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Good day. Today I'm going to talk to you about the overall state of the market, the SPY index, and the most important stock to watch this week. I also have a purchase notification from Nancy Pelosi that I want to share with you. The SPY index is gradually declining. We are no longer holding the structure, and the charts have even now shown an " evening star"—a bearish pattern.
The main trigger for the next drop is the 762 mark. Let me show this on the charts. So, here is the level 762 that should hold. Here is the “evening star” pattern we are observing. It is small, and if the level of 762 is broken, it will signal the closure of this gap, after which we can find support at the previous resistance level—757.
Below that, of course, is the 753 level, and that is our last chance for a significant rebound that could take us back to 800. One of the most important pieces of news that the market is trying to digest right now is that the Fed owns more than half of the Treasury bond market. Look at the yellow bar on this graph.
The Federal Reserve owns approximately 52.5% of all coupon Treasury bonds issued with maturities of 10 to 15 years. That's about $540 billion out of a total market of just over $1 trillion. Now let me make it clear. This does not mean that the Fed owns half of all US national debt. This means that the Fed owns more than half of the bonds of this particular maturity.
But it's still very serious. What happens if inflation remains high and the Fed has to maintain tight monetary policy? What happens if buyers start demanding higher yields for holding US government debt? And what happens if the Fed ever decides not to roll over these securities or starts reducing its holdings again?
Suddenly, the private market will have to absorb a much larger volume of supply. Bond prices could fall, long-term yields could rise, and these higher yields would spread throughout the economy. Mortgage rates will go up. Corporate refinancing will become more expensive. The federal government's interest spending will continue to rise.
Stock valuations, especially those of high-tech, fast- growing companies, may come under pressure from sellers. This is a macroeconomic problem in a market that is at its historic highs. A serious political conflict is also brewing here. The Treasury needs buyers for a huge amount of government debt, but the Fed's job is to control inflation and protect the value of the dollar.
These goals do not always coincide. If inflation remains high, the Fed may need to tighten financial conditions, but tighter conditions mean higher borrowing costs for a government that already has a huge debt. This is the trap. This is the macroeconomic situation we find ourselves in . Fight inflation aggressively and you risk crushing markets, the housing sector, and public finances.
Support the Treasury bond market and you risk leaving financial conditions too loose, allowing inflation to return. Inflation vs. financial stability. There is another detail that people don't understand. The Fed cannot go bankrupt like a regular company or commercial bank. It creates reserves that it uses to settle its payments.
But that doesn't mean its losses don't matter. Under current policy, the Fed rolls over its expiring Treasury assets instead of allowing them to go out of circulation. But the concentration shown here tells us something important. The Treasury bond market, and therefore the entire financial system, is extremely sensitive to Federal Reserve policy.
When a single institution owns more than half of the underlying maturity segment , even a small change in its policy can have a huge impact on profitability, liquidity, and investor confidence. And this is a real warning. The danger is not necessarily what the Fed owns today. The danger is what happens when inflation, government borrowing, and Fed policy eventually move in opposite directions.
So keep an eye on long-term Treasury yields , auction demand, the Fed's balance sheet, and whether the Fed continues to roll over its assets. Because if the bond market starts demanding higher yields while the government continues to issue record amounts of debt, the consequences will not be limited to the Treasury bond market.
They will affect mortgages, stocks, banks, corporate debt , the dollar, and ultimately the entire economy. And that's why this yellow column that I showed you is important . We are currently in a bull market, but this upward movement is fragile and extremely dependent on the daily actions of the Fed.
So just keep that in mind . Okay, now let's talk about the most important stock on Wall Street, which has been leading the AI rally, and this stock, by the way, has been falling for the last seven days in a row, and today there was a complete collapse. And if you know what I'm talking about , I'm talking about Nvidia.
So, that's how Wall Street rates it, but what were Nvidia's results? They have exceeded Wall Street expectations for the last four quarters in a row. And yet, the next day, Nvidia shares fell in all four cases. And it looks like Wall Street is playing it safe with this current 7- day losing streak. And this has only happened twice in the last 10 years.
The following session, Nvidia shares rebounded by 1.8%. The rebound was unsuccessful, and a month later the shares fell another 1.9%. Ultimately, they fell another 16.6% before bottoming out on October 14th. Now, three months after the seventh "red" day, Nvidia has risen by about 23.4%. In 2019, the situation was even better.
Nvidia fell for another session, then quickly recovered and rose by about 23% three months later. So, here's what I'm looking at and what I'm expecting. I think we'll get a little rebound tomorrow. I will try to participate in the small growth that may occur by Wednesday. I will open a long position, waiting for this move, as a 7-day losing streak is not typical for Nvidia.
Let's take a minute and move on to Nvidia's graphics. So, I'll put this dotted line so you can identify past reporting events. The reporting day was " green" as stocks rebounded from their declines, but they continued to decline after the report. Then, in February, we actually went up the week before the report, and the stock sold off the next day.
In this particular case, we fell between the day before the report and the day of the report. A day later, the price even increased, but this was the moment to take profit on the increase. And in this last example, you can see that the price rose the week before and fell the week after. So, in this particular case that we're in right now, reporting on Wednesday.
We fell hard today . I expect that tomorrow we will see a rise and on Wednesday we will see a rise and I will lock in profits on some options that I bought today with a target price of around 217. So I have described and shown you that Nvidia often rises before the report and falls after it. We are acting a little differently now as we are in a 7-day downtrend.
I expect the next 2 days to be "green" and I will try to capitalize on this small movement. Of course, on this trade, I will place a stop loss at around 205. Having said that, I want to point out another visual pattern on these charts—a clear double bottom in the shape of a bowl. So I expect a potential reversal that could continue and push us all the way to the 235 level.
And that would run counter to the previous four earnings reports, which mostly rose before the report was released and then fell after it. This is a completely different situation. The shares were sold off even before the report. Perhaps we are in for a slight upturn. I'm in the game now. I logged in today.
I'm waiting for the price to reach $217 and then I'll decide what to do with Nvidia next. So, Nancy Pelosi's choice is Intel, INTC. A true Wall Street legend from Washington, rivaled only by Donald Trump himself in daily stock trading, bought some Intel. Let me share the details with you. She bought 10,000 shares of Intel and spent half a million dollars on leaps options.
So for her, this is not a quick speculative deal. She believes these stocks are worth holding until 2027, and I agree with her . I don't know what she knows, but I believe Intel is at a bottom right now, and I was trading this with a tight stop loss that has already kicked me out of the position twice, but today I got in again.
So I continue to give them a chance and watch closely for a turnaround. Let's look at the graph together. So, I told you that the neckline is around 108, and a potential inverted head and shoulders pattern has formed on the chart. We set an entry target of 90. I got knocked out on my stop loss at 92 after the price rose to around 92.60.
Today I re- entered on the pullback and set a stop loss at around $86. So I have some room if the stock wants to continue to rise. The situation will only begin to stabilize when the price returns above 90. This is a rather critical level for Intel. I'll tell you, if I get knocked out at 86, I'll try again at 82.
This is kind of like Palantir for me a while back when I was actively trading them around $132 and they eventually made an incredible move up to the upper end of the range. I think Intel will do the same. I will continue to " hold on" to Intel as it grows, as will Nancy Pelosi. Let me know what you do with Intel and Nvidia.
I'll stop there. Join the Stocks with Josh community where you can receive my active alerts as well as A+ rated trading tools and scalping levels every morning. This is my trading system. This is how I take risks on Wall Street . Come and see for yourself. Peace and blessings to my friends. See you in the next video.
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