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BORSE, BOND, ORO, BITCOIN: SVOLTA DOPO IL MIDTERM? COSA DICE LA TEORIA DEI CICLI — Transcript

by Vito Lops · 9,850 words · 1,618 segments · language en · Watch on YouTube

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0:03Blue Sweep, the change in the financial
0:05markets.
0:07The Democrats have won, as expected, but
0:09perhaps even more than that, both
0:11chambers of Parliament in the United
0:13States.
0:15Obviously, it’s a presidential republic
0:17, so President Trump, the Republican,
0:19counts and will still count in the last
0:212 years of his term; but he will no
0:23longer have Parliament to support him.
0:28So the financial market will have to
0:30digest this new scenario in which there
0:32is no longer a "triplete," eh, on the
0:34Republican front—meaning they no longer
0:36have both chambers and the president,
0:38they only have the president, and so
0:40this is a very important scenario.
0:44We have already seen some very, very
0:46significant immediate reactions across
0:48various investment classes.
0:51To take stock of the situation and
0:53update us as usual on cycle theory, I
0:56have invited back my dear friend Paolo
0:59Nardovino who, well, can give us more
1:02than one point for reflection, now that
1:05this market is unfolding.
1:08Because, Paolo, having you come in a bit
1:11before the election would have been a
1:12waste.
1:14In my opinion, now we also have this
1:16piece of data, and so we can better
1:18connect the dots, precisely because your
1:20way of observing the markets is based
1:22heavily on connecting the dots.
1:24Welcome.
1:26>> Thank you.
1:27Thanks, Vito, eh, thanks for the
1:29invitation, and warm greetings to all
1:31the followers of your splendid channel.
1:34Eh, yes, we are living through a very
1:37important transition phase.
1:41There was this blue wave that reversed
1:45the political alignment in the U.S.
1:48Congress and Senate.
1:53As you were saying, though, we are in a
1:56change that sees President Trump still
1:59active for 2 years; he won't have the
2:02majority, so measures will be weighed.
2:07There is the situation that in America
2:09they call the "lame duck"; we could have
2:11a two-year stalemate.
2:15It must be said immediately, however,
2:17that in previous similar situations, the
2:20market has seen positive trends for at
2:23least the first year following the
2:25elections, for the first 9 months of the
2:28year.
2:30The statistics are largely encouraging
2:32from this point of view.
2:35Then, naturally, the themes will change
2:38a bit because, until now, the market was
2:40focused on certain topics.
2:44Now, with the new situation, perhaps we
2:48will see companies that had been
2:51neglected in some sectors like green
2:54energy or other areas, and perhaps,
2:57conversely, companies that had been,
3:00quote-unquote, favored by Trump's
3:03political activity could face a phase of
3:06greater difficulty.
3:11>> Also because, let's say, there have been
3:14some very strong attitudes from the
3:16Republicans, and maybe, who knows, we'll
3:19see, there might be a bit of payback
3:21from the Democrats who, from January 3
3:24rd—not immediately, let's say—will
3:26occupy the new seats they won in
3:29Parliament, so perhaps even the
3:31psychological aspect could, who knows,
3:33have an impact.
3:36However, at the financial market level,
3:38what matters are the profits that
3:39companies generate in the various
3:41sectors.
3:43And so, as you were saying, maybe some
3:46themes or narratives might change, given
3:49that the two political colors push for
3:52somewhat different sectors.
3:54A comparison that is perhaps easiest to
3:56understand comes to mind just like that
3:58. Coal versus clean energy.
4:02Yesterday we saw First Solar or similar
4:05stocks, and the clean energy sector
4:07doing very, very well, just to get a
4:10picture of how politics can change and
4:12then the narratives on individual
4:15sectors.
4:17Yes, that's actually the case, even if
4:20the prospect of a potential Democratic
4:23victory in the presidential election is
4:26two years away; so, the market might be
4:29anticipating things a bit, but these
4:32could also be isolated flares, because,
4:35in fact, there won't be any measures on
4:38these, eh,
4:41on these sectors, I think, as long as
4:44Trump is in the presidency.
4:48He has also said that he will make great
4:51use of his veto power, so even in
4:56any new legislation that there might be
4:59on the green sector, this will weigh in
5:02.
5:04So I don't see an immediate one; I mean
5:06, there is a rotation in the market and
5:08that is a very important thing to say.
5:11We were expecting a corrective phase in
5:15the month of October, let's say; it was
5:18also described by the cyclical models we
5:21had.
5:23We could have had a phase of even a
5:26sharp decline in the month of October.
5:29It wasn't a sharp decline, especially if
5:31we look at it on the benchmark index,
5:33which is the Standard&Poor's 500.
5:37There was a 10%correction on the NASDAQ
5:39, but the market remains substantially
5:41supported because there is a sector
5:43rotation underway.
5:47I read a piece of data yesterday that
5:49struck me a lot during the drop that
5:52occurred the day before yesterday, the
5:544th, when the market went down; on some
5:56intraday time frames, the Standard index
5:59had gone into oversold territory.
6:03While the index was going into oversold
6:06, in the same basket there were 40%of
6:09the stocks in the Standard, so 220
6:12stocks that were in overbought; that is
6:15, the index was showing oversold while
6:1840%of its components were going into
6:21overbought.
6:24This shows that we are not in a bear
6:27market; it is a market that is highly
6:31unbalanced by market capitalizations,
6:34but there is a rotation underway, so
6:37there is no definitive exit of funds
6:41from the stock market.
6:45Maybe there was an outflow of flows
6:47because when we analyze bonds we will
6:50also talk about this, but there is no
6:53definitive exit, so the current trend in
6:56the stock market will most likely resume
6:59, resume upward.
7:02We could even see new highs on the S&P
7:05in the coming weeks, in the coming
7:08months.
7:11Yes, let's say that company earnings are
7:14still very solid, even those projected
7:17for next year.
7:19So, in the end, a textbook bear market,
7:22if we think about it, Paolo, occurs when
7:25there is a contraction in earnings
7:27compared to the previous year, as was
7:30the case in 2022. The market anticipated
7:33what was effectively an earnings
7:35recession, whereas here, an earnings
7:38recession is not on the horizon.
7:42If analysts are doing their calculations
7:44well, well, it seems there isn't one,
7:46fortunately.
7:49So, a fifth year of a bull market, who
7:53knows, could clearly be on the horizon.
7:58But what I also wanted to ask you is
8:01just this: the rotation is very, very
8:03strong, very marked, and it saves the
8:05market.
8:08In the sense that, for example, if we
8:10look at the equal-weighted index, while
8:12the Nasdaq was falling, it was rising;
8:14so it was money moving out of
8:16semiconductors.
8:19And AI, perhaps a market that was
8:21already anticipating problems with data
8:23centers or with Trumpian companies
8:25heavily skewed toward this sector by
8:27virtue of the polls that were already
8:29showing the Democrats doing very well.
8:33And yet, precisely,
8:35>> I am asking you exactly this, well,
8:39>> The market certainly tends to anticipate
8:43trends, so we saw, referring precisely
8:46to the equal-weighted index, the
8:49equal-weighted S&P, there was a
8:52corrective phase from August onwards
8:56which then converged into the October
8:59lows and which was not seen on the S&P
9:03500, the benchmark index.
9:07The reason is because there were few,
9:10very few companies that were pulling so
9:13hard, weighing so heavily on the index,
9:17and distorting the trend's performance.
9:21The trend was in a corrective phase.
9:24I remember that the equal-weighted S&P
9:27had 7 weeks of decline and it is a...
9:31sequence that is not frequent.
9:35>> Not to cheat, let's say.
9:36>> Yes, yes, it's seven weeks of decline.
9:39Then, once the low was reached, it is
9:42precisely there that the underlying
9:45trend should be viewed; the index
9:49started again and produced a bullish
9:52phase, so we are still in a bullish
9:55trend phase, while the S&P was yielding
9:59on large-cap stocks.
10:04There is this dichotomy that I think
10:06will persist for a little while longer,
10:08even among the Magnificent Seven.
10:12A distinction must be made.
10:15And we saw yesterday—not 3 or 5 days ago
10:18, but yesterday—that Apple and Microsoft
10:21hit new all-time highs.
10:23Well, these are stocks; of course, they
10:27aren't totally—Microsoft a bit more, but
10:30Apple isn't fully involved in capex
10:33spending—the market is still rewarding
10:37that.
10:38Then there is the issue of buybacks,
10:40which continues to support these
10:42companies, but they did see all-time
10:45highs yesterday.
10:48In a bear market, large-cap stocks do
10:51not reach all-time highs.
10:54So that alone is enough to say we are
10:57not in a bear market; we are in a market
11:01that has experienced an expected, and I
11:04would say healthy, phase of rotation and
11:08correction, which has allowed for entry
11:11at acceptable levels into some companies
11:14, including big companies that reached
11:17earnings levels never seen before.
11:22I am referring to Alphabet.
11:24Alphabet reached the lowest
11:26price-earnings ratio in its history
11:28since Google went public.
11:31So when there are such violent, strong
11:34pullbacks, you go looking for value in
11:38the company, and it is up to those who
11:41do the analysis to identify these
11:45opportunities.
11:47As you said, we have now entered the
11:50fifth year.
11:52I count the cycle starting from the 2022
11:55low.
11:57Other colleagues don't do this, because
12:00they start from Covid, so they see 7
12:02years of growth.
12:03I count it from 2022 because for me that
12:06is the cyclical low, and we are in the
12:08fifth year; from October onwards, we
12:10have officially entered the fifth year
12:13of the bull market.
12:14Um,
12:17Gann argued that the average and
12:20statistically valid durations of a bull
12:23market were 5 years.
12:27Entering the fifth year, in my opinion,
12:30there is a concrete possibility of
12:33seeing new highs again, especially on
12:35the S&P, by virtue of the rotation we
12:38are talking about, even in the coming
12:41year.
12:42In fact, looking at long-term statistics
12:46, fifth-year movements are usually the
12:49most profitable, the ones that deliver
12:53the highest performance of all.
12:57All this, however, clashes with an
13:00element that must be watched, which
13:03concerns a sector that has been a key
13:06sector in this rally: the semiconductor
13:10sector.
13:11Um, now, some time ago, I showed you a
13:15chart here that is attributed to
13:17Livermore. Now I will try to share it.
13:22Yes, let's start the screen share
13:24because I am very curious myself to see
13:26the updated material you have prepared
13:28for us, as always.
13:30The chart is this one. So, it's this one
13:32here; I'll enlarge it for you a bit,
13:33then we'll put it back.
13:35This was a chart that schematically
13:38represents Livermore's ideas regarding
13:41the formation of speculative upward
13:44movements, followed by the bursting of
13:47the bubble and the downward phase.
13:51There is an initial phase that can last
13:54years where there is this accumulation
13:56cylinder with a widening mouth, which
13:59was divided into various points; there
14:02are seven points.
14:05Then there is the bullish phase where
14:07there is the market boost, the bubble
14:10explosion phase, and maximum euphoria.
14:15Then there is a first test, which was
14:17indicated here with point 11, and point
14:1912, which would be a market restart, a
14:21false restart.
14:24Then the breaking of this point 11
14:25starts the bear phase, and this point 12
14:27, as far as this model is concerned,
14:29would be the best point to take the
14:31short position.
14:34Now, looking at the SOX chart—
14:36unfortunately, the SOX is the
14:38Philadelphia Semiconductor Index.
14:42Philadelphia Semiconductor Index.
14:44This is a weekly chart, the weekly basis
14:46of this chart.
14:49We are exactly representing this
14:51movement predicted by this model, and
14:54the doubt is whether point 11 is the
14:58first decline that occurred, because the
15:01semiconductor top was made in June, on
15:04the high that the Nasdaq made in June.
15:09Then there was this first drop and then
15:12a rebound, and it saw the high right in
15:15conjunction with Nvidia's top on October
15:186th.
15:20By the way, that is also an important
15:22cyclical high, and we have had this
15:23downward phase that unfortunately broke
15:25the previous low.
15:27Now, the doubt I have is whether the
15:29dynamic is to shift point 11 to a
15:32possible current low and perhaps go
15:35looking for point 12.
15:39Point 10 has probably been made; that is
15:40, the top of the semiconductor index has
15:42been reached.
15:44This must also be viewed with a
15:47historical statistical function, because
15:49the semiconductor market often
15:51anticipates the top of the general
15:54market by a semester or even a year.
15:58So this phase of anticipation—let's call
16:02it a bubble—must be viewed as
16:05potentially already having reached
16:09maturity.
16:11The upward phase could already be over.
16:13So now there is a bit of
16:16doubt about whether we are still in the
16:19formation of the first bearish leg or if
16:23the first leg is already breaking, and
16:27this must be confirmed in the coming
16:30weeks, but it is the only big doubt I
16:34have now regarding the possibility of a
16:37general overall resumption of the trend
16:41.
16:42As for the Standard, the Standard has
16:45not made major corrective movements.
16:50We have seen that it is a—let's put the
16:54chart here.
16:58Here it is; let's set it to weekly, the
17:01correction that occurred.
17:04Now. Uh, here is the future. This is the
17:07standard future.
17:08I use an option that TradingView has to
17:12adjust the future to the value of the
17:16current future.
17:18It's this one below, this button right
17:20here.
17:22>> By adjusting it this way, we see that
17:25the actual top of the current future—
17:27the December expiry future—was reached
17:30in August, and it hit the value of 7906
17:32.
17:36From that value to the low of the
17:38correction, it’s a completely normal
17:41correction; we are at -5.26%on the
17:44standard index, but regarding the
17:46reaction from yesterday’s high to the
17:49all-time high, it's only off by 2-2%, so
17:52that's what we're talking about.
17:56>> Yes, yes, yes.
17:57>> We have a large-scale chart, and uh,
17:59there is no physical correction.
18:02It's hard to even call it a correction
18:04at these proportions, right?
18:05>> Indeed. Exactly.
18:08It's hard to even call it that; it’s
18:10just the market catching its breath.
18:13Why does this happen?
18:14Because the standard is a basket of 500
18:18stocks, and in this phase, they are
18:22buying back those stocks that had been
18:26largely neglected, and this rise in
18:30these sectoral indices compensates for
18:35the decline we saw in the tech market.
18:40I think this will continue to be the
18:43theme for the coming weeks.
18:46If we look at general cyclical models,
18:48we were expecting a phase in October; I
18:51was calling it "The Hunt for Red October
18:54," like the movie title.
18:56>> Yes, you said that; you said that in our
18:59previous social chat.
19:01We also spoke when we met in person in
19:03Milan.
19:05I came to your seminar; a wonderful
19:07seminar.
19:09We talked about how October could be a
19:13corrective month, but I personally
19:16continue to believe it’s a "buy
19:20opportunity," especially for stocks that
19:24have solid fundamentals and now also
19:28very attractive multiples.
19:31So, we can still maintain a preference
19:34for the stock market over other assets.
19:41However, this now needs to be framed
19:44within a broader context because, in the
19:49month of October, we also had a peak in
19:53bond market yields—I watch the 10-year—
19:57and that peak coincides with a very
20:01important cyclical closing because,
20:05historically,
20:07I look at history—you know I'm a...
20:13dinosaur. I go and see.
20:15>> You like to go back in time.
20:17>> I go back in time; let's say, in a world
20:20where everyone is doing intraday trading
20:22, I go look at secular data.
20:24Unfortunately, that's how it is. So, the
20:27month of
20:27>> This retrospective is very fascinating,
20:30after all.
20:31>> Yes, this is the historical chart of
20:33yields. I set it to line because the
20:35data here is point-to-point.
20:37If I use bars or candles, you don't see
20:41it in its entirety.
20:43This is the government bond yield chart
20:47since the birth of the Fed in 1913, so
20:51it covers 113 years of history. The
20:54month of October has always been a month
20:57,
20:59well, up until now, it has been a month
21:01where extreme market highs and lows have
21:03occurred.
21:05Here, in October 1941, the first
21:08historical low in yields occurred.
21:14We were at about two, two point
21:15something percent.
21:18From here, a long 40-year trend began,
21:21October 1941, until October 1981, when
21:24the peak in yields was reached.
21:28Here we were at yields that were above
21:3115.5%.
21:33So, uh
21:34>> and that's when Volcker was raising
21:36rates like crazy.
21:37>> Yes, he was really, yes, he was at his
21:43at his peak performance.
21:46Uh, then there was, from October '81,
21:49this decline, and we saw the low right
21:53during the Covid period, in March 2020,
21:56when rates were brought almost to zero.
22:01The interesting thing is that this month
22:03of October in which we saw the top is
22:05exactly the expiration of the 45-year
22:08cycle, which is one of the cycles that
22:10those who use Gann techniques look at
22:12for all assets.
22:15Uh, we have had, uh, 45 years are, this
22:18is a monthly chart, monthly time frame,
22:22it's 540 months.
22:25Uh, there are Gann techniques, geometric
22:28techniques.
22:29He placed one point per month,
22:32considering the point as a hundredth of
22:35a percent, so 540 months are 540 points
22:38, there's the zero angle that we start
22:41right from the moment of the historical
22:44high.
22:46This is the 1x1 angle.
22:48The 1x1 angle had already contained the
22:51first breakout attempt when there was
22:54this first attempt above 5%in 2023.
22:58We are talking here about a monthly
23:00chart, so we are here in 2023.
23:03And then it led for this cyclical
23:07expiration, which was 540 months, to a
23:11level, let's call it a resistance on the
23:16chart, at 5.40 percent.
23:21The yield stopped coincidentally, let's
23:24say, at 5.
23:26>> Geometrically, we should say.
23:28geometrically.
23:30This is the fascination of these
23:33techniques that I keep seeing on various
23:36assets, on gold, on oil, on the stock
23:39market, and continuously, and on
23:42individual stocks, there are these
23:44coincidences; some may see them as
23:50>> random, random, but as long as there is
23:54a frequency of
23:57they occur with frequency, we evaluate
24:00them. By the way, it was something we
24:02had said earlier, so it could stop in
24:05that 5.40 area.
24:06Now, the correction, if it does as it
24:09did previously, could even go around 4.5
24:12or even below to the 4 area for the
24:14yield.
24:16This would give Nasdaq companies some
24:19much-needed breathing room; even the
24:23companies currently undergoing a
24:26correction phase could soon see the
24:29light again. This doesn’t mean this is
24:32the absolute peak from which yields will
24:33never rise again.
24:35Absolutely, but there was a price-time
24:39timing at 140 months,
24:43>> a geometric resistance of 45 years.
24:47One of the techniques he talked about,
24:49one of my greatest discoveries, was
24:52precisely that over long periods of time
24:54, the price feels that number in both
24:57price and time, so he called it a
24:59squaring of price with time.
25:04We are in 2026, Gann died in '55, so his
25:08work lives on in the markets in an
25:11intermittent way, popping up every now
25:15and then, and this could be a key factor
25:19.
25:21I say this because it is also important
25:24to see the coincidences.
25:27There was a peak in the bond market at
25:29the beginning of October.
25:32There was this significant corrective
25:36phase in October, so one thing is
25:39certain: some of the money flows that
25:43were in the stock market moved into the
25:47bond market.
25:51This is something I want to stress
25:53because we shouldn't expect those flows
25:56that entered in October to exit now and
25:58return to equities.
26:00Absolutely not. I mean, a manager who
26:02executes a
26:03>> an intermarket rotation
26:07>> like this does it for the long term, not
26:10for just 15 days.
26:14So the next long phase of the market, if
26:17it happens, will not be participated in
26:21by them, and these are strong hands.
26:25That is what I want to point out. So
26:27let's not expect that if a bull market
26:29begins, it will last another 5 years
26:33>> because many managers are
26:37long term on these rates, let's say,
26:39>> shifting. This is a point that must also
26:43be made in light of what the cyclical
26:47model for 2027 looks like,
26:54which in this initial phase—starting
26:57from the low hit on November 4th, last
27:00night—could still have a cyclical phase
27:03because, from this moment on, starting
27:06from today, one of the bearish cycles
27:10expired today.
27:13We have a bullish confluence of cycles.
27:18The majority of the major cycles we
27:20monitor with our techniques now, at
27:22least until early January or February,
27:27show a bullish confluence, and so this
27:30somewhat supports the possibility that
27:33it is the low, also considering the way
27:36in which it was formed. Because here we
27:38are looking at it on the,
27:42on the, weekly, but if we look at it on
27:45a daily chart...on the daily chart, we
27:49have seen the formation of a bullish
27:52outside bar.
27:55A lot, let me clear the indicators for a
27:57second.
27:59There we go, it's easier to see now.
28:01Very extended.
28:03And when there have been such extended
28:06bullish outside bars, maybe let's look
28:09at the first three or four previous
28:12cases: the movement that followed...One
28:16is this one, this year, actually no,
28:19this is the low from, yes, March of this
28:22year, a bullish outside bar, and we saw
28:25such an upward movement.
28:29The other previous bullish outside bar
28:31of this magnitude, I mean, it doesn't
28:33mean this one isn't a bullish outside
28:35bar too, but it wasn't made at the low.
28:38This one was made at the extreme low,
28:40this was made at the extreme low, and
28:43here we are on the famous April 9th, the
28:46date of the record performance for the S
28:49&P; this is a bullish outside bar
28:51compared to this.
28:54Then maybe there was a breather phase,
28:56it reached the middle of the bar, this
28:58low here is at the middle of the bar,
29:00and then the mega-trend began.
29:03Also in other movements.
29:06>> I imagine there is one for Covid too.
29:10>> Here too, this is a bullish outside bar
29:12, let's show it.
29:16This is a bullish outside bar that
29:18started a trend, so it doesn't just end
29:21with the daily bar.
29:23The push.
29:25Yesterday there was a rush yesterday,
29:27yes. Yesterday there was a buying spree
29:29, both from those who had shorted and
29:32had to cover because when the Nasdaq
29:34gains 1,000 points against you on the
29:36upside—because that's what it did from
29:39the night's low to the high, the Nasdaq
29:41did over 1,000 points.
29:44A short squeeze, in short, the first
29:47point is those who have to quickly cover
29:49their positions.
29:51We must also see this, this is the other
29:54outside bar. This one here is from
29:58October 2022.
30:01>> Yes, which is the one from which this
30:03bull market started.
30:05So, we see there are patterns, this is
30:07the single bar, the bullish outside bar
30:10with a close like this.
30:11Then you also have to look at the
30:13extensions, we are talking about huge
30:15extensions on the standard index.
30:17See this extension. Uh
30:21>> well, actually this is one of the
30:23biggest, it's definitely the biggest in
30:25the last few months. We had, between
30:28high and low, eh.
30:32So, the high was 7746, 7490, at 490, so
30:37250 points of rise; a lot for the
30:41standard index, even more on the NASDAQ
30:47.
30:47So we have a setup that might still see
30:50a period of consolidation, but
30:53certifying this low as a possible swing
30:56low, in my opinion, is not wrong in the
30:59current phase, because we could now have
31:03a rotation phase, as we said, and also
31:06the recovery of some sectors that had
31:09been totally neglected by the market,
31:12especially the green sector, which is
31:15one of the sectors that was truly
31:18trading at very, very interesting
31:21fundamental multiples, and this could be
31:24one of the themes of the next bullish
31:27phase. Then perhaps there are some
31:30companies, especially those of Elon Musk
31:34, who has recklessly exposed himself to
31:37Trump, that could see phases of selling
31:41or correction, but even there we must
31:45remember both the actual value and the
31:48long-term perspective that those
31:51companies have. So maybe if they were to
31:54reach relatively low prices,
31:58looking at them not with a short-term,
32:01but a long-term perspective, in my
32:04opinion, is not wrong. It is not wrong.
32:08This concerns the stock market.
32:11Naturally, if the American stock market
32:12takes off, the same thing
32:16applies to the European markets as well
32:17.
32:19In fact, the European market, the FIB,
32:22actually hit its low earlier, it did so
32:25on October 23rd, so we are already in an
32:28interesting rebound phase. The same
32:31applies to the other European markets.
32:34This is another factor to look at
32:36because the de-powering, let's say, of
32:39President Trump's activities could bring
32:43back a new phase of relations between
32:46Europe and America, and this, in my
32:49opinion, does not hurt, does not hurt.
32:53>> And there is the whole issue of tariffs
32:55, well, where it's true that they cannot
32:57be,
32:58>> let's say, Trump still has veto power
33:01and executive orders, but
33:05the market looks to the future.
33:07Then, so, and on this I wanted to tell
33:10you, Paolo, and always putting ourselves
33:12in the shoes of, and also getting
33:14listeners, in these social chats, the
33:16members of the community, used to
33:18thinking from the perspective of a
33:21manager.
33:22I mean, a manager who perhaps has a lot
33:25of capital to position in the market and
33:28doesn't want to front-run too much
33:31because, well, maybe they wait for an
33:34important event like the elections, at
33:36that point they decide to position
33:39capital: it's not like they do it in a
33:42single day.
33:44Also because if they did it in one day,
33:47if all managers did everything that day
33:49, let's say, the price would skyrocket,
33:52there would be an impact on the books,
33:54so they dilute it over 2, 3, 4 weeks, I
33:56don't know.
33:59>> a new strategy, a new movement, let's
34:03say.
34:04That is why these trends, let's say,
34:07usually textbook reversals, correct me
34:09if I'm wrong, start with a short squeeze
34:12, so those who were short rush to close
34:15and fuel it.
34:17Then there is the institutional side,
34:19and in the end, unfortunately, we have
34:22to say it, when the move is already well
34:24and truly done, the inexperienced retail
34:27investor arrives when we are almost in
34:29the distribution phase of the move, in
34:31short.
34:33However, let's say: if this were to be a
34:36reversal candle, not even of a major
34:38correction, but a reversal of an
34:41important moment in which the Nasdaq,
34:43for example, corrected, the market was
34:46reflecting.
34:48In short, it started, it would have
34:50started with the players at the right
34:53moment: first short squeezes, then
34:55institutions moving into certain new
34:57narratives, and so on. We'll see, anyway
35:00, but thinking about it this way, I feel
35:03like giving you this food for thought.
35:06It's
35:06>> Exactly what I meant, that is, now we
35:09have had the uh the first cover, because
35:12the move was actually made at night.
35:17Then I said: they don't do it in one day
35:18, much less do managers do it at night,
35:20it's not like they work at night; so uh
35:22, maybe now they find themselves at
35:23prices that aren't too far not from the
35:25low, but from the all-time high.
35:28That is, the risk now is that those who
35:31stay out then have to go and catch the
35:33benchmark that has already run away,
35:36because we are only 2%away from new
35:38all-time highs. New all-time highs means
35:41that the benchmark, which is the S&P 500
35:43and is, let's say, the indicator on
35:45which the manager's performance is based
35:48, has to go and catch it.
35:50So the breakout of these highs, which is
35:53not impossible even in a few days, could
35:55even happen next week, this week the
35:58breakout of the high would trigger a
36:00buying spree because they have to chase
36:03the benchmark.
36:05From now until the end of the year we
36:08could actually have a uh a move like the
36:11one we had post-dazzi.
36:15That too was a market move.
36:17There wasn't a big correction here on
36:19the Standard or the Dow Jones.
36:21If we put on the Dow Jones and see a
36:23correction a bit more
36:26uh significant, uh there was a bit more
36:29of a bearish phase and here it is, let's
36:33put it on the weekly, the Dow Jones had
36:36its um here it is, its nice correction.
36:42>> It lost how much? 7-8%,
36:46>> Almost 8%for the Dow Jones, so uh yes,
36:47we are back into the physiology of
36:49market corrections and it has already
36:51restarted here.
36:53So here is the time also to have, to
36:56reason, okay, it hit the low, the week
36:58is holding it.
37:00Uh, on the Standard, one doesn't even
37:02really have the time to
37:05think, let alone the minimum, because
37:07we're already near the highs. Uh, where
37:09was the chart I was showing there? This
37:11one here. We're already close to the
37:12high area; we're just 2%away from the
37:14all-time high.
37:16So, one euphoric session is enough and
37:18we're at all-time highs.
37:21And so, once you've exited, managers
37:23don't just exit in a day like you say;
37:26they exit, they plan, maybe they've
37:28moved into bonds.
37:31Now, if the stock market takes off again
37:34, driven by both short covering and
37:36retail investors or buybacks, because
37:38the movements seen on Apple, on
37:40Microsoft, especially yesterday's on
37:43Apple,
37:46it smells to me like buybacks executed
37:48at certain levels.
37:51Because in the pre-market Apple had
37:52dropped to 321, yesterday it hit a top
37:54of 354,
37:58$ 3, the day when, let's say, there was
38:01some clarity from a political standpoint
38:04; let's say, it was understood there
38:06will be 2 years of stalemate, so maybe
38:09certain operators are making decisions.
38:12>> Right. slight, precisely the fact that
38:15two stocks,
38:15>> even company managers could be these
38:18operators, in short,
38:19>> especially
38:20>> Yes, that they also hold, uh
38:25let's say, they have a feel for what the
38:27company will do in the near future.
38:30Then both Apple and Microsoft, the last
38:34quarter of the year, which is what has
38:37just begun, uh, is historically the best
38:40quarter of the year; so, buying in
38:43October is also statistically, uh,
38:46reassuring from a statistical point of
38:49view, because these are stocks that
38:52perform best at the end of the year,
38:55meaning Apple between December and
38:57January,
38:59usually December and January, uh, hits
39:03the highs of the move.
39:06On Apple, I would have a target of 361
39:08using some Gann techniques we employ, uh
39:11, but it could even go beyond these
39:13levels.
39:16So the point is this: we are in a bull
39:19market in the fifth year of the bull
39:23trend within a time window that started
39:26in November, and from November to
39:29February,
39:34cyclical models do not foresee phases of
39:37, uh, major crashes.
39:40In February there's the first alert,
39:42because in February a cycle that Gann
39:45used expires, which is the 7-year cycle
39:47: 7 years from the pre-Covid high.
39:51And since the movement 7 years ago,
39:53February, March, was indeed due to Covid
39:56, but it was a violent market movement
39:59that prices recorded violently, that is
40:02one of the first alerts to keep in mind
40:05for next year.
40:06leading up to that period.
40:09Then there are other long-term models;
40:12perhaps in our next social chat, I will
40:16also show you the models regarding 2027
40:20.
40:22What we need to know is that 2027 is a
40:26year in which this 5-year cycle ends,
40:29but other very important cycles end at
40:32the same time.
40:34We have the 20-year cycle from 2007.
40:39And above all, the thing that makes me
40:41most
40:45fear a progressive issue is the 90-year
40:50cycle from 1937, because in 1937 the 5-
40:54year rebound from 1932 ended and a 5-
40:58year bear trend began until 1942.
41:04In the middle of the Second World War.
41:06So there was a market crash in August
41:101937 on the 90-year cycle.
41:14Next year, I believe significant
41:18attention must be paid to this.
41:22But right now, we are in that phase
41:25where the danger of breaking important
41:28supports has been avoided, because then
41:31on the Standard we went to 7005 on
41:34futures, nothing scandalous, and it
41:37could still have a bullish trend phase.
41:42In this scenario, yesterday, in
41:45conjunction with the stock market low,
41:47there was also a low in precious metals
41:50, where we saw both gold and silver go
41:53below certain levels.
41:56Gold went back below its previous low,
41:58but it has recovered now and is
42:00recovering well.
42:03Look, this is the gold chart; it is a
42:05long-term daily chart.
42:10It made a low below 3009, which was this
42:14area it had intercepted since October of
42:19last year, 3901, it hit 3800
42:2479.
42:25The whole area of lows where the market
42:27had rested multiple times.
42:29This is gold, this is the gold future,
42:31daily chart; it touched this area and
42:34bounced.
42:36Now, for the rebound to be effective, it
42:39must go at least above 4,220 to provide
42:42a reversal of the short-term trend.
42:46I think gold is not ready for an
42:49immediate bullish trend, but it has
42:53re-entered a re-accumulation zone.
43:00That doesn't rule out that, looking at
43:02the volumetric POCs, the POC that
43:04attracts is this one, 3375; it could
43:06also go take a trip down here, but from
43:11>> this would be, let's say, some would
43:13call it a great gift, let's say, in the
43:15long term, at 3003, but obviously these
43:17are not recommendations; our mutual
43:19friend
43:24who does volumetric analysis. Massimo
43:27Rea.
43:27>> Massimo Rea. Good job, Massimo.
43:31Our friend Massimo says, "If it hits
43:33here, we enter into a great gift." A
43:35gift, it would be a gift there.
43:37>> I don't know if I don't know if it will
43:39be an opportunity the market will
43:41present to us. I hope so. And, also
43:44because
43:45>> and also, sorry, Bitcoin at 42,000 had
43:47the same volumetric situation.
43:50The situation is a bit different because
43:52the cyclicality is now also rushed.
43:54>> Okay. No, no, but close with gold. I
43:56didn't want to, let's say,
43:57>> but let's say I'll close by saying this
44:00.
44:01Gold, in my opinion, is an asset that
44:03should be included in portfolios anyway
44:04, eh, just like Bitcoin.
44:07>> The third leg, the third alternative leg
44:09to stocks and bonds.
44:11I often talk about this third leg, you
44:12know. Yes,
44:13>> yes, exactly. The reason is that,
44:16because we, um, live in a period where,
44:21from here to 5 years forward, we will
44:25most likely see structural changes in
44:29the financial system, in the monetary
44:33system, and having "hard" goods in the
44:37portfolio, let's say, real assets,
44:41is a way to protect ourselves from any,
44:44uh, sudden changes.
44:47Let's remember that it hasn't been an
44:50exception; in America, a change has
44:52already occurred.
44:54There was one in 1933, from '33 it was,
44:57uh, quoted-unquoted requisitioned,
45:01>> the confiscation.
45:03Exactly, there was the confiscation of
45:05gold. Um, let's remember it because, uh
45:08, not everyone knows that Americans from
45:121933 to 1974,
45:15when the gold future was then born, were
45:17prohibited from owning physical gold at
45:19home; they couldn't invest in gold.
45:22And it all started in 1933
45:26when, uh,
45:29>> Roosevelt
45:31>> Roosevelt carried out the confiscation,
45:34that is, he forced Americans to sell at
45:3820, if I'm not mistaken $ 20.53 an ounce
45:41, therefore below market price, but very
45:44much below the market price of the gold
45:47they held as an investment.
45:51Then, once this imposition was made, he
45:55increased it from 20 to 35 overnight,
45:58devaluing the dollar and practically
46:02transferring the private wealth of the
46:05Americans into the public coffers, and
46:09from there the economic trend restarted
46:13.
46:15It was effectively a maneuver that
46:17restarted the American economic system,
46:19but it has already happened.
46:23Now, to put it into proportion, it's as
46:27if now that gold is at, uh, 4,000, uh,
46:30overnight he moves it from 4,000 to
46:337,500.
46:35And this is at 7,000, 4,000
46:39>> accounting juggling that, however, then
46:40changes the
46:42>> but that changes, that would change, in
46:45this way he devalues the currency, he
46:47devalues the debt because the debt is
46:50denominated in dollars and gold, but now
46:53imagine having
46:56>> they are forms of debasement at the end
46:57of the story, right? That is exactly it
47:00.
47:00Then rightly, uh, in your book that I
47:04keep like a relic, with which
47:07>> I thank you, I thank you Paolo, also
47:09because
47:10>> no, absolutely, yours is a meritorious
47:13work.
47:14And, uh, in your book you talk about the
47:1780-year cycle, which is one of the
47:19cycles of, let's say, the duration of
47:22monetary systems.
47:25Yes,
47:25>> There are also cycles; it is compatible
47:27with one of the cycles that Gann used.
47:32Gann used 8, 28, 4 years as cyclicality
47:36for the stock markets, for evaluating
47:40the bond market, and also for currencies
47:44.
47:46And this is...we are at the expiration
47:49of these cycles, so the duration of the
47:51current monetary system is not eternal.
47:54History tells us that monetary systems
47:56are not eternal, so we are probably
47:58entering—now these are slow phases, so
48:01we can't pinpoint exactly what day it
48:03will happen,
48:06but, let's say, you buy an umbrella when
48:08the weather is nice; you also build a
48:10roof when it's not raining.
48:14It is better to include these assets, a
48:17minimal portion, to have them in your
48:20portfolio, because they could turn out
48:23to be important in the near future.
48:27The same thing—this reasoning also
48:29applies to Bitcoin.
48:31As for Bitcoin, unfortunately, we are at
48:33double what you are suggesting we are at
48:35,
48:35>> aren't we? The extreme volumetric
48:37analysis, let's say, would have led to
48:39that POC at 42,000.
48:42Yes. But it must also be said that
48:44>> well, the market, as you were saying,
48:47does not always give these
48:51>> these gifts to some, and to others, well
48:54, everyone rightly has their own
48:57perspective, but
49:00>> yes, perhaps, but I think that the very
49:03fact of having revisited that low at
49:0675,000–76,000, this low here.
49:12Now we are in a phase, there, I had
49:14highlighted my ideal price-time;
49:16regarding time, we are there, regarding
49:19price, it did it earlier.
49:23This is the point where I cyclically
49:25expected the confluence.
49:28Here, let's say, below 60,000 around
49:32October 20th.
49:35We reached a double bottom in this area
49:38, and from here, I don't know if it
49:40gives us the best opportunities.
49:44However, while waiting for better
49:47opportunities, in my opinion, including
49:50some now even at these prices for an
49:54anti-fragility situation, just like gold
49:57, Bitcoin and other assets—because
50:00Ethereum and other cryptos could also
50:03represent a lifeline in case there were
50:07a structural crisis of the monetary
50:10system.
50:12Regarding Bitcoin, the cyclicality gives
50:16us a phase of a possible restart.
50:19There, this is
50:21>> Even here, you see that candle you were
50:23mentioning earlier.
50:25>> Yes, but this is a pattern; candles like
50:29this, the bullish outside bar with a
50:32close near the highs, are patterns that
50:35the market repeats across all assets.
50:39When they appear, they are absolute lows
50:42. Even at the absolute low, we saw this
50:44happen. Yeah, this is an outside bar.
50:47>> Yes, there is a confluence across
50:49various assets of this, this outside bar
50:51candle, it's a pattern.
50:54This is an elementary pattern, we're not
50:56talking about anything very
50:58sophisticated, a pattern, but the
51:00bullish outside bar formed at the lows,
51:03made with volume,
51:05>> on various assets, let's say,
51:08>> on various assets means, it means first
51:11of all a sudden change, that is, there
51:13is an ongoing trend, then suddenly
51:16something happens.
51:20Now, what happened Friday night is not
51:23only the result which, by the way, was
51:26also expected—it wasn't a surprise—but
51:29something else also happened in China,
51:32because the Chinese government prevented
51:35the uh,
51:38let's say, it prevented new IPOs for
51:41artificial intelligence companies.
51:43Exactly because the Chinese market is
51:45collapsing; especially the tech sector
51:47linked to artificial intelligence is
51:49collapsing. And it took two measures. It
51:52banned upcoming IPOs, among which there
51:55was also Dipsic that was supposed to
51:58have an IPO, and it also forced uh
52:03the banking system to buy shares of the
52:05Chinese market. It already did this in
52:082015, it didn't bring great results, the
52:10market continued to fall.
52:12Uh, but this also happened during the
52:14night, and it was the thing that
52:16initially caused the market to collapse
52:18, then there was the formation of that
52:20low and the restart.
52:23It was probably the Americans who made
52:26the stock market restart.
52:29Now the situation is this.
52:32We also had this change on Bitcoin, we
52:34had it on Bitcoin in October, we had it
52:36on the bond market.
52:38Gold also hit some interesting lows.
52:42Uh, other commodities could have, there
52:44are especially grains that have cycles
52:46expiring in November, so we could also
52:49see lows on these other assets.
52:53Uh, the situation now should normalize
52:56from here to the end of the year, unless
52:59there are important events, uh, like
53:01there could be
53:05new actions, uh, even warlike ones
53:09against Iran, because the other asset
53:12that has had a dizzying change is oil.
53:18Uh, in fact, that's what I wanted to ask
53:21you because then Paolo, uh, everything
53:24also depends on oil, I mean, on
53:26political decisions, and I saw that
53:29Vance said that we lost the election
53:32because of the war in Iran.
53:37Trump has substantially confirmed this,
53:40this line.
53:42So here too, perhaps the fact that the
53:45Republicans have realized this, let's
53:48say, electoral mistake, political
53:51mistake, this war in Iran that wasn't,
53:54let's say, in their plans, and this
53:56admission of guilt, might push a certain
53:59market to say: "Well, perhaps, since
54:02they have another 2 years to try to
54:05recover for the next elections,
54:09maybe they will want to show immediately
54:12that they made a mistake and..." And
54:15maybe, perhaps, this is also why oil,
54:17let's say, is falling a lot and has
54:20started to drop, and it has already
54:23reached an important support level; here
54:26we keep things simple.
54:29Anyone who wants to see the slightly
54:32more sophisticated way I perform my
54:35analyses can easily contact me via the
54:38email I have shown several times. Then
54:41maybe I'll show it again.
54:43Don't trust WhatsApp because, even in
54:45these past few hours and days, they have
54:47cloned my profiles and requests are
54:50coming from a fake Paolo Nardovino to
54:52everyone.
54:53Ah, unfortunately, that is an issue; in
54:55short, you always have to be very
54:57careful. Yes,
54:58>> but it has increased precisely in these
55:00hours, so really...
55:03So, it has already done an important
55:06test, the 88 area here, and it
55:08interrupts the 80 area here, which will
55:11be the real watershed.
55:13From a technical point of view, we had a
55:16false breakout, that is, a double top
55:18and a sharp decline.
55:20The volumes are very significant, we see
55:22the volumes rising here, so there have
55:25been sales, but it has already touched
55:27an interesting low area, this 87.13
55:29which hit 86.
55:3286.
55:32>> A great battle is taking place here to
55:34understand, in short...
55:35>> There is an important battle here,
55:38however, um, Vanz,
55:42yes, it is true that he said that, let's
55:44say, they lost because of the war, but
55:47let's remember that his minister changed
55:49the name from Ministry of Defense to
55:51Ministry of War.
55:53It's not that he should blame others;
55:56the problem was, and is, in there.
56:00So I think that, in any case, there will
56:02still be aftermaths from this point of
56:05view in the conflict with Iran, and it
56:08could still cause significant
56:10oscillations in the oil market.
56:13This correction is one of the
56:15consequences of what we have also seen
56:17in the other assets.
56:19Oil is one of the assets that must be
56:21watched. Um, if it were to break certain
56:24levels and move downward, then in the
56:27medium to long term this will bring
56:29further strength to the stock market
56:32because
56:33>> and also to bonds, and also to bonds,
56:35probably.
56:35>> Yes, yes.
56:37especially for bonds, because it will
56:40dispel that fear of an increase, at
56:43least in the immediate term, in
56:45inflation, which was one of the elements
56:48that led to Trump's defeat, if not the
56:51main one, because Americans often vote
56:55>> certainly in Texas. Certainly.
56:59>> Certainly in Texas, because when an
57:00American has to go vote, they have to
57:01take the car to go vote, and they look
57:03at how much gas costs to take the car to
57:04go vote.
57:06When they go to vote, they vote with
57:08that memory of the $ 6 per gallon they
57:11just had to pay to go vote. So.
57:13>> Which the year before was four and so.
57:16>> Even three, two.
57:19>> Exactly.
57:19>> So, and then the cause is that;
57:21basically, the cause is that.
57:24So yes, oil is one of the assets to
57:27monitor, along with other assets.
57:32Um, if things settle down, it could also
57:35be a selling opportunity for gas, the
57:39TTF I mean, not Natural Gas, because
57:42we've reached high peaks there too.
57:48Then other assets to monitor, precious
57:51metals have seen this low. On precious
57:54metals, if there is a recovery phase in
57:57the stock market, the industrial
57:59component must also be seen, so I would
58:02look at platinum, aluminum, and let's
58:04say precious metals, industrial metals,
58:07platinum should be seen, even copper,
58:10aluminum, because they can resume their
58:13long-term trend again.
58:15And then Paolo, I also wanted to ask you
58:18about the topic linked, obviously, to
58:20all this regarding the dollar, because
58:22we saw, close to the elections, a dollar
58:25index lose about half a percentage point
58:27, which for the Dollar Index in one day
58:30is quite a lot.
58:32>> And so it means that, fundamentally, it
58:36can be read in several ways. I'll try to
58:39summarize how some have interpreted it
58:41and ask for your opinion.
58:44So, one of the reasons could be oil
58:47going down, rates going down due to the
58:50lower inflation risk part, and so at
58:54that point, let's say a less attractive
58:57dollar, given that rates are falling a
59:01bit.
59:03Another topic, the Democrats could
59:07potentially slow down the deficit or the
59:10propulsion of the American deficit with
59:14this expected two-year stalemate.
59:19And at that point, given that American
59:21growth is also very deficit-driven,
59:24because it’s running an off-the-charts
59:27deficit, 6%a year, maybe this could push
59:29the economy to slow down a bit—the
59:32American economy, to no longer grow as
59:35robustly, but slow down a bit—and
59:37therefore, a less strong dollar for an
59:40economy that is still strong, but a
59:43little less strong.
59:44So, in short, there are various ways to
59:46read this Dollar Index that has fallen a
59:48bit.
59:49I am asking you also from the
59:51perspective,
59:51>> this is one of the topics, it is one of
59:53the topics.
59:54Uh, then let's also remember there is
59:56the issue of the debt ceiling to be
59:57voted on in America
59:59>> there is this famous ceiling that
1:00:00continues,
1:00:01>> it will return in 2027 as an absolute
1:00:03market [factor].
1:00:04>> It's a ceiling, it's a moving ceiling,
1:00:07>> the ceiling is raised,
1:00:08>> it's a hot air balloon, it rises every
1:00:11time, but uh, it has to be voted on.
1:00:14Now, historically we know that there can
1:00:17be—already in the previous instance
1:00:19there was a long period of standoff,
1:00:22then in the end they vote for it because
1:00:24they have to vote for it.
1:00:28And, yes, and this can, in this phase,
1:00:30lead to a weakening of the dollar,
1:00:32therefore a strengthening of currencies
1:00:34,
1:00:38of other currencies, mainly the euro,
1:00:41but also the pound and the Canadian
1:00:44dollar, especially the Canadian one,
1:00:48because this defeat of the Republicans
1:00:51was seen in Canada as an important event
1:00:54,
1:00:56because Canada was one of the countries
1:00:59that suffered most from the tariff
1:01:02policy and also the pressures imposed by
1:01:06President Trump.
1:01:09So yes, there is a bearish trend now on
1:01:11the Dollar Index.
1:01:14This is a 15-minute chart he put up. So
1:01:15we see the movement made,
1:01:19as you were saying: from 102 we reached
1:01:23101, so it lost—uh, the Dollar Index
1:01:26lost a lot.
1:01:28Now it is attempting a recovery phase,
1:01:31but we are in a situation where it could
1:01:34weaken, the dollar could weaken, also
1:01:37because, by virtue of a phase of
1:01:40political stalemate or at least of
1:01:43action that is not as decisive as it has
1:01:46been until today, uh, the currency
1:01:49suffers and so this is also one of the
1:01:52factors to consider.
1:01:55But let's keep in mind that a dollar, uh
1:01:58, tendentially weak or let's say stable
1:02:02, uh, favors, also favors the increase
1:02:05of stocks, of securities, of stock
1:02:08prices.
1:02:11So then the picture, the picture is
1:02:14there has been a period of uncertainty.
1:02:19Uh, the month of October was—for those
1:02:22who were in the market on the wrong side
1:02:25, it was a fairly difficult month of
1:02:28October, uh, but it could have
1:02:30represented an opportunity for a bottom
1:02:33and a possible re-entry in general
1:02:36regarding stock prices.
1:02:40We are not yet, in my opinion, at the
1:02:42beginning of the famous mega crash that
1:02:44is supposed to come.
1:02:46Uh,
1:02:48>> could also bring satisfaction.
1:02:51So, let's summarize, Paolo: based on
1:02:55your very interesting analysis,
1:02:59especially that first SOX chart, it’s as
1:03:03if the SOX marked that top, that number
1:03:0810, as if it started a sort of final
1:03:12countdown, maybe for another year, who
1:03:16knows,
1:03:18for the risk-on part of the market.
1:03:23Because if it's true that the SOX, with
1:03:26its cyclical potential, is a leading
1:03:29indicator of the cycle, in some ways
1:03:32it's starting to stumble, and while
1:03:35everything else might follow suit and
1:03:38continue for a while, eventually that 10
1:03:41could be the final meter, the end of
1:03:44this bull market.
1:03:47If it is the 10, it might surprise us.
1:03:50>> It will surprise us, I mean, if that's
1:03:52the case then
1:03:53>> if that is the 10, well, we probably
1:03:55won't see another 6-7 years of a bull
1:03:58market in its wake,
1:04:00>> But not just that, there's the
1:04:03possibility that we've lived through an
1:04:06era of, uh, extremely high stock market
1:04:09performance, which could then be
1:04:11followed by
1:04:15years where stock market performance
1:04:17won't be as strong; so, we might see a
1:04:20market go through a correction phase,
1:04:23then stabilize, but those highs might
1:04:26not be seen again for 10 years, like
1:04:28what happened with the Nasdaq after 2000
1:04:31(we didn't see those highs again until
1:04:342015).
1:04:36So, for some stocks and sectors, we
1:04:38might have seen the peak, and it’s not
1:04:41just about semiconductors: it’s
1:04:43everything, all the AI-related stocks
1:04:46have had charts like that, even
1:04:48Caterpillar, Caterpillar, which was a
1:04:51more old-economy company, has become, uh
1:04:54, due to the issue of,
1:04:58let's say, power generators, it’s become
1:05:01an AI-linked stock and has had quite a
1:05:03performance.
1:05:04In fact, it’s now one of the stocks I
1:05:07show when I do analysis for my students
1:05:10'courses.
1:05:12Eh, Caterpillar is a classic case, it's
1:05:13the exact same pattern there.
1:05:15Eh, you can see exactly the
1:05:18>> bullish capitulation and then
1:05:22>> it's exactly this; I mean, this isn't
1:05:24the SOX, this is Caterpillar, the
1:05:26company that makes earth-moving
1:05:28machinery.
1:05:31This phase was a bullish phase due to
1:05:34the crisis that had occurred in the
1:05:37supply of energy systems for data
1:05:40centers.
1:05:42Since Caterpillar was selling them, it
1:05:45went from 300 to 1000, so 1000, over
1:05:481000.
1:05:50Eh, the model is the one here, there is
1:05:53no doubt about it. This is 10, this is
1:05:57>> That was 10, that was 10, and this one
1:05:58will reach here now, it will reach 400,
1:06:00there is no doubt about it.
1:06:02Meaning here.
1:06:04But the reason is that the company is
1:06:06not one that has historically ever
1:06:08achieved these performances.
1:06:11I mean, it's a strong stock from the old
1:06:14economy, but when a stock does something
1:06:16like this, you have to pay attention.
1:06:20So this chart, which is a bit of a
1:06:23memento mori for our market activity,
1:06:27for Caterpillar, it's the same thing,
1:06:31it's the same chart.
1:06:34>> Yes, yes.
1:06:36Here, the doubt about the SOX, let's say
1:06:38, in a bull market, the SOX hangs like a
1:06:41sword of Damocles, graphically looking a
1:06:43bit ugly, let's put it that way.
1:06:46Yes.
1:06:48And also of stocks that might not be in
1:06:52the SOX index, but that have seen this
1:06:55trend now.
1:06:58>> that have transformed into AI stocks,
1:07:00despite having a business model, let's
1:07:02say, not...
1:07:04>> The historical business model is that,
1:07:06and in the end, it will return to that;
1:07:09if in the first 50 years of the
1:07:11company's life it never performed like
1:07:13this, this company is an exception, not
1:07:16the rule.
1:07:17And that's the market; as Gann used to
1:07:20say, the market, like water, always
1:07:22returns to its level. Once you turn off
1:07:25the pump, the water goes down and
1:07:27reaches its level. That's how it is.
1:07:29>> Yes, yes.
1:07:31The last big doubt concerns, let's say,
1:07:33the Democrats and.
1:07:37I mean, it's true that these days data
1:07:40center stocks are suffering a lot,
1:07:43especially the neo-cloud ones; actually
1:07:45, they have been suffering for some time
1:07:48, like CoreWeave and Nebius, and even at
1:07:51the bond level we are at near-default
1:07:54levels, extreme junk, rates over 15%for
1:07:57CoreWeave.
1:08:01Eh, so the market is already performing
1:08:03natural selection within the periphery
1:08:05of the AI sector, the most indebted, the
1:08:07least solid ones.
1:08:10But, eh, this concept comes to mind: the
1:08:14fact that the Democrats cannot
1:08:16strategically, or would perhaps make a
1:08:20mistake, let's say, to completely slow
1:08:23down the AI process, when on the other
1:08:26side there is a China that is advancing
1:08:29, that, let's say, brings its own AI
1:08:32model and geopolitics.
1:08:37as usual, as technology, as
1:08:39infrastructure.
1:08:41So it is true that the Democrats will
1:08:43have to impose, and even in their
1:08:45election campaign they have promised
1:08:48many more regulations and more
1:08:49constraints on data centers and this
1:08:52sector, but from a geopolitical point of
1:08:54view, well, looking at the bigger
1:08:56picture, China is the one that benefits
1:08:58.
1:09:01In fact, I don't rule out that one of
1:09:03the reasons why the Chinese stock market
1:09:06has been rebounding significantly over
1:09:09the last two sessions is also because,
1:09:12until the Democrats—or until the new
1:09:15hybrid administration born of the
1:09:17current stalemate—proves it will
1:09:20continue this geopolitical challenge,
1:09:23many investors are meanwhile shifting to
1:09:26Chinese AI valuations that,
1:09:29as you recalled, had collapsed to very
1:09:31low levels.
1:09:33This is one of the dangers, because we
1:09:34are talking politics,
1:09:36>> We talk about the Democratic Party, but
1:09:39the important thing is to see who the
1:09:42candidate will be, because even within
1:09:44the Democratic Party there is a variety
1:09:47of positions: from the most extreme to
1:09:50those a bit more
1:09:53market-friendly.
1:09:55So let's say the next, whoever the next
1:09:58candidate is, will set the tone for
1:10:07the future activity regarding,
1:10:08specifically, investments in artificial
1:10:10intelligence.
1:10:12We must remember that in this period—
1:10:15you have shown this several times in
1:10:18your segments—we are in a time where
1:10:21there is, in AI technology, the largest
1:10:24investment in terms of percentage of GDP
1:10:27; the annual investment, in terms of
1:10:29percentage of GDP, is about 3.63%
1:10:36of annual GDP invested in artificial
1:10:39intelligence.
1:10:41American GDP is currently around, I
1:10:44believe, 33 trillion, 33-34 trillion, so
1:10:47we are talking about the order of 1.6 to
1:10:501.7 trillion a year for the next 4-5
1:10:53years.
1:10:55So this is the major investment that
1:10:57will be made.
1:11:01I have very long-term charts, from when
1:11:04the United States of America was born,
1:11:07when there were great investments in
1:11:10technologies, starting with canals,
1:11:12railroads, and highways—there was always
1:11:16a rising market, a bubble, and a bubble
1:11:19burst with a subsequent crash.
1:11:24So this time as well, although we cannot
1:11:28highlight the timing immediately, we are
1:11:32in the phase of euphoria for a
1:11:34technology that will probably change
1:11:38everything.
1:11:40It will change everything.
1:11:43However, as previous technologies have
1:11:46changed things, what happened afterward
1:11:49is that, following this phase of massive
1:11:52investment, the market tends to
1:11:54overextend itself, giving companies high
1:11:57multiples, valuing them excessively;
1:12:00after that, there is always a correction
1:12:03phase and then a potential market crisis
1:12:06, like the financial crises we've seen
1:12:09in the past.
1:12:13This happened with the railroads, it
1:12:15happened when the highways were built,
1:12:17and even when the internet arrived in
1:12:192000, we experienced the bubble and then
1:12:21the NASDAQ bubble burst and
1:12:25I believe a model like this could also
1:12:28appear in the near future.
1:12:31So that Memento Mori of the SOX.
1:12:36Let's keep it, let's keep it in mind for
1:12:39202.
1:12:42Paolo, I thank you because, with these
1:12:45bullish outside bars in various charts,
1:12:48we have shown, let's say, how there has
1:12:51effectively been, perhaps, a change in
1:12:54momentum, as could only be expected with
1:12:57these elections, this Democratic blue
1:13:00wave.
1:13:01However, it is a blue wave that should
1:13:03be read more in terms of a stalemate
1:13:05than any real, constructive, proactive
1:13:07impact from the Democrats.
1:13:09In short, over the next two years, we
1:13:11will see the new balances that the
1:13:12market will look for and find.
1:13:15But in the meantime, I really thank you
1:13:17because we have analyzed many investment
1:13:19classes and the variety of the market.
1:13:23Even a bull market can present assets in
1:13:25severe difficulty, so not everything
1:13:27goes up, and not everything goes down.
1:13:31As usual, I thank you for the quality of
1:13:34your
1:13:34>> Yes, this is my email address.
1:13:37Those who want to contact me, I prefer
1:13:39they contact me by email without going
1:13:41through social media because on social
1:13:43media we have fake profiles, a constant
1:13:45proliferation of clones; even Vito has
1:13:47so many, they even contact me in your
1:13:50name.
1:13:51Eh
1:13:52>> yes, I don't see it, I don't see your
1:13:54address.
1:13:54>> Ah, no, not...So, wait, let me share
1:13:59>> because I see the Cor Wave screen. Yes,
1:14:02>> one moment while I share.
1:14:04>> Here it is. This is my email address.
1:14:10Eh, [email protected].
1:14:13Contact me here for any information,
1:14:16both on the charts I showed and on the
1:14:18techniques, and perhaps even for those
1:14:20who want to do training on Gann
1:14:22techniques, on cyclical GAN techniques.
1:14:27Alright Paolo, I thank you, come back
1:14:29and visit us soon.
1:14:31Let us know in the comments what you
1:14:33thought of these points, in short, for
1:14:35reflection—not financial advice,
1:14:37obviously, from Paolo.
1:14:39Until next time. Bye everyone.

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