You Have Never Seen This Before... (SP500, Nasdaq, CSI 300)

[00:00:00] Speaker 1: The Chinese stock market has been in decline for the last 10 weeks, making it the largest on record. But it's not just there that we're seeing new history being made. Even Nvidia isn't safe from the bonds market right now with credit default swaps expanding to new highs over the last week. So what could this be telling us about AI and the movement forward when it comes to inflation and concerns over the K-shaped economy? In today's video, we need to unpack a lot together. So don't go anywhere, let's take a look at it all right now. Well, welcome back. It's great to have you here. And today we have a lot to discuss, including the latest in macro, Wall Street flows, and of course, some very important information. It was an okay day for tech as it rebounded off those lows, but let's get into the bad, the ugly kind of components, then look at the good a little bit later on. Hi, my name's Thomas. If it's your first time here, remember to subscribe and smash that bell icon. I've been in markets for over 17 years on both the institutional side and retail side. And on this channel, we do things a little bit differently. We look at the price action, the data, and the flows, breaking down the daily occurrences of what Wall Street tends to do, which is trap our psychology. Speaking of which, let's take a look at what the bonds market is doing versus the stock market. Remember, we liken the bonds market a little bit to the canary in the coal mine. And if you're unfair, if you don't really that familiar with that story, basically, they used to send canaries down to test air quality in the coal mines or mines before going down in terms of mining and testing the area. If the canaries weren't chirping and didn't come back up, well, they didn't go down and wasn't safe to do so. If they did, I'm damn well hoping they did feed those birds and give them a very good dinner because, yeah, they were doing the hard work, weren't they? Now, let's take a look here at NVIDIA versus AVGO because there are signs of canaries potentially appearing in the bonds market, often considered risk and time versus, of course, the stock market, which is basically FOMO, fear, and a whole bunch of emotions. Remember, stock market players always think they can get out early. Bonds market, guys, it's all about managing the risk. And you'll notice here that risk is starting to increase for NVIDIA as we see a series of higher highs and higher lows and breakouts in October as with Broadcom. And this seems to be accelerating over the last week when it comes to those big decisions or big kind of releases happening when it comes to CoreWeave and, of course, Anthropik, which we discussed in the previous video. Another sign of maybe a bit of a slowdown here is China, 10 weeks in a row down. According to bar chart here, that is the biggest in history and the longest losing streak. And the thing is, it just accelerated over the last week. Now, could this be capitulation? Are we going to move to maybe some mean reversion? I wouldn't be surprised to see it outside of its Bollinger at this point. Maybe we'll take a look at that later on today's video. Let's now take a look, though, at the NASDAQ composite because 1989 is now the most correlated. And if you remember back, we talked about the S&P being most correlated to a 70s period. And what did that show, you know, maybe four or five months ago? A kangaroo-style market. Now, why is that important? Well, that's exactly what we've had. We've had a market that's gone up, down, up, down, up, down, up, down. And although a lot of things are happening, not much seems to be happening on the index. So yes, it hit an all-time high, but really most of the gains were in sectors. And that's what we talk about here on the channel. We break down those sectors and we look at Wall Street moving through defensives into growth, into value, and that huge rotation that they always do every year into different areas. Now, if we are following 1989, you can see here Blue Kurdic has some interesting data because that would mean we continue to go kangaroo potentially into 2027, and then we might see a bit more of a fall-off. And this is a pretty big deal because, of course, this would mean that we're going from like kind of like a plus 20 down to a negative 10. Yeah, that would be kind of nasty. And, of course, it brings up some interesting questions as we go further into this earnings season. And yes, we are in earnings season. If you weren't aware of that, then definitely subscribe to the channel. Subscribe anyway, guys. But, of course, this is a big time because we're kicking off big tech in less than 24 hours. We've got, of course, Netflix. Then we have Meta, and we also have Tesla this week. So many questions being asked about can we continue to have good earnings? And Duality Research here has an interesting chart. He's actually said since May, money has actually been dripping out of the market as we're getting kind of this, you know, slowly going kangaroo style. And this, for a bear anyway, they're going to look at this and say, oh, I told you, I think they're selling. And look, there's valid reasons behind this. You'll notice they track each other pretty well. But at the moment, it's been a series of lower highs in terms of overall money coming in from the big players and higher highs from the stock market itself. Who is correct? Well, ultimately, we'll find out. But at the same time, just good to keep the back pocket and have in light of earnings. Remember, if we do have bad earnings, possibly the market could reprice itself. And this is why you see it here on this chart, again, from Duality, which basically shows the earnings rollover. The market's not dumb, guys. It expects that current growth projections are going to drop off. That is, we can't grow at the rate that we've just been growing at. We have to slow down. That's just the nature of things. However, they're still pricing in some pretty damn good growth. And we actually haven't really seen the projections top out yet. Remember, we're looking at earnings and we often say earnings, earnings, earnings. Because if they top out, then Wall Street might start to freak out. But have a look here at historical analyst projections. They were totally off. Then they got a little bit more bullish. And then, of course, they've got a lot more bullish. And this has been reflected in price over the year. Remember the semiconductors? Great earnings, yet they all fell in June, July, August. Why? Well, the markets ran ahead of themselves because they all started to realize, oh, maybe we've hit a peak here in terms of their growth expansion. Such an important point. And we'll have to keep watching that. We also need to be looking at the billions of dollars that are being invested. Now, according to Coin Bureau here, we're still on the increase. And this is in line with, of course, charts we've seen from top down and other places because, of course, the CapEx spend continues to rise. And that puts us in an inflationary economy where we've also got growth or, of course, GDP increasing. Now, if we stop, lose, or if we lose AI data centers, guys, this becomes a big concern because you're probably aware by now we all are that effectively this market is driven by AI. Speaking of AI, some of the smaller companies in the world are starting to struggle due to inflation. We see this in triple Cs. And although this is not the overall percentage rate, just get an idea here of how the triple C bonds are totally disconnecting from the general high yield junk. I'll update this chart with a bit more history in it in the next couple of videos. But you'll notice in the past, usually you see triple Cs junk kind of come along with each other. At the moment, what's been happening is we've got this little increase in junk bonds and a massive increase of the junk of the junk. So that is basically the lower grade debts. When it comes to semiconductors, this is the story everyone's talking about. Decline for eight consecutive days kind of went nine, then it bounced the last 24 hours, but it wasn't even that strong, was it? To stop a freight train often takes market structure. It's a bit of a saying here on the channel that we all talk about together. And at this point, it's probably no surprise. If you look at the five day average after seeing this many days down, well, only 33% of the time the markets were up and really only one of those it was up that much. 6.6% here back in 2010. Not many data points, but still, you know, I fall off like this. It's going to hit headlines. Everyone's going to try to rally it. And you can even see that in the flows. I think in our last video, we saw record flows on Soxel. Has it really rebounded that well? Maybe not yet. This is a little bit outdated in terms of it's about 24 hours ago. But again, energy stocks were in the lead. Utilities. I just want to show everyone this again because it really shows that last week it was driven by defensives and inflation. And it was really a risk-off environment in terms of tech. So that's why everyone's focused so much in on the price action and particularly these earnings this week. So Netflix, SpaceX, most anticipated earnings, guys. October the 19th. Of course, this was set up, but we are all about Tuesday. This is going to be the 20th and it's going to be after the close here from earnings whispers. The most important part is what are we going to see in terms of options? Because if we do see Netflix give what the market thinks it's going to do, it could be plus or minus 9.5%. Meta, wow, 6.9 expected. Tesla, 7.6. These are huge moves because these are hundreds of billions of dollars of movements when it comes to market cap. But it's more the overall sentiment. So far, earning season I think is holding up. So we've got here so far basically the airlines, they looked okay, although costs are starting to bite. And then of course, the financials, they looked okay unless you look at home loans and credit card debts because delinquencies are up and we need to talk about that next time. Auto delinquencies are up as well. We're actually starting to really see a pressure here on that K economy. Unfortunately, a lot of us struggling down here and a lot of really, you know, top end, top end, top ends. They're sitting there going, wow, I get more of my bank. Fantastic. How good is this? And that is that K wave. 10% doing well, 90% not so good. The ADK level for Bitcoin now. Now, Bitcoin's held up remarkably well actually, but at the moment, it's still holding that node at 80. We'll take a look at the charts, but this one here from Glassnode really just shows that bid from last week. And do remember, if you're a fan of the four-year halving cycle, it probably makes sense that it's still kind of chopping around down here because that's what happened and actually took usually to around 950 to 1,000 days, of which we're getting closer to before we saw really that next major rally from the crypto market. Before we go any further into the charts and all of the key levels, just a reminder, if you haven't done so already, come along to one of our live training sessions. They're completely free to attend and there are links in the description down below to do it. It's 20 minutes. And of course, we do have a little Q&A area at the back as well. It's great to see you guys there. Also great to share a couple of tips and tricks that we've picked up over the years. The next one will be hosted by Ty. So if you're interested in checking it out, make sure to do so. Let's have a look here at SK Hynix. Now, this was the poster child of the markets only back in June. And it became the, of course, crash of the markets. Then we got a rally. Then we've sold off 20%. And look, today at the time of this recording, you can actually see Hynix is still struggling. Down another 3.68, making a new low there at the previous support. So critical level here for one of the most important stocks in the world. We'll be continuing to watch that because if it keeps falling, well, it doesn't bode well for the rest of the semiconductor market or really the backbone of the US, the tech industry. Let's now take a look at what's going on with the Bofa high yield spread. It continues to go up. And this is telling us that there's a real risk here in markets from that perspective. So of course, there are some risks starting to appear and we have to pay attention to that. The move index though, in terms of option volatility in the bonds market, that hasn't spiked out too much yet. So kind of like the calm before the storm, the canaries there, there are risks, but no one really seems to care enough. And I think that's really probably exemplified by the Magnificent Seven. High, low, higher high, equal low. The market's still actually holding up in terms of higher highs and higher lows for now. So in technical terms, I guess that looks a little bit bullish and it's hard to sell a market off when a huge component of it is the Magnificent Seven. It's not going to really push it around. Hence why you end up getting a kangaroo style market. Semiconductors were still, I think, quite weak down. Oh, they're only 1.61%. So of course, we didn't really see a huge rebound, but makes sense around the support area. And as you'll note here, with the Korean market, which is down 3% today, it's still sitting around support. So we often have that, we need to have patience. We need to react and not predict. So at the moment, look, could you say that's a good support? Wow, yesterday you're probably celebrating how great's this. Yeah, of course. But the problem is, is it fell off a cliff. So we often have a saying that it needs to create structure. So I don't think it's any surprise that it's kangarooing all over this price right now and moving around. XLK is still sitting around the most traded zone. So again, cross-correlation starting to come in with the NASDAQ as well. And when we go over here to the US three-year yields, you'll notice that they bounced off. Now, why is that important? Well, they're all bouncing off a little bit of support. So it doesn't really matter whether you're looking at the three-year, whether you're looking at a US 10Y. A lot of these markets kind of coming down to some levels that are critical. So the 10Y got towards 5% and the all-important 2Y, which a lot of people have been looking at, it rejected and sitting around this kind of previous little bit of demand. Let's move over to the dollar index now. So the thing with the dollar index is that it came down to this 101.50. It bounced off that area. It's failed to make a new high. And at the moment, there's a real struggle between the bulls and the bears. I said in the last video, maybe go check the euro out, the US dollar, because it had an interesting node on it. But at this point, the dollar index is really at a decision. And the reason why you say that is because look at these weekly closures. They were quite strong. It made it above 101.80. And it's still technically in an upward trend, but it did lose its all-important four hours. So it might need to consolidate a little bit here as the markets digest risk. Treasuries were down because we saw yields up. And yeah, I mean, they're still in a technical decline if you're looking at higher timeframes. Smaller timeframes, basically just trying to get towards the mean. Now let's have a look here at Netflix. We've got an earnings result coming. And where is the market? Well, it's still near those lows. So Netflix has been a pretty horrible stock for quite some time. Some people think that it might be on the improve, but I always go with, again, patience is the key. And with a market that's going to be that volatile, there's some significant trend change stuff that could happen down here on Netflix. What about SpaceX? I thought I'd update just the options here on SpaceX. A couple of sessions where it's found some spikes sitting around the put support. The real put support sits at 135 in terms of all expirations. And of course, it is currently in consolidation structure in that most traded area. So again, markets like to sit at these points just before big bits of news. The Russell 2000 kind of looks like the Chinese market in some ways. Massive fall off here in the Russell market. And other than the weekly 50, you can't really love this level because a lot of people are saying, well, could we go down to like a 243? Could we go down to a monthly mean reversion? Something like a 260? I mean, it's a pretty weak looking market at this stage. You can see the monthly have that horrible shooting star on it. And this is kind of a sign of the times. Wall Street is going after quality more than it is after just the broad market at this stage. And I think the reason is probably this. You think about tanker shipping, it's been absolutely exponential. And of course, that's because, well, we've got energy prices quite high. New high over the last 24 hours, it rejected those highs, but still higher highs, higher lows. And you can see here, CRAK, that's still been overall quite bullish, as in it's been moving towards the higher highs and higher lows. So really, the higher this is, I guess, the higher the pump price ultimately is. I did notice that the UK oil market still continues to push this kind of 110 and such a critical big resistance. But then I just saw while I was recording here that if we put in US oil, it's actually dropped off about 4%. I know it hasn't. It's actually just not updated properly. So there you go. Didn't drop off 4%. It was just the update. I was thinking, damn, that's a pretty big move. But you can see here, higher highs and higher lows, guys. And that proves it's not an AI video, by the way, because we're doing it on the fly here. And as you can see, US oil is still making higher highs and higher lows. So is this kind of a good sign? Well, not really. If you're not a fan of inflation, you wouldn't want to see this thing up. Generally, oil is the closest correlation to inflation, along with copper increasing in price. And if we take a look at copper price here, it's really just been stagnating recently, but it has been still holding up. Let's have a look at that Chinese market. So we can tell you 10 weeks down in a row, you might think that's up, but it was gapped down. So that's the problem there. But this is a really bad decline. And whenever you see kind of like extreme moves, you're always asking yourself, well, have we hit like a technical support, like maybe a 4,000, a psychological level, or this 3850 area. And I always like to put in things like Bollinger Bands as well and take a look at prices, because pretty much if you've got these really large candles, you're often expanding out past two standard deviations. And although markets can stay, you know, oversold for a while, you can see here, often when you push the weekly standard deviations here, the second standard deviation, then you sometimes get like a bit of what they call like a dead cat bounce reprieve. Now, I don't know that's going to happen. Of course, you don't either. But it's something similar to what we bought up in Treasuries. So like anything, it's always good to see things time and time and time again. So I thought I'd bring it up for you guys and I just show you that. It's a pretty tough market though in China at the moment. A lot of companies just not getting the investment and a lot of money is just going into the US. So we've seen huge amounts of money fleeing many different indices around the world and going towards the US. Gold spot still sitting in the tight range above 460 and below 4,225. So both these levels extremely critical when it comes to gold and silver still holding above the 5,560, but it's in still a lower lows and lower highs. So it's technically in a downward trend on many timeframes. When we look at the queues, well, not much to update here really. Put supports all over 700. Markets staying literally on the most traded areas and not much really changing there. When we have a look at SPY, something similar sitting around most traded, it rallied, it dumped, it sat pretty much flat. And whenever you've got, again, markets that are sitting in these areas, they're waiting for a big decision point. Could that be earnings? It certainly could be. And that's why each and every earnings will count. If Wall Street says, oh, I think that's the top of earnings, then all of a sudden you've got risk on, risk off straight away, pretty much. You've got Wall Street freaking out all over the place. Ibit, yep, you've got here a sideways market. And then of course, if we go to Bitcoin, we've got a market that's remaining pretty resilient. Let's go to the four hour here for a second. Then you'll notice that we have a low, a high and a lower low. There'll be a structure in here. And if we get past 84,000, could that bring in like positive gamma inside of things like Ibit? That is that basically the options markets go positive. We saw BlackRock come out with like a new ETF in crypto, well, at least plans for one. Over the last 24 hours, they're trying to get rid of some of the risk for traditional investors in crypto markets. It's kind of funny how ETFs in some ways ruined the crypto markets when you think about it, but they've got a new one. We've got home builder confidence, of course, falling to its lowest level since June, 2012. And we also have, of course, these credit default swaps. But at the moment, the markets still hold up with the Magnificent Seven. So it's like always, there are different sectors, there are different areas. It seems like energy still remains pretty, you know, higher, high, higher, low on both the spot prices. And of course, the stock prices and the metals markets, well, they're kind of going sideways. But it's really about a question of tech. You know, are we seeing a weakness in Anthropic, OpenAI, the data center build out? I've heard there's reports on some stuff with Amazon as well. We'll maybe bring that up in the next video. So make sure to subscribe. But guys, there's so much going on. If you're interested in finding out a little bit more about keeping up to date with that, remember, we've got charts, we've got one story, one market lesson in the weekly newsletter, new one dropping soon. So make sure to sub down below in the description as well for that and attend that live session moving forward. It's a wonderful world in markets, guys. There's a lot of complications. There's always something new to learn. So let's do it together. Catch you for now.