The Next Big Buying Opportunity May Be Closer Than You Think

[music] >> Okay, everyone. We'll go ahead and get started here. Hope you have a good evening. Good afternoon, wherever you are. >> [snorts] >> And um >> [clears throat] >> we'll use the same format, just kind of go through the broad market. The risk we see, the long-term potential that we see, uh justifications for and I'm going to kind of get into a bit of a thematic issue within the macro. Just to kind of give you some stuff to think about. And then we'll get into some stock charts. So, starting off with the trend. This is the S&P 500 on a very large scale. It's a monthly scale. That's the 2000 top, 2009 low. So, the large decade-long secular bear market that played out as a three-wave pattern. And what followed has been a secular bull market that we're in. And um since since it started in 2009, we've had a multitude of deep corrections. You know, 20% here, like a you know, two 15% drops here in 2016. I mean, the COVID situation was 30% plus. 2021 was a bear market that went down like 25%, I believe. Um Uh but all of them were punctuated with vertical recoveries, right? Just just completely reclaimed all-time highs and kept going. And um though it didn't doesn't look like it on this chart, these were some really powerful moments. Um but when you put it into this context in the big trend, they were your corrective waves in this ongoing five-wave pattern, your wave two, right? Wave four in COVID, bigger wave four in 2021. And since then, we've been in this long overlapping mess that started in 2022. Just overlap after overlap after overlap. And as I've said uh countless times, and I'll continue to say, the pattern that best resembles where we are from 2022 to now is what's called an ending diagonal and it's you know, the termination, the final move of a five-wave pattern. Now, just because it's the final move doesn't mean there's not meaningful gains that [snorts] potentially could be had. I don't think that this secular uh bull market is over yet. I don't think this pattern has ended yet. Um and I'll get into that. Um either I'm looking for like a minor drop now in October, set up a buying opportunity and then we just break out in a melt up, uh and you know, kind of do these large swings up and down uh basically up to a 12,000 around there in the S&P 500 into 2027, 2028, or we see that deep kind of drawdown in wave four now that'll take you sub 6,000, set up an epic buying opportunity and then we get our final fifth wave to 9 and 10,000 in 2027, 2028. Okay? But this is the big picture. And it's important to understand the big picture to know where you are in the trend because what always follows a secular bull market, always, guaranteed, is a secular bear market. Um this is nothing new. It's just a natural part of investing. What is new about this that we're in since 2009 is this the second most profitable secular bull market in US history. Um and so um yeah. So, just keep that in mind, you know, once this ends uh you know, our plan uh it won't change much. We've kind of set up our system to be a very active system. You know, we take gains at highs, you know, we hedge, we're very active, but we try to have some kind of long volatility component of our portfolio, whether it be cash um or hedging. Um and whenever a secular bear market plays out, um, I think that will be crucial. So, now we're going to analyze the ending diagonal. I had to switch to SPY, um, and TradingView. I'm actually not a fan of TradingView at all, and actively looking to replace them. I've been a long-time user of TradingView, but uh, I have meaningful problems with them and just think it's, um, getting to the point where it's not worth it, so uh, that might be coming down the road, but in the meantime, um, I'm using SPY to track the S&P 500. This will give us some volume data, so that the the levels have changed. These levels are according to SPY, and this is what I'm going to be using going forward, okay? So, the green count is what I'm I'm thinking is playing out. Three waves up from 2022 all the way to 2025. The April ZIRP was, um, wave two, then we had five waves up that ended in early 2026, three waves down that ended in March 2026, another five up, another three down. And so, when you take all of this into account, like what we have, big three up, three down, five up, three down, five up, three down, the only pattern that really makes sense without stretching the rules is this green count that we're setting up for this kind of melt up scenario. Uh, we're about to take off in what would be the most exciting part of this entire, you know, ending diagonal, which is wave three of C. Really, wave three of three. Um, so, anyway, >> [snorts] >> um, the other scenario is that this doesn't happen, right? That we see volatility pick up in October, and they start breaking support after support after support, and then we head towards 600 to 566, somewhere around there for wave four, buying opportunity when we get our final fifth wave up into your 900 to 10, you know, 1,000 range into 2027-ish. So, these are the levels that I'm watching. Any volatility that we see needs to hold 731 on SPY. Once we go below 769, this correction has started. And there's a three ways that it's got to break down. The The first one I just said, we're going to get a mild correction 5 7% and it goes down [clears throat] that holds 731, we consolidate, and the beginning of next year's probably going to be gangbusters. We break 731, doesn't mean that the bullish setup is over, it just means this second wave right here is actually going to be coming in right here. This would be about a 10 to 12 13% correction in the S&P 500. Okay? As long as we hold 665 to 650, I'm leaning to this to this green melt up scenario. Um which will either, you know, be what I just showed you. We We hold 731 or we break below 731 and have to hold 665. Either way, it's it'll be a second wave. If we break these levels, then we're in the blue count. Then we're looking for buying in this level right here. Now, based off of the hedge signal that we're following from Wealth Umbrella, um they've set up a pretty remarkable system that would very much likely trigger before we even get below 731. So, we've planned to be fully hedged if the worst-case scenario plays out. Okay? So, now we're going to take a look at this. See this little mess that we've been in since June? Okay? We're going to kind of take a look at this. Cuz I've been talking about this for several weeks and the scenario I've been tracking played out. Okay? So, now I'm on a 65-minute chart. Right? So, wave one um of this third wave ended in June, and we have a one, two, three wave drop into into late June. And since then, we have another overlapping mess of a pattern trending higher. See? Uh this is an ending diagonal. Uh what I It's either a leading diagonal or ending diagonal. It's a diagonal, okay? And so, the green count says it's a leading diagonal, which means it's wave one of this bigger third wave, okay? And what I was looking for was I was looking for one more final high above this 776 in order to complete the fifth wave of this diagonal making firm and that happened. That happened this week. Um they're still incomplete waves. It looks like we should hold today's low and then make one more slight high up into 783 or or somewhere around there, and that will complete wave five of this ending diagonal. Um if we instead break below that 768, we're not getting that fifth wave and we're in that we're in the correction, which I think started for a lot of stocks today, this week. Um but you could see lower highs in some stocks in broad market while the S&P makes one more little high. Either way, it doesn't really matter um for what I for from what I'm uh seeing. Now, what I find interesting is this pattern is really distinct. It's a It's a diagonal, right? You can see it. 1 2 3 4 A B C for five. Made a new high. Okay, but it's happening into this shaded area, which is a cycle I've been talking about for a long, long time. I do cycle work. The thing that's important about cycles is what is the trend going into them? And every one of these weird little symbols that have a different color is a is its own cycle. And you can see how the market would kind of like trend the trend would break going into them, you know? Right here, there's a low. There's the low. There's another high. There's a Whenever they cluster like this, it's usually a big deal. There's another one right there. And we're kind of moving into this big cycle, this kind of lime green one that I've been talking about forever. Last time it showed up was in uh February 2025, then it showed up at the top in July 23, it showed up at the top in 2021, it showed up around the COVID low, it showed up in the 2018 high. It has a pretty accurate history of uh you know, showing up around meaningful times. Doesn't mean it's perfect, but it is a cycle window that I pay attention to and it's happening right now. And so, what happened? We completed a diagonal pattern into this cycle window, which further confirms to me that this volatility is likely starting. Uh and what it unfolds to be, we'll find out by uh by what levels break. Uh what I think will happen is I think the green count that I showed you is likely what's going to play out. Um let me show you this. That we're going to see uh some kind of correction that holds 731. I think that'll happen. Worst case scenario, I think that, you know, we'll get this this version right here before we set up for a move higher. So, why do I think that? Well, let me show you this. This is the financial sector, XLF. It's all your big banks. This is semiconductors. And they typically move in lockstep, you know, but you'll see these periods where they'll diverge. So, in the 2021, semis didn't make a new high, financials did, right? And that followed a period of volatility. Same here. As semis made a a new high into 2023, the July 2023 high, and financials did not. Didn't confirm this new high, it was a divergence, and we saw volatility. So, you can see these periods where they're not moving in lockstep, and they tend to be followed by some kind of period of volatility. Um sometimes they're big, sometimes they're small, but they they whenever you see them not synced up, it's usually a warning sign. I've never seen what we're seeing right now. Um this is a really strange market, and if you're just looking at the broad market, uh it seems like it's a pretty boring market, but if you look under the hood, there's very violent rotations that that's not very normal to see this, okay? So, from here, at the beginning of the year, semis went on a tear, all the way up until June 22nd. And then they dropped about 20%, and during that time they were dropping, financials were going higher, right? So, money was flowing out of semis and moving into financials, uh amongst other sectors. Well, financials topped here in September, and now they're down meaningfully, while semis are back up. So, we're seeing this weird rotation from AI into financials, out of financials into semis. And it's like the market can't make up its mind what it wants to do. Um but it's not just financials, it's the Dow Jones showed the exact same characteristic as financials compared to semis. Uh small caps, industrials, a lot of your value names are um were were catching a bid while semis were getting hit, and now getting hit while semis are catching a bid. And so, to kind of spell this out a little further, if we take a look at financials right now, they clearly look like they're setting up for a bottom. Um this drop right here in September dropped down to the 61.8 retrace, a 50% retrace, which is a very powerful um support. There's more things going on than just Fibonacci stuff here. It's a it's a very strong support. But it's a pretty common place for a pullback in an uptrend to to stop. And look at the momentum indicator. I mean, it's making a brand new low while price is making a higher high. We tend to see that in uptrends. You have to go back to COVID to find the composite index this low on the weekly chart. And whenever you go to the daily chart, you start seeing some pretty meaningful bullish divergences, right? So, you know, everything I see says financials are set up for a low. And I can say the same thing about uh industrials, right? Industrials having this deep drop, hitting major support. Momentum is in in the basement. We're getting bullish divergences on a daily chart. Like that looks like we're setting up for some kind of a low. And small caps are in the same boat. Um Right? So, this drop here in September has a 13 It's a Demark 13. It's an exhaustion um signal, basically saying the trend lower is exhausting out. Momentum is in the basement, and we're catching divergences on meaningful support. So, I look at like the financials, you know, the anti-AI trade as established since June, and it looks like it's about to go higher. But then we take a look at semis, um which is kind of a proxy for your AI. And look at this. So, here's the drop in June. Since since late July, we have a very symmetrical three-wave move. So, this length right here, there's your drawdown, is the same length as this right here. When you see a symmetrical three-wave move, especially on volume that's going lower, it tends to be a B wave in a long ongoing correction. Right? So, I just showed you financials, small caps, industrials look like they're bottoming. Semis look like they're topping. So, what that tells me is that we're likely going to see one more weird, violent rotation out of semis and AI and back into your kind of value names. And if that does play out, the last time we saw that, the S&P 500 kind of went sideways, right? I mean, the S&P 500, while semis were getting rocked uh starting in June, kind of went down to up. Right? So, it's kind of the balance beam. People will ask me questions like, "Why don't you just track, you know, SMH or the Qs? Why do you always focus on S&P 500?" And this is why. It's because it is the balance beam of the markets. When the S&P breaks down, it's all breaking down. Okay? So, anyway, that's what I think is setting up here. Um and we'll see what happens. For SMH, just for reference, um it's a pretty busy chart, but your line in the sand is at 554, maybe 541. If that breaks, then we're heading down to 468, 430. And if we do see that drop, uh there will be a narrative uh surrounding that drop that will make one feel like buying down here is a bad idea. It always happens, which is why we set up these targets in advance. So, that when we get there, um we know that if the narrative was driving it, then how would we know that it was going to go down here? And the the answer to that question is there's more things driving stock markets than narratives. In fact, news accounts for maybe 20% of the stock stock moves. I'm not making that up. This is from a report that was done in the in the '80s and has since been backed up by various reports showing that news events is a is is a terrible way to invest. Um okay? So, that's the game plan. So, moving forward, that's over the short term, okay? Over the long term, you know, this is the South Korean Kospi. This is a South Korean market. I mean, it went through an insane 40% drop in less than a month. This is a 900 stock index that um is a developed market. So, it's a very extreme occurrence. Um there's many reasons why that happened. A lot of it has to do with how investing has moved into this passive strategy, which just automatically funnels money into the most expensive stocks. In this case, it was Samsung and SK Hynix. For good reason. However, it accounted for 54% those two stocks, 54% of the of the stock market index at the highs. So, when it did volatility, the entire index just got rocked. But, even with that volatility, we dropped almost to the penny to the low target of where the fourth wave should go in an ongoing uptrend that you're looking at right here that should last for very very long time. Even if we break this low, we can make one more one more low and still be in this fourth wave pattern. And this lines up with where we see AI, especially the memory. Memory is like one of the biggest bottlenecks out there. As [snorts] we move into inference, it's just going to get more of the the demand will get more and more intense. And so, what we're seeing on a fundamental and thematic level is lining up with this chart. But, it's not just South Korea. Micron's in the same boat. We've been tracking this forever. What we just saw was a very mild fourth wave, if it was, if it's not over. I think what makes sense is that we're in a B wave, get one more drop to 616, and even then, that's a very shallow fourth wave relative to the size of this third wave. And as you can see, like the South Korean Kospi years, looks like it has years to go. Um but, it's not just with memory. Light, we track light, you know, this is one of the key players and in networking. It looks like it has years to go to the upside. Even energy, Bloom Energy, another stock that we own. I mean, I'm starting to change my account on it to line up with more of the fundamental and thematic and this actually makes a lot of sense to me, but um it looks like it has years to go. So, almost every key stock across the entire AI stack is saying dip within secular uptrend. And now this is lining up with what I'm seeing with the S&P 500 on a much larger scale. Right? This right here. So, if we do see volatility, which which anyone who's been on this webinar for the last month should be should be totally fine and not concerned about any volatility that that unfolds in October. But if we do see it, um until the story changes or still critical supports break, we see that as a buying opportunity, another excellent one within an ongoing bull cycle. Okay? So, that's kind of the technical backdrop. Now, let's get into some really fascinating stuff. Or at least it's fascinating to me. Um The big talk out there, bonds are breaking down. We've been tracking this one for a while, too. TLT ETF tracks long-dated bonds. From the 20 top 2020 top, that was the start of a secular downtrend and it's not going to be a straight line, even though it feels like it. We broke this level at $80, which we've been testing for a very long time. We broke it on volume and I broke it on the RSI, which has been holding this kind of 36 level for many years. So, um as bonds go lower, yields go higher, which increases borrowing costs for governments that need to borrow money, right? So, that that's where the problem lies. This chart looks like it has further to go. It needs to get to 72. Even the RSI is not even at a major support. So, I think we're going lower before we go higher. Um but the question is, we're seeing, you know, the 20-30 years at like what, 25-year highs, the 10 years at like multi-decade highs, and the stock market doesn't care. And you got to wonder like, why is that? It's interesting. It's very intriguing um to see that cuz I didn't think that would happen, but it is happening. And so, here's my attempt to explain it. And I think that this really important to start wrapping one's mind frame uh around investing within more of like a global picture. Because for the last like 30-40 years, the global landscape wasn't really, I mean, it was pretty stable, right? Uh there wasn't like a lot of geopolitical tension driving stocks. Um usually it was based off of quarterly reports and, you know, just domestic numbers. And that's what fastly changing in front of our eyes. I mean, we are seeing the global order restructure right in front of our eyes. Um one of my favorite analyst said that um I love this comment. He said that if you um he told his son that you'll learn more from watching Game of Thrones about how uh global business and and the global world works as opposed to taking, you know, going to the business school. And so, keeping that in mind, um if you take a look, yeah, we're breaking down, but there's more to the picture. When we put it into a global context, this is global 10-year yields minus the US. Since 2020, they've been going higher. So, not only is the is is the US breaking down, their bond market breaking down, the rest of the world is, minus China. China's playing a completely different game. Uh they're not included in this segment. Uh and I can get into why that is later, but they they don't need to be included in this segment. This includes almost every major market, a lot of emerging markets, but bond yields are going higher along with the US. And so, how much higher? Since 2020, this is basis points, right? So, Brazil, 600 basis points. France, 476. UK, 458. All these countries 10-year yield is going up higher than the US, which is right there in the middle. Okay? It's just right in the average. Um And so, when you put that into the proper context, um yeah, the US is bond market's breaking down, but so is the rest of the world. And there's something very important about the US that is not true about the rest of the world. Okay? So, why am I showing uh the US dollar index in relation to uh you know, global foreign 10-year yields? So, um one specific reason. So, whenever global yields go higher, they have the then countries fall into the same problem that we're falling into right now. All of a sudden, it's going to cost them more to borrow money to fund their their government operations, right? Uh so, if they're running at a deficit, that means they got to borrow more money in order to fund their government, right? Same constraints that we're seeing right now. However, they have another dynamic that the United States does not have to worry about. And that is that um as the US dollar goes higher, um it acts like a wrecking ball in foreign markets. And why that is is because 84 trillion dollars of uh debt you uh of debt in the world is denominated um in US dollars. This is outside of the US. 84 trillion dollars of US debt of debt in US dollars is outside of the United States. And this is done by your you know, sovereign wealth funds, corporations, you know, your private sector, some banks. So, whenever the dollar goes higher against their currency, then all of a sudden they've got to use more of their >> [music]