Market Breakout & Volatility Analysis — Full Breakdown & Transcript

[00:02] is getting grimmer by the moment for the Bears. Um, the pent-up energy that I was talking about yesterday has been released. This range we've been trapped in on the spider for months

[00:16] is not a range anymore. It is support. And we have blasted above it. This is the biggest greenest bar in very long time, maybe even back to April. And we're up over 2% on the spider.

[00:31] We're up quadruple digits on the YM, quadruple digits on the NQ. So, it is a very, very green day. And it's not because there's any news you can point to and say well like well, the the deal's been signed and ratified

[00:46] by Earth for peace. Nothing like that. It's just positivity and as some people are calling it the Leopold low from last week after that massive washout of Mr. O'Shaughnessy's formerly $45 billion hedge fund.

[01:02] So, at this point it is the bulls market At some point we'll get some selling, of course. And the only test is going to be course. And the only test is going to be will prices stay above that range. The

[01:16] happen would be if we slumped right back into it and that would take some pretty into it and that would take some pretty serious selling. So, bulls are fully, fully in control again after um we bottomed Wednesday at the close and

[01:30] they haven't looked back since. Thursday, Friday, yesterday, today, all blasting higher. Today in particular. Uh, here's the diamond, lifetime high. That's a pair of words you're going to hear a lot with the market

[01:43] today. Uh, the Dow had the only little bitty bearish thing about this, or at least not bullish thing, is that trend line. That trend line dates back to the um

[01:57] to the um to the late March the March 30 bottom and we broke it here and didn't really fall that much but over the past four days we've gone roaring higher and have recaptured that

[02:11] trend line but we're right at the trend line now at lifetime highs. necessarily but we would need to see some follow through tomorrow to cement this as a as a new Dow rally. Small caps by IWM is very very close to

[02:27] its own lifetime high. We have in the span of two days undone weeks of selling and it had been just ever so slowly easing its way down and it actually on Friday

[02:43] and this is surprising but on Friday it was the lowest it's been in all those weeks and then yesterday and today undid all of that. as I've said the reason I'm not weeping onto my keyboard right now is

[02:58] because I've been lightening up persistently. I actually got as light as um early early today just almost nothing. It is it's hard to stay interested frankly with with so little in the way

[03:12] positions in it. Um I like to keep like half a toe in the water at least but I have been slowly building my way back into positions but absolutely nothing in the neighborhood of aggressive. I've gone from 14% to 50.

[03:29] Uh and that that that was built up about 10 minutes ago because prices are very high and there are certain securities that seem appealing on the short side again but here again

[03:41] 50% as opposed to five times that much a couple of weeks back. Um I had real misgivings last week about covering so much but that funny feeling I was getting the uh I I guess that's what it was all about

[03:56] it was done. I don't think, and I've written about this before, between now and the and the midterms, I don't think there's any um unless something outrageous happens geopolitically of a meaningful sell-off.

[04:11] geopolitically of a meaningful sell-off. After the midterms and definitely after uh new Congress is sworn in, I think sure. We we it is now, they're going to move heaven and earth

[04:24] and suspend this war as many times as they can uh to keep things propped up. And it has worked beautifully so far. Um so, we got to take a little opportunities as they come along, and they don't last that long, either.

[04:37] China FXI is amazingly actually down uh about half a percent right now. As I've said, uh this is my largest options position. uh this is my largest options position. These are March 2027 $37 puts.

[04:52] These are March 2027 $37 puts. And I uh I've shown the the whole chart before, so I won't bother you with that again. But in my estimation, this tremendous [clears throat] ascent we had uh should start unwinding,

[05:05] and I've got lots of time for it to unwind. Um almost 9 months. So, so far, so good. It's it's uh The fact it's down today at all is sort of a miracle considering the uh just

[05:19] unabashed um blast higher we're seeing across the board with the US stocks. across the board with the US stocks. Uh I made mention this morning that it's often more reliable and truthful to look at a financial chart than it is to try

[05:32] to read the news because it's it's impossible to know what really really really is going on with the Iran situation. you can easily find sources to convince you of any point of view.

[05:45] you of any point of view. Um but the crude oil markets don't play that game. They they're going to tease out the truth faster than anybody else. And given the fact that we're falling again on this,

[05:57] uh, indicates to me that the prospect of a lasting peace deal is, uh, pretty Um, we have a right triangle pattern here, which was briefly pierced, measured literally in hours, but that was

[06:12] repelled. And after that repulsion, of course, um, the, uh, suspension of hostilities began, and now. So, maybe this is actually going to

[06:25] happen. As I said again and again, I really want it to because it is just it really want it to because it is just it is it has dropped a thick layer of fog onto the market, when you never know what you're going to wake up to. On

[06:37] again, off again with this war. So, crude oil seems to be thinking that, uh, a lasting deal is on the way. Um, the other item in that regard is volatility, which has been crunched down to a pretty much the

[06:51] lowest levels it gets to in this environment. Um, the range of the VIX is roughly 15-ish to 30-ish. And on occasion, it'll get above that.

[07:05] Um, like when the war first broke out. But as you can see with the VIX futures, we we've ground our way down to, um, complete complacency again at this point. Um, [clears throat] so if something crazy does happen, um,

[07:19] this is the kind of, uh, situation which will see the VIX just reaccelerate higher and cycle higher. And historically, August and September are time periods where the VIX goes up. That is a clear seasonal trend. August,

[07:33] September, and somewhat into October, um, very strong tendency for volatility to increase. And a very strong, uh, likelihood that VIX is really low early in August as it is right now.

[07:46] So, hopefully we'll see some life breathed back into this poor thing soon. Um generally speaking though, the clarity, the cleanness of the the clarity, the cleanness of the patterns has been laid waste. Um as of

[08:01] even Friday, things were still pretty clean. Yesterday kind of mucked that up and today just completely up ends the uh the cleanness of a lot of these charts. I've left here as a historical relic the uh

[08:17] the rectangle that represented the top. We are way into that now. And this is neither bullish nor bearish. I mean, it's bullish the past couple days obviously, but from a predictive standpoint, it's just a mess again.

[08:30] Um it's much more bullish with the likes of say the spider, which is clearly, as I said at the top of the show, released higher, but with something like this, it's it's

[08:42] >> [clears throat] >> Um part of that murk has been created by the power of the Mag 7 stocks. Um you can see here Amazon. Its lift over the past few days has been astonishing, especially what followed

[08:57] after Thursday's earnings. Microsoft, four giant green bars, >> [clears throat] >> by the Wednesday afternoon. Um and

[09:09] keeping in mind that Wednesday at the close just before Microsoft and Apple um I'm sorry, Microsoft and uh Meta introduced their earnings. Um uh things were bottoming out, but the the

[09:22] Microsoft positive earnings report was a big element of reversing all of that. Um in South Korea, another lift here, almost 8%. We've still got kind of a top going. This is a pretty meaningful amount of overhead

[09:34] Um I'm not trading that myself. I do still have my uh uh and as I mentioned my options are all January and in one case March. The only only only exception case March. The only only only exception is SMH. These are October puts. And SMH

[09:49] has been strong the past couple of days. And we'll see. If this is if this just gives me something higher, forget about it. Um, as I said this morning, I've been more active um not losing money lately than making

[10:04] money. Uh and for example, um I'll repeat the examples I gave this morning. Palantir. I was short Palantir coming into yesterday. I got out. I covered at a profit big enough

[10:17] probably for a nice latte. Uh but I got out and good thing too cuz we're up almost 30% uh on Palantir. Uh I also and I think I mentioned this in my show yesterday, got out of my Caterpillar puts. Now

[10:31] out of my Caterpillar puts. Now interestingly, we opened pretty much at that trend line and it is a long-term trend line. This goes way back to about a year and a half. So we opened strong and we are still up, but we lost

[10:45] a chunk of that pop. So that's kind of interesting from a charting perspective if that trend line repelled that thing and if it just tumbles down from there socks off with a triple-digit rise when they opened.

[10:58] Um, over in the hyper-scaling land though, uh there's a lot of big gains today. Some even highs 20 30%. Um, in some [clears throat] cases the patterns are still clear and others it's just ruined. Uh Coreweave for example,

[11:11] this is still not a bad pattern. Uh it has exploded over the past 5 days, but it's right at the bottom of that um topping pattern. So Coreweave got just trampled uh as you can see in the series of lower highs. And so this isn't

[11:27] there there that are decent um in spite of these these monstrous um in spite of these these monstrous blasts, uh, its competitor Nevius, um, not so much. Uh, this is and and and it pushed into this pattern earlier anyway.

[11:42] We are Let's just lay down line real quick here. We have come up to a area of resistance by way of this exhaustion point here and here and here. But the pattern as a whole isn't as clear because we're deep into um, this

[11:56] rectangle that I've drawn. And Dr. Jim this morning was mentioning Oracle, um, and he was noting the rise we'd seen there. And this is even when it was, uh, Oracle would be something I would not touch because it had just basically done

[12:10] nothing but sell off for almost measured in months actually. I mean, just like wipeout. So, it kind of had nowhere to go but up. think Oracle will be especially weak because there's a reason that it just

[12:25] got blasted like this. There's a very very serious trouble going on. But with everyone buying everything with a ticker symbol right now, something as cheap pop. Um,

[12:37] in this very green day, I have a smattering of, uh, red on the screen. Um, one area that I'm sure that's still doing okay on a day like this, uh, is related to healthcare. Uh, Humana is

[12:49] one, H U M. This is down about 3 and 1/2%. And the other one relatedly is United Healthcare. It's down about 1 and 1/2%. So, as you can see those two don't know if they're down just cuz they're not tech and everyone's all the

[13:03] money sloshing somewhere else, but I'll take it, you know. Any red today is Um, I would also make mention going back to the theme of not losing money, Meta got just blasted last week after

[13:17] their earnings. And as I stated in my show both in the morning and the afternoon, I got out quick quick quick because this was a nice quick profit. And it went up on Wednesday and and I'm sorry this must be yeah Thursday Friday.

[13:30] Friday it went up yesterday it went up huge and today it's barely changed. I think resistance on this is up here we're already into the zone of overhead supply but getting out here you know

[13:48] of positions and this is the right time turned out to be that was the right time dodging a bullet on that one. All right two monster reports coming out in about half an hour let's keep our eyes on them AMD very important this is

[14:02] still range bound like the spider may come just blasting out of this range but as of now it's simply range bound all that's a key report it'll certainly inform SMH's direction and of course the

[14:19] one everybody's going to be watching and listening for space X two green bars in a row a welcome change we're up nicely now we were up about 10% earlier but up about 9% now I have no opinion on the direction of

[14:33] this I can only say this is going to have an enormous outsized psychological effect on the rest of the market particularly the big IPOs that people want to see in the next year anthropic and open AI so

[14:46] fingers crossed we'll see how that goes should be interesting no matter what all right see you guys tomorrow hope you're doing all right good night.