00:03welcome back Traders it's John it is
00:05March 1st 2024 and I'm recording this
00:08video at 6 PM eastern time on Friday so
00:12it was a really interesting week
00:16note so again the disclaimer I'm an
00:19individual gross stock investor not
00:20affiliated with IBD or
00:24marketsmith so here's our agenda we'll
00:26get into the indices a little bit on the
00:28internals there's been some changes
00:30and then I want to go into a segment
00:32called bubbly or is it early and then
00:35we're going to look examine a little bit
00:36of some of the big leaders and then
00:38we're going to wrap it
00:39up so let's get into the
00:45indices so here's the NASDAQ Composite
00:48on a daily chart about three weeks ago I
00:51was noting that the new highs in the
00:53NASDAQ had kind of stalled out a bit at
00:56the mid to late December we were in the
00:58480 to 400 range and then in January
01:01things got tough we really kind of
01:03stalled out and the new highs were not
01:05there even though the index was making
01:07new highs and that was a cautionary sign
01:09and we've been watching it closely well
01:11today things started to clear up the
01:14index hit a record high this black line
01:17is the record um old high for the NASDAQ
01:21so we hit a new high and we had 43 new
01:24highs so you can see here that is a
01:26market Improvement um in what we were
01:30um the past six seven weeks I mentioned
01:32only one week ago that got a little
01:34dicey with the new lows picking up
01:37sharply off the top that was a concern
01:40but we're flexible here so one week
01:43later the picture has changed we started
01:45to see the new highs pick up and new
01:46lows shrinking so that's a really
01:50sign now another thing of note is the
01:53small caps so this is the iwm small cap
01:57ETF going all the way back into the sum
01:59Sumer to August when we started
02:01correcting so you can see this is a
02:04classic coiling base pattern kind of
02:06wide and loose big broad ranges um tried
02:10to get up near the old highs pulled back
02:12all the way down to the 50 pulled back
02:15for another wave smaller correction then
02:17a really small correction and then we
02:19tried to get going on Thursday and we
02:21stalled just below uh the December Highs
02:25but today we closed above the December
02:27highs that I've marked on the chart so
02:29this is a classic kind of ringing the
02:32water out of a towel and then hopefully
02:35it clears the path for the small caps to
02:37really start launching and helping us
02:40with the next leg of the bull
02:42market now I also called up the small
02:45cap ETF Iwo which is a little bit more
02:48focused on Gross stocks the gross names
02:51you can see here similar coiling but
02:54you'll notice that the Iwo broke out a
02:56couple of days ago so the growth
02:58component is a a little bit ahead of the
03:00the iwm which is more dominated by
03:04financials and um some of the regional
03:06Banks which have been struggling as of
03:08late so this is a good sign to see these
03:11two charts looking like they want to
03:16out so following up with the Iwo um if
03:20we took the Iwo and we divide it by the
03:23Spy which is the S&P 500 um you get this
03:26line chart when the line's heading down
03:29it means Iwo growth is underperforming
03:32the S&P you've noticed since November um
03:36we're starting to see an uptrends just
03:38starting to emerge where the Iwo is
03:41starting to outperform the S&P that's a
03:44good sign for risk on it's a good sign
03:49investors so let's get into this segment
03:51I call Bubbly or is it
03:55early so we probably all know the hot
03:57sectors of the market there's no doubt
03:59that um crypto has really taken off it's
04:02probably one of the top performing
04:05sectors um of course Nidia the king is
04:08still the king Nvidia has been
04:10performing and delivering earnings and
04:13sales um all the semiconductors the SMH
04:16here is representing all the chips
04:18they've had a great day the last two
04:20days they were up quite a bit um xbi is
04:23the biotech index which has really
04:25started to um have a good move here the
04:28last two or three weeks um it's a more
04:31of a risky sector but if you're in the
04:34right name they could have some real
04:35potential now software uh cyber security
04:39software represented by hack has cooled
04:42off a little bit and we're going to talk
04:43about this a little bit more to follow
04:45up on last week's discussion XLF is the
04:49financials the financials have not been
04:52rocking and rolling yet but um they are
04:55participating in a slow methodical way
04:58we definitely need the financial to
04:59participate in the bull market and
05:02S&P so let's look at this idea of is the
05:07market in a bubble you've heard a little
05:08bit about it people saying things are
05:10getting really hot and frothy let's look
05:12at a real bubble here is the NASDAQ
05:15Composite on a weekly chart from 1998 to
05:192000 and a couple things one I wanted
05:23you to recognize Allan Greenspan was the
05:26Federal chairman fed Federal Reserve
05:28chairman um back at that time and in
05:30January of 99 Allen Greenspan warned
05:34Congress that the stock market appeared
05:37overvalued and you can see the NASDAQ
05:39was trading at about
05:412,300 later that year by December 5th
05:44you can see the market had been grinding
05:46its way higher uh Allan Greenman again
05:49warned of his famous irrational
05:52exuberance uh talk so at that point the
05:573,300 and you can see here that from the
06:00initial uh moving remarks that he made
06:04the market moved up over 100% And 61
06:07weeks with the last real blowoff phase
06:10you can see the angle of ascent got very
06:12steep in here we moved up 45% in only 13
06:16weeks to the top and you can see look at
06:18these powerful weeks week after week
06:21closing at the peak continuously that
06:24was a the dot bubble that burst in March
06:31so if we also look at a bubble period
06:32for Bitcoin you know from 2020 to 2021
06:36Bitcoin was on fire and it started in
06:402020 pretty much going till about early
06:432021 it was a 300% move in 17 weeks um
06:50impressive so now let's look a little
06:53bit of what we see today so the SNP is
06:56on the left now the SNP has gone through
06:59a bare market and we've been coming out
07:02of basically a two-year
07:05consolidation and we've hit new highs um
07:08right around uh the beginning of the
07:10year and we're moving higher to new
07:12highs it certainly doesn't seem like
07:15extended um and and in a bubble phase
07:19for the S&P now you can look at Bitcoin
07:23Bitcoin in 2021 tumbled pretty badly uh
07:27but what's really unusual is the
07:28recovery that we've seen um in Bitcoin
07:31in 2024 Bitcoin has been um is up from
07:35this point and I picked this point
07:37saying you're probably not buying off
07:39the bottom but but um you know you had
07:41an uptrend you had a little bit of a
07:43basing structure from this point it's
07:4527% in only 36 weeks but if you look at
07:49it it's really a big big cup and we're
07:51just getting to new highs so we're not
07:54exactly extended in a bubble now it's
07:59um a sector or a market would recover so
08:02quickly after having a blowoff top like
08:05Bitcoin did now I think we all know that
08:08the institutions have really taken favor
08:10to bitcoin um there's adoption they're
08:14starting to support it they have ETFs
08:16they all have ETFs now to allow retail
08:18investors Etc to invest in the crypto
08:20markets and the perception is that it's
08:23safer access into the crypto markets to
08:26people to add that component to their
08:28portfolio Olo so I think we're seeing a
08:33flow now let's go back a bit and talk
08:36about these major bull markets with
08:39multi-year catalysts you know if we go
08:42back to the internet 1995 to 2000 it was
08:45a five-year window of incredible
08:48Innovation with the birth of the
08:50internet and everything that happened
08:51Beyond now in general this was kind of
08:55the sequence of how things rolled out
08:57the first few years were dominated by
09:00networking and the infrastructure of the
09:03internet you know Cisco dominated
09:06networking Nel networks qualcom and
09:10fiber optics was really led by Lucent
09:13Technologies and JDS uniface PCS were
09:16proliferating chips were getting faster
09:19intel was actually the chip King at the
09:21time with processors and Gateway and
09:23ding compact were dominating PCS and
09:26then this thing called the web browser
09:28in 19 95 allowed people to actually go
09:32onto the internet and surf around and
09:34look at sites Netscape and spy glass
09:37were Innovative new companies now to
09:40connect all this um there were something
09:43called dialup modems and a company
09:45called us robotics dominated the modem
09:47business which allowed companies like
09:49AOL and Yahoo to get people connected to
09:53the internet and then it goes on and on
09:55eventually there's software that gets
09:57applied and developed for corporations
10:00Oracle started to take a dominant
10:02position people soft seil systems and
10:05then connecting to the internet with
10:07connective devices such as the phone and
10:09noia was the king of the phone in the
10:1190s then Blackberry came along and then
10:14e-commerce you know we can go on and on
10:17Amazon eBay Etc and then certainly um
10:20after 2000 you know all kinds of retail
10:24apps from Apple Netflix Google Shopify
10:27etc etc so it's a long process and it
10:31starts with networking and
10:33infrastructure to lay the the railroad
10:35tracks for all of that to
10:38happen so where are we artificial
10:40intelligence you know it's probably came
10:42into prominence more in 2023 than ever
10:45before the promise of it and we're
10:47seeing Bitcoin um really really start to
10:51masses well we're we've got
10:53infrastructure and chips dominating AI
10:56Nvidia AMD and super micro and other
10:59others then all of these artificial
11:01intelligence server Farms have
11:03incredible power and cooling needs and
11:06we're seeing companies like verv and
11:08Hubble and super micro and even Ecolab
11:11making particularly specialized cooling
11:14systems for all of the support that's
11:16needed for artificial intelligence chips
11:20of course we're seeing the beginnings of
11:21software tools um to be developed people
11:24to really leverage Ai gitlab and jfrog
11:28and Pega and the database companies are
11:31going to make sense and let people query
11:34all of this data and so with a
11:37sophisticated software elastic and
11:39mongodb snowflake cyber security is
11:43critical with artificial intelligence in
11:45order to have all these environments
11:46work in a secure way and we know a lot
11:49of the companies that are participating
11:51there and there's already already the
11:53beginnings of companies that are using
11:55software um Uber and samsara Etc we
11:59haven't even gotten to the the retail
12:02software apps in Mass yet so you know
12:04we're probably you know we're just in
12:07this early early phase of artificial
12:10intelligence basically the railroad
12:12tracks are being laid with the
12:13infrastructure and the chips and the
12:15Power Cooling to allow you know
12:17highspeed data exchange a lot of this
12:20buildout is going to happen over the
12:26years so I've included a couple slides
12:28with some data now this data comes from
12:31Arc invest and I've put down here they
12:33put out a yearly report called Big Ideas
12:36and this is from the Big Ideas 2024
12:39report which came out about a month ago
12:41and if you go to Ark invest you can grab
12:43it because it's a good I don't know 70
12:4580 pages so this is just one slide of
12:49some of the research they did on
12:50artificial intelligence um basically you
12:53can pause your video player and read the
12:55slide but essentially it's saying
12:57artificial intelligence is going to
12:58automate task to allow for productivity
13:01gains workers and knowledge-based
13:03professions are going to see incredible
13:06productivity gains so this is a powerful
13:09slide that there's a lot of growth and
13:12software um coming in the
13:15future now they also hold a whole
13:18section in the report on Bitcoin now I
13:21personally have not been a participant
13:23in Bitcoin I didn't really understand it
13:25and I have not really invested in it um
13:28but it's now becoming more uh mainstream
13:32and in this report they really talk
13:34about in this third block um how
13:37institutions have finally kind of
13:38accepted and they're bringing ETFs to
13:41represent Bitcoin into their portfolios
13:43and offer them to retail um investors so
13:47you can read this slide about some of
13:49the drivers that AR invest sees for
13:542024 and here's another slide relative
13:56to bitcoin really about the exchanges
13:59and liquidity um the three main uh
14:03exchanges were you know FTX for a while
14:06until they disappeared at the end of
14:082022 binance and then CME which is the
14:12Chicago merkantil Exchange and you can
14:15see here 2022 was dominated by binance
14:18and FTX and see purple is the CME well
14:22with FTX essentially going bankrupt um
14:25you can see that for the first time in
14:28December of 2023 cme's open interest has
14:32surpassed binance for the first time
14:34again another piece of evidence that
14:37this is really becoming um mainstream
14:40and the liquidity is picking up um
14:43tremendously in Bitcoin and other coins
14:47so just a little bit about the bigger
14:51Bitcoin so let's look at some of the big
14:56happening so I'm starting off with with
14:59uh I guess I'll call it the king Nvidia
15:02now I wanted to point out I pointed this
15:03out back in the summer when Nvidia um
15:06peaked out I said it was likely they
15:08were going to peek out for a short-term
15:10basis at the 500 psychological level and
15:13I've done GM andu extra videos on
15:16psychological numbers so you might want
15:18to go back to my YouTube page and search
15:20for those but n Nvidia came into 500 and
15:23it basically doodled around and it
15:25doodled between 500 as a psychological
15:28number and the one trillion valuation
15:31which was somewhere in the 410 range and
15:33you can see that it couldn't get through
15:35500 for this is about a six Monon period
15:38and you can see but every time it kind
15:40of bounced around to build the base um
15:42it got support at the one trillion
15:45psychological level now we all know it
15:48broke out had has an incredible push
15:50higher and it had a great earnings
15:52report last week um Nvidia the two
15:57trillion level which I've drawn in green
15:59here is right around in this 820 range
16:02and so far that's been an area that you
16:04know it's possible that Nvidia might
16:06dance around a little bit in or the
16:101,000 psychological price level is above
16:13maybe Nvidia goes through the the two
16:16trillion level gets to a thousand and
16:18starts to consolidate between the two
16:21levels just like it did six months ago
16:24that's possible it's had a 65% move
16:26right into the two trillion level
16:29super micro incredibly explosive move
16:33200% right into the 1,000 psychological
16:36price level really look like a climax
16:38top um and you know this stock probably
16:42needs time um needs to time to base out
16:45probably will do that somewhere under
16:47the 1,000 level but again psychological
16:51price levels in the market have worked
16:52over time and if you study charts and
16:54even model book stocks um you'll see
16:57that uh these levels have have some
17:00meaning so I've also put in meta here
17:02which has also had a strong strong move
17:04it's up over 50% and you'll notice that
17:07had a lot of really good velocity and
17:10it's right now right into the 500
17:12psychological level so it's possible
17:15that even something like meta will dance
17:18around a little bit maybe push and to
17:21consolidate its gains and form a base
17:24and then to the right this is Advanced
17:26Micro Devices and you look at this it
17:29had a incredibly powerful move
17:3296% in 11 weeks and you can see the
17:35volume was towering extreme
17:38institutional demand and it's been
17:41really really U moving tightly it only
17:44has a 12% flag you could consider this a
17:48high tight flag and or you could
17:51consider it a flat base at 12% deep so
17:56um it's broken out of that in the last
17:57two days as I mentioned the chips are
17:59really on fire again with the Nvidia
18:01report um really strong action from AMD
18:05um all four of these stocks have been
18:06acting really really well I will let
18:08everybody know I own a position in
18:11AMD now the point of showing you the
18:13slide is um it is possible that we could
18:16slow down a little bit as I mentioned we
18:18could get a pause we could consolidate
18:20some gains before we move higher but
18:23with the Russell 2000 breaking out who
18:26knows maybe we go further um in the
18:30term so I want to come back to cyber
18:32security I talked about this a little
18:35bit last week this this group has kind
18:37of cooled off a little bit in the last
18:39two weeks um you know we had the pal
18:42Alto uh earnings report and it was a
18:45real bomb um in terms of the report was
18:48good but the guidance did not impress
18:51and we had a kind of a wobble and then
18:53zscaler reported yesterday and it gapped
18:56down today um so it kind of and again
18:59its basic report was pretty good but
19:02again the guidance was not what the
19:03street wanted to hear so we had it a
19:06little bit of a stumble uh with zscaler
19:09today so next up is actually crowd
19:12strike and I do have a position in crowd
19:15strike and um it's going to be
19:17interesting next Tuesday is when they
19:19report and is this going to be the uh
19:21Splat of the series wob wobble stumble
19:25Splat well we don't know um we looked at
19:28the the actual index hack and last week
19:31I I talked about how you know this was
19:34looking a little bit toppy like maybe a
19:36head and shoulders was forming um I
19:39guess this report by crowd will be
19:40pretty important uh maybe the guidance
19:44from pelto and zscaler is really setting
19:47the tone for what the industry is
19:49experiencing or optimistically maybe
19:52crowd strike um has a good report and
19:55they actually say they're increasing
19:56their market share which would be at the
19:58expense of Z scaler and pal Alto um we
20:01don't know but let's see what happens
20:03can crowd keep the sector going um if if
20:07it's a flop um this might you know
20:09definitely come back and maybe have to
20:11base out for a few months so it's
20:13something to watch in the cyber security
20:17area Okay so let's wrap
20:20up so looking at our uh monitors the
20:23trend monitor you know we're at new
20:26highs and the NASDAQ and the p and we've
20:29got some optimism that maybe the iwm is
20:31really ready to break out it's closed
20:34today as if it does um everything is you
20:37know multiple indexes are hitting new
20:40highs which is always good to see Power
20:45place we talked about the net new highs
20:48much better number of new highs in the
20:50NASDAQ than we've seen for the past six
20:52seven weeks that's really encouraging
20:54because it didn't look so great last
20:56week um and and the leading stocks you
20:59know the leaders are leading we just
21:01looked at a whole series of them they
21:03look strong um there's some other ones
21:05that are also in the wings that are
21:06doing well as in addition to those
21:09exposure levels I think have been
21:10increased this week um I think we
21:13increased it by 10% or so 101 15% up to
21:1865% um you know the the uh push higher
21:23here it's possible that um chasing
21:25strength might not work maybe buying on
21:28weakness might be a better approach
21:30particularly in the chip stocks which
21:32have already pushed up higher in the
21:33last two days so if you miss that then
21:36you might want to wait for a pullback so
21:39the action is much better it's really
21:41encouraging to see that um some
21:44interesting earnings reports next week
21:46and I believe uh chairman Powell speaks
21:49on Tuesday to Congress so that'll be
21:51interesting to see what his tone is uh
21:58so the quote of the week is from Larry
22:00Bird the Boston Celtic I've got a theory
22:03that if you give 100% all the time
22:06somehow things will work out in the end
22:09I think this is a good quote because you
22:11know trading is hard it's difficult it
22:13has ups and downs but if you really
22:15dedicate yourself you do your homework
22:17you study hard apply good methodology
22:20you cut your losses um it'll work out
22:24but if you lose your discipline you'll
22:26lose it all so as Larry Bird said give
22:31time that's all the time for now that's
22:34the General market update for March 1st
22:372024 have a great weekend everybody look
22:39forward to talking to you again on next
