Transcript of THEY BOUGHT.
TraderNick
0:00So now that the Federal Reserve has0:02hiked interest rates, what are the0:04chances that gold is actually near a0:06bottom and is there the possibility that0:10the Fed interest rate hikes are very far0:13from done and that we could actually see0:15much lower gold prices? Because I will0:18say this, if the Federal Reserve is0:20starting a very aggressive uh hawkish0:24campaign against inflation, if that is0:27the narrative, then we should probably0:30expect gold to move lower. Historically0:32speaking, if you want to talk about0:34periods where gold price has really0:36struggled, especially like following the0:38crazy inflation that was seen in the0:40United States back in the 70s and 80s,0:44one of the things that absolutely sent0:45gold into a terrible draw down and0:48actually like a 25, 30-year sideways0:51price action move was effectively the0:54Federal Reserve getting aggressive on0:56inflation. And I mean very aggressive0:58raising interest rates to you know1:00massive massive high levels uh which1:03ultimately did kill inflation but it1:05also took out the economy and gold went1:07sideways for a very very long time. Are1:10we in that regime going into 2026 2027?1:14I personally don't think so. And I'm1:17going to map out here why I actually1:19still am in the camp leaning uh that the1:22Fed, while is positioned to and may1:26continue a couple of hikes, uh I still1:30think that the most likely scenario is1:33that hikes, if they do occur from here,1:36will be limited. And I'm still not fully1:38convinced that we are going to see1:40several more rate hikes from here. Is it1:42possible that we see a bit of a1:44oneandone or a two rate hikes before1:47sort of the end? Because what we need to1:49understand is if you're a trader who1:51watches gold, if the Federal Reserve1:54stops hiking rates or pauses or just1:57decides not to continue to hike rates,2:00that would be incredibly bullish for2:02gold because recently part of the reason2:04gold has effectively come under pressure2:06is the idea that the Fed is going to2:08hike rates. I mean, you really have to2:10look no further than what's going on2:11with the 2-year yield to kind of get the2:14idea. The 2-year yield is screaming at2:16the Federal Reserve to hike interest2:18rates. Inflation is concerning. But one2:20of the biggest counterpoints that I2:22think is very valid and have been making2:24on my own YouTube channel here about2:26gold is that uh the inflation concept is2:32largely contributed to by what's going2:34on in oil. And I want to talk about this2:36because it's really important. The2:38Federal Reserve, obviously, we've heard2:39this many times on my channel and many2:41other people saying it, they can't2:43control oil prices. So, hiking interest2:44rates does not solve the biggest problem2:46in the room, which is spiking diesel2:48prices and gasoline prices. And so, the2:51Fed can't do anything with their2:53monetary policy tools to stop that side2:56of things. Now, you could make the2:58argument that they are trying to control3:00what they can control. And I actually3:02want to show you guys this really quick3:04because I think it's a really good uh3:06conceptual thing to point out here. If3:08we take a look at the CPI, scroll down.3:10If you're an EdgeFinder user, check this3:11out. We've been adding these new AI3:13summaries to various uh data points for3:15you to better understand what's going3:16on. But I want to show you this. So3:18upward pressure on inflation is largely3:20contributed to by gasoline, shelter,3:22food away from home, select services,3:24etc. To the Fed's credit, you can make3:27the argument that any calming down of3:30inflation through economic uh price3:33pressures could be helped like by3:35shelter, food away from home, etc. Like3:37maybe there's select services like if3:39you squash the inflation in there by3:42raising rates. That's arguably a big3:44part of it. But let's not forget here3:47this little section showing that3:48gasoline index rose 3.9% month-on-month3:52accounting for over 1third of the total3:54monthly increase. Meanwhile, downward3:57cooling inflation is actually kind of3:59promising like in terms of like the the4:01inflationary aspects that would make the4:03Fed not hike rates too much more. uh you4:05have several other areas motor vehicle4:08insurance goods x energy year-on-year4:11trend like core CPI is not in a terrible4:15diabolical situation it is really truly4:17the gas price stuff and so that's4:20actually in some ways it's like okay so4:22inflation4:24is up but the thing to read through here4:27is that it is largely centered around4:30the conflict in the Middle East so if4:32the conflict in the Middle East ends4:33let's just be optimistic for a second4:35and say say that we get some positively4:38developing headlines and there's4:40negotiations that are happening again4:41and oil drops sharply. This is yet again4:44another thing where I think we need to4:46be open-minded to the idea that these4:48yields could come down very very4:51quickly. That being said, the trend is4:54up and so the conflict in the Middle4:56East continues to rage on and yet gold4:59is kind of defying gravity in the sense5:01that you know the yields are going up up5:03up and away and gold's kind of holding5:06really impressively sideways. Now I am5:08still long gold. I have a long trade5:11open. I also of course people always5:12love to point me out they're like you5:13shouldn't be trading gold. You should be5:15holding on it. Well, first of all, I've5:17actually made more money trading gold5:19actively than I have passively holding5:21it. So, that's just not for everyone5:23because most people are not profitable5:25traders and probably are better off not5:27touching the active side of things, but5:29just for context, I think that there is5:31really excellent ways to take active5:33management with gold. Personally, that5:35is my opinion. You may disagree with me,5:37and that's perfectly fine. But if you're5:39a passive precious metals person, here's5:42the thing. You have to remember that5:44gold does not go up in a straight line5:45all the time. Long-term, yes, there's a5:48myriad of reasons why I think precious5:50metals can continue to move up higher.5:51But could they go sideways or down for5:53two years? Sure, they could if the right5:55macro scenario happens. Here's why I'm5:58still kind of not fully convinced that5:59that is the case. The conflict in the6:02Middle East, I think, is actually, you6:03know, this is just again kind of a6:05personal opinion on this. Um, I think it6:08is more likely to find some kind of6:10resolution and exit ramp from the Trump6:11administration because it stops them6:13from pretty much all of their major6:15goals. That is getting mortgage rates6:18back under control. Um, you know,6:20keeping control of uh the government. We6:22have a midterm election coming up. I6:24think that there could possibly be some6:26efforts to try and change the direction6:28on things. But let me also show you here6:30in terms of my read through on the6:32economic data side of things. We also6:35have to think about something with gold6:36that is very important. Rates are6:39rising, interest rates are rising, but6:41is it because the economy is red-hot?6:43This is something that sometimes people6:45get confused about. You've got yields6:47moving higher, but is this there's6:49usually two reasons why uh yields move6:52higher. One is concerns about inflation6:56and uh fiscal spending and and you know,6:59all that sort of stuff. And the other7:01one is strong growth. Now, which one do7:05we have going on? Do we have a lot of7:08inflation or do we have a lot of strong7:09economic growth? And I think it's7:12actually a a good mix of both, but I'm7:16going to say it's much larger this one.7:19Now, is the economy in a good or bad7:22spot? That's the, you know, never-ending7:24question. Um, I would actually say a lot7:26of our indicators are are reasonably7:28okay for for uh the actual state of the7:30economy. Like for example, services and7:32manufacturing PMIs are in the mid-50s.7:34That's actually fairly strong. Retail7:36sales numbers, these numbers were7:38actually stronger than expectations.7:40Although consumer confidence is a bleak7:42spot. Consumers are in a rough spot and7:44not feeling great. So that is perfectly7:47uh valid to point out. Non-farm was7:49actually reasonably strong. This is7:50bearish for gold. Uh ADP employment7:53change was bad. That's good for gold.7:55Jolt's job openings bad. Good for gold,7:57right? Right. And these are comparing7:58expectations and we're looking at the8:00surprise factor. From a macroeconomics8:02perspective, we have a pretty mixed bag8:05here. We have inflation, which is hot,8:07but that is again subject to this 2-year8:09yield. If that trends lower, that could8:11very quickly become a tailwind, whereas8:13it is currently more of a headwind. On8:16the inflation side, PPI was higher than8:18expected. CPI is neutral because it came8:20in line with expectations. On an8:22absolute basis, 3.4% 4% is not great,8:25but it's certainly not, you know,8:26horrible. We could be much higher.8:28Encore CPI, as I mentioned, 2.4%8:31year-on-year is a lot better than where8:33headline CPI, which is driven largely by8:36food and energy costs, uh or or is8:39largely, you know, volatile subject to8:41volatility in those areas. Um that being8:44said, jobs data pretty mixed. Economic8:47growth is mixed. You have some good8:49spots, some bad spots. Um institutions,8:51they love gold, man. They just keep8:53buying the stuff. Look at this. We just8:55hit 90.3%. That's the highest long to8:58short ratio basis. Let me show you this9:00here. Coot data. I'm going to pull up9:03here. Gold. And take a look at this. We9:07see institutions continuing their trend9:10of just buying gold over and over and9:13over, building a larger position. And9:15I'm just going to narrow this down to9:16like the last nine months so we can see9:18this. Notice how institutions have9:21pretty much they've been building open9:23interest. You see how this red plus blue9:25bar is growing. That is showing you open9:27interest is rising. Simultaneously we9:31have this yellow line showing long9:33percentage rising as well hitting a9:36fresh high. So we have institutions who9:38are just loving the gold dip. I guess9:40they keep buying it and buying it and9:42buying it. This is not my opinion. It's9:44not subjective. It is objectively the9:46CFTC's data here showing that9:49institutions they like gold right now or9:51at least they have futures long9:53contracts open. So I find that kind of9:55interesting. What that maybe tells me is9:57that perhaps there is a little bit of a10:00you know willingness to say okay the Fed10:03may hike once or twice just to sort of10:05be in accordance with the bond market.10:07But the case for rapid rate hikes I10:10don't see it. Here is why. Remember how10:13I just talked about inflation and growth10:15being a thing? Well, if we go back to10:17our asset scorecard, and I'm going to10:19pull up um well, I'm going to keep it10:22right here. Again, we don't have a10:24red-hot amazing economy that we could10:27say, yeah, we we've got yields ripping10:29higher because the economy is strong and10:31because we have some expected inflation.10:33In which case, I would say that's10:34straight up bearish for gold and you10:36probably want to get out of the way of10:38it in my personal opinion. But that's10:40not the scenario that I see here right10:41now. The jobs market is mixed. Um, we10:44had a good like if we take a closer look10:46and again this is very important like I10:48cannot. We're getting into the macro10:50here today. It's very important that we10:53distinguish what kind of rate rise are10:55we looking at? We're looking at a10:56situation in which yields are moving10:58higher. But is it because the economy is11:00redot and growing? In which case you11:02probably don't want to be a big fan of11:03gold. That's a strong dollar play.11:05That's a, you know, stability in the11:07realm type of thing. You probably don't11:08want to be a gold bull in that11:09environment. or is it more concerns11:12about fiscal spending and inflation? And11:13I think it is a little bit more of the11:15latter there. The issue though that I11:18keep coming back to is that inflation is11:21driven largely by what's going on in11:23oil. So if you really want to know where11:25gold is going to go in the short term, I11:27think it's very largely dependent on11:29what happens with yields in oil. So I'm11:32watching those two things really11:33closely. I would like to see from a11:35technical perspective, uh, and I know11:37I've spent a lot of time doing macro11:38here, so I hope you've enjoyed it today.11:40Okay, if that has been helpful to you,11:41smash that thumbs up button, subscribe.11:43Oh, and hey, if you want to try out the11:44tool that I'm using here, it's called11:45EdgeFinder. We are absolutely throwing11:48the kitchen sink at building this thing.11:50We are working as hard as we can to make11:52this thing the best tool for macro11:54traders. Uh, think of it as like a11:56Bloomberg terminal that doesn't cost you11:5820 or whatever thousand it is a a year12:01to have access to. Our tools are cheap,12:04cheap, cheap cheap in comparison. We12:05offer very affordable rates. If you're12:07interested in checking out our tools, we12:09are constantly building what I believe12:10to be the best value on the market for12:13macro traders. If you are a trader who12:15wants to take this stuff seriously but12:17lacks the tools to do so, EdgeFinder not12:20only shows you the data, it helps to12:22interpret what it is actually saying.12:24And that is the most important part12:26because I've seen all sorts of different12:28stuff where it shows you different12:29graphs and fancy things like that. But12:31what I want to see is I want to see12:33something that actually pulls it all12:34together and gives me context. What is12:36this data generally telling me about a12:38market that I care about? So, you know,12:40I've shown you with gold I'm feeling a12:42little bit neutral because I can't12:43predict oil prices right now. They are12:45all over the place. The Middle East12:46conflict. While I have my speculations12:48that I think that there may be some12:50potential good news coming, I have no12:52idea when that will be. My theory is12:55kind of loosely on the idea that you12:56have midterm elections and I think that12:58the administration will want to try and,13:00you know, save face and look good for13:02the midterm elections. So, that's my13:04opinion is that there could be some good13:06news sooner rather than later. I also13:08know that Scott Bessant, he's a smart13:10dude. He's a markets uh hedge fund13:13manager guy. I also think that he may13:15know of September seasonality being13:17something that works against us here in13:19the next few weeks. Perhaps that that13:22backpocket uh exit ramp in Iran deal may13:25be suggested to the president to happen13:27sooner rather than later. That's just uh13:30that's what I would do if I was in his13:31role. I would know September. We know13:33this the stock market, you want it to13:34look good for a midterm election. And13:36I'm not telling you my, you know, I'm13:38not I'm not here sharing like my polit13:40political take. What I'm telling you is13:41regardless Republican, Democrat, etc.,13:44human beings who want to win votes, they13:46may time things deliberately. And so13:49what you're looking at here is13:50seasonally. I guarantee you Scott13:52Bessent who is a markets guy knows what13:55I'm looking at here before I say it13:57here, which is seasonality is14:00historically bad during half the second14:02half of September. The time to drop some14:05kind of buck the trend type of news14:08would probably be in a window like this.14:11Just throwing it out there. Again, I may14:13be totally off. I'm not telling you what14:15to do with your account. As always,14:16please understand this is not financial14:18advice. Trading is super high-risisk and14:20you probably shouldn't do it because14:21trading is literally very difficult and14:24the average person is better off not14:26touching it. I'm just sharing my14:28opinions here as always, but uh let's14:29keep going with them since people seem14:32to like them. So, I very much appre14:33appreciate you watching and spending14:35some time with me. Um I'm by the way,14:37just bit of context, I've been doing14:38this stuff for just about 10 years and14:41it really takes a lot of time and effort14:43to get good at this stuff. Uh, and and14:46getting good at this stuff does not mean14:47you're right all the time. There's many14:49times where you will watch my videos and14:51a couple days later you'd be like, "Wow,14:52Nick, you are dead wrong on these14:54ideas." The good news is trading14:56profitability does not come from being14:57right all the time. It comes from14:59managing your risk when you are wrong15:01and letting winners get really big every15:03once in a while. At least for me, that's15:04that's my style of trading that I like.15:06Some traders like the base hits. I'm15:08personally more of a home run type of15:10trader, looking for big runs that don't15:12come that often, but occasionally they15:14do. and they pay for all the losses and15:16more. So, with that said, while we've15:18got seasonality pulled up, uh I want to15:21mention also gold has a decent swing15:24coming back up, at least historically15:26speaking, in the month of October.15:28That's very promising. So, I'm sitting15:29here and I'm neutral on gold, I think15:32it's worth mentioning that when it comes15:33to gold, uh I would like to see this15:36thing actually show some material15:38breakout. We had a nice move on Thursday15:40and Friday. Um I would like to see from15:42a technical basis we've held support15:44here15:46pretty choppily if that's even a word15:49right you've had the big move up you've15:51had the pullback on rate right uh rate15:53rising fears you know rate hikes etc I15:57would really like to see from a15:58technical perspective um I'd like to see16:00a breakaway move this coming week it16:02would give me a lot more technical16:04resolve to the upside thinking okay16:06we've held that 61.8% 8% retracement. Uh16:10we've bottomed around that 4,000 level,16:12that big psychological number. But I I16:15want to reiterate that I think from a16:17technical perspective, it's important16:18that we start making some progress here16:20because if we don't if we start to break16:22through this level, uh from a technical16:25analyst perspective, my thought process16:27is you probably head back down to retest16:29levels like 4,000. And is that the end16:32of the world if it happens? No. In fact,16:34I think uh from a longer term16:35perspective, if you're somebody like16:37myself who simultaneously trades and16:40also has some investments in gold and16:42gold miner stocks, etc., um I'm not16:46opposed to it. If it happens, it16:47happens. I I cut this trade. I'm out of16:49there for a loss. But then I welcome the16:51idea of like if you come back down to16:52these lows and maybe even beneath that,16:55then there may be that opportunity to16:57start building a longer term position in16:59some of the stocks that I like17:00personally. So that's [snorts] I'm17:02keeping an open mind. And I think it's17:03important to do so. I do think17:05directionally we we lean bullish. We had17:07a nice little shift in nature. We had17:09the rate hike uh the hawkish hike and17:11yet it wasn't enough. The bottom the17:13market actually bottomed on that news17:14which I took as a kind of a positive17:16signal. Um I also think that from a from17:19a perspective of yields I I generally17:22think that they look a little stretched17:23to the upside. Maybe that's famous last17:25words but you know my thought process17:27here is I think that has some room to17:29come down on any sort of progress in the17:31Middle East. any sort of negotiations,17:33any sort of um there was actually kind17:36of something that was mentioned. I17:38shouldn't I should say this. Um China17:41and Saudi Arabia discussed uh the idea17:44or or the the expansion of the Houthi17:46stuff in in Yemen and um China actually17:49requested that that be be squashed. And17:52I actually thought that was a huge move17:54because not wanting the conflict to17:57expand and we know this this war is17:59ultimately sort of China versus the US.18:01That's the proxy stuff that's been going18:03on for a long time. Um not wanting to18:06expand it for for you know economic uh18:09destruction reasons probably um for18:12China. Obviously they're they're a huge18:14trade partner with like half the world18:15if not more than that. they don't want18:17necessarily a huge financial crisis to18:20come out of all of this because that18:22doesn't help anyone. Uh that concept,18:25right, is something that I think the18:27market glombmed on to. It's like, okay,18:29that's deescalationary, if that's a18:31word. Um and I do think that there is18:33probably some more of that coming. I18:35think that the the conflict in the18:36Middle East has has gone on for some18:38time. We'll see. Uh maybe I'm completely18:41wrong in thinking that. Uh but at this18:43point the war is, you know, coming up on18:46what 10 months or so, nine months. It's18:48been quite some time here. Maybe not18:50that long. Uh but you you get my point18:52here. Um and I think that there may be a18:54exit ramp from the administration. I18:56talked about this at length on my uh on18:58a video that went out on the A1 Trading19:00YouTube channel. We talked about whether19:02or not there is a exit ramp for the Iran19:04war coming. If you want to listen in on19:07that, head over to A1 Trading on19:09YouTube. It is my company's YouTube19:10channel where I had a conversation with19:12another gentleman. His name is Chris19:14Pver. We had a great conversation about19:15that. Um, but yes, I think uh the other19:18thing is seasonally we have a decent19:20period of upswing coming for gold. At19:22the same time, if you do start to see a19:25flip in some of the macroeconomic stuff19:28and in any way, if you see, you know,19:30this this two-year yield start to cool19:32off a little bit, uh, or if our next19:34round of inflation data points come in19:36better, it's not a crazy concept. We're19:38very neutral here for this to go19:40positive or for it to go more negative.19:42And I want to reiterate that if this19:44thing goes more negative, if my score19:45goes significantly more negative, I will19:48probably be looking for an exit ramp in19:50the short term for gold. Uh now, and I19:52want to clarify something because people19:53will say, well, you know, you're you're19:55changing up your mind. Well, that's what19:57you're supposed to do when you trade. If19:59you're somebody who passively invests in20:01gold, that's very different than someone20:03who actively trades it. The bullcase for20:06gold in the next five years does not20:08mean that it's going to go up every20:09single week. And that is an important20:12distinction if you're trading it versus20:14if you are investing in it. Let's talk a20:16little bit about the dollar here. Dollar20:17had a really solid week, moved higher.20:20And believe it or not, I actually do20:22think that the dollar looks pretty20:24strong right now. Um, at least as of I20:27have last checked. If we take a look at20:29the US dollar here on our scorecard,20:32this is a much more interesting reading20:33than gold because right now what you can20:35see here is the dollar's got some20:36synergy across multiple areas at the20:39same time. Technicals look very clearly20:42good. The dollar index looks really20:44solid, right? You've had this this20:46downward funk for a little while, these20:48lower highs, lower lows, and we broke20:50that pattern, right? We actually came20:52out with some some heat to the upside20:55this past week. um and actually broke20:58back above the 100 psychological level.21:01We did reject off the 100.6 level. Um21:05and so I do think that the dollar may21:06actually have some room to continue. Uh21:09and I want to clarify this because I21:11know a lot of people will say, well, how21:12can you be bullish on the dollar and21:14bullish on gold? Well, recognize that21:17actually they can move in the same21:19direction. Someone in my comment section21:21made a really good way. They they wrote21:23it out really well. Remember that the US21:26dollar like it can go this way. Gold is21:30stronger than the US dollar but that the21:32US dollar is21:35uh stronger than global currencies.21:37Right? This can coexist where gold goes21:40up because the dollar goes up more than21:44other currencies. Right? So in this case21:48all currencies weaker than gold but gold21:51or or dollar worker stronger than other21:54currencies. this can coexist. So21:56understand that there is not a perfectly21:58inverse correlation. If the dollar goes22:00up, gold does not necessarily have to go22:02down and vice versa, right? Um you have22:05to understand kind of how the dollar22:07index itself works. It's a comparison22:09against other global currencies. The22:11yen, for example, weakened this past22:13week. That's not necessarily something22:16that is uh bearish for gold. In fact, if22:19anything, it might be bullish for gold.22:20The carry trade continuing, that's22:22global. you know, we're not going to see22:23some sort of global margin call stuff.22:26That might actually be more positive for22:27gold and for the dollar at the same22:30time. So, understand your stuff here. If22:32you know your macro, you know that the22:34dollar and gold do not have to move22:35inversely to one another. The dollar is22:37a comparison of other fiats. The gold22:41chart is sort of gold verse all fiat.22:43Even though gold is quoted verse22:45dollars, it really is impacted by all,22:47you know, kind of global uh economic22:50data and fiat currencies. Anyways, um22:53the dollar index here from a technical22:56perspective, you look really good here22:57above this 100 level. I would say this23:00sort of uh break to the upside kind of23:02fizzles out. If you lose this 99.623:05level, if you start to fall back beneath23:06that, then I don't think that that idea23:09is uh worth sticking around for. Euro23:11dollar to the short side. This is a23:13trade idea that I've been looking for.23:14Um, if I get down to the 4hour time23:17frame, I have a idea that I like here,23:19which is a retest of this 38.2%23:22retracement uh or the 61.8% retracement.23:26Both of these areas look like uh23:28possible sell zones that I will be23:29watching. And if I take this trade, as23:31with all trades that I take, I'll be23:33sharing it inside of our VIP Discord23:35signal service. Inside of the group, I23:38share every trade position that I am23:39personally in with entries, exits, and a23:42full breakdown behind why the trade was23:44taken. If this would be something useful23:46to you, then come join us inside of the23:48group. There's a link in the description23:49down below to where you can sign up. And23:51subscribers get extra discounts with23:53promo code YTV.23:56So, check it out down below. And YouTube23:58VIP or YTVIP gets you an extra discount24:02at that checkout point. And signal24:04services kind of get a bad rep in the24:06industry and for a totally valid reason.24:09A lot of times signal services are sort24:10of a promise that they're going to make24:12you rich or they're going to like, you24:14know, copy and paste my stuff and you'll24:16make a bunch of money. I am absolutely24:18not promising you that. And if that is24:20something that you are looking for, copy24:21and paste, no effort trading, you are24:23not welcome in the group. You're just24:25really not meant to be there. Our group24:27is for traders who are interested in not24:29just seeing the trades and copying and24:31pasting them, but rather understanding24:33what's going on as an educational24:35service, reading along why trades are24:37taken. We talk a lot of macro on this24:39channel. And I know because I I, you24:41know, watch other people. It can24:42sometimes be frustrating when you hear24:44people talking about this stuff, but24:45they don't give you any sort of24:47concrete, you know, play playby-play24:49ideas or things that they're actually24:51doing with their own portfolio. The24:52other thing is I show my personal24:55brokerage account. And if you would like24:56to check that out, it's on our website.24:58It's also on my YouTube channel. I show25:00you that I actually trade and I've25:02actually been able to consistently make25:04returns over the long term with the25:06strategy that I share. So again, backed25:10by real results and not promising25:12anything, you know, easy money or25:14anything like that. Is absolutely the25:15opposite. We are a group of downto-earth25:17traders. If you like this stuff, if you25:19take macro and and swing trading25:21seriously, it might be the right group25:23for you. So check it out down below in25:25the description if you are interested in25:27learning more. Speaking of that yen25:29stuff, let's talk a little bit about25:30that. So the yen, uh, kind of an25:33interesting week for the yen, I have to25:34say. You had a situation, and again,25:38this is another one. If you look up A125:40Trading on YouTube, that's my company.25:42Um, I had another clip that went out25:45where, um, uh, Allen from our team, he25:49posted a, uh, or he gave a commentary on25:51how the yen stuff went this week. and I25:53joined him midway through the video.25:54It's a it's a highly good conversation.25:56I highly recommend you take some time to25:58go listen to that after this video. But26:00anyways, Allan and I talked about it and26:02it was basically long story short, um26:04the Bank of Japan hiked rates, but they26:06guided and they hiked in a way that did26:09not, you know, convinced the market that26:11there was going to be a sustainable26:13keeping up with other central banks and26:16their hikes. Remember, currencies trade26:18relative to one another. And so if the26:20US is hiking interest rates and26:22currently the market thinks the dollar26:24is going to strengthen and and the26:26dollar and the US is going to hike rates26:28several more times. Well, Japan is26:30saying, "Yeah, we'll hike rates, but26:33we're more like a slow and steady hike."26:36Now, what does that do to the divergence26:38of these two interest rates? Well, let26:39me show you because I've got a a chart26:41that might be worth looking at. Okay, so26:43we're looking at some interest rate26:45projections that are out there in the26:47world. And I think this is really kind26:49of interesting. If you take a look at26:50the US and you look at green for Japan,26:53it is expected for many central banks,26:55most global central banks are more in26:58the process of hiking rates, right?27:00They're looking at hiking rates in27:01response largely to the inflation that27:03we've seen the last, you know, year or27:05two. Okay. So27:08if we were talking about with UJ, right,27:11dollar yen, the yen strengthening, a27:14large piece of the thesis there was like27:16Japan's going to hike rates and other27:18central banks are sort of on pause. But27:21now the issue is that Europe, the UK,27:25the US, they're all talking about hiking27:27rates. And so Japan hiking rates means27:30less if everyone else is hiking too. And27:33so the yen, yes, it's strengthening on27:35the idea, oh, they're going to hike27:37rates, but if everyone is else is hiking27:39rates, remember currencies trade27:41relative to one another. If the US is27:43hiking rates, if Europe is hiking rates27:45and the we're kind of back to the status27:48quo of a similar d there's not like a27:52basically if this was narrowing right27:55this gap between the rate offered by the27:58US and Japan that would be more28:01destructive to the yen carry trade. But28:03because we have a situation in which the28:07US is hiking at a comparable, if not a28:09faster rate to Japan, the dollar looks28:13strong relative to the yen. Do you see28:15where I'm going with this? I hope this28:16is making sense. And if it is, do me a28:18favor, hit the thumbs up button down28:20below. If I see a lot of likes on this28:21video, I'll know that this concept is28:23helpful, resonating, and you would like28:24to see more of this sort of content.28:27Today's video, by the way, I know we're28:28going super in-depth, so uh if you're28:31enjoying it, hit that thumbs up button.28:32It's the best way you can let me know28:34you want more of this level sort of uh28:36context breakdowns etc. Anyways, I think28:39that what this does is it it shows you28:41know basically we're still in status quo28:43land which is yen looks longer term28:46still weak. We don't have anything to28:48change the narrative. If there was a28:50situation where the Fed was holding or28:52maybe even talking about cutting rates28:54and Japan was hiking rates then yeah we28:56could see some really serious big moves28:58lower in the dollar yen. But right now I29:00just don't see that as the base case.29:02Maybe that will change but for now I29:04actually think more likely it kind of29:06goes sideways um because there is some29:09desire some intervention from the J uh29:11the Japanese as well as the US Treasury29:13etc trying to keep the yen in in good29:15condition but simultaneously I don't see29:18this massive um you know yen strength29:22because of you know a a convergence in29:26the interest rates. I see that kind of29:28not being the case right now. So, I know29:30we're we're a little off offt target29:32here. Let me keep going because I've got29:33a lot of stuff to look at. The S&P 50029:36had a reasonably strong week given the29:40outcome of the rate hike. Right? We saw29:42a hawkish hike yet the stock market29:44actually bottomed out on that news and29:46moved higher. This this playbook is not29:48new. A lot of times you do get the buy29:50the rumor, sell the news, or in this29:51case, the sell the rumor, buy the news.29:54When it comes to the S&P 500 though, I29:56am not super positive right now. Um I29:59wouldn't say that I am outright looking30:01to short this thing aggressively at30:02these levels but I am getting a very30:05bearish reading on edgefinder. Now again30:07this is why edgefinder worth mentioning30:09is not a trading system. This does not30:13tell you go out sell right now S&P is30:16going to go lower. It's not what this is30:18telling you. It's telling you that these30:19conditions the many different things30:21that EdgeFinder checks are leaning30:23bearish right now. what I'd be looking30:26for to confirm a bearish setup. For me30:28personally, I'm watching this level here30:30around 7560,30:33let's call it, if we actually were to30:35come down to this area again. And had we30:37moved like this, I probably would be in30:39a short position right now. But we did30:41not. If we would see this type of let me30:43draw that better. If we were to see some30:45kind of break of structure here, some30:47break of this previous level of support,30:50then I'd be looking at this thing as a30:52okay, I want to sell any strength30:54because this thing looks like it is just30:55falling apart. But right now, to the30:58bull's credit, they were able to hold30:59this level really decisively and31:01actually put in the very nice green31:03bullish engulfing candle on Thursday,31:05followed through on Friday. This was a31:08pretty nice reversal that actually I31:10would like to see how this thing plays31:12out from here because this again could31:14be a sort of leg moving higher. I would31:17not be shocked at all just after kind of31:19we get the clearing event of the Fed31:20hikes and and now the market's like,31:22"Yeah, you might hike a little bit, but31:24we don't think you're going on this big31:26massive hiking campaign and earnings31:28growth is still good. The AI data center31:30stuff is still still going strong. And31:33meanwhile you have services PMIs and31:36manufacturing PMIs for that matter are31:38in the mid50s like growth projections31:41are still there. Now again I know that31:43the consumer is not in a great spot but31:45from an absolute output basis of the31:48economy the US growth looks fairly31:50strong versus its peers. We can actually31:52take a quick look at that. Okay. So here31:54is our edgeinders economic strength31:57index chart. Uh, and I think that this31:59is worth mentioning like the US dollar32:01is still looking fairly strong here.32:03Scroll down. We can actually compare32:05some of the metrics. Look at this. US32:07getting a pretty solid reading largely32:09because economic growth here 1.5%32:12is much higher than other places. Right?32:14Think about this. Like Japan, Australia,32:17the UK, Canada, they've got much less32:20impressive GDP growth to the US. Now,32:22you might say, well, that's because the32:23data center buildout. And I would say,32:26yeah, exactly. And so like the growth is32:29still here in the States. Now, you may32:31disagree. You may think the AI trade is32:32going to fall apart at some point and32:34and that may be valid. It probably will32:36eventually, but who knows exactly when.32:38I certainly do not. And right now, the32:41growth is here and the growth is strong.32:42So, in the meantime, you know, as a32:45trader that follows the trend, like I'm32:47not trying to predict exactly when the32:48AI bubble is going to pop. I think it32:51will pop, but it could be two years from32:52now. You could have another you could32:54have another 100% gain in the stock32:56market before the stock market crashes.32:58I'm not saying I think that's exactly32:59how it will play out. I'm thinking33:01you're probably going to get volatility33:02along the way, but that very well could33:05be the case. And if you don't believe33:07me, let me show you a chart that may33:10surprise you if you go back in time. And33:12we're going to really blast to the past33:14year to I wasn't even looking at stocks.33:16Let's just go back to 2000 right now. a33:21lot of people there there was um a33:23standing Fed chair in 1996, the year I33:25was born. Um check this out. In 1996,33:29there was a Fed chair, Alan Greenspan,33:32who basically said that he thinks that33:34the stock market is showing signs of33:36irrational exuberance. The Fed chair,33:39the smartest economist, or supposedly so33:42here's the deal. It doesn't matter how33:43smart you are. Markets are really hard33:44to predict even for brilliant people. So33:47if you think your your calls are33:49sometimes bad, guess what? The smartest33:51people in the world get it wrong. The33:53leaders of the economic system get it33:56wrong because he said that the stock33:57market basically looked overbought. It33:59basically looked like a hype train. And34:01it was he was actually correct. But look34:04what happened before the stock market34:06crash took place. Basically he called34:10the bottom about what 10 years later or34:14whatever, like eight, five years later.34:16Look at this. In 1996, it kept going.34:20The stock market doubled again before it34:22did ultimately crash violently. So, the34:25point is, you can be right about saying34:28the AI trade is a bubble. But what if34:30we're still halfway there? What if we're34:342/3 of the way there? What if we're 3/4s34:36of the way there and that last fourth is34:39the part that rips the hardest? Now, I'm34:42not again I I'm not making that34:43prediction. I I'm not an expert on how34:45long the data center buildout is going34:48to last, but right now, couple things34:51that stand out to me on why I don't want34:53to be caught, you know, aggressively34:55bearish in this market is that the Mag34:577, they're back. Look at this. Mag 7 hit35:00a fresh all-time high briefly on35:02Friday's trading. These are the35:05hyperscalers. These are the ones35:06spending money on A and the AI and the35:08stock market is sort of starting to35:10celebrate them again. you if you're a35:12bear on the AI trade, you want to see35:14this thing tanking, right? You want to35:16see this thing struggling to hold any35:18gains because a lot of times the leaders35:20in the current new brand new technology35:23falling are an early sign that the rest35:25will follow.35:27That's historically speaking very common35:29where you get the leaders falling much35:31sharply before. But right now, look at35:33the leaders. They're back, right?35:35They're back to the highs. So again, I35:37get the concern. I get the wanting to be35:40worried about AI. And I'm not telling35:42anyone, again, I'm not telling anyone to35:44go out and buy a bunch of AI stocks and35:46h Nick knows what's going to happen. I35:48certainly don't, right? I'm just telling35:50you a lot of the signs that I'm seeing,35:52decently strong economic growth. US35:55still central to the AI, you know, trade35:58tells me I don't want to be a bear in35:59this market for a long period of time.36:01Short-term, could there be some short uh36:02short setups? I I think perfectly fair36:05to look for that. Again, edgefinder is36:07not geared towards long-term investing36:09necessarily. It certainly can be useful36:11for looking through information and36:13building a bias, etc. But in the short36:15term, it's mostly or or the edgeinder is36:17primarily built around being more of a36:19short-term uh system. Right now,36:22short-term, what are we seeing? Well,36:23macroeconomics a little bit mixed.36:25Sentiment is kind of where we're losing36:26some score. There is a lot of uh36:29short-term bullish sentiment that's come36:30into the market giving us a contrarian36:32bearish signal. Let's take a look at36:33some sentiment here really quick. So, if36:35I go crowd sentiment put call ratio,36:38this is what is sort of being programmed36:40into EdgeFinder's scoring matrix. We'll36:42let it explode. And what you can see36:44here is crowd sentiment went bullish on36:46S&P 500 on Friday. So, people kind of36:48chasing the long side again. So,36:50short-term getting a little contrary and36:51bearishness. Let's take a look at gold36:53while we're on the subject um just to36:55see where that's at. So, crowd sentiment36:56went from very very pessimistic on gold36:59to now more neutral. So that's giving us37:01neither a plus or minus score towards37:04overall readings. I'm going to check oil37:06really quick cuz that's been37:07interesting. All right. Interesting. Oil37:09continues to get a lot of pessimism, a37:11lot of uh betting against oil going on.37:13We can also see this information. Some37:15people prefer this one as well. This is37:17the net options volume. It's just taking37:19a look at call volume on the day versus37:20put volume. Notice how this actually37:22went positive, but it's in nowhere near37:24an extreme level. So I wouldn't call37:26this a strong bias one way or the other.37:28Let's just flip through our charts37:29again. Gold uh getting much more neutral37:33here. So, not neither an extreme in37:35either direction and then just checking37:38oil as well. Keep an eye on our37:40commodities. Oh, by the way, we do have37:42um we do have treasuries in here, too.37:44Treasuries pretty neutral for the time37:46being. Bitcoin. We can check all sorts37:48of stuff here. Let's just see what else37:50we have. I'm looking for US oil. There37:53we go. So, US oil continues to sort of37:55have that that pessimism built up in it.37:57So, there's a little bit of this. By the37:59way, again, I mentioned this earlier.38:01Get access to EdgeFinder. Try it out38:03down below in the description if you are38:05interested. Uh, all of the information38:07can also be found on our website. I hope38:09this video was helpful to you. Today,38:10was pretty in-depth. But before we go38:12here, let me just mention that today's38:15video is sponsored by AAP. And if you're38:17a trader outside of the United States38:18considering a new brokerage, then check38:20out AAP for yourself to see if they're a38:23good fit for you and your trading style.38:24They're currently offering a 20% deposit38:27bonus for a limited time for subscribers38:29of my YouTube channel. Simply scan the38:31QR code that you see on the screen right38:32now or click the link in the description38:34down below for more context and details.38:37Thank you guys very much for tuning in38:39to today's video. I hope it was helpful38:41to you. Remember, trading is high risk.38:43Please be careful out there. Take it38:45slow, learn your stuff, and and38:48basically show some respect to the38:49market. A lot of times people, they are38:51trying to chase back losses that they've38:52had. Don't do that, right? approach this38:54thing with with respect like any other38:57industry. If you tried to become an38:59engineer or a doctor or a lawyer39:01overnight, uh people in those respective39:04classes would uh kind of laugh you off39:06the stage. And people treat trading very39:08differently. They think it's some sort39:09of uh quick money stuff and it really39:11really truly is not. This is a craft.39:13This is a skill and it takes a lot of39:15time and effort to build. So if you're39:17here for the long term, smash that39:18subscribe button. Thanks for watching39:20guys. We'll see you in the next one.
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