Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Things Are About to Get Painful (Nasdaq Breaks Down) + Stock Market News 04 September 2024

Transcript

Felix Prehn - Things Are About to Get Painful (Nasdaq Breaks Down) + Stock Market News 04 September 2024 · Felix Nikolas Prehn's Podcast

• 0:03
  Speaker 1: Felix here, good morning to you, to another bright, red morning.
• 0:08
  Speaker 1: After yesterday's disaster in the market, I think it's worth to reassess where we're at.
• 0:12
  Speaker 1: What's actually moving?
• 0:13
  Speaker 1: Why is it moving?
• 0:14
  Speaker 1: How far is it going to go down?
• 0:16
  Speaker 1: What should we do about it?
• 0:17
  Speaker 1: Go through our favorite stocks but, above all, actually understand what's going on here.
• 0:21
  Speaker 1: And it's come about two days earlier than we thought, wasn't it the 6th of September we thought was going to be the turning point.
• 0:29
  Speaker 1: So market surprising is just a little bit here after the holidays and I'm going to share my screen with you.
• 0:36
  Speaker 1: We're going to go straight into it here as I make myself a little bit more of an electrolyte beverage, a little bit more of an electrolyte beverage, becoming a bit of a bit of a free market ritual to get the juices flowing again in that old brain.
• 0:50
  Speaker 1: So let me share my screen with you and we're going to run through.
• 0:53
  Speaker 1: First of all, let me give you a bit of shock therapy.
• 0:55
  Speaker 1: This is pre market again today.
• 0:57
  Speaker 1: So nice and red, but not massively red, but red nevertheless.
• 1:01
  Speaker 1: Amd and Berkshire are the few things that are up oil stocks.
• 1:04
  Speaker 1: Some of them are up a little bit, but not a great deal, and most things are just down moderately, which is somewhat of an improvement on yesterday.
• 1:11
  Speaker 1: At the very least, semiconductors had the worst drop yesterday since March 2020.
• 1:19
  Speaker 1: Yeah, pretty, pretty significant stuff and yeah, it's enough to scare the bejesus out of some people.
• 1:31
  Speaker 1: I totally get that.
• 1:32
  Speaker 1: So I want you to, by the end of this, a understand what's going on and also, c what the opportunities are.
• 1:37
  Speaker 1: So what actually kicked this off?
• 1:38
  Speaker 1: Well, this number has a lot to do with it, and this was yesterday's manufacturing PMI, and manufacturing has been in a recession.
• 1:47
  Speaker 1: Below 50 is a recession, right.
• 1:49
  Speaker 1: So anything less than 50 is bad, and we were expecting it to be bad, but it came in just a little bit worse than we thought.
• 1:57
  Speaker 1: And if you look at a chart of the PMI, you can kind of start to see why this doesn't look good.
• 2:03
  Speaker 1: So 50 is going to be somewhere around here.
• 2:06
  Speaker 1: So we've actually been in a manufacturing recession for about a year now and that doesn't really look good, right.
• 2:16
  Speaker 1: So it kind of makes you think, eh, maybe that whole soft landing thing really was a miracle, and you know, alice in Wonderland isn't real.
• 2:22
  Speaker 1: So that was a bit of what went on there yesterday, but there's a bit more to it.
• 2:27
  Speaker 1: Oh yeah, we're still making money.
• 2:29
  Speaker 1: It might be annoying to some, but I just like to show it because you know it's good to gloat.
• 2:34
  Speaker 1: No, because I hope it's inspirational.
• 2:36
  Speaker 1: We're up $24,000, a realized profit on a $30,000 portfolio.
• 2:40
  Speaker 1: If you're wondering if our portfolio completely tanked overnight, no, it's lightened slightly, but we're still up $5,700.
• 2:48
  Speaker 1: A couple of things that I read, and I'm going to close a few of them today, but most of them have automation set up so they sort of take care of themselves.
• 2:55
  Speaker 1: If you want to learn how we do that exactly, join the live trading training down below One stock.
• 3:01
  Speaker 1: Three rules, nice and simple, few hours a week.
• 3:03
  Speaker 1: It's completely free of charge.
• 3:05
  Speaker 1: Grab yourself a seat Now.
• 3:08
  Speaker 1: I have been saying to you for some time if you've been tuning in before, if you haven't, then you know, welcome.
• 3:16
  Speaker 1: I just remember to smash the.
• 3:17
  Speaker 1: You know what?
• 3:17
  Speaker 1: I get a little bit grumpy when people don't smash the like button.
• 3:19
  Speaker 1: We have about an 11% like to viewer ratio, which is just pretty appalling from where I'm sitting.
• 3:23
  Speaker 1: But you know, I'll let you be the judge of that.
• 3:25
  Speaker 1: The second half of September is the worst two-week period of the year and we've been saying that right, so that would be around the 13th, I think of September.
• 3:36
  Speaker 1: Now a few other things that I've just changed.
• 3:39
  Speaker 1: Ctas, these are algo funds, these are basically computers.
• 3:44
  Speaker 1: You know, computers that's a computer.
• 3:46
  Speaker 1: You get the idea and you remember those 14-inch deep displays from the 90s and they are going to sell basically.
• 3:55
  Speaker 1: So this is the S&P one-month expected CTA expectations by, I want to say, bank of America.
• 4:04
  Speaker 1: I think they make the lovely little chart here.
• 4:06
  Speaker 1: It's quite nice and colourful.
• 4:08
  Speaker 1: They have various colours.
• 4:09
  Speaker 1: So it's a rich bank.
• 4:11
  Speaker 1: And if we go up, they're selling.
• 4:13
  Speaker 1: If we go up a little bit, they're selling.
• 4:16
  Speaker 1: If we go up a lot, a little bit, they're selling.
• 4:18
  Speaker 1: If we are flat, they're selling about I don't know how much, but a bit, a couple of billion.
• 4:24
  Speaker 1: And if we go down a lot, they're going to sell a lot.
• 4:26
  Speaker 1: If we go down really a lot, they're going to, like, sell everything, including the bathwater.
• 4:30
  Speaker 1: So no matter what happens here, computers will not be supportive of our little rally ambitions, which of course isn't brilliant, right.
• 4:39
  Speaker 1: And then the buybacks are almost gone, and I told you about that at least a week ago and I said they would fizzle out on the 13th, but that about a week before that and you can go back in the videos to last week if you want to check it out.
• 4:52
  Speaker 1: I said sort of 6th of September is roughly where I would start to, you know, shut the shutters and that kind of thing.
• 5:02
  Speaker 1: So we got there two days early, but basically we've been enjoying, through most of August, $6.6 billion daily of buybacks, so big companies buying back their own shares very nice and supportive from the market.
• 5:15
  Speaker 1: And well, that's basically gone now, as we are still doing it for a bit, but we know about it.
• 5:21
  Speaker 1: So it's basically gone from all intents and purposes.
• 5:24
  Speaker 1: And you might think, who cares about buybacks?
• 5:27
  Speaker 1: Felix Boring, tell me about AI chips.
• 5:29
  Speaker 1: Well, do you see this little chart?
• 5:31
  Speaker 1: And what do you see?
• 5:42
  Speaker 1: In blue, bright blue, you see the change in buybacks.
• 5:45
  Speaker 1: So when it's positive, the market goes up.
• 5:47
  Speaker 1: Positive goes up, negative market goes down.
• 5:48
  Speaker 1: Very, very simple.
• 5:48
  Speaker 1: So buybacks are actually the only thing that have been driving the stock market in the last 10 years, or something that and money printing.
• 5:55
  Speaker 1: You take away money printing and buybacks and the stock market would be a freaking disaster.
• 6:00
  Speaker 1: Nothing would ever happen, nothing would ever go up.
• 6:02
  Speaker 1: So something to bear in mind buybacks Pause on the things.
• 6:08
  Speaker 1: And why do they pause?
• 6:09
  Speaker 1: Because earnings come up and they kind of don't think that, well, insiders can't trade.
• 6:15
  Speaker 1: So if you're the CEO, you can't trade because you have insider information.
• 6:18
  Speaker 1: And if you're a company, they kind of think if you did do your own buybacks just before earnings because you knew they were going to be glorious, then the rest of the market would see it and then jump on it and it could cause all sorts of craziness.
• 6:31
  Speaker 1: So that's why it's basically illegal.
• 6:34
  Speaker 1: And then you lot in the US decided to hold an election God knows why.
• 6:39
  Speaker 1: And elections are bad.
• 6:42
  Speaker 1: Did you not know that Elections are just bad for the market?
• 6:46
  Speaker 1: So if you look at, zoom out a bit more, if you look at from September onwards so let me draw a little line here up.
• 6:54
  Speaker 1: This is sort of the beginning of September, not the straightest lines, it's a drunk line, but you get the idea that from September to November in election years is typically bad.
• 7:06
  Speaker 1: So you know, I don't know why you bother.
• 7:08
  Speaker 1: Really, you could just make it a lottery.
• 7:12
  Speaker 1: I mean that'd be fun, wouldn't it?
• 7:13
  Speaker 1: Just pick a few crazies and then run a lottery.
• 7:16
  Speaker 1: It's pretty much what you're doing the way I'm looking at it.
• 7:18
  Speaker 1: So, yes, that's coming in.
• 7:21
  Speaker 1: So that's not brilliant because, well, you get the uncertainty right, you don't know what's going to happen, so uncertainty is a thing the market hates.
• 7:29
  Speaker 1: You might get policy changes.
• 7:32
  Speaker 1: The market doesn't like that and then it's just like an event.
• 7:36
  Speaker 1: We don't really know what the outcome's going to be, so it's just a distraction and therefore the market tends to go down.
• 7:45
  Speaker 1: And then there was this little news the department of justice, in its ever um, you know strange ideas, have subpoenaed, subpoenaed, um, lots of nvidia people, and what they're saying is that nvidia has built a dominant position in ai computing.
• 8:03
  Speaker 1: Yeah, no shit, because Intel dropped the ball.
• 8:06
  Speaker 1: So apparently that's illegal.
• 8:09
  Speaker 1: So, if I show you the article here, the US Justice Department sent subpoenas to NVIDIA and other companies to seek evidence that the chipmaker violated antitrust laws.
• 8:18
  Speaker 1: An escalation of this investigation to the dominant provider of AI processes.
• 8:23
  Speaker 1: These are legally binding.
• 8:25
  Speaker 1: They're concerned.
• 8:27
  Speaker 1: Nvidia is making it harder to switch to other suppliers and penalizes buyers that don't exclusively use its AI chips, which is probably true, and you know, they run software, literally.
• 8:37
  Speaker 1: I was traveling last year.
• 8:38
  Speaker 1: I was in Monaco and I had my laptop with me, which had a relatively modern GPU in it, apparently, and I could use NVIDIA Broadcast, which is how we broadcast this.
• 8:48
  Speaker 1: It collects all the video and audio and all that stuff and makes it work, and I thought this is brilliant.
• 8:54
  Speaker 1: So I got home, turn on my computer and I want to install NVIDIA Broadcast and it says you can't, your GPU is too old.
• 9:00
  Speaker 1: And I'm like, ah.
• 9:01
  Speaker 1: So I call my IT guy and I spent $1,000 on a GPU and now I can use it again.
• 9:05
  Speaker 1: So that is bundling and that's like what Microsoft did with browsers, for example, and it's illegal.
• 9:13
  Speaker 1: So they know it's illegal, but they're obviously happy to pay the fine somewhere down the road and in the meantime they're going to enjoy the ride.
• 9:20
  Speaker 1: So, yeah, there is probably something there.
• 9:24
  Speaker 1: Is this going to break NVIDIA?
• 9:25
  Speaker 1: No, it's not.
• 9:26
  Speaker 1: Look at Microsoft and Matter and Google and everybody who gets big gets investigated and gets fined.
• 9:31
  Speaker 1: That's kind of the deal here, but the market doesn't love it, right?
• 9:36
  Speaker 1: So that kicked in yesterday, which was not a great timing then.
• 9:47
  Speaker 1: And then shall we look at some key support stock levels?
• 9:51
  Speaker 1: If I could write some, I think we should probably.
• 9:53
  Speaker 1: I see a few questions here in the chart.
• 9:54
  Speaker 1: So what we do is I use trade visionio.
• 9:58
  Speaker 1: There'sa link down below in the description as well, if you haven't seen that before.
• 10:01
  Speaker 1: It's uh, it's uh.
• 10:03
  Speaker 1: It's a platform that we built to make it easier so we can have a look at a few key things here.
• 10:08
  Speaker 1: We can maybe start off with NVIDIA, because that's what we're just talking about.
• 10:12
  Speaker 1: You can also see in here, by the way, the insider sales, the dark pool sales, rather, so that's what the big boys are doing on Wall Street.
• 10:22
  Speaker 1: You can see that live.
• 10:23
  Speaker 1: So yesterday I've had us filter to the large trades.
• 10:26
  Speaker 1: I tend to care more about the large trades and they were largely bearish, right, largely bearish, during the day.
• 10:34
  Speaker 1: You can see just the red color.
• 10:36
  Speaker 1: They're largely bearish, so you can see where they are.
• 10:38
  Speaker 1: You can see them really, really big trades here.
• 10:42
  Speaker 1: But just yeah, gives you an interesting perspective on what's going on out there.
• 10:46
  Speaker 1: But if you just look at the chart here, what do you actually see?
• 10:54
  Speaker 1: Well, I normally look at the 50-day moving average line here, that yellow line there, and while our indicator in the background, which is about to get updated, hopefully by beginning of next week, is still saying we're still okay, it wasn't a brilliant day, and let me just turn that off for a moment here.
• 11:08
  Speaker 1: Generally speaking, when you drop below the yellow line here, the 50 day, it's a bit of a sell signal and when you do it with a gap down, like we did yesterday here, that's a really, really, really horrible sign.
• 11:25
  Speaker 1: So we basically have a bunch of things here riding against it which are bunch of things here riding against it which are let me get a pen, so one, we're below the 50-day moving average, so below 50 MA, it's usually called.
• 11:36
  Speaker 1: And then you have here you have a gap.
• 11:39
  Speaker 1: Okay, that's also bad and that's a really, really red candle.
• 11:44
  Speaker 1: It's a really long red candle.
• 11:45
  Speaker 1: We closed at the bottom of that.
• 11:47
  Speaker 1: That's again not very, very good.
• 11:49
  Speaker 1: So where is our support set right now?
• 11:52
  Speaker 1: Well, one would be the bottom of that range, which would be in the 90s, which I know you don't want to hear about.
• 11:57
  Speaker 1: From a market positioning point of view, we can also see here in red where the market's positioned 110 was support, but we dropped below that 105, 100.
• 12:11
  Speaker 1: 100 would be probably the bigger next level of support here 100.
• 12:15
  Speaker 1: Still a fair way to go.
• 12:17
  Speaker 1: So we don't have to go that low necessarily, but that's a reality now which coincides also with the previous dip here right.
• 12:26
  Speaker 1: So yeah, it's a bearish setup right now and we dropped yesterday on big volume as well, which is again not good.
• 12:34
  Speaker 1: Guinea Big is asking is this more emotional or reflective of the true company's value?
• 12:38
  Speaker 1: A stock price is never reflective of the true company's value.
• 12:42
  Speaker 1: It's always emotional.
• 12:43
  Speaker 1: The market is always emotional.
• 12:45
  Speaker 1: The market in the very long run will move in the direction of the real value, but on any given day it's just a reflection of the emotion of the market that day, which is why there's money in trading, because stuff moves erratically right and we can make money out of that.
• 13:03
  Speaker 1: So that's NVIDIA.
• 13:05
  Speaker 1: If we look at, say, just QQQ step out just a little bit here what a completely wrong number.
• 13:14
  Speaker 1: 100, yeah, and that's also true.
• 13:15
  Speaker 1: Round numbers matter more than odd numbers, and that sounds weird, but that's just the way it is.
• 13:20
  Speaker 1: It's always been like that.
• 13:21
  Speaker 1: I was just reading a trading book actually yesterday from 1976.
• 13:25
  Speaker 1: It's all still true.
• 13:26
  Speaker 1: Nothing has bloody changed.
• 13:28
  Speaker 1: Technologies made absolutely no difference.
• 13:30
  Speaker 1: We had support last week at 465.
• 13:33
  Speaker 1: That support, hang on.
• 13:35
  Speaker 1: Let's go down to the end of the month.
• 13:39
  Speaker 1: It's really what matters for qqq.
• 13:40
  Speaker 1: Yeah, let's also check out the what's?
• 13:51
  Speaker 1: The third friday of the month, 20th.
• 13:53
  Speaker 1: Nope, it's really.
• 14:01
  Speaker 1: Really.
• 14:01
  Speaker 1: All that matters is the end of the month.
• 14:02
  Speaker 1: So supports dropped significantly to here 444.75 very bizarre, bizarrely, on the QQQ.
• 14:11
  Speaker 1: So that's a big shift down in support.
• 14:13
  Speaker 1: People are hedging way, way, way below and this little support level here is no longer so, again, not brilliant, below the 50-day moving average line.
• 14:24
  Speaker 1: Not the end of the world.
• 14:25
  Speaker 1: Two more stops here, one at 450 and one at 440.
• 14:30
  Speaker 1: But yeah, right now it's bearish, it just is, it's just, you know.
• 14:34
  Speaker 1: And