Transcript of The Biggest Trade Ever Seen…
FX Evolution - Trading Academy
0:00A new number one transaction just went0:02through for the triple Q's and this0:05means Wall Street is starting to heat up0:07in volume. But could it be the end of0:09month or something more sinister as we0:12head into September and the midterm0:13election period? Historically, one of0:16the worst times to be an investor in0:18markets.0:19So, why could this one be a little bit0:21special? Well, with diesel prices0:23increasing and Morgan Stanley having0:25something to say about it, in today's0:27video we'll take a look at the good, the0:29bad, and the ugly when it comes to0:31everything that's going on right now.0:34But it always comes back to one of the0:35things we talk about on the channel.0:37Bonds, bonds, bonds. And over the last0:4024 hours, US 10-year and Japanese bond0:43yields are going ballistic. Let's go0:46through it right now together and0:47whether you love stocks, commodities, or0:49cryptos, it's going to be a great video.0:51I'll see you very soon.0:56Well, welcome back to the channel. It's0:58great to have you here and today we have1:00a lot to go through including the latest1:02macro, Wall Street flows, and of course1:04some big transactional details that you1:07don't see every day. Hi, my name's1:09Thomas. I've been in markets for over 171:11years and on this channel we do things a1:13little bit differently. Understanding1:15how Wall Street traps retail traders and1:17investors and of course institutional1:19flow is one of the things that's least1:21utilized by so many people out there. If1:24that's something that interests you,1:25then remember to stick around. We've got1:26a lot to get into including a new number1:29one. So, let's start with that because1:31according to volume leaders here, we1:33have the largest transaction ever to go1:35through on the triple Q's since1:37inception just happening over the last1:3924 hours. And remember, this is pretty1:42wild because we've had other1:43transactions in the past couple of1:45months that are also very, very big. The1:48number three non-dark pool transaction,1:51basically meaning on the market1:52transaction, came through just a little1:54while ago. And you might think, well,1:56what's the big deal? The markets haven't1:58moved too much yet." Yeah, it's more2:00about the distribution accumulation and2:02of course structure of markets, but it2:04did happen after seeing of course many2:08other large transactions go through2:10during the months of of course late May2:12into June and July. And what we've2:14discussed through this period is that we2:16thought we would be in what we call a2:18kangaroo market. That is a potential2:21distribution accumulation pattern and2:23more importantly a market that actually2:25really benefits people that have2:27abundance. It benefits people that are2:29looking at the sectors, looking at the2:31rotation, and the stocks underneath.2:34Now, for all the you long-time viewers,2:35you would already know that last couple2:37of months have actually been pretty good2:38as long as you've been outside of2:40semiconductors and tech. And that's2:42because we're getting constant rotation,2:45but these companies are just not big2:47enough anymore to really move the index2:49around. It really is the land of2:51opportunity, but only if you know where2:53to look and we'll be going through some2:55of that a little bit later on in terms2:57of the good, the bad, and the ugly on2:58these charts. Let's start though with3:00some of the big storylines before we3:02keep going here. OpenAI's just come out3:04and said that their advertising business3:06has already reached $1 billion3:08annualized revenue. Now, that's of3:10course not going to be enough to pay3:11down that debt, but the stories keep3:13coming today. Of course, we're in3:14September's3:16big month of the year being the worst3:18historical period since 1950, but do3:21remember midterm election years tend to3:23have worse Octobers, so it's all up in3:25the air. I found that the data stats are3:27quite confusing there for this year,3:29which means that you really want to be3:30looking at the price action and the3:31flows more than anything else. Morgan3:33Stanley also has reported that they3:35lifted their Q4 Brent forecast from $753:38to $100 a barrel. So, they're also going3:41up now across the board.3:43And we're starting to see of course a3:45huge impact of the new Fed chair coming3:47into a few of these things. The hawkish3:50undertone at the Jackson Hole Symposium3:52last week, or the speech basically3:54changed the game. And we've actually3:55seen washers three times now. He's come3:58out. He's moved the market more than4:00anything else recently. It's been4:01historically low period volatility when4:04you're looking at just the indices.4:06There's also a whole bunch of other4:07stories. If you're ever interested in4:08finding out more about these before the4:10video, check out pin comment down below4:13to follow our X accounts, because of4:15course we do post before this video4:18there each day. So, why are you starting4:20to say, "Well, maybe this market's a4:22little bit boring?" Well, if you're just4:23looking at index, yep, you would say it4:26is pretty boring. According to Blue Car4:27Deck, actually, we have not seen the S&P4:30500 do this since 2004. It just recorded4:34its lowest monthly trade volume across4:37the board. So, it was actually extremely4:39low trade volumes here. It's been a very4:41long time since we've seen anything4:43quite like this. And I think it's really4:45surprising in some ways for a lot of4:47people, because everyone loved the4:49indices, and rightly so. Indices, you've4:50been great. But, over the last couple of4:52years, of course, everyone's piled in on4:55those. And what's happening now is it's4:57become more of a sector selection, more4:59of a stock picker's market. Great for5:01people like yourself that have been5:02putting in the hard yards, putting in5:04the thousands of hours, and putting in5:06the work that really allows you to5:08understand markets a little bit deeper.5:10So, as we go through the good, the bad,5:12and the ugly, let's talk about these5:14bond yields, because the 10-year yield,5:16of course, just closed to a new high5:19over the last 24 hours. It's not out in5:21the fear of the unknown yet, but what is5:23out in the fear of the unknown is, of5:24course, the JP 2-year, 1-year yields.5:27And they are continuing to accelerate.5:29Have a look at this chart here. We're at5:311.7%. You might say, "What's the big5:33deal, Tom? That's not too high." Yeah,5:35that's true, but at the same time, what5:37this is forcing is, of course, further5:39pressure from the central banks to5:41intervene in markets. We saw that just a5:43week ago with, of course, Besant having5:45to go from two to four billion, and then5:47basically say I've got a lot more where5:49that comes from. Just watch me. And all5:52of this is causing of course a unique5:54pressure in the bonds market at the same5:56time as most of these companies are5:59saying that we won't hit a capex peak6:01spend till potentially 2028.6:06Yes, there are companies out there6:07willing to borrow a hell of a lot still6:10in this AI boom that we're in right now.6:13Now, let's talk about Kevin Warsh6:14because on the surface of it this chart6:16here from Blue Heron shows that the6:18markets have been actually relatively6:20resilient. Generally during new Fed6:23chairs, we either get a kind of6:24resilient market that kangaroos around6:26for a while. So, not unusual to actually6:28see a fairly tight band on the S&P. Or6:31we can sometimes get new policies that6:33shift the market down quite a lot. And6:36over the last 24 hours we saw a couple I6:38actually last five days. We've seen a6:40little bit of change there. But, have a6:41look at this chart here from Bloomberg6:43and share that global markets I think on6:45X. And basically shows here that6:47Chairman Warsh's first two Fed decisions6:50and his Jackson Hole speech are6:51significantly moving the bonds market6:54like nothing else right now. And we6:56often say on the channel, bonds, bonds,6:58bonds. Why do we say that guys? Because7:01it's so important to understand that the7:03debt system is ultimately the cockroach7:06system as well guys. Where there's one7:07problem, there's usually many. And at7:09the moment for years we've basically7:11been doing okay. But, if that changes7:14like this you could have a financial7:15crisis or of course worse on your hands.7:18You don't want to say that. Depression7:20period, that would be very bad. But, all7:22of these things can happen if we see a7:25systemic spillover. So, you always want7:26to be watching with one eye open.7:29Remember, one of the things we do here7:30on the channel is we do it differently.7:32And it's really important I think to do7:33it this way. I've noticed that most7:35people either feel extreme FOMO or7:37extreme fear. What we like is7:40indifference. What's the good? What's7:42the bad, let's look at it in a7:44statistical systematic approach.7:46Speaking of changes over the last couple7:49of sessions, have a look here according7:50to Polymarket's latest research. We've7:52got here a 59% chance of7:55a September meeting potential hike, and7:58that's up a lot of course where it was8:00just a few weeks ago. So, back to where8:02we were during the kind of early part of8:05August or July, and as you know, if8:09yields do end up being spiked up, that's8:11going to put again further pressure on8:13delinquencies, further pressure on8:15everything we've seen, credit cards,8:17auto loans, these strange private equity8:20businesses that are out there at the8:21moment. Also, all sorts of things that8:24we've heard rumors about with the AI8:26data centers and how they're being8:27funded as well. All these things, again,8:30you've got to be just worried about them8:32thinking, but not necessarily paying too8:34much attention till the price action8:35shows up. Speaking of which, a lot of8:37people look at covers. This one here is8:39the Time cover shared from @finance a8:42lot over on X. And you can see here that8:44the the new cover is Time 100 AI8:47influential figures. Now, I know you all8:50saw it and I I expected you to in the8:52comments last 24 hours that when we8:54shared this, you're like, "Where's8:54Jensen?"8:55>> True.8:56>> [laughter]8:56>> Where is Jensen? He's not there, guys.8:59Um but in general, it's not just this9:01cover. There's so many covers right now9:03going around. They're all AI based. Um9:05there's like four or five major covers9:07that all AI based. I guess in9:09anticipation of of course the potential9:11of the Anthropic IPO coming very soon,9:15if it is. Now, let's talk9:16September-December because when we tend9:19to have a very good kind of run into9:22August, it creates a bit more of a coin9:25flippy market for September-October. As9:27you can see here, 55% reads from Blue9:29Calyx, and that you can get a lot of9:31volatility. So, do we expect that it9:33isn't going to be kangaroo moving9:35forward? I guess you could still expect9:37the markets to start to go sideways or9:40even decline a little. And that's not9:42necessarily because the data is only one9:44thing, but we do have some pretty9:46extreme exposure. The NAAIM9:49exposure actually has gone to 102. Now,9:52for anyone that doesn't know this, I9:53posted over on X, but basically it9:56tracks the actual US equity exposure9:58reported by active investment managers10:01each week. So, unlike sentiment surveys,10:04we're looking at real positioning, not10:06just opinions. I'm always interested in10:09these and marrying them up with10:10sentiment surveys. So, sentiment surveys10:12are coming in, of course, a little bit10:13freaked out. The NAAIM is showing that10:17you've got pretty much peak positioning10:19coming through.10:20While all of this is happening, we've10:22also got oil. Now, you would never think10:24oil could be where it's at in terms of10:26diesel price. Diesel price is pretty10:28crazy right now. And that we wouldn't be10:31seeing pain in the markets. And that's10:32because the markets have just become so10:34used to getting the financial levers.10:37And rightfully so, as soon as there's a10:38problem, "Oh, we'll fix it, guys. We'll10:39fix it." Band-Aid that.10:42Quick fix this. You know, eventually10:44that comes home. But, we have also had a10:46couple of large transactions. This one10:48actually came through on August the10:4929th. Since then, oil has gone up. And10:52you can see there was a fairly large10:54transaction coming through on crude oil10:55according to volume leaders. And what10:57that did was it led into, of course, a10:59bit more of a rally coming off a good11:01technical, being the daily 20 moving11:04average. So, we saw oil kind of spike11:06across the board.11:08And we've seen even semiconductors11:10holding their own last 24 hours. But,11:12oil services, uh cracks, so of course11:15diesel in particular, XLE, XOP, and11:19notice this one here. This is the11:21agriculture side. And why that's11:24important is because food could be11:26looking at going up. Have a look here at11:27the last 5 days. Moo, 1% across the11:30board. Software, of course, up the top11:32but oil services uh F and generalized11:36kind of things that could go into11:37inflation. They're all moving up again.11:40Now a lot of people asking about gold11:41seasonality, what's going on there?11:42Going to Polycarb and what we've seen in11:44and before is basically that again gold11:48has had that extremely good run. Let's11:49get a lot of information and people11:51getting excited about it but it often11:53does go kangaroo from now. Earning11:55season, we're past the big stuff now. Of11:57course now we even looked forward to the11:59next earning season. But according to12:02what we've been seeing so far, consumer12:03discretionary is all over the place. I'm12:05really still paying attention to that12:07this week of course because of the likes12:08of Lulu and a few others. These are the12:11expected options moves. That is how much12:15movement are you going to get in a day12:18based on what the options market is12:19pricing in. If you're not aware of this,12:21you're probably doing it a little bit12:22wrong. So this one here from earnings12:24watcher is always an excellent calendar.12:26Bitcoin price now, we did see of course12:28a spike up cross correlation. That is12:30gold, silver, Bitcoin, all these other12:32things all hit technical resistances or12:35supplies at the same point but still an12:38encouraging thrust and I am watching of12:40course and I'm sure you're interested to12:42see what flows are doing. The last 2412:44hours I did update them and I saw that12:46most of them are kind of slowly12:48negative. So that basically means that12:50we're in a holding pattern until the12:51next breakout happens or possibly we see12:54bad flows come in but for now it's just12:57like a little trickle of sell outs12:59coming through in the flows. Which13:01market are we tracking the most this13:03year? Well, I think it could be the13:051970s. A lot of people also looking at13:072007 as being a interesting overlay. Of13:11course what tends to happen with markets13:12is if they go bad,13:14you might actually know the stats13:15already. They go bad more in the last13:17quarter of the year. So December in13:19particular actually a pretty bad month13:21historically through the real history of13:24the markets but October, September, you13:27know, this is where we are right now.13:28Could we be just going up, down, up,13:30down, up, down, up, down? And then the13:32real risk is of course around midterms.13:34Nobody's Everyone's talking about it,13:37but it's it's clearly a confusion point13:39for many. Guys, if you're enjoying this13:41video and you want to find out a little13:43bit more about what we do over at FX13:44Explained Academy, then check out of13:46course our newsletter one chart, one13:48story, one market lesson. Always good to13:50have you guys. Linked comment or pinned13:52comment down below. Make sure to sign up13:54there. And what have you got to lose?13:56You know, you're learning something. I13:57also share some of my history in terms13:59of the things that I've learned and and14:03really observed over the years of14:04putting tens of thousands of hours into14:06these charts. And I think that's always14:08cool. Let's start here with actually14:10talking about software for a moment14:12because software has been the talk of14:14the town in the last month. And the14:17thing I think that's worthwhile14:18observing here on markets is that14:20software's of course going up while14:21semiconductors is failing. And this is14:24what people suspected for a long time.14:26If semiconductors pull back or hardware14:28pulls back, that software might benefit14:31from that. And so far it's kind of14:33sitting around this resistance, getting14:34close to the top. And depending on14:37which particular software ETF or sector14:41you're looking at, some of them are even14:42making new all-time highs. So clearly14:46people are seeing the real-world14:48application into some of these LLMs into14:51software. CRM was of course the first of14:53that. Now let's talk about bonds though14:56because JP 1 years and 2 years, look at14:58them go. They are accelerating. And this15:01is going to put a lot of pressure on of15:02course the markets in general because as15:05you guys know, if we have yield15:07breakouts15:08and they start to get a little bit wild,15:10that can put pressure on the Federal15:12Reserve, pressure on the monetary15:14system. And I don't think this is to be15:16sniffed at, especially the 10-year. I15:18mean, the 10-year has Look at this15:20weekly. This big wick rejection. Got15:22lots of wicks. It's going for that 4.815:25and you know, it could be even going15:26towards the 4.9 level. It's showing us15:29that there's an inflation here. So, what15:32tends to do better there? Well, there's15:34a reason I think energy is is kind of15:36coinciding with this. But, 10-year, as15:39you will note here, has that we're at15:41the sideways. We're in breakout of a15:43fairly tight range and you've got to be15:45paying attention, especially if this15:46happens on the weekly charts. Let's have15:48a look at treasuries. A lot of people15:50are going to say, "Well, treasuries must15:51be failing."15:53They're going to have to fall down. It's15:54interesting, it's the 10-year breaking15:55out the 20 and the 30. If I go back over15:58here and I put a US 30Y on, you'll note16:01that it's going up, but it hasn't quite16:02gone to the fear of the unknown yet. So,16:05treasuries are holding okay, but again,16:07they're just stabilized down near these16:09lows. So, it's not enough to think,16:11"Wow, I I I I love treasuries uh because16:14as we Well, as I've observed anyway,16:16most of the time markets like to push16:19the central banks around the world to16:21really see where their pain point is.16:23Then, when they've got it, they tend to16:24attack it. Uh so, that's what happened16:26with of course the Euro Swiss, if you're16:28familiar with that story in the past. In16:30terms of risk on, risk off, I have been16:32playing around with a couple of stats16:33here. IWM versus Spy, so that is the16:36smaller caps. Look at them, they're16:38continuing to decrease. That's actually16:40showing us that the market's starting to16:41price in a risk underneath and that risk16:44is in companies that have bad debts, in16:47companies that uh also levered into the16:49market. So, things that I'll be watching16:51over the next kind of weeks. Look at KRE16:54here, regional banks. They're starting16:56to also weaken off and it's not16:58happening in all of them. Look at XLF.17:00Okay, it's declined, but it hasn't17:02actually fallen off a cliff. So, we're17:05actually seeing rate sensitive markets.17:07Look here at home builders, rate17:09sensitive markets falling off as well as17:11we're seeing air airplane companies as17:14well falling off due to the high diesel17:17prices plus also the cost of living. So,17:19these things are actually showing up in17:21the charts. Not that many people are17:23We've all talked about them for ages,17:24but remember who cares about what you're17:26talking about, it's when does it start17:27to rock up in the charts that's most17:29important and that seems to be coming17:31through a little bit here. XLV, this is17:33healthcare. You can see here it's a17:35series of higher highs and higher lows17:37at least for now and this has come down17:40to a pretty important decision here for17:42the bulls and the bears at around that17:43daily 20 moving average. So, tends to be17:46a defensive but it's an interesting17:47level there. Let's now move over to17:49semiconductors. Semiconductors are still17:51stuck within the range of the big put17:53supports at 540 and of course the call17:57resistances. So, no real changes here on17:59semis. I've also been tracking of course18:01the Cosby. It's down 0.2% today. Still18:04stuck in a range. We've already seen the18:07assets under management that is retail18:09basically fleeing these sectors because18:12of the margin requirements, the new18:14changes plus also the mental fatigue.18:17So, they'll be basically just sleeping18:19for a while and Nvidia is holding up18:21pretty well as it just has bonkers of18:25profit and of course they just up their18:26prices and people are just like18:28eventually you know these prices aren't18:30going to hold cuz that's the nature of18:32capitalistic markets, but18:34wow, are they able18:36>> [laughter]18:37>> to make a lot of money and I say a lot18:39of money because even though the stock's18:41not moving much, you know, if you were a18:43fundamental person, you'd be looking at18:44it going what is this? This is crazy18:46stuff because it just really did live up18:49to everything that's people had been18:51pricing in. It's a kind of good lesson18:53of Wall Street tends to be pretty good18:55at figuring out things relatively early.18:57They've got those Einstein boffins and19:00they're sitting there working out these19:01spreadsheets for the future.19:04And it tends to show up pretty pretty19:05cleanly. So, you really do start to see19:08it. Let's have a look here at gold19:10versus the rest of the market. so you19:12can see gold here kind of finding that19:15resistance. It's come down to that first19:17anchored VWAP kind of area that we19:18talked about, the daily 20, and it's19:21held for now. And it's the same thing19:24here when we look at GLD, we can see19:26that we're stuck between kind of calls19:28and puts on the zero DTEs, and in19:31general, if we look at the silver as19:33well, daily 20. So, these things run in19:35usually uniformity. We're seeing Bitcoin19:37as well kind of sitting around that 7819:40to 80,000. They're effectively in pits19:42or holding patterns for now with the19:44next decision. And you you wouldn't, you19:46know, you wouldn't be surprised to see19:48silver finding a bit of resistance19:50around here. US oil about to potentially19:52break a new high, but the story of19:54course has been in stocks. XLE bouncing19:57off the 20 moving average. If we see19:59here, diesel price just hit a new high20:02in terms of oil refineries. So, this is20:04a significant concern because you go to20:06a weekly here and look, it's not exactly20:10super weak. Look at the volumes as well.20:11The volumes are actually huge, which is20:13a concern cuz it means everyone's on20:14board these party trains or whatever20:16they're doing. But at this point is a20:19series of higher highs and higher lows,20:21and there's no sign of weakness yet in20:23these markets, especially when you look20:25at everything that's going on20:26geopolitically. Let's have a look at20:28copper. It's still growing, so it's kind20:30of showing that government spend, CapEx20:32spend, everything that everybody's been20:34saying is still okay. So, it's a real20:36strange market because you've got oil20:38up,20:39you've got copper up, and then of course20:41you've got generally speaking debt up.20:43So, yeah, we're living in a debt-driven20:46society. We always have been, but the20:49real question is how much productivity20:51comes from AI and profit because that20:53ultimately20:55piles into the stock price and you end20:57up getting those higher multiples. So,20:58for now, copper certainly an improvement21:00last 24 hours. You can see it hasn't21:03closed above 67521:05for a very long time, so it's a little21:06level I'm watching over the next 2421:08hours. We'll bring that back. What about21:10US 500? Bad-looking rejection. Again, it21:12hasn't been the index that's that21:15interesting last couple of months. We've21:17We've discussed this many, many times.21:19In fact, you could argue as a21:20shorter-term time frame trader that this21:22is a little bit bearish-looking. The21:24problem is, of course, you got your21:26weeklies and your monthlies are still21:28hugely bullish. So, it's kind of like,21:30you know, there's there's a high, low,21:32high, high, lower, low kind of pattern21:33here. Uh and we're seeing a similar21:35thing in the Qs. But, what is happening?21:37We're stuck between a whole bunch of21:39options levels. We've got put supports21:41at 700 now uh for the net expirations.21:44We've got call resistances at 725, 730.21:47So, you're basically trapped in the21:48Nasdaq. You're trapped in the S&P. It21:51really has been a market outside of that21:53in terms of underneath the hood. For I21:55bit for Bitcoin, you can see here again21:57call resistances all over the place.22:00Should we break and close above these22:01levels, then many people will see that22:03as what we call positive gamma, which is22:05a slight positive for markets. And, of22:07course, we'll be watching that one as22:09well over the next coming days as we are22:11currently in reject, rally, reject,22:14rally, reject, rally. And, we often call22:16that a pullback in time or a pit.22:20So, for now, guys, the markets, they're22:21very strange thing in terms of they're22:23pretty much what you would expect in22:25late cycle. That is pretty good earnings22:28or exceptionally good earnings. The22:30question is really where top earnings22:32are at. We say this year three things:22:34IPOs, IPOs, IPOs, earnings, earnings,22:37earnings, and bonds, bonds, bonds. They22:40all tend to be very important,22:42especially if you're in a later stage22:44cycle, which can last for 1 to 2 years.22:46And, probably about a 1 year into it at22:48this stage. Guys, make sure to subscribe22:50if you enjoyed today's video. Please be22:52aware as well, we do see, of course,22:55some volatility potentially here Friday22:57due to nonfarm payrolls. And, if you22:59enjoyed what you saw, then come on over23:01to the FXE community. Obviously, we've23:04got the Market Masters Club. We'd love23:06to see you there, where I do like live23:08streams for the opens as well. And join23:10up our newsletter. One chart, one story,23:13one market lesson. Thanks so much, guys.23:14I'll see you in the next one. Bye for23:16now.
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