Transcription
Well, it sure doesn't look like the end of the world, but they certainly make it sound like it. Now, we have a lot to go over. I'm going to tell you exactly how we're going to do this video today. We're going to start 34,000 ft up and then we're going to drill into the minutia. It's my belief that we're in the phase where you're going to start seeing the winners and losers. We're going to go through who I think they are, but we have to focus on what exactly is going on out there to begin with on the broader scope because we're going from that rising tide lifts an all-boat kind of market to are we at the top? Is this finally it? And there's some signs here that some things that yeah, we have to talk about. So, let's do it.
The first thing that we would note is that on this we have a dogee and we can all see it right up here. Then we broke the dogee and we came down. We're just going to talk technically for a second. Then we have another dogee on the weekly and then we broke down and we hit another lower low. We stopped exactly on the October 6th weekly bar. Now, why is this important? It's important because this was the area that we've been yammering on about for some time that we had to break. We had to retest that low and then see if we were going to hold or not. I don't try to predict what's going to happen. I just know over time that you have to retest this. So, and it's just history. If you go back through history, you'll see it all the time. Even when we broke down here in April, you had to kind of come back down a little bit, rally back up, retest that area. And you can see it right here. Undercut that open, scare the bejesus out of people, rip, backfill, and go from there. There's no difference between this pullback up and backfill. But people kind of think it's a little different and we have a lot of a lot of people out there that are worried about speculation. So I'm going to show you a couple things that I thought were fascinating, uh, that I went through in a moment here.
But what do you have here on the S&P? Well, you have a textbook head and shoulders. So the very first thing we want to just understand that yeah, you have a pattern here and it could break, but the best bouncing patterns are always failed. So in other words, if it's a head and shoulders, if it fails, they're usually the best, meaning for the market to continue higher. Now, there are some things here that we're going to address that are not great. I've seen great before. It doesn't look like this, but we have to allow it to play out. So, if we look here, we would suggest that we have a left, a head, and a right shoulder. Now, why this would be troubling for somebody that is trading shorter term is this. The left shoulder here is kind of one of those weak trout-like shoulders. And over here, you have like this strong bodybuilding shoulder, right? The higher the right shoulder versus the left shoulder, the more strong the break will be. And you just go through history and see that. And what you'd want to do is just remember that you measure from the head of any head and shoulder simple textbook trading. And you'd mark that off and see that is a 5.4% correction. We're going to get to that in a second. And then what you would have to do is go, well, 5.4% would take me to where? And you come down here and you go, all right, well, that would take me to roughly this area or 6,200. And then you'd have to look at that and go, well, where does that really put us? At a 10% correction.
So, there's a lot of misnomers out here about these corrections and what they stand for and is it the end of the world? And I think it'd be really important for us to kind of go through this just for a moment and look at this. Now, I want to point out a statistic. If I go through from 1928 to date, every 5% correction, how many times do they turn into a bear market? And you're welcome to do this for yourself, but if every 5% correction was going to be the next bear market, you would have been wrong about 96% of the time. So only roughly three, three and a half percent, it came out to 3.4 actually of those corrections led to a bear market and that data is going back from 1928 and you are welcome to go through that data yourself.
Now, another interesting fact and a lot of people don't know this unless they were trading back there and I wasn't trading in '91, but I started in the mid-90s. So drawdowns, we had nine drawdowns during this period of time during that decade, which would equate to one a year where we lost an average of 9.7%. Was that the end of the world? Was that really the great bear market? Was that a time when you, you better have been out of the market? No. If you were doing it that way, you missed one of the greatest bull runs of all time. So I think that these are just outright statistics that you can go back yourself and you can go look at that as we discuss this. But these are facts. They're not tweets. They're actual facts of actual data.
Now, the reason that I bring that up before we go any further is because people get this kind of, I'm going to, I'm going to predict the top. I'm so good. I'm going to predict the top. I'm going to save everybody a bunch of time. You're not. None of us are. None of us will ever predict the top. It's just not the way that it works. And so, what we always have is we have fear and greed. Fear and greed over and over again. Are there going to be winners and losers of this new AI boom cycle? 100%. Are there companies that are going to go to zero? Absolutely. When we were trading, and I'll just show you from an S&P perspective, but when we were trading back here, back in the day, back in the day, and we were trading back here in the '90s, we had companies that we bought that were $10 billion, $20 billion companies that went to zero. And and and this, this to me is what people need to kind of wrap their noodle around. If you look from '91 to '99 and you sold every 10% correction, just to kind of put it in perspective, we'll take from '91 up to '99. What did you miss? I mean, you missed a 300% run on the S&P because you were worried about this or you were worried about this. And and I, I can't stress this enough, but this time it's going to be different because the guy on Twitter told you so. Uh, okay.
So, what we want to do is we just want to look at facts and then take those facts and make our own decisions because that's all we're really trying to do here. Information, education, start thinking like an institution thinks and start looking at what's really going on. So, is the market correcting because earnings are bad? Now, the market is not correcting because earnings are bad. A matter of fact, this is one of the strongest earnings quarters that we've had. I would suggest that we're correcting because of what's going on with the Fed and we're correcting because of the private credit markets. Are they going to seize up? What's going on with tariffs? Massive uncertainty out here is going to pull us back. That is no different than what happened to us in the '90s when Russia defaulted on debt. There was always something out there. So, we understand that we're not having an earnings-driven correction. We have people out there who say these companies are going to miss earnings. We really haven't seen that yet.
All right, so this is what we have from a technical standpoint. If we break here, we have a problem, right? We're going to come to this level and that's going to be like one of those corrections that we had nine times in 1991 to 1999. You'll be okay. So then what we want to do is just understand that that correction could come down to that 6145 level. That's 100% possible. And you have to understand that if you are a shorter-term trader, you're going to have a bad day. These are just facts. If you're here and you're not having a process that's going to get you out of the way and this starts to fall down, you're gonna have a bad day. You have to honor your process, honor the stops, make your decisions, and go forward.
To me, I actually think that one of the companies out there is becoming extremely disruptive, and it's showing great promise, and I think that's scaring the capex side of the market. That's my opinion of what we're also seeing in tech right now. And we're going to address that in great detail today. But when I look at something like this, that's where you're at. So, now let's drill into this just a little bit more. In front of us is the Ichimoku cloud. And I use this and I use it pretty religiously for long-term trends. And what it's telling me is that I have a little bit of a problem. And what tends to happen here is as these cross right here and they turn red. That's an issue. And that could mire us. Meaning that could keep us down. When these start to flip, it becomes a yellow flag. It's not really a red flag yet from on a daily perspective, but it is becoming a yellow flag. Why? Because when these two flip, that's telling you future what's happened. It counts out from 26 days. This was actually one of probably my best video I ever did on the Ichimoku cloud. Um, you should use it how you want to use it. My videos go through how I use it. You should do what you're comfortable with. But when I see this, we're holding the lower level of that, which usually means, hey, we're just mired in here. But we have to respect the fact that if we don't get out of this, eventually you're going to be under the cloud. And that starts to become a problem because when you start breaking under it, meaning how you held in here and you started breaking under it, that starts putting pressure on the market.
So for those that are concerned, the first thing that you don't want to start seeing, and they made it super simple for us, is you don't. That's too big, isn't it? That's just very aggressive. Hold on one second. Let's fix that. All right, we don't need that. There you go. That's much, much better. So what we don't want to start doing is closing under this. Now, if we start closing under that 652158, which is what this is telling me it is, then you might have an issue. And then this is going to start acting as a weight on us. It's not going to start propping us up. It's going to start acting as a weight. So, this is definitely something that we're going to want to watch and then see how we act and then go from there. And we can go through history and see when we broke it back over, broke it, and that usually leads to some really bad days. And it's no different candidly than we broke it here and you count out your 26 and you'll see it's telling you here that you got the same signal and a similar signal that you're getting here. So we don't want to dilute ourselves over what's going on. But we just want to be cognizant of it. So if we start closing under that, that becomes, you know, it's, I won't even say it's orange at that point from an intermediate trading standpoint. It's a yellow flag to me. And then it might, that yellow flag right now is going to turn to red. And we have to be, we have to be cognizant of that. And it's no different than when it's here and you count out your 26 and you go and take a look and go, oh, all right. So, where's that 26? Where's that sucker right here? And then you're going to see from there that that's telling you, okay, this is probably over from here. Now, some people would have bought in there, but your real signal on here is up here. Obviously, we were trading in there in the community as well, but whatever. But it's telling you in here like, hey, that might be, that really might be the end of it. So, that's really important for us to watch.
If we go and take a look at this on a longer time frame, we can see that we broke into it. It flipped, flipped right back on the on on the weekly and you're nowhere near it. And you don't really even have to worry about being in it until like May of '26. So, that is something else that we would definitely want to focus on. If we go and take a look at the monthly, it's kind of pointless, but let's just do it since we're here. Really not even close to it. So, the long-term secular trend of the market to think that this is over, it's kind of silly.
What we want to do is we want to focus on the fact that yes, you can 100% drop another 5%. And if you use the rule of three, which I would strongly suggest that you do, what that will tell you is that the leading sectors will drop by 3x that. So if I look at something like UR for example and we measure that off and we just drop it here, I'm going to get 34%. Whatever you're getting from here, so like let's say that the S&P dropped 5%. You're going to find the leading sectors are going to drop 3x that. So in this case it's way more than that, but on average it's like 3x. And then out of those names in here, if this drops 35%, you're going to find names that are going to drop a percentage of that. It's usually 3x that. So you'll find names that on a 10% correction where a name can lose 70 or 80% of its value and never come back on a 10% correction. So if we took something like Quantum for example and you marked Quantum off and you could see that we broke up here and we take a look at that. All right, there's a 15% correction on Quantum and that Quantum correction is aligned with the S&P being down five, which is three. And then you go look at something like RGTI and you go see that and go, all right, well, what are we down from the highs and go take a look at something like that. You're like, "Okay, well, we're down 60%." It's not an exact science, but it tells you exactly how that stuff's going, right? And I think that's super important.
So, people will go out there and go, "I'm going to buy this one." You should do what you're comfortable with. Where I'm going with this is that when the S&P corrects, that's how this goes. And so, what will happen from those corrections is you'll start to see other names start breaking out, becoming the leaders. They're the ones that they're buying during the correction. So, when we start to see this stuff like in the Qs and you're starting to break here, we're holding that put wall, but you are flipping here and we have to be cognizant of this. It's no different. We held that 590 put wall and we're probably going to get into that, but if we start closing below this 580, you have a problem and you need to understand like, yeah, that's going to be an issue here. And I, I can't stress that enough, but we did the undercut here. We did break that or we were unable to get above that peak VWAP. You're unable to get above that VWAP from the 10th, which is really important because the average person's now down in that trade all through here. And that's telling us like, hey, you have a, you have a real issue here. Why do you care about this? Because this is also telling you exactly that when you get over that, the area to pay attention to. But you can see that you have to get back on track here or this is going to start acting as a weight. And that weight can act very similar to what happened here in March or it could just grind us a little bit sideways. Either way, it's definitely something that you must pay attention to. And I can, I cannot stress that enough. You have to pay attention to this on the weekly and we have to look at it.
Now, we're all hearing that AI is dead and we're all looking at the socks and we're going to look at this on the weekly just so you can see this for yourself. Where are we really coming back to? All right. Well, here's that retracement of that previous break and resistance becomes what? Say it with me. Support. All right. So, if we look at the socks, what did you do? Oh, we came back to that support level. All right. And then if we come here and take a look at it, what did we do? Oh, we came back to support. Um, did we break or cross? No. But you're going to, right? So, if we're using this cloud as a guide again, we're going to see that we got to get our life together. We got to get our act together here or we're going to have a problem. And we did break that 10. And this is where we're at. All right. So, understand that we need the XLF. We need the socks. And we don't have it right now. A matter of fact, you're seeing cracks in here on a much shorter term daily time frame where we are below on the XLF on the cloud. And we, we're doing this way more than we've done in the past. But you can see clearly how this is acted and it becomes a problem. You really don't go up on the S&P and the NASDAQ if you don't have the semiconductor index and you don't have the XLF because you don't have what? You don't have leadership.
Now, there are times in the market where the XBI can lead for a period of time. There were times in the mid, uh, I think it was like 2015 or '16, something like that, where we had that period of time during trading, uh, yeah, it was back here where we had the XBI and the XBI was actually leading over the socks and we can see that if we just go take a quick look at that, right? Uh, and here it is from '15 to, you know, from '14 to '15, but it's not the norm. It's not normal for biotech to be the one that's leading us, right? It just, it just isn't. And obviously you got washed out during the great financial crisis. But when you start seeing where you're at right now, you can just see how rare it is for that to happen. Now, as we're saying that, if we take a look at the XBI and you're starting to see how we're lifting here and we look at the cross, you can see from December 25 back in here, how that is flipping, right? You're out to December 19 where this thing is flipping. And you count out your days, you get it, right? 26. All right, cool. So, is that something to pay attention to? Yeah, I do think you pay attention to it, but I also think you have to realize that over decades, it's not there. All right, stay with me.
So, if we go take a look at the XBI, we'd have to recognize that money is flowing there and that could support us for a period of time. The other side of this is you could get support from the XLA. That is possible. The XLA could give us some support, uh, and that can give us some support as well for the S&P, but it's not real leadership and after a while that leadership goes away. So, what we have to do and what you should be taking from this is you need to be watching the XLF. And I would strongly suggest you either use something like this cloud formation. Some people use CCX or RSI. I use RSI, but I like the cloud because it just tells me what is really going on out there. Um, and it really, it's pretty clean stuff for determining trend. And what we're doing is 34,000 ft and then drilling into it.
What I want to get people to stay away from is this. This big tech needs $2 trillion in AI revenue by 2030 or they wasted their capex. You will start seeing articles like this all over the place where pundits or critics are going to say they're wasting their money. Let me be really clear about this. 100% someone out there is spending a fortune that is going to go away and be a zero. It, it happens in every great boom cycle just like everyone that mined for gold didn't find gold. It's no different. So, what you want to do is sell the picks and the axes. It's, it's as old as time. They're the people that did the best. That's how they created Wells Fargo. They just took in all the money. They became the bank and the bank tellers. So, you have to understand that all we're doing is watching a cycle of human history repeat itself over and over and over again. And then you have to figure out how you're going to take advantage of it. The idea that this is the way to think about it is a huge mistake. And let me give you some examples. This is a real clip from Telephone Network's Western Union sees no value whatsoever to them. Western Union internal memo in 1876 dismissed Bell's telephone. This telephone has too many shortcomings to be seriously considered as a means of communication. This device is inherently of no value to us. Basic complaint, high infrastructure costs, switches, wireless, what looked like frivolous gadget as proven telegraph network. Okay, let's just rip a couple others over the past 200 years. So in 1987, Robert said, "You can't, you can see the computer age everywhere, but there's no productivity from them." Early electric gas lighting and power systems were criticized as too costly and fragile compared to gas and steam in the 1880s and 1890s. Edison light bulb, a conspicuous failure doubted the economies of rewiring cities and factories. All right. Uh, in the 1840s, Britain's railway mania attacked the press. It's a monster bubble. The Times and others complained over building, fraud, huge sum sunk in the lines to nowhere. My favorite, and this guy's still talking about a bubble. So in 1998, Paul Krugman wrote, "The growth of the internet will slow drastically. By 2005 or so, it will become clear that the internet's impact on the economy has no greater value than the fax machine." This is really important because these kinds of guys and girls are still out there saying the same thing two and a half decades later. And it's not a knock on them. It's a knock on to me their thought process. And when this starts getting in there into your head that you're going to be able to predict this and when this is going to end, and it will end. Everything always ends. It flushes out. You get your winners and losers and we all go forward. But the idea that you're going to be able to predict it is outright delusion.
Now, that doesn't mean that companies that are doing quantum that make a million dollars a quarter are the things you have to buy. Far from it. I, I'm short some of these names. I've been short for these some of these names for a while. It doesn't mean that you have to start running into things like OKLO and I'm sorry you guys are going to get annoyed with me on this one. There's no revenue here. So while we keep hearing about revenue in three years, that doesn't mean that this thing's worth 20 or 200. It's worth what the market's going to pay for it, right? So you are going to have companies like this that yeah, they're going to go to zero. That's just the way that it is. Not maybe not this one, but companies are going to do it. So some people would say don't pick the winners and losers. Understand that you're in a secular bull market and then what you want to do is just stay and ride the trend. H, that's one way to go, right? Where I, where I've gone in 20 some years of doing this is you want to identify if you can find these like, can you find the next Amazon, right? That's kind of where you want to go with this. And I think that that's super important.
What I, what I find fascinating is that people are so keen to call, oh, this is a bubble. Was it a bubble at 40? Was it a bubble at 100? Was it a bubble at 200? Is there going to be a bubble at 300? Right? Is this a bubble? When's that bubble going to burst? When was the best time to sell Google? Was the best time to sell Google here in 2015 at 33? Was it a bubble in '22 at 150? Is it a bubble now? Right? So, hopefully you can see where I'm going with this. And it's not just names like that, but you know, you look at stuff like UNP and the railroads because the railroads are a bubble, right? We just heard that in the 1800s. The railroads are a bubble. Were they a bubble in 1997? Were they a bubble in 2007? Are they a bubble now? So finding the winners and losers to me is really the fun of all of this. I don't really understand the point besides just saying that the market goes up. I mean, if that's really where you want to go with it, buy an index fund, call it a day, get a nice cup of coffee and a book. I mean, that seems like the easiest thing to do, right?
So, what we want to do is understand that when we get corrections, as we started this video with, that's where you want to go because you want the corrections. You might not think you do when you're dealing with all the pain, but the corrections show you who the winners or losers are going to be. So, when we see something like, you know, let's take a look at the, the RSP for example. We can see that that's that's rolling over, right? We can see that this definitely is cracking as it did here in February. You know, it kind of precedes what really goes on with the market. Then we go back to it. We look at this on the weekly and you'd say, "All right, well, where could we really get to?" Well, if we looked at this on the RSP and we just dropped this down like it's hot. We can see that we've retested this area. We broke it here with all that liberation and winning and it looks to me like we could kind of get down there again, right? So, could we get back down to this level? Sure. Are we going to break that level? I don't know. I don't have a clue. But when we start looking at stuff like the XLK and saying, "Well, there's our level." All right. Well, where does that put us? All right. Will the XLK if it breaks, and let's be clear, this does not look like something that's just dying to hold there, right? Like nothing about that screams sexy like, oh, I can't wait to just, we're definitely going to hold here. No, it very clearly could drop another 10%. But does that mean that you should be, you know, panicking and getting out of the market? If you're short-term, yeah, you want to make sure that you're buying the winners, not the ones that are cracking, you know, and it might mean that everything comes in, which usually what it is, and let's be clear about that, and then you pick up the pieces later. So you want to monitor this. But yeah, you can come down to there.
If you look at XLK versus the S&P just for a second, this is what we're dealing with right now. And I do like looking at relativism because I find it helpful. Now, if I use the, the wick, which I really don't like to use, um, but you've already cracked that level. So, then we would go and say, all right, well, what if we are using the body right there on that? Well, we've already cracked that, too. So, there's nothing really here, the XLK versus the S&P that's telling me that we're, we're going to hold here, right? So then we'd have to start just marking down, well, where's that, that next level? Well, it's, it's down here. All right, so we could still come in. Tech could still come in. And we're not, we're seeing some signs of holding on shorter term indicators, which we will get into. But are you really seeing something out there that's screaming, yeah, this is it. We definitely bottom. No, but as we started again with the video, it's a function of what do you do when you get here? Are you going to be the guy that's saying that AI is not going to be around because productivity is definitely not going to change and these people are spending billions of dollars and they're not getting anything out of it? That's one way to go. I'm going to go the other way. You should do what you're comfortable with. Right? That's the way that I've looked at this market. And I've looked at this market in over two decades of doing this. You're going to get winners and losers. Understand that.
If you look at RSP divided by the S&P, for example, what do you get? Is this something you really should be paying attention to? Does this really look like we were back here? No. Not even close. Oh, we should be concerned by this. Should I? Why? Why should I be concerned by that? If I take a look at the socks and I go take a look at the Qs, is this something I should be concerned about? Is the socks outperforming the Qs? Well, it's been since March and now it's not. Is that something I should be concerned about? If so, I'm seriously asking and comment why. Why are these things that people are saying are going to be concerns, concerns? What if we're just getting to the point where we're just pulling right back to a trend line and then from that trend line we're just going to rebuild again and we're going to find out who the winners are. You know, there was this really interesting study done and I can tell you from experience. Bubbles don't end when everyone's screaming bubble, right? Here's the socks versus the Qs. Here's the trend line. And I pulled right back to it and I'm holding. So, while everybody's screaming that this is the end of the world, I just see a retest. I just see an inverse head and shoulders breakout and retest. That's all I see. And that doesn't mean that you're going to just bounce there automatically, right? But to me, it doesn't end when when Nvidia is out there screaming, "By the way, we're raising gross margins. We're raising, we're raising our earnings estimates, we're raising revenue, and people are saying it's a bubble." I'm not saying that capex someday is not going to slow down. Please understand that as we go and proceed through here, it will slow down at some point. But you're not going to tell me it's going to slow down on a Wednesday because you won out and the market dropped.
And when people really go back and look at history and study what happened with Nvidia, and I find this fascinating that people weren't getting this. If you watch us when we do the pre-markets, the public pre-markets, we dropped. Oh, no. We're down 12%. That's probably it, right? Okay. So, if we go back and look at history and we said, well, that was earnings and what did we drop? And let's go just go three days over. 1, 2. All right, that's three. All right. So, we dropped 14% there. That was it, right? That was the end of the bull market of Nvidia at 119. It's 180 now, but you called it here before you got all that liberation and it went to 80. Okay. So, where else was it? Where was the end of it? Oh, here it was when it came out with earnings and it dropped again. Where did it drop in three, four days? 16%. That was it. That was the end of the bull market, right? That was it. I knew it. That's why I got out at 106. Okay. Right. I mean, how many times do you want to go through it and take a look at it? Nvidia has not really surprised, meaning that people didn't know that Nvidia was the cat's pajamas. Didn't happen till May. You can go back and look at all these names and see the same thing. But this time it's different. This time you know better, right? So understand why I'm saying it and I'm saying it in this tone to annoy you because you are not going to predict the bottom. I remember when we were trading this in the community back here at 900 and I said, "Nah, it's probably going to, you know, that's pretty much it. We should probably get out of the day trade or the swing that we were in and now it's got to consolidate and work it off." It took nine months and then it broke out. Everyone's like, "Oh, that's 90." You know, no one, no one's going to buy AVGO anymore. You know, that's, that's not going to work. Okay. Is it a bubble here or was it a bubble at 90? Hopefully, you understand how you should be viewing these things if you're a long-term investor. If you're a short-term investor or you're going to listen to Twitter, then what you're going to wind up doing is just saying that it's the end of the world. They're going to get rid of data centers. They're not going to use quantum computing because people don't want to compete anymore, right? Well, somebody should tell that to Google because Google's out here pretty much crushing everybody.
And before we get to Google, I want to show you one thing. How many times in your life have the masses actually been right? As have if you've been trading? If you've been trading for a couple years, you've had the experience that the masses have absolutely no idea what they're doing. And if you ever do the exact opposite of what the masses are doing, you'll make money. AI is not a bubble. And this gentleman ran this study. I think it was a couple thousand people. Um, AI is not a bubble. And this is a correction. New highs in 2026. 28% of the people believe that AI is a bubble but has not peaked yet. All right, 60% believe AI is a fad or a bubble. AI is a bubble and it's peaked. 14%. So when we look at this, we have 70% of the people out there that believe that AI is a bubble and they don't know if it's peaked or not peaked. That's, that's where you're at with AI right now. And I think that's really important. Take a look at this. Nvidia 183, 183, one-year time horizon. Would you want to short it here or go long it? So, we have a company that's trading at less than its growth rate. Just so we're all clear on this, and I know people are going to tell me the growth rate is going to go away because they know this guy on Twitter that he told pockets in his basement told him so. So, here's the thing. 50% it's a coin toss to me. 48% say short it. The company that just came out crushed earnings, raised guidance, and is reaccelerating its data center growth. 48% want to short Nvidia here.
Now, one of the things I started with was explaining to you that you're going to go through periods where you're going to get winners and losers. And the reason I did today's video like this is because I want people to truly understand this and and get a sense of what's going on. Not just from the short-term perspective. We do a lot of that in the weekday videos, but Saturdays I try to give you like a long term and go, "Okay, this is what I'm saying." And it doesn't, it doesn't mean that I'm, I'm right. And when the bubble bursts, believe me, I'll have a drawdown just like everybody else. But the point is that my drawdown will always be less because I know that just honor your stop. Get out of the way. And we, we've been doing this since October 7th. If you've been following this channel, finally, if you've been watching these these videos, and I'll show you this, but if you've been following these videos and you've been watching us on in the pre-markets, we went to cash in here, not because the AI bubble is dead, but because we saw stuff on the horizon. We saw what was happening with the government and the shutdown. We saw that the tariff issue was nowhere near solved. We saw that the divisiveness of the FOMC meetings and we could see where this was going. And so, we got out of the way. We're very fortunate to do that. And there's only been three times where I've actually done where I've gone literally to cash in in the swing and day trading accounts in in this period of time since we've been open in that community. I think it's been open three and a half years now. That's all that was it.
I'm not saying that you need to, oh, this is it. This is the bottom. Far from it. There are signs of that. I'm going to point this out for time's sake. But there are signs that you are getting to something like that when the RSI is getting down to that 30 level. I mean, if you want to short a 30 RSI, I'm not saying that it can't roll back over, but usually you get some kind of rally out of it first and then if you want to short it and from in there after 30 and you rally up back to the neutral line, go to town. But to get involved at something like this level when you're down here and you're going to tell me that this is the spot where you need to start shorting and that you can't bounce back up, uh, okay, I wish you the best with that. You know, you, you don't want to short when everybody else is shorting and everybody else is panicking. And that's what you had this week. You had guys that just got absolutely crushed because they don't have pro, they don't have a process. You have the CTA sellers that finally came in. And we could spend more time on that in the weekday videos. That's why I tell people to subscribe because all this stuff's connected. So, and make sure you hit all notifications because the videos come out at different times.
But if you look at what is happening here and you look at what's happening with Google, the market's pulling back. Google closed at an all-time high on Friday. Google closed at an all-time high on Friday. And when you really go through the new development that's out there that that they're coming out with, I think it's fascinating. And I want to spend a little time diving into this on how I see it. I want to spend a moment to go through some headlines. And the headlines I really want to focus on have to do with Gemini. Gemini, obviously, Gemini 3 came out for Alphabet. We're all aware that Warren Buffett recently took a huge position in this company. But there's some, there's some things here that are shaking up what's going on in AI and we're starting to get winners and losers and that's why some of these names are acting the way that they are. So I think it's important to get this. So Alphabet searches Gemini 3 and here's the broad and then we're going to go deep into this and I think that you need to go deep to see how it's disrupting OpenAI and some of these other models which we're going to get into. Alphabet shares rallied on Wednesday after investors cheered the release of Gemini 3. Yay. Gemini 3 allows users to get better answers to more complex questions. I'm going to be blunt. I, I use these and I ask them the same questions over and over again just to see how they answer those questions. The way that Gemini 3 thinks versus how the others were thinking is pretty darn interesting to me because it actually is thinking of things that I'm not asking it, overlaying and saying, "Hey, well, what about this?" It was like an actual conversation. It was super interesting to to actually see the progression. Alphabet stock jumped Wednesday. Google debuted artificial intelligence. New model improvement. Yes, 100%. It's an improvement. Complex questions. Yes, it did. And and we're going to get to some of these statistics here that were just kind of mind-blowing. Gemini will integrate Google search. Why am I going over this? Because when we have disruptive technology, it's always the same. We always think it's the first mover advantage, right? Well, there was a company called CD Now that used to buy your CDs from, and Amazon came along and took them out. Amazon was not the first mover. Books a Million was the first one that was actually shipping books just for whatever it's worth. So, I, I'm leaning towards the disruption in OpenAI not being the best any longer. And and we're going to get to some interesting stats here. Um, but I'm wondering if this is where it's going. So, why are people going to spend all billions and billions of dollars on this if Google's going to wind up taking it over? And I think Google was sandbagging a little bit here while they were dealing with the FTC to be quite honest. So analyst DA Davidson said Tuesday they were quickly impressed with three calling it generally strong model current state-of-the-art based on preliminary testing scored against AI benchmarks. We're going to get into some of those just so you can see how strong this performed as far as we go. The latest model DeepMind meaningful moves frontier forward. Okay, we've typically came expected some generation of frontier models. The firm has a neutral rating on Google. All right, Alphabet rallied recent Buffett. This is their second big tech position that I think I've ever seen them take. Uh, and it's a huge bet and I couldn't figure it out at once, but now I understand why they're doing what they're doing. But I just, I want to point something that I noticed out as I was doing some research on this. So the market share, market share of chatbots is what? 82.7% is ChatGPT, 8.2% Perplexity, Copilot, which is embedded, Gemini is 2.2, DeepSeek 1, and Claude .9. Now this is interesting because when I go to this next slide, this is market share. This is what they're saying market share is. So when we go and take a look at this and we see that you're getting five billion average per month visitors on chat. Okay, that's absolutely huge. But if we take that 46 and you look at something here and this is where I thought it got really interesting to me. Anyway, here's, here's Claude and Claude's 1.2 billion, right? So we have 1.2 billion on Claude and you have chat at 466. So if you're looking at this, you're like, "Wow, this is, this is enormous. This is 20 times as much." All right, now let's go back to this, right? And and I'm saying 1.2. It's actually, you know, obviously much higher than 20 times, but here's where, where we're going and looking at this. Here's Claude at at .9%. Here you are at 1.2. You're not at 80 times this. So what I'm noticing when you start going through these numbers, look at Gemini here at 1.7 billion versus this. Let's just make this two. We'll make this 50 just to make the math simple. And we can make this one and a half. And we'll make that 50. Right? So look at 35 and look at this from 25. Right? Just stay with me. Now watch when you go back to this, Gemini is 2.2%. So the 2.2% there into this is 40 times, right? Hopefully you see where I'm going with this. And then if you go and take a look at where Gemini is in regards to this, what are you saying? Well, it's 20 times. So what's happening are two things. People are either using ChatGPT and stopping using it or they're going to it for novelty. But the mar, the idea that this is the market share because they're downloading the thing and they're playing with it and it's free and they don't have to put any information into it is why they're using ChatGPT. They are not staying with ChatGPT. And I think that this is where it's get interesting. And I'm, I'm being, I'm speculating, but it's pretty darn obvious to me that when you look at Claude and you look at Gemini or even DeepSeek that when they're downloading these things, they're staying with them. I don't believe that. Now, I do have all, all of these and I will tell you that out, out.
Of them, um, I'm leaning towards Claude more than any of them. And I do, and I've been playing around with Gemini since the, the three is out, and it's absolutely fascinating. But I wouldn't take away from this because again, and people always like, it's not the same. I agree, it's not the same. But we had something called Alta Vista and Netscape, right? And that was the browser and that was the first one on Mover. And I'm wondering if this is where it's going, where we went through this and like back in back in the day, back in like '95, '96, and we had to get rid of the Alta Vista and the Netscape and go to the next thing. And I'm not saying they're getting rid of it, but what I'm saying is, are you going to throw hundreds of billions of dollars at ChatGPT? Like Microsoft's kind of getting away from this. I don't know if anyone saw that they embedded Anthropic into Excel. So what if that's what's going on here and like that capex number comes down? Because the capex number comes down because ChatGPT only does 12 billion in rev, which is enormous for the company they are, and the fastest how they got there. But where's this trillion dollars coming from to do all these investments? Right? The capital markets, the private equity side's not going to do it, the private credit's not going to do it. So I'm wondering if this is the issue. And now people are saying, well, wait a minute, also when you start going through some of this other stuff, which we're about to, I'm wondering if that's where this is going and that's why we saw the disruption this week because people were saying capex is going to come down because you're starting to get winners and losers. This is very similar to what happened to us in '96. Very, very similar, where we started getting winners and you start seeing which names you actually want to be in versus the rising tide. '95 to mid-'96 was really rising tide, everything went up, everything that just put in front of its name. And then you started finding out that no, people like Cisco, they want their switches, things like that.
Google, new Gemini, Vibe, Codes, responses come in with its own agent. Okay, so now they have their own agent. Some of these are clips from uh PE papers by MIT. Um, and some of them are from the Google fellow that actually worked on this project. But I thought that this would highlight it because if anything that works for us or works for me, it's numbers. I like visual presentation in numeric form. Now, I'll be very clear about this before we even begin. I have no idea what the humanities last exam is, but what I can tell you is it's, it's for academic research, right? And what they're doing here is they're comparing to where was Gemini Pro before, where's Claude now. Now, Claude also, in fairness, you know, Claude has another level to this that they're didn't rank on here. Um, and, and just so we're clear on that, and I think it's Opus. And I like that. It does seem to be be pretty, pretty u pretty in-depth in its answers. Anyway, so if we're looking here and you just start going through these numbers and you start seeing how this is going and, and again, you know, here's math, challenging math contest problems. Gemini Pro, 23.4%, ChatGPT, 1%. I mean, they're crushing it. There's certain categories here where they are crushing it. Screen spot pro, screen understanding, 72.7%, ChatGPT 3.5. So there, there are things here, in my opinion, that they are just knocking the cover off the ball. And when we really went through it, there really wasn't anything that was here where we really saw a standout where ChatGPT or Claude actually came anywhere close to these numbers. And I think that this is the thing that's starting to scare the heck out of people a little bit, right? When you're starting to see that the challenging math problems here are 23.4% versus one, that's only going to get stronger. When you start seeing some of these, you know, mathematics with codes, execution, no tools, you know, in your 100%, 95 to 100%, etc. I, I think it's worth paying attention to and I think that this was some of the reason you saw some of the volatility because why are people going to throw money at it if you have a winner? This also might be why Apple's starting to work with them.
So, some of this is just obviously visual and sometimes I find visual works better. And the whole premise of this is not saying Google's going to win, but I do think Google's going to win. But the whole premise is Google's winning right now. And that's going to scare the heck out of people that are throwing billions and billions of dollars into something on the private equity market side with the hopes of coming out with something. So if OpenAI can't raise the amount of money that they need to raise at the level that they want to raise it, that's going to hurt capex spending, especially with all these promises out there. And that could be one of the reasons why the market got hit on this, which is actually a bonus for us because get rid of the garbage and let us focus on who the winners are, right? That this is exactly what you want, right? It, it, it really is because it just makes the whole thing cleaner. I'd rather buy great companies cheaper because they got rid of the garbage and pulled everything down with it. And they're showing you like humanity's last exam, the scientific knowledge, the visual reasoning, and then they're putting it in graph form and showing you how it worked. And I, I do think it's interesting. Obviously, this is by DeepMind, so maybe they're going to say, no, they're biased. And I just thought that this was super interesting, too. And there are, are there some issues here? Um, cost per task in here for the score per dollar, I think is great. When you get into that deep think preview, yeah, that seems to be pretty darn expensive, doesn't it? So keep that in mind.
When they looked at text capabilities and they put Gemini 3 in here, and why, why would I spend so much time on this for for trading stocks? Because again, we always go back to the stool. You have to understand where this is going. So if, if this is what Gemini 3 is doing, right, and Gemini 3 Pro is doing this, you have to think about it from an investor standpoint. What chips are they using? Where are their data centers? Are they using anything from AVGO? How are all their connectivity? What servers are they using? Like, you really, you want to dig into this stuff because this is where the money's made. Because do you, do you think ChatGPT is just going to go away? No. Maybe in a year, they're on top, right? The scores are going, the scores are only going to get better. They're not going to get dumber, right? It, they're just not. So understand that. At the text capabilities, if we look at the average score here, this is the first leap that they've actually had in AI in a very long period of time. You went from 24, you leveled off where ChatGPT kind of, I guess they thought they had it, and now look at where you are. The, these other guys aren't even close. If you look at it in graph form, you can see it that way as well. I find that interesting. If you look at it from a visual capability standpoint, they're light years away. And again, what I find fascinating is this is the one that's jumping everything up. When we look at it in graph form, yet again, or we call barn form at this point, but 571, 47. I think it's important, I think it's important to grasp this concept because it's explaining why Google's closing at highs, why Meta is falling off a cliff because no one wants their stupid glasses, and why capex might get hit now with Google and the fact that you're closing at all-time highs. I do want to put this out in the comments if you have things that I should be reading about Google and Gemini or anything like that. It's not my wheelhouse and I'm always trying to get up to speed. So, please throw things out like that. And again, where I'm going with this whole video is I do think there's going to be winners. I do think Google's going to be one of those winners. I found it fascinating that Buffett's team actually bought the stock. And it actually makes sense to me now because I think people are starting to look at this and say, if I really want access to, you know, something like an OpenAI, Gemini seems to be crushing it right now. I don't know that that's really in Google's price. Maybe I should be looking at buying, you know, Google. I think some people might be thinking that way. Maybe that's what Buffett was thinking. I'm not really sure. Uh, but I do find that pretty fascinating.
Now, I do think again, you're going to get losers. And I think that Meta, something like Meta has a lot of problems with their silly little goggles. Um, nobody wants them. Nobody wants them at all. Matter of fact, there's a, a tape of somebody out there that was in a, a locker room in UFC that had them on it and turned into a whole event. Um, so they're not really, I don't think this was the way to go was a consumer AI product, personally. Um, but you are starting to kind of flatten out here on these names where it's been like three, four days and you're not breaking. And we're seeing that also, you know, other names just, they're just giving way. Like I love Oracle. I have a real long-term position in Oracle. But you can see how this is acting and the CDS's and they're predicting the ones that are going to have issues. To me, the larger issue with something like an Oracle would be their relationship with OpenAI. Um, and the fact that they're relying on OpenAI to write these checks. And I don't know that that's what's going to happen here with something like an Oracle. Candidly, um, because I think OpenAI is in a lot of trouble. You know, you can't have a $12 billion company saying they're going to write a trillion dollars. And we talked about that earlier. You're going to have the winners and you're going to have the losers. Take from that what you, what you think. Now, long term for me with Oracle, I really don't care where it goes. I'll continue to hold it. But I do think that when you look at names like Microsoft and how these names acted on Friday into the closes, you're starting to see that the people that have aligned themselves more with OpenAI, they're not, they're not really knocking the cover off the ball here, are they? And what you're starting to see is that differentiation. A matter of fact, this is the strongest non-correlation in the Mag Seven that you've had in years. You might want to look into that because you're starting to get names that are pulling away and you're getting your winners, which, you know, I would suggest that something that's hitting all-time highs and closing at all-time highs is a winner. And something that's actually holding in there, maybe they get it together or maybe they're at a valuation that's interesting. But when you start looking at something like an Oracle and it can't hold, and again, I've owned it for years. I'm not going anywhere with it. But that doesn't mean they're not going to have bumps in the road, right? You have to look at your time frame. And you're seeing these other names break really hard, really major levels. This is something that you have to start asking yourself, am I, am I getting winners? Am I getting losers? And right now, you're at the 200-day moving average on Microsoft. You have to be cognizant of this kind of thing going forward. I think that this is where it's going. I do think some of these companies next year are going to have to really reevaluate their capex if they can't start turning it around. I don't think one of those companies is going to be Amazon because I think they absolutely crushed it. But that doesn't mean that they don't get pulled back or come to some support level and hold their 200-day moving average. Wink wink, nudge nudge. So I do think that you want to look at that kind of thing and then make a better decision with what you're doing. For me, I've, you can kind of see where my head is and that was the point of doing this.
It also doesn't mean that you don't want to trade these things. I think SanDisk is fantastic. I think SanDisk and Mike Ron and all these names, people are going to look back at this and go, I can't believe I didn't buy this when it held the 55-day. Some people are going to say that to themselves and say, "Self, I can't believe you didn't buy this when it held there and just gave it a shot to see if it was going to hold or wow, I really wanted to buy SanDisk at 280, but at 200, I really don't want to go near it." But that doesn't mean that I'm not going to short these things on day trades when they're breaking down. And this is going to lead us to something, but watch these tools that I'm using very, very quickly on this day trade and then I'm going to wrap this up and give you an example of something that's probably going to save you a lot of aggravation. SanDisk will get smoked. That's a very crowded trade. And the question really becomes, how do you play it? I'm going to short SanDisk here using high as a stop. I'm short stock. It takes out the high of day. I'll close it. If it gets over, I'll just close it. It's not going to get over. I'm going to short more. I'm going to double the short. The moment it gets over, I close it. Going to triple the short, maxed short. I think you're going to at least get to here. If I'm wrong, I'll just close it. I'm up three in SanDisk. We're going to trim that two in SanDisk by the time I trimmed it. That's going to be a fun one to short the way that thing moves. And now I'm just leaving them on. And now I just want to see what happens. They could just keep dropping all day. What are we up here? Up five. I trimmed. I've trimmed enough that even using the top, I can't lose money, candidly, at this point. If you were concerned, you could just move the stop to break even and either way you win. There we go. Go down. So, what you do is what I've been doing is I pull something out and then I'm trying to leave the runners at this point when I'm up like 10 bucks or more on these trades. I probably really should move it to break even at that point. SanDisk just bounced even though the market took out a new low. I got to be cognizant of that. And I think I trimmed enough of it at this point that I'm not going to get out of anymore. I'm probably going to move it to break even versus doing anything else with it.
Now, you can see where I'm going with this. At one side, I'm sitting here and I'm saying, "Yeah, I do think some of these names are going to be long-term winners." The other time, you can see me shorting them. You have to figure out who you are as a trader. And this is where I think people run into problems. I'm going to do more videos on education because I don't think people understand this. And what, what I'm going to explain to you real quick, I'm just going to do it super quick here so that we can just knock it out. You have different quadrants in trading. If you ever watch that coaching video I did, this is how I view the world. But so, you have day trading, you have swing trading in this category, and you have long-term trading. And you're just going to have to deal with my childlike ability to do this because of time. But you have day trading, you have swing trading, you have long-term trading, special situations, special situations. WBD, I think this company's going to get bought. Uh, INSM, I think that this company is going to find themselves in a position where their drug's going to get approved by the FDA, special situation. And this would just be stock. Out of that, you have quadrants up here. So you have four quadrants. Then you have four quadrants down here. This would be the stock. This would be the derivative of the stock. You have eight quadrants. There are five stages to trading anything. Right? There are five stages to it. And again, it is, I made money or lost money. I have no idea how I did it. Right? I made money or lost money. I kind of know how I did it. I think I'm a genius or I think I'm a No one quits in those two stages. I'm here. And then they'll say, I know what I'm doing. I know where my stops are. I know what I'm supposed to be doing. And this is really how I'm going to make money, but it's not enough. The game's rigged. And I just keep breaking even. Then there's stage four. I make a little money. It's not worth the risk. It's not worth it. Everything's fixed. These, this is where people quit. By the way, stage five, I got it. I figured it out. I know it so well. I can't do it wrong. The problem that people run into, and I've seen this over years and years and years, I'm going to save you a bunch of time and a bunch of egg. Understand where you are in these five stages in all eight of these categories. Because if you're out there day trading, we're going to move this one to day trading, and you're like a five and day trading, and then that trade doesn't work and now you're now it's going to become a swing trade. That's why you're having a bad day. Okay, the day trade didn't work. It was a day trade. Move on. Don't start talking to yourself about the company and how they make DRAM chips or they sell the best waffles, right? Understand where in this hierarchy you are in all eight quadrants. And some people don't want to play options and they're like, I don't care. I'm awful at buying LEAPS. I'm never going to buy a LEAP again. Or I'm really bad at M&A activity. I could care less about it. Right? Understand where you are in every single one of these eight quadrants. And if you don't want to play in them, cross them out. But understand that they exist and understand that there's five stages in each one. And that's why you're having a bad time with the trades because you're not honoring the process and you're not being honest about where you are.