This Happens Next 90% Of The Time.

Summary

The script discusses the historical performance of the stock market in July, suggesting it's typically a strong month for investors. It delves into the potential AI stock bubble, market rotations, and the impact of large transactions on the S&P 500 and NASDAQ. The speaker also examines sectors like semiconductors, tech stocks, and oil, highlighting possible short squeezes and the significance of upcoming economic indicators like core PCE. The video aims to guide viewers on investment strategies amidst these market dynamics.

Takeaways

• 📈 Historically, July has been one of the best months for investors and traders, with a 90% success rate on the first trading day and a tendency for strong performance in the first half of the month.
• 💡 There is a discussion about whether we are in an AI stock bubble, suggesting that while bubbles are often mentioned, they usually grow larger and more explosive with time.
• 🚀 Large transactions in the Q's (quarterly options contracts) have been observed, marking the biggest since 2017, indicating potential market shifts.
• 📊 The script mentions the possibility of opportunities in oil, suggesting a potential short squeeze and breakout.
• 🔄 There is a rotation happening in the market, with trades leading to sales in semiconductors and a potential shift into other sectors like Amazon, Google, Meta, and Tesla.
• 🤖 The mention of an 'AI bubble' implies that while there may be concerns, the market might still have room to grow before reaching a peak of euphoria.
• 📉 The script discusses the potential for a market correction, suggesting that while a downturn might occur, it could be a healthy part of the overall market cycle.
• 🛒 US rail traffic and flight numbers are up, indicating a strong American consumer economy, which could influence market trends.
• 💰 The script points out that central banks' policies might not be restrictive enough, hinting at potential economic consequences.
• 📊 Hedge funds are reportedly betting against oil, but oil prices are rising, suggesting a possible short squeeze for these funds.
• 📈 The script suggests that despite some negative signs, the overall market trend is still bullish, with an eye on key levels like 5500 for the S&P 500.

Q & A

Why is July historically considered one of the best months for investors and traders?

July has been historically one of the best months for investors and traders due to a historical pattern where the first trading day of July has a high probability of positive performance, leading into what is often the best two weeks of the year for the markets.

What does the script suggest about the current state of the AI stock bubble?

The script suggests that we might be in an AI stock bubble, but it's important not to jump to conclusions just because the term 'bubble' is mentioned. It implies that there could be more growth ahead before the bubble bursts, as typically the market reaches euphoria without the mention of a bubble.

What is the significance of the large transactions in the Q's (quarterly options contracts) since 2017?

The large transactions in the Q's signify significant market activity and potential shifts in investor sentiment. It's a noteworthy event that needs to be discussed and monitored as it could indicate upcoming trends or changes in the market dynamics.

How does the script discuss the potential for a short squeeze in oil?

The script mentions that oil is in a potential short squeeze and looks set to break out. This is based on the observation that hedge funds are piling into short bets on oil, which has been rising, indicating that they might be on the wrong side of the trade and could lead to a short squeeze.

What is the script's stance on the rotation happening in the tech sector?

The script discusses a rotation happening in the tech sector with large tech stocks like Amazon, Google, Meta, and Tesla experiencing breakouts. It suggests that this rotation could be due to profit-taking and market consolidation as we approach the end of the quarter.

What does the script imply about the potential future of the AI bubble based on historical market cycles?

The script implies that by looking at historical market cycles, especially during periods of high correlation like 1986-1987 and 1997-1998, we might be heading towards a period of increased volatility and potential market tops. It suggests that the AI bubble could follow a similar pattern, growing until it reaches a point of euphoria before correcting.

How does the script analyze the current sentiment in the market based on the Bulls and Bears survey reports?

The script points out that the Bulls and Bears survey reports show a historically low bullish sentiment at 22.5%. It suggests that a small sell-off could bring back the Bears significantly, indicating that the market sentiment is fragile and could shift rapidly.

What is the significance of the 90% stat mentioned in the script regarding the first trading day of July?

The 90% stat refers to the historical performance of the first trading day of July, which has shown positive results 90% of the time over the last 21 years. This stat is significant as it suggests a strong start to the month, potentially leading to positive market performance for the rest of the month.

How does the script discuss the potential impact of the upcoming core PCE data on the markets?

The script highlights the importance of the upcoming core PCE data as the Federal Reserve's primary inflation indicator. It suggests that the market will be watching this data closely, as it could influence whether we see a reinflation or stagflationary period.

What is the script's view on the current state of the US rail traffic and flights as economic indicators?

The script views the current state of US rail traffic and flights as positive economic indicators. It notes that year-to-date rail traffic is up and flights are reaching an all-time high, suggesting that the American consumer is still spending and the economy is active heading into the election period.