Transcription
You can say a lot of things about today. You cannot say the stock market was boring. That's for sure.
So, we have the PPI data we have to go through for sure. But I want to talk technicals to begin with. We just look at the basics. We're going to see very clearly that we are back above the 55 here. And this is the ES S&P futures. And that is significant.
Now, you do have a pattern here: down, up, 1, 2, 3, down, which is a little concerning to be this way. You usually do get some backfill with this, but there are signs that this might actually hold. We'll go through the beginning parts of this so that you can see it.
Uh, the very first part that we would focus on is going to be the undercut. So, we've been talking about this, yammering on since this happened, that we needed to do an undercut. There it is. And so, we have our undercut. That's the first thing.
Second thing that we would look at was we would just look at the RSI and see where it's fitting in there. And it's fitting in where it fits pretty perfectly to that on the daily. And then we go look at the 4-hour. And what's fascinating to me about the 4-hour is you can see the here and you can see the lower low in the stock, and then you can see the higher high in the RSI. And then if you look at your pin from November, uh, 7th, and you can see that even this whole time the RSI has been going up, and you can even see the undercut here on the 10th to where you are here.
So, when I see that kind of stuff, in other words, we're making lower lows but the RSI is going higher, you're starting to get exhausted and the magnitude of the move down is starting to, let's say, dissipate. It does not mean you can't reset and roll over. That, that can happen. But at least for now, I think you're in somewhat of this kind of zone where you have this one DTL and then let's get rid of this magnet. And then you have another one here off of this high that you clearly broke today, which gets you back up to here.
So, the first thing that I noticed out of this is that the RSI is higher, which is a good sign, which means you're probably setting up to have some kind of continuation. Yesterday's short-selling rally, then coming into today with that exhaustion, was pretty perfect for putting this in. And then the news just scared the heck out of everybody and that shook out the remaining people.
And we'll go through two major indicators, but here's your peak VWAP. We've been yammering on about this for some time on how when we broke it, that was it. How we opened right at that peak VWAP and now you are above it. And I think that's super important because not only there, but if you start looking at these other areas that we talked to watch today, and we did the pre-market, there was the other one. So, you're above there, the RSI setting up nicely. So, when I'm looking at this from a technical standpoint, this is what we're dealing with and I like what we're seeing.
If we go and take a look at this going forward, does that mean that you can't roll back down? No, you can. But you're oversold and now maybe you go back up, you maybe retest something up here and then we kind of go from there. Um, you did broaden out today and I thought that was super important. And we go take a look at the NQ real quick and doing the same thing. Let's go do that real quick and then we'll flip to these two things and then I want to get to some of these names and news because there's a lot of news today that I think is pretty important.
Uh, but same pattern: down, up, 1, 2, 3. It's not great. It's not the pattern that I want. But you know what I want? What I'm going to get are two different things. Again, if we look at the undercut here from the 10th, the RSI is right here. We can see the undercut here of that where they just stop hunt. And you can see that pretty clearly. And you can see that the RSI is here. And we can see the RSI rising higher and higher and higher as this goes lower and lower, lower. And then we finally get that extreme move. And then you have news today which could have triggered a massive sell-off, and it didn't. And that news could have triggered a massive, massive dump, and it didn't.
Now, here's where it gets interesting because you can see the NQ is not above the peak yet. But that's usually how this goes. S&P tends to lead when you're coming out of these things a little bit because they still are buying those defensive names. But we do want to watch this tomorrow. You know, might not be the worst idea to put a little bit of a level there. And you had a lot of technical levels today that had to get above for CTAs not to sell, and you got above those. For time's sake, I'm not going to get into it all, but I do think that it's worth mentioning.
And if we go and take a look here, it's exactly what you wanted. It doesn't really get much cleaner. It looks like right now, at the timing of this, we're actually under it, but you're there. I do think you're going to get over it. The S&P is over it. Let's go take a look at the Q's really quickly here. And you can see on the cash market that you are above it. I'm going to clean all this off. Uh, and you can see on the cash market that you are above it on the Q's. You closed above it. And it's pretty much what you want. It's pretty much doesn't get any cleaner than that.
Um, you didn't have to do that. You haven't been able to close above this since you did here on the reversal. And then from that reversal, obviously that didn't work. And you can see where we're at. But you've never really closed below it and then closed over it. So, here you ran and you already closed above it, but you never closed below it, which you've done all this time, and then closed above it. And that's a change in trend. Just very clearly, it is. I mean, the last one that you had where you did this with was back here in April. Looks like May 1st when you finally flipped it. That's a big deal. Doesn't mean it's going to hold, but it's definitely a start saying, yeah, you might have a change in trend.
If you go and take a look here at the three, the five, and the eight, and that's what you're looking at right here. And I'm going to take this and get rid of the pre and the post and just look at the cash market. And if we look at the three, the five, and the eight, and we look at when this started to roll over, we can see the three in green, yellow, red. So, 3, 5, 8. Red's on top. Red means stop. Right? That's not the brightest bulb, but I just color code them that way. Green means go. Red means stop. Seems to work for me. So, if I look at that and how we're falling, red's still there, and red still means what? Stop. But what are you doing? Well, you're starting to turn up for the first time. You really have not had a five that has turned up in all this time. It just really has not happened. And here it is. We did have the three that turned up, and obviously that's going to go first, but and here was a 3-5 cross, but the five was still pointing down. It's not pointing down now.
So, we're starting to get that curl where it comes up and maybe we get some backfilling here and then within the next day or two, what will happen is we'll cross above that and then you'll start getting them all aligned. It's these crosses where it gets super interesting because you can still have some areas where you come down, pops back up, and by then they're crossed. And you could see something here where we get some downward pressure and then we just kind of go from there. You never know really what you're, you know, obviously what you're going to get, but I do think that that's worth mentioning. And it's certainly there.
If you go take a look at this in regards to the S&P, you're going to get a little bit of a different story whether we use the S&P. Um, and the reason for that obviously is because they go into more the safer names when we start to bottom first and then they start broadening out on their risk profile, just the way it is. You can see the undercut right here. Okay. Okay. And then you see the three, the five, and the eight right here. And the three is finally above as it was here. And you can see that the five is pointing up. And so you're getting to green is go. Very similar to what we had in here. And we have to see if we really going to go. Are we really going to push or not? Uh, it seems like the broadening out is definitely there. You can see it with even biotech today. It wasn't just a short squeeze. They just pushed the bio names and they kept breaking out on the biotech. You can see it with XBI and IBB as well. You can see these things just continuing to push. Let's get rid of that 3-5-8 chart for a second.
So, it's not really rocket science. These things wouldn't have pushed that not happened. Whatever you think the reason for it is or not, what we could really focus on here and we'll use, you know, we can use the spy for it. Um, what I think super important and clean this all off is that when we found out today and you could see right, you know, obviously you start breaking down on the market and then we start falling apart and then in here you got some news about who the new Fed chair is probably going to be and he's pretty much going to do, uh, whatever he's told to do. And I think that that's pretty much everybody just wanted to know that. I don't know why that would be such a surprise to everybody, but you could see like we we ran up, retested it, and then that was pretty much it.
Um, so when that gentleman comes in, he's pretty much going to just cut rates and as soon as they found that out, they felt comfortable and the market lifted from that period on. So, you do have a macro event that triggered the market and I think that is important. Uh, in regards to the macro event, you know, you do have some fundamental changes. Meta has come out and stated that they are most likely going to switch from GPUs to TPUs. I'll get more involved on this in another video, not today, but I think probably on Saturday's video I'll cover it.
Um, but it's really important because if they make this switch, the cost savings is in the billions. And I think that's one of the reasons why the stock's lifting. See, when Google came out and with Gemini, and obviously the stock has reacted very positively to that. They did it off of TPUs. They didn't do it off of GPUs. And I don't think a lot of people are getting this yet. And so when Meta saw that you could do this and for the cost that you could do it, they reached out and they want to switch. I think it's very interesting. So, let's see how this plays out. But it's definitely something that could be cost-saving and quite frankly, it could drive the cycle out for a much longer period of time. But we'll get into that another day.
What I really like about today is Nvidia could have really cracked hard on this. And I don't think that Nvidia is out of the woods on it yet, frankly. Um, and if I'm Nvidia, I think they might have gross margin issues eventually because of it. It could be a much bigger deal than people think it is. And I think if you go into it with that kind of attitude, you'll be better off. Who benefits? AVGO would benefit since they seem to be the architecture of these. That's one of the reasons why we hit all-time highs today on AVGO. And you can see that breaking out right there, right? That just makes sense.
Um, and then of course, no one's going to buy AMD chips. And you can just see that tried to rally and that would kind of be what you know what the market's telling us. So, Google for for sure, AVGO is the architecture working with Google and some other corporations. And then Meta benefits the most from a cost-saving standpoint besides the energy that they save if this works. And when you run the numbers, it's in the billions. What I think might actually happen is that Meta might set the standard for this. And then if that's the case, some of the other corporations might do this similarly. And I think Nvidia is going to have to come out and kind of explain why they you're better off using a GPU versus this other format that Google's using, which is called the TPU. And I'm not going to get into all of it right now, but it's certainly fascinating and that's why you dumped today because everyone was worried about the capex side of the market. I think they should be concerning themselves and understanding that these names might actually lift if capex either comes down or capex becomes more efficient in driving per dollar of revenue, right? If it's per dollar of revenue because it's cheaper and they get more efficiency out of that, that's actually good and that could actually lead to more EBITDA. So, I find it fascinating and we'll see how we'll see how it plays out and go from there.
But, um, some other things out there that I I don't think people are really paying attention to. For example, Kohl's absolutely unequivocally crushed, um, raised by an enormous amount, almost doubled the earnings. So, the idea that these names are dead in the water. Far from it. If we take a look at some of this stuff such as, you know, just I mean, just look at the volume today. Like some of some of this stuff was just insane here. Take a look at ANF. Like these names just exploded today. Uh, just disclosure, I own ANF and I own Kohl's, but they just exploded today. They just absolutely exploded. This name never made any sense to me why it was trading here. I've owned this for a while. Um, I started buying it back here, came back, gap filled, started buying it in there as well. But, you know, you're doing a $1.50 this quarter. You did, uh, $2.30 this quarter and then you do you're here. You're doing another $2.30. I It just never made any sense to me. Here's $3.75. If you go back and look at the last four quarters, you know, here's $3.50. I'll do it again so you can see it. Right? So, that takes you right there to five. And then you come here, you're at seven. Let's call it 7 and a half. And then you come here, kick it to eight, nine, 10. You're trading at nine times trailing earnings. It makes zero sense that this stock is sitting down here, but yet everybody's not really buying this stuff or doing this kind of due diligence. I guess it just it it really defies logic. So, I think you're starting to see people wake up to this. You saw people buying AEO getting ready for the Sydney Sweeney Jean Fest that's going to happen Tuesday. And then of course, you saw some of these other names after hours. I think it's Urban Outfitters that you should probably look at. Uh, you know, you're up about $10 or you were up about $10 on their earnings and again here we are, you know, these not these things are earning a buck 28 and when you start really going through these earnings, I don't like the pressure of these names. They really got taken to the cleaners on the whole tariff thing. Some of these names, yeah, they have issues, yes, it's a problem, but, you know, some of these things are trading at single digits in an S&P that's trading at 22, 23% or 23 PE depending upon who you ask. So, I I think that that's, uh, I think it's interesting and And I think that you're going to see more people start going, well, what's cheap out there versus that market.
So, you know, you can always look at VTV and see how that's going because that's your value fund. And you look at VUG, which is your growth fund. And then you just kind of go there and go VUG divided by VTV and you're going to get a ratio. And if we really take a look at this ratio, and I thought this was super interesting, so I wanted to share. Yay, teamwork. If we take a look at growth versus value, you're not going anywhere. Um, you're not really going anywhere. All right. It reminds me kind of that, you know, that ice cart that Austin Powers drives where he can't get out of his own way. But if you really look from like August 1st over, you're okay, you had this big rally for like 3 days and then everyone's like, "Yay!" And then it was boo. But look, look where you're at now. Like you're not going anywhere. So, whether you're buying growth or value, I think you're in a stock-specific picker market, which is awesome because you can really do well, especially when you're top down and you and you know what sectors to look at. And I think that that sector really is retail. I think it's absolutely fascinating that people were blowing out these $8, $9 stocks, you know, PE stocks without really understanding it. They're just like, "Oh, tariff, tariff, bad." You know, maybe get off Twitter, you know, just an idea.
But if we sit here and take a look at this stuff, that's the XRT, man. Like, what are you looking for? I I don't know. You know, you start flipping that 55, there's the 12, the 22, 55. That's what I use. You should use what you're comfortable with. I think that's pretty interesting. If you look at the XLY, very similar, but the XLY has an issue because you have the cruise lines in there. Uh, and they have a pretty heavy weighting in there. So, you know, I tend not to use that um as much as XRT. So, let's clean all that off. Um, just because of the weighting, but the XRT from looking at it that way, you might want to start looking at these names. I mean, I definitely think that you could even sort out the clothing side of those names. If you start seeing names like Kohl's doing this and people are going, "Well, why is it doing that?" You're like, "Oh, I don't know. It's trading at what? You know, 10 cents, but what was it supposed to lose?" This this one you did 56 cents and so you lost money. This is when they got the new CEO and he did the the the kitchen sink quarter. They always do that. They do a kitchen sink quarter. They scare the bejesus out of people and then this quarter was actually good, right? Cuz it's like, "Oh god, everything's so bad. Thank god I'm here. Look, I fixed things. Look, I really fixed things." And he has stock options all in here, right? It's the same thing that Amazon did when they got their new CEO and Bezos stepped down. Anyway, um, it's it's textbook. It's like textbook CEO stuff. So, I think that's where you're going with some of this stuff, guys. And I would definitely take a look at those names.
In regards to some of the larger names, I think you want to get through Wednesday and understand that you're going to have very, very light volume. But I'd be remiss not to show you a couple things. So, I'm going to drop in the headlines here and then there's two charts, actually three charts I think you really need to see.
So, the first thing that we really need to focus on here is US retail sales were worse than expected, right? And then the PPI came in higher than expected. Core PPI came in lower than expected. Month-over-month lower than expected on the core and month-over-month actual was in line. So, this is how we started the day and then we came in and we started selling down and then we went from there. But what I want to show you to start with is MOVE, and I think that this is super important. So, MOVE is the bond volatility index. And think about it as if you buy MOVE, you're buying bond insurance. It's not exact, but just think of it that way. It's the cost of bond insurance as everyone yammers on like they're a repo or CDS expert, right? So, if you take a look at September 3rd, if you took a look at October 10th, and now you take a look at November 20th or 19th, whatever this day is, and you looked at something as simplistic and overlay the S&P right into this, you're going to see that these levels are going to constantly mark lows. It is textbook that MOVE will mark the lows in the S&P because if there especially if there's an underlying issue in the economy, it will always do that. So, they're always going to buy insurance. If I go to this and you might be able to see it a little cleaner. So, we'll just do it as candlesticks, but you'll see the MOVE a little cleaner here. And here we are again. So, it's not really rocket science. That's probably a bottom, barring some kind of news. I'm not suggesting that you're going to, you know, rip and take out the highs, but I think you have to start with something about like, hey, did we form a bottom? What would make me think differently about this? If MOVE starts to turn up and starts taking out that level, that would be a concern.
The other thing that we should focus on is that the VIX completely imploded. The VIX could not get over that 17, which is excellent because if we got over that, then that would tell us that we would have a problem. We didn't get over it. So, that's exactly what you want to see from a bull perspective and then you broke the 20 and below 20, you're solid. Um, anything could happen. We could get a tweet, anything can happen. And but now here we are down at 18 and that's a really good sign. Once you broke 20, it does alleviate the pressure. You start seeing the implied vols come in, people can't understand why their calls aren't going up. You're welcome to volatility crush. You might want to learn that before you buy calls. So, once you have that done and you have that wrapped around your noodle, then you go VVIX, right? Which is the VIX's VIX if you want to get super into it. And what we're looking for is the following. Every bottom is followed by the following. You have some kind of rally up in VVIX divided by the VIX for a rally. You can see it even here on the 10th from that over. You kind of rallied up and what did you start doing the past couple days? You are starting to rally up and it's not like the best, but you definitely are from that area from the 20th on you are rallying up and that's a start. So, it's definitely there.
And then finally, I think we should just just do this one very quickly. S5FI / NDFI. Let's do it this way. Give me one sec. We'll do it this way. >> I was going to reverse it. Uh, S5FI divided by NDFI. I was going to reverse it, but it doesn't matter. Um, so what we're always looking for here is this is stocks above the 50 that are in the S&P. These are stocks in the NASDAQ. All right, good. Yay. As this pops up and then drops down, what are you noticing about this? So, here's September 3rd once again. And that will mark what? What is that going to mark for us? That is going to mark the bottom of the market. That's fantastic. How about this one? Marks the bottom of the market. Fantastic. You can literally go through these events and when they change a trend because the S&P will always broaden out before, right, the NASDAQ if you're going to collapse. Why? Because they have defensive names. It's not rocket science. July 24, go mark that off. It's not rocket science, guys. And here we are. And you can see we popped over and now we made the lower low yesterday. You know, you're going to have a lower low today. You already know that the lower low is coming. So, you peaked here and you're already forming that bottom. That is