Transcription
Nothing broke, but it just doesn't seem healthy. So, we came right back to the little lower area, obviously, that we tried to hold before, and we're bouncing off that area. We hit this put wall, and we stopped dead. Now, we didn't get to that 696 area, but we hit the put wall a couple times here. I do want to cover that extensively because I do think it's a big deal. But I also think we have to talk about the rotation, what's leading, what's not leading, because there is a rotation to some extent, but it's already been leading at the same time. So, if I see something like this, I have to be cognizant that that's where that put wall is. But at the same time, we have to look at the breath of the market.
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Now, we've been talking about the breath of the market for some time, and for those that are newer, this is the 200-day, the 50, the 20, and the five. And these are percentages above or below. What's getting troubling, and obviously it's not going to get better today. But this is the 50 in blue, and you can see really clearly that 50 has completely broken, and we're just not able to lift off of that. Now, you did get a piece of good news here, and I'll show you that. But what really bothers me about this is you're not seeing any lift. A matter of fact, it's actually getting worse, not better. So, does that mean that this could have more legs to it? Well, it starts with the first tick down, right? And we have the first tick down today. It might not feel like it, but you definitely have it. And we can see that here on the 20-day, we've gone from 80% of names are above their 20-day moving average to right now only 34% are above their 20-day moving average. So, the breath of the market has been deteriorating. I mean, that is very obvious that that's been going on. I don't think anybody would disagree with that. And you're not flushing on it. Meaning, to flush, you would have to get down here to single digits, at least 10%, and you're not even coming close to that. It's just kind of a slow bleed, and then what we're doing is we're rotating into the same names that are getting there, and those names are going to get tighter and tighter until they don't. And that's really where it becomes a problem.
So, if I go into this, I'll show you this very quickly, but if I go into NDFI, right, we can see that you're barely hanging on today. Now, I'm doing this before we get the Monday data. So, you're probably going to want to look at NDFI tonight and see if it breaks the 50 level. We all have to become bond experts again, as we can start seeing that we hit an all-time, well, not, I shouldn't say all-time, because you've been here before. This close on the week was definitely an issue, and if we go and mark this here, you can see that you did hit a higher high, and you haven't been back here since '23. So, and that's when they were cutting rates and said they were going to stop raising rates. And they haven't even started suggesting really what they're going to do with rates here. So, it's a pickle. It's going to be a problem here, and we had some issues with Japan last night. People are concerned about that. It's, it's, it becomes an issue when it starts spiking the way it did in Japan. So, I, I won't rule it out.
What I think is interesting is that the VIX is collapsing, and people don't understand that the market's been up because the VIX has been up, and then when the VIX stops, you have to understand that you're actually going to come in because the VIX is coming in. It's a very different kind of idea for people. You have to realize that the market's been moving because of all the options, right? They've been buying a lot of call options because they're chasing names, and we should know that. But names like Nvidia are going to come out with earnings. There's a lot to get, get into here, and I just want to jump right into it. So, let's do it.
Let's look at semis, and then we can start talking about how to play them and how we played them today, but also what's coming. So, if we start looking at the basics, just the overall basics, we can see that we have the doji. We have a retest of that doji low, and that we held right there. We did the undercut, which was perfect. Then we got the special tweet, and then the market lifted on said tweet, and then we kind of was trying to see how that's going to hold, right? But we're holding into this gap a little bit. And if we really look here at the top of that, right into that area, we're kind of in the same area. It's not exact, but you're within a couple points of that area.
Now, if we overlay the moving averages in here, we close below the 12. That's not ideal. And for me, that's really simple. So, what that means for me is this is the 12, the 22, and the 55. You should use what you're comfortable with. The reason that the 12 is not ideal for me is that really rules out doing swing trades now on semis. Whenever I'm below the 12, I really don't want to be doing swing trades on that group or sector anymore. 22 tells me if I have bulls or bears, who's in charge? And then this tells me if I have institutional support. You have to know who you are as a trader. And for me, I want everything stacked for me. In other words, I'm fighting for inches here. And I know that I am. So, I always want to make sure that everything's stacked as much as possible in my favor. And that's not, it's not a red flag. It's a yellow flag.
The other thing that I would say is if you were getting in off the 55 off a jump, you haven't closed under the 12 since then. Usually, you get some kind of retest and bounce. The question is, was that a retest or not? Do we go sideways for a little bit and then rebuild? If you didn't have earnings, I'd be way more concerned. You have fantastic earnings. I don't see that changing, but that doesn't mean that buyers can't get exhausted.
If we do the simple things again, and what we'll do is we'll just go to a bare chart here for a second. And then let's flip to open, high, low, close. And then let's just drop it, the RSI in. And we can see that the RSI is starting to deteriorate here. And now we have this low. But we have a lower low here. But at the same time, do we really have it to that level? No. And we've closed below 70 for the first time. So, we really never closed below 70 here. And that's another yellow flag to me. Doesn't mean you can't pop over it, but this is the hand that I'm dealt right now. So, this is the hand that I have to play.
If we look at this close, we also realize that this close puts us in a level below where we've really been closing for the past two weeks. So, it's not ideal by any stretch. What I really didn't like was how they were bidding you up and luring you in today. And we caught that really early today. But, let's just go through a couple more things here, and I'm going to go to the 4 hours so that you can see it even clearer. And we're going to get rid of the pre and the post here. And then what we're going to see is you're going to be able to see that rounding that started early. And that's the thing about this. When it starts the first two or three, you don't really have to do anything with it. You just have to be cognizant of it and understand that it's building. It usually takes about a week when you start seeing this on a 4-hour. It usually takes about a month when you see it on the daily for it to really come home. So, you have time with it. But when you start seeing that deterioration of the RSI, and you know how RSI is calculated, and it's basically just, you know, positive momentum versus negative momentum. And if you have more negative momentum than you do on the moves, it's not really rocket science why you could see deterioration. So, now we're really at that neutral line, which is not where I want to be.
Am I excited because he tweeted "no war tomorrow"? Well, that's good. Not really. Like, I really don't care. I would like to see some follow-through on it, but you structurally, you have some stuff here you have to work through. And until we see that, we just have to be very cognizant of it. So, no, not, not overly crazy about this. I will say this, they gave you a huge opportunity.
When we look at the socks, we came in long the socks, SOXL actually. And the very first thing we did was just close it like right off the open. I didn't even wait. It was pretty obvious to me that this was heavy, and this was a setup. I do think memory took it more on the chin because of the Samsung strike, and the fact that has gotten weighted down a little bit, meaning that they're not really able to strike the same way as we could in the U.S. They went to court, and it didn't really work out the same exact way. So, as they would hope, and I think that weighed on memory a little bit more, but that presented another huge opportunity to short today. But I had some names, and then off the open, up, we were long SanDisk, and just closed it almost immediately. As soon as I moved to my stop, I was like, "Stop is break even." That was it. And you are seeing rotation into general names, and we'll get into some of those general names are. I mean, there's some really big names out there that are lifting, but you're seeing that deterioration.
So, we started to see it on the compute side with the AMD. Now, the AMD actually held up a little bit better in here. If we go and take a look at this, you can start seeing the break later in the day, and then we have that same kind of pattern here where we do the undercut, and we're holding. We're trying to hold that gap fill. Whether we do or not remains to be seen. Personally, I think you're heading to something like this. I think you're going to come back and get into that 360 level. And guys, this is not the end of the world if it happens. It's actually a good thing. If you're a long-term investor, you actually want to come into these areas if you're a long-term investor. But I do think that these gaps have to be filled to some extent, and I think that that's going to happen. No different than how you gap filled down here. It's not a crazy idea for it to come in 10% gap fill. I don't think it's the end of the world.
I do think that when we looked at something like Micron today, this really stood out to us as just a huge opportunity to short. And you really saw them bid this up very early. And what made no sense was if the strike in Samsung couldn't go through, and they were able to produce, then the price of DRM should be actually what? In line or get cheaper? Or everybody frontloaded their Micron, and then when that happens, what do they do? They have to get out, right? And so, you could see that as well, and that's exactly what they did. They gave you really no quarter whatsoever. It was just straight selling until we got a special tweet, "no war Tuesday." And then from there, we obviously saw them, the shorts, want to cover, and I don't think that these rallies were anything more than that. But I do want to go through what happened in storage today. I think it's super important for people to understand why there was so much carnage there. I, I do want to show how we played this live today, and we were able to really pick this off and ride with it. And the biggest thing about this for me was you were so far away from the put wall. The put wall was 650. And so, by the time that this thing opened, and you're up, and everyone's getting all giddy and excited, they just really lured retail into their death today. So, let's watch this play out live.
All right, I'm just going to buy some 700 puts, and I'm going to leave them on. I paid 1785 for them. I'll figure out what I'm going to do in about an hour with them.
The Micron to me looks like a no-brainer. If it starts to rally through it, I can just always close those. I don't really have to be in a big hurry yet. I paid 17 and change. They're just kind of sitting there.
Micron's doing pretty much what I thought it would do. Up $3 on those puts. I'm not doing anything with it. If you look at that, what do you have so far? Also, get some learning. You have one green bar. One that tells you exactly what they did to people today. Called doing them dirty. Were they 23?
Going to trim some of those puts here. Not a lot, but some of them. Since we're back to break even, we're going to try and hold these bottoms. Trimmed more of the puts. At $28 now on those. I'm up $10 on each option. Going to trim a little bit there.
I think you can get to at least 700 today. I think you can get to the put wall, which is 650. I don't see why that's not going to come back down to 650. I'm in the money now. We in the money. It's a Monday. Up 100% in those puts. I'm going to trim some of the Micron.
>> So, you can see that the bell is when we were putting it on, and that's the moderator when we go out there and say, "Hey, this is what we're doing." And that was me locking in the rest of it at the end, the 100% of what was left. Thank you very much. On to the next one. And the real reason I just got out of it was I started to see the rally, and I saw the tweet, and I don't really think that was the reason why this stuff was down candidly. But I think they were looking for a reason to cover the shorts, and I don't want to be the last to cover. You really want to be the first, and that's why you scale out on the way down. But do we have a problem here? I think that you're overextended for sure. Does that mean that you are just going to fall apart? No. But how many people don't know about memory right now? Like, everybody knows that there's a memory draw, and they should all be in memory, and you really need memory because there's, there aren't any supply of it. So, the trade's kind of like everyone's aware of it, right? And the more everyone's aware of it, the more it weighs. You did see SanDisk hold that 1300 level today, which was kind of interesting. We undercut it, but we held that put, so that was kind of good as well. But for me, with something like this, I mean, yeah, you could really come in here. Let's just go through it really quickly.
So, if you look at your moving averages here, you know, it would be nothing to come to 600. Like, 650 is the put wall, but for this to come down to 605, like, it's really not that big of a deal. And I don't really think it's that a problem for the company. Like, if it comes down here, great. I mean, I want to buy more long term. But from a short-term perspective, you get usually get the hopers and the dreamers, right? It usually doesn't stop after one day. And the way that the socks is setting up right now, you know, it's hard, it's hard to see this barring some kind of new tweet or news that can move the market.
Now, if we look at STX here, this was more damaging because the JP Morgan conference was going on today, and STX came out and had some comments that was perceived as negative. And those comments were really just about demand and the inability to go out there and build enough to meet demand on the long end. By the time that demand would, they'd be, by the time they felt that they were built, they felt like demand would wayne. That's not really what people want to hear, right? They want to hear that demand's going to be around forever, and that this is going to go on forever. And so, that really went over like a ton of bricks. And you saw STX, you saw Western Digital really come in hard. When these came in like that, they're pretty bad technical breaks. When you have little flag patterns like this, and then you break to the downside of those, and you should be able to see those patterns. But when you have that, they're pretty bad technical breaks. It doesn't mean that they're done. But it does mean that you really have to understand that these are control bars where you know you're having 15% moves on the day, and now you really have to like let that settle in, and as the kids say, 'let it cook,' and figure out what it wants to be. It's very rare that you're just going to come in the next day and go, "Oh, we made a mistake." And everybody comes into that. Far from it.
So, the good news is you held that level. Let's click that off for a moment. You held the 22, which is great. You look at Western Digital, very similar, and you held the 22, which means that the bulls are still in charge. Remember, this is, "what do I want to swing that name or not?" And then who's in charge of it? Doesn't mean I won't day trade it. But as far as swinging, when that starts to happen, I just doesn't make sense to me to do it. It's not optimal. But we are holding in here, and we did hold that 22. So, I think that is good.
And now, let's talk about the names that absolutely rock today. We've been talking about IGV, and we went over it on Saturday for you guys, and I really like the whole software space. I think it got really taken to the cleaners: retest down, retest, and you can even see the retest here of the 55 over and over again, and then the hold, and you can see the huge volume. And some people think that there was rotation today between semis and software. It's possible. There was a lot going on there in the market today of getting out of semis. I don't know. I don't know if that was the case. You had a lot of people this weekend in research pieces talking about the software semi kind of divergence, and how crazy it is right now, and how they need to play catch-up.
If we look at cyber security names, they're completely breaking out. Yet again, another new high. Yet again, more volume, all-time highs here. And then you're seeing those names that are just absolute monsters. Crowd Strike just continues to push. And this is what we were talking about earlier, and we did again talk about this a little bit on Saturday. We've been talking about it for weeks where what AI is supposed to do versus what it's going to do, or in my opinion, are turning into two different things. It was supposed to be sentient. It was going to be this thing that was around your house. It was going to do your laundry. And you know, now it's kind of changed drastically, right? Where they keep lowering the bar on what it's going to be. And now we're getting more of that salesman pitch like, "'Oh, we have this model. We can't release it because it's so dangerous.'" So, that kind of stuff, you know, when you start getting gimmicky like that, it's, I don't know. It's an issue. It doesn't mean you're at the tail end of it, but just be aware of it. But it's very clear that it didn't affect the, the cyber security space the way, you know, that was the end of the world cyber security companies. No one's going to have a job. Okay? And yet here we are. So, these names are breaking out, and I think that it's pretty clear that people think that they're going to have a good quarter with solid comps despite what the street thought was going to happen, and that's why they're acting this way.
And you're starting to see it spread out too, right? You start seeing ZS, hold on, the wrong name. ZS, use your fingers. That's starting to break out here. Here, I'll show you. So, you have that 55, you've undercut that, and then you can just see test, and now the volume's starting to come in ahead of earnings next week. So, see how that one goes. And then of course, you have Snow, and then you can see Snow got above its 55 right in here. And then from there today, you have that push. So, that's pretty much what you want to see. And then from there, you're just really looking to see if it's going to hold, and if that is going to push or not. And I think everyone's looking for the next one. And then here you go. They're all looking for the next Crowd at this point, and whether that's Snow or not. They're completely different kinds of companies, but they're definitely looking for, you know, where the money's flow is going. And I think that's pretty clear, but to me, it's really that cyber security space.
Did you see anything really happen with XLP? We saw some things happen with the XLP names. I don't think it has anything to do with that as much as you have, you know, people wanting to get into Costco ahead of earnings, right? And you have that not until, hold on one second. They're saying July 29th. So, the question is really why are you moving the way that you are? Is it BJ's that's coming out this week, and BJ's is supposed to be the cat's pajamas, and then that they think that's going to lift it? It's kind of interesting that Costco is moving like that right now. Let's go take a look at Walmart. See how they did today, getting tighter and tighter going into earnings? And it starts tomorrow really with the Home Depots, right? And then the Lowe's and the Targets this week. So, you know, we'll see how it goes. But really, I'm really surprised that Costco moved like that. And is it a defensive, you know, is that a defensive play that it would move like that? It's pretty aggressive for it to move like that in a tape like this. It very well could be the case, but there might be more to it that I'm just not fully cognizant of.
You know, if I had to point out the biggest issue for me, it probably would have been that EWI did not go up today, considering that the strike is going to be way more minimal than people think it is. And that, that's definitely a concern for me because what, what's it going to take to turn this around? And again, we have the gap in the chart here, and we have our little gap in here, and it's not really where you want to be. And this does become a little bit of a concern for me. This has been leading. I don't know that we're getting out of memory. I don't know that that's what it is. I mean, the memory stuff has been very strong. The price points fairly decent on the DDR5 side. DDR4 prices have come in. But yeah, this was a little bit of a concern.
And I also think the other concern that people just really aren't wrapping their noodle around is he can say anything he wants about the war. Oil is just going higher. And you know, we've been told since back here that don't worry about it, everything's going to be fine. You know, it's up $50 on USO from there. If you go and take a look at what you're doing on crude oil, this is setting up to break out. Like, no matter how you see that, you're setting up to break out. So, when we see that, we have to pay attention to it. Right? This is again where he told us, "two weeks," I leave a little mark there, "and everything will be fine." It really doesn't feel like it's fine. It kind of feels like there's a, a larger issue out there, doesn't it? And, "oh, no war tomorrow." Okay, I don't even know what to do with that anymore. And I don't think anybody else does.
So, what we started to see today, I have a position in this, but we started to see them buy Exxon. We started to see them buy some of those names. If you take a look at like Baker Hughes and some of these other names, they're all of a sudden getting interested again. And people are starting to start plow into these names again. And you really can't blame them because it's going to take much longer to get all this stuff up and running than we originally thought. I do think it's also super interesting that the VIX was down today, and that is something that we want to pay attention to. You know, is it one of those things where we're just going to flush the market for a couple days and go forward? Yeah, I don't think it's an earnings issue. So, if it's not an earnings issue, it's becomes a technical exhaustion issue, right? So, then if we think, all right, well, it's a technical exhaustion issue. So, what does that mean to me? It just means that you could pull back. Now, the one thing I will say is when you go look at the put wall today, you weren't really able to get under that. So, you have the breath issue. You have probably buyers exhaustion here, and people going, "Okay, well, what's next? How much do I really want to own into Nvidia?" Because it's always, you know, kind of a sell the news event. And you're looking at this area and realizing, well, we hit the put wall. We bounced off of it. We hit the put wall again. We're bouncing off of it. We got a super secret tweet, which was nice. Um, and then we kind of came back down to what, the put wall, and then lifted into the last half hour, which is probably just shorts that want to cover, but nevertheless, it's there. So, I'd watch this 700 tomorrow, make sure that stays the put wall, and then we will, you know, kind of go from.