Transcription
Another day, another all-time high. We're going to talk about this one, why it's actually different, and what happened today that made this transpire. But, this is pretty clean, actually. You have an actually consolidation here for a period of days, and then all of a sudden you just break out, and you break out on big volume.
People will say now that it doesn't matter that it's big volume because it's the end of the month. Those people can't make up their minds. Does it matter that it's little volume, or does it matter that it's breaking out on big volume? Because then they quantify what day it is. What we want to do here is talk about what's happening, and then how we can profit from it.
The other thing that we need to talk about is this, the NDX. You have this huge wick down where it looks like that's it, we're going to fall apart, and then it pops over. Pop goes the weasel goes pop. Look at the volume here. What was most impressive about today is the way that they dumped early on and then reversed. That's the very first thing we're going to talk about and how to trade those levels so that you can do it for yourself. And then we have to go over some of these monster earnings last night, and of course there's a couple tonight. One software name is pretty interesting. So, let's get to it.
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All right, let's just start with the basics. Clearly, we can see the volume came in. A lot of people will say it's the end of the month, what did you expect? That doesn't mean it has to go up. So, you're seeing a ton of "window dressing." But, why didn't that happen earlier in the day? And we can see this pretty clearly if we do just this simple thing. So, we'll go to a completely plain chart, and then we're going to turn this into a line. And I like doing it this way and explaining what I'm doing so that people can see it for themselves. And then what we're going to do is add SPX in there, and then we're going to go here and add RSP in here. And then we're going to note to get rid of these lines that are in here, and we can all see which one's leading and which one's not leading since November. Let's go take a look since March and see which one's leading and which one's not since the end of March. And we can see the NDX is up. We can see that the S&P, and then we can see that RSP, which is the equal weight, is actually underperforming.
So, we come in today and we start to see this. I'm just going to go to this on the 30th. We can see that we're completely outperforming on the RSP, which starts to concern people, obviously. And it just would be somewhat concerning. But, what you start to see at the end, right here, and I'll just show it, you can actually see it start to flip. Right in here at 12:45, you can see it. And once you see that flip, let's just get back to it, and we'll start it again. Here you are in the beginning of the day, and then as you watch the day start, you can just see that flip right there. It actually starts right here, it looks like, at 11:50. But, if we just keep going, you can really can see it start to kick in at this level, at that 1:00 level. And then from there, it's just Nasdaq, S&P, and then the RSP changes. And this really, if you go and take a look, it's always so interesting to watch this stuff because if you go and take a look at stuff like this, and you watch these inflection points, look at where semiconductors, that area just kind of pulled back, and then that was really it, and then you just went up until the end of the day.
Now you're selling down after hours because some companies only are growing by, you know, 30% or 50%. They're raising earnings now every quarter. So, we're going to discuss that. In regards to this and in regards to what's going on here, let's go back and take a look at the S&P. And we don't have an earnings problem, we have a "what are we doing in the street" kind of problem, right? And this is something else we're going to address today. But, if we take a look again at the SOX, you're closing very closely to all-time highs. And again, this is really interesting behavior because this is not usually how this goes. You have a gap here, you have a gap here, and you've negated the gap. So, I want to be clear about that. To me, that's a negation of the gap. If you can close over that break, that negates your island gap. I don't need it to make the higher high. Because if I can close over that, doesn't mean cuz that's exactly where we opened, and then we sold down. All we did was flip it, go right back over it, and this is where we are. I think that's really important to note. It's not the be-all end-all, but it's definitely something that's on our radar that we have to pay attention to, and here it is. And that's really important to me because if we don't lose semiconductors, then things are pretty solid because things started off pretty rough on semis this morning, and we had this huge imbalance in them where it was only a couple of them were rallying, and then we were watching things like Nvidia just absolutely just dump. And you can even see at the end of the day, but here we are today, and a lot of this in the beginning of the month was really just the window dressing getting in and out. But, you see straight down.
As a matter of fact, if you turn this into a 5-minute bar chart, take a look at this, and just count them. Well, you don't have to count them all, but if you go from here over for the first hour, for the first hour at 5-minute bars, you have 12 of them. In this case, you had 13. Out of 13 bars, one was green. They were all down, it was just straight dumping. You know, people usually say wait five or six bars, and then you'll get a green one. Not today. So, this is pretty interesting behavior, but once they started this, it just didn't stop. As far as earnings out there, you're getting winners and losers, but this kind of behavior, when I saw this dump, and then you saw that AMD decided that it was just going to be the flight to safety, I thought that was super interesting as well. But, to me, when I look at something like that, I just have to pay attention to it and call it what it is. So, if it's going to be a flight to safety, great. If not, well, then it's not, I'm going to short it. I tried to short it, did not work. And what I noticed, and I start paying attention to this when I short, not only does it work or not work, but what time of day is it? Because that tells me a lot. So, later in the day, the shorts did not work anywhere near as well as they were working earlier in the day. So, like shorting Meta off the open was awesome. Doing it later in the day and trying to build the short position was like pulling teeth. It just didn't work. MSTR early in the day was great. Even here, we got that dip. But, look at this right here. And this is why it's so important even from a day trading perspective because people will say to me, "Oh, I day trade, I don't need to look at where the index is." All right, boomer, look at where this reversed on you. And then go back to our RSP, QQQ, S&P chart, right? Now, you might pick it up through something like this. You might pick it up through your divergences on the RSI. Like, that's a possibility, sure. You might be able to pick that up. We were short this, I did cover the majority into that flip. Turned into a really good trade. I shorted it, left it on, added to the short here.
On earnings days, I'm not a real big VWAP guy cuz it's an average tool, and if you use average tools, you're going to get average results. But, on earnings days, it's good to use them because it shows you where the institutions are after they have their information. We got back up to there, it was a great spot to add to the short, and then I just let it come back down. And then over that level, I just got out of the way because of the couple reasons, but that divergence. So, if we look at this, and then eventually the real ones got rewarded. Google got rewarded. Google looks amazing, and Google's earnings were amazing, that's why it's at all-time highs, and the charts look like this. And this is where I think you need to go with it. I think you need to start looking at stuff like this a little bit and saying, "Don't put them all together anymore, and start looking at the ones that are breaking out." Google clearly broke out. If you start going through them this way, and you look at the difference in charts, it's night and day.
In regards to Amazon, this was a blowout. And I I you know, I'm really interested how this is going to perform, but Amazon to me was just firing on all cylinders. So, I really liked the quarter, I think it was excellent. I do think there's some things here that I have to take a look at, but for me, when I see things like this, I really have to pay attention. I've seen some movements like where you're getting, you know, you're you're getting overbought, and then they're blowing them out. That's okay. Tonight, this was super interesting. But, let me Before I get into SanDisk and I you really can't complain about it being down because you're just killing it on the trade. What I think so interesting about this, and we'll get to it, is it you guided for $22, and you're coming out and saying 33. Revenues are up, earnings are up, gross margins are up, the backlog's up, everything's firing, you're down $80. And you have to just take it for what it is, right? It's the same thing going on here with Western Digital. You know, Western Digital, solid quarter, raised guidance, everything was great, we're going to open down eight or nine dollars. And to me, all that means to me is it's probably going to find a spot to buy more. And you know, your people are waiting for this to end. And to And again, maybe the expectations got built in with this STX.
Let's get back to this, I'm rambling because I had so important that I want to go over it, but I want to go through this. Because the way to trade these is to trade them when you don't want to. In other words, it's to do the exact opposite of what you think you're supposed to do. So, like I'll show you what I mean by this. So, here's MU. And then all I did today was watch this level. We had this level marked off up here, and it hits. And so, all I'm doing is watching these wicks over and over again, and then I just said, "You know what? This is exactly where you would short it." Like, it became so clear that this was your spot to put that short on. And then obviously, your target always becomes that stop right there. And then you want to just take a look at it and go from there and see how it plays out. But, that's how I'm viewing it, right? And that's how I would view this chart. But, let's take a look at it live and go from This is really where you'd short it. That's actually exactly where you'd short it. I've gone to you, that's where you'd short it. Yep, I'm short Micron here. I'm just going to use the high. It's not a huge position, but it's something in case this all starts falling apart. Trimmed up four. Let's going to watch here. I think you can get to 18. This was a super easy trade. Trimmed up five, boo. Up six and a half. And now we just leave the rest on and watch it die. And all I got to do is just use this as a stop if it forms. Now my stop will just be here on the whole thing. 123 19, you might break that actually, but that's enough. All right? Yeah, that's enough. Out. You're hitting here and that's going to bounce, too. People are going to buy that. I don't need the last hour. I don't think you're going to zero, but you might fall apart. That's enough. All right, next. So I could have just left it at break even. That's nasty what they're doing there. Just stay short. Call it a day, huh? So much easier in hindsight.
And here's the point I'm making and I think it's a And I think it's an important one. If you're looking at a trade and we're understanding that we're short-term traders and we're coming up to the same area that we've rejected four times, this is where it's going to reject again. Like that's not rocket science. If it doesn't reject there, then it doesn't reject there. We use our indicators and we make decisions predicated upon things that we think may happen. For example, if I overlay this with the RSI, I might look at the RSI and go, "Okay, well, I'm at a 94 off the open. It's probably not realistic to assume we're going to stay there." There's going to be some kind of pullback and then you can see the pullback and you can see how we try to get back over there and then we just can't and then we cascade down. It's not rocket science, but does that mean that, you know, Micron's dead? That you don't want to own Micron if you're a swing trader? No. And this really falls into what you're doing. And I can't stress how important this is. So for example, somebody that's looking at names last night and they are a swing traders, but they look at the fundamentals. You can't be looking at Meta and feeling good about yourself today and saying, "Oh, the market's wrong." The market's not wrong. You'd have to look and say, "Okay, well, why is Google doing what it's doing? Why is Amazon doing what it's doing after I thought it was good? And who's right, who's wrong?" Then Microsoft, how come that didn't fall down the way that it should have, right? So there's things like that you would like discern from it, but when you look at charts, you can't dilute yourself about a 5-minute chart on Google if Google's breaking out like that and you're a swing trader. It's very clear Google's going higher or the probability of Google going higher is greater. That's how you need to look at this and it's tearing down what you're doing.
And I'll I'll preface this. Like for example, when I look at something like SanDisk, you know, again, we're down 60 bucks right now after hours. Let's clean all this off. Earnings were fantastic. Like they absolutely crushed. And then they raised guidance by 50% over already re- re-raised guidance. They said they were going to do 22, they're going to do like 34. Something insane like that. And so when we look at this and go, "Okay, well, now you you just raised guidance another 50%." So if we look at that and go 34 * 30 So now we're only trading at 30 times earnings and if you want to go look at the growth, it's pretty freaking insane cuz you'd have to go look at like $3 billion here and then you'd have to go back and go 1 2 3 4 when it came out and go, "Are they I don't think they had earnings then, do they?" So did it When did they start giving revs? Was it here? All right, so there's 1.9 in August and then here you go to 1.88 and then here you go to three. All right, so and then I think you're at well over five or six. Give me a second. I'll pull up through another site because they're not updated yet. So I'll pull it up through another site and it'll tell me exactly where we are. Okay. So to put this in perspective, you were supposed to come in at 478, you're coming in at five. 5.9 is what they're coming in at. And then next quarter they're coming in and saying we're going to be at 7 and 3/4 to 8 and a quarter. So if if you went back from this quarter and then said, "Okay, from here." And then you come one quarter forward, right? Go All right, so that would be 1 going forward 2 3 4, you're going to look at that and go, "Okay, well, the next quarter that's coming up, whether you're looking here or here, however you want to look at it, 1.9 is turning into 7 and a quarter." And you're down $60 on the night. Like if you're a day trader, cool, trade it around. If you're a long-term trader and your company just came out and said, "We're going to earn 35 versus 20." And and you're growing at 300% and you're trading at 30 times earnings, it is insanely cheap. Like every analyst on this call had to be looking at this thing and just like laughing at how cheap it is. So tomorrow you'll see the upgrades on price.
But what I'll tell you what I'm going to start doing about it. I'm going to start writing again. I used to write research reports a long time ago. I'm going to start writing them up, just posting them for free on Substack. So make sure you get them because there's a part of this when I start talking about the trading, which I love. I love whacking the names around like this. It's so much fun. But people are missing like there's a reason why light's going up the way that it is, right? You know, there's a reason that Caterpillar was up 90 points today and it's breaking out. It's not because it starts with a C and ends with a T and it's doing something funny on a chart. It's because their earnings crushed, right? There's a reason why Apple is jumping up the way it is after hours. Hold on, I'll show you what it's doing right now. And we're seeing it after hours. Well, why? Because on the call they said, "Oh, by the way, we're going to grow at about 17% next quarter and we said we were going to grow at nine." So the last time Apple did this has been years. So once again, here we are, right? And I I can't stress how important this is for us to understand. Like this is a big deal. So when you start to see these earnings, it does affect the stocks and it does affect the trades. So it boils down to you deciding who you want to be as a trader.
Now tomorrow options are going to have you all over the place. Western Digital will gap down because Western Digital just will gap down and then you'll start seeing Micron and these other names gap down because of all the option players and they get washed out. If you're a day trader, you look at that one way. If you're a swing trader or an investor, you look at it a completely different way. I hope that makes sense and it's up to you to decide which of those you are. So just keep that in mind. If you're trying to get into the community, please look for a letter. We are sending out a bunch for the wait list and I will cover these earnings in greater detail on Saturday's deep dive video. That is it.