Latest / Felix Nikolas Prehn's Podcast / This "rule" only triggers before a tech crash + Stock Market News 16 February 2024

Transcript

This "rule" only triggers before a tech crash + Stock Market News 16 February 2024 · Felix Nikolas Prehn's Podcast

• 0:01
  Speaker 1: Felix here and welcome to this live stream on a particularly exciting morning for us, investors, old bankers and what nots.
• 0:11
  Speaker 1: Because, well, we've just had producer price inflation in, which is the most exciting thing to happen this side of Christmas, and it's come in.
• 0:21
  Speaker 1: Well, not where you want it, just a slight warning there.
• 0:26
  Speaker 1: And then, of course, we've got the madness of SMCI up another 7% today, trading at $1078.
• 0:34
  Speaker 1: This was a $300 stock couple of weeks back and we need to talk about that.
• 0:40
  Speaker 1: We need to understand where that means historically.
• 0:42
  Speaker 1: Where does that place is?
• 0:44
  Speaker 1: Are we now in dot com bubble territory, yes or no?
• 0:47
  Speaker 1: How do we make money out of this, and so on.
• 0:49
  Speaker 1: So let's get cracking, shall we?
• 0:52
  Speaker 1: Let me share my screen with you here she is and zoom in a little bit.
• 0:59
  Speaker 1: So let's look at the PPI data first, and PPI data was a little bit of a disaster.
• 1:06
  Speaker 1: Basically, we would like inflation to be lower.
• 1:10
  Speaker 1: I think most of us are probably with that script because, well, that's what Papa Powell wants, but Papa Powell wants, papa Powell gets.
• 1:18
  Speaker 1: Otherwise, rates stay higher for longer, and that's not a theme song we want to be singing.
• 1:23
  Speaker 1: So we've got a black pen today.
• 1:26
  Speaker 1: That's unusual.
• 1:27
  Speaker 1: We were expecting about a 0.1% PPI.
• 1:32
  Speaker 1: I say we, the Muppets who call themselves economists on Wall Street, you get pulled on this stuff.
• 1:38
  Speaker 1: We got 0.3% and that's obviously bad.
• 1:42
  Speaker 1: I say obviously.
• 1:43
  Speaker 1: It's three times higher.
• 1:44
  Speaker 1: So inflation is higher.
• 1:45
  Speaker 1: Producer price index inflation tends to drizzle down to you and me, the consumer, because what we are buying from manufacturers will be more expensive.
• 1:57
  Speaker 1: We then have core PPI, which we were expecting to be 0.1%, coming in at 0.5%.
• 2:07
  Speaker 1: Shoot me now.
• 2:09
  Speaker 1: That's obviously a huge, huge, huge, larger number than we thought.
• 2:13
  Speaker 1: Combine that with the CPI inflation data we had, which is also higher than expected, and things are starting to look a little bit dicey.
• 2:21
  Speaker 1: On the rate cut front Building permits yeah, worse than expected.
• 2:28
  Speaker 1: So we're looking at an inflationary recession this morning just saying right, housing starts 15% down.
• 2:36
  Speaker 1: It's not really good.
• 2:38
  Speaker 1: And if you strip out food, energy and trade, you actually have a worse inflation reading than we have on the headline number.
• 2:49
  Speaker 1: So it's just not good.
• 2:51
  Speaker 1: It's not a good number.
• 2:52
  Speaker 1: Is the market completely losing its mind over this and freaking the heck out?
• 2:57
  Speaker 1: Let me have a look at the pre market here.
• 3:01
  Speaker 1: Small caps were down, which is good, because I have a bearish trade on small caps.
• 3:08
  Speaker 1: I'd quite like them to be about 2% lower.
• 3:10
  Speaker 1: So if I manifest that, I apologize.
• 3:13
  Speaker 1: Nvidia is up because semiconductors have no relationship with the real economy.
• 3:19
  Speaker 1: But Apple down half a percent, meta is a bit down, amazon down a touch, tesla up 1.2%.
• 3:26
  Speaker 1: Fat drugs rebounding from yesterday's drop and banks are looking a little bit gloomy.
• 3:32
  Speaker 1: But it's a flat market.
• 3:34
  Speaker 1: Right, it's not the end of the world.
• 3:36
  Speaker 1: If we look at futures, the futures bright, the futures orange, you'll only get that if you're in the US.
• 3:44
  Speaker 1: Uk, rather, there's an advert in the Northies for a mobile phone company.
• 3:51
  Speaker 1: The S&P is basically flat.
• 3:55
  Speaker 1: That's okay.
• 3:56
  Speaker 1: The QQQ is up, even a teeny bit, probably because of Nvidia, and so not looking too terrible.
• 4:05
  Speaker 1: But it is a bit of a warning shot and you can understand why small caps are down, because those guys actually have to go to the bank to borrow money.
• 4:13
  Speaker 1: It was down 1.2% at 202.
• 4:15
  Speaker 1: I thought it would end at 200 this week and I hope I'm right.
• 4:21
  Speaker 1: We'll find out later on today and I'll let you know whether my trade lost or made me money on Saturday or on Monday.
• 4:28
  Speaker 1: We're up still, 13% this year.
• 4:30
  Speaker 1: I say still.
• 4:31
  Speaker 1: We actually had a very good start to the year.
• 4:33
  Speaker 1: That's a month and a half into it.
• 4:35
  Speaker 1: We did 10526% last year.
• 4:39
  Speaker 1: That's our return on capital employed.
• 4:41
  Speaker 1: Do you want to know how I did that?
• 4:44
  Speaker 1: I'll teach you, seriously.
• 4:46
  Speaker 1: I'll teach you On a free webinar on Tuesday, 10 am Eastern time.
• 4:50
  Speaker 1: Just head over to philxfrenzorg slash webinar, you'll see.
• 4:54
  Speaker 1: It takes about 90 minutes.
• 4:56
  Speaker 1: I'll walk you through how we do it.
• 4:58
  Speaker 1: I give you my rules, my systems, and you walk away smarter, happier, healthier, everything.
• 5:07
  Speaker 1: What about semiconductors?
• 5:08
  Speaker 1: We're going to need to talk about this.
• 5:09
  Speaker 1: There is an ETF, which is an index fund that tracks the S&P.
• 5:15
  Speaker 1: That's called SMH.
• 5:17
  Speaker 1: The other big one is for semiconductors.
• 5:20
  Speaker 1: Is I'm going to say it's Vox, it's Vox?
• 5:22
  Speaker 1: I think it is?
• 5:23
  Speaker 1: Let me know in the chat.
• 5:25
  Speaker 1: If it is, I will get through all your questions in a second, but only if we get the likes over 198 likes.
• 5:35
  Speaker 1: That's just depressing, isn't it?
• 5:37
  Speaker 1: It's a green morning for semiconductors.
• 5:41
  Speaker 1: This rally here seems a little extended.
• 5:44
  Speaker 1: If there was an indicator that would tell you whether it was extended, it would be lovely, wouldn't it?
• 5:49
  Speaker 1: Well, there is one.
• 5:50
  Speaker 1: There's this one down here.
• 5:52
  Speaker 1: We are extended when we're coming down, which should indicate that we're topping, but we do get Nvidia earnings next week.
• 6:04
  Speaker 1: That could, of course, change absolutely everything.
• 6:07
  Speaker 1: There is an indicator, though, that I want to get through and that probably nobody ever looks at.
• 6:15
  Speaker 1: You can look at two things in the market.
• 6:18
  Speaker 1: There's some data you can look at.
• 6:20
  Speaker 1: You can look at slow money and you can look at fast money.
• 6:24
  Speaker 1: What the heck do I mean by that?
• 6:26
  Speaker 1: Slow money are people who are buying a stock to hold and cherish till death.
• 6:32
  Speaker 1: Do us part.
• 6:33
  Speaker 1: Then fast money are people who are like what's the latest thing?
• 6:37
  Speaker 1: What's the latest thing?
• 6:38
  Speaker 1: Give it to me now.
• 6:39
  Speaker 1: Then they're typically found in Reddit forums.
• 6:42
  Speaker 1: When you get a lot of fast money coming in, it's typically an unsustainable rally.
• 6:47
  Speaker 1: When you get slow money coming in, it's good.
• 6:50
  Speaker 1: How do you figure out slow and fast?
• 6:53
  Speaker 1: I was going to say very simple.
• 6:55
  Speaker 1: It isn't the way you can think about that.
• 6:58
  Speaker 1: If you go into your broker, you will find a bid price and you will find an ask price.
• 7:05
  Speaker 1: Say, the bid is 98 cents and the ask is $1.05 or something.
• 7:12
  Speaker 1: There is a bid in the middle.
• 7:14
  Speaker 1: Now you're slow.
• 7:18
  Speaker 1: Investor, particularly institutions, will not pay 105 or 110 or some sort of crazy number.
• 7:26
  Speaker 1: They will be over here and they will want to pay 098, 099.
• 7:31
  Speaker 1: They're conservative.
• 7:33
  Speaker 1: They don't really care if them is the day.
• 7:35
  Speaker 1: So from that data we can assess whether people buying today are the nutters from Reddit or the calm and happy value investor.
• 7:46
  Speaker 1: I mean, maybe they're both bonkers.
• 7:48
  Speaker 1: And right now, on the semiconductors, what can we see?
• 7:56
  Speaker 1: The green line here is I need a thinner pen.
• 8:01
  Speaker 1: That's the fast money, and you can see a lot of this has been fast money going up and that makes me concerned about the longevity of this rally.
• 8:13
  Speaker 1: And if you then look at, well, is this accurate?
• 8:15
  Speaker 1: Let's draw a few lines up.
• 8:19
  Speaker 1: For example Called that peak, rather nicely.
• 8:23
  Speaker 1: What about this one here?
• 8:29
  Speaker 1: Pretty decent.
• 8:30
  Speaker 1: What about this one here?
• 8:31
  Speaker 1: Pretty decent.
• 8:35
  Speaker 1: It's doing an okay job, isn't it?
• 8:37
  Speaker 1: There we go.
• 8:40
  Speaker 1: Called that one there Doesn't mean it's all going to come crashing down, but it just seems a little stretched.
• 8:47
  Speaker 1: And typically the market moves with Apple.
• 8:50
  Speaker 1: Apple is usually the thing that's basically the market.
• 8:53
  Speaker 1: And at the moment, well, there is this great big schism.
• 8:58
  Speaker 1: What's the word?
• 8:58
  Speaker 1: How do you pronounce it?
• 9:00
  Speaker 1: Let me know in the chat.
• 9:01
  Speaker 1: Is it a soft sh or a hard sk?
• 9:03
  Speaker 1: This gap ought to get filled.
• 9:10
  Speaker 1: And is it Apple?
• 9:12
  Speaker 1: Who's going to rally up?
• 9:13
  Speaker 1: Because everybody is walking around with the funny little goggles, or is it the SMP that's going to have to come down?
• 9:19
  Speaker 1: That's kind of the question.
• 9:21
  Speaker 1: But it's unusual, very, very, very, very unusual for this to happen.
• 9:24
  Speaker 1: And then we look at the NASDAQ compared to small caps and you're like nobody does that and once ever woken up and said let me look at how the NASDAQs performing compared to small caps.
• 9:37
  Speaker 1: Well, as weird bankers do, it's a hedge fund thought, because as a hedge fund trader, you're looking at pairs.
• 9:44
  Speaker 1: You're trying to make money out of two things, not just the one.
• 9:47
  Speaker 1: This makes life more interesting.
• 9:49
  Speaker 1: And what have we got here?
• 9:50
  Speaker 1: Well, we have a double top, and the double top usually means you guessed it right it should go down, which would indicate that tech stocks should go down.
• 10:05
  Speaker 1: Iwm is, russell is coming down this morning and other things are happening in the world.
• 10:13
  Speaker 1: The dollar is going back up.
• 10:14
  Speaker 1: Why is the dollar going back up?
• 10:16
  Speaker 1: And it's going up pretty significantly.
• 10:20
  Speaker 1: Is it going to go back up to 2022 highs?
• 10:25
  Speaker 1: If it does, it does a couple of things.
• 10:27
  Speaker 1: It hurts the likes of Microsoft, netflix, anybody with a large foreign customer base, people selling to us foreigners sell in euros and yen and sterling and other monkey currencies.
• 10:50
  Speaker 1: And then when they have to convert those monkey currencies back to the good old, trusted United States dollar, backed by 900 billion of defense spending a year, then they get less good dollars for their monkey currencies from all those pesky foreigners.
• 11:06
  Speaker 1: So it'll hurt earnings if it goes up more and that isn't particularly good.
• 11:13
  Speaker 1: But yeah, this super micro computer thing, it seems.
• 11:16
  Speaker 1: You look at a chart like this and you think this is, this is going to be a, this is going to be a nut job thing, this is going to be some sort of Reddit thing.
• 11:22
  Speaker 1: This was worth like nothing and now it's worth a thousand dollars.
• 11:27
  Speaker 1: And the Nvidia lot I just agree with them on this.
• 11:38
  Speaker 1: The forward PE on this is something like 30.
• 11:41
  Speaker 1: Nvidia is something like 34.
• 11:45
  Speaker 1: So it actually seems cheap compared to Nvidia.
• 11:49
  Speaker 1: Now, nvidia isn't exactly cheap, but it doesn't seem unhinged.
• 11:54
  Speaker 1: And what do they do, super micro computer?
• 11:56
  Speaker 1: It sounds like something from the 1990s, doesn't it?
• 11:59
  Speaker 1: They build service from the base app.
• 12:04
  Speaker 1: In a sense, they built their own motherboards and their own what not?
• 12:08
  Speaker 1: You put on top of motherboards and apparently it allows them to build stuff that is faster and cheaper and offers a lot more power for people who want to build service, so it's apparently something fairly unique that's needed and required for AI, and I have to take their words on that, because I have built a PC.
• 12:29
  Speaker 1: I have not built a motherboard, so I can't really tell you what makes a motherboard particularly good.
• 12:34
  Speaker 1: I would have thought it was the memory, but apparently it isn't, so this might not seem as unhinged as it does.
• 12:45
  Speaker 1: But, yeah, is it overboard?
• 12:47
  Speaker 1: I was going to swear that I'm just going to re-word that starts with F and ends with Uck.
• 12:53
  Speaker 1: Yeah and yeah, of course it's massively overboard, but you can be overboard for a while and you can also get these sort of re-rating things where somebody you know invents a solution for cancer or, better yet, ai video.
• 13:09
  Speaker 1: That's what chat GPT's Sam Altman announced today.
• 13:13
  Speaker 1: I can't remember what it's called, but basically you can type in I'd like to see six kittens walk down a forest path in the sunlight or something, and it'll do that and it's pretty good.
• 13:24
  Speaker 1: It's very, very good already.
• 13:26
  Speaker 1: So look forward to a YouTube full of nonsensical B-roll coming up shortly.
• 13:32
  Speaker 1: We'll be doing lots of it.
• 13:35
  Speaker 1: Of course, our videos in the future will just be kittens AI kittens Say.
• 13:40
  Speaker 1: You know that'll need a lot of computing power, all of those kittens.
• 13:43
  Speaker 1: And why is this in here?
• 13:46
  Speaker 1: Can't remember.
• 13:47
  Speaker 1: To be honest with you, I would want to look at resistance.
• 13:51
  Speaker 1: Maybe we want to look at resistance, probably.
• 13:53
  Speaker 1: So where is the resistance for NVIDIA?
• 13:55
  Speaker 1: Well, there is some at 750.
• 13:59
  Speaker 1: There is a lot more at it's the pen a little fat today.
• 14:05
  Speaker 1: I think the pen needs some LLY treatment.
• 14:09
  Speaker 1: $800 also, and then at $900.
• 14:15
  Speaker 1: And what does that mean?
• 14:17
  Speaker 1: Well, it's resistance, that's all it is.
• 14:21
  Speaker 1: Support sits down here at support at $700.
• 14:28
  Speaker 1: And this is, of course, from the glorious piece of software that we are working on, which I'm very excited by, which is called optionswatchio.
• 14:35
  Speaker 1: Optionswatchio Can you read that?
• 14:44
  Speaker 1: Probably not Optionswatchio and you can see where the market's positioned here.
• 14:48
  Speaker 1: So the big fat green lines will tell you where the resistance sits.
• 14:51
  Speaker 1: So 750, 800, 900, on the way up, and, yeah, that's basically what we're sitting right now.
• 14:59
  Speaker 1: There, with that, all options are at sort of historic highs, not quite the 2021 madness, but pretty, pretty elevated, and that basically means people are bullish as heck.
• 15:15
  Speaker 1: And what's kind of funny, goldman Sachs you know, the lovely bank, the one with the big food stamp program, that one they pointed this out today saying the Google search trend for call options is at an all time high, and they were basically saying, look, it's unlikely to be institutional money managers who are trying to figure out what a call option is.
• 15:42
  Speaker 1: So it's probably the nutters like you and me, the retail traders, who are trying to figure out what a call option is.
• 15:48
  Speaker 1: And that, again, is typically a sign of exuberance.
• 15:53
  Speaker 1: Everyone's like wanting to go just berserk on something, and it typically implies you know we might be somewhere like this Do you remember this 2021?
• 16:04
  Speaker 1: This was a brilliant article.
• 16:05
  Speaker 1: Artist sells invisible sculpture for $18,000.
• 16:09
  Speaker 1: This was June 2021.
• 16:11
  Speaker 1: Seems like a long time ago, right?
• 16:13
  Speaker 1: Seems kind of madness.
• 16:14
  Speaker 1: The sculpture never existed.
• 16:16
  Speaker 1: There was no drawing for it, there wasn't an NFT.
• 16:18
  Speaker 1: It was just an invisible sculpture that was marked by this and an artist laughing himself to sleep.
• 16:28
  Speaker 1: Maybe he was just really high and thought it was a good idea.
• 16:31
  Speaker 1: That's kind of stuff.
• 16:33
  Speaker 1: When it comes up, I think, ok, ok, probably time to sell some stock, buy some puts and knuckle down for a little while and wait for the market crash to make some money.
• 16:44
  Speaker 1: But I think we're going to go higher.
• 16:45
  Speaker 1: I think we will and I think we'll enjoy it.
• 16:47
  Speaker 1: It'll be fun Now, today, $2.4 trillion of options are expiring.
• 16:56
  Speaker 1: Does it mean it's going to go up?
• 16:57
  Speaker 1: Is it going to go down?
• 16:58
  Speaker 1: Is it going to go sideways?
• 16:59
  Speaker 1: Is it going to go round and round?
• 17:00
  Speaker 1: She goes.
• 17:01
  Speaker 1: It's a tough question to answer.
• 17:09
  Speaker 1: Yes and no, I think, would be the politician's answer.
• 17:13
  Speaker 1: I think it is likely has somewhat of a negative impact this time around.
• 17:18
  Speaker 1: And the other thing it does is it means next week will be wait for it, wait for it More exciting, because a large number of options basically pin the market down.
• 17:40
  Speaker 1: Because these expire.
• 17:41
  Speaker 1: We can go more nuts next week.
• 17:44
  Speaker 1: So I'm a little bit more bearish going into next week.
• 17:47
  Speaker 1: Now we will know on Monday where the new options are positioned and that will tell us a lot and I'll obviously tell you what's going on there.
• 17:53
  Speaker 1: But right now, the options market is very supportive of this rally.
• 17:57
  Speaker 1: We basically are forcing the market to buy stocks and if you want to understand that again ask be happy to Matthew.
• 18:05
  Speaker 1: You bought that sculpture.
• 18:06
  Speaker 1: You have no regrets?
• 18:07
  Speaker 1: Brilliant, matthew, where did you display it?
• 18:09
  Speaker 1: And no matter what happens, you basically want to learn how you can make money from your money.
• 18:16
  Speaker 1: It doesn't mean you have to do what I do, but you might want to check it out.
• 18:19
  Speaker 1: We've done rather well for ourselves and everybody in our community, so come and join me this coming Tuesday.
• 18:27
  Speaker 1: Seems like a long time away there's a whole weekend in between, but you know how quick time goes.
• 18:32
  Speaker 1: It's almost the end of February.
• 18:34
  Speaker 1: Come and join me at philxfrensorg slash webinar and learn my easy three rules.
• 18:39
  Speaker 1: Full automations, probably once you get going, take you less than three hours, so it's really something you can do while you're still collecting invisible sculptures and everything else.