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In this daily editorial, we are joined by TG Watkins, Director of Stocks at Simpler Trading and Editor of The Profit Pilot. TG provides a deep dive into the technical setups defining the current market landscape, characterized by aggressive volatility and shifting geopolitical narratives.
Key Discussion Points:
Stocks and Symbols Mentioned: S&P 500 ($SPY), Homebuilders ($XHB, $NAIL), Oil ($USO), Gold ($GDX, $GDXJ), Silver ($SLV), Bitcoin ($BTC), Wolfspeed ($WOLF), Iren ($IREN), Cipher Mining ($CIFR), Hut 8 ($HUT), NVIDIA ($NVDA), Tesla ($TSLA).
Click here to visit the Simpler Trading website - https://www.simplertrading.com/
Click here to visit TG’s site - Profit Pilot - https://www.profit-pilot.com/
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Investment disclaimer: This content is for informational and educational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security or investment product. Investing in equities, commodities, really everything involves risk, including the possible loss of principal. Do your own research and consult a licensed financial advisor before making any investment decisions. Guests and hosts may own shares in companies mentioned.
Hey, everyone. Welcome to the K E report daily editorial Monday, March 16th chatting with TG Watkins TG is the director of stocks at simpler trading also editor of the profit pilot website.
I'll post a link to TG's profit pilot website in the show notes TG last time we got to chat was down in Vegas at the money show conference.
We were talking about markets a lot at that conference and I kind of want to follow up on what we were talking about there.
One thing when we had dinner together is that you'd mentioned that you'd gone into almost fully cash.
It sounded like you were trying to pick certain spots in these markets.
Unfortunately, really since that date, which was March 24th, we have seen these markets continue to move down almost moved down more aggressively.
Yes, in a very choppy manner. Boy, oh, boy, it's a percent, if not a little bit more movements, either way.
It seems like at least for the S&P, but definitely a downward biased here question is, are we reaching some sort of a short term lower?
Is this just the start of weakness for these markets?
Yeah, so going back to when we last spoke with each other in Vegas for February 24th, yeah, the market's been coming down.
It's been really choppy. It's not been the easiest way to even trade it to the downside.
I think mostly because large market participants were kind of aware of what's going on and saw this coming.
I mean, a lot of us have seen the weakness coming.
It took forever for it to kind of work its way into the indices itself.
And so if you look at the poke call ratio and if you look at just how many puts people have been buying, they're all hedged.
And so the way that people have been describing it is that they've been monetizing their hedges.
So every time we get a drop, they cash in their puts and then that helps to drive the market back up.
Then they re-short the market drops, they cash in, they drive it back up.
And that's what we've been seeing for easily last two, maybe even three weeks.
And I think that's part of the why the market hasn't just crashed and rolled over like that.
Some names, of course, have gotten hit really hard.
You know, I'm looking at home builders, for example, we can talk about that a little bit more.
But I'm starting to see that things have, I believe, gotten to extremes.
And not to dive too much into the politics about this.
And I'm being agnostic as far as the political side of this.
But I think we need to understand that all of this is basically because of the Iran conflict and what's going on over there.
Which if I could say something, it kind of feels like it's a self-inflicted situation.
Very much like the tear of tantrums.
And I think if we were to try to understand Trump and objectives and all that,
he does watch the market, we know that.
And he, I think he's trying to do something that is short-term.
And he knows that there's some pain going on with the market, which is why last week,
I think it was that when he came out with the press conference,
he said, you know, this thing's going to be wrapped up pretty quickly.
The market really ran for what, two, three days, it gave it back.
But that was, I think, an indication of what the market was feeling as far as that.
And it started to tell me that I think the market says,
okay, we don't think this is going to be really deep and involved
and probably not going to spill over into something huge.
And we just need to kind of buy it our time until it's all said and done.
And then last week, there was more news about maybe other countries coming in to help
clear up the straight-of-our-muse and the market jumped up on the overnight of that too.
Again, it sold off, but again, kind of news on that.
That was also where we saw crypto really start to spike and shoot up on Friday.
It pulled back, but now we're up again.
So that's what I'm saying is I'm starting to see some clues out there.
That number one, we're getting into some extreme low areas.
The internals are telling me that too.
The VIX, whatever, I don't know, a week or two ago,
popped to 35.
That tends to put in a low and then we've been kind of retesting it.
And now I think more news is starting to come out
where, in Trump had a press conference this morning,
the market's kind of not really responding to that today.
But I think that what I'm starting to do is looking for two things.
One, I see some areas of the market that are extremely oversold.
And I think if good news starts to really come out
about the Iran conflict, those oversold things can spike right back up.
Or two, I'm trading things that have actually held up fairly well
despite the market going down.
And those are my two paths.
And I do think that the market is a forward-looking thing
where it's kind of looking around.
It's okay, a lot of stuff as far as military for Iran has been destroyed.
And so if they do continue to say strong things
or threaten all that kind of stuff, maybe that's not a real concern
because well, most of their offensive stuff has been destroyed.
And again, I don't know everything about this kind of stuff,
but I'm trying to think what the market might be thinking.
And so that's why I think this week is important to see
if the narrative starts to change, if the market believes the narrative.
And if we can actually start to see more energetic moves to the upside
because I've been seeing spurts of it, includes of it.
And I really just looking for follow-through.
Well, TG, let's do a couple examples.
You mentioned homebuilders as one of sectors that are pretty oversold
that maybe you're looking at as a potential reversal if the news improves.
And then a couple examples of relative strength,
the sectors that have held up better than the other sectors.
Yeah, so XHB, which is the homebuilders,
if you look at Nail, which is the leverage ETF of homebuilders.
So this is the thing that I talk about on my YouTube video,
which is profit pilot, if anybody wants to go there.
I've also really, really been studying leverage ETFs for the last several years.
There are things that the leverage ETFs tell us that most other stocks don't.
And so I did just teach a class about that if anybody's interest on that.
But it's these clues with the leverage ETFs that I'm seeing in the homebuilders
and I'm seeing in crypto, which are telling me that I want to start being long
in those areas and that I think they're telling me that the bottom is in for them.
And so if we look at homebuilders, they've really fallen off a cliff over the last three weeks.
And I think that's because interest rates really went up.
You know, you look at the TLT went down, TNX went up
because of all the concern and fear of what's going on out there.
But now I'm looking at XHB homebuilders being extremely oversold
and very, very far outside of the lower limits.
And I'm starting to see it turn around.
In fact, I started to see it Friday and I'm seeing some a little bit of follow through today.
As long as we can hold this level and start to move up,
I think the low is in for the homebuilders.
I think that's also going to say the low is in for the market.
And if we continue to see crypto to do its thing,
which has been making it making higher lows for the last several weeks.
And now it's up even more on kind of the news out there.
I think we're starting to see this work.
And of course, then we need to see oil come down too,
because that's the other thing that the market has been inversely keying off of.
As oil continues to go up, that's more fear, that's more problems,
that's more inflation, that's more cost, we need that to come down.
And I believe we could be seeing USO double topping.
Okay, that's going to ask the homebuilders.
Crypto, they don't usually get brought up in this same conversation.
So it does really seem like a selective market.
But on that oil aspect, a lot of people are saying this war is going to end.
Oil does need to correct back into who knows the mid 60s or a range somewhere around there.
But other people are saying it could take time because of the
straight-ahorn moves being shut down.
Just in terms of the chart, you set a potential double top.
Where's the lower level?
Where do you see oil settling out if it really has top dope here?
Yeah, I don't trade oil.
So I couldn't really say that.
But if I were to just look at the charts, USO,
if we're using that as our metric for right now,
double top that about 120.
It's extremely up there.
I think the first, you know, if you just look at price action,
and again, I need anybody who's listening to me on this one, understand,
I don't trade oil and there's a lot of political stuff that's going on.
So this is just me trying to talk from a technician standpoint.
I think if we just look at how price has shot up,
there are really no areas of support because it went so fast.
When you see this typically with stocks,
it's called single time-braining.
They just go straight up.
Well, they can also come straight back down relatively speaking,
because it didn't build any layers of support.
So I think if we start to come down,
the next level would be about $106.
That would probably be very temporary.
And then I'd actually probably look and see if this thing can come down quickly
to say 95.
And then maybe we dabbled there for a little bit.
And honestly, if this all really gets resolved,
I mean, it should come right back to where it was,
which might have been the breakout point back to $80 or $81.
And I think that would also signify that basically the market
thinks everything's back to normal and it's fine.
So we'll see if that kind of happens.
TG, what do you think about something like the US dollar,
which seems to have gotten some of the safe haven bid during this,
even more so than bonds and other markets,
but just thinking about the safe havens,
where do people go to hide out?
What do you think about the greenback?
I don't know if that is...
I just don't understand if that is a safe haven.
I know that other, like, gold safe haven oil,
just because that was an expensive thing, you know, supply demand.
I just don't know if the dollar is considered a safe haven
in this kind of situation.
I'm wondering if for whatever reason the dollar started moving up,
it actually did, like, if you guys look at the dollar sign DXY,
it actually did an undercut late January and, yeah,
undercut of all the prior lows.
And then it flipped back around.
I mean, all of my price patterns set up there.
If you were trading this like a normal stock,
every single technical setup that I used to go long,
all fired between the daily and hourly chart.
So we could see it coming.
I just never traded and that's something to know.
But right now, here we are.
The dollar is now back at its previous high from November.
And I think it's kind of extended.
So I kind of actually would see this starting to unwind.
And maybe that's because, as you said,
it's a flight to safety or whatever the reasons this moved up.
But I think that maybe as the tensions calm down,
we could actually start seeing these things,
everything kind of unwind to their other directions.
Since you mentioned gold is a flight to safety,
why haven't we seen gold take off during this war?
It's actually been kind of under pressure,
same with the gold stocks.
Well, we kind of did.
I think a lot of people,
well, again, there's multiple reasons going on with gold
and silver, why they're going up.
And they've been going up for a long time already.
And I think that a lot of probably smarter market participants,
like institutions and hedge funds,
probably saw the whole Iran situation coming a little bit.
And that might have explained why we had that huge
run up at the end of January.
They were kind of all trying to get ahead of it.
It did pull back to the daily 50.
And then it ran up again.
You got to think that gold did go up until March 2nd.
And I don't know, when was the beginning of the start of the conflict?
It was kind of around there, wasn't it?
And I know that perversely,
that a lot of times the market will actually bottom
once a conflict starts,
because it's the unknown becoming known at that time.
Once a conflict starts.
And that's when I think that gold has actually started to unwind.
Because now everybody kind of knows what's going on.
They see what's happening.
Maybe they know it's the short-term thing.
They kind of see that Trump's not putting boots on the ground.
I know that there's 2,500 that are kind of moving that way.
But we're not getting into a full-fledged war.
He did everything remotely with missiles
and blowing up all their military stuff.
And so now tensions can start being unwound the other direction.
So I'm actually short some of the precious metals.
Because this has been a huge move.
And I've actually been looking in this area
for gold to start coming down at least to its weekly 21.
This is just too much of a move.
And I think it needs to consolidate.
And as far as I said with the flight to safety,
if the tensions with this Iran thing start to come down,
then gold could actually,
money could come out of gold.
Because I think the risk to reward right now
is not favorable on the long side.
I think it's just overbought.
And if risk starts to come back on,
Bitcoin's starting to go up.
Homebuilders could go up.
We could see money start coming back into tech.
And if that happens,
then the smart money is going to look at gold.
And be like, yo, this is a huge move.
It's probably not going to go that much higher right now.
Let's take our profits from gold and go put it into other places
that have been beaten up and they're likely to go up.
So I think we should start being prepared
for that kind of rotation out there.
Is that how you feel about gold stocks as well?
Is something like GDX or GDXJ?
Absolutely.
Yeah, look, GDX basically did a double-top.
I know that it went higher.
You know, March 2nd did make new highs.
But it really rolled over hard after it did that.
So that was a bear, a bull trap
where it just pushed past the double-top for two days
and then rolled over.
You could see the same phenomenon
with the semiconductors when they topped.
You know, it shot up a little bit
then rolled over and came back down.
But yeah, you look at GDX.
It's been getting hammered for the last two weeks.
You're right.
It really has been, it's been going down.
And now it's that threat of really going
back to where it started this year.
And you consider just how different that would be
from last year after three months.
I think GDX was up like 30 or something percent
in the first three months.
Now it's up marginally still.
So maybe it gets some levels.
I'm just curious too.
It's also below a lot of daily moving averages
or some of the key ones.
What are you watching in that aspect
in terms of maybe where a bottom could be for GDX?
Well, I don't know about that yet
because actually GDX is sitting on its weekly 21
right now, which could act as a temporary floor.
But if this trade continues to unwind,
I think, don't be surprised
if there's a bounce at the weekly 21.
But after that, then start looking
to see if price actually fails the weekly 21.
Because again, I think if all this tension
and global geopolitical stuff starts to calm down
and the tech trade and the Bitcoin trade
and the rest of the market, equities
actually starts coming back alive.
Then I think the need or the desire to be in something
like gold or GDX or silver starts to unwind a little bit
because they've already had massive moves.
And it just comes from a risk-to-reward standpoint.
Where's the opportunity?
Well, the opportunity is probably not
going to be in precious metals for right now.
It might take a few months for this to all pull back,
find support, and then if it's going to go, start again.
And if there's that period of time
where the precious metals are kind of not the hot thing
for the next few months, well, money's going to leave
and it's going to go find all the other beat-up stuff
that suddenly is starting to come back now
that tensions have eased.
So this is why I'm saying we just need to be prepared
that there could be a rotation
and that's what I'm looking for.
We're looking for this to continue to happen.
I can't exactly confirm it right here,
but I'm starting to see the beginning stages of this.
And what we want to see until the next time
we have our interview again, three weeks from now
or something, we just want to make sure
that everything I'm saying right now
continues to actually happen in that way.
And if it doesn't, and then the war keeps going,
well, then we need to change our narrative.
But I think if the war starts to wind down
and the conflict kind of dissolves away,
we're going to see everything flow back
into what we consider more normal.
So more of a rotation trade underway
until further notice, until we see more of the data come in
and how things progress on the fundamental side
and on the news side.
But when you look at something like silver,
it just doesn't seem like a strong of a chart as gold
until while gold may be rolling over
and has more weakness, longer term,
if you look at a weekly or monthly,
it's a lot stronger chart.
Silver is more of a basket case here.
Are you worried at all when you look at the silver chart
or I guess you could do the SLV if you normally use that,
that it could roll over in a bigger way than gold?
Generally, yes.
Again, I'm not much of a metals trader,
so you guys might actually be better about this.
But when I look back at silver compared to gold
over the last 30 years,
and I just look at their big moves and have this happens,
silver tends to spurt and then kind of fall back down.
While gold, even though it might eventually come down
and give it all back, it tends to hold for a while
because I do think that gold is more of a flight
to safety than silver.
And so people will continue to kind of hang into gold
for much longer before finally letting it go.
And so that's why I would certainly look at silver
probably being more of like a bottle rocket
and then coming back down as opposed to gold
that goes up, hangs out,
and then we'll have to see if the trend changes.
I'm still not saying that the complete trend
of precious metals is over.
Like, we don't know.
I have no people who keep saying that silver
is going to go much, much higher.
And that's possible.
But what I am saying is I think these things
are all overbought right now.
The conflict should be settling down.
I think there's going to be a rotation.
The wrist reward is not there for the precious metals.
The wrist reward is there for equities, Bitcoin,
home builders, the rest of the market that's been hammered
and tech.
And so I think what we should see is some softness
and pulling back of the precious metals
and rotating into other places of the market.
And that could be a big move for silver.
This pullback could be big.
And then we just have to see if it continues to get smashed
or if it just finds support over the next few months
and then goes up again.
Yeah, I appreciate your honesty on that on TG.
I know people are always trying to say,
for certainty where markets are going,
but right now it does seem like very much a wait and see.
Let the markets let the charts tell us
where these prices are going to go.
And it could take some time.
Broadly, does that just speak to this whole market though
where right now it's tough to really get aggressive
with any position.
I guess it's geopolitical, but it's also just the fact
that we've had a number of good years
in a lot of different sectors over the past three-ish years.
And quite frankly, is everything just maybe a little too
overheated and we need some time to digest this all
and find leadership?
Yeah, that's a possibility.
There's been a lot of talk that maybe this year
is gonna be kind of a sideways choppy year,
but of course, predictions are always,
nobody ever gets the prediction entirely right.
You know, I thought this year was gonna start off
a little bit stronger and then of course
the Iran war got in the way,
so that totally changed things.
So I can't say too far out.
I think we just need to, at least in this moment of time,
I think we need to understand why things have been doing,
what they've been doing.
And I think it was risk off
because of the Iran conflict and just tensions
and markets don't wanna be putting money
into risky areas when we have missiles flying.
And if we can hopefully start to see that that actually starts
to calm down and wind down,
then I think the risk on trades could start coming back.
And that's why I'm really looking at crypto
because I think crypto got smashed
and now I think crypto has bottomed.
And the fact that crypto's actually been making higher lows
while the market's been making lower lows,
I think is a really big thing to be paying attention to.
But I also knew that crypto wasn't really going to get going
to the upside and be energetic to the upside
while we still have missiles flying.
And so I think we just need to really see that that calms down.
The market wants to look forward and see,
okay, is this going to resolve itself and wrap up
and start being a non or at least less of an issue?
And then we could start seeing crypto flourish.
And if that happens,
then we're gonna see things like Robin Hood,
SoFi, Microsoft probably,
and maybe some of the software stocks
and even things like Reddit.
I'm categorizing them because they are all extremely oversold.
And if we start catching a bullish vibe to this market,
I see all of those names probably heading up
to their weekly 21s in very short order.
And that's kind of the oversold bounce trade
that I see for now.
Well, TG, you brought up the crypto a couple of times
and I know that you track some individual names there too,
but there's three buckets we've been talking about.
Some are actually the crypto repository.
Some actually have crypto,
but they're actually more power generation,
they tie into AI.
And then some of them are just more crypto adjacent.
So is there any individual names you're watching
that you think in particular would be juicy to bounce on?
Yes, in fact, Wolf, WLF,
it was actually a leader a few weeks ago
despite the market turmoil kind of right around its earnings.
And it made new highs,
but then this market was still challenging.
So it came all the way back down.
It is a very choppy stock,
but really if you kind of look at the monthly and weekly chart,
which I'm sure your subscribers like
because they're probably looking at longer term trends,
the monthly chart is still beautifully intact.
And the weekly chart, despite all the noise,
has actually been holding the weekly 21 very well.
And so if you kind of just look at a bigger picture thing,
yeah, I think this thing has been holding up extremely well
despite what the market's been doing.
And today it's actually up quite a bit
and I think it's going to be following the crypto AI trade
before power generation, as you said.
The next one, Irene, I'm sure lots of people know
about this one.
And while it did have a double top recently
and has pulled back, you look at the monthly weekly again,
it's probably just flagging.
It's just doing a very, very long term flag digesting
these things.
And that's why I think some people have said,
oh, maybe it's just going to be a sideways year
because a lot of things got over their skis.
And now they've had to kind of correct.
But they've had a lot of time to correct.
This market's been correcting.
We've had a lot of tensions.
And if we can move on from those tensions,
we can actually start seeing things perk up again.
And that's why I'm looking at that.
And then, I don't know, things like cipher is a maybe,
yeah, I don't know, a hut, I think is another one
kind of in that territory, you know,
that's kind of hanging in there.
Very, very choppy trying to trade this stuff has been tough.
But if you'd maybe try and invest in this stuff,
then you can kind of look at the longer term.
No kidding, those charts have been choppy.
Wow, just on a weekly basis moving,
double digit percentage wise on some of them.
But hey, TG, you've given us a lot to consider here.
These markets are a whole lot more confusing than they were
last year, a whole lot choppy and maybe we will finally
get a year of slow sideways consolidation.
But even last year, people were calling for that
and boy, boy, markets continue to find.
Let me mention two more things for you
just to leave your members with this as well.
Watch NVIDIA, it has been going sideways for something
six months or more, hasn't it?
And I think if we can start to see this thing
actually get some traction to the upside,
that's going to indicate that the market's happy again.
And I think we should also look at things like Tesla.
For as much as anybody might say whatever about Tesla,
I think we need to know that Tesla over the last week or two
stopped going down.
And I think as of Friday, could be putting in a higher low.
So we need to start watching some of these key important stocks
to see if they actually start getting some traction to the upside
as a barometer for market conditions.
All right, there you go, TG.
Always great comments.
Everyone click that link in the show notes.
Go visit the profit pilot website
and follow along with TG in his trading.
Thanks for your time, TG.
We'll chat in a few weeks.
All right, thanks guys.

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