Stock Market Crash Is Almost Over! (Here's Why)

[00:00:00] Speaker 1: We've had a crazy sell-off this week. Inveria is down 10.5% on the week, AVGO 11%, Micron 22%, AMD 12%, and even JP Morgan. A lot of the banks, Eli Lilly is going down. A lot of stocks are going down. The fear and greed index is sitting at extreme fear territory. I've been making a lot of videos about the crash even before it happened. I said the AI rally is nearing the end months ago. So I don't only make bullish videos. I make also bearish videos when I see the right bearish setup. And a lot of you guys are asking me if I believe the market has bottomed. The truth is nobody knows if I knew I would be richer than Warren Buffett. But I've been investing for a while and I look at a few indicators to determine those things. And after this week is over, I'm going to show you some of those indicators and give you my assessment if I believe the market has bottomed or not. Now, we did talk about the broadening of the sell-off on Thursday. JP Morgan, Lilly, and many other non-AI stocks also joined the market on the way down. Normally, that happens near the end of a market pullback because the market pullback is normally based on a specific sector. In this case, it was the AI stocks. There was a lot of leverage in AI stocks. And whenever you have so much leverage, they get margin called. To cover the margins, they have to sell gold. They have to sell treasuries. They have to sell other stocks. Anything they have for them to be able to cover the leverage requirement on AI. And this assessment has so far been true. We've had about seven hedge funds blow up. Loan Pine, Millennium, and Samlin was a popular one. And many other tech-focused hedge funds blew up. A lot of them shutting down, taking redemptions. You know, that's pretty crazy for the S&P trading at almost all-time high. And we're already having hedge funds blowing up because of so much concentration in the AI trade. Now, I showed you this chart before, and that's mainly the support on the NASDAQ QQQ from the April bottom, the tariff bottom in 2025. We retested it again in March 30th of 2026. And then we just retested it again, and we held it so far for the week. Every time we touch the support, the market has bounced after. But there are some people that are calling for a major bear market that we're going to break down the trend. We're going to have a major bear market, or we're going to have something like in 2018. So 2018 was also a midterm year, similar to right now in 2026. And the market peaked in October 1st of 2018. And it went down about 23% from the highs into December. It was a very sharp, it was a brutal sell-off. I was investing back then. I bought Apple at 13, 14 times earnings. I sold it early, I was an idiot. But there was just so many crazy opportunities. And it was a midterm year. Some people are calling for the same thing, or they're calling for a major bear market, meaning 20% plus down from an all-time high. But if you look at major bear markets, or even what happened in 2018, we had the Fed hiking interest rates. We had the Fed hiking interest rates. We had the dot-com market crash. They were hiking interest rates before the 2008 financial crisis. They were hiking interest rates in 2018. That's one reason why we had the blow-off in 2018. We also had the Fed tightening the balance sheet. So instead of them buying treasuries, they were doing quantitative tightening for the first time ever. It was an experiment from Jerome Powell for him to load the bazooka for the next crisis. That's what he was saying in so many words. And they were doing it for the first time ever, and it put pressure on the system. So all those things have caused the market to drop in 2018. I'm personally not seeing the same setup. Like, normally bear markets happen when the Fed is hiking interest rates. The Fed did hike interest rates 25 basis points, but I don't believe we're entering a hiking cycle like we did in 2018, like we did in 2000, like we did in 2006, 2007. I think we're closer to a cutting cycle. We just entered the cutting cycle in January, but then we had the Iran war, and that changed the expectations. If it wasn't for the war, for a one-time event, we were about to cut interest rates three or four times this year in 2026, but we had the opposite. Now, if you look at the CPI, the CPI has been a little bit hot, sitting at 3.7% year on year for the CPI. But if you look at what's driving the CPI to be so bad, it's mainly energy, 20% increase in energy prices. Everything else is pretty much near or below 3%. Food and beverage was 2.4%, nowhere close to 3% or above. Core PCI was 2.5%. Apparels only increased 3.3%. Used trucks actually declined 1.5%. New vehicles not even up 1%. Shelter, like housing was 3.3%, a little bit hot. Nothing too crazy. Transportation, 2.7%. Medical, 2.5%. Recreation, 2.8%. Education, communication was 2.3%. So inflation is really at 2% if we didn't have the energy prices. So I'm not really sure if Kevin Walsh is going to be hiking interest rates like crazy. I'm talking about like crazy hikes, like a major hiking cycle from a one-time event. That's energy that could end tomorrow if the war ends or next week or even next year, maybe they could put pressure on the president and end the war. So once the war ends, inflation is over. It's not above 3% or 3.5%. So I don't believe we're entering a rate hiking cycle that could cause a major stock market crash. If you look at the prediction markets from Kalshi, which I've been following a lot, and you can check out my link in the description, but they're expecting one more rate hikes. That's it. One more rate hikes in December, we have, I think, a 75% chance of a 25 basis point hike. I don't think that's going to happen, but even if it does happen, this is expected to be the last hike. Interest rates should peak about 4, 4.2%, and then they should start to decline once the war is over, and that could happen any time. So we don't have the ingredients of a major bear market, which is a tightening balance sheet. We're not tightening the balance sheet. We're actually expanding the balance sheet a little bit, and we're not entering a crazy rate hiking cycle. We're just hiking a Mickey Mouse 25 basis point, which is nothing, and the market is expecting it, and the market can take it. Now, in terms of price action on the charts that I showed you, I want to zoom in a little bit and tell you what happens near market bottoms. Generally speaking, not always, but in most cases, whenever the market is bottoming out, you don't have time to buy any kind of stock. So whenever stocks open lower, let's say on a morning session, 9.30, 10 a.m., by 11 or 12, sometimes even before 12, like in April of 2025, this is an example. We hit that bottom here, and the market went up in the same day. You had no time to buy the bottom. This is a general rule that the market doesn't give you too much time to buy the bottom, and you have a crazy bounce. People say it's a dead cat bounce, but then we go even higher, and we bottom out. Same thing happened in March. We did hit the trend line. Next day was so green. I mean, my eyes were lighting up. You couldn't buy anything because we just recovered so fast. You had no time to buy the bottom. That's not the case this time around. So we did hit the trend line. Yes, we had a nice bounce on Friday, nothing too crazy, but it's not as huge as other bounces where you have no time to buy the bottom. You could still go in on Monday and buy many stocks at or near their bottom of their first day whenever we sold off. That's not normally how a bottom looks like, and on Friday when we had the bounce, the RSP index, which is the equal-weighted S&P 500 index, meaning all 500 stock equal-weighted, was actually negative on the day. So that does not look to me like a strong rally, like a strong bounce, like a typical market bottom. It doesn't look like that to me, unfortunately. And normally when the market bottomed in a sell-off, not a bear market, but a sell-off, we have the VIX, which is a volatility index. It tends to go to 34 whenever the market's going down. This is, I put out those lines, but this is where it went to 34 when we bottomed in March 2nd of 2026. In April 2025, the tariff bottomed. Whenever we went above 34, we actually went a little bit higher, as high as like 52 or 53. This is where the market bottomed. In October 3rd, 2022, when we had the 2022 bottom, we hit around 34, and that was the market bottom. And same thing in the 2018 sell-off I showed you. We hit about 36, 35, and the market bottomed. The VIX today got as high as 28. 28 is not an indication of a bottom as well. Now, it could happen. Anything is possible. As a market, it could still bottom, despite the VIX not hitting 34, 35, and despite us not having a big bounce, if we have some kind of a major news. So maybe if we have some peace deal on Monday or some kind of tweet or something that really excites the market, we could bottom like we did in April. But so far, based on those indicators, I am not seeing a market bottom. Anything is possible. Again, it's hard to know. But if I had to bet on it, I would bet maybe we go a little bit lower because a lot of people are watching this trend line as well. Normally, what happens is once a market retests a trend line a few times, it tends to break it to shake out a lot of the buyers with stop losses and other things. And then once we go a little bit below the trend line, maybe if we retest this level here, whenever we had the double top, like if we go there, it would shake out a lot of people buying on stop losses. That's what normally happens. And then maybe we bought them out of nowhere. I'm not expecting a major bear market or a stock market crash, but maybe we go a little bit lower before it gets better. But I don't know. I'll see what happens. And that's my opinion on the market. Hope you enjoyed it. It was not financial advice. If you enjoy it, please press the like button and maybe consider subscribing. So I'll talk to you in another video.