MEGA8s Confirming Consolidation Despite FOMO
So let’s just jump right into it, our last podcast talked about the FOMO mentality that is gripping global markets. This time around we will demonstrate that despite the Nvidia craze, the MEGA8s are confirming a consolidation rather than a breakout to new highs. We know that since Covid that the recovery in equities has been led by these MEGA8s and now less than half this group is confirming the recent euphoria.
What does it all mean? Well consolidations are good and healthy, but when they come at all time highs, they can also lead to selling. What it also means and what we think is the case is that the majors, the big guys, the shops that manage trillions in wealth, well we believe they are selling into this rally, most notably and in particular, Tesla, Apple, Google and now more recently Berkshire.
Here is a chart of Berkshire for reference:
First let’s look at the Magnelibra MEGA8s:
A massive reversal weekly candle and this has definitely caught our eye. A trade above 2900 in our consolidated chart would negate some of the damage but for now, this doesn’t look good for the overall markets.
Secondly we have the Nikkei which has been the leader for quite some time here:
The consolidated breakout here is now turning over and a test of our prior channel seems quite obvious now.
We know that Nvidia has been the AI poster child and has been on a FOMO run for quite sometime, however last week we saw massive up moves followed by a massive reversal off the highs at $974, we believe someone is taking an obvious short here and selling into massive buying. $643 is our baseline support here after $825 and no we do not like this stock anywhere above $500 just so you know:
Furthermore the Nasdaq Futures have also put in a reversal on the weekly, but note, this contract hasn’t had a back to back weekly loss since October 2023:
As far as the SP500 it looks like it is improving its fate slowly and it as an index has outperformed last week vs the Nasdaq so broader buying in the overall market and selling in the MegaCaps:
Ok let’s look at the US Bond market where the 10Y yields continue to improve and move lower following our path we laid out in late December:
The US yield curve is seeing buying at the front end leading to a steepening of the curve which indicates money is seeking shorter duration safety vs the longer end issues. This is what we would expect to see as the year progresses and towards that first initial rate cut:
So what does the bond market know? We know the BTFP program is expiring and those loans will have to be paid back, some $160bn by next March 2025. We know CRE is getting hammered, we know regional banks are being sold and we also know JPMorgan has been a big recipient as of late of their misfortune as their chart most obviously points out here. The top of this channel should prove formidable:
Hey with all this FOMO we know Bitcoin and Gold will not be left out and looking at the charts, well Bitcoin and Gold are at ATHs!
One chart in the futures that concerns us is the chart of Crude it is turning back below $80 once again:
Ok we have CPI and PPI this week Tuesday and Wednesday, but honestly do the numbers matter? We know money flows have reached epic FOMO proportions and chasing here will end in blood, it always does. Everyone thinks that the FOMC is still concerned about inflation, they are not, their next move is a rate cut and historically we know this puts the top in markets. So we will await this for confirmation. For now let’s just see how it all plays out.
Here are last weeks settlements across our board:
As far as the Futures Model Tracker, Friday added onto Nasdaq shorts:
When we look at the MEGA8s, the hedge this week is the 342Call in the QQQs:
Overall as we talked about the market caps vs their ATHs, Apple, Tesla and Google not joining in the FOMO:
Overall the market cap of this MEGA8s has been consolidating for nearly a month:
Ok that is it guys, we will be back with a podcast this week as well! Good luck out there, stay safe and take some pennies off the table if you have been long all this time. You deserve it and the markets are destabilized now, trading like penny stocks! Till next time, like, share or subscribe if you can, we greatly appreciate it!