Latest / Felix Nikolas Prehn's Podcast / Wall Street Just Flipped on Tech Stocks + Stock Market News 08 January 2024

Transcript

Wall Street Just Flipped on Tech Stocks + Stock Market News 08 January 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Good morning everybody.
• 0:01
  Speaker 1: It seems we're live.
• 0:02
  Speaker 1: It's not showing it to me, but I believe we might be.
• 0:05
  Speaker 1: So good morning to you, an interesting day.
• 0:08
  Speaker 1: Today.
• 0:09
  Speaker 1: We'll be running you through the key things you need to know, because Wall Street, the hedge fund guys, the big investors, have just changed their position entirely from where we were in December.
• 0:21
  Speaker 1: I think it's important to understand what that means the nuances, the Fed, the rate cuts, what's happening?
• 0:27
  Speaker 1: Where are we going?
• 0:28
  Speaker 1: So you know how to become a better investor.
• 0:32
  Speaker 1: This is surely what that is all about, right?
• 0:35
  Speaker 1: So Winston, back here, is going to walk you through it.
• 0:39
  Speaker 1: I'll do some live trading after this as well for you guys in the community and the coaching community.
• 0:44
  Speaker 1: You will have seen already me putting that out there.
• 0:46
  Speaker 1: If you have an interest in seeing how you might get into that coaching community and just generally learn how you can make your money work for you in 2024 in a really simple way Three steps and learn from a group of investment bankers who have a desire to learn with you what they learned at the job, then come and join me tomorrow literally tomorrow, 10am Eastern time, at phelixfrensorg slash webinar and you'll learn the three rules we trade one stock with, and it's a very simple system that we run again and again and again, and Winston's a big fan.
• 1:21
  Speaker 1: But let's look at the real key stuff here.
• 1:24
  Speaker 1: So a few major changes that I would think you might want to be aware of.
• 1:30
  Speaker 1: And that's professional investor positioning.
• 1:33
  Speaker 1: So that's the guys on Wall Street, and they have significantly reduced their exposure to the market.
• 1:47
  Speaker 1: And how can you tell that?
• 1:49
  Speaker 1: Because we know that the funding spreads are down, which means that they're probably less in futures and they're less in options position because they got less to fund.
• 1:58
  Speaker 1: So when you see these declines in the funding spreads, you kind of know the professionals, the big boys, are pulling back and that has an impact on the share price.
• 2:10
  Speaker 1: But it also can be a little bit of a warning signal of should we be as long as we possibly are?
• 2:17
  Speaker 1: If you look at the Goldman Sachs prime book, what does that mean?
• 2:20
  Speaker 1: Just how much exposure do the key funds have?
• 2:25
  Speaker 1: We're at the almost 90 percentile, which means we're super, super high in terms of how long they are.
• 2:32
  Speaker 1: We also have the CTAs, the algo funds.
• 2:36
  Speaker 1: You're insanely long, like only 5% of the time are they?
• 2:40
  Speaker 1: Are they more long than then, right now?
• 2:42
  Speaker 1: And that kind of says to me well, we might be nearing a temporary peak.
• 2:50
  Speaker 1: The numbers of puts people have been buying has been going up as well.
• 2:54
  Speaker 1: What does that mean?
• 2:55
  Speaker 1: People are starting to think, oh, maybe this thing will go down, maybe this is something I should buy myself some insurance for which is always a good idea.
• 3:03
  Speaker 1: But typically it only starts to happen when the market starts to take a little bit of a nose dive.
• 3:09
  Speaker 1: Here and Winston doesn't seem too concerned back there.
• 3:11
  Speaker 1: Does he?
• 3:11
  Speaker 1: Exposure again of the big funds to tech is also coming down pretty harshly and they've been actually pretty much sellers of tech since early 2022.
• 3:26
  Speaker 1: And maybe it doesn't feel like it, but it's retailers for buying a lot of this stuff.
• 3:31
  Speaker 1: So they're just cautious on the big tech rally.
• 3:35
  Speaker 1: Same if you look at the Magnificent Seven, the largest seven tech stocks there, the stock exposure to those seven has come down from about 20% of all money, which is insane to now.
• 3:51
  Speaker 1: Just, I mean still a lot, but 17%.
• 3:54
  Speaker 1: So we're coming down and you might say that's healthy.
• 3:58
  Speaker 1: But that's also putting pressure on the big tech stocks and we'll have a look at what the life market's doing here in a second and I'm going to run you through a few more data points.
• 4:06
  Speaker 1: If you hate data, you hate charts, then this is probably not the place for you.
• 4:10
  Speaker 1: I will keep going.
• 4:12
  Speaker 1: I'm sorry about that.
• 4:18
  Speaker 1: Apple Apple is the one that I worry about the most.
• 4:21
  Speaker 1: Why?
• 4:22
  Speaker 1: Because there is an old saying where Apple goes, the market goes, and it's, I think, rather true.
• 4:28
  Speaker 1: And Apple has come down a lot more than the index, the NASDAQ, the QQQ, and it's created a gap, and typically, apple is the leading indicator.
• 4:45
  Speaker 1: So you might expect, therefore, that the NASDAQ will catch up, and if the NASDAQ has to catch up, it's going to go to about 370 points.
• 4:54
  Speaker 1: We're right now trading just above 390.
• 4:57
  Speaker 1: That would be a pretty big drop.
• 4:59
  Speaker 1: Now we have a look at how likely that is and where the market support is and where people are positioned in just a moment.
• 5:04
  Speaker 1: So stick around.
• 5:05
  Speaker 1: I just want to give you a little bit of a bigger picture here.
• 5:09
  Speaker 1: By the way, I'll also be sharing all my research notes with all you guys in the coaching community here.
• 5:14
  Speaker 1: Some of you asked about it yesterday on the coaching call.
• 5:17
  Speaker 1: I will put a link out for you so you can get your pause on that yourself and reference it back Now.
• 5:26
  Speaker 1: Nasdaq QQQ if it drops below the last high, which is essentially sitting at 390,.
• 5:38
  Speaker 1: Ever so slightly below that would then likely take us quite a bit lower, potentially back into the 360s, 350s.
• 5:47
  Speaker 1: So we really want to make sure we hold on to the 390.
• 5:51
  Speaker 1: Now, is that likely?
• 5:52
  Speaker 1: Well, if you have better information then you know how likely that is.
• 5:56
  Speaker 1: And by better information I mean go to optionswatchio, grab yourself a one month free trial account.
• 6:04
  Speaker 1: It's a website we develop, got some serious, serious plans for it, which I'm very, very excited about, and this makes it easier to visualize data and understand how the market's positioned.
• 6:15
  Speaker 1: And what I'm looking at here is that I can see where the put options are positioned and I can see there are lots of puts in red at $390.
• 6:28
  Speaker 1: And there are also quite a lot of puts at $380.
• 6:33
  Speaker 1: So those are support lines, those are kind of put walls that will help to hold the stock up so the baby won't get dropped, hopefully, below 390.
• 6:43
  Speaker 1: If it does, 380 will kick in.
• 6:45
  Speaker 1: So that's important to understand and therefore you know we're going to look up maybe setting up some trades from those levels.
• 6:52
  Speaker 1: But it puts into perspective a little bit dropping here below the 390 mark and then if we go down through 385, the real support is actually 390 and 380, as always visualized by those red sort of bars that you see on optionswatchio Links down below to that, by the way.
• 7:15
  Speaker 1: Now if you look again just at exposure of how big funds are, the active managers, funds are positioned they were pretty, pretty long just really at sort of historic long levels and they're coming down a bit.
• 7:30
  Speaker 1: So it's not really super surprising that we've come down a bit.
• 7:34
  Speaker 1: They've just been too overexposed and we're not in like panic, sell off land, but we have come down a fair bit.
• 7:41
  Speaker 1: If you look at Goldman Sachs sentiment indicator and I know I'm hitting you pretty hard here with, with, with data, but I just feel like if you are well informed and you know all this stuff, you can just make better decisions in your investment and your trading, and that's really my, my entire intention here.
• 8:00
  Speaker 1: As it's Winston's back there, although he seems to be a little bit less interested right now, he's actually sleeping.
• 8:07
  Speaker 1: Sleep for anything, that guy.
• 8:09
  Speaker 1: The Goldman Sachs indicator was above one, above one is stretched as in like overboard.
• 8:16
  Speaker 1: Now it's back to 0.5.
• 8:18
  Speaker 1: So we might be lingering here for a little while without going much lower and we then might possibly go a little bit higher again.
• 8:25
  Speaker 1: So that's kind of good news.
• 8:26
  Speaker 1: In a sense, it's sort of saying to us okay, we've done a fair bit of sell off and it's may not have to get that much worse.
• 8:33
  Speaker 1: The other thing that is actually good news is I talked yesterday about the labor market data being super cooked.
• 8:42
  Speaker 1: The GDP data, which is also somewhat cooked, is kind of indicating that we're going back to about zero.
• 8:54
  Speaker 1: That's looking at the ISM numbers, manufacturing data.
• 8:58
  Speaker 1: The Fed will actually like that because they've basically said we're not going to allow a recession.
• 9:05
  Speaker 1: We're going to suck up more inflation if needed, because we don't want to allow a recession for whatever reason.
• 9:11
  Speaker 1: It seems to be some sort of recession allergy going around with the Fed.
• 9:16
  Speaker 1: Or, if the economy slows down to about zero, that's a soft landing miracle.
• 9:22
  Speaker 1: It means they can actually start cutting rates.
• 9:25
  Speaker 1: It will help to bring inflation down.
• 9:28
  Speaker 1: I actually like seeing the economy slow down.
• 9:33
  Speaker 1: If you look at this little quote here, over the last 90 days, wall Street analysts have cut their earnings estimates far more than is usually the case.
• 9:43
  Speaker 1: I'll try to get a different pen.
• 9:45
  Speaker 1: The rally late last year November, december was not based on accelerating fundamentals.
• 9:53
  Speaker 1: It wasn't about, oh my God, earnings are going to get this much better.
• 9:55
  Speaker 1: It was really about rate cuts for 2024.
• 9:58
  Speaker 1: We've now baked in percent, percent and a half of rate cuts.
• 10:03
  Speaker 1: The good news here is that there's a very low bar for earnings, as we're about to get earnings starting from this Friday.
• 10:13
  Speaker 1: The big banks start reporting on Friday JPMorgan and so on that the bankers with the big heart, the ones who really care.
• 10:19
  Speaker 1: That means it might actually be very easy to beat the expectations, which might give us a nice little earnings rally.
• 10:27
  Speaker 1: I think this is a real positive.
• 10:29
  Speaker 1: I agree with this that the rally in November December was a rate cut expectation rally.
• 10:36
  Speaker 1: That's.
• 10:37
  Speaker 1: One elephant in the room is like what's the Fed going to do?
• 10:39
  Speaker 1: Are they going to really cut in March?
• 10:41
  Speaker 1: If they don't, then expect to get punched.
• 10:44
  Speaker 1: In addition to that, we have the second leg of our potential 2024 rally, which is earnings might actually improve.
• 11:00
  Speaker 1: Second bit of good news is you know how many countries are expected to cut their interest rates in 2024?
• 11:07
  Speaker 1: We're expecting the US and Mexico and Brazil and Russia, poland, czech Republic and China and New Zealand to all cut their rates in just Q1.
• 11:21
  Speaker 1: Then we are expecting pretty much the rest of the world the Canadians, the rest of the Eurozone, the Indians, the Australians and so on to follow suit in Q2.
• 11:32
  Speaker 1: That means that there is this global easing of financial conditions borrowing money gets cheaper, risky investments start to look more appealing because the risk-free return from governments is going down.
• 11:47
  Speaker 1: That is happening.
• 11:49
  Speaker 1: If that continues to happen throughout the year, as we expect, we are actually in a very, very, very nice setup for pretty much everything.
• 11:58
  Speaker 1: You are going to see these temporary pullbacks, like right now, where unprofitable tech has been hammered like 6%, 7% or something, but then you're going to see the spikes again, at least if their earnings start improving, I think, as rates keep coming down and then expectations keep coming up for okay, what are the 2025 rate cuts going to look like?
• 12:23
  Speaker 1: Then?
• 12:23
  Speaker 1: That might be another 10% rally for 2025.
• 12:27
  Speaker 1: I'm actually still kind of a bit of an optimist here.
• 12:29
  Speaker 1: We just need to be a little bit cautious.
• 12:31
  Speaker 1: On the shorter term, we're going to do some trading.
• 12:34
  Speaker 1: We're going to literally in 18 minutes, I'll go live over to our private community and I'll do some live trading and you guys can see me trade and think and chat and so on I think we do this a couple of times a week Also our other coaches who invest in bankers and have been doing this for decades and show you just what we do.
• 12:56
  Speaker 1: I think that experience is, honestly, probably the biggest thing you can really take away from us is learning from invest in bankers how they actually trade.
• 13:04
  Speaker 1: And look over our shoulders and have us look over your shoulders.
• 13:07
  Speaker 1: You want to figure out more about how we do that, what we do that, what our rules are, and we are completely ruled spaced as traders.
• 13:14
  Speaker 1: There's none of this.
• 13:14
  Speaker 1: What would be good Is this fit kind of thing?
• 13:18
  Speaker 1: We really do it with the rules.
• 13:19
  Speaker 1: Then come and check out our live trading training tomorrow.
• 13:23
  Speaker 1: It's completely free philxfrontorg slash webinar.
• 13:27
  Speaker 1: Grab yourself a seat and learn.
• 13:29
  Speaker 1: It'll take you about an hour and you walk away with the actual rules and the actual knowledge and you'll be able to implement it yourself in a paper trading account in an assimilated account.
• 13:38
  Speaker 1: But just the way we learn and teach.
• 13:40
  Speaker 1: How do you recommend you check that out?