Blood in the Streets: The Stock Market Crash Nobody Was Ready For!

[00:00:00] Speaker 1: The stock market crashed today, obviously in the S&P, it was pretty clean, it was straight down, open was the high, low was the close, but what was most troubling was this, even the safe stuff that was running yesterday, financials were safe yesterday, they're breaking out to all-time highs, massive reversals today, and then we see this in the XLV as well, where there's just these massive reversals, and what was supposed to be good news, all of a sudden we're seeing panic, we're going to explain why that happened, and what you should be aware of going into tomorrow. In regards to semiconductors, you had one of the worst moves you've had since COVID, I think we were down 12% today, it was pretty exceptional, the amount of selling that's out there, and with how you're set up in the market, it's just triggering more and more, and we'll explain. Those traders are reacting to the institutional levels, what we're trying to get you to do here, is to know what they're doing ahead of time, subscribe, click all notifications, what we go over here is timely by hitting the bell, you don't get it after retail's already in, the important thing is you get the information, education that you need, subscribe, let's get to it. To start with, this is a CTA level right here, this is a CTA sell level, now they are systematic sellers, meaning no matter what happens, they have to act. So the moment that we broke this, they have to act, and they have to sell, because they are system traders, they trade the trend, that is the way that they're set up, and when they hit here, that had a massive dump. The issue is, as you're dropping, they have to actually sell more, so what starts to happen from a flow standpoint is, in these situations, it just exacerbates upon itself. That doesn't mean that you don't have concerns in the market, far from it, we do, but the important part is to understand the order flow and why it was so bad. So once that starts triggering, you also have other issues out there, and then it just follows through on everything, and that was one of the key things that people were missing today. The faster that you dropped, and the speed in which you dropped, led people to start having real issues, and started having margin calls, and those margin calls are pretty public right now, with a bunch of funds that are struggling this year, and you know, some have to unwind, some have been around for a very long period of time, and they're dealing with it, and they'll be fine, but they have to unwind a lot of this stuff. So the important thing for us, and I'm leaving this 200-day moving average in, once you've broken that 200-day moving average, you've lost everybody. Now, you can bounce back up from here, but when you break the 200, to think that you're doing anything more than day trading till you come back up, or short-term trading in tech, there's nothing else to do. You can do whatever you want, but there's nothing else to do until that reclaims. Historically, if you look at it back here, when you broke it in March, you were down for a very short period of time, probably one of the longest or shortest period of times in a long time. Closed back over it, and then you ripped, but if you can't get above that, if you go back historically and look at this, it's an issue, and when you see that, you can see you test it, test it, and a lot of people will say, well, it's still pointing up. I don't really care. Good for you. I'm glad it's still pointing up, but here it is pointing up. Did anybody care? Here it is pointing up. Did anybody care? When was the bottom in? When we finally flipped it back, and I think it took about a year, year and a half for it to get back over, and I'm not suggesting that's going to happen, but what I'm suggesting is that when you look at when we start to break these areas, they are significant areas, and then you get some reversion of that move, which you obviously got here, and then you can see when you broke it over here. So if you're looking for a demarcation line, once you break that 200, that's pretty much it. If you take a look at it with the socks, and I'll clean off my levels for a second, once you've broken here, that's pretty much been it, and you can see that when I show that, let me click to that real quick right here, and show this breath indicator. So obviously the breath has been getting worse and worse. We triggered here, and then we triggered here again. It is extremely rare for me to get the breath better twice, and then for this to happen. It's extremely rare. I mean, I'd have to go back 20 years to even see if I can find something similar to it, but are we at this extreme level? We're certainly getting to an extreme level. I think we closed, and let's blow it up, and there's an absolute value of 100. You really can't go past 100. You're at 97. If you look last time when we were up at that 100, you got there for a couple days. It sold off and then started coming back down. So maybe there's some kind of bounce out there, but I don't see it. Maybe there's a short-term bounce out there, but candidly, you're going to want to see that someone steps into this market because you certainly did not see that today at all. Matter of fact, even into the close, closing at the lows. So maybe there's a flush tomorrow, Monday follow-through, and then maybe we start to settle down and people start really understanding what's actually going to happen out there in regards to the midterms and some of these statements. Interesting today that the governor-elect of Texas actually came out after hours. IREN actually popped on it despite its earnings being a pig and said, hey, every data center that's out to like 29, they're all going to be allowed to continue. So I thought that that was at least some clarity on what people would expect. 20% of all data centers come out of Texas, or all the new ones are going to be out of Texas. So that's really important. But this was pretty telegraphed when you start looking at some of these moves here. And we've been talking about it for a long time on this channel from the October 8th, where nobody really wanted to believe this. It's funny. I still get people here telling me that I'm wrong. I don't know how you could be saying that I'm wrong when you're looking at the chart. It's called the scoreboard. But if you take a look at what happened here with OpenAI, and then you come here, and then you realize that this is Anthropic. And from those S1s, Anthropic's toast. That's not going public. I mean, OpenAI is far out, but Anthropic's not going public this year, in my opinion, with a market like this. They get destroyed. Nobody's going to want it. People are trying to get out of data center loans right now or reduce their data center loans, let alone take on more debt. So that's going to really see some of these things up. And I think that's also what's happening in finance. We'll get to that. But when you have moves like this, and then you break down here. And of course, this is when we all got Intel'd. And then from there, you had AMD, which was kind of holding us in there. And AMD did a really good job of this. And we're going to get into this on Saturday, because I think it's really important. AMD held in there really well. And the reason for AMD holding in there so well is really predicated on a couple of things. The most important thing for me with AMD hanging in there was the fact of what they said about the data center business building them out. Well, if you're going to have issues when those options expire, on November 4th, look what happened to it. It came back down because people are like, what that, you know, what are you talking about? These data centers are going to slow. And it's very clear that they're going to have more, way more Roblox than they've had in the past. So no matter how you think about it, it's got to go net negative. You can't think it's a neutral event at this point. It's very clear the market doesn't think so. So if we look at this and you see how you broke down from here. So one of the things I was going through with the community today this morning and last night we were talking about buying puts on SanDisk, but we had a really great short on that today. I'll cover some of that. And Omicron actually killed it on both. But if you, if you look at how you're acting with ARM, ARM's earnings were abysmal. Qualcomm's earnings were abysmal. Now the stock bounced a little bit, but overall semiconductor earnings have not been great. And you're seeing that start to follow through. And now you start to see the big dogs start to pay for it with NVIDIA. And people are not going to want to hear that. Don't worry, I'll backstop you with all my cash. What they're going to want to hear is when are we getting the cash as a dividend? When are you going to buy your own stock back? Not when are you going to stop the bleeding of all these companies that you're supporting? And so that that's going to get really interesting there for this company. They've got a, they've got a big decision to make here. And, you know, I don't think you can, you can backstop every NeoCloud, but this does present some, some things. And one of the things I would say is if you don't get the free newsletter, make sure that you get it because I am starting to write again and starting to do research reports. It's free. It's links in description. I think it says click here for free newsletter. But the point that I'm getting at with something like this, this morning, you could say it and I'll pull up pre in the post and we'll get rid of this for one minute. Because I think that this is worth our time. Get to this around. You can see where you're at on Wednesday and then you start rallying and then you start breaking down Wednesday night, tries to get through it, can't get through it, starts ripping down. And then you can see your level right here. And then you can see right in here at seven o'clock what happened. So right in this area, you start trying to rally through. And it was the simplest thing in the world because you're down, you try to rally and you can't. And then it's right in here. And I actually put it out there in the room. And what I did at seven o'clock, I got it out there and I see the short 716. There's a timestamp. I'm short. I'm going to short rallies. MU was going to break 750. It was inevitable at this point. Dell was talking about down because we bought puts yesterday. I guess I could cover that a little bit. And I was clear I'm not covering the short. I wanted to stay short. And my thought was that the real support on SanDisk is around 506. And I think you have a shot. Obviously, I did not expect it to be this much carnage this fast. You have a support level right here. And I thought you had a, you know, a shot getting to that. You can see that you're bouncing after hours. You're going to bounce all around. But what's interesting about this is that's an entire retrace basically of everything from back to March, like everything from March on, you've just completely retraced from that entire rally in the market. And I think that's extremely telling. So this is just absolute unequivocal carnage that's out there right now. And what you want to do in these kinds of situations is you do not want to stand in front of that train, even when you're bottoming, you just want to stay out of the way. But this presented a lot of opportunity today from a trading spot. And let me just pull this up. We'll clean all this off. And then we'll go there. And you got to bear with me, guys, because I've been trading all day. So obviously, this is going to be raw and unedited as always. But what I would do is just mark off the first one minute orb bar. And then all we were doing was waiting for it to rally. I wasn't using anything else. You can see the doji. And then from there, up, down, cracks. I'm like, all right, I'm adding to it. And if it goes over here, I'll just close it. And I get out of the way. And then I'm just allowing it to do what it's going to do all day. And then all I'm doing is just putting stops down there where I'm going to get stopped out. I really didn't want to trim any of it. My goal was to stay. But then it starts doing some things. And I'm like, you know what, if we start flipping some of these levels, I'll get out. It is what it is. I'm not going to complain making 140 points on the part in the morning. And then, of course, what we made almost 100 points on the one that we did later. And then we did the same exact trade here with MU. It was literally the same exact thing. What's crazy about this to me is how clean it was. It was just straight selling. You can actually see the action off the open. And then it was just straight down. Like you never, ever had a care. No matter what vehicle you're using or oscillator or whatever, like there were zero issues here. You did try to bounce. And this would be troubling to me as well. And it was troubling to me. Let me get rid of the pre and the post because I actually sold some puts here to open. And what they did was they actually had this rally over here and then over this other bar. And then they reversed it at the end of it before the bar closed, like 15 minutes before the bar closed and then undercut. This is concerning because that's a liquidity grab. And I was thinking like, oh, they're going to definitely wind up covering some of the shorts into the clothes. And they're just, they're not, there's no, there's no one out there that feels the need that they need to buy right now. And that's becoming very clear. Let's watch this play out. Sandus can bounce up. I might short more of it. What's the high of that? I can do that and add to it. Then if it breaks 67, just check it. Let's just give it a minute and see what it does here. I'm going to add to the short. Just watch 67. I shorted it this morning around the thousand. If it hits there, then I'll just kick that ad. Up 12 on the sand disc ad. I'm not doing anything with that. Sandus could break. There's not really anything for me to do if I'm going to try and stay with these shorts all day. Trim some of the sand disc ad up 20, 25. I'll just leave the rest on all day. There we go. I'm up 90 on the short from this morning. Over 904 over that doji, I'm going to trim. That's a great spot for me to use now. Because by that time now, if it got back over there, the cloud would flip. Up 130 on today's short from free market. And now up 75, 80 from the other one. I'm just going to use 900 now as a stop on everything. Then it's going to turn again. Over 75, I'm going to trim some. I trimmed up $75 on the ad. Our stop on the entire trades, 880. Move the stop on sand disc short to 862. Call it 865 on the whole thing. That might be it. We saw that before, but that really might be it. On the day trade, move the stop up to 850. And then 862 is going to be the remainder from the pre-market when we did it at 1,000. So on the short side, there's definitely opportunity. The question is, you know, how far and how fast and how ugly can this get? And I don't want to be out there in environments like this trying to pick a bottom. I may try to trade it for the day, but when I see stuff like this, you need an event. You need something cathartic where it washes it out. Now, this is where it gets complicated. Anyone who tells you that this is easy, runaway screaming. But if we take a look at VXN, and that is the volatility index. And if we go back and take a look, like this was the bear market. And you know, this everyone remembers this 1.7 trillion, whatever. This is Japanese yen. This is winning and liberation. And let's just call this midterms because I don't know what else to call it, but we'll just call it a complete kerfuffle. So here we are, and we're back at the same exact level that we've been. Now, the issue with this is it doesn't mean it's over. That means that you're starting to enter the period where this is going to be in the last innings, not the beginning innings. So if somebody wanted to say, how do you view this? I think you're between the sixth to eighth inning of the sell-off. You're certainly not in the first part of it. But the end of the Dragon's Tale is the worst part of these things. Like if someone said here on, you know, April 7th or here, we're, oh, we're fine on the NASDAQ, you know, we're at 37 or they say it on the 5th. And you go back and look at that date and go, well, what, you know, what happened there? And you start looking at these days, like they're not easy days to stay in this and just go, oh no, well, the VIX is back over. So, you know, we're fine. Like tell that to the guy that's like long at 435 and staring at the queues at 412, you know, wondering what he's going to have for lunch, hot pockets, clearly. And then you had the winning liberation pause. But you see where, like, if you start looking at all this nonsense and you start looking at that at the same time, you look at like the VXN during that period in time, you're like, no, we're fine. It doesn't matter that the VIX is here and that it imploded. And now we ran back up. That's okay. It's okay. Because we're over 38. It doesn't work that way. So what you have to do is set demarcation lines. And then just, if they hate your demarcation lines, you just get out of the way. And I think that that's the best thing that I could say is that just understand that I think, yeah, I do think you're in the late, the late innings of this. I don't think you're in the early innings of it. And the other thing I like too, is that the VIX caught up today. And this also was super interesting to me because, you know, 30 handles really where you need to be to start seeing something as some semblance of it. But again, you know, April, in April, we were at 60 during the Japanese yen crisis, you were at 65. And you can go all the way back. I mean, you know, I don't think they're going to shut down the global economy that that's an 84. But when you really look at like these events, and what could really happen, you're in the tail end of it on the VXN, in my opinion, the other thing that that is really interesting, and I pointed this out a couple times, is if you look at value divided by growth, value divided by growth, I feel like I've been through a war today. And we look at these areas, same thing, yen trade, and then you come across and then it's April 25. And then you have March 25, 26, right around there. And then we hit this area as well. And then what do you have from there? Well, you have these extreme readings. Does that mean that all of a sudden it gets better? No, what it tends to mean is that value stops underperforming growth, or starts, it stops, it stops overperforming apologies. So what does that mean for you? Well, this is where, pardon me, this is where it gets super complicated. But when people start having margin calls, they don't care what a company does. They don't care that it's Warren Buffett. I think it's, I need to get paid, I need to keep my job. And that's really what people start doing. If you look at the amount of hedge funds that are blowing out up there. When people said to me today, I got a bunch of DMs about, is this retail? My friend told me it's retail, or this guy that runs a fund told me, this was not retail. Retail cannot do this to a market. And so if you look at something like this, what did they do? They got out of it. Well, why? Because they need to cash, right? That's why they're getting out of these trades. I had a bunch of longs on like this, like TRV, all these, all these names today. And, you know, when I did it in the room, I know people were looking at me like, wow, what do you think is going to happen? You know, I got out of A&F. We got out of all this stuff like in the first half hour. And the reason that I saw it was like, man, if they kill the market like this, everyone's going to have to reduce their equity exposure, their gross exposure. And then of course you had the reversal in XLF, because when people start realizing that, hey, if data centers slow, then you're not going to need any of these debt insuances. If it does slow and these things reversed, I couldn't figure out why Blue Owl was actually even up yesterday. I was trying to figure it out for the life of me, but all the private credit side is just going to get absolutely smoked because nobody's going to want the debt and no one's going to be able to issue the debt. That's why I think companies like Anthropic, I think they push it out to 27 or they wait, but I don't know. I don't know what they're going to do. I think they're going to have to wait to 27. If it's on me, I think they're waiting to 27. But when you see that this start to happen in the market, it's definitely something that you have to pay attention to. You know, I saw this really cool graph. I'll try to grab it again for Saturday, showing what's happening between the spreads of like different junk rated bonds and how it's getting crazy. And I think that was also just fascinating. But anything that Raleigh does today, where you're like, oh, I'm just going to buy defensive names because XLV is certainly safe. Now it rolled right over XLP. No, we're getting out of that too. So there was really no place to hide. You think the consumer is going to be better because of what's going on. And so we start watching the consumer names break out and we broke down. And this is the other reason why I think you're more on that six to eight innings because they're getting out of things that they really don't want to get out of because they have to get out to reduce their exposure to the market. And that's usually in the later innings, not the beginning innings. In the beginning innings of any correction, you're buying the XLP because you want to be defensive. Now you're looking at it and saying, boy, this got even worse than I thought, and I need to de-risk across the board. And they're getting out of those names. Even things that we were in, we had some great trades in like nail that we were in for a while. DPST, if you take a look at the regional banks, this went today from 140 to 120 and we kicked it up in here somewhere. So the reason I'm pointing it out is because it wasn't like, oh, no, just go into these safe assets. Because as you look through these, nothing was really spared today. You had names that probably like APP, candidly, that probably would have absolutely ripped even higher if they had the opportunity to. But in a situation like this, they didn't have that opportunity. And the reason why is because nobody was really going to go out there and pot commit to anything. Now, if we go to S5FI, and I think this is a really good spot for us to focus, but if we look at that, 72% today of names were above their 50-day moving average. We're definitely going to need more caffeine. Now you're at 60%. So if you think about that, that's 12% of 500 names or 60 names broke their 50-day moving average today, if you think about it that way. You rallied all the way up and now you're getting to the spot, watch where you look at the NDFI. And you look here and you're like, okay, we went from 53 to 46, right? So you dropped commensurate, we'll call it its commensurate amount. But if we go and do this, we go S5FI and we divide that by NDFI. And then we turn that, so we have S, hold on, S5FI. I'm not going to have time to edit this, so you're just going to have to deal with my blooper reel, S5. So if we deal with S5FI and NDFI, we're back in our zone. And that coincides with here's April, here's where we were back in July, right before what happened, happened in August. And then you can see the move from there in August when that happened with the yen trade, obviously what happened back here in April 24. But what does this mean? Does that mean that like that's the end of it? No, these things can always get worse. But when you're getting in these zones that we got here, you remember, if you go back to October's video, we talked about this here and said, hey, you're starting to rally, this is where the S&P is going to start outperforming. When you start pushing, the S&P will start outperforming the NASDAQ. And if you go from this date over, which would be October 1st, go take a look at it, we can do it really quickly here. But now we're getting back into this area. And this is where you tend to revert and the NASDAQ will start doing that. So when we start looking at some of these signals, I do think there's something to it. And I do think it's worth paying attention to. I really, I think it's worth our time. If we go and take a look at the SPY here, I might as well just do it because I brought it up. But if we went and looked at the SPY and we'll turn that into a line, and then we'll go here and we'll turn the cues into a line as well. And we'll go back to, let's go back to 15 because that might make it easier. And we'll get rid of the pre and the post. And we'll just take a look. I haven't done this yet. But if we went back to October, did the S&P, yeah, the S&P outperformed considerably during that period in time. So what I think is going to start happening at some point in November is that the NASDAQ will at least start being commensurate here. And you might start dropping together. And that makes sense because when you look at what's happening, they're getting out of everything. And what I mean by that, let's go to a bear chart now. It doesn't matter the sector. And so they're just throwing, when you're at the point where they're throwing the baby out with the bathwater, that's what you want to pay attention to. Tomorrow, you're going to get non-farm payrolls. They're buying bonds, non-farm payrolls overall. Is it an event? Yes. Is it the event? No. It's getting a handle right now on how bad the damage is going to be on the AI trade and what we're going to see and where we can see some kind of bottom. And what I would like you to take from today, just watching this, is that you want to put yourself in a position where you're not telling the market what it's going to do. You're allowing the market to settle down. And then you're watching the key demarcation lines we went over this evening. That's it.