Is the Market About to Break? Tim Knight's Technical Analysis

[00:00:00] Speaker 1: Hello, Tim Knight. Well, well, well, well. Okay, so it's been a really terrific week and if you joined me this morning with Jermal, you might have seen that I had kind of switched teams partly. I went from 37 shorts to 18 and I went along the cubes, along the EEM and greatly increased the size of my XLU short, which is kind of a hedge also. It's, you know, it's not like a semiconductor stock. It's my way of jumping to another portion of the market, which is a good results. And it's a funny thing because you people are never happy because like when I'm bearish, it's like, oh, this guy's always bearish. And then I went somewhat bullish this morning. Tasty Live about the clip. One twit wrote that something like this guy's covering with a 1.5% drop. That's not a bear. That's a used car salesman. First of all, a used car salesman is not the antonym of bear. So I'm not sure what that's all about. And secondly, the drop's been far more than 1.5% with my own picks. I mean, maybe the spider or something or some index out there is down only a little bit, but I've made a lot more than 1.5%. So it's been a very good time lately. I tend to not hold on to these hedges as long as I should historically. But the fact is that the ES is green. The RTY is green. The YM is green. I'm still largely short and I'm still having a great day. The hedges helped a little. But I got to tell you, the shorts are still performing. But it was an exceptionally busy morning. I used to have kind of the whole day to myself. Now they've given me this little morning segment. So I've got like, you know, instead of like, you remember summer camp, you'd have like free time. My free time is somewhat corralled at this point. So I had to frantically, in 45 minutes, move a battlecruiser in a different direction. But I got it done in time. And well, I've got some charts for you too. And I'll sort of talk through these. And you know what? I'm in a lazy bum because it's going to be pretty much the same symbols you saw yesterday, but that's on purpose. I'd like to show you updated some of the things that have happened since then. Because very broadly speaking, my point of view this morning was the selling was largely done for now. And what does that mean? Does that mean in a year you'll short again? No, we could resume tomorrow. It just, there was a lot of key charts to me that seemed kind of done. So I cleared on out of there, you know, because you don't go from 37 shorts to 18 for no reason. I mean, that's a, I don't know how many positions you trade, but I doubt it's 37. So it's a lot of work. Um, it takes a lot of TLC. So, uh, let's look at some charts together because there are some things happening out there. The spider broke its uptrend. Um, yesterday it damaged it a little bit, but today it fully cracked it. We're trading above that same trend line now, but the damage is done. And that's great because we are starting to see more and more cracks in the, um, in the bullish, um, shtick. Uh, and as I, you know, where are we at now? Uh, 11, 11 full trading days left until boating day. And so once we're past that, I think it'll be a lot easier to not worry about what your hero is up to. Um, so yeah, we are up a little bit on this. We opened a week. We're trading strong. Um, and like, yeah, like I say, we're getting some damage and I love the damage. So we'll just keep doing that. TLT is up strong. And that's kind of exciting because as I told you days ago, uh, I felt we were in for a rally. I didn't know how far it would go, but the higher we got, the better I would feel about it because that would sort of, uh, dispense with the prospect of, um, something nastier happening to the upside. And so I don't know if this is a flight to safety or quality, either of which are sort of odd adjectives to, or odd nouns for this, uh, for what they're getting. But, uh, it's up strong. Rates are down hard. I don't know if Besant's buying or what, maybe this is some of the shenanigans. I don't know, but it opened pretty strong. That's trading rather weak right now. Um, and you can see this reflected in, so for example, LQD, anything interest, interest sensitive is rallying as well. Uh, LQD, we've got IEF also strong like so. And, um, um, the one I'm most interested in cause I have, this is my biggest position is XLU, uh, and XLU, it will zoom in here, open, nice and strong, and it's trading weaker. Now we've got a bearish engulfing pattern on it. And of all those, it's definitely my favorite, um, pattern from the, for interest sensitive standpoint. Um, so, so, so yeah, this can be one of those days where I just chime in with commentary if I feel like it, but, uh, maybe the charts will inspire me to say something meaningful. I kind of got a lot of it out of my system with, with, uh, this morning segment. Um, the diamonds are up awfully strong, uh, over 500 points on the Dow over a full percentage points on the diamond and, uh, I ain't going near it, but we'll keep an eye on that Fibonacci to see if that maintains its role as resistance. Uh, the small caps, I do IWM is also strong. Remember yesterday I mentioned covering that and I, you know, did the self-flagellation thing saying, oh, it's probably going to plunge dah, dah, dah, dah, dah, whatever it didn't. That was the right thing to do. It was the right thing to do to ease up some yesterday and ease up real quick this morning. Um, I had my sneakers on when I was running out of these positions. So luckily, um, I actually was up at four in the morning, looking at this stuff, worried that we'd be rallying big by the time the opening happened. Happily the open things got kind of sloppy and weak for a while there. And we actually spent the first 20 minutes kind of slipping lower. So it was a good opportunity for the one or two bears out there to, um, to get out. Um, yeah. Uh, bum bum bum bum. I'm just reflecting on, on, uh, this and that my better get back to the charts. Uh, what else is cooking? Let's jump overseas for a sec. Uh, EEM. The emerging markets. Now I made mention of going long these guys. I also made mention that I don't tend to hold on to hedges very long. Same, same. Uh, I bought straight away this morning. I sold it at a profit. I'm out. It's probably not done rising, but I said the same thing, but I didn't be messed it in the other direction and turn it to be a good trade. So, uh, this is rallying. We're near the highest of the day. Small loss on it. Now I expect South Korea has a lot to do with the very weak opening. Um, the closer we get to this level, the more short I'll be that they're done. And because, so if I'm going to make any sweeping statement right now, it would be this. Um, there is plenty more downside to come. Uh, my bullishness as it, as such that it was this morning was just a way to ameliorate any losses from being too short. And it's always a struggle I have with like, okay, you think the market's going to go up. Do you want to go long or do you simply want to get less short? Um, or you could do both. But, uh, you know, I tweeted out early this morning, even before the, uh, like, again, like four in the morning, like in the selling, I said something like, you know, the, the selling is done. Um, another twit, uh, interpreted that as like, you know, the bear market of the past week is over. And he's like cope harder. It's quite, you know, I give so much free advice and in return, I get snark in return. It's like, you know, I don't know if you want to go to the seller. Um, but what I tried to clarify to this in it was that, uh, the idea wasn't like, you know, full steam ahead. Let's just buy everything. It's just like, there'll be a pause here in the selling. There'll be a bit of a bounce. Uh, we can reload later, which I have every intention of doing. And I, it's kind of sad to see these pauses. I prefer to go down every day until the end of time, but zero is a hard limit on this. And you just kind of like, all right, well, we'll give it a break for a while. Um, and so I'll get more aggressive at the right time. And the kind of thing I mean by right time is that a rally to that kind of level, you know, if we got back to where we were, um, on, you know, Tuesday here, um, that would be much more appealing, but things were so badly battered. Um, here's EFA. It's also, and it's actually up. The other one's down less. This one's actually up. And here again, we've got a gap on that fella that it's getting close to. So it's all, it's all moving in, in a, in a good direction to, um, German was asking like, what does the slope of hope mean? Cause my website's called slopeofhope.com and I explained it to him and this is what we're experiencing now. This is the hope coming in here. It's okay. It's all over. Leopold's been blown out again. AI is going to be fine. Anthropoc is going to come public rainbows and unicorns. So that's what we're seeing in front of us. We've got green all over the place and like stocks are on sale. So that's the sort of environment where you just sort of hold back, back up, sit in the corner quietly and wait for those prices to get attractive again. Uh, semiconductors, of course, been an important part of this demolition. Um, and my observation of SMH, which I think we'll look at later, uh, was that we'd sort of bottomed out. So I decided to take profits on that. That's when I covered the fastest. Um, but, uh, we, we're bouncing on this one. It, this is not a sea change at all. It's not like, wow, we are set up for another terrific bull run here. You're just going to get a counter trend rally, which is what's commenced. And the only question is how far will it go? Um, will we be, you know, is today it, will it get up to here? Uh, et cetera. So, um, like I said, just sit back, wait, watch, look at lots of different markets to try to tease out what's meaningful. Um, the, what I keep calling my North star came through just great, which is of course KORU, South Korea's, uh, leveraged instrument. I thought weeks ago that, you know, maybe in a few months, this head and shoulders will complete. It did nothing. Uh, it didn't take anything like that in terms of time. It was done in a matter of days. This was just a sensational, almost an uninterrupted fall. Um, starting on October 5th, that was when, you know, he stood at the edge of the hundredth floor and jumped. And so it's just been pretty much straight down. Uh, but again, here's a gap. This is an important price gap. What if all we're going to do is seal that gap and then resume selling? It could happen. Um, this is tremendous fall. We have finally completed cause I've said all the way down, you know, it's not a pattern. It's not a pattern. It's not a pattern until it's done. Well, now it's done. Now it's not very useful from a measured move perspective because the measured move on this is like negative $50. That's not going to happen, but it is quite interesting that we've completed this monster of a pattern here. It's a real beauty. Uh, speaking of, kind of the persistence of that drop, uh, here's SOXS, which is the, uh, triple leveraged semiconductor bear stock. And look at this here. We are on the 6th of October. And we were at about 29, about $28, $29. And we went from 29 to almost 50. So that's like what a 60% rise in a matter of days. Uh, but the thing I really want to point out is how, how almost uninterrupted it was. This is a triple leveraged instrument and it was a pretty smooth ride higher. And today for that was kind of the tippity top. So this was sort of, um, usually, you know, I'll just swipe a random area here. You get just noise, just all kinds of crazy moves this way and that you don't usually get a smooth right up or a smooth right down, but this time we did. Um, what else, what else is going on? Well, okay. You're probably tired of hearing about my Island Reversal, but sorry, I'm going to say it again. So the Island Reversal was the key here. That was our champion. Um, we have broken, but we're not below. We have broken the line from July 29. We opened below it today. We're almost certainly going to close above it, but the damage was done. And, you know, I got to say that my, uh, shift this morning, because I talked about, uh, the rally we were going to see that is, you know, we're at the highest of the day right now. Um, we are seeing a good, strong reversal and bring it on because I want to get back in again in a big way. Um, but it's, um, it's, uh, when you've been this better, this long, the ascendancy feeds on itself because this morning about half an hour into the training day, that was sort of like peak worry because the, any sort of rally didn't seem to be holding together. But then it started kind of gathering up its strength and now it's kind of feeding on itself and probably will just kind of propel that momentum through the end of the day. Um, so yeah, uh, we are, we have, we have broken, but we would not necessarily below, but we have broken, damaged lots of important trend lines today because of that very weak open. Uh, USO is up again over two and a half percent. Uh, but interestingly, the energy stocks aren't necessarily following along. So here's XOP. We're down about one and three quarters percent. We had a week, we had a red bar yesterday and another one today. And these are the first kind of back-to-back red bars we've seen in a very long time. Um, so I'm not trading energy myself, but it's interesting to look at, you know, just peek at it once a day. Uh, here's XLE. It opened at a lifetime high and we've got a huge bearish engulfing pattern on it now. It's gobbled up yesterday's and Tuesday's bars. Uh, so it's a big reversal down about two percent on XLE. Now, as far as gold goes, uh, gold is finally catching a bit of a break. Uh, the futures on gold are up $75 right now. And that's nice, but it's not any huge victory because, uh, this is on GLD. We got to get above this line, um, to have, you know, any sort of sell a miniature celebration about a recovery as it is now. All we've done is sort of shake off yesterday's drop. We're trading now where we were trading on Tuesday. So it's a, it's a nice little rally, but it's just control zine yesterday. Um, here's the miners GDX. We have sealed this price gap, but we've got a lot of overhead supply here. So this, this could be a one day wonder on, on metals. Um, dust. I just wanted to show this just to go back to that persistence point. Um, dust back on way back on the 25th of August was trading down around 30 and we were up at 45 yesterday. This is a pretty smooth path for a leveraged instrument. Uh, I forget if this is two extra three X, but this is, this is silky smooth for, um, for anything leveraged like this, as opposed to, again, this kind of crazy noise, which is more typical. Um, and oh, silver SLV, it's having a good day as well. Um, uh, importantly, and I was, I was talking about this line yesterday. It did not break support. It did not fail to a new low for, um, the year. Um, it's, you know, pretty thin reed to hang, uh, uh, uh, your hat on, but at least it didn't do that. Um, so it could rally a bit more, but I think metals have months of work to do to really show themselves to be heading in the right upward direction. Um, and as far as XME, it's up a bit as well, aided by precious metals. Um, not a very interesting chart right now, but I just wanted to give it a moment, uh, in the sun. Uh, as far as SpaceX goes, it fell quite hard earlier today. We went in a matter of days from, um, 176 down to today, um, about 140. That's a lot. And we, uh, as I had made mention, 150 ish is a very important support zone. And it was kind of worrisome that it fell this far, but it's recovered and we're back around 150 again. So we've, we've sort of sprung back to this, um, kind of happy medium. It seems to have found it was stuck here for the longest time, escaped it for two days and then just sort of gave it all back. So that, um, that's kind of exactly what I was expecting. Uh, and I think in the weeks ahead, we'll probably grind down to, you know, one twenties or something like that at some point, but long, long-term I think it'll be fine. Um, UFO, which is the, uh, kind of superset of all that is the ETF for, for space, um, has also completed its own enormous head and shoulders top. We are rallying on this back to the neckline. I would say that once we get back to the neckline, uh, it's probably just about done with that rally. Uh, so that's another honey of a top right there. Um, Rocket Lab, RKLB. This has fallen hard today. Um, 7%. This is one of my shorts. I'm sticking with this one. Um, you know, I didn't get rid of everything. Like I've said, I've run over and I've tightened my stop. Like, so just tighten my stop. Like, so to the new price gap. So that's a very, very good looking, um, chart now, um, Planet Labs PL. Uh, this is one of the ones I covered fast as I could this morning. And, uh, same with Vias at VSAT. I have every intention of getting back into these positions. I want to wait for better prices, but, uh, I covered that one too. Um, a lot of these other short charts, um, is just a repeat from yesterday. Um, but I just wanted to give them their due moment. Um, because it's interesting to see what's changed even between this morning and right now. Um, a lot of these I'm out of already, but, um, here's applied up to electronics. And in many cases, you'll see a green bar there because obviously we opened rather weak and we're trading strong right now. Um, so, uh, advanced micro devices, zooming on this, um, another big green bar there. Um, this is not nothing. This is an important breakdown. I do believe in spite of the strength we're seeing right now, because we've got, you know, one and a quarter percent gains on the RTY and on the YM. The, uh, in queue, which had been down hundreds of points is coming up to unchanged. Um, but this shift we've seen over the past eight, nine trading days, whatever it's been is, is important. I think it's changed the character of the market and this rally that we're seeing that I went out on a limb this morning to say, we're probably going to have, um, is, is unfolding nicely. Um, carnival CCL is up a little bit. Uh, it's still pretty bearishly configured though. Like, so you can see a very nice looking top there and a, and a failure of that trend line. Um, here's another one I covered, LEN up a lot, almost 6% today, I suppose, aided by the big drop in interest rates, uh, um, synopsis. This one, I'm still with, um, I talked about this, like, it's like a kind of jagged buzzsaw looking pattern there. Um, so this has fallen nicely today, about 3%. I, I, I, I've tended to keep the, I mean, like the semiconductors and the hyperscaling, I tended to get out of those this morning, the quantum, that course, that sort of thing, stuff that isn't that I tended to keep, um, Tesla, for example, I'm still in that. Um, this is down about 1% right now. Um, applied materials. I am not in this, I got out of that immediately. Um, we had, uh, you know, approached this area, the, the, the low for the past many, many months. Um, and it's not a great looking chart. Anyway, I wasn't thrilled with being in it in the first place. I was glad to take profits on that credo C R D O. We have a sealed up the price gap, nice and neat. Um, stuff, a tiny drop on that, but another example of something I got out of, uh, Carvana. This is up big. I'm still in it. I just love this chart in the long term. Uh, we're up almost 5%. I've not budged. My stop is way up there. So it's not like I covered everything. This is a terrific chart and the fact it doesn't make, you know, semiconductors for meta helps. Um, IonQ. This is, uh, one of those quantum stocks. This is the only one I'm still in. Um, maybe I'm just sentimental, but I wanted to be in something. Um, although the stop isn't too far away. So I don't know if it'll survive or not, but yeah, this is the one and only one that I'm still sticking with. Uh, O N D S got out of this one too. Long term. It is a terrific looking top. Short term. I'm not surprised it's rallying and it could have a little ways to go. Um, yeah. So, um, that's worth monitoring a couple more of these. Uh, here's QBTS. I scooted out of this one. Lickety split. Uh, this is a D wave quantum, but I'll be very interested to get back in if we can get close to that price gap right there. And, uh, our old dear friend, WDC Western digital. Um, am I still in him? Well, do I still have that? Let me see. No, I don't. I got out of that quick too. And, uh, once again, there's kind of the zone I'd like to see us get back to in order to get back in. So I'm sorry to be so repetitious about this. This is just point. I want to make so, so clear that there's the, all the opportunities are still there, but I'd like them to represent themselves, um, to, to get back in because it is, you know, I, if you just look at today, if you look at this week, week open, we had, it was a real opportunity just to take profits, to lighten up and to reexamine, reassess the situation. Um, I showed you XLU earlier or did I? Yeah, I did. I did. That's important because that's, that's kind of my like only anchor position right now. Uh, like I said, I covered SMH, I covered FXI. I had covered EWZ, um, and so on. Got out of all those big ETFs. So XLU is kind of the last man standing. Um, couple of, uh, broad points here. This is one of those rare times that I have extra time. So I'll just sort of like yak a bit. Uh, NVIDIA, as I said yesterday at the close remains absolutely key. Um, evidently, Jensen Huang's, uh, words early this morning, pre-open helped, uh, calm nervous traders about the whole AI space. He has every reason to do that. Um, because, uh, the, the, this house of cards is built with the 52 card deck from NVIDIA. I mean, it's all intertwined and NVIDIA itself has done a couple of interesting charty type things. One yesterday, it did break that trend line, as I mentioned. And today we have traded below yesterday's low all day long. We have a new price gap right here and it is within the realm of possibility that we'll stay below that gap. And who knows the, the sell off could resume tomorrow. I just don't know. Uh, we have been at this very moment, the NQ is at the highs of the day and we are at the cusp of going green on that. So in spite of all the snark, I was right to, um, preach bullishness this morning because the, um, I'm not showing it here, but the, the thing that just grabbed me by the throat was the chart, the four hour bar chart of the NQ, because the, the just simple trend lines on that some weeks ago told me it was time to reverse. And as of even last night, it's like, it's time to lighten up because we had perfectly tagged the, um, that trend line in, in a bullish sense. And the funny thing about all of this is that the VIX kind of couldn't care less, uh, what's been going on. Um, this is, um, this data is, this is not a real-time trend. This does not include yesterday, uh, today's information. It ends yesterday. So, um, that's why I had this one final spike, but even in the mayhem and the terror and the running around and even Jim Kramer saying the bears are winning. Um, how high did we get the high sixteens? You know, were we at 90? No, we got to 16 point something. That is the, that is the level of complacency we're at, but I will take it. That's I will happily take that because it's been a really, really good run. So in these 70 seconds, we've got left just to review some things coming up. Um, we have in, what is it now? A couple of weeks on the 28th, the FOMC, when I suspect they'll say, you know, keep on keeping on, uh, no change to the rates. And of course the following Tuesday is election day. Um, where I think the entire stage that we're dancing on changes. So in the 11 days until then, it seems so long away, but it's so, so quick. We'll be there before you know it in the 11 trading days until then. Um, let's stay cautious. Let's stay vigilant. Let's stay sensible. Uh, and like I said to myself yesterday, don't do anything crazy. So, uh, that is it for me. I hope you're doing all right. I hope my charts have been helpful to you and continue to be helpful to you. Um, and I will leave you now. So we'll wrap it up tomorrow and, uh, good luck and let's just keep our eyes open. Thanks. Bye. [00:28:58] Speaker ?: Thank you.