Don't Chase Stocks Higher | Diamonds Edge Live | August 20th @ 8:45AM
Summary
Market Correction: The podcast discusses the unfolding market correction, emphasizing the potential for either a violent or mild correction in the coming months.
Investment Strategy: Investors are advised not to chase stocks higher during this period and to consider tactical trading opportunities, such as buying put options if certain scenarios unfold.
Technical Analysis: The host highlights the importance of Elliott Wave patterns, specifically the five-wave move up followed by an ABC correction, and how these patterns may influence market behavior.
Key Indices and Stocks: The discussion includes analysis of major indices like the NASDAQ and Dow, as well as specific stocks such as Nvidia, AMD, TSM, and Intel, focusing on their recent performance and potential trading opportunities.
Labor Day Significance: Labor Day is highlighted as a historical inflection point for market movements, with potential trading opportunities around this time.
Sector Focus: Semiconductors are identified as a leading sector, with specific attention to the performance of stocks within this sector and their corrective patterns.
Government Influence: The podcast touches on the government's involvement in companies like Intel and the potential implications for investors.
Upcoming Catalysts: The upcoming Federal Reserve minutes and Jerome Powell's speech at Jackson Hole are noted as potential catalysts that could influence market direction.
Transcript
Heat. Heat. [Music] Heat. [Music] [Music] Heat. [Music] Heat. [Music] Heat. Heat. Heat. [Applause] [Music] [Music] Heat. Heat. [Music] [Music] [Music] Heat. Heat. [Music] [Applause] [Music] [Music] Good morning everyone. Welcome to Diamond's Edge Live. This week we're going to be looking at the correction that is unfolding. Okay, we looked at the first two weeks of August and how the 12th and 13th specifically we were looking for a topping situation that seems to be the case. I'm going to go over um a few scenarios uh you know whether we can see you know slight new highs in some stocker indexes or we simply have this correction unfold where last week marked a significant high and so I think what is important is that you not necessarily want to chase this market higher even if we do trade higher and I'll go over what I'm looking at uh in terms of those scenarios but really there's two things that I'm looking at you know over the next few months really is is this going to be a a violent uh you know intense correction or is it going to be uh mild choppy kind of confusing? Um that's the scenarios that I think that we're facing here. We are looking at you know this fivewave move up that happened and now we're looking at this ABC 3-wave correction. So the problem with corrections is that you don't know again whether it's going to be intense or whether it's going to be you know kind of this mild confusing correction. Now the good thing uh regardless of of which scenario unfolds is that once you get that three-wave correction guess what you get another fivewave move up. Okay but let's not get ahead of ourselves. Let's focus on um you know over the next few weeks uh you know what scenarios we can look at. All right. So, I'm going to dive into uh some of the indices and sectors and we'll look at some uh big tech uh stocks as well. Nvidia, AMD, TSM, stuff like that. All right. So, let me uh start with the NASDAQ here. All right. And this is a chart that I highlighted to 10 stock trader subscribers this morning. This is a NASDAQ composite index. Okay. And again, you can see I've I've labeled this one, two, three, four, five. uh you'll see over the last um over the charts, you know, we looked at August 5th and 6th and then 12th and 13th. You can see, you know, a lot of stocks topped out last week on this 13th and now we're having this drop. All right. Now, what I highlighted this morning is I'm highlighting this RSI down here. if we get uh a drop, okay, in the NASDAQ that where you know, we see price make a higher low off of this swing low back in August 1st, okay, but RSI comes down and makes a new low that sets up at least a short-term bottom. All right, I don't, you know, we'll have to wait and see. We have the Federal Reserve minutes later today. The and then, you know, uh Jerome Powell is speaking at Jackson Hole. Usually this tends to be um an important meeting. Is that going to change now with the pressure that he's been facing? I'm not sure. Okay. We saw, you know, CPI come out that was uh lower, but producer prices come in come in that was much higher. Does that give him just to say, you know what, we're just going to wait and see. Uh I don't know how the market's going to react to that. So, it's something to to keep an eye on. It's certainly a catalyst. There's no doubt about that. All right. So this is what I'm looking at in the NASDAQ at least in the very very short term. But you can see here we have this clear wave five. Now going moving beyond what we saw in terms of that twoe time frame where there is the top we are either going to see this situation unfold where we get a drop. Okay. Uh and I'll highlight this for you right now where we get a drop. Okay. Um, and then the next sort of inflection point, and again, all these tend to be just very short-term based upon the rules of Elliot wave and then time. This doesn't mean that I'm calling for a crash. Again, we're looking at a fivewave move up with an ABC corrective move. Okay, it's that's those are just the rules, okay? So, are we going to see um a situation like this? And now I've highlighted late August and around Labor Day. You can go all the way back uh well over a hundred years and look at how Labor Day has created highs and lows. Sometimes they're they're pretty intense. Uh look no further than the crash of 1929 and look what happened around Labor Day. Okay. Um that marked the high, right? That's the on the extreme. Okay? Same thing with 1987. You know, that started to top out that market there. I'm not saying that's going to happen now, but if you go back, you know, just over the last few years, you can see how around Labor Day will mark important trading opportunities. Let's put it at that. Not necessarily crashes or, you know, or big bottoms, but trading opportunities. So, if we think about this ABC correction, okay, and if we continue lower from this August 13th top, okay, all this means is that heading into Labor Day, this could just create this Awave. All right? And then from there we would get something around something like this. Okay? So a Bwave, you know, into uh let's call it late September, you know, and then the C-wave heading into October. That would be the ideal setup. And again, this is A. This is B, right? Uh let's get that a little bit bigger so you can see it. Okay. And then you get your C-wave into October. All right, that's the general scenario in terms of this three-wave correction. Now, again, as I said at the start, is this going to be something where it's volatile and intense, right? A lot of catalyst, earnings, the Fed, right? War in Iran or Ukraine, peace, no peace. What's going to happen? Is it going to be intense or is it just going to be more of a sideways move, right? Work off overbought corrections, you know, and then we rally into that next fiveway move up. That's what we have to see. But to me, this is um you know the the the best probability setup for you know the next few months. All right. So that's the NASDAQ. You can see here in the Dow I've already outlined this and again this red is the more intense and the black is the more mild choppy corrective confusing type of of move over the next few months. Now you can also see and I'm going to delete this black one here. And you can see here there's another scenario where we actually create this um high into Labor Day, right? So the NASDAQ uh or excuse me, the Dow here did not drop as much yesterday or the last couple days as much as the NASDAQ. That was um something to keep in mind. So is there a scenario where let's say the Dow extends up into late August, Labor Day, then corrects, right? And then we see divergence develop in SMH or IWM. We'll get to IWM in a second. Okay. And then, you know, we still have this larger correction unfold. That's certainly a possibility. Okay. And as I told 10 stocks trading subscribers this morning, if we see this scenario unfold where we get another high into Labor Day, to me, that's a situation to buy put options. All right. So, that's the Dow. Um, let's look at SMH, which which has obviously been a leader this year. Okay. Uh, and we'll look at some of the stocks within it. But you can see again this August 13th high, right? And now we've corrected. So is this a scenario where we we get a drop and we test this uh swing low from earlier this month. Okay, the 55day moving averages right around here. Maybe we again we rally into Labor Day, late August. Okay, and then we get a correction. Or the other thing that unfolds is we have this choppy, okay, where we get a short-term low. we get another high, it can't break above that August 13th high and then we trade back down into September and August or September and October. Okay, so that's the situation that I'm looking at, you know, with some of the bigger uh sectors, the leading sectors, semiconductors. Certainly, when we look at IWM, and I believe we've been tracking this for for quite a while on the show, we can see that it did not make new highs with the rest of the market this year. uh this, you know, this high from late November of 2024 is still intact. Okay. Now, IWM has had a nice move of late, but where did it top? Right on that August 13th date. Okay. But when I look at this really close, all right, let's zoom in here. And if I just do something like this, uh, and this is what I'm going to be looking forward to um over the next week or two. So, let's say this is a one, two, three, four, five into late August, early September. again this Labor Day time factor, right? Then we can have this correction. It still wouldn't make a new high above this late December or late 2024 high. So that would create price divergence too where that's again that's something where I would look to um likely trade put options especially if we see divergence elsewhere in the market which I think we will see. All right. So if we look at IWM, small caps, SMH, the Dow, the NASDAQ, we have some scenarios to keep in to keep in mind in terms of whether we get, you know, this is all very short-term moves. You have to remember this is a corrective pattern that's unfolding. It can get confusing. It can get choppy. All right? So you have to be uh, you know, tactical in your trading almost in terms of all right, we're going to look for short-term lows. We're going to look for short-term highs. And that's how you navigate this environment. Okay. Uh sticking with the semiconductors. All right. This is advanced micro devices. Again, this topped out on the 13th. You can see it's had a nice move down. Now, look at some of this RSI action. You can actually see here this is already starting to complete or uh trigger a positive RSI reversal. Now, this has to stay this price action. So, if we see a big drop today or later this week and and AMD drops below what's that low there? 15780. Okay, that negates this positive RSI reversal. All right. And so now, if this holds, this could this could mean that we get, you know, this grinding move higher again over the next week or two. All right. I could totally see that as a possibility. That's not something that I would chase. That's the that's my that's my point this week is to not chase that into Labor Day. to me that would be uh a place to actually again buy put options. Okay, because then we like likely unfold into that um corrective pattern over the next you know call it two months. Okay, so something to keep in mind there. We can also look at Nvidia. Everyone knows this stock again. This top the high was on the this high was on actually on the 12th but you know 13th started dropping and now we had that big move down yesterday. Same thing. Let's look at the RSI. It's already at 51. How low can this go? Does it get choppy here and we create a low into late August and Labor Day? All right. And that creates an opportunity to take some profit on any put options, possibly even go long. Again, this is all very short-term stuff, but you can see how this is coming together. August 12th, August 13th marked this top off of a fivewave move. Now, we're looking at corrective price action over the next few weeks, maybe few months. Um let's look at uh Caterpillar. Actually, let's stick with um semiconductors. Now, Taiwan semiconductor has had um a nice move, but again, you can see here that this actually topped out in July and has gone sideways. So, this has already been in this corrective pattern. I looked this morning uh or actually late last night and I was tracking Taiwan stocks. Okay, you can see it had a big drop last night, right? So, this is starting to top out again, you know, after a nice move higher. This tell this confirms to me that we're still we're in this corrective pattern. All right. I like looking at at stocks overseas. Even though we don't trade them, it's good to understand how everything is flowing globally. And this kind of confirms to me that again, we are in this corrective pattern. Doesn't mean we can't make new highs. I'm not saying that. Again, we've gone over that scenario, but to me, this isn't something that you want to chase. All right. So, uh, let's switch over to Caterpillar. And Caterpillar's had a nice move. This also topped out in late July. Okay. And you can see on the RSI, you know, we're already if we dropped significantly. If we get into this low in September, okay, or Labor Day, late August, and we get into oversold conditions, this is a situation where we would actually buy call options. All right? So, something to keep an eye on. Um, let's look at uh what else can we look at? Let's look at Microsoft. All right. And this will be the last one and then I'm happy to take any questions. Okay. Well, you can see Microsoft here, you know, topped out July 31st and it's just been in this corrective price action um after a night again after a nice big move up. So, and you can see here RSI is down to 46. you know, within bull markets, stocks or whatever market you're looking at, the RSI likes to trade uh into support on the RSI around the 40 level. Um, so that would be something to keep an eye on. But even if that doesn't hold, you're looking at, you know, oversold conditions heading into, you know, let's say it drops over the next two weeks, right? That gets us into Labor Day. and now you're in an oversold condition within a bull market heading into a historical, you know, turning point trading opportunity at least. Okay. Uh that would be something where I'll look to to start buying. All right. So, those are the scenarios that I'm looking at over the next few weeks. Again, we looked at the high last week for August 13th. Mo many stocks, many indices are looking at a fivewave move up. We're in this strong bull market, but now we're looking at this corrective move that is either going to be intense or it's going to be mild and choppy. And then we'll look at specific time factors, you know, heading over the next 3 weeks, call it even um probably 3 months if we're honest. Um and how this whole thing unfolds, you know, before this bull market likely takes off. However, given that, I still think that there are some good trading opportunities, at least short-term trading tactically here. All right, I'm happy to take some questions. How about Intel? Yeah. So, the government uh is going to take a stake in Intel. And look, I there I've tracked this stock for years and years and years and years. And um you know, every time I hear somebody say uh oh, there's a bullish catalyst. They're they're they're they're building this. They're they're expanding their uh capital expenditures. uh new CEOs, new strategy, uh they're acquiring this, they're acquiring that. You know, it's just a stock that, you know, has not kept up with certainly with AMD or Nvidia or TSM. Okay. And so now that the government's taking a stake, you know, do you really want uh the government to be involved in uh this type of in this type of industry? I'm not so sure. You know, the the government loses a billion dollars a year delivering mail. Do you really want them getting involved in microchips and computer processing? Not something that I would do. All right. But regardless of my opinion or my bias, let's look at what the chart action is saying, you know, and it's had plenty of moves, okay? But since 2020 has been in a bare market, it's been in a downtrend relative to Nvidia, AMD, TSM, you know, all these other things that have just, you know, skyrocketed higher. So, is this something that you could take a, you know, a punt on and have a very low risk entry point here, right? It's trading at 25. You put your stop down here at 18. Sure. Is this something that is going to be a long-term investment? Not right now. Okay. Okay, if you follow Paul Tudtor Jones, he talks about, you know, a 200 a stock will have to be above its 200 day moving average for me to look even look at it in terms of investment. Okay, it traded above it. Now, can can it sustain this? Okay, make new swing highs and then sustain a new uptrend. What would that have to be? Let's say this is the low. Okay, right. Government's stepping in. they have the backing uh the tariffs, you know, all the rules around what's happening with China and uh you know, this this chip war. Okay, let let's see this start to make a series of higher highs and higher lows um and keep up with the rest of the market and then I would switch my um you know, my outlook on this stock. Why is Labor Day so special historically as an inflection point? Are there any other holidays where the market tends to react? That's a great question. So, you know, I don't get into the why of of Labor Day. Some people say, you know, uh all the traders and bankers are coming back from vacation, you know, and then things get a little hectic. Uh I I don't really focus on the why. Other than that, it historically has. Let's go back and look at um and some of those inflection points. Okay. And you know, we can go back to um uh you know, the the the big crashes and stuff, but you can look and just see, okay, this is going back to 2024. Okay, this is last year. And look, you know, was this the biggest move in the world? No. But this was the high on August 30th, right? And then the day after, you know, when the market back opened back up, okay, you had this drop, right? So, that's something that I that I'm looking at. Um, you know, again, something for this year. And whether that's a low or a high, that's something that we're going to have to to check out. Okay. You can see here, same thing. 2023, we had a short-term top into it, and we had a nice little drop. Not the biggest move in the world, but something to keep an eye on. Okay, you can go back right here, right, and look in August, and this actually created a low around Labor Day, right? This is actually after a big move. But if you really want to get crazy, okay, and you know, we can go all the way back to um let's see, uh where was one that was actually really really good. I think this is Yeah, here we go. So, this is right before the election in 2020. Okay. Rallied into Labor Day and then that created a significant top. So, you can see again, I'm not saying that this is going to be a crash or, you know, a huge bottom. Historically, they are trading opportunities. They are turning points. Are there any others that tend to be when I look at it's around Labor Day? Okay. And then um around Christmas also tends to be um trading opportunities turning points. All right, check out PLTR. Yeah, that had a big move, too. Uh this has obviously been a very popular stock uh momentum, but you can see here this topped out on the 13th just like all the other stocks we've been looking at. So, it's obviously been in this clear uptrend. So, and this is something that I was looking at over the weekend actually. And what I'm going to be looking at is I'm going to be uh tracking some of the Fibonacci retracement levels. Okay? So, I'm going to and you can see how I do this here. Um, you know, if we start trading into this support down in here, and again, especially if this happens into and around Labor Day, you can see the RSI is already, you know, at 43. If we get into an extreme oversold condition and there's a lot of panic, this could be a situation um to buy call options. When you have a stock where the price can remain flat for long stretches of time, how do those plateaus figure into your wave analysis? That's a great question and that just tells me, let's go back to Intel, right? Uh because I think that is something where this is exactly what you're talking about. So if you go back to what is this a it's been a year August 2024 all the way has hasn't done much it's just gone sideways to me coming off of these this downtrend this is still corrective now you could make the argument um although I think it would be a weak one that you know this would be the low okay and this would but I just don't see that so to me if you were to to answer your question uh coming off of this this move I would look at something like this. Okay. So, I would have these different uh Fibonacci retracement levels. All right. And then what I would do is to me when I see this sideways, I almost always think it's a wave four. So, you can see how it's um you know, maybe it pops a little bit higher, but I would expect at least a fifth wave move down and maybe that creates the low. Okay, everyone gets excited about the government stepping in. You know, you see this rush, you see this positioning that it gets on the wrong side. What's going to happen? What's going to hurt the most people is if this continues to make a new low and maybe that is actually, you know, a puke out low, everyone gives up on it. Intel has no hope. That would actually be a low that we want to buy. So, that's kind of how I would look at those sideways moves. Those sideways moves are simply corrective patterns. You just have to figure out whether it's going to be within an uptrend or a downtrend. In this case, it's a downtrend. All right. Uh so, thanks for tuning in this week. Remember to like and subscribe. Uh we'll see how these scenarios play out and uh certainly with Friday's uh speech with Jerome Powell, you know, that could be a catalyst that sets us up for next week and then we're into Labor Day. So, we'll discuss that next week. Thank you very much. [Music]
Don't Chase Stocks Higher | Diamonds Edge Live | August 20th @ 8:45AM
Summary
Transcript
Heat. Heat. [Music] Heat. [Music] [Music] Heat. [Music] Heat. [Music] Heat. Heat. Heat. [Applause] [Music] [Music] Heat. Heat. [Music] [Music] [Music] Heat. Heat. [Music] [Applause] [Music] [Music] Good morning everyone. Welcome to Diamond's Edge Live. This week we're going to be looking at the correction that is unfolding. Okay, we looked at the first two weeks of August and how the 12th and 13th specifically we were looking for a topping situation that seems to be the case. I'm going to go over um a few scenarios uh you know whether we can see you know slight new highs in some stocker indexes or we simply have this correction unfold where last week marked a significant high and so I think what is important is that you not necessarily want to chase this market higher even if we do trade higher and I'll go over what I'm looking at uh in terms of those scenarios but really there's two things that I'm looking at you know over the next few months really is is this going to be a a violent uh you know intense correction or is it going to be uh mild choppy kind of confusing? Um that's the scenarios that I think that we're facing here. We are looking at you know this fivewave move up that happened and now we're looking at this ABC 3-wave correction. So the problem with corrections is that you don't know again whether it's going to be intense or whether it's going to be you know kind of this mild confusing correction. Now the good thing uh regardless of of which scenario unfolds is that once you get that three-wave correction guess what you get another fivewave move up. Okay but let's not get ahead of ourselves. Let's focus on um you know over the next few weeks uh you know what scenarios we can look at. All right. So, I'm going to dive into uh some of the indices and sectors and we'll look at some uh big tech uh stocks as well. Nvidia, AMD, TSM, stuff like that. All right. So, let me uh start with the NASDAQ here. All right. And this is a chart that I highlighted to 10 stock trader subscribers this morning. This is a NASDAQ composite index. Okay. And again, you can see I've I've labeled this one, two, three, four, five. uh you'll see over the last um over the charts, you know, we looked at August 5th and 6th and then 12th and 13th. You can see, you know, a lot of stocks topped out last week on this 13th and now we're having this drop. All right. Now, what I highlighted this morning is I'm highlighting this RSI down here. if we get uh a drop, okay, in the NASDAQ that where you know, we see price make a higher low off of this swing low back in August 1st, okay, but RSI comes down and makes a new low that sets up at least a short-term bottom. All right, I don't, you know, we'll have to wait and see. We have the Federal Reserve minutes later today. The and then, you know, uh Jerome Powell is speaking at Jackson Hole. Usually this tends to be um an important meeting. Is that going to change now with the pressure that he's been facing? I'm not sure. Okay. We saw, you know, CPI come out that was uh lower, but producer prices come in come in that was much higher. Does that give him just to say, you know what, we're just going to wait and see. Uh I don't know how the market's going to react to that. So, it's something to to keep an eye on. It's certainly a catalyst. There's no doubt about that. All right. So this is what I'm looking at in the NASDAQ at least in the very very short term. But you can see here we have this clear wave five. Now going moving beyond what we saw in terms of that twoe time frame where there is the top we are either going to see this situation unfold where we get a drop. Okay. Uh and I'll highlight this for you right now where we get a drop. Okay. Um, and then the next sort of inflection point, and again, all these tend to be just very short-term based upon the rules of Elliot wave and then time. This doesn't mean that I'm calling for a crash. Again, we're looking at a fivewave move up with an ABC corrective move. Okay, it's that's those are just the rules, okay? So, are we going to see um a situation like this? And now I've highlighted late August and around Labor Day. You can go all the way back uh well over a hundred years and look at how Labor Day has created highs and lows. Sometimes they're they're pretty intense. Uh look no further than the crash of 1929 and look what happened around Labor Day. Okay. Um that marked the high, right? That's the on the extreme. Okay? Same thing with 1987. You know, that started to top out that market there. I'm not saying that's going to happen now, but if you go back, you know, just over the last few years, you can see how around Labor Day will mark important trading opportunities. Let's put it at that. Not necessarily crashes or, you know, or big bottoms, but trading opportunities. So, if we think about this ABC correction, okay, and if we continue lower from this August 13th top, okay, all this means is that heading into Labor Day, this could just create this Awave. All right? And then from there we would get something around something like this. Okay? So a Bwave, you know, into uh let's call it late September, you know, and then the C-wave heading into October. That would be the ideal setup. And again, this is A. This is B, right? Uh let's get that a little bit bigger so you can see it. Okay. And then you get your C-wave into October. All right, that's the general scenario in terms of this three-wave correction. Now, again, as I said at the start, is this going to be something where it's volatile and intense, right? A lot of catalyst, earnings, the Fed, right? War in Iran or Ukraine, peace, no peace. What's going to happen? Is it going to be intense or is it just going to be more of a sideways move, right? Work off overbought corrections, you know, and then we rally into that next fiveway move up. That's what we have to see. But to me, this is um you know the the the best probability setup for you know the next few months. All right. So that's the NASDAQ. You can see here in the Dow I've already outlined this and again this red is the more intense and the black is the more mild choppy corrective confusing type of of move over the next few months. Now you can also see and I'm going to delete this black one here. And you can see here there's another scenario where we actually create this um high into Labor Day, right? So the NASDAQ uh or excuse me, the Dow here did not drop as much yesterday or the last couple days as much as the NASDAQ. That was um something to keep in mind. So is there a scenario where let's say the Dow extends up into late August, Labor Day, then corrects, right? And then we see divergence develop in SMH or IWM. We'll get to IWM in a second. Okay. And then, you know, we still have this larger correction unfold. That's certainly a possibility. Okay. And as I told 10 stocks trading subscribers this morning, if we see this scenario unfold where we get another high into Labor Day, to me, that's a situation to buy put options. All right. So, that's the Dow. Um, let's look at SMH, which which has obviously been a leader this year. Okay. Uh, and we'll look at some of the stocks within it. But you can see again this August 13th high, right? And now we've corrected. So is this a scenario where we we get a drop and we test this uh swing low from earlier this month. Okay, the 55day moving averages right around here. Maybe we again we rally into Labor Day, late August. Okay, and then we get a correction. Or the other thing that unfolds is we have this choppy, okay, where we get a short-term low. we get another high, it can't break above that August 13th high and then we trade back down into September and August or September and October. Okay, so that's the situation that I'm looking at, you know, with some of the bigger uh sectors, the leading sectors, semiconductors. Certainly, when we look at IWM, and I believe we've been tracking this for for quite a while on the show, we can see that it did not make new highs with the rest of the market this year. uh this, you know, this high from late November of 2024 is still intact. Okay. Now, IWM has had a nice move of late, but where did it top? Right on that August 13th date. Okay. But when I look at this really close, all right, let's zoom in here. And if I just do something like this, uh, and this is what I'm going to be looking forward to um over the next week or two. So, let's say this is a one, two, three, four, five into late August, early September. again this Labor Day time factor, right? Then we can have this correction. It still wouldn't make a new high above this late December or late 2024 high. So that would create price divergence too where that's again that's something where I would look to um likely trade put options especially if we see divergence elsewhere in the market which I think we will see. All right. So if we look at IWM, small caps, SMH, the Dow, the NASDAQ, we have some scenarios to keep in to keep in mind in terms of whether we get, you know, this is all very short-term moves. You have to remember this is a corrective pattern that's unfolding. It can get confusing. It can get choppy. All right? So you have to be uh, you know, tactical in your trading almost in terms of all right, we're going to look for short-term lows. We're going to look for short-term highs. And that's how you navigate this environment. Okay. Uh sticking with the semiconductors. All right. This is advanced micro devices. Again, this topped out on the 13th. You can see it's had a nice move down. Now, look at some of this RSI action. You can actually see here this is already starting to complete or uh trigger a positive RSI reversal. Now, this has to stay this price action. So, if we see a big drop today or later this week and and AMD drops below what's that low there? 15780. Okay, that negates this positive RSI reversal. All right. And so now, if this holds, this could this could mean that we get, you know, this grinding move higher again over the next week or two. All right. I could totally see that as a possibility. That's not something that I would chase. That's the that's my that's my point this week is to not chase that into Labor Day. to me that would be uh a place to actually again buy put options. Okay, because then we like likely unfold into that um corrective pattern over the next you know call it two months. Okay, so something to keep in mind there. We can also look at Nvidia. Everyone knows this stock again. This top the high was on the this high was on actually on the 12th but you know 13th started dropping and now we had that big move down yesterday. Same thing. Let's look at the RSI. It's already at 51. How low can this go? Does it get choppy here and we create a low into late August and Labor Day? All right. And that creates an opportunity to take some profit on any put options, possibly even go long. Again, this is all very short-term stuff, but you can see how this is coming together. August 12th, August 13th marked this top off of a fivewave move. Now, we're looking at corrective price action over the next few weeks, maybe few months. Um let's look at uh Caterpillar. Actually, let's stick with um semiconductors. Now, Taiwan semiconductor has had um a nice move, but again, you can see here that this actually topped out in July and has gone sideways. So, this has already been in this corrective pattern. I looked this morning uh or actually late last night and I was tracking Taiwan stocks. Okay, you can see it had a big drop last night, right? So, this is starting to top out again, you know, after a nice move higher. This tell this confirms to me that we're still we're in this corrective pattern. All right. I like looking at at stocks overseas. Even though we don't trade them, it's good to understand how everything is flowing globally. And this kind of confirms to me that again, we are in this corrective pattern. Doesn't mean we can't make new highs. I'm not saying that. Again, we've gone over that scenario, but to me, this isn't something that you want to chase. All right. So, uh, let's switch over to Caterpillar. And Caterpillar's had a nice move. This also topped out in late July. Okay. And you can see on the RSI, you know, we're already if we dropped significantly. If we get into this low in September, okay, or Labor Day, late August, and we get into oversold conditions, this is a situation where we would actually buy call options. All right? So, something to keep an eye on. Um, let's look at uh what else can we look at? Let's look at Microsoft. All right. And this will be the last one and then I'm happy to take any questions. Okay. Well, you can see Microsoft here, you know, topped out July 31st and it's just been in this corrective price action um after a night again after a nice big move up. So, and you can see here RSI is down to 46. you know, within bull markets, stocks or whatever market you're looking at, the RSI likes to trade uh into support on the RSI around the 40 level. Um, so that would be something to keep an eye on. But even if that doesn't hold, you're looking at, you know, oversold conditions heading into, you know, let's say it drops over the next two weeks, right? That gets us into Labor Day. and now you're in an oversold condition within a bull market heading into a historical, you know, turning point trading opportunity at least. Okay. Uh that would be something where I'll look to to start buying. All right. So, those are the scenarios that I'm looking at over the next few weeks. Again, we looked at the high last week for August 13th. Mo many stocks, many indices are looking at a fivewave move up. We're in this strong bull market, but now we're looking at this corrective move that is either going to be intense or it's going to be mild and choppy. And then we'll look at specific time factors, you know, heading over the next 3 weeks, call it even um probably 3 months if we're honest. Um and how this whole thing unfolds, you know, before this bull market likely takes off. However, given that, I still think that there are some good trading opportunities, at least short-term trading tactically here. All right, I'm happy to take some questions. How about Intel? Yeah. So, the government uh is going to take a stake in Intel. And look, I there I've tracked this stock for years and years and years and years. And um you know, every time I hear somebody say uh oh, there's a bullish catalyst. They're they're they're they're building this. They're they're expanding their uh capital expenditures. uh new CEOs, new strategy, uh they're acquiring this, they're acquiring that. You know, it's just a stock that, you know, has not kept up with certainly with AMD or Nvidia or TSM. Okay. And so now that the government's taking a stake, you know, do you really want uh the government to be involved in uh this type of in this type of industry? I'm not so sure. You know, the the government loses a billion dollars a year delivering mail. Do you really want them getting involved in microchips and computer processing? Not something that I would do. All right. But regardless of my opinion or my bias, let's look at what the chart action is saying, you know, and it's had plenty of moves, okay? But since 2020 has been in a bare market, it's been in a downtrend relative to Nvidia, AMD, TSM, you know, all these other things that have just, you know, skyrocketed higher. So, is this something that you could take a, you know, a punt on and have a very low risk entry point here, right? It's trading at 25. You put your stop down here at 18. Sure. Is this something that is going to be a long-term investment? Not right now. Okay. Okay, if you follow Paul Tudtor Jones, he talks about, you know, a 200 a stock will have to be above its 200 day moving average for me to look even look at it in terms of investment. Okay, it traded above it. Now, can can it sustain this? Okay, make new swing highs and then sustain a new uptrend. What would that have to be? Let's say this is the low. Okay, right. Government's stepping in. they have the backing uh the tariffs, you know, all the rules around what's happening with China and uh you know, this this chip war. Okay, let let's see this start to make a series of higher highs and higher lows um and keep up with the rest of the market and then I would switch my um you know, my outlook on this stock. Why is Labor Day so special historically as an inflection point? Are there any other holidays where the market tends to react? That's a great question. So, you know, I don't get into the why of of Labor Day. Some people say, you know, uh all the traders and bankers are coming back from vacation, you know, and then things get a little hectic. Uh I I don't really focus on the why. Other than that, it historically has. Let's go back and look at um and some of those inflection points. Okay. And you know, we can go back to um uh you know, the the the big crashes and stuff, but you can look and just see, okay, this is going back to 2024. Okay, this is last year. And look, you know, was this the biggest move in the world? No. But this was the high on August 30th, right? And then the day after, you know, when the market back opened back up, okay, you had this drop, right? So, that's something that I that I'm looking at. Um, you know, again, something for this year. And whether that's a low or a high, that's something that we're going to have to to check out. Okay. You can see here, same thing. 2023, we had a short-term top into it, and we had a nice little drop. Not the biggest move in the world, but something to keep an eye on. Okay, you can go back right here, right, and look in August, and this actually created a low around Labor Day, right? This is actually after a big move. But if you really want to get crazy, okay, and you know, we can go all the way back to um let's see, uh where was one that was actually really really good. I think this is Yeah, here we go. So, this is right before the election in 2020. Okay. Rallied into Labor Day and then that created a significant top. So, you can see again, I'm not saying that this is going to be a crash or, you know, a huge bottom. Historically, they are trading opportunities. They are turning points. Are there any others that tend to be when I look at it's around Labor Day? Okay. And then um around Christmas also tends to be um trading opportunities turning points. All right, check out PLTR. Yeah, that had a big move, too. Uh this has obviously been a very popular stock uh momentum, but you can see here this topped out on the 13th just like all the other stocks we've been looking at. So, it's obviously been in this clear uptrend. So, and this is something that I was looking at over the weekend actually. And what I'm going to be looking at is I'm going to be uh tracking some of the Fibonacci retracement levels. Okay? So, I'm going to and you can see how I do this here. Um, you know, if we start trading into this support down in here, and again, especially if this happens into and around Labor Day, you can see the RSI is already, you know, at 43. If we get into an extreme oversold condition and there's a lot of panic, this could be a situation um to buy call options. When you have a stock where the price can remain flat for long stretches of time, how do those plateaus figure into your wave analysis? That's a great question and that just tells me, let's go back to Intel, right? Uh because I think that is something where this is exactly what you're talking about. So if you go back to what is this a it's been a year August 2024 all the way has hasn't done much it's just gone sideways to me coming off of these this downtrend this is still corrective now you could make the argument um although I think it would be a weak one that you know this would be the low okay and this would but I just don't see that so to me if you were to to answer your question uh coming off of this this move I would look at something like this. Okay. So, I would have these different uh Fibonacci retracement levels. All right. And then what I would do is to me when I see this sideways, I almost always think it's a wave four. So, you can see how it's um you know, maybe it pops a little bit higher, but I would expect at least a fifth wave move down and maybe that creates the low. Okay, everyone gets excited about the government stepping in. You know, you see this rush, you see this positioning that it gets on the wrong side. What's going to happen? What's going to hurt the most people is if this continues to make a new low and maybe that is actually, you know, a puke out low, everyone gives up on it. Intel has no hope. That would actually be a low that we want to buy. So, that's kind of how I would look at those sideways moves. Those sideways moves are simply corrective patterns. You just have to figure out whether it's going to be within an uptrend or a downtrend. In this case, it's a downtrend. All right. Uh so, thanks for tuning in this week. Remember to like and subscribe. Uh we'll see how these scenarios play out and uh certainly with Friday's uh speech with Jerome Powell, you know, that could be a catalyst that sets us up for next week and then we're into Labor Day. So, we'll discuss that next week. Thank you very much. [Music]