolutely ballistic. Anything to do with semiconductors, anything to do with tech in general is being upgraded. And really the only blip on the horizon at the moment is Meta which of course is starting to show signs of if the market thinks there's no clear sign of profitability in the future and they can't put together the AI story line then they're punishing the stock. And we saw this with Oracle. We've seen this of course now begin with Meta. Could this be the big turning point for Meta to the downside? I'm interested to hear your comments. Put them down below guys because of course we want to check those out. Uh, but in general, this is of course one of those storylines that's going to continue to go through this year. If earnings is good and we're still hitting new peaks, it's unlikely the market's done yet. Remember, we're looking for peak earnings at some point in 26 to 27. And at least at this point, it could have been peak, but we don't know that because we haven't seen the next earning season. This one was an absolute blockbuster.
Speaking of large trades and big opinions, one of the things we've been looking for is cluster trades on some of the major ETFs. Now, we have had some big clusters on the Russell, which is the IWM, but this is the first two that we've seen here on the SPY, and this comes off the back of volume leaders and obviously off the back of having some massive transactions all the way through that March period that ended up leading into, of course, a huge rally. Now, why is this important? Well, it's something for us to keep a look on and a look out for because, of course, if markets do choose to actually change trend towards the downside, then this could be saying, well, they could be sells. And of course, when you start looking at some of these dark pools, it does look like some people, considering that was the 11th largest trade. May have been looking at saying, you know what, that was a pretty good run. Maybe I'm going to trim some of my profits. We don't know that, but of course, it does make sense when you're starting to look at the charts. Can markets still keep moving up? Of course they can.
Now, for the week ahead, we do have more semiconductor stocks coming out with earnings, of course, we'll be watching those very closely. And this is really a blockbuster week of the rest of the market. We've got big ones on Monday such as Palunteer. Then we have AMD, Super Micro, Shopify, we've got Walt Disney, we've got ARM, we've got so many companies and although it wasn't or it isn't as big as the week we've just seen, it is still a continuation and so far these earning seasons guys, they've been absolutely knockouts. So basically, the market will be continuing to look for very strong results. If it doesn't get them, it could be like that. But at this point, everything's been upgrading.
Let's now jump into the charts before we look at the options and then of course we'll go through the key levels and the big zones later on today's show. But we'll start off here with the US dollar because the US dollar guys has been up down all around. Now we saw some intervention from the Bank of Japan last week leading into basically the US dollar yen dropping off. But we can see here that that affected the dollar index. Now it actually hit a level that we thought would be key resistance. This was actually a pretty beautiful technical trade when you look underneath the hood. In fact, over at fxevolution.com, we've got a day trading masterass if you're ever interested in looking into that a little bit more. It's very similar to this type of strategy down there to here. But it does show you the importance of risk management. It also shows you the importance of, of course, sticking to the rules because all of a sudden it hits that key resistance and then suddenly we get news coming out. So, we're stuck between two different zones on the US dollar. So, we're not really clear on which way it's going to break just yet. But you can see here two dogees in a row has led onto that.
When it comes to US dollar yen, it did drop through at the floor, but it managed to hold the weekly on the 20weekly moving average. And I think there'll be more stories to come on this this week. So make sure to sub as we cover off on those.
When it comes to the SPY or S&P in general, the advanced decline, obviously, it's going up, which is technically a good sign. We did see a rejection or do or kind of shooting star candle come through on the Friday which suggests somebody may have sold into the close into the weekend risk and that's probably pretty normal because we have seen a lot of announcements often happening during the weekend which is leading to of course further risk coming through but at this point have we got a lower low? Are we underneath things like 705? No, we're not. Here are the options high and low levels and you can see here the markets are still regaining higher highs and higher lows for now. So although it's dull compared to the massive rally it's got, it is not a market that is showing significant signs of weakness just yet. And it's important to note that with dull markets, there's always that saying of, you know, you never short a dull market because they're the ones that often blow you out just before you know you expect it. And here's an example of a dull market which is going up very slowly with serious kind of vol in between and then all of a sudden it just goes through and it absolutely face rips anyone that's trying to short. So you got to be a little bit careful. Remember the markets are a little bit detached from some realities because they're so excited about those future earnings.
Let's now take a look at the big gamma levels. So, we entered into positive gamma over the last couple of weeks and we continue to see positive gamma on the option zones and it looks like Tom Lee might be correct at least about his first level which is 7,300. You can see here that's now the most struck zone as we enter into the positive gamma. And when you take a look at the S&P in general, you can see here lots of calls all over the current price which are going to help at least the buyers at this stage. The cues are something similar. We're seeing pretty strong numbers coming out of technology, which is nothing new if you've been watching the channel for a little while. And Tesla also had a little bit of a comeback on the Friday trade, entering 390, but still not through that massive zone of 400, which remains a really big call.
When it comes to Nvidia, it's not fared as well. It's been one of the worst or it's been pretty much one of the worst uh semiconductor stocks. And while it's still kind of holding on, which we'll look at later, it's basically sitting right on the support at this stage with really the major call walls being around 210 at this stage.
Let's have a look at Bitcoin now. And Bitcoin remains 4445 4445. It's been pretty strong, but it still hasn't broken through the allimportant 79K.
So, just before we jump into some of the biggest charts for the week ahead, we did want to say a big thank you to today's sponsor of the video, Tiger Brokers, who are a NASDAQ listed business. Now, when it comes to awards in Australia, Tiger Brokers have won several over the last couple of years, including big ones here from Canstar and Finder. But another question we often get asked is what about the fees? Well, of course, there are many different fees that go into investing and trading. But one of those is brokerage itself. And you can see here that Tiger Brokers have put together a very interesting chart when it comes to ASX trading, chess sponsored trading, and of course, the biggest market in the world, the US market. and they've currently got a promotion on when compared to of course some of the other overall brokerage companies here in Australia.
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Now, let's get in to those charts. All right. Well, let's take a look at some of the lead indicators that are moving the markets right now. And first up, we'll start with the bonds market because of course, not only are we seeing credit default sweep swaps or risks start to rise up, which are leading into certain stocks having a little bit of pain, but we're also seeing the US 30-year coming under a lot of pressure. In over a decade, we've never seen really a 5 plus% US 30-year hold up. So, if that happens, something to watch, guys, especially ahead of the new Fed chair. And obviously, the Fed doesn't really control the long end of the market. They control the short end. So the difference between the short and the long end could be very telling especially over the next weeks as we see the new Fed char take charge and obviously Jerome Pal big story this week is of course he's going to stay on as well. So it'll be interesting to see how that whole thing plays out.
Let's have a look at Meta for a moment here just because I want to talk about AI and semiconductors. You can see here Meta ended up down and after the earnings it actually sold around 11% which was pretty bad. This is of course coming off the idea that we've got a bunch of spend and the market doesn't really see how it's going to become profitable long term. I think that's the problem with AI. The market's saying, do you have a natural engine where we can see it become profitable? Because you got to remember in the dotcom boom that's exactly what happened, especially when it came to software as a service after that point where many companies were having these clear runways. So, one of the things that the market's looking for right now is yes, you can spend a lot of money on AI and we like that it seems, but at the same time, we want to make sure that there's some profitability later on. Now, Meta hasn't dumped underneath 500 or anything yet, but of course, the concern for a lot of people is, is it going to turn into one of these oracle style situations where the market started to sniff it out, blew up CDs, so basically took them above where we were at the worst part of 2008 and 9 and then of course slumped the stock all the way down to the eventual, you know, pretty heavy sell-off, which was actually at a percentage point around 60% down. So, it just goes to show there's some risk still in this market when you're looking at this type of stuff.
Let's have a look at the overall movements in the oil markets. The oil markets didn't end up, you know, getting through properly. They did close slightly at a higher high when you're taking a look at December futures, which most retail traders don't do, guys. So, you definitely want to be thinking about that. And you can see here that overall the oil markets were um, you know, up for the week and of course moving higher which is against what you would think they'd be doing if semiconductors are flying so high. At the same point US oil did drop down. UK oil which is Brent which you want to look at both of those did uh still hold the high but but not did come down a little bit basically closing exactly where you'd expect resistance to be. And energy stocks in general if we have a look here basically remained in a dogee through the Friday session. So nice recovery. This was the number one sized trade through here. This is a higher high. Slight different change of trend. And the markets again kind of disconnected from the semis at this point.
Let's have a look at the semis. They keep driving higher. We did see a higher high after what could have been a little mini island reversal last week and the markets actually came down to the trend line and bounced off that area. It's a very aggressive market, guys. And it's getting a lot of activity because we know that the socks, the semiconductors, the 3x kind of levered be bare ones. It's just huge money going in on each side. Now, there's huge money on the bull side and huge money on the bare side. So, ultimately, Wall Street's probably going to pick the direction that's going to make them the most. But take a look at that activity. And just to kind of blow it out here a little bit, take a look. It hasn't been like this pretty much ever. So there's clearly a ton of disconnect here between certain traders and investors in the markets and it's certainly a story we need to keep watching. We're going to look for dark pulls this week. Going to look for some unusual activity.
So let's take a quick look at this socks chart. So basically the semiconductor market has been going ballistic and this will come as no surprise to any of you guys that have been watching. And this log chart you can see here that we saw market kind of drop below and then just go on a historic run. Now, that's led the RSI to go into an extremely overbought level over 80, which it doesn't often do. And you can see when we go back through history, only happened during a couple of times, including, of course, the 2000 and the 95 rally, which led to some pretty big sell-offs. Now, why is this so important? Well, let's take a look here at 2017, because, of course, that was the last time that we saw this market go into a very similar period. And what generally happens is when everyone finds out about something, the gains start to dissipate. Now, was that the end of the market itself? Not really, because of course, if we took that level and we went to the bottom, it fell around 18%. Which doesn't seem like much when you consider the overall move of semiconductors recently. It also took quite some time. But what I want to really point out here is volatility started to come back through. And if we go back here to the.com boom and actually we'll go to the 95 point here because that was extreme volatility after this over buy here. And again you can see 80 getting reached once over here. Then it went up even more crazy and then of course it ended up being a blowoff. But let's have a look at this 2000's one. Here it is. Here's kind of the same level around that 82 level. And what happened? Extreme levels of volatility. And I think you're going to see a lot of people drawing the same conclusion over the next coming weeks as basically we have every single thing screaming, "Yeah, it's overbought." But again, it's still underneath where the bofins have priced it in at. This is one to watch. And again, whenever you're looking at these markets, you've got to say, okay, what probably has happened is that we've seen 2/3 to even three quarters of the first initial impulse move, and now we end up going into the more dangerous period, which is that volatility. Uh, semiconductors still absolutely beating out the spy. The answer is quite simply yes. We can see it here. And as we've often said over the last couple of years, this is the backbone of this bubble run. And yeah, we'll call it a bubble cuz I think it is. But at the same time, bubbles can go for ages, guys. And one of the things is it's not a question of whether this is the best technology that's going to come out. It is. To me, it's the biggest thing since the rail. Uh, but at the same point, you've got to recognize that markets can stay absolutely ballistic for a very long time. And remember, the picks and the shovels concept is the big one this week. I'm actually writing a bit of a newsletter about that. I've held it off just to the weekend. So, if you still want to sub to get that, totally free in the description down below, guys, to sub for the newsletter. That's a totally free uh one institutional insight each week. And it's going to be a good one cuz of course I want to talk about that concept a little bit.
Cosby continues up higher. Did have a few people in the in the markets uh commentary saying, Tom, you said it was probably at a high um back over here and that you thought it would either rally like this or kind of just like slightly go above and then come down. Yeah, I still feel that way about it. Usually this means that someone figured out that it's a little bit expensive. Now so far the hardware because of course the spend is out of control. This is a hardware style index. So of course the South Korean market's absolutely crazy. Will this sell in my opinion? Probably at some point. But the key here is of course you've always got to practice extreme risk management and know the types of asset classes that you're going to use against it if you are going to do that. Would I sell into a heavy bubble? Probably not. But yeah, I still stand by I think that this is a sign generally of topping markets. Now markets can go a little bit higher and that's why they they sometimes blow these things out and actually share and talk about this in my in my thought processes around these types of markets. So we'll see what happens there. But the Cosby is still in my opinion a very very risky market due to the fact that it's gone up almost 200% in literally just a year and a bit.
Tesla meanwhile little bit of a gap up here guys. Not much but it did gap up after holding. Yes, you guessed it. Daily 20 moving average. A few people in the comment section did not like Tesla, but again that the key here is not really our opinions of whether we think it's worth this much or worth less or worth more. It doesn't really matter. The market did rally up a little bit and now of course it's struggling at 400 and if it breaks 400, it's probably going into positive gamma and then that point we can talk about maybe the next zones that technically make sense. But it did have a change of trend. It's actually doing what you would kind of expect Tesla to be doing right now at this stage.
What about gold? little bit of a rally came up to 50 4614 which is relatively strong. It's actually done a small time frame change of trend towards the upside. Obviously it's got a lot of pressure at 4700 still and the overall high outer trend still remained down and then the big big trend like the monthly that still remains up. So yeah, will it hit 4500? I'm not sure. It's just kind of sitting around. It's a bit tough there at this point. We're also seeing silver do the same kind of thing. A lot of people would have traded that like a inverse head and shoulders. It actually completed straight away. Went past the most traded zone on the way down. Hit into the resistance and again kind of like gold's finding its uh finding a bit of a holding but at this stage still technically in lower lows and lower highs at this stage on higher time frames.
Chinese markets holding their own and of course coiling through. Some people saying could this be a head and shoulders towards the downside? Hey, it could be but it needs to break towards the downside. So, it hasn't done that quite yet, guys. And if we take a look here at the NASDAQ, it just keeps climbing this market. Look at it go. Bang, bang, bang, bang, bang. Series of higher highs and higher lows and higher highs and higher lows. You don't want to fight against that. The algorithms are just ripping the shorts at this stage. And you can see here we still haven't made a lower low. We did kind of show some weakness here on the 2hour 50, which we've been looking at, but since then continued to make higher highs and hold it. So, I guess that's still around the right area to be watching um in terms of these markets this week.
Now, when it comes to Bitcoin, it's all about, you know, pretty much this trend line thing and uh the 79 12K. So, we're watching very closely and it did manage to rebound a little bit, but still it hasn't quite broken that all important level. And you can kind of see how these options markets are interacting with the crypto markets nowadays as well. It's uh pretty important to start to bring all this together, which we do on the show. We talk about flows. We've obviously seen quite a lot of flow from Wales over here. And um yeah, it's a really interesting time for crypto actually. Even though most people are sick of it and not even talking about it, now that's when I usually get interested. So, it's how it is. Sometimes it comes up in the charts, guys.
We'll go through all the news in the next video for the week ahead and of course cover all of that. But for the time being, if you're interested in finding out more about what we do, make sure to sign up for the free newsletter down below. Obviously, check us out on X as well. Um, and if you're interested in finding out more about the sponsor of today's video, Tiger Brokers, you can check out the T's and C's and risk disclaimers down below as well and see whether the product is right for you. Thanks so much, guys. Bye for now.