Bank of America Hartnett’s 5% Yield Warning Just Got Real !?!

Added: 2026-05-19

[00:00:01]Hey everybody, welcome to the show today.

[00:00:06]Brand new week. David back in the chat.

[00:00:10]Glad to see you again. Cool. 52 degrees in Sedona.

[00:00:15]It's uh I don't even know what it is out here today. Um 90 here yesterday.

[00:00:21]Anyway, welcome everybody. Grab your I don't know. I got the the white again today. But grab your neon can of questionable life choices because Wall Street apparently deciding that the best way to celebrate all-time highs is to walk directly toward the door labeled doom doomsday. Anyway, you can hear the screaming behind it and say this looks bullish.

[00:00:46]So today we have Michael Hartnett's new flow show report. Just in case you don't know, he's the Bank of America chief strategist, you might say, professional and, you know, improfessional strategist type language.

[00:01:04]He said, "Hey, maybe we should not ignore the giant flaming bond monster in the corner."

[00:01:12]His warning kind of simple. The 30-year Treasury yield pushed past 5%. I was talking about that last week. A level that he called the bond markets magnet line magnol line. Sorry. And uh historically when big bubbles which however you want to debate it this AI stuff the current valuations if if anything hiccups with the circular reinvestment it is a bubble. I don't care what anybody argues. It is. And maybe it pops now, maybe it pops later, maybe it never pops, but it is a bubble.

[00:01:57]And historically, when big bubbles suddenly see a jump in yields, the uh the ending is less soft landing and more jumping out the windows.

[00:02:12]So, here's why this matters to all of our wallets, all of our portfolios. If long-term interest rates stay above 5%.

[00:02:20]And that's what we have right now with 30-year yield. While in I mean, think about it. If you had like a million dollars, you could like stash that into 30-year treasuries right now, the whole thing, and just live off the 5% for 5% a year. I mean, it's almost beautiful.

[00:02:44]Anyway, $50,000 a year and that's all while inflation is crawling back toward 4%.

[00:02:55]The entire stock market math problem is changing.

[00:03:00]while we pushed all-time highs with just a few names at the top and more names at the bottom than we've had probably since 1929. While we're pushing highs, growth stocks get more expensive to justify. Real estate, utilities, home builders, and small caps get squeezed by higher financing cost of goods.

[00:03:22]bonds start competing with stocks because well cutting rates while energy and prices are ripping is like trying to put out a grease fire with a monster energy drink could be very energetic could be a little bit stupid and so your portfolio is not just watching AI rally anymore it's watching a fight between meltup momentum and some of the bond market reality and right Well, since all the expansion plans are starting to be beyond the cash flows that these companies have, bonds are where they go.

[00:04:04]And if the bond rates are getting too high to fund the projects, well, we're going to have to dial back expectations a little bit.

[00:04:15]What happens when we start announcing that, you know, we're gonna have to pull back our expectations a little bit due to financing costs.

[00:04:26]So, let's set the steam.

[00:04:28]Stocks near all-time highs. Tech doing tech things, which for the last gosh, my entire lifetime, tech's been ripping, which now means semiconductors are levitating like they found a cheat code to the simulation here. The SOX semiconductor ind index according to hardnet, you know, it's 62% above its 200 day moving average. That's what he put in the flow show.

[00:04:59]And this is not a healthy jog. This is a market sprinting through a glass door while yelling, "We've got AI productivity.

[00:05:10]Let's go."

[00:05:12]And yes, there are real companies here that make real money.

[00:05:18]But think about it. Nvidia is financing the companies that are buying their GPUs. If anything, hiccups there.

[00:05:27]Well, that's a problem. Then you got Broadcom, AMD, Micron, Timeline CMI. You know, they're not imaginary.com sock puppets selling pet food. But think about all the things that are built on top of this, you know.

[00:05:42]These guys are like the people that were selling the fiber optics back in the dot boom.

[00:05:50]Now think about it. Cisco in the dot boom made routers.

[00:05:56]They sold bajillion tons of routers.

[00:06:00]They were hyped.

[00:06:03]Nvidia, Broadcom, AMD, Micron, they're selling real stuff just like Cisco did.

[00:06:10]Well, when the thing flinches, it flinches and everything gets flushed with it.

[00:06:17]So, business models power powered by vibes.

[00:06:22]Be careful. Nvidia does have earnings.

[00:06:24]Broadcom has cash flow. So did Cisco.

[00:06:28]Micron has pricing power when memory gets hot.

[00:06:31]Taiwan Semi is still one of the most important companies on the planet right now.

[00:06:36]So, the problem's not that anything's fake.

[00:06:40]The problem is that Wall Street can easily take a real story, put more leverage on it than we've ever seen in our lifetimes, which is actually what we've got right now, is that stock market leverage is at the highest level we've ever seen before.

[00:06:59]Add a gamma squeeze, sprinkle of retail FOMO, and turn this thing into a pinata hanging over a room full of blindfolded hedge funds.

[00:07:12]We just beat it and then explodes and the bond market is standing there like the only adult at a bachelor party.

[00:07:23]The 30-year Treasury yield moving above 5% matters because it changes the discount rate.

[00:07:30]In normal human English, that means future profits are worth less today when investors can earn a fat return sitting on no risk or lowrisk government bonds.

[00:07:44]If you're paying nosebleleed multiples for long-term duration growth, a higher discount rate is not a mild inconvenience.

[00:07:56]It's kind of like a bouncer at a club checking your fake ID.

[00:08:01]Business Insider recently put it bluntly. The bond market is warning investors not to expect rate cuts.

[00:08:09]Inflation fears, especially due to energy, have pushed yields higher. We're looking at ending these this year above with the trend in CPI. We're looking at ending this year 2026 above 5% inflation. That's a far cry from 2%.

[00:08:29]Put the new Fed chair in a spot, you ask me.

[00:08:34]Inflation fears, they're real. I I don't even know if it's fears. I think it's happening. It's happening, sweetheart.

[00:08:43]Energy helping push this thing go along, plus fertilizer costs and metal costs.

[00:08:51]And this Middle East Middle East thing is getting to be a lot bigger than just some oil.

[00:08:58]Um, I saw over the weekend that AutoZone issued a warning to store managers.

[00:09:11]They expect a shortage of 40% of lubricants like motor oil.

[00:09:19]There's a there's not a ice engine out there that runs without motor oil. 40% shortage.

[00:09:29]They're like, "We're not going to be able to obtain 40% of what we need." And that's just AutoZone.

[00:09:36]That's a problem.

[00:09:39]That includes diesel and gasoline pretty much. If you got an engine, going to be a problem.

[00:09:49]CNBC reported April CPI running at 3.8 year-over-year, the highest level since Mar 2023.

[00:09:57]With energy up 17.9% over the 12 months and gasoline up 28.4%.

[00:10:04]This may not be the end yet. Real hour hourly wages were falling. And the translation mainstream is getting punched in the wallet while Wall Street is celebrating that four chip stocks are doing parkour higher on the charts. And that brings us to the mental model for the day. We have three doors. Three doors down. Door one is meltup.

[00:10:25]I mean this is the door where AI keeps winning, semiconductors keep semiconductors keep ripping and anybody who dared to short Nvidia gets mailed home in a decorative earn.

[00:10:38]The plays here are obvious but extremely dangerous at these levels. Nvidia, AVGO, AMD, MU, TSM, semiconductor ETFs like SMH, SOXX, they're all going like straight up. If the rally continues, which hey, we may push this party right on up to NASDAQ 40,000, 40K, baby, they're the center of the storm right now. And this is not a storm to treat like a picnic. You know, size your position. Understand that the trees can come out of the ground and whack you off the field.

[00:11:19]Door number two is the bond market trap door. This is where 5% long bonds start chewing through the weak parts of the market. Real estate investment trust, VNQ, Utilities, XLU, Home Builders, Dr. Horton, Lenar, Toll Brothers, because higher mortgage rates are not exactly a love letter for housing affordability.

[00:11:42]Think about small caps like IWM and the 1,800 or so companies in the Russell 2000.

[00:11:50]Because small companies need cheaper credit and don't have Apple's balance sheet sitting around like a dragon horde in a moat pile of pile of gold in the back room.

[00:12:02]And yes, long duration tech through QQQ.

[00:12:06]If yields start climbing, great businesses can still be bad entries with prices already assume that uh angels have been doing the accounting. And then door number three is the political pivot door. This is the one markets love to ignore until it shows up and kicks everybody on the shins. Hartnet's broader point here is that politics and bonds can end the boom loop in America.

[00:12:36]Americans have enjoyed huge paper wealth gains from stocks, but affordability When when 75% of Americans say that they're having a hard time buying groceries, that's not really something you can ignore.

[00:13:00]This affordability anger is not just academic.

[00:13:06]rent going up, groceries, gasoline, insurance, and the monthly ritual of opening credit card statements, and quietly applying for a new identity in a new country with better cheese.

[00:13:20]This is real for a lot of Americans. If inflation stays hot and voters get angry, policy attention can shift away from more chips, more commodities, more national champion industrial policy toward please make life affordable before we have to break out the pitchfork ETF.

[00:13:43]And that creates a different set of potential winners here. Discount retailers, Walmart, Costco, Dollar General, Dollar Tree, they become a little more interesting because consumers trade down staples, consumer staples, you know, XLP can become a portfolio ballast. insurers and strong financials like JP Morgan, Goldman, Morgan Stanley, Birkshshire Hathway, Chub Travelers, they benefit from higher reinvestment yields or at least survive the rate regime better than companies that are addicted to free money.

[00:14:20]Now, let's be fair, though, because this is Morning Monster, not Doomsday Karaoke, and there's a bullish counter argument here.

[00:14:30]The AI capex cycle it's real. Earnings revisions have been strong in parts of tech. Energy, mining, industrials.

[00:14:40]Business insider cited Goldman's data showing 85% upward earnings revisions concentrated in four chip makers.

[00:14:49]We're seeing energy stocks and I mean so these four that have seen the 85% earnings revisions Micron, Exxon, Chevron, Broadcom, that means the market is not just hallucinating upside.

[00:15:12]There's actual profits growth here, but the breadth is terrible.

[00:15:19]Bulls can say great that means the rest of the market can catch up.

[00:15:25]But sometimes a narrow rally can broaden.

[00:15:30]Sometimes the generals get taken out back blindfolded and shot.

[00:15:43]Yeah. Sometimes the generals charge ahead. Sometimes the soldiers follow.

[00:15:46]Sometimes everything is great. You know, that's the happy version. The sad version, sometimes those generals sprint ahead, look back, realize that nobody followed them and then they get murderized and value compress value compression takes place.

[00:16:05]And this is why I'm cautious.

[00:16:12]No, your move is not sell everything and hide in a bunker with a can of beans and a suspicious amount of silver. That's not investing. That's, you know, doomsayers. That's there's a whole segment of YouTube for that.

[00:16:30]Be careful. But if the cracks if if something does come apart, it will be a sell everything type event.

[00:16:40]So bucket number one, the momentum bucket. If you own some AI leaders here, understand that they are momentum assets. Until the momentum runs out, then they could be dangerous weapons, especially in your portfolio.

[00:16:57]So that means they can keep going higher for longer than any bear can stay solvent. But when they turn, it's going to be like a caffeinated rhinoceros on wet tile.

[00:17:11]you know these names that we're talking about just to remind you one more time NVDA Nvidia AVGO Broadcom AMD MU Micron TSM Taiwan Semi SMH that's a semiconductor ETF sx another semiconductor ETF QQQ that's the NASDAQ ETF respect the trends here but be willing to leave at the first sign of trouble Don't be married to this trend and and get caught in thoughts that we just need to cool off a little bit before we go higher again.

[00:17:51]Bucket number two, the inflation and energy bucket. If gasoline, oil, freight costs, you know, if these things are feeding inflation energy names like Exxon, Chevron, XLE, they deserve attention.

[00:18:04]They're not just commodity plays.

[00:18:06]They're part of the inflation story, forcing the Fed's hand here. We've got a new Fed chief. We haven't seen what he's going to do yet.

[00:18:13]Are they going to be aggressive on inflation or they're going to be a little looser on policy? I don't know. I don't know that they can be looser on the policy in the face of higher inflation.

[00:18:32]So, energy is volatile, geopolitical, prone to headline whiplash. So again, positioned like an adult, not like uh a raccoon drinking monster. Now bucket number three, the rate resilience bucket. Banks and insurers can benefit from rates stay higher, though banks also have credit risk. If the economy cracks here, JP Morgan remains the fortress. Birkshshire Hathway is basically on a cash bunker with operating businesses attached. Chub and travelers can benefit from reinvestment income. These are not kind of sexy AI rocket ships. They're more like armored vehicles traveling through the market.

[00:19:14]In certain markets, armored vehicles are the best rocket ships, especially when rocket ships explode and forgot to check the interest rate. Bucket number four, avoid or possibly hedge out bucket. This includes areas where higher for longer rates are the most painful. long bonds if yields are rising, reats, real estate, investment trusts, utilities, homebuilders, overle overleverag small caps, TLT can rally if growth breaks and yields fall, but if the issue is inflation, and bond vigilantes come in, long bonds can keep punching in the face while politely calling it duration risk. The timing question is where this potentially gets the most spicy.

[00:20:05]Hartnett points out that early June as a potential moment for taking some risk off the table.

[00:20:12]Dang, it's like he watches this show.

[00:20:17]Anyway, um with catalyst including OPEC, World Cup, G7, Fed meeting with first Fed meeting with Kevin Worsh at the head markets love calendars because they create the illusion that chaos RSVPd.

[00:20:35]But the real timing issue might be simpler. If yields keep rising, if you keep watching that 30-year Treasury, while stocks keep rising, the gap is widening. Eventually, either bonds are going to flinch or stocks are going to flinch. Who's the first to flinch this market?

[00:20:57]Yeah, this may be the new this time's different. You know, this is new math type situation, but not likely.

[00:21:06]So, what do we do with the 1999 and 2009 echoes here? See, in 1999, yields rose into a tech mania.

[00:21:17]Gee, that sounds familiar. And then the bubble broke. In 2009, yields and the NASDAQ were both ripping higher as a new cycle began. And everybody's saying this time's different.

[00:21:33]And that's the creepy part because today it's looks like both the beginning and the ending. It's kind of like Schrodinger's bubble here.

[00:21:47]Does the bubble exist if you don't look for the bubble? Open the box. Maybe you get a new AI productivity super cycle or maybe you get a margin call wearing a party hat. So my take here, don't bet your entitle entire financial future life on one door here. The meltup door can make money. The bond market trapdo can take it back. The political pivot door may decide that the next leadership group when voters and policy makers stop worshiping at the altar of mega cap tech and start asking why is everything expensive? You know, why why do we have to finance a tank of gas every week?

[00:22:31]That'd be pretty bad for investors. The opportunity is not panic. It's rotation discipline. Own some winners, but know why you own them. Watch yields like their earnings reports. Respect inflation data. Think about this.

[00:22:47]Since 2001, if you look at the annual CPI inflation rate, prices are 160% higher over the last 25 years.

[00:23:02]160% higher.

[00:23:04]Is gasoline60% higher? If not, then it's running behind inflation.

[00:23:10]Respect that inflation data.

[00:23:12]Look for companies with pricing powers, strong balance sheets, and real cash flows. Be careful with anything that works if money gets cheap. Only if money gets cheap. Because through the doom door, you know, even though it cracked open, the math and the ability for everything to walk through it doesn't mean we have to walk through it.

[00:23:40]All right. the the conditions are right, but maybe it doesn't rain. Even though it looks cloudy, even though uh you see some lightning, maybe it doesn't rain.

[00:23:53]Be careful. Don't be holding the bag on the most crowded trades on Earth. So, drink your Monster. Check your duration exposure. Remember, when Wall Street says this time's different, it usually means that they're just doing the same thing a different way.

[00:24:09]We've we've learned this same lesson and uh we just found a more expensive way to to to teach you the same lesson.

[00:24:17]That's why it's different this time.

[00:24:19]Stay sharp everybody. My magnificent monsters, this market is giving us some options. Our job is to try to pick the best one. Try to choose your own adventure. Survive long enough to profit while everybody else is uh jumping out the windows.

[00:24:37]If we get that event in the market, be careful out there, everybody. Be careful. Let's take a look at some charts. See how we might make some money today. What do you say?

[00:24:48]Jumping over here. Altering involves a substantial risk of loss. Past performance is not necessarily indicative of future results.

[00:24:54]This presentation intended to beformational, educational, fun, entertaining. Hopefully you like the monologues, but it's not a recommendation to be buying or selling any financial instrument, including stocks, options, bonds, forex, futures, cryptos, treasuries. If you buy those things, you may lose money. If you buy them and trade them, you may lose money. 90% of people that trade tend to lose money.

[00:25:16]So, be careful. It's just the statistical thing. If you desire personal financial advice, hire and consult a financial adviser.

[00:25:24]It's uh not what I do. I'm not advising anybody.

[00:25:29]So, look at Friday here. This is that pinned pretty darn well. Look at that. Right down the last few minutes.

[00:25:35]We were running down the It's pretty crazy.

[00:25:42]Stayed pinned right in there with the gamma.

[00:25:46]Beautiful. Beautiful dreamer. Let's check out the queue. So, we'll come back to this uh toward the end of the show. I try to make a educated wild guess about where the market might end up based on the options market and the flows.

[00:26:08]And I look at gamma charts, which you know, if you're new here, you're like not sure what that is.

[00:26:17]It's this right here. Based on options positioning and what market makers have to do to hedge market moves and stay delta neutral, what might be the end result for the day? So, I kind of take a look at this and try to figure it out. But the thing is, these are zero day options.

[00:26:43]Zero day options need a little time for players to start playing zero day options. So, I can't do it right at the beginning of the show. I got to wait more toward the end of the show. So, we'll come back and look at this here in just a little bit.

[00:26:58]Now, S&P, we're kind of completing five down here in case you don't can't make it out.

[00:27:10]That's one. This is two.

[00:27:13]Yikes. Is a three. We spent basically Friday doing a four. And now we're dipping on down to potential five.

[00:27:26]Why would I, you know, you can't just slap five waves on anything that looks like five waves. There's some rules and there's some guidelines, but the proportionates of this thing look pretty darn good, if you will. That was a 618 retrace right there. First move down, 618 retrace.

[00:27:46]And then we got the next move down. And this move compared to the first move went all the way to the 3272.

[00:27:57]That was an exciting dip.

[00:28:00]Then we got a retrace.

[00:28:02]That retrace very proportional almost. A equals C. A B C three-wave move right there into the fivem minute robep line. And then we're turning down again. The only requirement on this move is that we go lower than the three. And guess what we did right there?

[00:28:27]We went lower than the three.

[00:28:34]Now, this doesn't have to be an impulsive trending move down. This could be the start of a maybe a little bit bigger correction.

[00:28:44]It could be the Awave complete, then a B-wave retrace, and then a C-wave.

[00:28:53]And five waves on its own is unlikely to be all she wrote.

[00:29:00]So, this move could potentially take us down in here on the S&P.

[00:29:08]Now, the rally, if this is if we bottomed out, can it go lower?

[00:29:13]Absolutely. If we bottomed out, and that's it for this fivewave down, the B-wave retrace likely to end up up here at this 618.

[00:29:23]But the upright's right there. This is the zone for potential continuation lower if that's what we're going to get. First move down a retrace B and next move down. Now, if we just stop in here, find support, and go back higher, that's probably it.

[00:29:45]If this gets uglier and we start on down to bigger levels like the 1618 possibly on down here two 2.272 2618 3.272 mirroring this little move up here we start doing that and making the you know making these giant extensions of the Awave.

[00:30:14]This is probably turning into a bigger one.

[00:30:18]That would be a two. This is going to be a three.

[00:30:21]Probably expect a four.

[00:30:24]And then a five.

[00:30:26]And this is how it changes based on how far this move goes.

[00:30:33]And then this could be an Awave.

[00:30:38]And then we would look for a B-wave and a C-wave.

[00:30:45]So be careful.

[00:30:47]And right now just expecting some minor correction and then possibly take us higher into June and then maybe we make that ultimate top and roll off.

[00:31:04]So in the midst of some correction here.

[00:31:07]Could this possibly be all could we go higher from here immediately? Sure. break above this zone right here. Game on for higher prices.

[00:31:23]And let's look at the futures overnight.

[00:31:30]If you didn't know, futures open at like 6 pm on Sunday and had a little rally going here.

[00:31:44]on the futures.

[00:31:47]So even though the cash index looks bad, the futures turning up a little bit.

[00:31:56]Looking a little bit positive.

[00:31:59]So we actually open them right there.

[00:32:07]Dipped and we're higher.

[00:32:11]positive, right? Everything's good.

[00:32:15]But it's also comes back to bit sloppier, but potential for that to have been one, two, three down to the 3272 through quick three-wave retrace and five. And this five much more aggressive than the five on the cash index.

[00:32:41]So possibly we rally right up here, come up shy on the cash index, turn back down and make that C A B C right in here.

[00:32:55]Absolutely beautiful correction. If we can bottom of absolutely beautiful correction, turn higher, probably rally up into June for now.

[00:33:05]NASDAQ looking the same with more volatility on the moves.

[00:33:12]So, right now, there's the high, here's the low, and we're coming up into the resistance resistance. And this could lead the market. We could pop up in here and then turn this more viciously.

[00:33:26]This is one to watch. We get above here though, we could just all clear going higher.

[00:33:35]Crazy. We're in the 30,000 vicinity here. NASDAQ cash index of course more like the cash index of S&P and hasn't completed a five down yet. So the futures could wrap this baby up with the 618 hit and push this down. And this completes the five down for the cash index.

[00:34:05]Then we got a 618 retrace and then more downside.

[00:34:14]We've got to bring the cash index and the futures into alignment on the NASDAQ before we get clear direction. So it may be choppy for a few days on the NASDAQ.

[00:34:24]Russell caution here.

[00:34:32]probably coming back to retest this breakout. We we made this high back here in January.

[00:34:39]We firmly broke above, retested, moved on up, pretty much hit the 1618 target.

[00:34:45]Got in the vicinity in the neighborhood anyway. Now we're coming back down. If we can hold on to that breakout, probably going higher. If we get below it though, probably going to test the daily road map line down here around 2600.

[00:35:01]That's the road map right now.

[00:35:09]Oil still sitting in the water mode.

[00:35:10]Seed squeeze.

[00:35:14]In two days back in March, we established the range and we've been inside that range ever since, making higher lows and lower highs and squeezing price. And we can keep squeezing price right out into June and then we'll either pop or drop.

[00:35:37]We may do the pop and crush the stock market.

[00:35:42]GC.

[00:35:44]So far we are finding a little bit of support on this daily road map line.

[00:35:52]If we poke through, probably going to finish this up.

[00:35:57]This potentially gonna be an A back here, a B up here, and a one, two, three, four, five down with a five down here for the C-wave.

[00:36:20]If we can do this spike down below this 4100 area where we bottomed back in March, we could be all clear to going higher on gold.

[00:36:31]Bitcoin taking the turn down probably heading right down here.

[00:36:39]Retest this zone if we can hold it.

[00:36:43]Turn higher. targets up around 95K and then probably turn down for the last part of crypto winter and bottom around 30 to 50K.

[00:36:57]If we don't hold this, we're going to do this sooner rather than later in the fall.

[00:37:04]That's the path. That's direction.

[00:37:08]So, next move is probably this one you can keep an eye on in. If we do this like this, probably going to hold it, go higher. If we start making it look like five down into this or just a sudden move down and then keep on going, we're probably going on down to 30 to 50K.

[00:37:36]Ether hasn't looked very bullish at all.

[00:37:43]coming down for this is starting to look like I don't even know.

[00:37:49]You could you could say a lot of things, but it looks like a complex corrective and this may have been all of it and we're going on down on Ether sooner than later. Dollar getting a little bit of rejection off of this gap fill.

[00:38:06]If we can hold the road map line, probably coming on up through If we don't may need to come on down to some lower levels here.

[00:38:21]ENKD, this is a global liquidity indicator.

[00:38:25]This has been absolutely bananas higher this year. And look, look at these numbers. If you go from beginning of the year right here, right up to the top, this thing's 26% higher so far this year.

[00:38:41]And sure, we've got a little pullback here. We're down to 21% higher, but this thing can come all the way back down and go negative this year. Seeing a lot of money pumping into the Japanese stock market.

[00:38:55]We're retesting the breakout here. We made this high back in February, retraced in March, popped up, retested the breakouts, and we can go even higher.

[00:39:11]74,000 would not surprise me. And we could take then, why do I watch this?

[00:39:16]Because the only thing correlated to the US stock market with 98% correlation and basically I'm talking about the S&P 500.

[00:39:26]The only thing with 98% correlation is global liquidity.

[00:39:33]Now, how do you measure global liquidity? It's pretty difficult. You got to keep track all the central banks and what they're cutting or raising or this or that or how much money are they actually pumping in the system versus their rate cuts and rate raises and it's difficult but simple proxy is to just keep track of the Nike because lots of free money flows here.

[00:39:58]We take cheap money from the Nike, from the Japanese stock market, from the Japanese economy and borrow money, use Nike as collateral, and then we take it and invest it into other places like US stock market to get higher returns.

[00:40:19]Now, it's kind of hard to beat the Nike right now, but I use this as a global liquidity indicator, not as something I could trade.

[00:40:30]When global liquidity is indicating we can pop higher, US market likely to go higher. Bitcoin likely to go higher.

[00:40:40]When Nike is looking like it might fail and fail big, that's a caution. We could see a large pullback in US markets, large pullback in Bitcoin.

[00:40:56]Example of that right back here.

[00:41:00]Large pullback happened in the US market. Large pullback happened in the US market. 24 and 25.

[00:41:09]Maybe like, well, that was Trump right there. Global liquidity was already rolling off. given the warning right after the beginning of the year. One reason why I was able to call how far down we were going had nothing to do with Trump.

[00:41:28]I was prepared for that after we did this move back here in 24. We were probably going to get another leg lower.

[00:41:36]Showed up in global liquidity and that's exactly what we got in the US markets.

[00:41:45]Here was the swing in 24.

[00:41:50]Went right back to new highs. And then here's the swing in 25.

[00:41:58]You can say global liquidity doesn't matter, but it does for me.

[00:42:04]Apple dumpling hit the targets.

[00:42:11]Couple potential paths here. One, turn sideways and pop.

[00:42:19]Two, retrace the breakout and pop.

[00:42:25]Three, we mess around here a little bit and then break through support and come back down to the road map line.

[00:42:35]It's kind of the potential pass here.

[00:42:39]After that, we'll see where we're going.

[00:42:43]more likely at this point is that we see this. That's kind of the most likely some way somehow. But lately for things making extensions, we've seen them retest the breakout and get an extension.

[00:42:59]And it is part of big tech after all.

[00:43:02]Amazon retesting the breakout. May go for the extension. 307.

[00:43:07]Google sitting on the small extension and we may go for a bigger extension on up to like 560. Now this one's going to be a little difficult though because this has now entered the realm of one of the biggest companies on Earth almost $5 trillion for this thing to go to 800.

[00:43:31]It's going to need five trillion more dollars.

[00:43:38]That's kind of wild.

[00:43:42]I've seen little fanfare about Google overtaking basically the number two spot as the biggest company on Earth.

[00:43:54]Nvidia's got the crown. Alphabet coming in number two.

[00:43:58]the old the old guard that's held the crown and swapped it back and forth for the last 20 years.

[00:44:08]They're sitting down to number three and number four.

[00:44:15]It's kind of crazy.

[00:44:18]New kings of the AI world.

[00:44:21]Old kings. the old guard operating systems big numbers. The law of big numbers comes in that these two and actually anything above and you know probably the $2 trillion level, maybe even maybe the $1 trillion level. Anything that enters up into this has a tough time doubling their share price because it takes literally takes trillions of dollars of market cap to go higher.

[00:45:01]This is why I typically don't play in the big dogs except for day trades and stuff.

[00:45:08]Now, this one down here, even this one right here, think about it, that can double and it still doesn't put it above the, you know, it just barely gets to the $3 trillion level. Doesn't get up into the realm of Apple and Microsoft.

[00:45:35]So somewhere down around 1 trillion, you're still d, you know, you're still able to double.

[00:45:41]There's still enough money flowing around that you could double it.

[00:45:47]It's kind of crazy to think about.

[00:45:50]So Meta, we could double that to,200.

[00:45:55]Just puts in a $3 trillion club. It's not even in the top four.

[00:46:04]But once you get in the top four, three trillion and above, to double Microsoft, it takes $3.1 trillion. To double Amazon, it takes almost $3 trillion.

[00:46:17]$3 trillion.

[00:46:19]It's a ridiculous amount of money.

[00:46:25]Things can keep keep being more ridiculous, though. So, Meta, I still think we're going to visit this 580.

[00:46:34]test that and then we'll see if we can bounce. Have a downtrend of highs going.

[00:46:38]We're going to have to break through that to confirm we're going higher.

[00:46:42]1,200 to 1300 is my target. This is we've got the setup, but we're waiting on something. Maybe this 580 test and then a bounce break up through some gap fills. We left another gap here.

[00:47:00]Left a gap up here.

[00:47:03]Got some gap fill resistance. We've got to work through to go higher.

[00:47:08]Microsoft still grinding down here under the road map line.

[00:47:15]And this chart would look best with a dip right down in here.

[00:47:25]Lower low than what we made back here in 2025.

[00:47:32]Nvidia cranking it on up. This similar to Apple, Amazon, Google may see a retrace to a breakout before we can rally on higher around 250 next upside resistance.

[00:47:50]Tesla coming on back down. Don't want to see it overlap that high right there. If we overlap that high, this is all of a sudden not a clean five up and opens the door for more volatility if we're going higher.

[00:48:12]So, if we do complete, if we bounce off the road map line here and then get a higher high than this last high, we're going to see a deep retrace.

[00:48:24]probably something on the 886 88.6 neighborhood for a fib retracement and that's due to the overlap nature.

[00:48:34]Now, if we'd hold it here, we can keep on the bull train, but we're we're getting close. Too close for my comfort to make a definitive call either way at the moment.

[00:48:49]If we get the overlap, we set up for something more volatile.

[00:48:54]We can keep this train going. Turn this higher right now. Get a five up. We'll probably see a three-wave retrace back down in this vicinity.

[00:49:06]And then we open the door for a much much much bigger move.

[00:49:14]Netflix holding on to this 618 retrace with all she's got so far.

[00:49:23]If we can get away from here, pop through the rub line. Beat that gap down resistance.

[00:49:29]Beat that high resistance.

[00:49:32]Get through this gap down resistance.

[00:49:34]There's a lot of things Netflix has got to do to go higher. Lots of levels of resistance.

[00:49:42]But it may just decide to turn and burn.

[00:49:48]If you want to pick up a long-term play, this would be a good time to do it. Ripping on up here to 145.

[00:50:01]If we fail below this level right down here around 81, we're probably going to go down to 50 to 60. So, this would be this would be a good point to stop out if you grab something right now. Talking about maybe a debit spread in some leap type stuff.

[00:50:26]It' be Let me pull up a platform. See if I can figure out anything. Oh, cool. It's um got to log me out.

[00:50:40]Refresh, please. There we go.

[00:50:47]And there we go. So, I'm talking about looking out maybe maybe January. Maybe not enough time.

[00:50:58]The upside here, 145.

[00:51:01]So, you look at these prices all the way up to 145. It gives it like it's at the two standard deviations. So, the market's not really pricing in that we're going up that high. Now, could you just buy 145? Well, if you pay a dollar for it and we only rally up to 145, you might lose your dollar. So, you got to be down a little bit. Now, where is the point where things start becoming too expensive?

[00:51:29]I can't say for you and your account, but making the move to 100 is much more likely than going all the way to 145.

[00:51:40]Now, maybe something like 110, 130.

[00:51:50]So that's 20 wide.

[00:51:53]Cost you about 270.

[00:51:56]Not saying this is the best way to play.

[00:52:01]It's a fair way to play. Maybe you want to go maybe you want to make sure you get money faster.

[00:52:08]$5 cost 30 wide.

[00:52:16]But you also have to weigh that. Like what if I just bought a $520 option somewhere around 107 and this went to 130.

[00:52:36]So if you paid $5 at 107 one two three four five it'd be like having a 112, right?

[00:52:47]So 30 from 112 other way.

[00:53:12]I need 130.

[00:53:18]$18 upside.

[00:53:22]My math brain's always slow in the morning. It's $18 potential if we go up to here. And then if we got to the 45, that's plus another 15.

[00:53:32]So, your potential is 33 here on the upside if you bought the 107 and we got to the 145 target by January 27.

[00:53:50]Now, on the flip side of this, if you did the same cost, $5 for the debit spread, you'd be limited to $25 upside on the 30 wide debit spread.

[00:54:05]So, bang for your buck. You're better off buying 107s than you would be buying a debit spread.

[00:54:15]So really the the debit spread comes to me it starts being more attractive when you can get your cost down around a buck or a large upside. They're pricing in this to come up in this vicinity. you know, they're already pricing in a $21 move out to January and that puts it somewhere in this neighborhood or go the other way somewhere in this neighborhood.

[00:54:54]And it's interesting there's upward skew. Look at that. One standard deviation down, a dollar. One standard deviation up, $2. Three, almost $3.

[00:55:09]There's upward skew.

[00:55:14]It's interesting.

[00:55:20]Market thinks Netflix is going higher or the market makers think it's going higher. Options players think it's going higher.

[00:55:37]makes it juicy to play calls on the upside. Maybe the best way is just to buy some shares and sell cover calls, cash in on the upward premium.

[00:55:50]Anyway, if you found that helpful, beneficial to dive into that, look at that, let me know.

[00:55:56]It's kind of how I think about trades and break it down a little bit. So, debit spread not necessarily the best way to play that right now premium wise.

[00:56:05]Looking at some potential movers here, movers and shakers. Rocket Lab hitting targets. Be careful. That can retrace.

[00:56:14]Gave you ample time to get in. I didn't grab this one this time. I just kind of sat on the sides. ESTs. A lot of people kept asking me, why do you like Rocket Lab better than AS? Rocket Labs more reliably hit the targets for me. ESTs has been higher priced and we've been on the struggle bus here trying to break out and go higher.

[00:56:36]This actually looks like we may dip on down on ESTs before we can go higher.

[00:56:44]It has not triggered a bounce entry.

[00:56:48]We need a move back above this 9879.

[00:56:53]We need a daily close above that to trigger this target up here 143.

[00:57:01]Rocket Lab already paid out played out.

[00:57:03]So be careful.

[00:57:06]Caleb until lunar baba rejection of the road map line. See bu this one activated the upside 176 but it may do a double bounce if this comes down to this level. holds.

[00:57:38]It's probably a good indication we're coming on up to 176 service. Now, I go pull gainers and decliners in the pre-market.

[00:57:52]Things are moving up $2 or more in the pre-market. Put them on the gainers list.

[00:57:58]This list doesn't look like the current list today, but I guess it is. Getting lots of chop in here. MDB.

[00:58:13]Nice run.

[00:58:19]If this can complete the a gap fill here, get a close above this 618 at 337, we might be set to break out.

[00:58:33]might do to have that downtrend of highs. But if we can get through that 491, which is a pretty fair move here from 333 to 491, pretty fair move.

[00:58:50]Key site may come back down. TER Intel starting to be played out. Watch for a deeper retrace here.

[00:59:08]That one's probably done.

[00:59:11]CRDO.

[00:59:14]See PMW.

[00:59:17]Oh, baby. At the target.

[00:59:20]Beautiful. Anybody jumped on this with me?

[00:59:30]PNW.

[00:59:33]What is the tiger? I can't remember. P A L U. That's the one I got.

[00:59:42]It's going to be time to book the profits here.

[00:59:45]Even though we didn't get as high as I wanted to see it, it's time to book it out.

[00:59:54]35% gainer. That's not bad.

[01:00:02]It did sit underwater for a good long time. So nice. Nice pop. Nice. That's a I like them when they work.

[01:00:15]UNH getting a little pullback now. We may see this one. The ultimate target's up here, but we may see this one retrace to the road map line again before we can pop up there.

[01:00:28]MSTR.

[01:00:29]Be careful.

[01:00:34]Can make a bigger move down.

[01:00:43]didn't have any setups today.

[01:00:46]And this has got a nice nested pattern here.

[01:00:50]If we can hold on to this 618 we've got right here.

[01:01:01]Set a couple alerts. We break back about 30. It's probably game on.

[01:01:06]Coming way on up in here.

[01:01:10]I like this potential we've got cooking here. Now there is caution if we start breaking down below start breaking down below 17 not looking good.

[01:01:30]Let's go look at the gamma charts for those of you left. Not very many. Thanks for hanging out. I appreciate it. It's viewers like you that make this whole thing work. Comments been kind of thin this morning. Any questions ro about a cup?

[01:01:58]Where is the S&P going to close today?

[01:02:01]It's a good question and we'll see if we can answer that with the gamma chart right here.

[01:02:10]It's one of the only one of the only things I know of that kind of drives the market options. We had a huge opex come through last Friday. Big monthly option expiration cleared the gamma board and there wasn't much sitting out here. Now, interestingly is there is a level building right up here just above us at 7:45 on this is on spy.

[01:02:35]Look at the bubble today. We got big levels up to 747 and big levels down to 7:30.

[01:02:49]That was 747. 7:30.

[01:02:52]Added the range.

[01:02:55]This is the range I expected to hang out in today because that's where the big options levels are.

[01:03:06]All right. This is what I call a bubble.

[01:03:10]I haven't heard anybody else calling it that really. It's kind of my terminology made up. So, we get a gamma bubble. It's where a whole bunch of big levels are stacked right beside each other. Now, we're kind of at a flip point. Red gamma here, green gamma here. Market makers behave very differently in these two zones. Up here, market makers are trading opposite and muting volatility.

[01:03:34]down here. Market makers are trading with the direction of market and increasing volatility. It's why drops get bigger and pops get bigger when we're in the red gamma. And while everything seems like it's muted and grinding when we're in the green gamma.

[01:03:48]Right now, we're sitting on the flip point right in between that. Now, looking out here further, we do have this bigger level set out for Friday. We possibly could drift higher into that on Friday, but there's nothing tomorrow, Wednesday, Thursday to indicate that that's the path. This could just take a spill and start down the toilet right now. That's kind of what we got cooking.

[01:04:19]I like to click on the levels, try to guesstimate where we might end up today based on where. So these market makers, they sell everybody options. You know, you got people buying calls like crazy, selling calls like crazy, buying puts like crazy, selling puts like crazy. The market makers are buying and selling all these puts and calls.

[01:04:41]They're trying to balance it out as much as they can, but invariably there's imbalance. And that's where we get the gamma levels. Like when the market makers end up with a buttload of calls or a buttload of puts, that's imbalance.

[01:04:53]And so when you look at this, we try to figure out where the imbalance is. And the market makers are trying to offload these to trading desks. Trading, you know, often the story is the market makers try to screw everybody. Market makers don't care. They try to stay delta neutral neutral. They make their money moving contracts, but they work in conjunction with trading desks. Trading desks love to screw everybody. So, they'll buy up these options from the market makers.

[01:05:27]They'll scoop these up in deals and then they'll try to turn those into cash flow for themselves.

[01:05:36]And they do that by screwing the individual investor.

[01:05:39]And they can do that by pinning the price at a point where most of the put players lose money and most of the call players lose money. And that kind of tends to be a point where right here in the middle where you see most of the puts if price stopped right here all these puts be worthless. All these calls would be worthless.

[01:06:00]So somewhere around 739 would be my guess.

[01:06:04]If we held it in here at 739, we screw the most number of players.

[01:06:11]And that's how I kind of figure out reading the tea leaves of the market where we might kind of hang out for most of the day. Worked on Friday.

[01:06:21]Does it always work? No.

[01:06:25]Just if that's going to be the the the deal for the day.

[01:06:30]If that's how the market's going to go down.

[01:06:35]Not as in travel down, but if that's how the mark that the trading day is going to happen and we're going to screw a lot of people, option players specifically, we'll probably hang out right here on 7 at around 739 on SPY and just churn out those options right into the close.

[01:06:54]could end up a couple bucks higher or lower, but probably end up hanging out here, especially as the day gets longer later long longer in the day, later in the day. If that chart, that balance chart still looks about the same, we'll probably hang end up hanging out, you know, could be down to 738, could even be on down to 737. It still screw most of the call and most of the P players.

[01:07:23]Now look at the QQQ. And this that flies in the face a little bit of max pain. If you've ever heard of the max pain level, my way to do it is a little bit different than the max pain way to do it.

[01:07:39]So just be aware that my level may not always correspond to the max pain level if you subscribe to that method of figuring this out.

[01:07:53]kind of come up with my own way to do it over the years, years and years of watching these gamma charts. Now, missed it on Q's on Friday. Like Q's rallied higher instead of hanging out, but we did stay in the in the red zone.

[01:08:09]Jumping this over.

[01:08:12]Take a look what we might have today.

[01:08:15]Verticues less of a bubble. You know, the spy had this nice tight blob.

[01:08:24]The Q's for whatever re whatever reason, we have not seen big daily volume on the cues since mid January.

[01:08:36]Just not been a lot of players. Now, sometimes we can get a nice tight bubble. today. This is what I call a spotty bubble where you have a level, nothing, nothing, nothing, level, nothing, nothing, level, nothing, nothing, nothing, nothing, level, nothing, level, almost nothing. Level, nothing, nothing. And then the big level, oddly down here. So, the biggest level right now today 700 and then not really anything below that.

[01:09:06]Got some bigger levels cooking for this Friday.

[01:09:13]Nothing super meaningful here.

[01:09:18]So, it looks like down to 700 and up to 715 is going to have to be the the zone today.

[01:09:27]Can we easily get out of there?

[01:09:29]Absolutely.

[01:09:30]When the when the level's not really stacked very well, we definitely see it not act as a very good magnet.

[01:09:42]It when the bubble is really tight, price tends to hang in. So, more confident on the spy, less confident.

[01:09:50]And that's, you know, like on the cues here Friday, we didn't see it hang out with this big level because there's just not there's not big levels being played.

[01:10:00]Look at these how small these numbers are. 622,000 at 709.

[01:10:07]That is not much.

[01:10:10]Now, there's 100 million 130 million of calls and 130 130 million of puts, but it's balanced.

[01:10:20]doesn't create any imbalance. You know, this whole thing works on imbalance.

[01:10:24]Even though there are larger levels, there's no everything's being really balanced on the cues and that doesn't create any you kind of see it here too. Lots of players, but it looks like this June level is becoming the biggest level on the board.

[01:10:46]End of the quarter.

[01:10:50]Got more put players today.

[01:10:55]If we're going to screw the put players, probably keep it around 708.

[01:11:09]But the put players can easily turn that into if if the bears get a hold of it and start pushing the ball lower, which you know, I was already talking about the NASDAQ needing needing to go lower.

[01:11:19]One, two, three, four, five.

[01:11:23]But we can see this pop down and then come back up and hang out here in the close.

[01:11:29]It's quite possible.

[01:11:32]Could see it come all the way down to 700 and then come back. So that's kind of your what we got cooking today.

[01:11:45]Kind of what we got cooking today.

[01:11:55]I'm going to do a trade. I'm going to see if I can catch that dip down.

[01:12:00]Spend about 80 cents on this. do like one.

[01:12:06]See if I can get filled on it.

[01:12:18]Order filled. There it goes.

[01:12:22]So, I got me in a at 78 cents on a $3 wide and trying to make let's see 78 * 2 there's 80 cents* two buck 60.

[01:12:43]See if I can turn that into a double. If we get a dip on out here, may lose my 80 bucks, 78 bucks.

[01:12:52]See what happens. Do you like that trade? Take it. I might lose the money, so be careful. But that's a that's a play on this dipping on out here.

[01:13:03]That's a zero day play.

[01:13:08]There you go.

[01:13:10]Be careful out there, everybody. And lose money. I'll be on Market Masters here in about an hour with Jack Carter talking income trades and otherwise I'll be back. Same bad time, same bat channel, 9:15 tomorrow. Hunt for opportunities again. Be careful out there.