Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Warning: FED Pivot Rug Pull + Stock Market News 19 December 2024

Transcript

Felix Prehn - Warning: FED Pivot Rug Pull + Stock Market News 19 December 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Peter Kessler here and welcome to this pre-market live stream.
• 0:03
  Speaker 1: Yesterday was a day we haven't seen in about two and a half years Big, big, big move and I want you to understand why that happened, what is likely to happen now and how we therefore make money out of this.
• 0:19
  Speaker 1: Because every big move in the market is what An opportunity for the well-informed investor, and my goal here is to dispense a little bit of old banking wisdom to you and my 20 years of trading experience and make this into something tremendously wonderful for everybody.
• 0:37
  Speaker 1: So what are we going to do?
• 0:38
  Speaker 1: Well, all we're going to do is smash the like button, and this stream will keep delivering value.
• 0:43
  Speaker 1: Now this here will show you that it was literally the second worst day in 13 months.
• 0:50
  Speaker 1: That's how much we dropped by.
• 0:51
  Speaker 1: We haven't had that since.
• 0:53
  Speaker 1: Well, the Japan thing in 5th of August, wasn't that it?
• 0:58
  Speaker 1: Yeah, that was kind of close, but this was a little bit bigger, and then we had a few others in sort of 2022.
• 1:03
  Speaker 1: So, yeah, was a little bit bigger, and then we had a few others instead of 2022.
• 1:07
  Speaker 1: So, yeah, monstrous, monstrous drop yesterday.
• 1:15
  Speaker 1: And what I noticed is when I woke up this morning and I got the trade vision end of market day alert.
• 1:18
  Speaker 1: Normally, we have 10 buy alerts here, right, and we only had two.
• 1:24
  Speaker 1: Literally, there was nothing else that our algorithm could recommend except for these two.
• 1:31
  Speaker 1: Fox actually had a tremendously good day, and look at what the sales are.
• 1:36
  Speaker 1: I mean, it's like the S&P, it's Mara, which is basically Bitcoin.
• 1:39
  Speaker 1: It's Robinhood, which is all trading.
• 1:41
  Speaker 1: It's gold, all growth stocks, that's ARK, small caps you know just everything, basically, and it's literally unprecedented in the history of Trade Vision, which is the app that we build to give you tremendous value and data.
• 1:55
  Speaker 1: So my question to you is did you lose money yesterday?
• 1:57
  Speaker 1: If yes, put a yes in the chat or raise your hand, if you can.
• 2:02
  Speaker 1: I'm not going to see it, but, yeah, put a yes in the chat if you lost some money yesterday, because this was yesterday, right, and it'd be pretty extraordinary if you didn't lose money yesterday.
• 2:12
  Speaker 1: And I will then continue and explain to you what actually happened here, why it happened and what it means for you next.
• 2:24
  Speaker 1: Okay, yes, yes, yes, yes, yes.
• 2:26
  Speaker 1: I like all the whys Yep, yep, yep, yep, yep, yep.
• 2:29
  Speaker 1: Nobody was invested in Fox News then, right Now, we actually have one trade that made us money yesterday, and I'm not showing you that to gloat, but I want to come back to that to again teach you something of value here.
• 2:44
  Speaker 1: I put on this VIX trade that's the fear index VIX on Friday for good reasons, and we got in here at 14 and we're now up 96% and I'm going to close this trade out this morning.
• 2:57
  Speaker 1: I've already submitted the order here to the broker.
• 3:00
  Speaker 1: You can see it in the brokerage here at the top.
• 3:03
  Speaker 1: There's a VIX trade here to the broker.
• 3:04
  Speaker 1: You can see it in the brokerage here at the top.
• 3:06
  Speaker 1: There's a VIX trade 95% up, and so we make some money on these days.
• 3:13
  Speaker 1: There's always a way to make money if you understand the trends and the patterns of the market.
• 3:16
  Speaker 1: The market moves in fairly predictable patterns and this here is, as I mentioned, the VIX.
• 3:21
  Speaker 1: So the VIX is to most people it's just fear, and I think that's really all you need to understand about it.
• 3:27
  Speaker 1: It's a little bit more complex than that.
• 3:29
  Speaker 1: So we have this massive, massive spike and today we're already coming down a little bit here.
• 3:33
  Speaker 1: So I wish I would have been awake when the market was closing yesterday, but it's the middle of the night for me, so I wasn't and I could have taken a much larger profit, but either way taken a much larger profit.
• 3:45
  Speaker 1: But either way, we'll make some money here.
• 3:49
  Speaker 1: Can you trade VIX outside the US?
• 3:50
  Speaker 1: Yes, you need a decent broker.
• 3:52
  Speaker 1: Something like Think or Swim Schwab will give you access to it.
• 4:00
  Speaker 1: The sort of real retail brokers like a Webull or something won't give you access to VIX, which is a little bit of a shame, because it's actually a really really good way to kind of hedge your portfolio and make money out of pretty predictable moves.
• 4:09
  Speaker 1: How did you trade it?
• 4:11
  Speaker 1: It was basically a bunch of call options.
• 4:13
  Speaker 1: I bought two calls, I sold some to finance the trade.
• 4:17
  Speaker 1: So, yeah, basically a bunch of call options into January and I didn't know this was going to happen.
• 4:22
  Speaker 1: But I knew it was likely to go up because we're at such low levels.
• 4:26
  Speaker 1: So it's like if you'd been awake yesterday at 27, it would have made sense to buy some puts, for example, because it's never going to stay at 27 for very long.
• 4:34
  Speaker 1: So it's one of those little things that, if you understand that it just becomes a regular money printer.
• 4:40
  Speaker 1: Maybe two, three times a year, you get these nice opportunities where you make 50% or 100% in a couple of weeks.
• 4:48
  Speaker 1: It's very easy to do, but you need to understand it a little bit.
• 4:51
  Speaker 1: But let me get to the heart of the matter here.
• 4:54
  Speaker 1: What's really crucial, which is what's actually going on here.
• 4:59
  Speaker 1: David Elikwu Right, what's actually going on here is this what very, very few people understand Everything that Jerome Powell said yesterday, all that word salad, the waffling about this and that and the other.
• 5:14
  Speaker 1: The essence of it is this, and I like looking at these.
• 5:17
  Speaker 1: So this is the probabilities of rate cuts.
• 5:20
  Speaker 1: And a week ago, which is before Jerome Powell opened his mouth, the biggest percentage number was here.
• 5:27
  Speaker 1: What does that mean?
• 5:29
  Speaker 1: It meant that we were expecting.
• 5:31
  Speaker 1: What was that?
• 5:34
  Speaker 1: We were basically expecting two rate cuts, two plus rate cuts.
• 5:42
  Speaker 1: So we're expecting two to three cuts until Powell opened his big mouth.
• 5:47
  Speaker 1: And what's the outcome after yesterday's waffle?
• 5:51
  Speaker 1: Well, we're now expecting really only one cut, maybe one to two cuts for next year.
• 5:58
  Speaker 1: Is it that big a shift?
• 6:00
  Speaker 1: Not really.
• 6:01
  Speaker 1: It's a quarter percent.
• 6:03
  Speaker 1: Does it really make a difference?
• 6:05
  Speaker 1: No, it doesn't.
• 6:07
  Speaker 1: And what I was talking about yesterday?
• 6:09
  Speaker 1: What did I say?
• 6:09
  Speaker 1: What the risk was yesterday?
• 6:11
  Speaker 1: I said the risk is that he's going to overstate the hawkish tone he's going to overstate.
• 6:16
  Speaker 1: Hey, we might just wait and see for a couple of months and see what happens there, which is pretty much what he did, and it makes some sense if you are Jerome the almighty Powell right.
• 6:28
  Speaker 1: You have a change of government in the US and, for those of you who haven't heard about it, there was a presidential election and they're going to do one of two things, but they're going to do two things.
• 6:39
  Speaker 1: They're going to cut taxes, which does what?
• 6:43
  Speaker 1: Well, that should actually cause inflation, so that brings us more inflation.
• 6:49
  Speaker 1: What's the second thing they're going to do?
• 6:51
  Speaker 1: Well, they're going to cut spending.
• 6:53
  Speaker 1: Now we have to see how successful that is.
• 6:56
  Speaker 1: Trump Elon's obviously in charge of that.
• 6:59
  Speaker 1: What does less spending mean?
• 7:01
  Speaker 1: That means less inflation.
• 7:02
  Speaker 1: And then what's the third thing they're going to do?
• 7:05
  Speaker 1: Well, they're going to hike tariffs.
• 7:07
  Speaker 1: Now, tariffs should do what?
• 7:11
  Speaker 1: Higher tariffs are essentially a tax right, so the imported goods get more expensive, at least for a while, until the manufacturing moves to lower tariff countries or to the US.
• 7:26
  Speaker 1: That should cause higher inflation.
• 7:28
  Speaker 1: So the Fed kind of doesn't quite know what's going to happen.
• 7:31
  Speaker 1: They're not really sure the extent of which.
• 7:33
  Speaker 1: Politics is a complicated beast, as you're seeing right now the talks about a shutdown and so on in the US.
• 7:37
  Speaker 1: So what they're basically saying is we don't know what's going to happen, we don't know what the data is, so we're going to wait and see.
• 7:44
  Speaker 1: That's really all he said.
• 7:46
  Speaker 1: And is that unusual?
• 7:47
  Speaker 1: Is that irrational?
• 7:49
  Speaker 1: Is that weird?
• 7:50
  Speaker 1: Is that unexpected?
• 7:51
  Speaker 1: Not really.
• 7:52
  Speaker 1: So.
• 7:53
  Speaker 1: This tiny change from two cuts to one cut.
• 7:59
  Speaker 1: What does that do to the valuation of a company, let's say a growth stock?
• 8:05
  Speaker 1: Well, it takes about 2.5% of a growth stock.
• 8:08
  Speaker 1: That's about it.
• 8:09
  Speaker 1: What happened yesterday?
• 8:10
  Speaker 1: If you look at something like a Palantir, how much did it drop yesterday?
• 8:13
  Speaker 1: 3.8% overreaction, I would say.
• 8:21
  Speaker 1: So really, yesterday is a bit of a nothing book.
• 8:25
  Speaker 1: It really is a bit of a nothing book.
• 8:28
  Speaker 1: The Fed overstates what it's going to do every time.
• 8:31
  Speaker 1: They said they were going to hike rates more than they did.
• 8:33
  Speaker 1: They said they were going to cut rates faster, and then they didn't.
• 8:36
  Speaker 1: And now they're saying we're not going to do any more cuts and they probably will do more cuts than they're announcing.
• 8:42
  Speaker 1: So they use expectations as a policy tool.
• 8:45
  Speaker 1: So, as guinea pigs here say, the Fed says a lot of things.
• 8:50
  Speaker 1: What they say next year versus what they will do next year isn't the same story, and they do that intentionally.
• 8:56
  Speaker 1: It doesn't mean they're a bunch of tools I mean they might be, but they do it intentionally because, really, their most powerful tool is to set expectations.
• 9:05
  Speaker 1: It's not about the rates, it's about what he says he's going to do in the future.
• 9:08
  Speaker 1: That's what the market reacts to.
• 9:10
  Speaker 1: So big overreaction at this point, I'd say so.
• 9:15
  Speaker 1: So why, then, does big tech drop like this?
• 9:17
  Speaker 1: So this is the magnificent seven leveraged etf, which is a stupid thing to invest in if you ask me.
• 9:26
  Speaker 1: But it dropped yesterday 8.75%, which is pretty big.
• 9:30
  Speaker 1: But can you see that yellow line here?
• 9:32
  Speaker 1: You see that.
• 9:33
  Speaker 1: Let me zoom in on it.
• 9:33
  Speaker 1: What's that yellow line?
• 9:34
  Speaker 1: That yellow line is the 50-day moving average and we are massively above it still.
• 9:41
  Speaker 1: So it's this cause for panic?
• 9:44
  Speaker 1: No, no, it isn't.
• 9:45
  Speaker 1: It's just a little blip that doesn't really do very much.
• 9:49
  Speaker 1: But there is something that's quite important here, and that is the S&P 500.
• 9:57
  Speaker 1: And I took this screenshot just a second ago, in fact.
• 9:59
  Speaker 1: Why don't we open it up live?
• 10:01
  Speaker 1: That's probably the smarter thing to do.
• 10:03
  Speaker 1: And I'm opening this up in Trade Vision here, which again is the tool that we use to get tremendous data, and you can get a week's trial to that.
• 10:13
  Speaker 1: If you go to felixfrenzelogcom tradevision and what do you see?
• 10:18
  Speaker 1: Well, again we drop below this yellow line here.
• 10:23
  Speaker 1: Let me just take the trend off.
• 10:24
  Speaker 1: So we triggered a sell signal here yesterday, which made sense because we dropped below the 50-day moving average line.
• 10:29
  Speaker 1: And those sell signals, you don't have to follow them, they're basically telling you risk management time.
• 10:35
  Speaker 1: That's basically what it's saying to you, so you can obviously come to your own conclusion there.
• 10:38
  Speaker 1: But on big volume, we dropped a lot and we dropped below the important support line.
• 10:46
  Speaker 1: What happens at 590?
• 10:47
  Speaker 1: What happens if we drop below 590?
• 10:49
  Speaker 1: For those of you who've heard me explain this before, put it in the chat what happens at 590?
• 10:54
  Speaker 1: What's the support?
• 10:55
  Speaker 1: The support means that market makers this is important buy Not because they want to, but because they have to.
• 11:06
  Speaker 1: It's the way their rules are set up, their hedging is set up.
• 11:08
  Speaker 1: They have no choice but to buy and we get that data from the options world and we make it available to you.
• 11:15
  Speaker 1: So we dropped below that yesterday and that's a bad thing.
• 11:18
  Speaker 1: But look at where we are right now here pre-market.
• 11:21
  Speaker 1: You see that there 591, we're above it again.
• 11:23
  Speaker 1: So the support is actually holding.
• 11:26
  Speaker 1: And the way to think about support lines is you can drop a little below them and they're kind of still effective.
• 11:32
  Speaker 1: If you drop a lot below them, then they're no longer effective and you sort of win or you lose, depending on your point of view or the direction of your position.
• 11:41
  Speaker 1: So the fact that we are above it and the fact that we are back to the yellow line here, the 50-day moving average says to me this was a blip and we're kind of waking up and we're going.
• 11:52
  Speaker 1: We probably overdid it a little bit yesterday, didn't we, with all that sell, sell, sell, sell type thing and stop, losses get triggered and that kind of thing.