Raw Transcript
We need to talk about the dollar and exactly what's going on and why it's actually wreaking havoc by going up. This is really important and we're going to dive into this really slow and then I'm going to get pretty in depth, but it's going to explain a lot why some sectors are going up and why others are absolutely cratering. Now, we can all see the rounding on what's happening here with the S&P and it's not rocket science, but we can all see how this is rounding out and we're still hitting the same areas over and over again, but slowly, you see how they're starting to deteriorate us? that deterioration is going to align perfectly with something. Very quickly, 27.5% of you do not subscribe to this channel. Please click subscribe, all notifications. I purposely do not run ads on here. And all these videos are linked. Let's get back to it. Now, as I was saying, we can all see the rounding here on the S&P. Now, if we go and take a look at the NDX on the same thing, we're going to see this peak right around here on the 28th. And we can all see it, right? We can all see that peak and the higher peak from here. All right. Once you understand those peaks and then we're going to overlay something and then we're going to tie this all together so that you can understand. I'm going to dive into this deeper on Saturday. But in order for you to kind of get position on why the heck does this keep happening and then rallying back into the end of the day. It's because it's not a bet on what's going to happen with the individual names. It's a bet on the dollar. It's also a bet on the fact that they're derisking. They have to unwind their trades. That's why things are happening. It's got more to do with the macro leg of the stool than the technical or fundamental leg of the stool. For example, if we put on the NDX here and then we just do the simple things. We're going to drop on the dollar and we're going to drop on the S&P. And then what we're going to do is we're going to leave them. Actually, you know what? We're not going to do it that way. What we're going to do is we're going to have to put them on separate ones. Now, we're just going to move to new pane above. And then we'll go to this one as well. And we'll go to move to new pane above. I like leaving them on because people will actually message me and say, "How do you know that? How did you know how to do that?" So, what you're going to see here is that date right here is where the dollar was the lowest value. And then if you go and take a look there from January 28th on and you'll see those levels. Now, this is where it gets crazy. You know this historically, you know this that if the dollar does this that you might get a strong dollar, you might start seeing these roll over. Why? Because they have to unwind the other trade. So, what I mean by that is, let's clean all this off. So, they have to unwind the other trade. So if you if you have the dollar here and everything that you're doing, right, is short the dollar. So winning liberation, yay. So all the trades you're putting on are short dollar trades. Meaning you're looking at what you want to buy and you're buying things predicated upon what? Shorting the dollar. That's why you're doing those trades. Meaning, well, why would I buy emerging markets now? Well, you wouldn't because the currency exchange. So, in other words, if the dollar is going down and the other currency is going up, that just for example, like let's take South Korea. If the dollar is going down and the one's going up or the one's even staying flat, even if this is the South Korean stock market, and you're flat, you're still making money when you convert back into the dollar. Where you start to lose it is when the dollar starts to rally. So, if we go back to this date, which happens to be January 27th, and we look at things like EWY, and we're going, "All right, well, here's February 26th. Why does it take so long?" Well, it took so long because you finally got a catalyst to actually shake you out of the trade. Meaning, you could have a portion of the trade that's going to be affected by this. But then as this part of the trade exacerbates, they have to start unwinding more and more of the trade. It's what I refer to as degrossing or de-risking. And I know some of this stuff gets a little in in over people's heads, but it's really important to get the concepts because this is actually what's happening. It's not, oh, AI is gonna crash and what? No, that's got nothing to do with it. SanDisk is not down today because people are buying less chips. SanDisk is down today. And if you notice where it peaked, it's right around where? Right around where the dollar hit hit a bottom. But SanDisk is down because they are getting out of these trades. They are derisking from the long semis and they are getting out of what the IGV shorts. So the bit the best trade of the year was IGV. Well, it was socks long, IGB short. So, that trade worked. And then if you come back to this area to where? Right around February 24th. Well, if you overlay February 24th and then if you put something in like EWY and align it up with it right around the 26th. So, as they're going through their trades, they unwind what they can, not what they want to. There's a huge differentiation there. So, as this unwind continues, what will start to happen is you'll start seeing the VIX, and people won't be able to figure this out. They'll be like, "The VIX isn't running. So therefore, we're bottoming. Therefore, I have to get in." The problem with something like this is if you go back through time and I'll get rid of 24 and we'll go through 22 in this whole area. You remember all in here when when when we had everything and and you had, you know, NFTTS, uh, JPEGs were called NFTs and all that stuff. Everybody was super smart. One guy bought a JPEG for like $80 million and said, "We didn't understand." We understood. He didn't. So, if you take a look at where you peaked in like March and see where the VIX is, April and how September and how you keep dropping. Well, if you go and take a look, let's just do the NDX because it'll be cleaner and you'll get this. And I like doing these unedited like this, but if you go through here and goes March, May, June, July, October, so you start seeing it drop, but it never really peaked. Like, you never had that huge peak in it where you had like, oh no, this is it. This is definitely it. Right? you just kind of wamp wamp and then all of a sudden it's like no no that's it we're done and everyone's waiting well shouldn't we like spike up and that's going to be the bottom and no we never could get over these highs. No, you're unwinding the trade. So as they're unwinding the trade you're going to get these spikes and these spikes that you're seeing this one in particular is just really them unwinding the trade. So what is going to be able to put the trade back on or how are they going to put this trade back on? The simple part of this is that you're going to need the dollar to get weaker. And I'm not sure the dollar is going to get weaker considering what's going on. And it doesn't look like that's going to end anytime soon. I was hoping that we're going to see more clarity on this and it was going to end sooner, not later with what's going on in Iran. It's it doesn't look that way. You know, it's funny. You have all these people that are in Dubai and all of a sudden all the influencers are like, "Come to Dubai. Come to Dubai." Now they're all calling daddy to go back to the UK and send them a plane ticket. So all of a sudden you got a huge disruption over there and I don't think that's going away. So here you are with the DXY and the dollar and this is really becoming your nemesis in the market. The strong dollar is throwing everything off. If you look at industrials, industrials are not peaking the same way, but industrials might have a problem because when you have a weak dollar, you sell your product for more because they get more from the currency exchange. These are just little nuances. But the bigger thing here is the one the one constant that led to all this for over a year on the rally has changed drastically and it was the weak weak dollar and it was just people were worried about it and they were able to hedge those bets based upon that. So that is why all of a sudden you're seeing Poland come in or Italy come in or you're watching EWY implode. Now also you have an issue here with the straight and one of the things about the straight and the blockage of the straight is from from a simple basis with like FXI and EWY you have a situation here where they do have their costs going up because if they can't get goods through the straight or oil or things like that where I think you have to realize they're going to come to some kind of agreement and I've been saying this for a couple days and people just aren't getting it. Um, the tankers are telling you that this is probably going to end sooner than later. The way that they're trading, right? They're not trading like they're preparing for the end of the world. But I think what's important about this is to keep a clear head on this. You have a couple different things going on and we'll dive more into it in Saturday's deep dive, but to get through what we'll refer to as Friday and then early next week. I think on a short term and just a general understanding of what is exactly happening here is exactly what you need. For example, when we look at something like this, the XLE, all we're going to see with something like this is that it's just probably going to stay in that range. OIH, if we take a look at this, what do we see happening? Starting to get a little weaker. Why? Well, we were talking thinking about there was going to be all this buildout just like, you know, Iraq. And clearly, there's not going to be anything like that. Um, or it doesn't look that way. So, you're starting to see a little weakness there, but I think it ties back all to watch the dollar. And I do think we're going through that period where you're seeing that dollar really drive the market here. So if we look at individual names, does that mean that SanDisk is dead? No. But I do think you need to look at the technical side of the market. So the very first thing that we would do that we love to do with these names, we're going to get super technical here so that you can see exactly what's going on. If you take a look at the technical side of the market, that SanDisk since you've broken out here, which was right around the the low of the dollar, all you've done is what? Stayed in that range. That's literally you've never you've never broken out of it. You've been in that trading range. If you're not selling in the breakouts and buying supports, you're getting slaughtered in this market. And there's no there's no way to say it. Um, and if you're not locking in trades, you're having bad days. I mean, there's there's really no again, no way to say that. If I'm if I'm looking at this peak from January 30th on something like Micron, it is what it is. Did demand slow down? No. Do I think that this ends? Yeah. I think that the what's going to happen here, I'm going to get a little bit in Saturday's video. I think you're going to unwind all the people that were doing the short dollar trade and they're going to unwind all the EM stuff that they were doing. And I don't know how far down that is. And then you're going to start seeing them come back in the market and buy the names that they really want to buy. And I think that's where this is heading. But when we start to see stuff like MU and you're starting to get 1222 crosses, you don't want to play with this stuff. If you look at AVGO, and I've given a lot of slack on these, a lot of slack to, oh, well, we're in a trading range, so I'm not really paying that much attention to the 55. Well, you know, it goes from myself, too. I might not believe in gravity, but after a while, gravity is going to believe in me. Hits the 55 can't. 55 can't. 55 can't. 55 can't. Like, it's not rocket science. So, when we start to see this, and it's not like it's super weak. You know, I came in long um and did I had a great trade and it actually was long into earnings and then today I tried a couple times just to short it on the way down. Uh and I did okay a couple times, but there's still this bit out there. So, I don't really know that there's a lot more for me to say here with this name. Like, it it just doesn't seem like there's much for me to say or to do with it. So, when I see things like this and we're in this kind of trading range, I'm just going to have to respect the 55 till I can get over it. And I'm not saying there's not going to be pockets like I I'm long some of these names that are breaking out over the 55. I think spot really is falling into and this is I'll give you a quick tip. I would go back through tech names and I would find the tech names that started to break first. First in, first out. Like this was one of the first ones that started to break, right? So, if you start going through these with that kind of thought process, like start looking at the ones that broke and you go back to them, and I'm not saying that they're all going to like run away right away, but something like a Reddit, you start watching A's doing it. The whole IGV space is starting to turn and we've been talking about this and it definitely is, but you're, you know, you're what, 5% away from the 55day moving average. Like, I don't know, what is it, six? I don't know that you're getting through that in the first turn. I don't have a clue. But I do know right now this is the first higher high that you've had. And why does that fit that you're making that first higher high here even though you look at the socks and we're seeing the socks barely hold on to the 55. Now everyone will say, "Well, it did close above it." It did, but you closed above it into the end of the day again. And I really think that's them just stepping off the gas because when you look at the top names like Western Digital and here, let's clean all this off. But we look at the top names like Western Digital, you can see the rolling. You can see the break of the trend lines. So, we're losing the big names and we don't have leadership. If someone's like, "Well, where's the leadership?" Well, who's leading? Well, software is not leading. We were just talking about a month ago that no one was ever going to have a software job again. So, that's not really leading, right? That's not really the driving earnings force of the market. If we look at something even like the micron and we just leave the 55 in and just start going to the body on these looking at the body levels and you start seeing these cracks, you don't have a leader there. STX once it broke, let's clean this off. Once this broke 400 and got out of that control bar and we again when we look at where these control bars are from where the dollar is, it's like look it makes so much more sense when you look at it that way that oh the dollar that was the bottom of the dollar and that was the high of STX. Like it's not a coincidence that it's all fitting that way, right? So what we need to understand is we need the dollar to stabilize. Not run up, not pull back, but stabilize and stability is not something that we've been living with for the past, you know, year and a half. So get used to it. And now we have to watch what happens here and how we're going to hold this area. I think you have a shot at it. I think you have a shot at holding these areas. I think you need to be cognizant of the fact of what's driving the engine so that you can make better decisions. So, instead of saying to yourself, "It's this trade or that trade, and I'll show you I'll show you what you should be taking from this." And I'd watch this again if you didn't get the concept. I'd watch it a couple times because it's such an important concept because when everyone else is saying it's this or it's that, it's not. I'm telling you exactly what it is. And I can show you it on a chart what it is. It's objective and it's very, very clear what it is. And what that means is what's going to happen. I don't know. Do you know what's going to happen with the dollar? Because I don't. And right now if the dollar is being driven because of of safety, right? All of a sudden you have what's going on in Dubai, UAE stock market. I'll show you in a second. But if we look here, that's the macro, right? That's what who when. And then this is where we sit. When you're sitting at the bar, sometimes you lean on macro more. Sometimes you lean on tech more, right? What are you doing right now? Well, you're leaning on macro. The dollar is driving the engine. So when we're looking at something like this, it's not is STX selling something. It's how much was bought against a weak dollar. Did they short this and go long this? They have pair trades on predicated upon a short dollar. And that's what you're saying. And I think that's really important to get. It also is kind of interesting too because if you think about it, semiconductors are capital intensive. So they're long the capital intensive side of the market and they're short the the capital non-intensive side of the market or the capital light side of the market. So I'll explain what I mean by that. So if you go and build a semiconductor, you need stuff, right? You're going to need a machine, an ASML machine cost $400 million. You need things. So that is capital intensive. And so then you would think that okay, well why would why would that matter? Because the goods as the dollar drops and you're overseas with the currency exchange that makes more sense. So in other words, you see names like ASML that were absolutely ripping or whatever. Anything overseas like that. So the capital intensive side of the market is actually been the part that's going up where the software side of the market which has no capital intensity to it whatsoever. It's just it's software, it's body count, right? That's been the short side. And if you really look at this and you go SOXV, I feel like a darn light bulb went on today when I first first started saying this. You know, you start looking at where you're at at the peak and then you overlay something like that with the dollar and you look at where the dollar peaked. Come on, that's awful. And you look at where the dollar peaked here, it starts making sense. Not now. Larry. So, what we want to do is we want to keep our eye on this. I don't like the way this is going. Hold on. Let me do it this way so you can see what I'm talking about. That's the this way. So, you see where we're at? You see the movement? And then all of a sudden, that's it. It's not as clean as I want because it goes back so much further. But you can actually see it as it drops. It just starts leveling off, leveling off, leveling off, and then it just hits. It's pretty fascinating stuff to me, but I think that this is definitely something we need to keep on our radar. So, what do you do about it? Is causation is the cause of something always how they're correlated? No. But it does make sense and I think if we are smart and you know causation or correlation is not always causation they say and it's true but you need to watch this as far as names and what we're seeing out there. I thought AVGO was fantastic. I did I thought it was a fantastic quarter. I don't have anything else that I would say about it but it was just a great quarter o overall. Um I think crowd I said it this week I thought this was a fantastic quarter as well. I think it makes a lot of sense. I think what you want to understand is that they're not really rushing into these names. They're unwinding them and you're starting to see them hit certain levels and then reject. Um I don't know that you just want to blindly under, you know, go with this. But what does this mean to me? They're going to get out of the emerging markets in my opinion and for a while. We'll find out where that bottom is. then we're going to get into the domestic markets again and then they're going to unwind their short in IGV which is exactly what they're doing and they've been doing and I don't think that's going to stop but we have to take that to account. You know, if you just watch the Oracle news, I had a great day trade in this today and I think you have to bob and weave here. But I'll show you one more thing before you go so that you're prepped for it tomorrow. I'm going to go over it tomorrow as well. They dropped off a cliff here um and then it came out that they are laying a bunch of people off and then it just started ripping as soon as they said it. So, I actually bought it in here and then I just stayed with the trade and we did quite well with it. But the important thing about this is I think some of these are going to hold. I do want to show you this cuz I think it was it was pretty much everything today. It's what we used in the room. Um I saw this RSI down here and you have a positive divergence on the RSI where it's lifting and it's lifting and it's lifting and the guys and girls in the room caught it. Um and what bothered me about it was I was waiting for it to break because we couldn't get over the higher highs. But what you're going to see here with the these levels, and I think this is really important. Uh, hold on one second. Let me do it this way on the four. And then we're going to drop this down. I'm going to clean all this off for a second. And then what we're going to do is we're going to go to this level. And I just want to show you this because I think it's important. And so you can see your level right here at that 605 on the 4 hour from the peak. Then we're going to drop to a five minute. You can see how you're using that level. So, you want to make sure and if you're not watching us pre-market when we're live, um if you're not in the community and you don't see this stuff, like just mark off exactly what I did, just go back and watch that exact level because it's everything. And they caught this earlier. I still thought we were going to roll over and test that 600, right? I just have trust issues in general. But I would watch this like a freaking hawk tomorrow. This was pretty much everything. And as soon as you got over it, you did see buying into the end of the day. I do think that unwind that I went over in this video, I don't think a lot of people get it. I think you understanding that gets you ahead of about 99% of the people you're trading against. That's a