They're Buying Yesterday's Dip, Was This The Set Up For The Santa Claus Rally?
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00:00 That was a dip and they're buying to dip.
00:04 Was that our final setup for the Santa Claus rally?
00:08 - I don't know.
00:09 This market just will do whatever you think
00:11 it's not gonna do.
00:12 And I mean, every bear through in the towel,
00:14 including Mike Wilson, I mean,
00:17 maybe it was just the fact that we're just overbought
00:20 and massively overbought.
00:22 We've talked about that being, you know,
00:24 a possible issue going into the Santa Claus rally
00:28 is that they have front run the Santa Claus rally.
00:30 That's the only issue I saw
00:32 because FedEx, they were seeming to shrug off.
00:35 I thought they would have sold it off earlier
00:36 if it was gonna be FedEx.
00:38 FedEx didn't even get a sniff of a bounce here,
00:40 but that caught a lot of people.
00:41 I mean, it's a key reversal in a lot of indices,
00:44 IWM, key reversal.
00:46 It's something to think about for today.
00:49 Today is a very important day here, Joel.
00:53 Very important.
00:53 - You said that about yesterday too, Dennis.
00:55 And I agree with you. - Well, important days.
00:58 (laughing)
00:59 But after yesterday's sell off,
01:01 you don't wanna see follow through here.
01:03 You don't wanna see people come in as like,
01:05 "Oh, you know, I got spooked yesterday.
01:06 I'm gonna use this rip to sell here this morning."
01:09 You do not wanna see that if you're a bull.
01:12 You wanna see them buy the dip relentlessly
01:14 and just get a lot of yesterday's losses back.
01:17 I don't know who's gonna win here.
01:18 Again, seasonality keeps me bullish here,
01:21 but maybe they're gonna pull the rug
01:22 on the seasonality traders.
01:23 I mean, this market has found a way
01:25 to punish the maximum amount of participants.
01:28 And maybe that's what they were doing yesterday.
01:30 Let's bring in money, Mitch, to get these thoughts here.
01:31 - Yeah, let's get Mitch in here.
01:33 - He had some longs, I had some longs.
01:35 I got stopped out on some stuff yesterday.
01:36 - Stop, stop, stop, stop, stop, stop, stop.
01:38 - You can't fight that, man.
01:39 You know, as a trader, it's all about risk management.
01:42 And you start seeing no bids out there.
01:45 Like, you know, S&P is falling as quickly as they did.
01:48 Biggest sell off we've had in a couple of months.
01:51 You gotta be cautious.
01:52 So Mitch, what do you, first,
01:55 and we have a million theories on this.
01:57 You know, what was the reason for yesterday?
02:00 I jokingly say it was Mike Wilson.
02:02 And if you don't know Mike Wilson, obviously,
02:04 analyst Morgan Stanley has been wrong all year.
02:08 Every time he gets bullish, the market sells off.
02:10 Every time he gets bearish, the market rallies.
02:12 Back in October, he started getting his bear thesis back on.
02:15 That was the absolute bottom.
02:16 Well, two days ago, he said stocks can move higher from here.
02:20 So he basically threw in the towel on his bear thesis.
02:22 Zero hedge push, put that out there as well.
02:25 And you know, here we are the next day
02:27 and the market sells off substantially.
02:29 So jokingly, you know, I was even saying to Mike Tuttle,
02:32 we need a Mike Wilson inverse ETF here
02:35 because you want to pick on Kramer?
02:37 Nobody has been more wrong than Mike Wilson.
02:40 - Yeah, yesterday I should have known something.
02:42 The chat was just buzzing when I made any type of comment
02:46 to the bear side.
02:48 - Oh yeah, they hate bears.
02:49 - You know, that's like one of the indicators
02:51 that I use also when the chat is like 99% bullish.
02:56 And then everybody coming on, all our guests are coming on
02:59 and they're extremely bullish.
03:02 I mean, well, there you guys have it.
03:03 The whole world is bullish.
03:05 I mean, give me a bear out there
03:07 because I'm here looking for it.
03:09 And then the funny part was, I mean,
03:12 this is one of those examples
03:13 where I'm glad I had some stops set
03:15 because I was not watching the market
03:17 when that downturn happened.
03:19 I was editing a video.
03:21 And so if I was not having those stops set,
03:25 let's just say today would be
03:26 one of those tears type of days.
03:28 So I think that everyone was riding the wave
03:31 and this was finally the wave that starts to break what?
03:34 A lot of the momentum traders.
03:36 And I think that now we need to be watching to see
03:39 if they start to break like
03:41 known exponential moving averages.
03:44 I keep up with the nine
03:46 and that's still slightly down.
03:48 I mean, that's more towards yesterday's low of 402.
03:51 So that's one thing that I'll keep on watch.
03:53 I think what we might go into
03:55 is a little bit of a sideways period.
03:56 - Yeah, we haven't gone sideways in a long time.
03:59 And that's a good point.
04:01 After we had the big ramp up,
04:03 you can see in November, December.
04:05 It's funny because you guys got stopped out
04:07 on some longs.
04:10 In the morning, I said,
04:11 I'm looking at that FedEx report and I'm like,
04:13 you know what?
04:14 I'm not gonna sell in the hole.
04:15 I'm gonna wait till we go unchanged.
04:17 Right, I figured that close,
04:19 that might be the closing high for the move.
04:21 Well, I did and it goes 10 handles against me.
04:24 And I don't like that for risk rewards and stuff.
04:28 I'm like, okay, this market's never going down.
04:31 Because that was the plan.
04:34 But fortunately when it started to come down
04:37 later in the day,
04:38 I was able, that just goes to show you, man,
04:40 shorting, and I tell you that as all the time,
04:43 shorting with something's going up is so tempting.
04:47 But when the momentum's going against you, it's hard.
04:51 And when you catch it on the way down, it's much better.
04:54 But it was an interesting day.
04:56 I totally agree with you, Dennis.
04:58 This is an important day.
05:00 We bounced right back.
05:01 We bounced, we're back up 23 handles.
05:05 People are just saying,
05:07 whether it was a zero dated options
05:09 or whether it was the cheat comments.
05:11 What was the reason, right?
05:13 - That's what we all want to know.
05:15 And of course, yesterday's morning, this was reported.
05:18 Some are saying that this is the reason
05:20 and you guys in the chat weigh in
05:22 and what you think is the reason why we sold off here.
05:25 But of course, Chinese President Xi
05:27 bluntly told President Joe Biden
05:29 during the recent summit in San Francisco
05:32 that Beijing would reunify with Taiwan,
05:36 will reunify Taiwan with the mainland China,
05:39 but that the timing has not been decided yet.
05:41 And this came from three current and former US officials.
05:46 One thing that is definitely gonna be on the talk out there,
05:49 just political talk is,
05:51 why didn't Biden come out with this information?
05:54 - I know, I'm up for that.
05:55 - Why did it come out from three current former US officials?
05:59 I mean, if they knew it,
06:01 I mean, then maybe a lot of people knew this.
06:03 So I think that's another thing
06:04 that we need to be thinking about.
06:06 And the only thing that can change this up
06:08 is I think this exact situation.
06:12 - I mean, this is the boogeyman
06:14 that keeps China stocks depressed.
06:17 Everybody can analyze, why is China lag so much?
06:20 Why is the FXI continue to make new lows, which it does.
06:24 I mean, you look at this index
06:27 and the FXI making new lows,
06:29 Alibaba can't seem to get a sniff at all.
06:33 PDD is the only stock it seems like over there
06:35 that gets a rally.
06:37 Why do the China stocks stay down?
06:39 Because of this risk.
06:40 This risk is so exponential because the day,
06:44 if it happens, the day China invades Taiwan,
06:48 the FXI doesn't fall 2%.
06:50 It doesn't fall 5%.
06:52 It falls 30% that day.
06:55 If that happens, the day that China invades Taiwan,
06:57 the FXI falls 30% that day, in my opinion, not three, 30.
07:02 So I mean, this is the risk.
07:04 So yeah, they're all cheap, but we don't know.
07:07 Like, and if he keeps talking about unification,
07:09 if he keeps talking about, you know,
07:11 eventually, you know, bringing it back,
07:12 that's basically implying an eventual invasion
07:15 and coming in.
07:16 And then we're into World War III going on,
07:18 and then it's a whole different can of worms.
07:21 So that is the risk.
07:22 Mitch, you've identified,
07:23 this is the risk of this overall bull market.
07:27 The Fed is going to be behind this market.
07:28 It looks like we got interest rates.
07:30 We've got a lot of reasons.
07:31 But if you see problems
07:33 with the Taiwan-China situation escalate,
07:35 that could derail the market.
07:37 Now, yesterday, there was commentary,
07:39 but to Joel's point,
07:41 those comments came out at eight o'clock in the morning.
07:43 We didn't sell off at eight o'clock in the morning.
07:45 We sold off at two o'clock in the afternoon.
07:47 So unless you think the market is completely blind
07:50 and just ignores comments for six hours,
07:52 that was probably not the reason for the sell-off.
07:55 And sometimes, folks, there isn't a reason for a sell-off.
07:58 Sometimes it's just the fact
07:59 that we're just massively overbought,
08:01 which we are on every indicator.
08:03 We've run up so far.
08:04 Everybody's bullish.
08:05 Mike Wilson's thrown in the towel.
08:06 I've thrown in the towel on bearishness
08:08 because it's just where we are.
08:11 And seasonality sets up that it looks like
08:13 it's an easy slam dunk
08:15 to just own stocks for the next eight days.
08:18 Maybe they're gonna pull the rug out from that scenario.
08:21 We've seen it before,
08:22 and that's what the market likes to do,
08:24 is punish the maximum amount of participants.
08:26 What would punish them the most
08:27 is a sell-off during the Santa Claus rally.
08:30 And that period starts, I believe, Friday?
08:32 Yeah, tomorrow.
08:33 It's the five days before the two days after.
08:35 It starts tomorrow.
08:37 So the Santa Claus rally is officially, I believe,
08:39 if I'm doing my math right,
08:40 supposed to start tomorrow.
08:41 Yeah.
08:42 If they pull the rug out during the Santa Claus rally,
08:44 that would catch a lot of money managers off guard.