Transcription
Did the market bottom? Well, that's the question. So, we have a couple key levels here. We have this undercut right here at the 705. We made the lower low and now we have this wick. At the same time, you have volume here on the cues that looks like it's not in a level where you're supposed to be. It's very different than when I go here and I look at the composite, isn't it? We're going to get to this. Let's do it.
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So, I just want to point something out because people don't know this difference. So, I'm going to explain the difference. NDX is the NASDAQ 100. That is the biggest 100 names that are out there. IXIC, if we take a look at that right here, we can see what we can see how we're acting. And then the IXIC is the NASDAQ composite. It is the entire NASDAQ, right? Very different when we look at the volume here versus what we're looking at when we look at the NDX. Super important to get that and to get that there is a difference there. And it's certainly something that we want to pay attention to. So why do you care about this? Because you want to make sure you're looking at the right thing and you're comparing apples to apples.
Now, you had some huge moves down in some of these names. Specifically, the rocket names came down pretty hard today. We had a really good short on this and we sold calls as well and we did quite well with that. And then going into Friday, I really think these rocket names are in a lot of trouble. I plan on covering them in greater detail tomorrow. You can see that we closed below the 55. What I have to get everybody kind of geared up for here is CPI tomorrow. We have to get first the first suck salad before we can go through the second one. And we have a lot of breaking news tonight that we're going to get into as well. So, we're going to start with the basics and then we're going to jump right into CPI and have a prep for tomorrow and then what's going on after hours. We have a $7 billion equity raise that hit as well.
If we take a look at the S&P, the 200, the 50, the 20, and the five. Remember, this is the 200, the 50, the 20, and the five. Percentages of stocks that are above their moving average. What does the breath look like here? Does that look like it's better or worse? And I waited to redo this part so that I had the data from Tuesday. So if we go and take a look here, did things get better or did they get worse? Well, the five's not over, but let's close the five down for a second. So let's take a look at this. And let's look at the 20 for a second. And then let's look at the S&P and we're going to blow that sucker up. Now, if we looked at this low here, we can see where we were. And if we look at the low here, we can see where we are. We made a lower low on the S&P, but more stocks are above their 20-day moving average. Welcome to the world of divergences. The breath is getting better and the market's going lower. These are bottoming signs. They are not signs that a bottom is in, but they are signs that you are going through a bottom. So maybe, pardon me, maybe a flush tomorrow of CPI. You have a lot of differentiating opinions on what's going on there, but we can we're going to get to that. But more importantly, what do I think of this? Well, I think there's a couple things here we definitely have to pay attention to, but that's certainly one of them for me.
Now, if I look at something like this, I have to really think about this and say, is that enough? It's a start. It's not the be all end all, but it's definitely a start. When I look here and I see where I'm at on the 50 here at 46, and I'm now back over a level of 57, it's really hard to see that you're going to have a major correction in the market. Now, if I get 57% of all names are above what the 50-day moving average, it doesn't really make a lot of sense. Now, do you have that kind of divergence in here? A little bit, but it's more the movement here to me where I'm hitting those higher highs on the 50 that's important to me. So, I don't I think the 20 is a more clear divergence than what we have here. If we take a look at this spot, you can see that you're at 51% on the 200 versus where you are here at 58%. It's very hard to see more names getting above their moving averages and then for this to continue to fall apart. Meaning any consistency of falling apart looks like this where you get worse and worse, right? And you'll remember this in March and you can remember it back here too, right? When we had all that winning and liberation. So I think that's very important to get. It's not sustainable to continually fall apart if the breath of the market is getting better. It's just not. And we're going to get into a little bit more of this at the end as well. But more importantly, let's get to CPI.
So, let's take a look at what's going on here. This is just from the Bureau of Labor Statistics. It's done and calculated by Bloomberg and tells you when your next release dates are, which obviously is tomorrow. But you have three here and I think we should go through this because you have core goods down here that you can see they're in blue. Core services and they are in orange and they're really what's rising. So, the services are really what we're seeing go up. Then you have Super Core and Supercore has been lifting. That's a very large concern. Now, if you note on the chart, here's core CPI. And if you look in this area, you will note that core CPI is actually hitting a lower low where super core is actually making what that higher high. And so, this differentiation is pretty important to us. And we're going to get to it so that you can take a look and dive into exactly what this is so you know tomorrow because there's two very different ways to look at this data tomorrow. Two very different opinions. So, let's get to it.
All right. So, this is the broadest one. This is headline CPI. Price changes across a full basket of goods and services which we just went through. Food, energy, shelter, Medicare, Medicaid, medical care, apparel, transportation, all included most comprehensive raid on the cost of living. Also the most volatile obviously hurricane, OPEC, etc. You see in this number, that's the headline number. Now they refer to this as stripping out the noise core. Okay? It removes food and energy because who needs those things? Two categories, too volatile, reveal a trend. So what they're trying to do is get rid of the more volatile and then see what's under the hood. What remains shows the structural persistent pressure of the Fed when making policy decisions. Still includes shelter, owner's equivalent rent. Remember that because it's going to come in very important in a minute here, which carries roughly 35% weight and the index intends to lag and real world rent changes. Also, there's other parts of this that we need to talk about when we go through this data, but remember that part of it.
Now, Supercore. Supercore will take out food, energy, and shelter cuz who needs those things? Leaving core services minus housing, Medicare, medical care, airfare, haircuts, insurance, and recreational service. Most wage sensitive category services, prices, sticky, labor intensive. Super core is the Fed's best signal. So, it tells you if it's bleeding into the economy, meaning like, okay, oil prices up. And we're going to go through that in a bit. But what's so interesting about this is they're saying, okay, is it being passed through into this? And I think that's important. If we look at the number, it'd be really hard for anybody to look at this and think that Super Core is not being passed through. And the other thing that's really interesting is as it's going higher, you're getting the spread in between the two, which is showing why it doesn't feel like that when people show these numbers and why it feels so much harder than it is right now because of Super Corp because it's bleeding into everything. I think that's very important. But let me show you this.
Now, this is from JP Morgan and this is their preview. And for CPI, they see headline printing at 0.58 and core month-over-month printing at 27. This equates to year-over-year 43 and core 29. Then they break down what they think is going to happen if this happens. And of course, these are always just estimates. Nobody really knows what's going to happen, but core month-over-month prints, if they come in roughly where they're supposed to come in, that's usually in these areas. You can see that for example if we take the core month overmonth and we go look at their print of 27 and we look at where that would fall right here they're saying you're going to be up 50 basis points or lose 50 basis points to up 75 basis points and then they assign a risk tolerance to it. The option market is pricing in a 1.7% move. This is there's a lot of headline risk with this one. It's why I'm spending time on it. There's a lot going on with this one because of what we have with non-farm payrolls and what's going on overseas and they're looking for some clarity here and this number may actually give that clarity.
Now just remember these top numbers for a second. We're seeing core month over month printing 27 and CPI headline month over month 58 because this is super interesting because this is actually from Goldman. We expect.17 increase in May versus consensus of.3. So, they're coming out, JPM Morgan's coming out saying in line, these guys are saying no, it's going to come in substantially lower. And I'll show you how they get there. Corresponding to year-over-year rate of 279, we expect45 increase in headline versus.5. Now, remember the headline on JP Morgan was 5.58, right? 58 basis points. And here they're 0.5. The these are really I know it might not seem it, but these numbers are way off from one another. reflecting a sharply higher energy price. Our forecast is consistent with a 27 and core PCEMA large increase in financial services component. Let's look how they got there because I do think it matters.
So in front of you is the breakdown of core CPI and you guys can always comment on this but I think it's really helpful for you guys to understand these numbers to really be able to dig into it. If you think this is too in-depth, let me know. But the devil's always in the details. So if we go here and look at the increase in core CPI, they're going to have the month overmonth and then they're going to go here from April and then they're going to have May and what Goldman's forecasting over these numbers. So what I did was they always say that owner equivalent rent is 33%. Which it is, but rent of primary residence as well is also 10%, lodging away from home is 2%. So when we start saying how much does shelter really come into place? Well, owner equivalent rent is 33%. Rent of primary residence is 10%. Lodging away from home 2%. So it's more than 33% when we look at it, right? And so when we start looking at these numbers, you look at where you're at in April to May. And then you look at rents of primary residence 0.55.22 lodging away from home. You start looking at these numbers, they're really expecting the rent side of the market to implode. Now whether or not it does or it doesn't, I don't have a clue. But this is the kind of environment where one of those firms is advising somebody and somebody gets really hurt which means expect a lot of volatility. We'll be live for it tomorrow and I just thought it was important to spend the time on it. You're always welcome to comment.
Now I want to show you how I do this just back an envelope. If I want to see where we are, I'll just take a look at something like April 1st for example and this is just crude oil in front of us. And then I'll just drop a little pin there for a VWAP. And then I'll go to May 1st right there. And we can see that they're above. But what we're always doing is going to the end of May, which would put you right here, which put you at $96. And then if we come to the one in June, or I'm sorry, the one from April, we'd go to the end of April, which is going to take you right in here, and that's going to put you at 91. So between 91 there and 95 there, you would have a 4% on average increase in crude oil. Right? It's really simple. You're just taking from the dates, measuring when that's that one ended, taking the date, measuring from when that one ended, subtracting the two, coming up with the percentage. Right? It's not rocket science, but that tells you whether or not you're higher or lower from that period of time. You can do the same thing with gas. And gas is in obviously everything. And I have them already marked off here, which is April because I was doing this earlier in the community. And then you go here and you can see where you're at. And that gets you to three bucks a gallon. And everyone's like, "Oo, three bucks a gallon." And then, you know, May's like, "Hold my beer." And here you go. And now where are we? 330. So that's 10% increase in the price of gasoline. All that passes through. So the question is, is that going to be enough? Is that rent side going to be enough? Now, I don't have accurate rental data like Goldman does. I mean, they have pretty good data there. And so for me, I'm not going to pretend that I know which way that's leaning, >> but it's definitely something that's on my radar.
All right, guys. We're going to have to do partially fil. >> All right. Thank you, little British guy. >> SMCI after hours is actually doing do a little breaking news sign. So, God, I'm funny. SMCI 7 billion in equity after hours. 7 billion $7 billion mixed shelf. Probably doing some converts, too. I mean, who doesn't want some SMCI, right? Let's get back to your regularly scheduled program. Okay, let's get back to it now.
So, there's a couple things I really want to go over here that I think are super important. And at the time recording this, we have some more breaking news that US began self-defense strikes against Iran. So, just FYI, we got that going for us as well here. Uh there are a couple things here that I think are super important. A lot of people are going to look at this and then they're going to say, "Are we bottoming?" I'm going to give you some data that I think super interesting. First and foremost, the higher volume here is absolutely huge. The fact that the socks came all the way down here, trapped all the shorts, and then ripped it in the face like this, you're setting up at least for a higher high. Now, CPI is going to have a say in that, but you're going to have buyers the whole way down on this. This was a huge reversal. And this is why I always tell people you're better off waiting for it to happen instead of telling it that when it's going to happen. So the very first thing that we do with these is we always drop that 50% mark on there because that tells us if we had net buyers or sellers on the day. And you can see that the majority at the end of the day the wick is more than 50% of the bar meaning they've rejected sellers have rejected that area. That's super important for us to get and understand. And I'm showing semis because semis have been leading and we always want to watch whatever's leading right. It just that just makes sense and semis right now are clearly leading.
So what do we do about this? There's a couple things here that I think are very interesting with semiconductors. So first and foremost besides all the memory stuff but take a look at like DRAM for a second then we'll come back to this because this was really interesting. So when we got to this level today and so here's DRAM and then here's that level and looking at these ETFs as subsectors makes a lot of sense. So you could take all these sectors and then make subsectors like this would be the memory subsector right out of it and you can just go and put them all together. Hopefully you follow what I'm putting down. I'm not going to spend a lot of time on it, but I just want you to get the theory and maybe we'll go over it on Saturday if you want. Just comment below. So here's the low. We got to that low and we held. Now this is where it gets interesting and this is why I use the RSI to understand this stuff. Here's a divergence down here. So when you have a fivem minute divergence on these, I tend to mark those off because they can be support levels. And then if you come here, you'll see that you also have another divergence at the same exact area. You cross over and so you have a pretty strong bottom on that chart here now at 55 65. So I'll just be very blunt about this. If we gap down tomorrow on a hot CPI, as long as we hold that, that's an area of interest for me and it's definitely an area that I'm going to pay attention to. So I want to be really clear about that. That's a big one for me. So I really think that's something that if you look at how these people spoke today about the memory space, people >> partially filled >> little British guy. >> I think that it's really very important for us to get this. They're out there. They're buying that and they have levels on it. So that's the first thing that I would take from this. And then if you drilled into those names, you're going to get Samsung, you're going to get SKH, which are obviously in Korea. So let's go take a look at that for a second and see what's going on there. Okay. Well, there's a divergence. what a quinky inc came right to the low and look, yep, another divergence and you flipped. So, you have big support levels on both of those. And I'm telling you exactly where I'm looking at these and I'm doing it because they're right there. They're in your face. Look at it. And so, they are major areas. And you can see how we responded to those areas. Why are those areas so important? And why am I pointing them out? See how you really came in here? And let's see the V. See how the V is over my level. and that level, that little SMA line right there, which is I won't get into all the different standard deviations of this, but you can go and pull this for yourself off of Trading View. And really, what is Arvall and then I just played with the standard deviations, but it's all there and you can just grab it yourself and play with it, but I use a 50 down here. You should use what you're comfortable with. And then you can see how we're lighting up that area. And so, that's very strong. And that's what you're looking for off a bottom.
So, I'll give you an example of when you don't have something like that, and then we'll come back to it. So here's the cues and then you'll see something like this. We'll clean all this off for a sec. And you can see your undercut right here as well. And then that undercut they just koshed, right? And this was the one everybody was really waiting for ju just in here that 695 and we undercut it. And then of course you had 700 which was the put wall and you went through that like a hot knife through butter. But you see how you bounced through this and how strong that was and all the volume that was in here. That's like perfect puke level. And that's where everyone said just get me out. I've had enough. And that's really what you're looking for, right? So, when you see that and it's that strength, you want to mark these off and you want to watch those levels. And certain bottoms have more value than others. Just like this one at the end of the day on Friday was a huge one because of the volume there. I mean, you can see that volume, right? You can see here as well. But this was absolutely huge. And if you look here on the volume here, this gets a little more complex, but Tuesday at 12:30 volume like this means a heck of a lot more than a Friday volume here. Why? Because Tuesday at 12:30, nobody's doing anything. So when you see this at Tuesday at 12:30, it means a lot more. And when I mean doing anything, like we all know that the dead time of the market's 11 to1. So when you see something like that, it's definitely worth paying attention to. And I cannot stress that enough. So that's very important for me to realize and for me to point out. And so what we want to do tomorrow is if we gap down tomorrow because they're probably going to move the put wall, I think, because I think they trapped a lot of shorts. And you're going to come down to that 687 level and you're going to want to watch that. See how you bounce. Watch this with the SPY. Let this load in. And you'll see that it was pretty strong, but nowhere near as strong as what we had going on with the NASDAQ. And I think that's very important.
Now, we could look at this a little bit differently, but I think it's worth pointing out. So, here we are on Tuesday, May 26th. And here we are today. And I waited for this to close. These are new highs. That's the symbol. So, you can do this for yourself. And you're over the new highs. So, you had more new highs today on the New York Stock Exchange than you had on Tuesday, May 26th. But wait, there's more. If we look at the new lows, you can see your low right here. And you did not make a lower low from Friday. So, the new lows did not make a lower low. And then again, if we go and take a look at the highs and you can see where we were Thursday, where we were on Friday versus where we are now. Obviously, higher highs, but the new lows did not make a new lower low. I think that's very important. Another thing that we could always look at would just be software as we go into Oracle's earnings. I don't really have the same kind of move here on IGV that I have on the socks, and I do think that's important. I also think you have diversification in the socks, and I think this is very important. So, here's acks. And if I was to measure this off, which I'll do very quickly, and we'll just drop it there like it's hot, you can see that you're over that 50% line. If I go there and take a look at ESOCS, and I drop it here again like it's hot, you can see that you're there and you're have that 50% line. Remember, wicks are price rejection. Also, while we didn't get that perfectly in IGV, the cyber security names do have that. It does not mean that you're out of the woods. I'm going to be very clear on that. But it does mean that you are going into a bottoming process and you have to start somewhere. Now, escalation, hot CPI, when we think we're going to get a cold CPI, it's anybody's game from there. But you now have some levels and a full understanding of what to do tomorrow. If you found this helpful, please share this one. There's a lot in here to unpack. That's it.