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STOCK MARKET TALK
Recorded: March 3, 2026 Duration: 3:00:34Space Recording
Full Transcription
Thank you. Thank you. What is up, everyone?
Happy Tuesday.
Another wild day in the stock market.
This is not Evan Stock Market News.
This is Ryan behind the account today.
Back with you guys to host. We've got some travel stuff going on.
What's up, Options Mike? How's it going?
I'm hanging, man. I'm a little under the weather, but I'm here.
How are you doing, bud?
I'm pretty good, actually. My entire family's under the weather, so that's been fun to deal with.
The only thing worse than your family being sick is when you're sick.
But I'm fighting the good fight with you, taking care of a bunch of little ones and stuff.
But we're here.
We're following these crazy markets.
A lot of things, obviously, going on.
A lot of things to talk about.
And, oh, boy, it's been a while.
This week, I had to look at the date there for a second because I looked over and I was like, it's only Tuesday?
Like, it's only Tuesday? Like it's only Tuesday afternoon after everything from Sunday night on, obviously
this weekend being wild. I'm sure you guys have covered a lot of it on here going into
yesterday and then there's more developing stuff going on here. But some interesting
reactions around the market. Options Mike, I don't know if you want to go ahead and kick
us off with any thoughts, anything that you've got going on.
I'll come in and fill in some news stories and stuff.
We'll get some of the rest of the panel up here as well.
We'll cover all the different things going on today.
But Options Mike, if you want to just kick us off, that's the way I do it.
I always go to Options Mike. He's my ace in the hole.
I love it, man. Thanks for having me on.
I'm going to keep voices kind of in and out, so please bear with me here.
So, you know, yesterday we closed right on the moving averages.
We're right up against the 8 to 21 and the 50-day on the SPY.
It looked good, and we gapped down badly tonight, and it was the world markets.
Specifically, we saw panic-selling Korea that spread around the world,
and we saw China get in on it, Japan and Europe and even India and everything came down.
And our markets reacted to that.
And we had this, you know, very big down move this overnight.
We had some follow through where the SPY bounced to the 670 area, which went down and it took out a, if you look at the SPY, it took out another low and it was a big one.
So we went down and we took out the low that came from December 17th. And that was 6-7-1-21. We overshot it and shot right back up.
And here we are trading back at the 100 day after a nice big reversal off of that.
The market doesn't want to go down. Our market does not want to go break out. It also doesn't
want to easily go down. And so you get this move today, caught everybody off guard. They piled on, but they quickly reversed it and they brought it back up.
The VIX spiked hard on this today.
The VIX got all the way up to 28, but it's come back in.
It's almost back inside the Bollinger Bands here, down under 23 at the moment.
Bonds, by the way, they dumped yesterday and today.
Gold and silver have dumped.
So we're seeing a change in character in this market as we're doing this.
And, you know, the question is what we're doing today was not an easy day to trade.
If you're trading options, you had to be right at the money to make them work because the IV drain as you're on calls specifically was just horrific.
If you're trying to trade calls on that as the VIX came down, the IV was draining out of it.
And you had just yet the money or, you know it just wasn't going to work today
um you know there were things to do i did not trade aggressively today i
wasn't feeling good i traded some target some nvidia and some tqqq and overall
just an okay day made some money and not doing a heck of a lot here
uh what did show a lot of relative strength were the software names like
like microsoft today back above that 405 area.
Adobe had a big day for whatever reason, breaking to the upside here.
And we see, you know, Amazon highs of the day leading up back as well.
So we've seen some nice little moves on some of these names moving back up.
Meta testing yesterday's high of 100 day around that 460 area.
Palantir back up at 147.
So they came back in for some names here and did some buying.
The question is for me right now is what's going to happen here in the overnight session?
Are we going to get another big down move in the open market markets?
And if we do, that's probably very likely to affect our markets overnight.
Or is that selling over?
They're going to go buy our markets, take the queue, and they're going to buy it up,
and we're going to gap up.
It's really hard to say. The market really seems to be shrugging off
most of what's going on over in the Iranian war with us at this point, and just doesn't seem to
be overly concerned about it. And so, you know, for me, I'm just trying to look for a clearer
signal here. So probably tonight, I will not take any risk home overnight. I just feel like the risk is too high of what the world market wants to do.
And if the world market wants to dump, we're going to have a hard time holding up against that.
We can stay stronger, but if the world market continues to come in like it did last night,
and some of these indexes were down 4%, 5%, 6%, we could see some problems come back into this market.
So I think it's a time to be cautious.
Keep your head on a swivel,
see what's going on. But the market could have dumped again today. And we talked about it yesterday. They bought the dip. They bought the dip again today. Our market does not want to go
down easily. It just does not. And then you just need to remember that. And if you're trying to
be careful. Yeah, some interesting things to unpack there. First off, you mentioned the S&P
yesterday came right up to the high. If you look at your SPX or SPY chart, you'll see it hits the
50-day. You've got some down-sloping, shorter-term moving averages that it rejected on. And then
obviously the overnight session. I mean, if anybody looks at futures, there was just red
hourly candle after hourly candle all night long. Korea obviously had some sell-off stuff over there.
But you came down to a really interesting level.
If you go back to the low we made in December on that kind of gap down day,
we filled that gap.
It was an unfilled gap on the daily chart.
We filled that gap.
Mike, we've come right back up.
And as a trader and anybody looking at market structure, you look at, okay, we tried to break down and we're reclaiming our way back up.
I mean, it's hard for me.
And seeing software catch the bid, as you mentioned there as well, a lot of names in that sector, Adobe, Toast, some of these names that have been literally just Toast, just thrown out, getting completely bought up, having really
nice reversal looking patterns to them.
It's hard for me not to look at this and maybe get a little excited.
I mean, I'm being cautious, but I'm very cautiously optimistic, actually.
Yeah, again, my worry remains what's going to happen with the other markets, the world
markets overnight, right?
Because, you know, do we get contagions that continue to come into our markets here?
Or was that a one day thing?
That's the real thing I'm watching.
As long as we don't get some kind of really black swan type event over in the Iranian war, I think we're OK.
I saw the administration's trying to guarantee trade through the through the Gulf.
That's going to be next to impossible to do and very expensive
It's very hard to shut down
To guarantee safety when you have 12 miles between Iran and the shipping channel to protect and you can't put ships in there
Really hard to protect that with air power. So I don't know how they're gonna make that work, but you know
I think that was an interesting time to prop up trade
Yeah, let me let me read that out for everyone. About 30 minutes ago, there was speculation earlier in the
day in a headline, but about 30 minutes ago, Donald Trump put out a true social around this.
And essentially, as Mike was saying there, you've had the Strait of Hormuz with a lot of these.
And from what I've read, it's been more of like insurers saying, hey, we're not going to insure you if you go through there right now.
And so Donald Trump, effective immediately, I've ordered the United States Development Finance Corporation, it's DFC, to provide at a very reasonable price political risk insurance and guarantees for the financial security of all maritime trade, especially energy traveling through the Gulf. This will be available to all shipping lines. If necessary, the United States Navy will begin escorting tankers through
the Strait of Hormuz as soon as possible. No matter what, the United States will ensure the free flow
of energy to the world. So we'll leave it there. That was the post about 30 minutes ago. You saw
the markets catch a little bit of this last push to the new high of day on
that headline, Mike.
And when I look at that, I see that and I say, OK, a lot of the risk around the market
side of things people are worried about is this disruption of trade, especially oil.
And you saw the oil price shoot up like crazy today, obviously, on that headline, drop back
down into yesterday's range a little bit, about a 3% drop just on that within
a 15-minute period on that true social post that came out. And you think about just take the
politics and the conflict aside. That is one of the biggest effects people are worried about.
And now maybe you're getting some reassurance that the U.S. Navy is going to help get these
ships through there. I don't know. How are you reacting to that?
I mean, I think you're trying to reassure the world and keep the world's supply open and everybody. But, I mean, you can't put U.S. destroyers and cruisers into that channel.
They'll get killed.
They'll get taken out.
It's just too easy.
Remember, they almost got the Houthis almost got one of our ships over 50 miles offshore last year.
They came within a second of getting through our last defense on that one missile.
You're going to be having them try to fire at you a very short range i i'm sure the admirals are telling him we can't do this you know we just cannot put our ships into
that channel plus they put mines in the water i don't know i hope that i hope that trade plays
out well that one worries me i mean i love the idea that we can do it but putting you know our
our warships into that channel in a very tight area where you cannot maneuver is extremely dangerous.
Yeah, that was big news, and I'm sure we'll see how that plays out.
Of course, kind of a two-piece there, because first he's saying we're going to find a way to insure these people so they can continue to push their ships through there.
And then as the secondary, if necessary, is the quoted word here, the United States Navy will be in escorting tankers.
Yeah, that's a tough one.
Very tough. Well, let me give a little market update of sorts here. You heard options,
Mike mentioned several things, but we look around the market. We are down less than 1% now after
being down pretty far.
I mean, I think we were down around 2.5% right at the lows on the S&P.
Yeah, almost exactly 2.5% down on the day, a little bit further than that on tech.
But it's bounced back now.
We're within 1% on the NASDAQ, three-quarters of a percent down on the S&P.
IWM still lagging 1.3% down on IWM,
but nice recovery.
I mean, you can't really call it a V-shape, I guess,
but pretty decent recovery off the lows.
The bid is underneath the market.
Software and the mags were kind of sticking out to me.
Mike, you mentioned Microsoft there,
almost up 2% today, 1.75,
hanging out at 405 here.
Some of these other, I mean, I look across the board,
I see Amazon's green, I see Meta's green. Some of these other names have fought back pretty well.
And then Tesla and NVIDIA, still 200-day moving average sitting below there yesterday that we've
kind of flirted with and come back on. And your average market participant, Mike, not all of us
are traders like you, me, and some of the others. I see Brian's up here with us, and your average market participant, you know, Mike, not all of us are traders like you,
me, and some of the others. I see Brian's up here with us, but, you know, your average market
participant's going to see that in a simplistic form and say, hey, this company I want to own,
there's a 200-day moving average, and probably put a little bit in there.
Yeah, I think you're seeing some dip buyers come in here, especially the software names that have been beaten to a pulp. You know, I wouldn't be putting all going all in here.
I think it's the way I would look at this, Ryan.
Like if you really want to own Microsoft here, I mean, like, you know, I know Scott was talking about he bought some Oracle.
Same thing. You know, these names look like they're trying to put in a bottom or build a base here.
So maybe you buy some, but you don't buy a full size because it can go lower, especially if the market comes in here.
So I think you have to just head on a swivel.
I mean, I always tell people you don't have to catch the lows.
You just have to catch the meat of the moon.
So I would be careful here.
I would be thinking about what I want to own.
And again, watch how the world and the world markets react.
But overall, I think some of these software names are looking good.
What is the ETF for the software names? I forget the name of it, but that's another way to trade
instead of having individual names by the ETF. It's a safer way. It'll give you exposure to a
lot of the names and not exposure to just one in case you have a bad earnings report or some bad
news. Yeah, on the news front of things, obviously a lot of things, geopolitical going on, some other little pieces here.
IGV, big bounce off the lows, up almost 2% today on that sector.
Now SMH down 3.5 today is an interesting divergence there.
But banks did make it back to green, XLF.
They've kind of let us down a little bit here.
XLE is kind of its own world because of everything with oil that's going on. It's been all over the
place. But you look at some of your other sectors, banks communications coming back,
being green on the day, not a bad thing. Obviously, IGV, we talked about software there.
Hard to mention software without saying, okay, some of these names are bouncing, but we did have another software report. MongoDB yesterday got absolutely crushed down on their earnings report. ASTS, Space Mobile, another earnings report yesterday. Then you had Target on SE, Best Buy this morning, AutoZone. This afternoon, we will have CrowdStrike live. So I'm sure we'll get some CrowdStrike discussion as we get closer to that closing bell in about 45 minutes.
Options, Mike, anything else that really stood out to you other than just kind of the bid under the market,
especially, I mean, in the tech names and some of these software names?
And I see the 50-day rejection, but I also see a huge support zone down here that obviously people stepped in today.
So jury's still out, but I just didn't know if there's any other pieces that you noticed that maybe we haven't covered yet.
You know, market breadth is still very negative on the day.
Even though we've bounced quite a bit, it's still very negative here on the day.
The banks had a nice bounce back.
I mean, everything kind of came back nicely.
Target had a very mixed bag report this morning but they bought it it's trading up at a I think it's
almost 52 week high here at 122 so kind of a weird little market you know they
seem to like these names have been beaten up as long as the report is not
miserable yeah and you know credit for a lot of people pointing out private credit, still having some
issues over there on that side of the market. So I don't think you can kind of credit to everything
that's going on here to the conflict in the Middle East. I think there are some other things
underlying in this market that have been, you know, maybe some red flags and stuff, but perhaps
we've reset enough. I don't know.
I mean, we'll see what happens.
But I'm with you, Mike.
Catch the meat of the move.
I thought that was a very good statement that you made.
I think more people should try to remember that.
And sometimes you have to remind yourself of that instead of trying to catch bottoms and being a hero.
That's the ego stepson.
Exactly it.
And think before you put your money to work here.
We've had a lot of volume today.
By the way, the SPY is at 96 million shares.
It did a ton of volume in the first couple of hours before it really started to slow down.
So there's a lot of churn here in the markets today.
So tomorrow, if this market's real, we'll get up and we'll get back above that 698 area.
I'm sorry, 688 area on the spot.
Yeah, definitely looking to see if we get a continued follow through on this.
It's going to take maybe a couple days to kind of repair this, but you get outside of a balance range.
The market is basically priced in and said, hey, this is where we kind of want to be, even though certain sectors are doing different things. Now you look for it to
reclaim back into it. And that's arguably what we're trying to do here across a lot of the major
indices from what I'm seeing. Yeah, I agree. Well, Mike, I hope you get to fill in better.
Feel free to hang out and come back in the conversation at any point. I want to make sure
we go around anyone. Before I to uh my friend Brian Lund
I want to see if do we have an Evan up here I know Evan's uh got some travel stuff going on if
we've got an Evan we'll test it out here just to see if there's anything that he wants to say
stalling for just a second in case we have an Evan got a thumbs down there from Evan that's
no problem uh Brian I want to come over, bring you
into the conversation. I haven't got to speak with you in quite some time. Always a treat when I get
to host these spaces and have people on here. Brian, what do you see going on in these markets,
I guess? I mean, we hit a bunch of stuff there with Options Mike, but I'm just curious, what's
stuck out to you? Where are you finding value? Where are you finding opportunity? And what are
you maybe so cautious about?
So you call me your friend, but you go to Evan before me.
How does that work?
Well, Evan thinks you got to stroke the ego.
Right. Don't tell him I said that.
Right, right.
Yeah, no, I get it.
So look, today is a great learning lesson day.
And, you know, everybody probably woke up this morning and saw the futures
are down huge. The markets across the world were down huge. And I know it's hard. It sounds
counterintuitive. But when that happens, the first thing you want to do is not panic. You don't want
to panic. The second thing you want to do is you don't want to predict what you think will happen.
Like, oh no, we're down 600 points on the NASDAQ and we're going to crash.
Because when you do that, not only might you be wrong, but oftentimes it blinds us to what could happen.
We think we know what's happening, so we're not watching what is happening.
So you come into the market, try to stay calm, and then you put the
pieces together. Today, in my daily update, which I do every day, Monday through Friday,
I'm going to walk through three separate strategies that you could have made money on today. So if
anyone's out there and they want to see it, just follow me. It'll be in my Twitter stream. But I'm
going to give you one right here. And this is one that we did in real time in our trading room, in the LundLoop trading room.
So, market's down 600 points on the NASDAQ, right?
NASDAQ futures are down 600 points.
And you've got a stock like ASTS, which had earnings yesterday after the bell, right?
And if you just look at like a sample of the headlines, here's one from Barron's.
ASTS Space Mobile stock rises after larger than expected
loss. Okay, so we've got signal here. We've got puzzle pieces. Markets down huge. Markets down
across the world huge. ASTS had larger than expected losses, but the stock is up. Okay,
that's a signal. That's something you need to start paying attention to because that's really good relative strength. ASTS was down like maybe 60 cents before the market opened.
And then as soon as it opened, it went green while everything else was tanking.
What you do is you wait, you see if you can find an intraday base with a very low risk spot. And
there was just a beautiful bull flag on ASTS where you could have got in and
risked maybe 50 cents, maybe a buck at most and got a ride from 90 to 97, right? That's an
opportunity that you wouldn't see if you were coming in panicking, freaking out, thinking what
could happen. And there were lots of opportunities like that and a lot of different names as well as
different strategies to make money today. In terms of the whole what's going to happen in the Strait of Hormuz and what's going to happen
with oil, I mentioned this yesterday and I'm going to mention it again because I think it's
important. There's a lot of noise out there. There's a lot of people that are acting like
they think they know what's going to happen with oil and energy and whatever, I would suggest you just go right to the experts.
John Arnold, who was trader for Enron, the youngest billionaire in the US in 2007, and a billionaire because he traded oil and gas, right? Guy's worth billions of dollars. He's
probably the smartest guy ever when it comes to oil and gas. He's on Twitter. He's on Twitter.
John Arnold,
at John Arnold. Go look at what he's been tweeting the last couple of days about
insurance prices and whether the straight is open or not. When people were screaming,
oh, they're going to raise insurance prices on ships. He's like, yeah, it's already factored in.
Right. It's not, it's not, that's nothing new. When they said, oh, the straight may be closed
for a couple of days. Yeah. Yeah. That's factored in. It's not whether it's going to be closed three days. It's whether it's going to be closed three weeks. The point I'm trying to make is there are smart people out there that you can go right to and get a good sense of what's happening. They're not trying to sell you a service. They're not trying to get likes.
that, you figure out the people to listen to, you curate your streams, you don't panic, you don't
try to predict what's going to happen. You put the pieces together and then you just do it cookie
cutter again and again and again. And if you didn't do it today, that's totally cool because guess
what? There's going to be another opportunity to have a trade just like ASTS tomorrow, next week,
next month, next year. It's never going to stop. You figure out how these strategies work.
You figure out how to work them.
And then you just do them over and over again going forward.
I saw that AST Space Mobile.
So when you get a gap down day like today, and it looks like it wants, I mean, we break the lows from that kind of the open and
push down. Is there a spot, and I know a lot of people probably struggled with this, but
that pivot, how do you manage the emotional stuff of the if-then, the pivot to this,
finding some type of opportunity, but being able to pivot and say, hey, we sold off hard.
We looked like we were going to get some continuation there
in that first hour or so of the market. And then that first hour closes at 1030 Eastern time. And
all of a sudden we start ripping to the upside. Is there a way that you kind of approach that to
be able to pivot and say, hey, I got to play what's in front of me? Yeah. So let me just be
really clear about this. I'm not saying that trading this way today is easy, right?
In fact, it's probably a lot, it is a lot more work.
It's a lot more stress.
It's a lot more focus and energy than it is when you're swing trading.
I would prefer to swing trade nine out of 10 times, right?
But the market is not giving us a swing trading market right now.
So you don't have to trade this market.
Like I know people are out there like, oh, you know, traders love volatility. Like, do they really? Like, you don't have to trade this market. Like I know people
are out there like, oh, you know, traders love volatility. Like, do they really? Like,
I don't really like volatility that much. I like a market that trades like an MF-er. Okay.
So let me just be clear. You don't have to trade markets like this, but if you're going to trade
markets like this, what I do is I'm putting alerts all over my stocks at key spots, right?
Like if stocks are moving down, I'm going to put some key alerts at the low of the previous
day, at the breakeven spot of the previous day, maybe above a pivot for the previous
day.
And then I don't have to be sitting there searching through 2,500 stocks.
They're going to come to me as they trigger.
And so just like the first five minutes of this morning, you can go back and look at
the five-minute charts on these stocks.
I'll just pull out three stocks.
You can look at PATH, you can look at POET, and you can look at IGV.
All three of those stocks had massive reversal bars on the five-minute chart, okay?
When a lot of the market
is still going down, that is signal. That's telling you, okay, everything's weighing on the
market and these stocks have just reversed like rubber bands and are almost ready to go green.
That either tells you that they're ahead of the curve for what's going to happen the rest of the
market or that the sellers are done and they're exhausted. You could have probably found 50 stocks that were doing that.
So you put the alerts on, you see those sort of reversals.
You don't just jump on, you then wait for a base, right?
It doesn't matter if you're trading off a daily chart.
It doesn't matter if you're trading off a 15 minute, a five minute, a monthly, I don't
care what it is.
You want to find an area that you'll know when you're wrong and you'll know a spot to get in that makes sense.
And that's usually a base.
So you see those big reversal bars.
You wait for a little bit of a pullback.
You say, okay, I think we're going to continue this initial move.
You put a stop below the low of the base and you trade it.
Again, easier said than done.
I've been doing this a long time.
But there are ways to make money in markets like
this. You just have to be patient. You have to be in the right stocks and you have to know why
you're in them and where you would be out so that you can manage your risk.
I can agree more really good points there. You mentioned like the swing trading piece of things
and I know I feel like there's probably more people that are either active investors, swing traders,
than maybe day traders just in general.
Some of us obviously have that ability to sit here all day and be in and out and all
kinds of stuff like Options Mike does.
Like I know that you do at times, myself and others.
But my question on the swing trading is I'm with you 100% because when I look at the
market and at least the sector of the market that I follow the most is more tech and NASDAQ. That's
just kind of where I'm comfortable, where I'm more familiar. And honestly, I have not felt good about
swing trades in quite some time. And you look at the daily chart and most people look at a daily
chart and you can probably tell why, because it's just messy. There's no real trend or setup to it. But Brian, I'm curious on the
swing trading, do you take that much into account when you look at the S&P or you look at the NASDAQ
and you say, well, hey, this looks like it's going nowhere, but maybe this subsector over here I
really like in a certain trade or this name I really like? Or do you just kind of like you were hinting at there, which is
what I've done, is just I haven't been taking hardly any swing trades. If anything, I've been
looking to sell some premium. Yeah, so look, there's only five types of trades you can make,
right? There's a scalp, there's a day trade, there's a swing trade, there's what I call an
active investment.
This is something you want to hold longer term, but you want to be strategic as you
get in and out.
Those are kind of things like maybe Stock Talk would do.
And then there is long-term investing.
Scalping is its own little world, so you don't even worry about that.
Long-term investing is just dollar cost averaging, so you don't worry about that.
It's really that world between the day trade and the swing trade where most traders play, right?
And there's a connection there because a lot of times you get into a position as a day trade, and then you figure out if it has the gravitas to become a swing trade.
So I'll give you an example.
And this is a stock that's been on – I initially put it on the watch list, I believe
last Friday on our watch list. Let me take it. No, I put it on our watch list on Tuesday the 24th,
right? This is Palantir. Palantir had held a level around 129, had a very narrow bar.
It seemed like a good risk reward. So I put it on our daily setups, right? It triggered the next day and it kept moving. And yesterday I said, hey, here's a good spot to trim it right at a pivot resistance. It started as a day trade, but price action gave you enough confidence to take it as a swing trade. I'll say a swing trade because it was more than one day. But what I told people
yesterday is like, trim half of it at that resistance level. And the reason you do that
is because if the market falls through, right, or if the market gaps down a little bit and recovers,
you've already got profit locked in, you've reduced your size, and you've got a better
chance that you can swing that position, right? So figuring out
that transition between day trading and swing trading is really key. But to answer your question,
I just looked at the SPX after you said that. It's literally crossed the 50-day moving average
20 times since December 17th. That is not a market that is conducive to swing trading. So the reason
you haven't felt anything has been out there to swing trade is because the market's literally
just been chopping or kind of going a little bit down. It's not always like that. Go take a look
at when we came out of the tariff tantrum, right, back in May and April of last year. There was
literally no reason to day trade that market
for probably six months because all it did was trade up like an MFR and everything trended up.
So I will always pick a swing trade over a day trade. I really don't even like to day trade the
older I get because if I'm doing a ratio of effort towards reward,
there's way too much effort and little reward on a day trade where it's just the opposite on a
swing trade. Very little effort, big reward. But again, the market doesn't always give you that
sort of situation. And when it doesn't, you either have to decide, okay, I'm going to be a day trader,
I'm going to be a little bit more strategic intraday. Or what I suggest to most people is you just step out. Just there's no need,
unless you're trying to collect money every month or every quarter, like Scott does, Scott Redler,
there's no need for you to sit there and get beat up. Today looks like a great reversal day,
but guess what? We could be back down tomorrow. So that's the way I look at it.
My two favorite trades are a swing trade that turns into a day trade and a day trade that turns into runners on a swing trade.
Those are my two favorites, Brian.
Anything else that you want to mention here today?
I appreciate you joining the spaces.
And I know you definitely – I think the link's in your bio, if I remember.
Yeah, the one loop to check out some of the other things that you're doing there.
Brian, anything else that you wanted to mention before I move around to the panel? Yeah. I mean, look, if you're having trouble
out there in this market, don't feel like you're alone. It's a tough market for everyone, whether
you've been doing this for a couple months or you've been doing it 40 years like me. I just
always say when markets are like this, just aside stepping out of it waiting for better you
know I always try to manage the risk like from zero to ten risk off to risk on waiting for the
percentages to add up don't feel like you have to get in there you're gonna hear people on fin
twit talking about oh I love this volatility I'm doing this that 99% of them are not doing that
and you're here to make money and you're not here to make money for just the sake of money. You're here to make it for your family,
for financial freedom, to support the causes of people you like. And the best way to do that is
wait till the odds are in your favor. So don't be afraid to just step aside and wait until things
firm up a little bit. Phone call right in the middle of that. Wise words. I heard all the words as soon as I tried
to come in. Phone call popped up there. Wise words from Brian Lund. Real quick, if you are
in the audience, if you're a consistent listener here, you've probably seen a lot of these faces
up here before. If you're new, make sure you go in and follow all these great speakers. We
appreciate their time, sharing their thoughts, especially some of these guys that have been around trading
the markets for a long time. Great stuff there from Brian. Let's continue around the panel here
a little bit. Who else has popped up here with us this afternoon? I saw a Logical slide in here.
Logical, bring you into the conversation yet. Next, we hit on a few different things,
obviously talking about the action of today, software bouncing a little bit. We talked about
some of the geopolitical news that has come out in the last hour, a couple hours. Where are you
at today as you look at these markets, finding value, finding trades, finding investments?
Do you feel like, hey, the dip is here, like the bid is under the market here?
Yeah, I'm not necessarily going to say I changed my tune here, but I think this market has actually been quite resilient.
The economic data is not falling apart.
Every time we gap down, we rally back up.
Is this day generally weaker than prior days? I mean, you can make the
argument given where, you know, SPY is below the 100 day. I don't think I got rejected
right there. But I was a buyer of stocks today. I am actually levered long for the first time
in a long time. We'll see how that, you know, develops. But, you. But today at the lows, I just saw a lot of really good companies down 7% or more.
I think that a lot of them were down to pretty logical levels.
They were being sold off on low volume.
So I think my perspective has been developing in this bull market.
And the chop has been very fierce because under the hood, obviously, the things that were working so well the last two years are not working.
And the things that have been working are, you know, these staples, utilities, etc.
Yeah, I've been saying constantly that I think, you know, a perfect storm could happen is if you like, take your foot off the gas
and on some of these sectors that have been working so well.
Like I mean, dude, materials, industrials, utilities, staples, whatever, you know, they're
up like 17% in two months year to date, right?
So, you know, profit taking there, some selling there is going to start adding pressure to
the RSP.
And if, you know, the rest of the sectors that have been weak,
like financials and tech, remain weak,
then you get a double sell.
You get to sell across the market
and that's going to give you kind of this,
you know, kind of a reaction that you saw today.
But it's very possible that a lot of those sectors
are just seeing healthy profit-taking,
normal activity pullbacks and consolidation.
I think that the trend that we've seen year to date is that we've seen a broadening and
that's why you've seen such outperformance in the RSP versus SPI.
Generally speaking, that level of broadening, it's not like it's just energy, utilities,
and staples that are catching a bid.
It's like every sector X financials and big tech.
And obviously, you need financials and big tech
to really lead for a strong bull market.
But is it possible that the trade for the RSP
has been so strong in all these other sectors?
And now as you start to see some profit-taking,
again, a lot of names in these industries
are up like 40% year to date.
They're actually, they've absolutely been crushing it.
Now, if you're like a portfolio manager and you're like,
okay, this stock with fundamentals not improving at all
because it's only been two months,
you haven't gotten any reports, right?
There's not like these crazy thematic shifts here.
The valuations and the multiples have just expanded. So now you had, you know, undervalued to fair value things going to, you know, fair
value to overvalued territory, a good portfolio manager after a run like that is going to
say, time to rebalance his portfolio, and then take some profits on the things that
are working. I think that that money will find its way to the other sectors that have
been lagging. So I mean, that's what I would do.
So, because the economic data has not necessarily been falling apart,
you know, I am still a little wary about consumer in general.
But, you know, a lot of the manufacturing data points that we've seen
have been actually expansionary territory for the economy.
So this is, you know, lately been more of a CapEx economy
rather than a consumer spending driven one.
But for now, it's not like falling apart.
If the economic data was showing us
this is getting really bad and all that stuff,
I'd be a lot more concerned.
Now, I don't want to long the consumer.
If you've listened to me over the last years,
I prefer biotechs and I like healthcare.
I like stuff like that.
So that's where I'm really heavy.
I started buying...
Whenever I say...
I'm actually levered long today.
So I've added a lot of exposure.
But I've just decided to add things that I feel more confident in, regardless of the macro
or regardless of the backdrop.
I do think that biotechs and healthcare will do well.
So I think the things that I've been posting lately
is just this chop will drive you nuts.
It's important to be obviously selective
in what you buy.
If you buy something at 60 times sales,
you're asking for it.
But if you're buying things that you think
are reasonably valued,
technicals look good,
they're not just like in a stage four decline,
which I don't think any of my names really are,
then I think you have something there.
Now I say that,
but I actually added some software as well.
That was the first sector to go green today.
I think you have to be very selective in software too.
You can't just say, oh, look, Adobe's cheap or Salesforce is cheap.
I think those are...
I don't like those businesses at all.
So I think it'll remain a stock picker's market.
I think you have to be pretty selective.
But yeah, I had a good amount
of exposure today. And I think the theme that I've been the kind of thoughts I've been having lately
is to extend your expected duration, your time horizon on some of these names, there will be
volatility ahead. But if you're just like
not over levered, and you have, you know, and you're buying things that are not just
like, falling straight, vertically down. And you're not like buying calls and things that
are going to absolutely bleed your account to death. I think you can. I think it would. I think it's totally fine to be buying stocks.
Um, you know, again, this market definitely looks like it could have further correction
ahead. I think what is notable though is in prior corrections, typically you start to
see like a lot of stocks roll over first. I think you can make the argument that a lot of stocks have rolled over
quite a bit. And a lot of these names are down 40, 50, 60% from their highs. So, you know,
it's possible we rally a bit, roll back over again. But I wonder if at some point, some of
these individual names that and these individual sectors that have been sold off a lot, if they'll be able to make a relative, like they'll show relative strength to the index. And we can start to see some sort of like a like a higher low, or you know what I mean, like a higher low, not while the index makes a lower low, because that's kind of typical behavior you see in pullbacks, is that maybe the index is just late to this action. Now, if you want to like, wait this out,
you can totally do that too. That's not an issue. I'm personally just kind of tired of
watching the tape so closely every day. And I just want to own the stocks that I like.
This is not a time to be owning your third favorite idea. I think everything you own your
portfolio, you got to be able to defend it and understand the business, understand the valuation
of the stock. Look at the technicals and say, you know, this isn't breaking down by any means. Maybe
there's like some sideways consolidation here. Maybe it's a pullback to support. You know, if
it's just rolling over, and it looks like it's about to reject, then
make new lows and all that stuff. And there's zero. So you got to have technical support,
valuation support, or both. They need to be good businesses. Yeah. So I mean, I think if you stay
away from... On that point there, logical, when you're looking around maybe different companies
you've researched and liked, and I've heard both sides of this argument, so I'm just curious kind of where you stand because a lot of times I see people say, hey, this chart, I have conviction in this name.
Obviously, that's like a key checkoff point.
But then from there, I see people say, well, technically, it still looks great.
Valuation is still fair, whatever it is, and I like it there.
And then I see other people that say, hey, I've really liked this name for a while.
It just went on a 20%, 30% discount.
The fundamentals look very attractive down here.
And even though the chart has broken down, now they see the opportunity that they didn't see when it was at higher levels.
I'm just curious where you're at between those two.
Hey, let me – I don't mean to interrupt here, but I want to, this ties into something
you said logical.
You said, make sure you don't buy a stock in a stage four breakdown.
Can you explain that to people?
Because I think that was really key.
And I think this also goes to your, your question, uh, stocks.
Yeah.
So, uh, look, I, I, and I'll answer both those questions at once. You know, Ryan, you asked me essentially,
how do you buy a stock if you know it's down 30%?
But, you know, and then, you know,
Brian's question of, well, what's a stage four decline
and how do you avoid that?
So that's kind of where it comes into,
I think to be a very good stock picker and good investor,
you can't just be a technical person
or a fundamental person. You really have just be a technical person or a fundamental
person. You really have to be both, especially in times of volatility. And so there are many names
to me that are in stage four declines, which means that they've broken through all of their
moving averages. The shorter term moving averages are just now starting to curl to the downside.
They're below their 200-day moving averages.
And they just look like they keep doing this thing where they're in a downtrend,
where they fall, they take a leg lower, they rally a little bit,
roll back over, make a new leg lower, things like that.
It's really, I would just technically speaking,
not want to be buying any of those kinds of stocks
unless I could see them trying to put in at least a higher low and push a little bit higher.
That would try to help me think that there might be a trend reversal here.
But then putting my fundamental cap on, some of these names in stage four declines,
also, even after 30%, 40% drawdowns, they're still very expensive.
So I don't touch things that have extremely high valuations. I think one mistake I probably make
is that I don't touch them typically during bull markets, like raging bull markets where
valuation takes a backseat. And that's probably where I could be juicing more of my returns. But because I'm not the type of person to, I'm not going to switch really,
you know, my perspective on how I invest. I always like to have a reasonable valuations.
It allows for more upside through multiple expansion on the valuation upfront. So yeah,
you know, I think one thing is, yeah, so on the stage four decline, it's making new lows,
it's rolling over.
And then it's definitely a do not touch if the fundamentals also say that it's an extremely
overvalued stock.
So those are probably things to best avoid right now.
It's hard to defend them both on a technical and fundamental basis.
But there's a lot of stocks that are down a lot.
And they are, you know, for whether it's sector-driven weakness or whatever,
they're just not really performing well.
Things like biotechs are actually holding up quite nicely.
At worst, they've been basically sideways to flat.
So I think those have been actually showing quite a bit of relative strength
relative to a lot of other sectors that were doing well last year
because they're not breaking down.
They're not actually going lower.
So those are things that I've actually been increasing my size to.
But there are other things that I am totally,
I am catching some falling knives.
We'll see how that ends up playing out. Like on the software totally, I am catching some falling knives.
We'll see how that ends up playing out.
Like on the software side, I have a couple names.
But I mean, we talk about synaptics on here.
I mean, that touched 100 day today.
I added to that today.
Like there are names that have really strong fundamentals.
Like the businesses have massive tailwinds ahead.
The valuations are quite cheap.
I think that's trading at like 15 or 16 times earnings here. And we know that their underlying IOT business is growing 50% year over year. And that'll continue to grow. And so you need to
understand the fundamentals of the business. You need to understand that valuation-wise,
what's the downside here?
Not to say a cheap stock can't get cheaper,
but if it's a cheap stock and it's a growing stock,
then you feel somewhat comfortable.
I think if you're buying a cheap stock
and you're just buying it because it's cheap,
then that will probably get cheaper.
That's the definition of a value trap.
A value trap is a stock that looks cheap
and it's not growing anymore. So you just want to make sure that you're, you know, you have to take all of this into
account. Fundamentals, having fundamental support means not just valuation support, as in this stock
is pretty reasonably priced or cheap, but also that it's growing, which means that the business
fundamentals are strong into the upside. That gives you some confidence in buying some of these things.
I like Global Foundries, GFS.
I mean, that chart has been pretty good.
I haven't actually looked at...
Let's see what the chart looks like.
I actually added some today.
Yeah, I mean, look at that chart.
Look at GFS today, down 5%.
But that thing is right sitting on the 90MA.
It hasn't even violated the 21.
And it's in a sector that it's going to see a lot of
upside. So and it's trading at like, I don't know, 15 or under times their operational cash flow.
It's a cheap stock. It's a growing business. And the technical still look great.
I like Personalis, PSNL, maybe those, you know, it's a higher beta stock. It gets bunched in with the ArcG kind of names.
But it's just been consolidating sideways.
Nice volume.
They're in the middle of an inflection here.
Are the technicals maybe a little volatile?
Yeah.
But what do you expect in small caps and small cap bios?
It's definitely not breaking down.
It's actually
above all the moving averages on the weekly timeframe, one of my largest positions. Or,
you know, names like ABVX, which I've talked about, or Nectar. I mean, those things look so good,
and I just keep adding to them. Or SNDX. I mean, there's just so many names that look good. So on
a day like today, I see five, six, 7% pullbacks and names that I like that fundamentals look good.
Valuation looks good.
Technicals look fine.
They look good.
I'm leaning in.
And I don't think that a lot of those deserves to be sell off.
And generally speaking, the market has been pretty resilient.
And some of these names have held up and shown quite a lot of relative strength.
We'll see. I still think there's risk in the MAG7. I think that it requires far too much liquidity
to keep those names up. That's probably why you've seen breadth expansion as these names
have approached $3, $4, $5 trillion market caps. And so that's why they've kind of been stuck in
mud. There's not much of a bid there. They're not bad businesses, so I don't expect them to just fall apart in the middle of a bull market. We shall see. I think the way I frame it is like, there are stocks to avoid, there are sectors to avoid, and there are other places that just look still great. And so I'm taking advantage of dips, especially in names that I think look good relatively on a lot of different angles.
And real quick, just to give a little extra color on that stage four thing.
So there's four stages of stock, accumulation, markup, distribution, and decline.
Decline is stage four.
This is a concept that came out in the 80s from a technician called Stan Weinstein.
It's been built upon by Brian Shannon, who I think a lot of people know. I put a graphic on my Twitter feed that shows the four stages and shows the decline stage.
The big thing about stage four is it's the final stage. It's after all the buyers are out and the
stock's going to tank a lot. You can have pullbacks and you can have selling in the markup stages or even in
the accumulation stages, and that's fine. But when you get that final decline, that stage four,
what Logical is talking about is that's a big difference. That's a stock that isn't coming
back anytime soon. Brian, I still got you. I appreciate that additional thought there.
Can I swing that same kind of topic towards you that I was asking Logical there? Because I see both people, and there's a thousand
ways to skin a cat, as they say, but I see some people that look at it and they say, hey, this is
holding up very well in the meantime. And I see other people say, hey, it's been overvalued and
it's finally come down to an area where I'm comfortably, or I'm more comfortable buying it at this. It's more attractive to them. I'm just curious, do you look for something that's,
you know, comes down into that 30, 40% discount? Do you wait on it to base or do you look for more
things in a bull market as logical alluded to there? You've been in a bull market. Do you look
for things that are holding up strongly in a bull market? Yeah, this is something we talked about
yesterday a little bit is you have people that are like a stock, a runaway stock, let's say ASTS a few months back
or Oklo, and they're like, oh boy, I'd love to buy this thing down 20 or 30%. And then it goes
down 20, 30%. They don't want to buy it at all, right? So the way I look at it is people were
trying to buy ASTS down 5%, down 7%, down 10%, down 50%.
Like they kept trying to buy it and they kept getting their head smashed.
And if a stock pulls back like that, I want to see some strength before I get into it.
There's no rush, right?
It's not any different than catching a falling knife,
except that you're catching a stock that's pulling back from an uptrend.
And so I don't need to be the first person in it unless
I'm doing a day trade. And if that's the case, then I'm looking at five minute charts and none
of that stuff matters. So I have this concept that I think I created. It's called the move
after the move, right? So stock is tanking, tanking, tanking. It just keeps going down
every day. People are like, oh, it can't go any farther. Oh, the valuation's great,
but it keeps tanking, keeps tank tanking I don't want to buy that
stock at any point I don't want to catch that knife I want to wait until it has
its first counter trend rally right so this is a reactive rally in the opposite
direction of the major trend I don't want to buy that either I want to wait
till it pulls back a little bit after that counter trend rally gives me a
little base and then I want to get in on the move after the move because if that counter trend rally continues after basing a little bit, there's a higher percentage chance that it's going to continue.
And the bonus is I know where I'm wrong because I can put a stop below that base.
If I'm just trying to pick a stock that's tanking, that's falling because people say it's cheap now or because the valuation, like I have no objective spot where I know I'm wrong. I'm literally trying
to catch something that isn't a free fall. So like I wait for the move after the move that can
happen on a pullback. It can happen on a stock that's correcting. Again, there's no need to be
the first person in there. Like I'll wait for some people to get in there, see some strength,
see some levels hold. Then I'll get in because I just think that puts the odds
in my favor
that's a really good take there Brian and your technical traders are out
there you know they'll call it looking for the higher low or an inverse head
and shoulders or whatever but the way you just described it is what I look for
personally as well like okay no I don't have to catch the falling knife.
And options Mike kind of let off today,
talking about just catching the meat of the move.
Okay, you've got some type of confirmation.
You've got, okay, it's trying to change structure,
change character here a little bit.
There's some confirmation.
Now I get in the trade.
I really like the way you laid that out.
Brian, I did pin that up top, the stage four decline.
If anybody wants to look at that,
you see Brian Shannon tagged in that tweet as well, but a really good graphic there up in the
nest for anyone that wants to take a look at that. Seven minutes until the close here. Great
conversation going on as always over here. I don't get to be a part of it as much anymore,
but boy, I am really enjoying this one today. So big shout out to everyone being here,
all the people down below. We've got a few more speakers that we can get to.
Obviously, we'll get over to Stock Talk. We'll get to Sam. We'll get to Will.
We do have the close and we'll have CrowdStrike earnings here in just a little bit. And then
Sam, I'll actually bring you in next if I can. I know you're really looking forward to this
afternoon's earnings of Ross Stores, your favorite place to go shop on Saturdays.
Yeah, that's my largest program.
You don't care about CrowdStrike, but you're a big ROST guy over here, Ross Stores.
Ross Stores is going to disrupt NVIDIA.
They are developing their ASIC chip.
No, just kidding around.
I don't think I've ever traded Ross Stores.
Go look at the chart.
You'll actually be shocked
at what no i know i've been doing i know like there's a lot of those charts have been acting
wild i mean even think about it from a fundamental perspective um you know well this is the reason
why walmart has done so well it's because they cater toward uh they still cater toward like the
middle class but also it's like where people kind of go like when they're on a budget, whatever it is.
So I guess if the economy is slowing down,
whatever, and spending is tight,
then they will likely go to raw stores
and see more footage traffic there.
But it's not my realm of expertise.
And if it would be anything, it would be a trade.
I just have no, like, I don't even know how to examine
even like retail businesses,
brick and mortar ones specifically,
more in the e-commerce segment.
But I mean, speaking of e-commerce, Sea Limited is down like 20%.
And this was a major Wall Street darling.
It bottomed around like 30 bucks a couple of years back, went all the way to near 200
and it's down over 50 or 60% from its recent highs.
Not its all-time. It's recent highs. And, um, you know, to be honest, I'm kind of surprised. I never bought into it, uh, as it was falling,
as you guys were discussing the stage four declines,
I don't like to catch falling knives. And even then,
like you would have thought that it would have based that,
but actually never based out the whole time. It just kept on falling.
So I know there's like a lot of people who are waiting to buy this thing and it just keeps falling. You know, I could wait for that
thing to settle out, wait for the moving average to catch down and then wait for it to base out
for that stage one accumulation. And then when it does, then maybe look to get longer. It starts to
see like maybe a multi-month or something breakout. But until then, it is not just C-Limited that's
been having this pullback. There's been
a lot of emerging markets in e-commerce. You know, your Mercado Libre pulling back pretty
considerably below the 200-day moving average. And this is actually a pretty decent size. I know,
right? It's pretty bad. I know me and you were along the stock. And it has just not been performing
as well, even though you had an exuberance of outperformance for emerging markets.
The problem is, is that the emerging emerging markets outperformance has been centralized more toward
memory. And that's why everyone has been looking toward EWY, which is like literally 50%
Samsung and SK Hynix. And that's two of the three high bandwidth memory companies around
the entire world that shift supply globally. And the third one is Micron, which obviously is based in the US.
So when you really think about it, EWI is down like 10% today, right?
But if you look under the hood, a lot of the memory stocks are down.
And these things are up like almost 50% to 100% year to date.
So even if it's down like 10%, 15% for the memory stocks,
it still is up considerably
and could just be backtesting some moving average
in a weekly chart.
But if I was still long these stocks,
I would really wait to see what's going to happen here
because these trends tend to reverse pretty rapidly
like we've seen with silver and gold.
When we originally thought gold was going to top around $3,500,
we thought silver topped around $72 and it continued to make a move higher. Now, timing the top is very
difficult to do, especially when it comes to metals. And I'm not going to be the one to talk
about that because I am not a metals trader at all. But with a lot of these tech stocks,
there's a bit of fundamentals behind it. I don't own any memory stocks, by the way. But if I really
think about the cycle going on here, memory stocks tend to be the last things to peak in a major
semiconductor cycle. I'm not saying it's topping right now, but the reason why they're last in the
top is because they are like the cyclical of cyclical stocks when it comes to semiconductors.
like the cyclical of cyclical stocks when it comes to semiconductors.
And if we are in somewhat a digestive period,
these will likely have much more downside if we did reach the peak.
Now, I don't have any leg in this,
so I can't really say if it actually is going to do that.
But if you're going to be buying here,
then it would need to be at like some sort
of critical juncture on the TA chart, moving averages, exponential moving averages, whatever
it is. But then you'd have to have some sort of fundamental conviction behind it. We are seeing
the spending continue when it comes to a lot of AI. We're seeing the hyperscalers likely going
to continue the spending into 2027. Who knows what's going to
happen in 2028, but it's very likely going to continue increasing the spending for a while.
But the rate of acceleration is probably going to slow down dramatically. And we do see a lot
of greater investment from these memory companies, especially from Micron we've been seeing lately.
So it possibly could continue. But the reason why I'm not a buyer in it is because I'd rather buy something that has
already went through that base out period, where it has already went through that stage two and is
already in the stage one period and then starts a social recovery. So one thing that I've noticed
lately was that you've had a lot of software stocks outperform semiconductors very dramatically
in the last few days. Now, just a short-term trend does not mean a massive trend reversal
and software stocks go to the moon.
But it is good to see that they kind of already based that already
and they're starting to have some relative outperformance.
Same time, it's like, dude, if you chase it over here,
there's nothing to say that it's just going to pull back and then that that's where your entry will be and like brian was saying
that's the problem with this is that if you were to chase this move and you set your stop too tight
you might get stopped out of a continuing trend or possibly even a near bottom so it's good just
to be patient and not try to do anything i mean mean, in a day like today, I barely do any trading,
mostly because one of the VIX is around like 25,
or maybe it's like around 22, 23 now.
I see the market pull back a little bit into the close,
but I don't know.
It's just, I'm not a complete expert at trading this
at a very short-term timeframe.
And I don't want to try to push it,
but I do have some names that I'd like
to buy. I'm really planting myself in some software stocks here, and there are names that
I'd like to add. But as far as the broad market goes, you're not really seeing that continued
move that we do want to see. Actually, I think we just closed over here, and I'm wondering where
the market closed, actually. Yeah, market officially just closed right there. End of day,
NASDAQ down 272 points. It's right at 1%. The S&P down 65 points, just under 1%. If you use SPY,
that's $6. QQQ, $6.50 down on the close there. VIX at 23.5 there at the close. Pretty interesting. Silver down 8% as we close here.
I do want to get some more of your thoughts, Sam,
but I did want to get that close there as well.
We are waiting for CrowdStrike earnings,
I think, is the biggest one that we'll be watching for this afternoon.
Those are expected here in the next couple minutes or so.
405, I guess.
Whatever time zone you're in. 05. Just add 05. That's the last time it
reported historically looking at earnings hub over here. SpaceX adds Citigroup to the IPO lineup.
They're really trying to get that pushed out. There's been a lot of other headlines as well.
Not too many new headlines in the last hour or so, so we can hash back on that. We'll see what
these earnings look like. And I'm curious, and if anyone that's up here on stage,
feel free to hang out as we get these CrowdStrike earnings out. We'll probably react to those in
real time. We'll get over to StockTalk, get some of his takes around the conversation that we've
had so far, the markets, everything that's going on, anything that he's doing. And we'll get around
to some of the other thoughts on the panel today. Great panel this afternoon.
For sure.
I see Sniper hanging out with the Sniper.
I know he's got some of these earnings stuff, headlines ready.
There's some other earnings coming out as well.
Not as many large or even medium caps today.
We have Ross Stores, Q4 EPSB, Q4 Sales came in at $6.64 billion, grew 12%.
I didn't know that company makes so much money in a single quarter.
That's crazy.
EPS $2 above guidance.
And Q1 guide is $1.60 to $1.67.
So we're seeing some EPS growth year over year.
And they beat estimates for EPS for the full year, 2026.
So they're probably up right now because that's a triple beat.
Ross, yeah, Ross store is up 7%, new all-time high, actually.
Just go Long Ross and Walmart.
Just go Long Ross.
Dude, Long Ross short crowd, is that the trade now?
Is that the trade now?
That might be the trade in a couple of minutes.
Here's trade.
Intel appoints Craig H. Barrett as new board chair.
I see that coming out right now as well.
But yeah, Ross Stores, nice beat there.
Cross bottom line, new all-time highs.
CrowdStrike should be out in a minute.
I know we have GitLab today as well.
That's another name that I know Sam has fought with.
I'm not going to say you're right. I'm just saying you fought with it over time. Oh my goodness, man.
Like just, oh my goodness. I held that thing. I bought it in early 2023 around like 30 bucks
and ended up riding it up and down, up and down and ended up getting out of 47 bucks. Thank goodness.
But that's like one of those software stocks where the valuation has compressed so much
lately that it might just end up being an acquisition target for below premium of what
people would have expected to be. That's what usually happens with a lot of these software
stocks where they pull back dramatically. We saw the same thing happen with Confluent.
And then there's other companies that get bought at a premium near its peak. So you saw that with
CyberArk. You saw it with New Relic when it sold around like 70 bucks or something at a premium near its peak. So you saw that with CyberArk.
You saw it with New Relic when it sold around like 70 bucks or something at a premium.
It happens pretty often, but I wouldn't be surprised if this gets acquired.
Quick Logic just reported as well.
They missed on one of their metrics there.
That one's down a little bit.
Q-U-I-K.
CrowdStrike's the big one.
Of course, we should be getting here in the next 30 seconds or so.
So we'll see what happens with that.
And we'll continue the conversation here.
Of course, any other breaking news or anything, we'll bring it to you live here on Stocks on Spaces. Make sure you're following this host account for live, free spaces, information, education, all the above, each and every day, Monday through Thursday.
Power hour, as we call it, 2 p.m. Eastern.
I thought you were live for the close.
Proud strike is out.
$1.12 is the report.
74 cents was the estimate.
So that's a pretty decent beat there if those numbers are accurate.
Up 3%, just over $400 a share.
Let me see what the revenue numbers say.
I didn't hear the revenue.
CrowdStrike revenue came in at $1.305 billion.
Expectation, $1.30 billion.
EPS came in at $1.12.
Expected EPS, $1.10.
I suspect there might be a surprise in guidance or something
because the stock is definitely moving higher.
Oh, we just reversed.
Yeah, it just reversed.
Down 2%.
The guidance they gave out is where it's dropping.
4.78 to 4.9 full-year guidance update, 1.6 to 1.7 for Q1.
I'm looking for the benchmarks on that as well,
but as soon as that started hitting the headline
As soon as that started hitting the headline is when the reversal really started happening here.
is when the reversal really started happening here.
Yeah, I don't, whatever the numbers are, if software is back, this stock's going to recover.
It's always at a premium.
But software has to be back for this thing to come back.
Still trades are very expensive.
I see the Wolf account just got it out here.
1.36 billion. The here. 1.36 billion.
The estimate was 1.35 billion.
So pretty much unchanged on the revenue guide for Q1.
Yeah, net income, all this stuff I'm looking for here.
I think Crowd is not even in the IGV.
Maybe.
They're in the sub security ETF though. I read the, yeah, everyone's eyes are on IGV right now.
Let's just take a look and see what those holdings are. It's like Palantir, Microsoft.
Let's get so many in here, yeah. Microsoft, Palantir, Oracle, CRM, Pandabi are the top five.
Yeah, that's pretty much it.
Applovin, Intuit, Adobe.
CrowdStrike is here, right here.
4% weighting, the ninth one.
ServiceNow, which had an amazing day today, is the 10th one.
And then it goes much smaller from there.
I'll tell you, I think you're going to see relative outperformance in the software side
from like the names that have relatively much better valuations. Because I think at this point,
if the whole bear thesis for software is that AI is going to lower the barriers to entry.
And so, you know, some of these businesses are quote unquote commoditized. I don't really believe
that. But if that's the sentiment, then the idea is that the premium multiples need to compress.
And so that's where I would be thinking that if you're trading at a 50 PE versus a 15 PE,
there's just a lot more compression that can happen from 50.
Question.
I got a question for everybody does anybody think i mean when you look back at 2022
for example and we've had two years where the market is from the 2022 low has basically gone
straight up we had the pullback in 25 and then we've gone straight higher i mean could we be in
this in this mode where we consolidate and maybe we just kind of
drift we kind of stair step our way lower and and kind of just grind where maybe it's not a big
washout like we had in april but it's more of like a more measured move down and things reset
because even if you look like you know the mag seven names right like a lot of these mags are
not really in great places if you look at the, you know,
just look at the queues on the weekly now below the 21, below the nine. And when we close like
three, four, five weekly candles below those levels, historically, we typically trade further
down. The times that we have traded below the 21 we usually get a snapback weekly candle then
it's back to the upside but we have not gotten that um thus far so i mean i'm more in the camp
that a lot of the charts have some damage the big mega cap names unless they get it in gear
along with the banks like the xlf and the financials I just am not sure that we just go ripping to new all-time highs
unless those things start to turn around. You need financials, you need technology,
you need the big mega cap names to perform. And if they don't, I just think that you're in more
of a choppy market that could be two-sided. Maybe it's just sideways or maybe just a light
stair step down over the next few months.
I think it's a fair assessment.
And I don't think anyone's base case at this point should be that there's going to be a V-shape recovery.
But again, does it also mean that there's going to be severe downside from here?
I think that's the question you got to ask yourself.
If you look at the,
I'm looking at XLF, the weekly chart, we bottomed just above like a couple bucks above the
100 week moving average. We're a couple bucks above the 100 week moving average now.
So and I did see that there was a lot of bullish options activity. There are selling puts on the big banks today. So I don't necessarily think it's going
to be like a reversal to the upside in any strong, meaningful way like immediately.
But I could see us having less downside from here. I just don't necessarily see
as much of a economic like you would need, in my view, to get something like that's a prolonged
bear market or something like that. You would need something that's really going to throw this
market off its seas. And I, like in 2021 to 22, you had the fastest rate hiking cycle ever at a
point where there was free money for a couple years, fiscal spending like crazy,
like money supply increased, and then you basically pressed on the brakes as hard as possible.
It's just not that scenario right now. We don't have those levels of elevated valuations.
Now, I think there is risk in terms of big tech is a big weighting in the market,
too much liquidity to keep them up,
and their free cash flow is impaired with all the CapEx investment. 100% agree with that. I do think
that there could be further correction, especially in big tech, which could drag the market down.
Well, even if you look at, I agree with you. The other thing I'm looking at just from,
and I've been looking at this for months, is credit. When you start to look at
the consumer credit, I mean, you got subprime auto loan delinquencies are at record highs.
So you have stress in the consumer, especially on the low end. You got credit card delinquencies
that are moving up. You have bankruptcies that are moving up year over year. You have foreclosures
that are moving up year over year. So some of those early signals in the credit markets,
and when you start to look at the private equity side, which has been getting destroyed,
like KKR and Blackstone and Blue Owl, like these names are, you know, they took out the April lows
a while ago and they've continued to go lower and there is stress in that space. And some of it
has to do with, you know, credit default swaps and some of the data
center lending that's going on that have been moving higher. But if interest rates or treasuries
outside of today do the inflation scare, but if treasuries start to come lower over the next six
to 12 months, you're going to see widening of credit spreads. And that is going
to put a little bit more pressure on the market. And you're already seeing it in these private
equity names. So I think there's maybe some churn, maybe a lot of this or some more of this
volatility that we've seen recently has to do more with some of that private equity issues that
there may be some stress in there. And then also, I think there is
some stress on the consumer, especially on the lower end with delinquencies on the auto loan
side. And then you're starting to see some small rises. Obviously, it's from below base, but rises
in foreclosures and stuff like that. So the the you know you look at the big mega cap names
right like like a tesla that's you know below the 21 week you know apple is probably i would
say the most constructive but a little defensive nvidia not so good microsoft is at a key level i
think that needs to hold i mean i don't i mean google's run a ton but google could easily come
back to where it broke out from, which is 207.
I mean, and that would still be bullish to me.
That'd be a great buy down there.
I mean, that's a long way down, but it went vertical in the past five, six months.
Meta's in the middle of kind of nowhere.
Amazon, obviously below the 50 week.
Broadcom doesn't look great.
AMD doesn't look great.
Even the semis really didn't rally that much today. Um, semis was probably one of the weakest spots in the market. So yeah,
we're in an uptrend, but could we stair step our way down to, you know, 6,100, 6,150 and SPX. And,
you know, could you get, uh, still be in a bull market? Of course you can, because
the market's still up on the long-term
trend, but could we burn off a lot more than people think? I think you got to put that on your
risk profile. Sure, software has been absolutely crushed and there's some great buys in software,
like I've been nibbling on ServiceNow, a little bit on Adobe, Intuit, Microsoft, some of these
names that have been getting absolutely crushed.
I think those are the places you want to go. And some of the other stuff that started outperform
was real estate starts to look good. Some of those names are up 15, 20% this year already.
There's definitely some other sectors that you can get involved in. But I just think that
where are we in the market? I think you got to prepare for two-sided
action and maybe we go nowhere or maybe we just grind sideways or a little bit lower. But,
you know, if we did move a little bit lower in the S&P back to, you know, 6,100, 6,200 and tested
those previous highs, I think that'd be healthy and give you a great entry for longs back to the upside. So I just think you got to have it on your radar and keep your size small.
Don't go all in on positions thinking we're going to go to 7,500 or something in the next three months
because I see all over the internet, all over X and all over Reddit,
these people like, I'm loading up on calls.
Well, the other thing too is when you're loading up on calls with a VIX in the mid twenties, uh, the return's not always that great because
obviously when volatility comes out, you don't get the same juice to the upside on the calls. So,
um, just kind of trade small, pick your spots. Cash is a position, you know, you can be patient,
uh, look for the stuff that, that has been beaten up that you like. And I think you just,
you know, be nimble and, and try to, uh, you know, try to be patient and look for the stuff that has been beaten up that you like. And I think you just, you know, be nimble and try to, you know,
try to be patient and look for the best opportunities.
Well, to your point, there are a couple of things.
Seeing the, you know, Stock Talk, and I'm going to go over to him next,
but looking at like the 21 EMA on the weekly chart,
until that's forfeited, you're still in pretty decent structure. But
I did see Stock Talk just post this a little bit ago, that 100-day moving average being forfeited.
And the last time it did this, it was another $100 drop, which not everything is the same. But
there's always something to kind of draw comparisons to look for those rhyming pieces of the market.
I would much rather see a pullback like we had maybe in the fall of 2023, you know, a two, three month kind of just drop down a little bit instead of I mean, that 2022 was just brutal for for everyone.
I don't think, you know, dip buyers, traders, all the like.
That was not a fun time because it was a lot of head ripping,
dead cat bounces, whatever you want to call it, you know, counter trend rallies. But either way,
I kind of want to see what Stock Talk's looking at here. Stock Talk, great to finally chat with you again. I hardly ever get to talk to you much these days, but great to be here with you.
You've heard a lot of our conversation throughout the last hour, hour and 20 here. And I'm just
curious what your take is on everything.
I saw that chart you posted and you heard Will's comments there and some of the counterpoints.
So I'm just curious where you're at.
Yeah.
So we talked a little bit about the war yesterday.
Obviously, it was not a good day for most of my stocks today.
I imagine most people had a lot of stocks red today.
Most major indexes were red today outside of IGV
and oil this morning. Even oil faded the highs pretty aggressively with that Trump headline. So
not a good day for stocks broadly. The structure on SPY and the Qs is not really improving much.
There have been some attempted stick-sfe candles, usually on Thursday or Friday.
It tends to be towards the end of the week where we've seen the bulls throw some energy at the markets,
maybe pull us up by a couple of points.
Looks like it's gearing into a 9 or 21 EMA reclaim on the daily,
and then we just get rejected again the next session or two or three sessions later.
That's been kind of the MO of this chop for the last two or three months uh but if you're tracking this from a top-down view and you know you want to look where the liquidity is which is
where i care about looking which is spy on the queues um the structure hasn't improved yet and
so you know that doesn't mean that we're headed for
a bigger drop like that. The post I just made about the S&P 500 forfeiting the 100 day,
that's not a good sign. I mean, when you look at most 100 day forfeits, traditionally,
they do lead to more downside. But there are these wick below and then, you know,
there are these wick below and then, you know, crunch liquidity and then save the market moments.
We've seen that a lot, especially in bull markets. That's a pretty frequent thing that happens,
you know, where you get an undercut of the 50 day or an undercut of the 100 day
or an undercut of the 21 EMA and then, you know, three or four green sessions in a row pull you
back above all the moving averages. There's still the possibility for that to happen. You can't write that off just because we lost
100 in moving average. But considering all the stuff that's happening in the background
contextually, there probably is a reason to sell here, which is how I like to contextualize
weakness in the broader markets, right? Like, is it selling without cause? Is it selling out of fear?
Or is it selling with rationale? And I think sellers here, even though I'm not a seller here,
I think the sellers here do have valid rationale. And that makes it trickier to call a bottom,
because generally conflict and war is not a bad thing for markets. If you look at like the
historical precedent for war, times of war, it's generally actually a good thing for markets because it leads to more military spending, a.k.a. government spending, a.k.a. more liquidity.
But occasionally there are disruptions to commodity markets that do have an impact on the real economy.
that do have an impact on the real economy.
And in the Russia-Ukraine war,
this was an issue with agricultural goods,
fertilizers, wheat, for those that remember,
in the first few weeks and first few months
of that conflict.
But that was quickly resolved.
The commodity chokes around the agricultural goods
in Ukraine were pretty quickly resolved.
I mean, relatively speaking, within a matter of three or four months, and then markets were able to resume a pretty
confident uptrend, even in the middle of that war. Now, in the case of Iran, anywhere from 20 to 25%
of global oil supply goes to the Strait of Hormuz. And the IRGC yesterday announced that
that strait is closed. Then US Central Command came out and rebutted that statement and said, no, it's not closed.
We are protecting vessels. We are getting in control of the region.
And then Trump came out today offering special insurance provisions through the U.S. government, through the U.S. military for ships that want to sail in that region.
Now, I don't know if that's going to be enough incentive for ships to take the risk,
regardless of being provided insurance.
But we have to see how that pans out.
If not, then you are going to see a choke in oil markets.
This isn't a region that's like minimally relevant to oil.
You know, like when the war in Israel and Gaza kicked off, there were concerns
about disruptions to oil supply that didn't really materialize because those regions are not
particularly important to global oil supply. There's also concerns, for example, when we were
in a trade dispute with Canada about oil supply and that gas supply. And those didn't really materialize either.
Because again, there are ways around
both of those zones of interest to stabilize markets.
I don't know if there's an immediate way around
the Strait of Hormuz being effectively unusable
for an extended period of time.
And the reason that that's particularly
relevant here is because we're at an inflection point of monetary policy. Like going into the
summer, you are expecting a more dovish chair to come in on behalf of Trump and Powell will be out
in May. And so while the market does have a mixed opinion on whether Warsh is going to be
So while the market does have a mixed opinion on whether Warsh is going to be absolutely dovish or not, it gives him less cause to be if we see a rise in oil prices, which leads to a rise in inputs for pretty much every industry, which leads to higher prices.
And that's going to be a difficult environment to be overtly dovish in from a rate standpoint.
So I think the market is looking a few steps ahead here.
I don't think this is purely about the conflict and a vacuum.
I think this is about the commodity implications, especially the oil and gas implications.
And that's where I think the fear is centered around right now.
And if you believe that the economy is weaker today than it was a year ago,
which I think is a pretty safe case to make, the saving grace you're looking for is the imminency of rate cuts and the imminency
of dovish policy. And if there is something that throws a wrench in that, in the trend of that
dovish policy, then that potentially interrupts the real economy even further. So in a nutshell,
that's what I think markets are thinking right now. I mean, I can't know for sure. I'm not the market, but if I had
to rationalize the price action over the last couple of sessions, that's how I would put it.
Now from a technical standpoint, you work needs to be done period. I mean, you can,
you can be nuanced about it or you can like, you know, flip to higher timeframes and look for support.
Work needs to be done to restore confidence, bidders confidence on the major indexes.
And for those that are looking for like a haven in housing or financials or health care or, you know, whatever precious metals, I, I, I remain in the belief that I've
reiterated multiple times this year and multiple times last year, there is not enough liquidity.
There's just not, uh, you can say there's not enough market capitalization. That's the way
you can phrase it. You can say there's not enough, um, uh, daily volume, however you want to put it
in any metric, there's not enough liquidity to hold the
market up in those circumstances. And people will, when I say that, a lot of people will say, well,
look to 2022 and there was a huge collapse in the markets, but you could have longed oil and done
well. Yeah. I'm not saying there's not one sector that might be able to be up this year or two
sectors. And that's not what I'm saying, but I'm saying there's going to be a general liquidity crunch if the S&P 500
and the Qs can't hold up because tech composition,
tech weighting in the Qs and S&P 500 is materially higher than it was in 22.
Even though that was just a couple of years ago, it is materially higher,
right? Like Microsoft has what doubled since then i don't know let's look
microsoft it's almost like to your point the real selling begins it's like right now you've had so
much rotation and you're seeing rotation and people rotating in different sectors the real
if there's going to be real selling where you start to get real washout it's when all the
sectors are selling there's nowhere to hide and you start to get correlations that go to one.
So everything just starts selling off and probably right now.
The bathwater.
Exactly.
That's,
that's,
that's a good point.
You will see indiscriminate selling with it when liquidity gets low enough.
And,
and again,
you don't have to just look at market caps.
I brought up daily average volume,
right?
If you average,
and I'm talking about in absolute dollar terms, not in number of shares, obviously.
But if you average the dollars inputted and traded, right, in any individual stocks, and you add it all up for the S&P 500 and the NASDAQ, and you compare it to any of the other indexes, it's laughable.
Like, it's laughable.
Like, all anyone wants to trade is
tech and high beta and growth. That's where all the volume is. That's where all liquidity is.
That's where all the market cap is. And so when you see weakness there, there are these flashes
in the pan of rotation, but they cannot last because eventually you'll have a wave of
indiscriminate selling. You'll have margin calls. You'll have all of that, I don't want to say good stuff,
all that bad stuff that leads to indiscriminate selling.
And so you basically, if you're a bull in this market,
if you're long almost anything, maybe outside of oil and gas,
but if you're long almost anything else,
you are depending on that liquidity to remain alive.
And so you have to hope that the tech will step up,
even if you're not long tech.
And that's the tricky part of this market
because when we've put ourselves in this position
by bidding everything in tech to the moon
in the last three years behind AI,
and I'm not saying that was the wrong thing
for the market to do,
but by virtue of doing that,
we have made the market dependent on the AI trade, the entire market. And not just our market, the global market is dependent on the AI trade. You look at GDP growth this year, where did it come from? AI data center spend. You look at much of the private sector job growth this year, where did it come from? Construction, electricity, all these things that are literally being attributed directly to data center spend. It's all coming from one place.
You're talking about the tune of trillions of dollars being spent on AI globally.
If the incentive for that investment wanes, then liquidity will wane.
for that investment wanes, then liquidity will wane, right? Because the counterparties to that
risk and to those investments are involved in a lot of other parts of the real economy
and are involved in huge amounts of employment in the real economy and huge amounts of spending in
the real economy. And when those entities see drawdowns on their
investment or see risk blow out on the debt that their counterparties to, or see any of these
things happen, they then have to manage risk as an enterprise or as an entity. And that means
managing risk indiscriminately sometimes across sectors. And so bottom line is everything is at the end of the day linked to the
S&P 500 and the Qs. Everything is. And all the money in the world and all the economic growth
in the world really is linked there. And I think if you continue to see weakness there, you're
going to continue to see broader weakness in the other indexes and in the economy as well.
And so that's the issue here. And I think it needs to be resolved sooner than later from a technical standpoint.
You could probably take a little bit more damage on SPY, but not much more.
I mean, if you want to take a non-moving average perspective here and just look at the lows from November, right, at 650,
you could say, okay, as long as we hold that,
there's an opportunity for a bounce and reversal
and a resumption of highs.
But, I mean, any lower than that,
and then things start getting really tricky.
And that's not far from where we are today, right?
I mean, at today's lows, we were trading 660, right?
We were trading 10 bucks above that spot from November.
trading 10 bucks above that spot um from november so yeah i mean it is chop but it's not the type of
chop that would make you think it's just consolidation it is it's weak chop and i don't
know i don't like i don't like the look of it but that being said i'm still net long on the market
so you know i haven't really flipped my bias here yet. And I haven't put it on a tremendous amount of hedges.
I have a very small SQQQ hedge, but that's really it.
I mean, I will be willing to add more put exposure
if the indexes just can't get up from under themselves,
the major indexes I'm talking about.
But again, on the bright side,
the Qs are pretty close to the 200-day moving average now.
They are what? Where's the 200 day moving average now um they are what where's the 200 day sitting here 200 days sitting at let me zoom out 586 queues traded at the lows today uh. Yeah, we were almost there. Yeah.
So, again, I'm trying to be even-handed here and not say everything looks bad.
But, you know, maybe that's a spot where we bounce.
I don't know.
But I think trying to play crystal ball in a market where you have chop like this is a wild thing to do.
Like, I am certainly not trying to make any predictions.
I'm definitely more of a read and react person in an environment like this.
there are stocks that I own that,
that take drawdowns on days to like today.
Absolutely.
But,
I'm paying attention to structure on those individual names and I'm just
hoping for the best on the indexes.
Obviously if we continue to see weakness,
I'll just add to add to my hedges.
But,
um, yeah, that's kind of where I'm at right now what's up cantro long time no see we haven't had you up
here in a while how's it going love to get your thoughts on the broader market uh i just heard
the i just jumped in a minute ago and just heard what so i think you know everyone's glued to the
s&p 500 international investors are glued to that and the top 10 biggest stocks.
Why not think of whether you're looking at the equal weighted, which is, it's not a measure of weight, but it's a measure of breadth, or even looking at the MSCI World Index, which is more or less at an all-time high today so like the world you know your point what i just heard you say and i don't know if i heard it all but that like if equities go down it's going to impact the
economy but if you look at the world equity market it's at a new high you know just off of a new high
yeah no i mean pretty much the same thing i'm not i'm not saying that there aren't international
stocks have done well they've done very well but um I'm just saying from the U.S. perspective, I mean, a ton of our real economic growth this year has been from the AI trade, has been from the data center spend, right?
Yeah, but that and what the market's doing is particularly going down.
Don't you think compression and equity values for these names would dampen the enthusiasm for that spend?
Perhaps, but that was the point I was going to make.
It's because they're spending more, there's going to be more economic investment, which is leading to part of the reasons there's multiple compression in the large cap growth index.
But I wouldn't say that's a reflection, certainly not yet um of something that's going to influence
the economic outlook particularly i'm speculating but i think like if you continue to see
weakness in the valuations of ai related stocks i do think it is going to compress spending in
that category i mean of course it's speculation but yeah i don't think it's a huge lead it could but but again i think a big difference between this year from a macro perspective in the
last three and a half four years is that there are other parts of the economy that are starting
to show signs of life that can help pick up the slack which of course is why the you know the
equal weighted and the breadth of the market looks so much better than the S and P. And, you know, I think that's one of the traps people can fall
into today because of the concentration, which is a result of everyone being pushed into the same
stocks and the same stock market, really going back to 2012 and that accelerated in the last
three years. But, you know, know i mean we definitely have like a
tale of two markets because you you have a handful of stocks that are weighing on the index but at
the same time you've got the best u.s market breadth and the best certainly the best global
market breadth we've had in five years so my point is just that you kind of have to consider that you're looking at a weighting issue more so than necessarily an economic or an earnings issue.
No, I agree. Yeah. And I think that was the part you didn't hear is the outset of that little rant of mine was about the weighting issue.
So, yeah, I agree with you. It is a weighting issue.
I'm just saying I am somewhat concerned that it could translate into an economic issue if data center spend compresses with the valuation compression and i'm not again
you're right it hasn't happened yet but i mean we this quote-unquote shop just started a couple
of months ago so um well consider this though if if too much spending and too much capex is weighing
on the multiples theoretically what if companies came out and said, you know, we're actually going to spend 80% of what we said, not 100%, stocks i don't know if that's the causation though well i don't know if these years around you know uh what ai will look
like in five years and what it'll do to the real economy i don't know if that's part of what's
driving it sure no yeah no i mean it definitely it definitely is i mean you could see the
software stocks brokers and things like that that people are just reacting to headlines
where there's not a lot of...
Yeah, yeah.
I mean, I think we have, in a way, like a bit of a opposite condition that we had in
2023, where money was pouring into AI stocks because earnings were getting better and the
rest of the economy was getting worse.
And now you're starting to see the rest of the economy incrementally looking
better um at a time where people are looking to diversify out too which which again i think is
that you know again again 10 years now back 2012 so really 14 years of global pms just plowing money into the u.s and if you get a hint of uh broadening out in the
economy and it's also happening in the global economy you some of the rotation just could need
could be because something's got to finance that rotation and clearly tech stocks are financing part of that rotation.
Yeah, yeah.
I buy into the idea that, look, there's probably a need for a little bit more breadth if you look at the regime of the last four or five years.
But I also am concerned that there's a lot of narrative-driven enthusiasm around the AI trade that will be hard to just translate to these other sectors, you know? And I don't know if this is a sell or a chop event that is entirely driven by one or two narrative points.
I think it's a lot, right? I think it's the geopolitical situation.
I think it's the enthusiasm around what this might do to the real economy, these articles that are being released, whether it's a Citrini sub stack or all the other speculation that's happened on that issue.
and that reminds me kind of of last year or last March, April,
where first it started with a DeepSeq sell-off
that drove us below the 100-day moving average
going into March of last year,
which frankly, there was no...
The DeepSeq model was known about for weeks before that.
It was just the Bloomberg article that came out
that highlighted the fact that they might have done it
without NVIDIA GPUs.
And then two weeks later, we get the headline
that they did use NVIDIA GPUs.
Market got a little bit of a bump of a rebound. And then three weeks after that, you get the headline that they did use in video GPUs market got a
little bit of a bump of a rebound and then three weeks after that you get the liberation day
sell-off yeah and before you know it we're 120 lower on the sb500 in less than six weeks and
and that and there was nothing that happened you know like he held up a board about the tariffs
and then within weeks tariffs were changing and lowering and nothing happened with deep seek.
Like it didn't,
it didn't change NVIDIA's trajectory in sales,
but all of those were to the market,
valid reasons to sell for a matter,
for a matter of six weeks,
bring the markets down,
you know,
almost 20% on nothing happening.
So uncertainty,
right?
I wouldn't say trump's whole platform was
on tariff so people knew he was going to do something and then when he put out that board
obviously it was a bit of shock and awe for for a few days um but yeah i mean that's like today
if oil prices keep going up yeah the market's going to keep going down if oil prices keep going up, yeah, the market's going to keep going down if oil prices keep going up.
I mean, it's funny.
It's like the timing is kind of serendipitous because if you look at last year, I mean, it began in kind of early March with, I think it was the auto tariffs were kind of the first ones that really hit the market.
And now you've got oil prices, and it's very much the same thing.
And a lot of people are having the same conversations.
I'm hearing from clients like, oh is this gonna how is this gonna affect oil like people are almost not oil
how how is the move higher in oil going to affect this and that and like extrapolating that this is
going to be you know oil is going to go much higher and stay much higher and i don't think it will but
you know it it could uh and obviously if it, then the answer is things are going to be worse.
But it's funny how it kind of feels a lot like that. And ultimately, if oil doesn't come down,
the markets won't go back up. I think that's a pretty simple, I mean, there's plenty of historical
precedents to see that. And as soon as oil comes down, the market will be ripping higher until that issue is kind of priced back out,
like what happened with tariffs. Yeah, that's another thing I touched on before you got here
was that exactly, about this conflict and the impact on oil prices and how that's going to
impact people's perception of
the rate path going forward potentially, and also inputs in the real economy, prices and all that
stuff. So yeah, I mean, I agree with that. Oil needs to come down and can't have a sustained
rally if you want to see equities have a nice run, broadly speaking. So yeah, I agree. I think we're on the same page about a lot
of that. Yeah. Yeah. I mean, the one big difference though, is that again, a year ago,
there was really no data improving outside of AI and this year there is. And I don't think oil's
gone up anywhere near high enough to cause a kind of a shift in that what's going on in the economy
but of course it could and that's what people are kind of reacting to
it's funny you know the markets everyone thinks the markets are forward looking until something
happens and then it makes it pretty obvious that it's everyone's just reacting to headlines
yeah exactly i mean yeah we're more narrative driven than ever i mean retail participation is higher than ever short-term options exposure is higher than ever um and by a wide margin um so
yeah i mean it's a reactive market i don't think people are surprised by that surprised by these
big one-day moves or they shouldn't be by now i mean we've had um this sort of volatility for a
while now so um yeah i don't know i don't know what's going to happen but i would like to see structure improvement from a tech purely technical standpoint i would like to
see structure improvement on spy and the queues um i think that would make me feel better about
liquidity broadly speaking and feel better about um the market well the funny thing is i 100%
agree there's like a million different narratives that were moving around the market year to date until this move in oil happened.
And now, to me, it's like it actually ironically simplified the backdrop because now the only thing that really matters for equities is oil in the near term or until oil basically stops moving higher.
is oil in the near term or until oil basically stops moving higher
i would think rates might be a concern too more of the volatility of rates
yeah but again that's i feel like that's a derivative of oil though
yeah i was saying earlier too sam like you know if if oil goes higher then people are going to be
concerned that input costs are going to go higher, price of goods is going to go higher, and then rate cuts are going to be less likely, or a dovish trend in rate cuts is going to be less likely.
And so then, yeah, I agree that they'd be linked in theory.
That makes sense.
And that explains why the dollar goes up, people sell the bonds, buy the US dollars when they sell them. Yeah, that makes sense and that explains your is why the dollar goes up people sell the bonds by the
that's all yeah that makes exactly it's a i've been calling it it's a one variable market and
again we've seen that literally we saw this with tariffs in 1990 oil traded with the market the
same exact way um when you get these exogenous shocks it just dominates the market until um
the the uncertainty with that issue gets priced out
yeah that's why this straight-of-road move stuff is important to pay attention to too i think and
like the stuff that trump said today around um providing specialty insurance for for ships i
mean the thing to pay most attention to i think is outside of the narratives is like actual volume
of shifts that are passing through that region if any at all and that'll give some indication of if it's a problem
or not but um even the oil markets even these spikes have been somewhere reactionary as well
or predictive i should say so yeah yeah it's hard to track well i i gotta think that i mean that
trump's number one and number two priority is keeping the stock market up and keeping oil prices down.
The rest will take care of itself in the economy
with everything else that's going on.
And it hasn't been good to bet against Trump on that front.
And one of the core beliefs that feels like a lot of people have is that you have to have the leaders come back to the market.
You have to have tech.
XLK or XLF was mentioned with the big banks as well.
Are you in that camp as well where tech comes back and starts leading again, that the market just continues as it was?
Or do you think the rest of the market, because it wasn't really,
it had no love for three years,
everybody chasing the crowded AI trade,
that's the only reason that we're hanging out
where we're at.
I'm just curious where you're at between that,
or if you put any credence into that.
I don't think, in the short term, who knows?
But beyond the current oil issue,
I do not see the market returning back to the way
it was trading in 23 and 24 and 25. And the rotation we're seeing, the reason, in my opinion,
that it's been the longest broadening we've seen, it's been the longest period of small cap
outperformance and value outperformance and international app performance we've seen is because there's actual fundamental data that is improving is earnings data you know russell
earnings expectations have improved uh have risen at a faster clip in the last five months
than the s p index and that's what ultimately explains 90% of the time relative earnings expectations, relative performance across markets and sectors and things like that.
So I'm in the camp and have been for a while that we are seeing a cyclical macro recovery for the first time.
And that's why we're seeing this rotation in the market. It's not the only
reason, but what we were just talking about before with the fear of AI CapEx spend, that is
exacerbating it in terms of that. And people having crowded into the same stocks for three
years, if not 12 years, and beginning to unwind some of that is also exacerbating
it. That's why I think you're seeing consumer staple stocks, the first month and a half,
two months of the year, rise, relatively outperform. Part of that is, well, those companies
aren't going to get disrupted. But I also think that all the money in the US and the big cap stocks, they have to go somewhere.
And they can't all go into trucking stocks and regional banks and small caps. I mean, small cap market's not that big. So the money's going into international markets. And I think
there's people that, again, just focus on the S&P 500, which prior to this past week, you know, was flat on the year and stocks were
down that were, you know, the mag seven was down most of them year to date. And I think that's
made people bearish because that's all they look at. And maybe they're the ones that were buying
bonds in February and buying staples. But again, it's like, when I see that as a strategist,
you see staples outperform
as much as they have but at the same time see the small cap value index up 13 and international
markets crushing it like those two things shouldn't coincide but in the context i just
walked through you know i think it does kind of make sense so really it kind of depends on
your sentiment is going to depend on where you're
looking both fundamentally and also in the market and that's why i think you know people that are
very focused on ai and the nasdaq and the s&p 500 are sound more negative than those people that have
been kind of looking for a rotation um the last four or five months, which should feel pretty good.
That's where I start to get into the post-rotation thoughts and just wonder,
like, yes, there's opportunities.
What's the old saying?
There's always a bull market somewhere.
But when I think about, like you mentioned, like the top 10,
so you think about the top 10 tech stocks in the NASDAQ,
that it's your Mag7+, Broadcom, Netflix, and Costco.
And you take those, it's 71% of the NASDAQ right now. It's up to 37% of the S&P. And I think,
obviously, I feel like more people are attracted to those tech stocks, period, just like your
average person, not your trader, but your average investor. And so when I look at those weightings,
I just think that's really tough for the market to do anything without those 10 coming back and
at least half of them leading us up higher. Yeah. Well, this is not the year. If kind of
what I was laying out and what's played out the first two months of the year, it's not the year
they own the S&P. And that's okay. And you could still see small caps, again, up double digits,
and the equal weight up 6% while the index is struggling.
And again, that goes to the difference between people who are passive.
I think it's going to be a shitty year for passive investors.
Whether you're owning the SPY or even owning some of the sector ETFs,
which are also absurdly cap weighted towards a few names.
It's just not the right thing of it.
Not the right season for those stocks.
Can I,
just cause I think I have like a similar view to you in the sense that this
broadening is,
it's not a situation like 22,
which,
you know, everybody wants to draw the comparison. Like which year situation like 22, which, you know,
everybody wants to draw the comparison.
Like which year?
Like 2022,
right?
Because not,
not at all.
Not even,
not at all.
That wasn't a broadening.
That was not a broadening.
That was a narrowing to,
to maybe,
you know,
you know,
yeah,
exactly.
Energy and staples.
That's probably a,
maybe utilities.
I don't,
I don't.
This is the first year that value,
you know,
our first period of four
months where value is outperformed in an up market you know then 2022 is nothing like what we're a
question for you um yeah i wasn't around trading in the 2000.com but like wasn't that the time
when you also had uh this kind of value out performance for the next couple years versus growth so would that be yeah
you did but the difference is we went into a recession in 99 we had an aggressive easing
tightening cycle um that lasted in the middle we had an oil shock too um you know people don't
think about it like that but oil went from 10 bucks to 35 dollars which was a you know take
out the 1990 spike uh pers Persian Gulf. It was like a
40-year high in oil prices. And the long end went up like 200 basis points. And we had a nasty
tightening cycle beginning in mid-99 that lasted about a year. And then the economy went into
recession by the end of, where unemployment started going up vertically the end of 2020 and um oh one actually
yes a lot of stocks did really well and and then you had 9 11 which set everything back down for
a period of time so i mean for for me looking at this i just see so many sectors working and it
does definitely does feel like a broadening, which means that there is plenty
of things to own, which gives me a little bit more confidence in the bull case.
And we had a guy on here, Will, earlier that was saying things like delinquencies are taking
I think he said foreclosures, but coming off a very low base.
So there is potentially stress in the consumer.
And again, we had those retail sales numbers that were flat month over month.
They're expected to be up 0.4%.
Yeah, I don't know how much I believe some of these jobs numbers.
But I could see potentially stress in the consumer.
But again, if you have stress in the consumer, I'm jumping two steps ahead here.
You're not going to get stagflation.
I don't think that's going to happen.
I don't think that's a very easy, simple thing to happen where like you have like this slowing
consumer and you have this rising inflation.
Like I just find that to have a sustained stagflationary period is probably not anyone's
base case.
So, I mean, you know, we're not in a situation like 2022.
We're not in a situation like 1999 in the sense that you had, you know, these kind of
rate hiking rate type, you know, these tightening cycles, you're not in a situation like 1999 in the sense that you had these kind of rate hiking, rate tightening cycles.
You're not headed into that.
Even if oil spikes here, maybe the odds of rates get pushed down or get pushed down the line.
But if you're getting a weaker consumer, I don't think you're headed into a sort of rate tightening cycle.
You're not going to get a hiking cycle. They're not going to just
because oil spikes, if the demand is dying, because the consumer is weaker than oil prices.
Sure, they can squeeze based on like kind of these exogenous shocks, but they're not going to have a
sustained bid on oil if the consumer is weakening. So to me, it just feels like a lot of this is that
odds, which means that rate cuts probably continue. And I just don't see a situation where you're getting rate hikes, right?
And that's what would definitely throw the market off from here.
Yeah, I agree.
I mean, first, supply shock energy spikes are ultimately deflationary.
They're not inflationary, especially with a war, right?
Because you've got oil going up, but at the same time, you've got uncertainty going up. And yeah, you're going to because the you got oil going up but at the
same time you got uncertainty going up and yeah you got you're gonna have the cost of gasoline
going up and that ultimately will be deflationary not inflationary the fed is sure shit not going
to react and hike rates because of a middle east oil spike because what the hell would that do
raising rates is not going to make things it's not going to solve the issue.
Um, so other central banks could, but I think it'd be really stupid.
You know, the ECB was the only moronic central bank or one of them that raised rates in 2011, which turned out to be, you know, really stupid as they did in also 07.
When again, commodity prices were largely pushing up inflation, which, which are going to ultimately always deflationary, um, with a lag because
they crushed demand and they, especially when it's, uh, surrounding a war, it's,
uh, leading to uncertainty, which is disinflationary essentially.
Um, I agree if we ever get to a point this year where people are actually
really think we're
going to get rate hikes then that's going to be a problem for markets but i don't see that
happening especially with like a potentially weakening consumer you're saying you know you're
seeing lower uh you're seeing lower retail sales than expected you're seeing uh you know delinquencies
rising it just doesn't seem like going on delinquencies have been rising for
two and a half years like to me that's the lagged effect of a k-shaped economy and yes there's bad
parts but none of that is systemic right like you don't see a big uptick in unemployment or like
no yeah exactly no you know all you got to look at small business hiring plans they've been
improving for the last nine months and if we're going to see weaker
employment, that's going to be the first data set to show it. And, you know, the thing that's
keeping me more constructive on the market is, again, the broadening, because you're seeing
more than just defensive catch a bid, you're seeing more economies catch a bid. And you
mentioned that, you know, it's not going to be a great year for passive investors. I think that for once, you're finally getting this one year where active investing is, these
active managers have basically underperformed for many years, a large majority of them.
So year in, year out, because the S&P has been an absolute tank.
I mean, this thing's returning 20 plus percent a year.
And so you're finally getting the situation where they're able to outperform and for good reason, because there's like a lot of things that are working.
And, you know, you're seeing the manufacturing data come in and it's expansionary. It's very
bullish for the economy. So, you know, whether we're, you know, shifting a little bit from
consumer spending growth to CapEx driven growth, whatever the reason is, I mean, the macro data is holding up.
The other industries are doing well.
The spending that's coming from, let's say, the Mag7,
that CapEx is like almost a trillion dollars per year.
And that's going into the revenue line items
for a lot of these businesses.
So I could see a scenario where the Mag7
are just a sacrifice here and everything else
is working and the Mag7 just don't work.
Because if you take the free cash flow multiples right now, everyone's still saying, oh, Amazon's
trading at a 20 times PE.
Compare that to Walmart's 50 times.
It's like, yeah, dude, now do free cash flow multiples.
There's a reason why Walmart's getting a huge...
I don't agree that it should be this expensive, but comparing it to Amazon is taking out so much context. Like, yeah, so if you do the
free cash flow multiple, you know, Walmart's not putting in $200 billion this year into their CapEx,
they're not draining their free cash flow that's going, that's going to be returned to cash,
you know, as cash to shareholders essentially. So yeah, very different parts of the cycle.
Generally, you don't want to be long these names when they're in investment cycles. So, yeah, very different parts of the cycle. Generally, you don't want to be long these names when they're in investment cycles. So, you know, I think the PE is definitely,
you know, masking what's really going on, the free cash flow is what you want to look at.
And if you had, like, again, we're talking about, you know, growth driven by CapEx,
not the consumer. If you had any sort of slowdown in the consumer, Now you have an issue with some of these MAG-7
because their revenues could drop.
Let's say their revenues were like 10% lower than expectations.
That means that their earnings growth is going to be
30% lower than expectations just given the margins.
And then you're still footing the bill for that CapEx.
And so all of a sudden, you're going from using most of your CapEx,
using most of your cash flow for CapEx to now you're actually going to the negative and you're seeing some of these names, you know, lever up.
They're becoming more high asset, you know, versus, I own this company because it had 40% free cash flow or 40% operating margins.
They were light on assets.
That means that their return on assets, their return on equity was really high.
Now you're telling me they're going to keep stacking assets onto their balance sheet.
The ROEs are going down.
And so I think investors are actually being quite rational
by not wanting to own these businesses moving forward.
I mean, it's very possible that their investments return very good returns,
but are they going to have to continue to stack assets
for the next two, three, five years?
And if so, then I mean, Amazon is a $2 trillion company.
They're doing $200 billion in CapEx this year.
That's a tenth of their market cap.
If they do that for the next five years,
they have now just stacked up 50% of their market cap in assets.
That's going to inflate the denominator.
It's going to reduce the return on equity and return on assets.
So these businesses are becoming structurally less attractive to own.
They're becoming more like industrial.
And yeah, I mean, you know, they can still be tank businesses, but they're just not.
It's like we're entering the next phase of maturity for these businesses.
And they could easily continue to become $10 trillion companies.
But the growth engine is now, it's being slowed in my view a bit yeah well again
they're all great companies and but great companies don't outperform every single year just because
they're great companies and a lot of that has to do with the kind of seasonal shift in the macro
cycle and everything you just said now add to that that you're seeing 90 percent of US PMI data in expansion for the first time since 2021. You're seeing 70%
of them as of current today in expansion for the first time also since 2021. So it's not only that
there's growing concerns given everything you just said, but there's also now alternatives where there hadn't been in 23,
in 24, or in 25. We just had this really unique period in the macro data where we basically had
the same macro backdrop for three years from an activity perspective while everyone was focused
on interest rates and inflation. And you had unemployment go up, brought rates down.
And that provides some of the fuel for what we're seeing in,
in the better PMI data.
And when you get these PMI trends,
they tend to last two years and we're in month like three of this right now.
It doesn't mean it's going to go up every month or that we're going to see
the same leadership every month, but you know,
this is a kind of a proper, somewhat classic macro cycle.
And then you add all these nuances onto it.
Um, it, again, it doesn't, you don't have to be bearish on the mag seven or take anything
away from them, but investors are myopic.
And when you sit and look at the data and look at your opportunity set, you see some
companies growing their CapEx massively.
And at the other side, you see macro data and earnings data that have been left for dead for three years that are actually starting to show signs of life.
And so people are doing what they always do and they're rotating.
And I think that'll last as long as that the breadth of the macro data are improving
which i think you know unless we have a real sustained oil shock it looks like it to me is
going to last into 2027. yeah i mean i one i'm happy to hear you say all this because there is
a lot of noise lately with everything getting scrutinized. And I think a lot of it is price driving narrative
for sure. And I do agree with your earlier point about if they decided to like if the
mag seven stocks were down, you know, 20% from here, and I know some of them are already down 20%.
But if some of them decided, hey, we're actually going to, you know, our shareholders are, you know,
wishing that we
would spend less money and Amazon brings down their CapEx from 200 billion to 160 billion.
I for sure could see those stocks catching a bit. I do understand that they feel that they're in
like this existential war. And, you know, at least for Microsoft, Google and Amazon, it makes a ton
of sense as the main cloud service providers, like they don't want to let up their guard because they want to be the toll booth of
all of the AI applications that compute. So I totally understand why they're investing. I think
most of us can understand that. But seeing those CapEx guides, I mean, they were already like
Google's guiding for 120 and they came in at 180, 185.
And then Amazon said 140 was the estimate and they came in at 200.
I mean, my jaw dropped on some of those numbers.
Like last year, we were talking about $100 billion and that was like jaw dropping.
And now you're doing double that in the following year.
It's just, it is insane.
And I do see that investors are, in my view, pretty rational by not wanting to own these
stocks and not wanting to reward these stocks, not until they're able to see a return on
that investment.
And if you don't get a return in the next year, as this kind of 10% of your market cap
in CapEx in a year, you don't show something from that that's substantial.
I could see them starting to taper off some of their
CapEx expectations. So we'll see how that plays out. But I think investors are very rational here
by not wanting to own these things at this exact moment. Well, again, they still own a ton of it.
And again, you have to appreciate how many of you've had investors you know max out you know one of the reasons active managers couldn't outperform the market because they like legally couldn't own as
much of some of these stocks in their portfolios because of reg 40x and they just got too big in
the market and you couldn't literally own anymore and so even if you're going from being, you know, I think the average MAG7 stock is owned by over 8,000 institutions right now. The average S&P stock is about 1,200. And that gap has just blown out over the last really 10 years, but accelerated, of course, in the last three years.
last really 10 years but accelerated of course in the last three years so people are still
there no one's going to sell all of that likely i mean dude how easy has it been to be like the
terry smiths of the world and just you know have 12 allocations to each of the mag 7 outperform every
single year and you know people write books about you or whatever and it's like most pms can't do
most most you know mutual funds can't do that and hedge funds can't do that because that's just no one's going to
allow them to take that much risk concentration in a book you know some can obviously but
most aren't going to do that or can't do that but funny enough if you own the smp you basically
have an eight percent allocation to each of those names anyway. True. But again, active managers who I deal with.
Right, right.
Yeah.
I mean, but yeah, at the end of the day, a narrow market is the hardest market to beat.
And a broad market is much easier.
I mean, there's an extremely tight correlation between market breadth and active manager performance.
Last year was one of the worst years of active manager performance.
The year before that, the year before that, you know, same thing.
Even really going back to post GFC, going back to 2013 and 14, where Fang, you know,
really drove everything in 2014 and 2015, nobody outperformed there either.
Because again, you had a really narrow market.
And the irony is for small cap PMs, this is a backdrop where it's really tough to outperform because when you get the smallest companies in the Russell going up as much as they have,
micro caps, which is the bottom of the Russell going up, a lot of PMs can't even own that
stuff because it's just too illiquid.
And so the irony is that this year you'll probably see large cap PMs do really well, particularly growth PMs on a relative basis.
Doesn't mean their, their books are going to be up, but relatively, whereas small cap
PMs will have great returns theoretically, but you're going to see far fewer of them
outperform when you get this monotonic size performance.
I'm going to jump in right here.
What a great conversation.
We're having really good dialogue back and forth.
Make sure you're following all these great speakers up here.
I did see Paul, friend of the show, Leverage Shares, jumped up here with us.
has jumped up here with us. Paul, I know you've been listening in the last several minutes.
Paul, I know you've been listening in the last several minutes.
Just curious, any of the topics that you heard there, if you had to take around any of that
as we roll the conversation over here just a little bit. I'm curious, a lot of pieces there,
narrow broadening markets, fund managers, any of that stuff or any of the events going on. Paul,
how are you? I'm good. How are you guys? And I was doing a little bit of multitasking because I'm trying
to, while I was listening in, planning a trip. So I didn't catch quite every little detail of
what you guys were talking about. But when you talk about where we are in the market today,
I think a lot of this noise that we see in the marketplace today is a gift.
A lot of the uncertainty that's been caused by the strikes in
Iran with the United States and Israel is sort of causing a little bit of concern in the marketplace.
But I think the overriding themes that have been out there, that are out there, are still there.
And you're starting to see places where, you know, if you've
got the stomach, if you've got the patience, and if you have the cash on the sidelines, there are
some places that I think are interesting to start to dip your toe in. And if you've got a little bit
more courage, perhaps maybe even go in, you know, little bit uh more aggressively so um for sure i'm starting to
see some places where it looks like um even with this downturn the market is uh holding its own in
certain uh places and and uh um you know we we kind of have our our our spots where we uh where
we're pretty um where we're pretty interested in of course course. I can get as specific as you want, but I just want to make sure that I'm-
Absolutely. Hey, we've got plenty of time. I do want to say here at the top of the show,
we are working with LeverageShares. We're excited to have LeverageShares, Paul and his team coming on with us,
Themes ETFs as well. You can go to Themes themesetfs.com and check out a lot of this.
An investor should carefully consider a fund's investment objective,
risk charges, and expenses before investing.
A fund's prospectus and summary prospectus contain this
and other information about leverage shares and about themes ETFs.
To obtain that prospectus, you can go straight to the website,
as I was mentioning, leverageshares.com,
and there's a link to the Themes ETFs. A lot of
themes to talk about, and because we may mention some tickers in here, definitely wanted to get
that out of the way. We are excited to work with the LeverageShares team. Paul, boy, we could start
anywhere. We could go anywhere with everything that's going on in this market, right? Yeah,
I'll start. So Themes ETFs and LeverageShares by by themes, just for the people that are out there that might be confused by both brands.
Themes ETFs is the American issuer, and that's our trust company.
Inside of that, we have leveraged shares U.S., which are single stock leveraged ETFs.
On the theme side, they are thematic and sector based ETFs.
The thing that you should know about us is we are a pure play.
We are in high conviction areas of the market with the potential to grow for years to come. And we have the lowest cost thematic and
sector-based ETFs on the market. That being said, when you think about what's going on in the world,
and I've been beating this drum now for a while. Since I started with you guys coming on last year,
I've been talking about aerospace and defense. And specifically, I've been talking about aerospace and defense, and specifically I've been talking about the
prime contractors, the large and mid-sized companies, names that we all know, Lockheed
Martin RTX, L3 Harris, Northrop Grumman, so on and so forth, inside of NATO member countries.
So you have some players in Europe, including Aerobus, Rolls-Royce, Ryan Mittal, Safran,
but the major players. And, you know, when you looked at the markets opening up yesterday, this theme always continues
because it doesn't really matter what's happening in AI, although AI is a contributor to why
these companies are so needed, why they are so precise, and why the attacks, whether you agree
with them or not politically, were so
targeted and precise and effective, this is where the world is going.
And the United States is very far advanced right now, and everybody else has to catch
But that being said, there's no stop in spending here.
So we don't have to really think about what's to come.
We could just look at where the investment is.
So, you know, the Trump administration has increased defense budget to $900 plus billion.
Think about that. $900 plus billion. It's a trillion dollars. It's all going to those large and mid-cap aerospace and defense companies that I just mentioned and several others.
When you think about Europe, their goal is to rearm, right?
So there's a Rearm Europe plan 2030, targets 850 plus billion to strengthen Europe's defense
technology and industrial base, okay? So all of that money is coming into these major,
what I call prime contract companies.
Yes, there is technology that's being used within these companies.
They're either outsourcing it or they're building it on their own.
But what you saw on Monday morning when the rest of the markets were having trouble, you
saw all of these companies going straight up like a rocket.
You know, some were going up 10%, 12%, and some even
more. And that's because it's no secret now that there's going to be a heavy importance on
investment into aerospace and defense companies. These companies are the benefactors of those prime
contracts. And this is a long-term theme that we've been really excited about. Since we launched this fund about two years ago, all I get for people is, did I miss the move?
Did I miss the move? Did I miss the move? Did I miss the move? I'm like, no,
this is a long-term investment theme. Never goes away. What we're seeing now is that
military might and competence and technology is at the forefront, not just for the U.S.,
but for countries all over the world, especially with inside NATO, because there's so much
there that needs to get up to speed.
And so what I would say is one of the best investment themes that we see and continue
to see and we're really bullish about is our NATO Transatlantic Defense ETF.
Has all those companies in it, low cost and really, really great investment returns that
just continue very solidly.
And with all the other market noise that's going on, I get it.
People don't like volatility.
They don't like the downturns.
Nobody likes to see their account go down on paper. Here is something that has done really,
really well in down markets, including last year when the tariff tantrum came about in February.
This ETF maintained a positive return, and it's been up ever since. I don't want to say
past performance is indicative of a future performance
because that's not the case.
But what we do, what we can anticipate
and what we do see is increased spending
coming into these companies
and they just are in a sweet spot right now.
So we really, really like that theme.
One quick follow-up question just on some of this.
When you look at these, how do you track things?
I think a lot of people, they do get caught up in the noise that you mentioned around the broader markets and stuff, everything all around, volatility, all this stuff.
And you hear Stock Talk all the time saying, have conviction in your thematics and in your place.
And you guys over there at Themes ETFs, how do you guys, I guess, educate people on saying, and you did a great job going down through,
why the theme is so bullish with looking at NATO and all the names inside of it within that ETF.
How do you educate people to say, hey, tune out the noise, look at the bigger picture here.
And as you just illustrated, we have so many reasons to think that the spending is not going
to stop and that these,
you know, GE Aerospace, Boeing, Rolls-Royce, Lockheed, all these names are going to continue
to be benefactors of this. Okay. So again, going back, those commitments to spend is there. And
in fact, the only country within the European NATO nations that has refused to up their spending
is Spain. I just saw the German chancellor with Trump today,
and he's not going against Trump saying like,
hey, give Spain a break.
He's saying it's our collective job to go to Spain
and make sure they get their spending up.
Otherwise, they're gonna get sort of like isolated
within the NATO alliance.
So it is a collective effort to increase spend.
This isn't Paul Marina talking. This isn't Deem's ETFs talking. This is commitments that are being
made by governments to increase the spend, to rearm themselves. And so the United States is
committed to that. We've always been committed to that. We've always spent a great deal of money on our defense. So you can, you know, I don't ever want to say put that in the bank, but, you know, for my money, that's a good place to invest.
I mean, the United States is taking a hard stance on being the world's police.
Like, we don't want to be the world's police forever.
We will go in, we will make strategic, you know, strategic positions across the world
to make sure that, like, we are in a good position, our American citizens are safe,
and to protect our allies. But we are not a good position, our American citizens are safe,
and to protect our allies.
But we are not going to be boots on the ground long term.
And everybody understands that while we'll support them, we're not going to put boots on the ground to secure their own defense.
So they have to get up to speed.
So that is the first and foremost thing that we look at.
And these commitments are there.
Government commitments are great because they'll go into deficit spending in order to meet their commitments without a problem.
And especially in the United States, we have a printing press, right?
So again, it's not an if.
The spending is going to be there.
So that's the reason why we're committed to that space.
And when we think about what kind of thematic ETFs we're going to launch, we're not looking
for the quick hit. We're not looking for the popular thing in the marketplace. We're looking
to launch ideas where people who do have high conviction in those places can park money for a
while and go through a little bit of the ups and downs. I don't, I don't want anybody to think
for any second that there will be no volatility in any of these long-term investment themes.
Obviously you're seeing that in AI, in software, like, but we still believe that the long-term investment thesis is there.
And so as an investment firm, we look for various different themes that people have
high conviction in.
Now, for the investor's perspective, it's your job to say, where do I want to put my
money?
Where do I want to make my investments?
And what am I most convinced about? And I would say, I would agree wholeheartedly with Stock Talk. If you're going
to invest in these places, you really need to have high conviction for the long term.
If you change your thesis or something in the world changes, the great thing is these are ETFs,
they're daily liquid, you could always get out. But at the end of the day, these are investments that you can
invest in for the long term because they're long-term investment thesis. And again,
when it comes to something like defense, this is as much of a risk-adjusted investment return you could possibly get because the world is pointing in the direction of increased spend into military and defense.
Sam, I saw your hand go up on that.
I'm curious if you have any thoughts or questions here around the defense spend and NATO and all of these companies involved?
Yeah, I mean, when you look at the relative outperformance of defensive stocks,
not defensive stocks like dividend stocks, low volatility or SP, LV or whatever that may be.
That is a good clarification, like defense companies, not defensive stocks.
That is a good clarification, like defense companies, not defensive stocks.
Yeah, defense stocks versus defensive companies and so on.
Anyways, the spending is going to dramatically increase because of the fact that not only do we have a war regime, but also war is money printing, right?
To basically find all of the extra efforts to win the battle or win the war regardless.
I mean, you can wholly expect under this regime
or under this presidential administration
that there will most likely not be a surrender
or, hey, we were wrong.
We're going to back out kind of like what we saw
in, I believe it was the Korean War,
if I study my history correctly.
But if it continues on, which to me, it kind of looks like it's going to take a little
bit longer than we expect it to.
We've heard both sides where it's like, it's going to be a few days, it's going to be months,
whatever.
I personally don't think this is ending anytime soon.
But I do think that when you think about budget expansion, it is going to be defense.
And you saw the rally
into this event. It's not like oil just gapped up out of nowhere and just bounced off like 52-week
lows or Lockheed Martin bounced off like 52-week lows and so on, or Raytheon did. There was a lot
of money flow into the event. And then you had a little bit of the sell-off after the event.
But if this war goes on,
it's very difficult to see, especially as budget does increase, it's very difficult to see a situation where the rally in defense stocks does not go up. Mostly because one, there's uncertainty
and people tend to flock into what's leading the market in a form of a trending down market.
But also because of the fact that if you increase the budget, that means more money is going
to be allocated to these companies on its own.
So one thing that I find beneficial of some of these ETFs is that for me personally, I'd
like to find the stocks and I'd like to buy them.
But these ETFs, like he was saying, was that it provides an ample opportunity to buy an
entire sector or a group of themes
without having to do the research on individual companies and so on that all of us pour hours and
hours into, which is a very difficult thing to do and to ride that theme for a period of time.
And we saw there were a lot of themes that Leverage Shares has that they offered a lot of upside for
for the last like three years.
the last like three years. And even though we're getting a little bit of rotation today,
And even though we're getting a little bit of rotation today,
some of the thematic ETFs that they have
have been doing quite well.
And you didn't really need to research
the individual companies.
You just kind of had to look at the trend of the market
and then kind of join the trend by joining an ETF
that would make that move for a long period of time.
Like probably better for people who are a lot less,
who are a lot more passive or do want exposure into an industry
without having to research individual companies.
But I mean, that is a very clear theme that it is today.
Like defense companies,
anything associated with government spending,
anything associated with, I guess, drone technology
as it is today, or at least that's what it was for a minute.
We'll see if that comes back.
But really anything that's associated with like anything with war is just,
there's just a lot of inflows into it.
And a lot of the money is being rotated out of what was working because that
is, that is what defense companies are or defensive companies are in rotation.
Paul, any thoughts to add around those comments there from Sam before I go over to Shai?
No, I mean, I agree with him.
You know, I don't have much else to say.
And I think like what you get is two things.
You get a diversified portfolio that's not overly diversified.
So you're getting exposure to the upside.
But it's just diversified enough where you got United States exposure,
you got Europe exposure. And on the way down, when things aren't going so well,
you're getting risk mitigation to the downside so that you're not getting this huge pop down.
If you're just picking individual stocks at times and some people are really great at it,
so I wouldn't discourage them from not doing that. But if you're not great at it and you're, you know, some people are really great at it. So I wouldn't discourage them from not doing that. But if you're not great at it, you know, and you're in something that gets
hit hard for one reason or another, like it could really have a profound impact on your portfolio
to the downside. When you're investing in something like this, you know, you don't get that, you know,
massive down move because you have enough diversification to mitigate that where
everything isn't always working against you.
So that's kind of how we view it.
And that's the reason why we like thematics.
It gives you exposure to high growth areas of the market, but it's diversified enough
where you do get some downside protection when things aren't going your way.
Absolutely.
Shai, can I bring you into the conversation here?
If we've got you up here,
I'm curious if you have any thoughts
around that piece of the conversation there
with thematic investing
and of course the defense spend
that we've seen lately.
Shai, great to have you if you're around.
Yeah, appreciate it.
I am a Thematic investor for years,
and New Age Defense has been one of my most highest conviction themes.
Why is that?
It's because it's an interesting lane where it provides you risk on
you risk on as well as risk off if that makes sense because you got to capitalize on the ai
as well as risk off, if that makes sense,
thematic through software's eating the pentagon uh and also i mean uh because the ai is becoming
such a massive tailwind for soft these software companies but also it's defensive because when
there's geopolitical tension like we've seen the past couple weeks, like this is the theme that also catches a bit.
So it provides a very high floor to participate in the AI cycle, but also somewhat defensive.
So it's a really interesting combination.
And I think that for a long time, you've seen signs of the US military kind of going through
this big transformation where instead of a lot of the Pentagon budget
isn't going down the traditional route of building more tanks and jets.
It's actually going towards buying AI software, autonomous drones, data platforms.
I think Palantir's recent success has really spotlighted how big of an area that is of the budget.
And I think that you heard Trump even say some comments.
I don't know if he's gone back on these comments,
but he wanted $1.5 trillion in spending in 2027,
citing dangerous times, I think,
was what he referenced when he called that out.
That's a massive jump from what the budget is this year.
I think the budget for 2026 is under a billion dollars, under a trillion dollars. So huge jump. I don't
think it's going to be a 50 or 60% jump, but it's still symbolic of how the incremental spend that
the budget is going to be having in the future, which is going to go towards software, cybersecurity, drones.
So I think that the reason for that as well, it's not just because AI is the new spice
of everyone's budget, but it's because of the runtime difference.
Like what's different about this defense bank than prior defense spending periods is it takes years to build hardware like the
Lockheer Martin Boeing like these defense contractors like it takes like a decade to
develop and uh actually deploy it uh that for perfect example is F-35 fighter jets like they're
still being bots right now even though I think they were that program started decades ago. So the new defense tech, the Palantir's, Axon, Andurl just did a $60 billion raise.
Is there another example?
They build software that deploys in literally months, sometimes in weeks if you're talking Palantir.
And they have massive margins as well.
So a lot of these legacy defense contractors, they're like low teens.
Maybe some of them are even under 10% profit margins were pounds here is like close to 60%
operating margin. Axon has high operating margins as well. I don't know and rolls, but
and rolls is interesting because there is a hardware component to them. But what I'm trying
to get at is I do believe that this trend is only going to continue in its velocity where a lot of the incremental
budget spend going forward will be go towards these new age of defense on threats you can't
really see. Where in the prior decades, you just you still need them, but it's not where all the
the value pool is going to go towards the future like right now the whole thing about
AI is going to replace software that whole ridiculous
narrative like it's tricky there's a niche to because like AI is not going to replace software
but all the value pool or the profit pool for the new AI economy is going to go move up the
stack above software so that's why the risk economy it's going to go move up the stack above software
so that's why the risk of software is going to become this legacy layer that is somewhat uh true
where the defense spend it's not going to be as severe as software but a lot of the new spend is
going to go towards that so i think that you're seeing pounds here like they caught a bid because they're literally used in every single uh mission
if it's venezuela iran like um it's just doesn't matter what model frontier model that the
the u.s government uses it could be anthropic it could be open ai it could be xai
palantir will be the decision layer in that stack on whatever they do going forward so
like that is the one thing that won't change and you're seeing that in their earnings like
they have a rule 40 score of 127 it's absurd uh and i think that there's other names as well like
axon had one of the better earnings reports this cycle as well because they had future
contractor bookings up 14 billion which was like around $14 billion.
That's 43% year over year.
A lot of people think of them as this like taser company or cameras on cops.
But it's much bigger than that.
Like they truly are.
They have a software remote.
The hardware is just their wedge.
So I do think that Axon is kind of becoming this like control center for public safety that's
only going to continue in the same way that Palantir is building their moat for the military.
Drones is actually a big tailwind as well for Axon, especially if you believe policing is going
to be above the sky in the future. So Axon's another name. And also CrowdStrike. We just
saw CrowdStrike report their earnings just an hour ago. They probably had the strongest earnings reaction of the whole cycle among the cybersecurity
names on a really good report.
It wasn't anything special, but I also think that companies at this scale, the way it's
growing is like really impressive.
Like Falcon Flex, I think they went up 200% year over year.
Pretty nuts at that scale across 1.4 billion but like charlotte ai is their agent security angle on what
they're trying to do new ai economy there's so many different names like this is where i'm trying
to get at uh and it's exciting and i think it's only going to continue but unfortunately like
um this what's happening geopolitically is a pretty big tailwind on the sector.
And I just, like Sam said earlier, I just don't see this being a fleeing moment.
I believe it's going to be the durability of this conflict is actually going to be a lot longer than people anticipate.
And it's not just anything ended with Iran.
Like we truly are playing this game of sellers of Katana bits in the world.
And I think it's going to be something that might last longer than a couple weeks or a couple months.
But, Sam, I'll pass it to you. Your hands are up.
My bad. I completely lost my train of thought.
That's embarrassing. Sorry about that's embarrassing. You're good.
Sorry about that.
No, you're good.
Well, there was some really good information right there.
I know.
Well, Shia, I saw a post the other day that came out
about the new age of defense.
We are kind of in a new age of defense.
It's interesting how you think about how some of the cybersecurity names,
you know, CrowdStrike, for example,
kind of crosses over into defense.
And it's not your traditional defense.
You hear Trump mention, you know, $1.5 trillion in spending is what he wants to have in 2027.
But people automatically go to the old names.
They go to the Lockheed Martins, and sure, they're beneficiaries of it.
But this, you know, Cloudflare, Rubrik, CrowdStrike, Axon, Palantir, all these kind of
new age names are really interesting. Paul, I'm curious, I want to bring it over to you and see
if you had any thoughts around what Shai was saying there and that kind of thematic of this
new age of defense and where that kind of fits in. I know you guys have NATO. I know you guys also
have SPAM, which is, you know, cybersecurity ETF there. We saw the CrowdStrike report today.
I'm curious to see any of your thoughts around this. Yeah. So we like software at this point,
and we think it's a really good place to dip into. And again, when I was talking about,
you could pick winners and that could be very volatile. If you were in CrowdStrike earlier in
the year and we watched the impact impact that you know the software trade had
on all these big names you know they got beaten up pretty bad and you're down like a tremendous
amount of money if you only hold on to one name or a couple names in our spam etf which is a small
etf but we we think it's got legs you know these things once they catch on they grow pretty quickly
you know our spam etf was only down down like 2% throughout the whole down market in software.
But the reason for that is, again, because we're diversified enough so that even if the
big names are getting hit, we're weighting it, we're rebalancing it, and there's other
names that are also picking up the slack when the big names are getting hit.
So again, if you're opportunistic and you don't think that software is going away, which I don't think software is going away.
We don't think that's happening at Themes.
We take this thought in the marketplace that AI is going to destroy software.
We don't really listen to it. And we start to think about where we want to make a position. And again, I think a thematic like
spam is one of those interesting places where if you start to invest in something that's, again,
diversified enough to mitigate the downside risk, but hyper-focused on that cybersecurity movement, you could get a very
good move to the upside when it comes back and mitigate your risk on the downside. So we do like
software a tremendous amount. I think another place that people might want to focus on, like AI, I don't think there's any issue
with AI at all.
I think AI is going through some tough times right now and people are worried about how
much longer it has to run.
I think it has a tremendous runway.
So we really like AI.
We have our USAI strategy, WISE, W-I-S-E. If you think about the Chinese
AI movement, again, very much isolated from what's going on in the US and abroad. They have to build
their own infrastructure across every single layer of the AI stack. They have expertise. They have
all the intelligence. They have the, they have all the intelligence,
they have the ability to manufacture data centers and chips very, very well.
So we think that theme is still very much intact. If you're still leery about the AI specific theme,
we have a humanoid robotics ETF that's done really, really well. And it's a separate type of return stream from all your other AI
because it's focused on, you know, robotics.
And what you'll see is a differentiated return stream from companies
that are not in the US.
You know, South Korea is a hub for humanoid robotics.
And, you know, I think 27% of the portfolio is companies that are based out of South Korea, another
26% in the US, another 27% in Hong Kong and China.
So you're getting this great return stream that hasn't really been impacted by what's
happening in the broader markets in AI,
but still tied to that very, very much. So you get a different return stream. And then I'm talking
really fast, but we're running out of time here. The globally systemic important banks,
the largest financial institutions in the world, they are very attractive to us and have been very attractive to us
for a long period of time. Because again, they are less interest rate sensitive. They hold the
most deposits. They're integrated. They're involved in all of this various investment,
all of these investment themes that are happening around the globe.
Financial tech and tokenization is taking over. So they are evolving into more scalable,
more profitable, more efficient monetary platforms. And there's a push for blockchain and, you know, fintech that's really increasing their valuations. So, you know,
there's just, we have several things that we're really, really positive on. We're really, really
bullish on. And we also think they are defensive plays in a time where there's lots of, you know,
concern about what's going on in the marketplace. We just think that these are poised for long-term investment and risk mitigation to the downside.
Yeah, Paul, I know we're running short on time for you.
We're having such a great conversation here.
I'm happy to keep it open and keep going, but do want to be respectful of your time and everyone's time.
Some great ETFs definitely mentioned there. Themesetfs.com, SPAM, SPAM. We talked about, you heard GSIB, G-S-I-B mentioned
there. WISE, W-I-S-E. And then of course, NATO, we had a nice deep dive into that one. One good
exercise that I love to do personally is open up and look at the holdings inside of some of these
and do my research on them and kind of see holdings inside of some of these and do my
research on them and kind of see, well, what are these guys doing? What are they tracking?
What's the thematic here and the thesis behind it? And do it as a launch point. I encourage everyone
to go in and look at some of these and see if any of them maybe fit your investing needs.
Definitely read the prospectus and all that. Paul, any final words before we kind of
rotate the conversation back around here through some of the panel? No, like I said, you know,
I think my only final thoughts would be like, we are in a really great position for growth.
Whether or not we are in a bubble, it doesn't really matter at this point, because the bubble
is not about to burst. Sort of in my, you know, Everything is in my opinion, but I think we have
a long runway because there's so much investment that's being made. And we have an administration
that regardless of where we are moment to moment is very, very interested in growth at all costs,
meaning the Federal Reserve chairman that's coming in is interested in growth. They know
that the only way to get out of this debt is to grow.
And so they're going to make an attempt at growth like no other administration has seen
because they don't want to stop the spending or the investment either because there's so
much that needs to be invested in infrastructure and AI, you know, technology, defense, all
the things that we were just talking about.
So in order to do that, they're going to have to continue to spend.
And if they're going to have to continue to spend, the only way to get out of this massive
deficit spending that we have is to continue to grow, continue to grow, continue to grow.
So my thoughts are, think about US in a growth mindset for at least the next two to three years until we get a new administration.
And then we'll see what happens there.
But relatively speaking, I'm kind of bullish on things.
Even when you talk about like if you look at where the crypto market has been, it seems to be settling.
It seems to be moving sideways right now and consolidating.
I just think there's a lot to look forward to going into the back half of 2026 and into 2027. And if we can clear up a lot of this stuff
and get to a little bit of a better place. And I think, you know, regardless, again,
of politics, the world may be a better place if we have, you know, the Middle East and the United
States and Israel all working together,
you know, that might be something that you could see towards the back half of 2026,
really accelerate growth. So thank you very much for your time. Thanks for being a good partner
of ours. I love your audience. So thank you to the audience. And, you know, I hope everybody
navigates through this as good as possible.
Appreciate you, Paul.
Make sure you follow that LeverageShares account.
Always great having Paul and his well-researched thoughts from him and the team on here on Spaces with us.
We really enjoy partnering with them.
I get to talk to them once or twice a week.
And I tell you what, it's really grounding for me as a trader and investor.
So big shout out to Paul there. Shai, if we still have you, I know you may have to run soon,
but I'd love to see if you had to take around CrowdStrike. And you mentioned the ridiculous software, you know, sell off and this AI stuff. And as someone that, you know, follows this space
very closely, I'm just curious if you got a chance to look at the CrowdStrike thing. I saw an interesting note you posted the other day from George Kurtz where CrowdStrike built by thousands
of engineers over a decade that Claude's not just going to replace. I'm just curious if you had to
take around CrowdStrike and if you had any thoughts around the software sell-off. It looks like there
was a bit under software today a little bit. And it just seems like maybe the narrative just needs to shift there.
Yeah, so I mean, right now we're a lot of questions there.
So let me try to think about in my head which one I'll tackle first.
I guess we can talk about the software disruption.
I think that is somewhat of a lazy type of phase in the market where we're sentencing all software to this
doomsday scenario when it's going to be a lot more of a nuance than that. I think that it's
going to be like 95%. Here's the tricky thing. 95% of the stocks are deserving to be re-rated.
And I think they're going to somewhat become the, let's just say the legacy layer of the neogenic ai stack because
uh again like if i i created this uh legacy layer test for myself uh that i've been using and
re-evaluing all these software companies like the first question is are you a c-based uh business
model in a world where ai aids reduce knowledge workers if yes then you might be at risk
second one is do you actually own the data that agenda AI can't replicate generate or replicates
if you do then you might be secure and the third one is going to be more about are you just so uh like are you just a horizontal offering in someone's it stack and i think a lot
of people a lot of companies are somewhat of that bloated part of the it stack where
i there might not be a moat and it's tricky because right now you're not going to see any real signs of this narrative that these software companies who the market has been rewarded for years.
Is now all of a sudden questioning in real time on do they actually deserve to be 20 times free cash flow, 30 times free cash flow.
And right now a lot of these names are under 10 times free cash flow because the market is pricing in future uncertainty.
And that is honestly valid because the people that we speak to at Future, I'm like, they don't have as much visibility past 2030 due to how quickly things are just moving at – how quickly AI is moving at this point.
Like it's truly remarkable the velocity of AI and it's happening every couple of months.
Like the agentec AI moment, like chat DBT moment for AI agents just happened a couple months ago.
And you're seeing news stories week after week. Like I think early February is when Anthropic launched Cloud Cowork,
I think early February is when Anthropic launched Cloud Cowork, which introduced that
genetic AI capability that can tonicly navigate all the software and enterprises.
I think it can execute legal contract reviews.
It can do all these different things that touch so many different industries that, like
every single day in an industry, it was a game of hot potato about which industry is
going to get sold off.
The market looked at that and said, okay, we're now going to price,
reprice every software category in existence and start valuing each name
with the same brush that you might be at risk on, uh, not having any kind of
incremental growth in five plus years, 10 plus years.
I think February 3rd was the black Tuesday dates for software, uh, where
you had IGV dropped 6%, uh, in a single session.
That's kind of bonkers. Um, because that ETF isn't just, uh, uh, Monday.com's the sauna is like these,
like, uh, get labs. Like these are, that's an ETF that has Microsoft Palantir, CrowdStrike,
like they have blue chip software companies and that was down six percent one day
so i think that right now you're just seeing the market trying to pick out who's going to win in
the new ai economy who's going to potentially be a lagger who's going to be um fragile and it's
it's processed you have to do every single three every three months a perfect example is
like mongo db mongo d was down 20. I'm trying to see
it. Yeah, they're down 20% today. This was an interesting name because they had, until yesterday,
they had three straight quarters of clear momentum from AI. I was like, okay, this might be a winner
because you saw Atlas growth continue to reaccelerate quarter after quarter after quarter.
continue to re-accelerate quarter after quarter after quarter and guess what it decelerated
yesterday it went from 30 to 29 percent monga uh mongodb atlas again that's the cloud offering the
atlas uh mongodb does that was trending from 71 a year ago of total revenue to 75 two quarters ago
anticipation was going to maintain that level or maybe go to 76 77 like remember
this is the consumption engine for the whole company like this is what the stock is valued at
that's why they have a premium that decelerated 72 so that was that combined with the alice growth
decelerating at 29 uh there was some clear weakness in al performance last quarter. So this pullback, re-rating the Mongo
God, like it was justified because maybe they aren't a winner in the AI economy because now
it's become a lot more noisier and they had a premium valuation entering this print. I think
it was at, I'm seeing right now what they're trading at. I still think they have a premium
valuation. Yeah, they're at nine times price of sales like 55 times free
cash flow and they are uh the type of business that doesn't really have gap profitability so
this is a stock that's kind of stuck in the middle of like no man's land where they're not cheap like
their peers in the software space but they also aren't showing any kind of clear reaccel acceleration
that they're going
to be a winner in the AI economy, like the Palantir, the Cloud Flares, the CrowdStrikes,
where the Axon as well, like where there's clear RPO reacceleration at the same pace,
that there's a scarcity premium now towards these handful of names, because you don't
really have to worry about the AI tsunami coming
for the business model and rereading them to that legacy layer. They're going to have
a clear spot in the Gentic AI stack. And you know that for me, specifically on my team,
we believe that the software spend in IT is actually going to be a lot higher in five plus
years, but the distribution is going to be radically uneven towards the top. And that's why there's a lot, there's a massive scarcity
premium in these names. And CrowdStrike today is, they showed really good numbers. Like there
was no weakness. They had, I think they were produced 30, they reported 23% revenue and their
margins were 29%. Rule 40 score of 51 plus.
Why are they catching a bid?
I think it's ridiculous that George even said 2036 target, but he gave a 10 year guidance.
Like again, everyone I speak to don't really have much visibility after four years, but
George feels confident enough to call out a 20 billion arr by 2036 uh that is a
pretty big runway but i think that the whole thesis about crowdstrike is they're a category leader in
endpoint security and what's the one thing that agentic ai is going to essentially create a ton
of different ai being used on a ton of machines that would be continuously on 24-7.
So the category that fits best with agentic AI and cybersecurity is endpoint.
And this is a category leader in that category.
So this is why they're kind of the only clear tier one cybersecurity name.
And there are multiple backs it up.
This is not a cheap name.
This is a premium valuation assigned to it.
And it's, again, justified because there's a scarcity premium now with these names where
Palo Alto, they are still a blue chip cybersecurity company, but they have had zero evidence on
being able to organically grow themselves to capitalize on the latest and greatest.
They have to acquire their way in order to get
identity exposure and cybersecurity through CyberArk.
They have to acquire their way through to get
observability exposure and cybersecurity and Chronosphere.
They constantly have to acquire, acquire, acquire their way.
That's why they spent $30 billion in the past year.
That's going to create synergy risk.
Just because when you spend that much money,
there's going to be somewhat of a bumps along the way
on trying to sell this platform narrative
that they've been trying to do.
So I think that Palo Alto has some signs of maybe
this is a Salesforce 2.0 because Salesforce holding
on the cloud era was they had,
they acquired all these BI tools
to sell themselves as this platform. It worked until they made a couple awful acquisition after
acquisition after acquisition. Now there's $50 billion in goodwill debts on their balance sheet.
And now they're kind of anchored a bit from all these awful acquisitions on what the old economy was looking like in software, where obviously the new economy is being rewritten in front of our eyes.
And they have to pay for all the previous mistakes still.
So I think that I'm not a big fan of the acquisitive business model of what Palo Alto is doing.
But I still think they're a great network security company.
But I just don't like their style of what they're doing right now.
Rubrik, probably the unsexiest part of cybersecurity company.
I mean, Data Vault of Genetic AI essentially.
And they make sure that if something happens to your enterprise,
that you're going to be able to protect that data and
you don't lose it uh god forbid so i i think that and then zscaler is interesting they're hyper
uh they're incredibly cheap they're probably the best risk and reward if i'm going to be honest in the cyber security space right now uh but i don't know if they're going to be a platform i don't
know if this is more of a layer in someone else's ecosystem uh especially with
what they do is hyper competitive and controlling all the traffic in someone's enterprise so um i
mean to answer your question i mean crowdstrike was a great report i'm shocked to be honest
it's green uh i think it was a great not an upward surprise report and typically the cycle
anything great has been sold off.
And we'll see what happens tomorrow, Bob.
Pass it back to you.
I went off on a pretty big rant.
Oh, that was a beautiful rant, Shia.
You didn't match Stock Talk's rants, but it was pretty close.
I'll give you second place on that.
But well done.
I appreciate all the thoughts there.
It has been interesting.
CrowdStrike, a lot of these reports we've seen lately, the market's just, okay, just sell it, you know, just no matter what the earnings were.
And CrowdStrike actually holding in here, basically break even, you interesting stuff around the market. I appreciate those thoughts. Stock talk. I haven't heard from you in a little while. A lot of things discussed today. We're getting probably close to the end of the show here, but wanted to bring it back around to you, see if you had anything you heard that you wanted to cover on, anything to add,
or maybe something we didn't get to today.
No, not really. I think you just have to wait out this shop if you're looking for markets to stabilize.
I think if you don't see technical recovery on the major indexes within a few weeks, then you're probably headed
lower by then. I mean, probably within that time, you'll be a lot lower. So I think you need to see
repair on the queues and SPY. I mean, me and Candro kind of had a little bit of a back and
forth about it earlier. I still stand behind the idea that these companies will be unlikely to
meet their spending commitments if their equities don't
perform. I think it's not a big leap in logic to make that speculation. And so that's what I think
the biggest risk to both the market and the economy is, is data center spend being throttled
by multiple compression in the underlying equities. And I think that could become a bigger issue than some
are pinning it out to be. And then the other side of caution, I guess, is oil markets and
the Strait of Hormuz and the Iran situation in general. And if that leads to a sustained climb
in oil prices, which we haven't seen yet, there hasn't been much movement, much significant movement in oil prices yet. But if you do see sustained movement to the upside in oil prices, which we haven't seen yet. There hasn't been much movement, much significant movement in oil prices yet.
But if you do see sustained movement to the upside in oil prices, then I think that could
pose an issue as well, because I think that will slow the pace of cuts that the market
is expecting starting in May.
So I think those are the two big issues to watch. Stabilization and the equity values for the big data center players. And then hopefully not a sustained rally in oil, because I think that would I don't think the markets would like that.
So those are the two big, I guess, macro factors, I think, that are on the table right now. Outside of that, I think you just keep watching your individual stocks, looking at your technical structure and your individual stocks.
The daily charts are going to be very, very, very noisy during CHOP.
Anyone who's traded during a period of CHOP before knows this, but the newer trader and investors might be confused by it.
But your daily charts just are not going to look good on most things in a choppy environment. You're going to have to look to those weekly and monthly charts
to sort of give you room for confidence, if you will.
And if those weekly and monthly charts look okay,
I think if you have the cost basis to endure the volatility,
then you're okay.
If you don't, then you do kind of have to defer to the daily charts, unfortunately.
But that's why buying stuff at the right prices is so important, not only in choppy markets,
but in all markets.
So make sure you're buying at the right prices.
And if you're planning on holding stuff during the chop, make sure you have the cost basis
to be able to do that and focus on those weekly and monthly charts.
I'll be doing a workshop tonight for our members on weekly charts and
going through those and also going through a little checklist I made for things to know about
a stock before you start researching it. So that's what I'll be doing tonight for our Discord members
and a lot of you in the audience are members. So we'll be doing that around, I don't know,
6 or 7 p.m., probably 7 or 8 p.m. actually.
And then we'll see how the rest of the week goes.
We did see the SB500 give up its 20 SMA on the weekly today.
Now the week isn't over, but you would like to see a little bit of stabilization there
and hopefully close above that into the end of the week.
You're still holding the 21 EMA on the weekly on SPY,
so that is an incrementally good sign.
And you're still holding the November lows on both SPYs and the Qs,
so that's also an incrementally good sign.
If you take out those November lows on SPYs or the Qs,
I would be cautious from that point.
So, yeah, that's kind of all the things I'm looking at.
We'll see you guys tomorrow, obviously,
and throughout the rest of the week into Thursday.
Take it easy, everybody.
There you have it.
Workshop tonight.
If you are in the Stock Talk Weekly Discord,
link is in his bio.
Code CooperFlag actually gets you nothing off right now
because the Mavericks suck. That was funny. is in his bio code CooperFlag actually gets you nothing off right now because
the Mavericks suck.
That was funny.
Gets you nothing off.
20 points a game. At least he's doing something, I guess.
Mavericks are terrible.
But Link is in the bio for that.
Great Discord community over there. I really
enjoy being a part of it. I've noticed
not many updates lately, Stock Talk,
as far as, I mean, you give updates, but not changes, I guess, would be the... Yeah, not many changes lately. Yep, just holding
the ship. I like that. And honestly, seeing someone with Stock Talk's approach being,
I don't know if cautious is the right term, but not being super active in the current market
conditions kind of helps reinforce my same thoughts of looking at this chop in the market and just staying.
I'm not defensive defensive.
I do have some hedges on personally, but I'm just patient.
I'm being very patient in this market, not taking a whole lot of shots, holding companies that I enjoy, being in that I'm confident in, that I have longer term thesis in.
I enjoy being in that I'm confident in that I have longer term thesis.
And I don't mind buying some of those, you know, statically, but just kind of waiting, waiting.
Do we get down to those November lows that Sock Talk was talking about?
That's around the 200 day moving average on both of both the NASDAQ and the SPX.
Basically, the NASDAQ a little bit closer than SPX.
But you look at SPX SPY, that 200-day moving average hanging out down there
right around those November lows, which was also basically October lows as well. So some really,
really key areas on the market if we get down there. Obviously, today, wicked down,
a lot of buyers stepped in. I think a lot of shorts may be a little bit scared to just hold
for follow-through in this market as well. Could be a lot of short covering. Either way,
we'll see what happens.
We'll bring it to you right here on Stocks on Spaces.
Make sure you follow all the great accounts
that came through today.
The whole space was recorded.
So if you missed any of the great conversation
over the last, what was it, three hours or so today,
some really good stuff.
I appreciate Cantro coming up today.
Stock Talk, of course, co-hosting this with me.
I saw Evan pop in and out.
He was listening a little bit
in the background as he travels.
I'll be back tomorrow hosting again on here
and then you'll have to go back
to Evan on Thursday.
So I'll just apologize in advance,
but try to give you a break
from our friend Evan
for a couple of days either way.
But Logical, Sam,
all the other ones that came through today,
my friend Will jumping up here on stage. Make sure
you follow those guys. Check out everything that they're doing and follow this account. There we
go. Top of the hour right there. Futures are open. Let's see if Asia doesn't just sell straight down
again like it did last night. All right, guys. Appreciate everyone. Make sure you follow this
host account. We don't post a whole lot on here. We'll basically just post out our schedule and
go live power hour each and every day. We'll see you tomorrow. Thank you.
