‘I’m Petrified’: What’s Next Is 'Far Worse' Than 2008 Warns Trader | Gareth Soloway
Summary
Market Outlook: Gareth Soloway predicts a major recession worse than 2008, potentially comparable to the 1929 crash, emphasizing the fragility of current economic conditions.
Crypto Market Analysis: Recent market volatility highlighted excessive leverage in crypto markets, with Bitcoin showing resilience despite a significant liquidation event.
Technical Analysis: Bitcoin is currently in a wedge pattern, indicating potential for either a breakout or breakdown, with key support and resistance levels at $110,000 and $126,000 respectively.
Stock Market Insights: The S&P 500 is in a wedge pattern, with a recent breakdown not yet confirmed, suggesting potential for a 10% correction if confirmed.
AI Sector Concerns: The AI sector's significant contribution to recent market gains raises concerns about sustainability, with potential risks if the momentum slows.
Precious Metals: Gold's recent parabolic rise is seen as overextended short-term, but remains a long-term buying opportunity amid ongoing economic uncertainties.
Bond Market: Soloway is bullish on bonds, anticipating lower interest rates and a decline in the 10-year yield, targeting low 3% by early 2026.
Transcript
Be ready for for for what exactly, Gareth? >> For a major recession. Like, we're going to I think this what I think what's coming is going to be far worse than 089. When this happens, whether it's in a year or two or whenever once the Margo round stops and the music stops, this is going to be far worse, folks. This is going to be the worst thing since the drops in 2000 and probably even going back closing in on 1929. >> Market saw a brutal sell-off last Friday. The crypto markets saw one of the biggest sell-offs in crypto history. If you weigh it by market capitalization and actually if you take a look by market cap loss, that was the single biggest single day drop possibly for a lot of altcoins and Bitcoin combined. This happened after Trump announced a 100% tariff on China. He since uh ameliated tensions with China somewhat over the weekend. We'll talk about that. And just on Monday, today on the 13th of October, uh there's a big rebound in the markets. We'll talk about stocks, cryptos, what's next for Trump's tariffs on China, and uh many, many other things. Gareth Solo joins us once more. He is the president of Verified Investing. Welcome back, Gareth. Good to see you. >> Hey, good to see you, David. Thanks for having me back. What was your initial reaction to uh Trump's tariff announcement on Friday? 100% tariff on China. China saying today uh or Sunday rather last night that it will not back down in the face of a 100% tariff threat. Trump has since made tweets or posts on social media um over the weekend that uh he's trying to make a deal and negotiate with the great Xi Jinping. So giving him praise while at the same time giving him 100% tariff. Yeah. So, I mean, in reality, when I heard this news, you know, number one, the markets had sold off all day long at that point. This was after hours on Friday, and it was one of those situations where it's like, okay, this could be the start of something bigger, but we know Trump doesn't like the markets going down. So, right away, I told everyone out there, I said, guys, he might walk this back over the weekend once he sees the market's reaction. And that's exactly what he did. But there was te technical damage done in the charts and this actually still could turn out to be a major pivot high. We're going to have to watch and see. I want to just draw your attention and focus the conversation right now on this. $19 billion wiped out in crypto's biggest liquidation ever. Like I mentioned in the introduction, this was the single biggest day drop for crypto on a combined market cap basis. And even though that happened, remarkably, Bitcoin only dropped to um 110,000 or something like that, it was still well above $100,000. And it went from 120 to 110. So on a percentage based drop, it wasn't as dramatic and catastrophic as maybe the headlines make it out to be, but on an aggre aggregate market cap drop basis, um it was quite significant. It did reveal who was leveraged and who wasn't and uh all the leverage positions basically got wiped out. Let's comment on that. Excessive leverage in the system exposed. Is that what happened? >> That's exactly what happened and that's why you get these crazy drops, right? When you look at, you know, whether it's XRP dropping from 280 down to 175 or so on that flush. It's basically telling you that the crypto markets allow for the most leverage of any market out there. I mean, maybe not futures and a few other forex type stuff, but in terms of volatility, by far, it's the most leverage out there. And that's really what happens is, you know, when the tide goes out, it shows you who's wearing a bathing suit and who's naked. And that's when it'll flush out all the leverage in the system. And that's why these type of moves are so much more dramatic than in the stock market. The stock market's not using 50 to one, 100 to one in general versus crypto markets. A lot of investors do use incredible leverage. >> So, what are you doing right now as a trader? Are you just waiting for Trump to announce a deal and then buy? Is it just that easy? So, I I wish it was. I feel like anytime you think it's that easy, it usually is not that easy. Meaning that the that's when the the fake out comes. But let's jump into some charts here and let's take a look. So, speaking of crypto, let's start with that just because that's where we are right now. We're discussing the leverage and the flush out. And what's so fascinating here is going into this just literally a week ago, we had crypto at a high that made sense for being a major resistance level. So in fact, I'm going to take away this underbelly support. And we're just going to go to the weekly chart. And what we could see on this weekly chart is that if you take the 2017 high, the bull market high on Bitcoin, and you connect it to its highest point in 2021, you literally get each of these last two highs and then this recent high right here. And notice selloff, selloff, selloff. And so it's amazing how we talk about how the charts can sometimes dictate price, but in reality, I mean, look at what's happened every time we hit this level. And so remember, I don't try to reinvent the wheel when I'm using technical analysis. All technical analysis is, it's probability based trading. And by looking at that, you have to say, okay, well, every time it's hit this line, we've had a selloff. And so I had my members short Bitcoin up here, and we obviously got out on this flush. But it's amazing again how the charts dictate the price action. >> Well, it looks like just looking at that chart, it looks like in the last data point, we've reached a bottom. Is that true? >> Yeah, at least in the short term, you're right. So, one of the lines I love showing people is there's this trend line right here. And and it notice how a trend line that is a good trend line should have multiple pivot points along it, right? And so, we can look at all of these points and say, "Wow." So, just like this was resistance up at this range around 126,000. Technically speaking, until proven otherwise, this 110,000 level was support. And that's exactly what Bitcoin's done. Now, there are a couple things that we have to pay attention to, right? So any support or resistance line can fail at a certain point. Remember probabilities tell us that essentially something is favored but it's not guaranteed. And so what I like to do here is I like to say okay well until we confirm above 126 this is your top until we confirm below essentially 110,000 that is your bottom. So as a trader now we're in a range and I have to watch to see which direction ultimately Bitcoin goes. And as we can see, these lines are slightly inverted, meaning they're eventually going to come to a head. And Bitcoin will be forced to either break out or break down. So, you're either going to go up like this or start to collapse lower. But right now, Bitcoin is in a wedge, which means it's at support and it's above below resistance. So, it's holding steady here. Those trend lines that you're drawing, the orange and yellow lines, it's been trending up, sloping slightly up ever since the beginning of your chart, which is, I think, earlier this year. Does that signal or indicate Gareth that uh Bitcoin is in an uptrend long term? >> It does. Absolutely it does. There's no doubt about it. In fact, um Bitcoin's been in a longer term uptrend here even, right? We could even connect these lows going back to 2023 and we can clearly see it is in an uptrend. So now listen, in all fairness, this uptrend has been the shorter uptrend. So let's just say price does break here. it's okay because it still isn't within a bigger uptrend that goes back to 2023. Now listen, it could fall down to let's say 93,000 or so, but as long as it doesn't take out the longer bull market of 2024 into 2020, well really 2023 all the way through 2025, it's still in an uptrend and we have to respect that uptrend. I mean, if you're looking for the bigger bare case on a technical analysis basis, so not just pullbacks that are buying opportunities, you have to expect this line to break, which again is your longer term bull market uptrend. If that breaks, now we're in trouble for Bitcoin. Uh then you could see that bigger correction that we hear when the stock market drops 40 or 50%, Bitcoin obviously drops equals to that or more. But as long as we hold, let's say, 9293, this is just an uptrend. As we can see, it just kind of follows along. Even if it goes down there, you would still be in a beautiful uptrend. >> Are you surprised that the biggest liquidation event in crypto history by market cap only saw a decline in Bitcoin by the order of less than 10%. Which is significant for any asset class for a single day for for Bitcoin that just seems like Tuesday. >> Yeah, you're right. I think I think number one, it shows us that Bitcoin is having a bigger bigger grasp within the institutional money, right? So again, when you have bigger market down days, Apple maybe moves a couple percentage points, right? Because, you know, there's so much institutional pension funds owning it and these other entities that it doesn't have the panic selloff before people are coming in and buying it and stabilizing it. And I think that's where we're heading with Bitcoin, at least in the near term. And so you're right, historically on a day like that, on a flush, Bitcoin would have dropped 20, 25, 30%. and instead to see basically 10% or less is a testament to Bitcoin becoming a real asset that institutions believe in and a broader amount of the public believe in. Before we jump back into the video, let's talk about something most people ignore. Online privacy. Now, your personal information isn't just sitting on your phone or email. It's being scraped, bought, and sold by data broker websites every day without your permission. Our sponsor today, Delete Me, helps you take that control back. They scan the internet for your exposed information, send you regular privacy reports, and remove your data from hundreds of broker sites so it can't be used against you. Take mine for example. In the latest report, they reviewed over 325 listings to see if any data of brokers had my personal information, and they continue to check every week to ensure that it stays off. Go to joindeleteme.com/davidlinin and use the promo code davidin at checkout link down below or scan the QR code here on the screen and you'll get 20% off of all US plans. Take control of your privacy today before somebody else does. Most of the gains from the early October rally for so basically this beginning of October were wiped out. Uh now today's rebound um is happening. Everything's in the green uh at least the things I'm looking at on my screen. So, let's talk about today's rebound. >> Yeah, today's rebound is great on Bitcoin, right? So, again, at least in Bitcoin, and we can get to the S&P in a second as well and talk about that. But the only thing I'm going to monitor on this, guys, and again, this isn't a fully formed pattern yet. So, I don't want anyone to get in a panic about it. But on Bitcoin, there's something called a or on any chart, there's something called a head and shoulders pattern. And a head and shoulders basically is a bearish pattern where you have this sort of formation. Here's your head, right? There's your shoulder and shoulder. And the idea is if it ever forms that and breaks the neckline, which is the connector here, then you can technically get a much bigger move to the downside. The only reason I'm bringing this up on Bitcoin is yes, we've had a good rally, but could it be that that pattern is forming on Bitcoin here if we were to go up like this? And it's just something that as a technician, my job is to always look into the future and see exactly what's forming and what could be at risk. And it's just something that's on the radar. But as of now, support is holding. The only time I'd be nervous is again if we break about 110,000 and have a daily close below that, then you start have to prep having to prepare for a sub 100,000 Bitcoin. But right now, holding beautifully. >> It did briefly touch 9,000 over the weekend though, Gareth. >> Y and uh >> you can see right here. In fact, I think on Friday it even got as low as 107,000 on that chart. And so, listen, pierces happen, right? Not only with stocks, but especially in crypto where these liquidation events happen. you're going to get these deep flushes. You have to really follow the daily close and sometimes even the weekly close because these whips saw moves can can be causing be caused by deleveraging and essentially wiping out the these extreme amounts of leverage that are being used. And so try to ignore the whips. Look at where the daily candle closes. Do you have to wait for a certain amount of time before something closes below a uh a floor in order to assess that it's broken down and then you should start shorting it? Because let's say you have a rule uh built into your trading system, either an algorithm or just a stop-loss or whatever rule you make for yourself that below 110,000 or 109,000, whatever that floor may be for you, you're going to start liquidating and and perhaps even shorting. And if you had done that using that logic and not waiting and not having been patient, you would have lost a lot of money on the rebound. So I'm I'm just wondering, you know, how you make the distinction between, okay, something has pierced the floor, it's time to take profits, we're short, versus I'm going to wait a bit more to see what's going to happen next. Yeah. And so so the general rule is everyone has to kind of figure out for them what their risk tolerance is. Because needless to say is if you say and there's something I abide by which is called the confirmation signal where you have to close below a level and then confirm that breakdown the next day before you say okay this is an official breakdown uh in the chart and so that's what I follow but in all fairness that can be on crypto that can be a big move where you're really putting your assets at risk if that were to happen. And so each person has to kind of make that determination for themselves, but that's what I use because I have seen so many instances where institutions will whip price knowing that there's a bunch of bears that'll be stopped out when they push it above this level and then once they do, they bring it right back in and then vice versa. They know that these stops are put at these levels. They'll wipe it down and then they'll bring it right back up like we've seen right here. And so the confirmation signal enables me to avoid those whips that are caused by institutions or deleveraging versus really telling where probability favors a true breakdown in the chart. And we needless to say didn't get that here on Bitcoin. >> So what is the momentum right now? >> Yeah, momentum remains on Bitcoin to be neutral to bullish. I wouldn't call it hardcore bullish because anytime you have a wipeout like this, this is going to do technical damage to the psychology of the market, right? The psychology of the bulls. But right now, like we talked about, we're still in the upper zone of a longerterm uptrend here, and that has to be respected. And so neutral to bullish bias is is intact. If we were to break below 110,000 and confirm, it would go to a neutral bias. And then if we break below and confirm 92,000, then it flips to bearish. >> Can you make the same analysis for the NASDAQ and the S&P? >> Yeah, absolutely. Let's let's look at the S&P. I think this is a fantastic one. Okay, so check this out. This is what we call a wedge pattern in technical analysis. It's epic and it's it's helped guide me to the market in terms of price action here up or down. So number one, this upper trend line. I'm going to change the color to orange so we can all see it a little bit more clearly here versus the other yellow one. This goes back to your low in October of 2023. And notice how it literally goes through each low. So here's your August 2024 collapse in the market. NASDAQ dropped massively there in a very short amount of time. your January pullback and then this was the liberation selloff on tariffs and you can see we broke support right here. Okay, so we broke down, we continued lower and then notice how remember in technical analysis support which is all these three points once you break and confirm it becomes resistance and what we can see here is absolutely remarkable how when you hit this level it sells off because now this line is resistance and that's exactly what we saw here. Now we have this lower trend line, right? We have this lower trend line here which we just broke. Now remember what we just talked about on Bitcoin, how it went below, but it never confirmed the breakdown. Same thing is is standard here. Now in this case, you closed below the trend line, but you haven't had a second close below yet where you would say, okay, we've confirmed the breakdown. And sure enough, what happens? We're getting a big bounce today. So while a lot of people would say, oh my goodness, this market broke down. I don't buy that yet. All right. Now, listen. Overall, I am still bearish on the markets, right? I still have that angle to thinking that the markets are overdone. But I'm a true technician when it comes to whether a breakdown is right is is confirmed. And as of now, we haven't confirmed. And look at the bounce we're getting. Now, if we reestablish back above this trend line on the S&P at around 6685, then you're just back inside of this tightening wedge pattern, right? That's all that is. And you could even test the highs again. But for me at least, I'm very clued in to this, right? These hits over and over again have been rejection points. So if we ever get up to this level here, let's say over here, I will be looking to sell into that right there. All right. So the essence of this is is that we've broken a key trend line here, but it's not confirmed a breakdown. If we confirm below this low, meaning any daily close below this low, then it's game on for at least a 10% correction in the markets. I don't know what the market is rebounding on exactly when you when you think about it. It's kind of it's kind of trivial if you if you if you consider that if you consider the possibility the possibility that this rebound is based entirely on Trump's truth social post on Sunday. Don't worry about China. He said it will all be fine. Highly respected President Xi just had a bad moment. He doesn't want depression for his country. Neither do I. The USA wants to help China, not hurt it. So it sounds like he's opening the door for negotiations for a possible deal. No such deal has been reached as of today, as of this moment. So what >> so this is this is honestly the most scary thing out there and this is probably the most important thing I'm going to say. What this has shown us is that the leaders of the two biggest countries in the world have no tolerance for the stock market to go down. All right, think about this. We were only down 2.77% on the S&P and it literally caused Trump to do a 180. And even China, China came out over the weekend and said, "Oh, well, these curbs were already in like all they backpedal." And what this tells us is that the global economy is so reliant on the stock market going up. And that's what he means when Trump says, you know, we don't want a depression or recession or anything like that. He knows at this point that everything hinges on the stock market. And the problem with that is is when everything hinges on the stock market, a really aka the AI trade, inevitably we're all in a lot of trouble. Essentially, the the politicians, the leaders of the world, are now at a point where they cannot afford to let the stock market decline because of the massive loss in wealth that would then ripple through the economies and cause a major recession or depression. And again, just to summarize why that's such a big deal is that it's inevitable that we're going to get a downturn at some point and at some point these type of reversions don't work anymore. Like you can only use the oh, I just was kidding so many times to get the market back up before the market says you know what, we can't do it. But I think that's why the markets are rallying back here because it's basically showing you that these leaders do not want the stock market to go down and they'll do whatever it takes to keep the stock market going up. I was a bit baffled at what happened on Friday because we've seen time and time and again, time and time again, this term and the last term. So, both of Trump's terms that every time he announced a tariff, at some point some sort of deal is reached later on. And even if he just hints at a deal being reached, the market rebounds and so pretty much every single tariff announcement up until now has been a buying opportunity. If I were a trader or or an investor looking at this situation, objectively, I'd say, well, history has proven that this is just a buying opportunity, so I'm not even going to bother selling. I'm just going to wait and write it out. Uh, that would be my logic. So, if everybody, let's suppose everybody collectively has the same logic, the markets wouldn't even sell off. It'll be like the boy who cried wolf, well, I'm going to announce 100% tariff. And we all know that's not going to happen. So, >> and that's the taco trade, right? I mean that's essentially the taco trade um you know that that people have become accustomed to and I think I think there had been such a lull between these tariff issues that it kind of calmed things down and kind of the markets lulled in and then this was a little bit of surprise that it came out on Friday and it was so vehement you know I mean he really wrote a book on truth social I mean it was not a short post uh ripping China and ripping president Xi there at the time but the markets again initially got scared and then they said you know what he's always going to back down no matter what and I think one of the things that we have to worry about here is that there are being repercussions of the trade war, right? And and for instance, now they're talking about a bailout for farmers because the price of soybeans and corn and wheat have collapsed so much that now the government's like, "Oops, well, we'll give you guys a $10 billion bailout potentially." And so you're seeing the repercussions. And my bigger worry is that at some point there's going to be a breakdown in the stock market. And regardless of what is walked back, it's inevitable. You can only push something up, right? You can only inflate a balloon so much before it pops because it gets so stretched out. And that's my biggest fear. And what we're seeing now is that the economy is literally the stock market. You have two sets of people in the world here, especially in the US, but I think all over the world. You have 70% that don't invest as much and they're struggling because of tariffs, uh, inflation, and all of the rest. And then you have anyone that has invested heavily and they're just making money. They don't care about inflation. They just see that their accounts are going up and they're spending and those are the people that are driving the economy now, those people that are seeing those gains in their stock market accounts. And so if you suddenly suddenly lose those gains, then this economy is done at that point. >> So right now I'm looking at these charts that you've shown and I'm thinking, well, there's a big green bar today on Monday. The bottom at least on a localized basis has been confirmed. It's time to start buying the dip or the dip that has already happened. Can you evaluate that logic? >> Yes. So per and I'll give you exactly what the technical charting books tell us, right? So when you get a major red candle, this is called a reversal engulfing reversal candle. Essentially, it essentially does a lot of damage on a technical or psychological basis. The only way you can negate this is if you come up and close back above this zone here. So listen, a lot of times you'll see a big red candle and then you'll go like this. And especially if we stay below this trend line, this would be known as a bare flag. And so while we haven't confirmed a breakdown, we all have to still be on a little bit higher alert that there has been technical damage done. We all think, oh well, Trump can just say something positive and the markets will rip higher. Let's hope that's the case. But we will know from the charts. If we can't get back and take out the high of the down day, the big down reversal candle, then this market technically remains in a very vulnerable state. All right, let's talk about uh something you brought up a couple minutes ago, which is the AI trade. This is an article from CNBC. How fund managers are investing for the fourth quarter as AI bubble talk swirls. Uh how are investors balancing this with the desire not to miss out on a potential $4.8 trillion market? Valuations and policy uncertainty make it hard to be overweight risk assets, but neither do we want to fight strong momentum. Now, that's the crux of the issue. valuations on any traditional um PE or EVA or cash flow basis look astronomical right now and there's probably some evidence to suggest that the stock market from the AI sector is being propped up because AI spending is just tech companies passing funds from one company to another and so they're basically propping each other up but on the other hand strong momentum is currently at play and we don't want to miss out. What do you do in an environment where there's strong momentum, there's strong FOMO, you don't want to miss out, but valuations are crazy. >> Yeah. So, one of the things that catches my eye, so number one, you know, everyone says this time is different. Um, I went through the dot and I swear that was different and then the stock market and NASDAQ collapsed, you know, 66% or so. And so, I'm just very wary of that mentality like, oh, this time's different. Um, yes, these AI companies are growing at amazing amounts, but I think we as investors have to look at the bigger picture. 75% of all the S&P gains in the last two years have been on the AI stocks. Like that's what's taken the S&P up 75% of its total gain in the last two years has been just the AI and related stocks. That is a very scary metric because if that trade ever stops out or slows down, we're going to see big cuts or drops in the market. In addition, think about this. The AI stocks, all they're doing is roundroining, right? So, you know, for instance, AMD is getting a h 100red billion from Open AI and then in response, Open AAI is like is getting um they're getting a the warrants to buy 160 million shares of AMD for a penny per share. All right. What does that mean? Well, basically AMD is is paying Open AAI so that OpenAI can pay them right back. And that's another concerning is issue that I'm having with what's going on in the AI realm. Now listen, it's an amazing trade. The valuations will come down. Margins will come down over time. The question is when are we near the end of the bubble or is it still inflating? We know from from Greenspan back in the 90s in 1996, he said irrational exuberance and the NASDAQ rallied another four to five years before we collapse. So again, I'm okay with missing out at this point. I'm not going to be chasing holding the bag. I understand a lot of investors want to hop on board. It's not my style. My style is to buy beaten down things and wait for them to jump up so that my riskreward is at a much better point versus risking a major collapse if I were to go long. And by the way, last thing I'll say here is that the drop on Friday shows you the air pocket in the market. Meaning that any sort of thing, any curveball that's thrown in this market, it's not down a quarter percent, not down half a percent, not down 1% on the NASDAQ or the S&P. It's literally 3 to 4% drops that we're seeing versus when the markets go up. If you look at the gains just since I was last on, the average gain of upside was like a quarter percent or a tenth of a percent. So, the markets are going up ever so slightly and making new all-time highs. But when they drop, they drop hard and fast. And that to me is scary as an investor to be getting in something where I could get a little bit of upside, but the downside one day drop could be 3 4%. You've just described a roller coaster goes up really slowly and then drops really fast. Um, this is a this is a chart I saw on Instagram where an image that someone put together. Just want to share with you. Did you make this chart, Gareth? Did you did you did you create this graphic? World's biggest bubbles. >> Looks good though. >> Bubble science parabolic price charts. I'm going to get to that in just a minute. Everyone's talking about crazy valuations. This time is different. Literally what you just said and then it's shown a few examples of market uh uh bubbles that have popped. Uh by comparison and this is the y-axis is a percentage gain basis. So by comparison, Bitcoin has been uh the biggest bubble and you we know what happened in 2022. Uh what's missing right now? Something that has moved parabol parabolically up are the precious metals, gold and silver. Now, they haven't popped, which is why it hasn't made it on this chart cuz it's not a bubble that's popped. Now, let's just evaluate gold and silver. Let's take a look at the charts, Gareth. Um, >> absolutely. >> And it's and it's a scary looking chart when you just look at it zoomed out. It's moving parabolically in one direction. What do you do with that? >> It really is. It It's incredible. Um, you know, I was even reading over the weekend that now stable coin companies are now buying gold. And if that's the case, I mean, what's what was the point of the stable coins? I guess I I mean, again, if they're now not even believing in the dollar and that's what they're putting out is a stable coin being equal to the dollar. But the point here is guys is that at a certain point when you see the amount of debt, right, we came into 2025 with this Doge set where they were going to cut all this government spending, get the spending under control, and then lo and behold, nothing ever got under control. And and listen, Elon Musk even got fired basically. I mean, he resigned technically, but let's be honest, I mean, he just couldn't get anything through with the politicians in terms of cuts. And so when you have that type of environment where the US is going on on this tariff tirade where the USI financial system is having less and less kind of belief in it from the global powers, they're going to just buy gold and I think everyone is jumping on this trade. Now does it mean that gold's going to go for up forever? No. There is going to be a point where it pulls back. I actually think it's short-term ridiculously extended here. Um look at this. This is the weekly chart. one, two, three, four, five, six, seven, eight, nine weeks up in a row. That's almost unheard of historically on gold. So, it's due for a pullback, but for me, I'm a buyer on pullbacks. You give if you give me a shot at 3500 on gold, I'm buying it right there. That's a great opportunity. Still quite a correction from here, and it may not get there, but again, that would be the major support that you'd have to start buying. And there's really no reason to say that gold won't go up longer term, right? I mean, when is the US ever going to stop printing money or lowering rates or all these type of things? >> We have to do a sanity check here. Inflation isn't out of control at this particular moment compared to at least a couple years ago. I mean, if you just take a look at CO for example, it was near double digits inflation actually more than double digits um in in some for for some products. Uh real yields is not collapsing. The dollar's down this year, but the dollar hasn't collapsed completely relative to other currencies. Some other currencies, it's still up. And so, you have to do a sanity check. And the debt issue that you're talking about, it hasn't just happened in the last what, 9 weeks since gold started rallying parabolically. Um, you you you got to ask yourself, does this make sense? I'll let you. >> Yeah. So I think I think with the precious metals in particular, everyone has been so focused on the AI trade, on the fact that the US is the most stabilizing power out there that they've really just kind of ignored the gold gold trade, the palladium, the platinum, the silver trade. Um, you can only ignore it for so long until it has to play catch-up, right? And if you look at inflation, inflation adjusted. I mean, really inflation adjusted, we just made a new all-time high recently uh on gold itself and silver just made a new all-time high from 1980. Um, so these things have lagged tremendously, they're now playing the pick the pickup or or catch-up trade to the upside. So I think again while things are getting a little out of control, um, if we go back here in terms of upside, you know, for me again as an investor, as a technician, we just simply look at this and say, "All right, if we ever pull back to this base point here around 3500 right in here, this becomes a buying opportunity." But I agree with you. It's getting a little long in the tooth short term look for a correction and then buy again because unless the US government is forced to to re in their spending which by the way if they reign in their spending immediate depression right I mean it's just it's immediate depression right because that's part of the stimulus that's been keeping this economy growing. Last thing too we mentioned we talked about the AI trade. What's so scary about that is we heard GDP was 3.8%. A majority of that is just the capex from the AI trade spend. And that's scary, too, folks, because that's not going to go on forever. These companies will not be putting trillions of dollars into spending forever. So, be ready. >> Be ready for for for what exactly, Gareth? >> For a major recession. Like, we're going to I think this what I think what's coming is going to be far worse than 089. When this happens, whether it's in a year or two or whenever once the Margo round stops and the music stops, this is going to be far worse, folks. This is going to be the worst thing since the drops in 2000 and probably even going back closing in on 1929. >> Wow. Okay. >> Yeah. >> I'll just let petrified. I mean, I'm at a point where where Listen, I'll still play the upside as a short-term trader. Like, I have no problem on pullbacks buying. Heck, I bought Fizer just the other day. You know, there are certain opportunities out there for me to buy. Um I'm holding my long-term gold. Um Bitcoin when it comes back, I'll be buying that. Um, and there's opportunities within within many areas, many sectors. But the house of cards that we are seeing being built, including the tweets that won't allow the market to fall more than 3% without us backing off of any policy change that hurts the markets. That is a recipe for a disaster and people have to be prepared. the notion that we could get this kind of a pullback in the economy, this kind of a recession, this level of depression. Well, the Fed's going to make note of that. Their mandate is to prop up the economy, if I were to sum that up in succinct words, right? They're they're bas their employment mandate basically means we're not going to let a recession happen. And so, let's factor that in. Maybe they'll drop rates significantly if what you're saying pans out. Maybe that's good for markets. Yeah, and you're right. I think to some extent it will be, but at a certain point you can only keep the patient alive for so long with drugs, right? I mean, essentially interest rate cuts are drugs. They're injecting those drugs, cheap money into the system, and it props the system up. But at some point, the bubble gets too big, the heart explodes, and that's ultimately where we are headed. So, yes, I have no doubt the Federal Reserve will cut rates as things get worse in the economy. But just like we saw in 089, remember, and you remember this too, David, is that there was a point in 089 where the Fed would literally come out with a new announcement. I mean, I still remember vividly they outlawed shorting in financial stocks. The financial companies dove even more, right? There's a point of no return and at some point we're getting there and it's getting closer and closer. We're definitely in the 11th hour. I'm unsure of the timing of this because again, is it does it mirror the hundred-year cycle with the the the Great Depression? So, is it 1929ish where this happens or does it happen before? How many levers left are in the system to prop the markets up? How many new drugs can be introduced? We have the government spending. We have the Federal Reserve printing and and lowering rates. We have the tweeting side of things, the deals, etc. But at some point, the patient goes regardless. >> Are you bullish on bonds then, Gareth? >> I am bullish on bonds. I do think interest rates are going to go lower here. Um on the 10-year, if we take a look at the 10-year yield here, yes. Um in fact, we got our first weekly close below a major trend line here. So, we can see this trend line goes back to 2022, August of 2022. Notice we hit it here. We bounced, we hit it, we bounced, we hit it, and then look at how minor this bounce was. And then there's your breakdown to the downside on the 10-year. And so ultimately, again, this hasn't traded since Friday, so we'll see because today's a holiday. But nonetheless, my guess is we're beginning our next leg lower of the 10-year yield. Now, it'll take time. I want to be clear on this. It's not going to collapse, right? But it'll it should continue down. And I'm looking for the low 3% by early 2026. >> All right, let's end it here. Gareth, great talk. uh a lot of volatility over the weekend and we're we're we're just um starting to see some green bars today. So, let's follow up soon and see what happens in the next couple weeks. >> Yeah, I'd love to see let's let's just jump back together in a maybe in month or so and see where the yields are. And really, let's follow this gold trade. The gold trade is something that you're seeing gold going to new all-time highs almost daily with the stock market. That is not healthy, folks. There's there's something broken there and we have yet to see what it is. But one of those two is going to give and we're gonna have to find out here in the next week or two. >> So I guess before we go, my final question is is this. If you're still long, if you're still riding this wave like you just said, at some point you're going to have to flip the script and say, "All right, that's enough. I'm out." What's that signal for you? >> So for me, it would be the confirmation of a breakdown on the S&P. If you confirm below that trend line, that low that we had on Friday, that would be the rip cord, not time at that point because that would be a technical signal, not not a just a guess, but at that point, it's a probability based assessment that markets have topped. All right, if we don't confirm, markets could continue to grind higher. I don't think there's a lot of upside at this point based on valuations, but again, we'll have to see as we come into earning season. >> Let's follow Gareth link down below. Where can we go, Gareth? Where can we go to follow you and learn about you? Yeah, just come over to verified investing, folks. Everything we do there is based on chart analysis and probabilities. No guessing, no hype, no FOMO, no narratives. It's like what is the chart telling us and what's the probability? Let's decide if that's worth it for us to take that trade. A short-term analysis on the markets all the time. Follow Gareth down below. He also has a YouTube channel where he gives regular weekly or daily updates. So, he um if you want to see just Gareth without me, check out his channel. And if you like what you're hearing on this channel, do subscribe. Click down below. Daily video updates on financial news. Welcome back, Gareth. It's good to see you and uh we'll see you again soon. Take care for now. >> Take care, David. >> Thank you for watching. Don't forget to like and subscribe.
‘I’m Petrified’: What’s Next Is 'Far Worse' Than 2008 Warns Trader | Gareth Soloway
Summary
Transcript
Be ready for for for what exactly, Gareth? >> For a major recession. Like, we're going to I think this what I think what's coming is going to be far worse than 089. When this happens, whether it's in a year or two or whenever once the Margo round stops and the music stops, this is going to be far worse, folks. This is going to be the worst thing since the drops in 2000 and probably even going back closing in on 1929. >> Market saw a brutal sell-off last Friday. The crypto markets saw one of the biggest sell-offs in crypto history. If you weigh it by market capitalization and actually if you take a look by market cap loss, that was the single biggest single day drop possibly for a lot of altcoins and Bitcoin combined. This happened after Trump announced a 100% tariff on China. He since uh ameliated tensions with China somewhat over the weekend. We'll talk about that. And just on Monday, today on the 13th of October, uh there's a big rebound in the markets. We'll talk about stocks, cryptos, what's next for Trump's tariffs on China, and uh many, many other things. Gareth Solo joins us once more. He is the president of Verified Investing. Welcome back, Gareth. Good to see you. >> Hey, good to see you, David. Thanks for having me back. What was your initial reaction to uh Trump's tariff announcement on Friday? 100% tariff on China. China saying today uh or Sunday rather last night that it will not back down in the face of a 100% tariff threat. Trump has since made tweets or posts on social media um over the weekend that uh he's trying to make a deal and negotiate with the great Xi Jinping. So giving him praise while at the same time giving him 100% tariff. Yeah. So, I mean, in reality, when I heard this news, you know, number one, the markets had sold off all day long at that point. This was after hours on Friday, and it was one of those situations where it's like, okay, this could be the start of something bigger, but we know Trump doesn't like the markets going down. So, right away, I told everyone out there, I said, guys, he might walk this back over the weekend once he sees the market's reaction. And that's exactly what he did. But there was te technical damage done in the charts and this actually still could turn out to be a major pivot high. We're going to have to watch and see. I want to just draw your attention and focus the conversation right now on this. $19 billion wiped out in crypto's biggest liquidation ever. Like I mentioned in the introduction, this was the single biggest day drop for crypto on a combined market cap basis. And even though that happened, remarkably, Bitcoin only dropped to um 110,000 or something like that, it was still well above $100,000. And it went from 120 to 110. So on a percentage based drop, it wasn't as dramatic and catastrophic as maybe the headlines make it out to be, but on an aggre aggregate market cap drop basis, um it was quite significant. It did reveal who was leveraged and who wasn't and uh all the leverage positions basically got wiped out. Let's comment on that. Excessive leverage in the system exposed. Is that what happened? >> That's exactly what happened and that's why you get these crazy drops, right? When you look at, you know, whether it's XRP dropping from 280 down to 175 or so on that flush. It's basically telling you that the crypto markets allow for the most leverage of any market out there. I mean, maybe not futures and a few other forex type stuff, but in terms of volatility, by far, it's the most leverage out there. And that's really what happens is, you know, when the tide goes out, it shows you who's wearing a bathing suit and who's naked. And that's when it'll flush out all the leverage in the system. And that's why these type of moves are so much more dramatic than in the stock market. The stock market's not using 50 to one, 100 to one in general versus crypto markets. A lot of investors do use incredible leverage. >> So, what are you doing right now as a trader? Are you just waiting for Trump to announce a deal and then buy? Is it just that easy? So, I I wish it was. I feel like anytime you think it's that easy, it usually is not that easy. Meaning that the that's when the the fake out comes. But let's jump into some charts here and let's take a look. So, speaking of crypto, let's start with that just because that's where we are right now. We're discussing the leverage and the flush out. And what's so fascinating here is going into this just literally a week ago, we had crypto at a high that made sense for being a major resistance level. So in fact, I'm going to take away this underbelly support. And we're just going to go to the weekly chart. And what we could see on this weekly chart is that if you take the 2017 high, the bull market high on Bitcoin, and you connect it to its highest point in 2021, you literally get each of these last two highs and then this recent high right here. And notice selloff, selloff, selloff. And so it's amazing how we talk about how the charts can sometimes dictate price, but in reality, I mean, look at what's happened every time we hit this level. And so remember, I don't try to reinvent the wheel when I'm using technical analysis. All technical analysis is, it's probability based trading. And by looking at that, you have to say, okay, well, every time it's hit this line, we've had a selloff. And so I had my members short Bitcoin up here, and we obviously got out on this flush. But it's amazing again how the charts dictate the price action. >> Well, it looks like just looking at that chart, it looks like in the last data point, we've reached a bottom. Is that true? >> Yeah, at least in the short term, you're right. So, one of the lines I love showing people is there's this trend line right here. And and it notice how a trend line that is a good trend line should have multiple pivot points along it, right? And so, we can look at all of these points and say, "Wow." So, just like this was resistance up at this range around 126,000. Technically speaking, until proven otherwise, this 110,000 level was support. And that's exactly what Bitcoin's done. Now, there are a couple things that we have to pay attention to, right? So any support or resistance line can fail at a certain point. Remember probabilities tell us that essentially something is favored but it's not guaranteed. And so what I like to do here is I like to say okay well until we confirm above 126 this is your top until we confirm below essentially 110,000 that is your bottom. So as a trader now we're in a range and I have to watch to see which direction ultimately Bitcoin goes. And as we can see, these lines are slightly inverted, meaning they're eventually going to come to a head. And Bitcoin will be forced to either break out or break down. So, you're either going to go up like this or start to collapse lower. But right now, Bitcoin is in a wedge, which means it's at support and it's above below resistance. So, it's holding steady here. Those trend lines that you're drawing, the orange and yellow lines, it's been trending up, sloping slightly up ever since the beginning of your chart, which is, I think, earlier this year. Does that signal or indicate Gareth that uh Bitcoin is in an uptrend long term? >> It does. Absolutely it does. There's no doubt about it. In fact, um Bitcoin's been in a longer term uptrend here even, right? We could even connect these lows going back to 2023 and we can clearly see it is in an uptrend. So now listen, in all fairness, this uptrend has been the shorter uptrend. So let's just say price does break here. it's okay because it still isn't within a bigger uptrend that goes back to 2023. Now listen, it could fall down to let's say 93,000 or so, but as long as it doesn't take out the longer bull market of 2024 into 2020, well really 2023 all the way through 2025, it's still in an uptrend and we have to respect that uptrend. I mean, if you're looking for the bigger bare case on a technical analysis basis, so not just pullbacks that are buying opportunities, you have to expect this line to break, which again is your longer term bull market uptrend. If that breaks, now we're in trouble for Bitcoin. Uh then you could see that bigger correction that we hear when the stock market drops 40 or 50%, Bitcoin obviously drops equals to that or more. But as long as we hold, let's say, 9293, this is just an uptrend. As we can see, it just kind of follows along. Even if it goes down there, you would still be in a beautiful uptrend. >> Are you surprised that the biggest liquidation event in crypto history by market cap only saw a decline in Bitcoin by the order of less than 10%. Which is significant for any asset class for a single day for for Bitcoin that just seems like Tuesday. >> Yeah, you're right. I think I think number one, it shows us that Bitcoin is having a bigger bigger grasp within the institutional money, right? So again, when you have bigger market down days, Apple maybe moves a couple percentage points, right? Because, you know, there's so much institutional pension funds owning it and these other entities that it doesn't have the panic selloff before people are coming in and buying it and stabilizing it. And I think that's where we're heading with Bitcoin, at least in the near term. And so you're right, historically on a day like that, on a flush, Bitcoin would have dropped 20, 25, 30%. and instead to see basically 10% or less is a testament to Bitcoin becoming a real asset that institutions believe in and a broader amount of the public believe in. Before we jump back into the video, let's talk about something most people ignore. Online privacy. Now, your personal information isn't just sitting on your phone or email. It's being scraped, bought, and sold by data broker websites every day without your permission. Our sponsor today, Delete Me, helps you take that control back. They scan the internet for your exposed information, send you regular privacy reports, and remove your data from hundreds of broker sites so it can't be used against you. Take mine for example. In the latest report, they reviewed over 325 listings to see if any data of brokers had my personal information, and they continue to check every week to ensure that it stays off. Go to joindeleteme.com/davidlinin and use the promo code davidin at checkout link down below or scan the QR code here on the screen and you'll get 20% off of all US plans. Take control of your privacy today before somebody else does. Most of the gains from the early October rally for so basically this beginning of October were wiped out. Uh now today's rebound um is happening. Everything's in the green uh at least the things I'm looking at on my screen. So, let's talk about today's rebound. >> Yeah, today's rebound is great on Bitcoin, right? So, again, at least in Bitcoin, and we can get to the S&P in a second as well and talk about that. But the only thing I'm going to monitor on this, guys, and again, this isn't a fully formed pattern yet. So, I don't want anyone to get in a panic about it. But on Bitcoin, there's something called a or on any chart, there's something called a head and shoulders pattern. And a head and shoulders basically is a bearish pattern where you have this sort of formation. Here's your head, right? There's your shoulder and shoulder. And the idea is if it ever forms that and breaks the neckline, which is the connector here, then you can technically get a much bigger move to the downside. The only reason I'm bringing this up on Bitcoin is yes, we've had a good rally, but could it be that that pattern is forming on Bitcoin here if we were to go up like this? And it's just something that as a technician, my job is to always look into the future and see exactly what's forming and what could be at risk. And it's just something that's on the radar. But as of now, support is holding. The only time I'd be nervous is again if we break about 110,000 and have a daily close below that, then you start have to prep having to prepare for a sub 100,000 Bitcoin. But right now, holding beautifully. >> It did briefly touch 9,000 over the weekend though, Gareth. >> Y and uh >> you can see right here. In fact, I think on Friday it even got as low as 107,000 on that chart. And so, listen, pierces happen, right? Not only with stocks, but especially in crypto where these liquidation events happen. you're going to get these deep flushes. You have to really follow the daily close and sometimes even the weekly close because these whips saw moves can can be causing be caused by deleveraging and essentially wiping out the these extreme amounts of leverage that are being used. And so try to ignore the whips. Look at where the daily candle closes. Do you have to wait for a certain amount of time before something closes below a uh a floor in order to assess that it's broken down and then you should start shorting it? Because let's say you have a rule uh built into your trading system, either an algorithm or just a stop-loss or whatever rule you make for yourself that below 110,000 or 109,000, whatever that floor may be for you, you're going to start liquidating and and perhaps even shorting. And if you had done that using that logic and not waiting and not having been patient, you would have lost a lot of money on the rebound. So I'm I'm just wondering, you know, how you make the distinction between, okay, something has pierced the floor, it's time to take profits, we're short, versus I'm going to wait a bit more to see what's going to happen next. Yeah. And so so the general rule is everyone has to kind of figure out for them what their risk tolerance is. Because needless to say is if you say and there's something I abide by which is called the confirmation signal where you have to close below a level and then confirm that breakdown the next day before you say okay this is an official breakdown uh in the chart and so that's what I follow but in all fairness that can be on crypto that can be a big move where you're really putting your assets at risk if that were to happen. And so each person has to kind of make that determination for themselves, but that's what I use because I have seen so many instances where institutions will whip price knowing that there's a bunch of bears that'll be stopped out when they push it above this level and then once they do, they bring it right back in and then vice versa. They know that these stops are put at these levels. They'll wipe it down and then they'll bring it right back up like we've seen right here. And so the confirmation signal enables me to avoid those whips that are caused by institutions or deleveraging versus really telling where probability favors a true breakdown in the chart. And we needless to say didn't get that here on Bitcoin. >> So what is the momentum right now? >> Yeah, momentum remains on Bitcoin to be neutral to bullish. I wouldn't call it hardcore bullish because anytime you have a wipeout like this, this is going to do technical damage to the psychology of the market, right? The psychology of the bulls. But right now, like we talked about, we're still in the upper zone of a longerterm uptrend here, and that has to be respected. And so neutral to bullish bias is is intact. If we were to break below 110,000 and confirm, it would go to a neutral bias. And then if we break below and confirm 92,000, then it flips to bearish. >> Can you make the same analysis for the NASDAQ and the S&P? >> Yeah, absolutely. Let's let's look at the S&P. I think this is a fantastic one. Okay, so check this out. This is what we call a wedge pattern in technical analysis. It's epic and it's it's helped guide me to the market in terms of price action here up or down. So number one, this upper trend line. I'm going to change the color to orange so we can all see it a little bit more clearly here versus the other yellow one. This goes back to your low in October of 2023. And notice how it literally goes through each low. So here's your August 2024 collapse in the market. NASDAQ dropped massively there in a very short amount of time. your January pullback and then this was the liberation selloff on tariffs and you can see we broke support right here. Okay, so we broke down, we continued lower and then notice how remember in technical analysis support which is all these three points once you break and confirm it becomes resistance and what we can see here is absolutely remarkable how when you hit this level it sells off because now this line is resistance and that's exactly what we saw here. Now we have this lower trend line, right? We have this lower trend line here which we just broke. Now remember what we just talked about on Bitcoin, how it went below, but it never confirmed the breakdown. Same thing is is standard here. Now in this case, you closed below the trend line, but you haven't had a second close below yet where you would say, okay, we've confirmed the breakdown. And sure enough, what happens? We're getting a big bounce today. So while a lot of people would say, oh my goodness, this market broke down. I don't buy that yet. All right. Now, listen. Overall, I am still bearish on the markets, right? I still have that angle to thinking that the markets are overdone. But I'm a true technician when it comes to whether a breakdown is right is is confirmed. And as of now, we haven't confirmed. And look at the bounce we're getting. Now, if we reestablish back above this trend line on the S&P at around 6685, then you're just back inside of this tightening wedge pattern, right? That's all that is. And you could even test the highs again. But for me at least, I'm very clued in to this, right? These hits over and over again have been rejection points. So if we ever get up to this level here, let's say over here, I will be looking to sell into that right there. All right. So the essence of this is is that we've broken a key trend line here, but it's not confirmed a breakdown. If we confirm below this low, meaning any daily close below this low, then it's game on for at least a 10% correction in the markets. I don't know what the market is rebounding on exactly when you when you think about it. It's kind of it's kind of trivial if you if you if you consider that if you consider the possibility the possibility that this rebound is based entirely on Trump's truth social post on Sunday. Don't worry about China. He said it will all be fine. Highly respected President Xi just had a bad moment. He doesn't want depression for his country. Neither do I. The USA wants to help China, not hurt it. So it sounds like he's opening the door for negotiations for a possible deal. No such deal has been reached as of today, as of this moment. So what >> so this is this is honestly the most scary thing out there and this is probably the most important thing I'm going to say. What this has shown us is that the leaders of the two biggest countries in the world have no tolerance for the stock market to go down. All right, think about this. We were only down 2.77% on the S&P and it literally caused Trump to do a 180. And even China, China came out over the weekend and said, "Oh, well, these curbs were already in like all they backpedal." And what this tells us is that the global economy is so reliant on the stock market going up. And that's what he means when Trump says, you know, we don't want a depression or recession or anything like that. He knows at this point that everything hinges on the stock market. And the problem with that is is when everything hinges on the stock market, a really aka the AI trade, inevitably we're all in a lot of trouble. Essentially, the the politicians, the leaders of the world, are now at a point where they cannot afford to let the stock market decline because of the massive loss in wealth that would then ripple through the economies and cause a major recession or depression. And again, just to summarize why that's such a big deal is that it's inevitable that we're going to get a downturn at some point and at some point these type of reversions don't work anymore. Like you can only use the oh, I just was kidding so many times to get the market back up before the market says you know what, we can't do it. But I think that's why the markets are rallying back here because it's basically showing you that these leaders do not want the stock market to go down and they'll do whatever it takes to keep the stock market going up. I was a bit baffled at what happened on Friday because we've seen time and time and again, time and time again, this term and the last term. So, both of Trump's terms that every time he announced a tariff, at some point some sort of deal is reached later on. And even if he just hints at a deal being reached, the market rebounds and so pretty much every single tariff announcement up until now has been a buying opportunity. If I were a trader or or an investor looking at this situation, objectively, I'd say, well, history has proven that this is just a buying opportunity, so I'm not even going to bother selling. I'm just going to wait and write it out. Uh, that would be my logic. So, if everybody, let's suppose everybody collectively has the same logic, the markets wouldn't even sell off. It'll be like the boy who cried wolf, well, I'm going to announce 100% tariff. And we all know that's not going to happen. So, >> and that's the taco trade, right? I mean that's essentially the taco trade um you know that that people have become accustomed to and I think I think there had been such a lull between these tariff issues that it kind of calmed things down and kind of the markets lulled in and then this was a little bit of surprise that it came out on Friday and it was so vehement you know I mean he really wrote a book on truth social I mean it was not a short post uh ripping China and ripping president Xi there at the time but the markets again initially got scared and then they said you know what he's always going to back down no matter what and I think one of the things that we have to worry about here is that there are being repercussions of the trade war, right? And and for instance, now they're talking about a bailout for farmers because the price of soybeans and corn and wheat have collapsed so much that now the government's like, "Oops, well, we'll give you guys a $10 billion bailout potentially." And so you're seeing the repercussions. And my bigger worry is that at some point there's going to be a breakdown in the stock market. And regardless of what is walked back, it's inevitable. You can only push something up, right? You can only inflate a balloon so much before it pops because it gets so stretched out. And that's my biggest fear. And what we're seeing now is that the economy is literally the stock market. You have two sets of people in the world here, especially in the US, but I think all over the world. You have 70% that don't invest as much and they're struggling because of tariffs, uh, inflation, and all of the rest. And then you have anyone that has invested heavily and they're just making money. They don't care about inflation. They just see that their accounts are going up and they're spending and those are the people that are driving the economy now, those people that are seeing those gains in their stock market accounts. And so if you suddenly suddenly lose those gains, then this economy is done at that point. >> So right now I'm looking at these charts that you've shown and I'm thinking, well, there's a big green bar today on Monday. The bottom at least on a localized basis has been confirmed. It's time to start buying the dip or the dip that has already happened. Can you evaluate that logic? >> Yes. So per and I'll give you exactly what the technical charting books tell us, right? So when you get a major red candle, this is called a reversal engulfing reversal candle. Essentially, it essentially does a lot of damage on a technical or psychological basis. The only way you can negate this is if you come up and close back above this zone here. So listen, a lot of times you'll see a big red candle and then you'll go like this. And especially if we stay below this trend line, this would be known as a bare flag. And so while we haven't confirmed a breakdown, we all have to still be on a little bit higher alert that there has been technical damage done. We all think, oh well, Trump can just say something positive and the markets will rip higher. Let's hope that's the case. But we will know from the charts. If we can't get back and take out the high of the down day, the big down reversal candle, then this market technically remains in a very vulnerable state. All right, let's talk about uh something you brought up a couple minutes ago, which is the AI trade. This is an article from CNBC. How fund managers are investing for the fourth quarter as AI bubble talk swirls. Uh how are investors balancing this with the desire not to miss out on a potential $4.8 trillion market? Valuations and policy uncertainty make it hard to be overweight risk assets, but neither do we want to fight strong momentum. Now, that's the crux of the issue. valuations on any traditional um PE or EVA or cash flow basis look astronomical right now and there's probably some evidence to suggest that the stock market from the AI sector is being propped up because AI spending is just tech companies passing funds from one company to another and so they're basically propping each other up but on the other hand strong momentum is currently at play and we don't want to miss out. What do you do in an environment where there's strong momentum, there's strong FOMO, you don't want to miss out, but valuations are crazy. >> Yeah. So, one of the things that catches my eye, so number one, you know, everyone says this time is different. Um, I went through the dot and I swear that was different and then the stock market and NASDAQ collapsed, you know, 66% or so. And so, I'm just very wary of that mentality like, oh, this time's different. Um, yes, these AI companies are growing at amazing amounts, but I think we as investors have to look at the bigger picture. 75% of all the S&P gains in the last two years have been on the AI stocks. Like that's what's taken the S&P up 75% of its total gain in the last two years has been just the AI and related stocks. That is a very scary metric because if that trade ever stops out or slows down, we're going to see big cuts or drops in the market. In addition, think about this. The AI stocks, all they're doing is roundroining, right? So, you know, for instance, AMD is getting a h 100red billion from Open AI and then in response, Open AAI is like is getting um they're getting a the warrants to buy 160 million shares of AMD for a penny per share. All right. What does that mean? Well, basically AMD is is paying Open AAI so that OpenAI can pay them right back. And that's another concerning is issue that I'm having with what's going on in the AI realm. Now listen, it's an amazing trade. The valuations will come down. Margins will come down over time. The question is when are we near the end of the bubble or is it still inflating? We know from from Greenspan back in the 90s in 1996, he said irrational exuberance and the NASDAQ rallied another four to five years before we collapse. So again, I'm okay with missing out at this point. I'm not going to be chasing holding the bag. I understand a lot of investors want to hop on board. It's not my style. My style is to buy beaten down things and wait for them to jump up so that my riskreward is at a much better point versus risking a major collapse if I were to go long. And by the way, last thing I'll say here is that the drop on Friday shows you the air pocket in the market. Meaning that any sort of thing, any curveball that's thrown in this market, it's not down a quarter percent, not down half a percent, not down 1% on the NASDAQ or the S&P. It's literally 3 to 4% drops that we're seeing versus when the markets go up. If you look at the gains just since I was last on, the average gain of upside was like a quarter percent or a tenth of a percent. So, the markets are going up ever so slightly and making new all-time highs. But when they drop, they drop hard and fast. And that to me is scary as an investor to be getting in something where I could get a little bit of upside, but the downside one day drop could be 3 4%. You've just described a roller coaster goes up really slowly and then drops really fast. Um, this is a this is a chart I saw on Instagram where an image that someone put together. Just want to share with you. Did you make this chart, Gareth? Did you did you did you create this graphic? World's biggest bubbles. >> Looks good though. >> Bubble science parabolic price charts. I'm going to get to that in just a minute. Everyone's talking about crazy valuations. This time is different. Literally what you just said and then it's shown a few examples of market uh uh bubbles that have popped. Uh by comparison and this is the y-axis is a percentage gain basis. So by comparison, Bitcoin has been uh the biggest bubble and you we know what happened in 2022. Uh what's missing right now? Something that has moved parabol parabolically up are the precious metals, gold and silver. Now, they haven't popped, which is why it hasn't made it on this chart cuz it's not a bubble that's popped. Now, let's just evaluate gold and silver. Let's take a look at the charts, Gareth. Um, >> absolutely. >> And it's and it's a scary looking chart when you just look at it zoomed out. It's moving parabolically in one direction. What do you do with that? >> It really is. It It's incredible. Um, you know, I was even reading over the weekend that now stable coin companies are now buying gold. And if that's the case, I mean, what's what was the point of the stable coins? I guess I I mean, again, if they're now not even believing in the dollar and that's what they're putting out is a stable coin being equal to the dollar. But the point here is guys is that at a certain point when you see the amount of debt, right, we came into 2025 with this Doge set where they were going to cut all this government spending, get the spending under control, and then lo and behold, nothing ever got under control. And and listen, Elon Musk even got fired basically. I mean, he resigned technically, but let's be honest, I mean, he just couldn't get anything through with the politicians in terms of cuts. And so when you have that type of environment where the US is going on on this tariff tirade where the USI financial system is having less and less kind of belief in it from the global powers, they're going to just buy gold and I think everyone is jumping on this trade. Now does it mean that gold's going to go for up forever? No. There is going to be a point where it pulls back. I actually think it's short-term ridiculously extended here. Um look at this. This is the weekly chart. one, two, three, four, five, six, seven, eight, nine weeks up in a row. That's almost unheard of historically on gold. So, it's due for a pullback, but for me, I'm a buyer on pullbacks. You give if you give me a shot at 3500 on gold, I'm buying it right there. That's a great opportunity. Still quite a correction from here, and it may not get there, but again, that would be the major support that you'd have to start buying. And there's really no reason to say that gold won't go up longer term, right? I mean, when is the US ever going to stop printing money or lowering rates or all these type of things? >> We have to do a sanity check here. Inflation isn't out of control at this particular moment compared to at least a couple years ago. I mean, if you just take a look at CO for example, it was near double digits inflation actually more than double digits um in in some for for some products. Uh real yields is not collapsing. The dollar's down this year, but the dollar hasn't collapsed completely relative to other currencies. Some other currencies, it's still up. And so, you have to do a sanity check. And the debt issue that you're talking about, it hasn't just happened in the last what, 9 weeks since gold started rallying parabolically. Um, you you you got to ask yourself, does this make sense? I'll let you. >> Yeah. So I think I think with the precious metals in particular, everyone has been so focused on the AI trade, on the fact that the US is the most stabilizing power out there that they've really just kind of ignored the gold gold trade, the palladium, the platinum, the silver trade. Um, you can only ignore it for so long until it has to play catch-up, right? And if you look at inflation, inflation adjusted. I mean, really inflation adjusted, we just made a new all-time high recently uh on gold itself and silver just made a new all-time high from 1980. Um, so these things have lagged tremendously, they're now playing the pick the pickup or or catch-up trade to the upside. So I think again while things are getting a little out of control, um, if we go back here in terms of upside, you know, for me again as an investor, as a technician, we just simply look at this and say, "All right, if we ever pull back to this base point here around 3500 right in here, this becomes a buying opportunity." But I agree with you. It's getting a little long in the tooth short term look for a correction and then buy again because unless the US government is forced to to re in their spending which by the way if they reign in their spending immediate depression right I mean it's just it's immediate depression right because that's part of the stimulus that's been keeping this economy growing. Last thing too we mentioned we talked about the AI trade. What's so scary about that is we heard GDP was 3.8%. A majority of that is just the capex from the AI trade spend. And that's scary, too, folks, because that's not going to go on forever. These companies will not be putting trillions of dollars into spending forever. So, be ready. >> Be ready for for for what exactly, Gareth? >> For a major recession. Like, we're going to I think this what I think what's coming is going to be far worse than 089. When this happens, whether it's in a year or two or whenever once the Margo round stops and the music stops, this is going to be far worse, folks. This is going to be the worst thing since the drops in 2000 and probably even going back closing in on 1929. >> Wow. Okay. >> Yeah. >> I'll just let petrified. I mean, I'm at a point where where Listen, I'll still play the upside as a short-term trader. Like, I have no problem on pullbacks buying. Heck, I bought Fizer just the other day. You know, there are certain opportunities out there for me to buy. Um I'm holding my long-term gold. Um Bitcoin when it comes back, I'll be buying that. Um, and there's opportunities within within many areas, many sectors. But the house of cards that we are seeing being built, including the tweets that won't allow the market to fall more than 3% without us backing off of any policy change that hurts the markets. That is a recipe for a disaster and people have to be prepared. the notion that we could get this kind of a pullback in the economy, this kind of a recession, this level of depression. Well, the Fed's going to make note of that. Their mandate is to prop up the economy, if I were to sum that up in succinct words, right? They're they're bas their employment mandate basically means we're not going to let a recession happen. And so, let's factor that in. Maybe they'll drop rates significantly if what you're saying pans out. Maybe that's good for markets. Yeah, and you're right. I think to some extent it will be, but at a certain point you can only keep the patient alive for so long with drugs, right? I mean, essentially interest rate cuts are drugs. They're injecting those drugs, cheap money into the system, and it props the system up. But at some point, the bubble gets too big, the heart explodes, and that's ultimately where we are headed. So, yes, I have no doubt the Federal Reserve will cut rates as things get worse in the economy. But just like we saw in 089, remember, and you remember this too, David, is that there was a point in 089 where the Fed would literally come out with a new announcement. I mean, I still remember vividly they outlawed shorting in financial stocks. The financial companies dove even more, right? There's a point of no return and at some point we're getting there and it's getting closer and closer. We're definitely in the 11th hour. I'm unsure of the timing of this because again, is it does it mirror the hundred-year cycle with the the the Great Depression? So, is it 1929ish where this happens or does it happen before? How many levers left are in the system to prop the markets up? How many new drugs can be introduced? We have the government spending. We have the Federal Reserve printing and and lowering rates. We have the tweeting side of things, the deals, etc. But at some point, the patient goes regardless. >> Are you bullish on bonds then, Gareth? >> I am bullish on bonds. I do think interest rates are going to go lower here. Um on the 10-year, if we take a look at the 10-year yield here, yes. Um in fact, we got our first weekly close below a major trend line here. So, we can see this trend line goes back to 2022, August of 2022. Notice we hit it here. We bounced, we hit it, we bounced, we hit it, and then look at how minor this bounce was. And then there's your breakdown to the downside on the 10-year. And so ultimately, again, this hasn't traded since Friday, so we'll see because today's a holiday. But nonetheless, my guess is we're beginning our next leg lower of the 10-year yield. Now, it'll take time. I want to be clear on this. It's not going to collapse, right? But it'll it should continue down. And I'm looking for the low 3% by early 2026. >> All right, let's end it here. Gareth, great talk. uh a lot of volatility over the weekend and we're we're we're just um starting to see some green bars today. So, let's follow up soon and see what happens in the next couple weeks. >> Yeah, I'd love to see let's let's just jump back together in a maybe in month or so and see where the yields are. And really, let's follow this gold trade. The gold trade is something that you're seeing gold going to new all-time highs almost daily with the stock market. That is not healthy, folks. There's there's something broken there and we have yet to see what it is. But one of those two is going to give and we're gonna have to find out here in the next week or two. >> So I guess before we go, my final question is is this. If you're still long, if you're still riding this wave like you just said, at some point you're going to have to flip the script and say, "All right, that's enough. I'm out." What's that signal for you? >> So for me, it would be the confirmation of a breakdown on the S&P. If you confirm below that trend line, that low that we had on Friday, that would be the rip cord, not time at that point because that would be a technical signal, not not a just a guess, but at that point, it's a probability based assessment that markets have topped. All right, if we don't confirm, markets could continue to grind higher. I don't think there's a lot of upside at this point based on valuations, but again, we'll have to see as we come into earning season. >> Let's follow Gareth link down below. Where can we go, Gareth? Where can we go to follow you and learn about you? Yeah, just come over to verified investing, folks. Everything we do there is based on chart analysis and probabilities. No guessing, no hype, no FOMO, no narratives. It's like what is the chart telling us and what's the probability? Let's decide if that's worth it for us to take that trade. A short-term analysis on the markets all the time. Follow Gareth down below. He also has a YouTube channel where he gives regular weekly or daily updates. So, he um if you want to see just Gareth without me, check out his channel. And if you like what you're hearing on this channel, do subscribe. Click down below. Daily video updates on financial news. Welcome back, Gareth. It's good to see you and uh we'll see you again soon. Take care for now. >> Take care, David. >> Thank you for watching. Don't forget to like and subscribe.