Latest / Felix Nikolas Prehn's Podcast / THIS IS REALLY HAPPENING + Stock Market News 19 January 2024

Transcript

THIS IS REALLY HAPPENING + Stock Market News 19 January 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here, and good morning to you.
• 0:01
  Speaker 1: We seem to have gotten our wires a bit crossed today with the time right.
• 0:04
  Speaker 1: Is that something to do with time zones?
• 0:06
  Speaker 1: Those are just me losing my marbles.
• 0:08
  Speaker 1: I don't know.
• 0:08
  Speaker 1: Maybe it's the cat sabotaging Winston sofa.
• 0:12
  Speaker 1: Back there I can see at least one.
• 0:14
  Speaker 1: Anyway, it's going to be an interesting day.
• 0:16
  Speaker 1: It's the biggest options exploration in history and you know that makes me very excited.
• 0:22
  Speaker 1: We're going to walk through what that actually means and what that's going to do, where the market's going to go so we can make more money.
• 0:28
  Speaker 1: It's not what it's all about.
• 0:30
  Speaker 1: Good morning.
• 0:32
  Speaker 1: Everybody.
• 0:32
  Speaker 1: Ask your questions if you have any, and I'll be very, very happy to go through them.
• 0:38
  Speaker 1: Let's jump straight into it and see what the excitement is today, shall we?
• 0:45
  Speaker 1: Let's see what the excitement is today.
• 0:46
  Speaker 1: I hear it's an excitement.
• 0:48
  Speaker 1: Actually.
• 0:48
  Speaker 1: Let's get a bit of a few things here.
• 0:50
  Speaker 1: Anyway, come and join me on Tuesday.
• 0:53
  Speaker 1: Learn how we make money from our money.
• 0:55
  Speaker 1: That's probably the most important decision this year is if you will make your money work for you.
• 0:59
  Speaker 1: If you will continue to slay for some bastard who pays you a pittance, felix van Zilogslash, webinar is the place where you do that.
• 1:06
  Speaker 1: But let's look at some stuff here.
• 1:08
  Speaker 1: Yesterday was an extraordinary day in video search, to an all-time high, highest closing price in its glorious shiny green history.
• 1:16
  Speaker 1: Microsoft highest closing price in history.
• 1:19
  Speaker 1: The mega caps are all the tech stocks, all the highest price in history and it's a very, very oh hang on.
• 1:32
  Speaker 1: It's a very, very one-sided rally.
• 1:34
  Speaker 1: It's basically just the S&P, just the big tech stocks are going up.
• 1:43
  Speaker 1: Everything else is not moving.
• 1:44
  Speaker 1: Very much Lost in BKK.
• 1:46
  Speaker 1: That's very kind of you.
• 1:47
  Speaker 1: Bkk is worried that Winston won't get fed, and you're right, he should start to earn his keep.
• 1:51
  Speaker 1: I think that's what we'll do with trades.
• 1:52
  Speaker 1: If he does well, more treats.
• 1:55
  Speaker 1: If he doesn't, no more cucumbers.
• 1:56
  Speaker 1: That would be terribly cruel, wouldn't it?
• 1:58
  Speaker 1: Don't worry, I won't do that to him.
• 2:00
  Speaker 1: Okay, a little bit of a Fed update and then we'll look at what the expiration of $3 trillion something of options is actually going to do.
• 2:08
  Speaker 1: Today, and if you see me moving around a bit, finally, I did have cupping done today.
• 2:14
  Speaker 1: It makes you feel slightly weird and itchy on your back.
• 2:19
  Speaker 1: I highly recommend it.
• 2:20
  Speaker 1: It's a slightly strange procedure.
• 2:22
  Speaker 1: I look like I've made out with an octopus.
• 2:26
  Speaker 1: That's what my back looks like.
• 2:28
  Speaker 1: Anyway, enough of me.
• 2:29
  Speaker 1: We've had the Atlanta Fed president Bostick, our favorite hook.
• 2:34
  Speaker 1: He urged policymakers to proceed cautiously given the potential impacts of unpredictable things from elections.
• 2:43
  Speaker 1: Orange people might get elected, and Patrick Harker said inflation is likely to start ebbing towards this target, which is kind of positive.
• 2:53
  Speaker 1: And Gouldsby and Mary Daly are going to speak today.
• 2:59
  Speaker 1: Oh dear, and BlackRock?
• 3:01
  Speaker 1: You know the people who actually run the country.
• 3:03
  Speaker 1: There are people who think they run the country, that's politicians, and then there are people who actually run the country, and that's BlackRock and JP Morgan.
• 3:11
  Speaker 1: They expect the Fed to start cutting rates in June.
• 3:16
  Speaker 1: No, we want it in March.
• 3:19
  Speaker 1: June would be a disaster.
• 3:21
  Speaker 1: Actually, it'd be a glorious trade opportunity for a couple of months.
• 3:24
  Speaker 1: That's what we're expecting from there.
• 3:26
  Speaker 1: They say we're leaning more towards a root June rate cut than a recalibration.
• 3:30
  Speaker 1: And she's saying the markets become very exuberant in their bets on policy easing.
• 3:36
  Speaker 1: And yeah, so it's a little bit of a cautionary thing then.
• 3:40
  Speaker 1: But don't worry, today is a glorious green day.
• 3:42
  Speaker 1: Everything is green today.
• 3:43
  Speaker 1: But I wanted to just show you a little few points of perspective so that you are better informed than everybody else out there.
• 3:50
  Speaker 1: The gap between the NASDAQ and the Fed reserves should be worried about that.
• 3:56
  Speaker 1: Well, no, not that much.
• 3:58
  Speaker 1: There are gaps occasionally.
• 3:59
  Speaker 1: What I'm actually saying is that the rally is all been stimulus.
• 4:05
  Speaker 1: Fed reserves are up from what are they?
• 4:11
  Speaker 1: Up from 2.8 trillion to now 3.6 trillion.
• 4:16
  Speaker 1: So $800 billion have been pumped out there by the lot at the Fed and that's triggered a rally.
• 4:23
  Speaker 1: That's really all it's about.
• 4:25
  Speaker 1: I mean, you might think it's AI, I think it's the Fed.
• 4:28
  Speaker 1: What has actually gone up the most Well, growth software has done marvelously well.
• 4:34
  Speaker 1: But non-profitable tech is still taking up beating and you're seeing that in some of your favorite stock names.
• 4:43
  Speaker 1: I take it and that's because there is an element of the market starting to worry that rate cuts might not come in quite as thick and heavy as you'd like them to.
• 4:55
  Speaker 1: It's a little bit like the light buttons push us on this particular stream here, very, very few and far between.
• 5:02
  Speaker 1: So yeah, non-profitable tech is probably, if it goes down a little lower, a really nice bullish trade for those of you who are like a little bit of risk.
• 5:14
  Speaker 1: But I guess I want to break this down here.
• 5:19
  Speaker 1: Short term, I'm quite bullish.
• 5:22
  Speaker 1: Medium term, I'm worried.
• 5:25
  Speaker 1: Longer term, I'm bullish again.
• 5:28
  Speaker 1: Let me explain this Hedge funds did a trade, a massive trade, towards the end of last year and they're still in it.
• 5:34
  Speaker 1: They are long big tech and they're short crap Meme stocks what the Reddit crowd talks about, that's what they're shorting.
• 5:46
  Speaker 1: And last year that really bit them because the meme stuff came up a lot and mega cap was kind of fizzling out a little bit, so they were losing money.
• 5:54
  Speaker 1: This year they're like swimming in it.
• 5:57
  Speaker 1: I mean, they really are.
• 5:58
  Speaker 1: Just how many yacht shall we buy this week?
• 6:00
  Speaker 1: That's what's going on in the hedge funds, because mega caps have absolutely exploded and the meme stocks got absolutely killed.
• 6:07
  Speaker 1: They will at some point exit this trade because they're just making too much money and they actually take profits, they don't just sit on the stuff, and that could cause a reversal in big tech, recalibrating down and possibly the meme nonsense starting to float up to the surface again, just where the dead bodies are.
• 6:28
  Speaker 1: So that's something to bear in mind.
• 6:30
  Speaker 1: And then, if I look at I just a little chart here for you, which was Microsoft plus Apple plus meta plus Amazon plus Nvidia, so the magnificent five, the particular reason.
• 6:42
  Speaker 1: I admitted the other two, but it can be bothered to type them and then in the bottom chart I've got the RSI, and when the RSI is above let me put a little yellow line in here when it's above this yellow line, that it's above the 70 point line, like it is right now or like it was in November or in July or in June, typically that corresponds to a peak in the market.
• 7:13
  Speaker 1: So it's something just think about.
• 7:15
  Speaker 1: We're probably nearing this peak.
• 7:18
  Speaker 1: I think it'll probably go a little higher, but we're near it.
• 7:22
  Speaker 1: So you can always I got to ask yourself if you're a long-term and you're not a big investor.
• 7:26
  Speaker 1: Of course it's not financial advice, just an old banker sharing his thoughts.
• 7:29
  Speaker 1: Is this the point where I end up?
• 7:31
  Speaker 1: Is this the point where I pick up my first bit of Microsoft jazz at the all-time high?
• 7:36
  Speaker 1: You know, think about it, think about it.
• 7:40
  Speaker 1: That's all I'm asking.
• 7:40
  Speaker 1: And the other slight bit of warning.
• 7:44
  Speaker 1: And then we get onto something a bit more cheerful and I'll take as many of your questions as I probably can.
• 7:49
  Speaker 1: Jerome, you got a yacht for sale, have you?
• 7:50
  Speaker 1: You bought another one, have you?
• 7:52
  Speaker 1: Oh, this is good.
• 7:59
  Speaker 1: I also got herbs for my favorite doctor and they are tasting funky Crikey, oh God.
• 8:10
  Speaker 1: It's enough to make me go quiet.
• 8:12
  Speaker 1: Now you know what to do.
• 8:15
  Speaker 1: So what have I got here?
• 8:16
  Speaker 1: I've got the SMP and I've got in red the 10-year yields and oh, wow, sorry, the 10-year yield inverted exactly.
• 8:39
  Speaker 1: So the 10-year yield is back to the infamous December Fed meeting where they basically said we're done, we're going to cut rates.
• 8:48
  Speaker 1: I don't actually say that, but that was sort of implied in the 2000s bit word drivel that they put out.
• 8:53
  Speaker 1: So the bond market is exactly where we started in December, whereas the S&P is up 200.5%, and those two don't connect.
• 9:06
  Speaker 1: Either the bond market moves back to where it was in December, and I think we're going to get rate cuts, or the S&P is going to actually come back down to earth.
• 9:16
  Speaker 1: This doesn't have to happen tomorrow or next week or the week after, but in some point in the next couple of months it sort of has to do that.
• 9:24
  Speaker 1: One of them has to move in the other direction.
• 9:26
  Speaker 1: So watch those two, watch the 10-year bond yield and watch the S&P and see how they separate.
• 9:33
  Speaker 1: Now, today is a big deal.
• 9:35
  Speaker 1: We love a good options exploration as options traders, because it's sort of I don't know what is this the day before Christmas for us?
• 9:43
  Speaker 1: What did Santa Claus put under the Christmas tree, that kind of thing.
• 9:46
  Speaker 1: $3.4 trillion expiring today and, as Goldman Sachs here says, this will unclench the dealer gamma position, unclench lots of things.
• 9:59
  Speaker 1: And what does that mean?
• 10:01
  Speaker 1: I'll show you another chart that actually explains that.
• 10:04
  Speaker 1: But essentially, all these options pin the market to a certain price range and once they expire, the market gets unclenched and therefore the market can move more freely next week.
• 10:22
  Speaker 1: And, yeah, $1.3 trillion on the S&P and about trillion on individual stocks, spire is another $260 billion, other ETFs are another half a trillion or thereabouts.
• 10:39
  Speaker 1: And what's going to happen is this beautiful thing here and I'm sometimes surprised that people actually watch me because I call about talk, about spot gamma exposure.
• 10:51
  Speaker 1: You know, other people show pictures of puppies.
• 10:55
  Speaker 1: I mean, you're a special crowd.
• 10:57
  Speaker 1: Thank you very much.
• 10:58
  Speaker 1: Gamma as it comes down means the market is more likely to go further south, because at the moment, when the market drops, the dealers are forced to buy the S&P and that's happening less and less and less the extent to which they have to.
• 11:16
  Speaker 1: And if that comes down a bit more, then we're going to get into a point again where, when the market drops, the dealers sell and then, well then, stuff happens.
• 11:25
  Speaker 1: That's very, very interesting and that's what we make most of our money.
• 11:28
  Speaker 1: This is a really nice visualization of what we're looking at here, with market right now, basically up to the next FOMC meeting and anywhere above $4,800.
• 11:43
  Speaker 1: So $4,800 and above were bullish as hell.
• 11:49
  Speaker 1: We're basically saying the world is good, everything is wonderful, and between $4,700 and $4,800, can you see that?
• 12:01
  Speaker 1: Not so sure we're under-cycled, we're just like should go either way, basically just going flat.
• 12:11
  Speaker 1: And below $4,700, the gates of hell open up bit extreme.
• 12:20
  Speaker 1: But below $4,700, we get really, really worried.
• 12:25
  Speaker 1: So as long as we are between $4,748, everything's fine.
• 12:30
  Speaker 1: Above $4,800, it's bonga, bonga parties all around like in Davos every single night, and below $4,700, the doom and gloomers are right.
• 12:40
  Speaker 1: That's the way I would look at it.
• 12:41
  Speaker 1: I think that's a pretty useful bit of information there, and this applies equally to the SPY.
• 12:51
  Speaker 1: If you would trade that, it's very much the same thing.
• 12:52
  Speaker 1: So that's something to look at.
• 12:54
  Speaker 1: Maybe take a screenshot of that.
• 12:56
  Speaker 1: Anything else you've got screenshots of?
• 12:58
  Speaker 1: Yes, we do, come and join me and learn.
• 13:01
  Speaker 1: And seriously, you might think options are complicated.
• 13:03
  Speaker 1: I get that.
• 13:04
  Speaker 1: It's initially very simple.
• 13:08
  Speaker 1: Like with everything, you can go deeper and deeper.
• 13:11
  Speaker 1: But to actually be able to consistently execute trades.
• 13:15
  Speaker 1: You need a couple of hours a week, not a lot of them.
• 13:19
  Speaker 1: It's very, very simple, especially if you've been given a structure and a system like what I'm going to give you.
• 13:24
  Speaker 1: On Tuesday.
• 13:25
  Speaker 1: If you decide to join me live for a live trading trading at phoenixorg slash webinar and I'll be holding that from when I'm on the move Should I give away where I'm going?
• 13:34
  Speaker 1: It might be more interesting.
• 13:35
  Speaker 1: If I don't, I won't give it away, okay, okay.