Stock Market Today: Wall Street Dumps Tech Before CPI!

[00:00:00] Speaker 1: as tech came in prepared to just wipe everybody out and scare the bejesus out of everybody what happened with the s p today we're staying in a range ahead of cpi asml and the anthropic news tomorrow we're going to cover that if we take a look at the queues let's clean off all my levels for a second all we've done so far is rally break retest the gap and then hold that gap area and i think that's really important we thought we could get to that 35 area which is really the low of this week we didn't really get there did we now coming into tomorrow it's anyone's guess what happens but we have some pretty clear indications here on some things that could have gone horribly wrong today and didn't so for example if we take a look at the socks and let's just get rid of this for a second we're going to do a deeper dive into it in a moment but if i look at the 55 here we broke the 55 and we closed back over it did we have to do that no do i think that it had a lot to do with short covering at the end of the day i do but the breath indicators that we've been showing you for weeks did some things today that are definitely worth us taking a look at so let's get to that 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 is already in the important thing is you get the information education that you need subscribe let's get to it we've been showing a proprietary model for the breadth of the s p for a period of time because it's significant now as we've gotten to levels that you haven't really seen but only twice in the past two years and once was in this march time frame and then the other was back here when we had all that winning and liberation and during these periods in time this gave us a really extreme reading red is not very common maybe you see it once every 18 months we've seen it three times recently and now we're in the same area and that breath to me seems to be getting better which is actually a good thing but if we dive into this a little further i think it's pretty clear what's actually happening here so we got back to this 18 level and we stated that's usually where we tend to bottom could you always come back down you can usually when you start getting up this high that off the breath indicator it's pretty rare for you to come back down until you at least get back up over 50 that's historically what's transpired here if you go and take a look at these levels you usually will bounce back up to the 50 level 50 over the 50 day before you retest you're only at 38 so i do think you can grind higher now that could be defensive names but we didn't see that today matter of fact we kind of saw the opposite of that and we'll get to it but for me looking at that yeah we bounced off that and we're starting to see the breadth of the s p get better if we take a look at ndfi for a second and i thought that this was very telling so what we did here was we came right back to that 41 and then as the day progressed the breath got better but it's really important to note that we're trapped right we cannot get over 50 of the ndx over its 50-day moving average so the one thing that we want to take away from this is when do we think that we may have bottomed or may actually have some stability underneath of us to start thinking about swings for a longer term i would want to be over that 50-day i would argue that the majority of your trades when you're swing trading tech if you're over the 50-day on 50 your swings tend to do a little bit better your swings in here from april on you were probably a genius right for that quarter and then you had a couple good ones and i guarantee you from august on your swing trades you weren't a genius none of us were so you have to kind of put that into perspective now what i tend to do with this when i have those two pieces and i put them together and when i put them together what i get is ns5fi divided by ndfi and then i can see in here that still the s p is outperforming the nasdaq which means that relatively speaking the s p will outperform the nasdaq but what's important about this is relatively speaking this is not anything more than relative meaning they could both drop but then the s p could drop less so when we start to see let's not get to that yet let's go here so when we start to see that we have to just break down the sectors and what are we saying and we're seeing this with xlf and these earnings weren't great we're going to cover it but they weren't great and so we didn't really rally there right we kind of lifted then we kind of rolled over xli we can't get out of our own way so that takes us to xlp and then if you take a look at xlp today what happened well we were going to get defensive and we were defensive for a day so what's interesting from our perspective is if we start looking at the defensive side of the market which is xlp xlv in particular this is what happened now xlu rallied and xlu looks fantastic but that's also because you're watching tnx it looks like it peaked at that 535 and we'll get more details on that with cpi but that's more of an interest rate bearing trade those trades we've gone over this two weeks ago those trades we've done we've been talking about the utes two utes and they look fantastic but really what we're seeing here besides utilities besides the xlv that popped and then we look at xlp that popped like pop goes the whistle goes pop third base anybody so when you start to see this you have to go all right well what are we doing well igv was supposed to be weak today it wasn't great the socks actually was able to hold above its 55 and this really very important level matter of fact we touched this level we talked about that today like this was significant you did not want to break that and you're right around that 525 and it's the low here that vweb so now we have what we refer to as a vweb pinch going on here and we're going to address that in some detail what's important for you to get about this is that the defensive names rolled over which is kind of interesting going ahead of cpi and at the same time you have a lot of earnings that are going to come out such as asml that will come out tonight and then on top of that right after that you're going to get taiwan semi so we have to discuss this in some detail but there's three key events that are coming out and those three key events are really important for you to be aware of probably one of them you're aware of so there's probably two here that we're going to cover that you're not aware of let's get to it three main events tomorrow one that you might not be aware of anthropics has their investor meeting tomorrow and this is important because it's not a public meeting and there's some details here that you should know anthropic plans on a brief select institutional investors in its san fran headquarters so really what they're doing here and this actually gets into way more detail but they're lining up a private session it's for a very few hand-picked institutional investors to question senior leadership ahead of a possible listing and what i would refer to this as a dry run meaning what are you guys really going to want to know to actually invest in this as a public company and i think that this is a dry run for them but also when we had open ai come out and do their dry run a day later or a couple days later that's when all that news hit the financial times and that was on a thursday invitations were sent out in recent days meaning slated for the company's main office process timeline points to a november you know ipo you'd get an s1 before then so you'd be able to go through it but for me it's really a dry run for them to say hey what's going to happen here it depends how small the meeting is it depends how much they they hold them i don't think they're gonna make them sign ndas or anything but you know stuff leaks so you can see some volatility either today or i'm sorry tomorrow or the day after as it starts leaking out that is a possibility and speaking of a i do a ton of research and i do a ton of reading and this is what from one of the investment banks and i just wanted to clip it out because i thought it was interesting so it tells you who this gentleman is karpathy and it says one of the most credible voices founding member of open ai director of ai tesla stanford phd so i mean guy knows what he's talking about in regards to the space but this was really interesting because i never really thought about it this way when it talks about llm capabilities we're talking about anthropic and what we see versus what they see meaning people that are really in the know six billion people have barely touched the system one to two billion people treat it at free tier chat bots as a slightly better search engine or writing tool one of those people i mean i use it a lot to edit stuff or to search instead of going and doing the google 20 million people math and code are seeking complex projects i know a bunch of people that use it for this a tiny group of people 5 000 with an internal frontier access are watching swarms of agents attack multi-week software mega projects so what i want to just point out here is the disparity between these people or 20 million and then you have people like me that are basically hey you know fix this and then you have 5 000 people that are watching and attack swarms of agents on multi-week software mega projects new science frontier mathematics at speed that outpace human review the gap is driven by a problem ambitions jagged strength in digital and verifiable domains unequal access the result is that most of the world still sees a derpy chatbot you know i refer to it as clippy on steroids while a microscopic elite has experienced the curve going vertical all at the same time so what these people on the cutting edge are seeing versus what we're seeing like we're going i don't get it right like a lot of us are looking at saying i see it i get it it's fun but we're not seeing this a very select group of people that are tied to those units are seeing that and i just think it's a really important distinction there was also this comment about open ai i usually do this on deep dives on saturday deep dives when we do those but these comments really stood out to me so while they were fresh in my mind i'm going to get them out revenue positive signal explained 50 billion analyzed revenue real demand viable business model exact framing doesn't tell anything except that there's a lot of potential revenue out there okay wafer and memory storage are easing that's kind of interesting capital the cost of capital is becoming a bigger constraint so this was pretty interesting capital and the cost of capital is becoming the bigger constraint over wafer memory shortages so we had dalio ray dalio and i'm not going to pull all these articles out but he had a note saying the one thing that could hurt people here that they're not thinking about is that the cost of capital can become a bigger constraint he was out with that today i thought it was somewhat interesting compute capacity demand could remain ahead of supply into 2030 shorties itself may ease 28 29. now the big event for tomorrow is inflation cpi one idea was i just cut this out so that you can snapshot it so you know exactly what you're looking for you just snapshot your screen with it then you have it but core inflation month over month this was previous this is consensus core inflation year over year this is previous this is consensus so they're thinking year over year is heading up inflation on the rate side just core is without food and energy without food and energy this is going to become interesting for when we're about to talk about a portion of this but month over month we're looking at 0.6 inflation rate year over year three four to and then we're looking at three six so these are the numbers that we're watching tomorrow and after this we have one more event so this is not a graph that i did the name of the corporation and the investment bank is just right here and then this is obviously where they're getting their source but this is core cpi september forecast and you can see september forecast on housing and you can see that housing we can zoom in on this a little bit here so that you can see it on your phone you crazy kids with your phones but you can see core cpi they're expecting it to drop down but if you look at core services minus housing they're expecting that to come in they're expecting core goods to come in and they're expecting housing to come in so across the board they're really expecting all the metrics to come in maybe core goods they're looking at upticking very slightly like a modicum but you know i don't see that and i think that this is important so when we look at this from a core perspective which is let's say it again without food and energy and last time more spoke he used this language and so he used trimmed median and trimmed mean and so what this corporation did this investment bank was just showed you those in here along with it and so whether you're using core cpi trim medium sticky cpi trim mean or what our target is which is here you could see that all of them are off that target but they're all heading in the same direction they're all heading down and i just thought that was important so no matter what metric that he's stating that he may be looking at i believe he referred to trimmed median and trimmed mean you could see that they're all dropping now inflation has components and this is going to get really important because it all to me stems around the oil but percentage of cpi components above three percent so if you look at 25 a bunch were and then everything ran up and then everything came back down on a percentage basis a lot of the components dropped now you're not taking out lower lows but you're not taking out higher highs either so you're still down on that the breadth of inflation has narrowed significantly and that takes us to this cyclical versus a cyclical so the way i want you to think about this is an event a cyclical think about an event that could trigger something and this is pce versus cyclicality this is what we expect during this particular period in time so when you have an a cyclical event you have something that contributed to core pce going up so if we look from 21 to 22 you'll see that this was grossly outweighing what this was grossly outweighing anything else that had to do with cyclicality and this was say it with me 1.7 trillion dollars injected into the market jpegs were called nfts you guys remember all that crazy stuff so once we started narrowing that down and that starts coming out of the market what happened you can start seeing that then eventually the cyclicality starts catching up to it and what's starting to happen here is why the cyclical contribution to the market is dropping meaning the cyclicality parts of inflation are dropping that's not really what we're seeing with the acyclical parts of it so think of the middle east and what's going on over there right now and how that's expanding out that is driving the inflation so we really have the issue of oil over everything else and now it's been explained in graphs so when oil if and when oil comes in this is what we're saying and we're actually seeing that oil may stay higher for longer now we know that the major driver is crude and we can see that we can see that it's the asic locality of what's going on we just walked through that in charts so what does that mean for us and the breadth of the s&p is getting better and today if i take a look at this looks like a really normal breakout on energy and what you have is you have like these when you bang as i refer to it banging the ui so you're just really banging the u-turn here and you can see that the tighter these u-turns are the stronger they are by the way and what's interesting about this is you could say oh here's like kind of like a wonky cup maybe but here's where i want to go with it if i go to this point and again as always raw and unedited and i go here i have an upper channel so i've done this for years and doing these videos and just explained how i feel about upper channels when you flip these you either reject very hard or when you push through them you can go exponential meaning you can go up a whole other level because a lot of people one don't expect it but it also means that their normal trajectory is now in an abnormal environment so we just went through the asic locality of what's going on with inflation so you would have to say that this is not a normal environment but this is an abnormal environment with what's going on in the middle east it's not getting better we also what happened in saudi arabia etc so when we're setting up to push and to break out here we're breaking out of an upper channel at the same time the rsi is breaking through but it's not like we've been up here forever so we could stay up here for a very long time so we're starting to see the energy trade really catch on here now higher for longer with these names usually means that they continue to do exceptionally well for a long period of time so when you're looking at something like exxon that's been in this trading range forever and bouncing around you can see now that you came all the way back down to this 134 and now you're back to 174 as they come across you've never been here so now we have names like exxon hitting all-time highs if you take a look at chevron all-time highs all these integrated energy companies are all setting up to break out and this kind of flies in the confluence of what we've been talking about you know we're constantly trading tech and in and out of tech but for me looking at this this could be setting up for an entirely different life you could be setting up for another leg and energy here that was paul tudor jones that came out today and said that oil price is where they are right now by the time that this is done they could be 20 to 25 dollars higher now you could always come out and go good news we have world peace for the fourth time and that can happen sure but here's the thing about this when that guy says something you really want to make sure that if you're betting against it you have some belief and some semblance as to why you're betting against it i don't have a good reason for betting against him i can't come up with a good reason why we're going to see oil prices drop i see no sign of this going anywhere so maybe there's going to be some type of deal or try to be a deal coming out ahead of midterms but it does not look likely far from it matter of fact you see more ships being attacked etc the rsi came right down to the 50 on crude now we're crossing back over and we're starting to break this little downward trend here and we're starting to lift and start to push higher so if someone said to me which way is oil going barring some massive like peace deal it seems to me like we're going to take that out like we're going to grind higher how much i don't know but i do think the names that are going to benefit the most now start getting into the integrated names and the reason i think that is because the longer you stay here the more they benefit they spend they just benefit from it and i think we're going to see that on earnings i think that's what we're setting up for here and i know this is a little different than us looking at tech but and we went through tech and i want to go through a couple key things here that i think are very important it's very hard if i clean this off for a minute it's very hard to look at that sector right now if it's not semiconductors and we go back to our bar here which was we'll refer to this as the open ai bar so just remember that bar is the open ai bar and i'm going to click off this again and there's a reason why i want to do this so if we look at this if this wasn't semiconductors and someone looked at this and said you know i can get rid of the title for a second so we're not even looking at the title and someone said to you oh i'm going to buy this chart you wouldn't be looking at them and saying man that's definitely something i'm going to swing trade you tried to break out you absolutely failed your rsi is rolling over the only thing you truly have going for you is that the 55 here is setting you up in such a way that you held your 55 day moving average and you're trying to get back over the old put wall and the new put wall is still 500 and maybe you do or maybe it's because of one of those events and so one of those events tonight that we're talking about is going to be asml asml broke its 55 today but asml is a leading indicator for the market and the future of the market so tomorrow not only do you have the other events we went through with this super secret anthropic meeting which is common they usually do that they'll do private it's not even a roadshow but they'll do a private meeting to see like hey these are the holes in our speech what do we do then you have cpi and then around 1 30 this evening you're going to get asml and then from there we're going to have a conference call tomorrow around nine o'clock on asml that will tell us what's really going on with the corporation so you have a lot that's going on here but the point that i'm getting at here is that you can't really look at this and say oh it's good we're fine and we've gone through the other breath indicators and things like that and then if i put all this back and i drop it here this was the old put wall which means yeah you might get up to here and then we have to see how we react to that there's the call wall and here's the new put wall so trying to swing tech right now is incredibly hard and i saw a couple people today shorted this in the community and they did exceptionally well with it but really what we did with like names like mdb is it looks like you're about ready to break out it gets back to the previous close and they can't get out fast enough to the point where after it's up it dumps like thirty dollars sure certain names are starting to hold up better than others but yesterday i walked through what i think is a great way to trade this on the tech side and this is what i went over yesterday and why i think it's so important to just follow from saturday on how we cover through these videos i think they stand on their own but we also connect the dots so i'll give you a great example of this so yesterday we stated hey you really want to watch the put walls and watch what's happening at such put walls and then go from there either those put walls are going to act as resistance or they're going to act as support and you can see this today very clearly and the end of the day i want to be real clear where my head is on the end of the day action it could be short covering where people are just like there's no way in god's name i'm staying short semis going into asml overnight coming into a suck salad i don't want to be short for cpi the majority of people think cpi is coming in line most of the investment banks i'll come in tomorrow and i'll reevaluate and i'll take a look at it but what i really think is significant about this is that the trade and the way that those trades are setting up is really working so if you take a look here let's drop it to the 50 and so we get to the 50. so then when we do this morning and this is from a short-term perspective and that's how i think that you should be looking at this for example last night i went i shorted soxl and i had a great trade on it would i be short xsoxl in huge size like i was no because of what we're going into there's no way i would do that now because of what you're doing so when it pulled back you're trimming and then you're moving the stop either to another level or whatever you're or break even but if you're trying to stay in it you have to take money out ahead of events like this because you don't know what's going to happen you have an estimate on cpi but you just you really don't know and you know asml raised prices so how bad could their bookings really be if you take a look at mu here but this was perfect comes down and so your target becomes the put wall because you know that the option market makers are going to try to get you to that level and because they don't really want to pay on the puts they want to take that money and put it back in their pocket and that's exactly what they did in here here watch [00:21:57] Speaker 2: this play out live you haven't made one over so there's nothing to do there until you can start doing that and then maybe it's worth trying here we know that gonna be it oh micron i think you can get to the footwell the minute that they reverse i'll just kick them there we go trim some of the mu up two if i start undercutting here then i'll kick it up six seven all right cool you're going to get through the pool you are yay up 10 trimmed yep great trimmed mu and now i have a runner and the runner is at break even so there's your put wall yeah we're not screwing with this out 100 micron [00:22:29] Speaker 1: let's trade next and what's so fascinating about that is then if you look for the rest of the day was that the right move unless you're going to come in and say no i'm going to go under my cost and just you know jesus take the wheel which is not really a strategy right and so then at the end of the day yeah you get this move but that trade was there the same exact setup is on the other side here and a lot of people did this one i didn't do this because i had a bunch of stuff on today that i went to trade but that was your put wall right here here was your put wall on sandisk you opened right to it 1400 that was your bottom take a look at stx your put wall was 700 this morning and this is when c who is it cx mt said we're me too we're going to do this too and you opened right at it and then you never looked back and then you were up 50 but the majority of these moves are happening within an hour and then you're you know whether you're staying there you're not staying there it's up to you so knowing where those key levels are not all put walls are created the same depends how you want to calculate them for yourselves they usually get pretty close they're pretty similar but they're not exact and i would say that you know understanding where these levels are right now in a trading market is significantly important we had something like i came in short nbis and really what i did was i'm like all right they moved the put wall to 200 and we had puts on this and we did really well with this trade and then once it starts taking out the highs i'm like well they're through the put wall we're here you know we paid five for them i think they were eight and a half or nine it's time to go and so when you start to see that kind of stuff it's really kind of it's kind of interesting to me but i would certainly be well aware of those levels tomorrow when you're coming in and we'll go over a bunch of them publicly pre-market as well and i think that's pretty significant and the other thing that i would just touch base with here that i think kind of was not great was that these earnings with jp morgan they were not good i've seen good before this is not what good looks like and you can see this with goldman as well that came in city was bad so i'm not surprised by this but city was not ideal goldman's was fantastic goldman beat by 30 but no one seemed to care everybody just wanted out of the financials and that's exactly what they did the question is what do they do tomorrow i on the tech side i think you have to be looking at this and be using some of the same techniques i just went over with you and watching some of these core levels i think that's the way to go about it that's what i'm going to do you should do what you're comfortable with that's it