"TALE OF TWO CITIES" - Semiconductors EXPLODE, Mega Cap Tech DIES
Market Action (Extreme Divergence)
- Dow: +319 (but Caterpillar + Goldman = 390 Dow points)
- S&P: +12 (came in last few minutes)
- NASDAQ 100: -43
- SOX (Semiconductors): +4% 🚀
Gary: "390 Dow points with two names that had the Dow up 319. But with the Dow up 319, the S&P was up a measly 12. And the NASDAQ 100 was down 43."
Small/mid-caps: Better day (Gary owns mid-caps, still down from failed breakout)
🚀 SEMICONDUCTORS/AI: MASSIVE BREAKOUT DAY
THE CATALYST:
- ASML (Dutch semiconductor): Gapped up $70-80 (+7%), got upgrade
- Baidu (BIDU): Bringing AI chip company public (spinning off), gapped up 10%, finished +15%
EQUIPMENT MAKERS - NEW HIGHS/BREAKOUTS:
- ASML: Up 8.78%, breaks into new high ground
- LAM Research: NEW HIGH, up 8%
- Applied Materials: Up 4.62% (not at new highs yet, but OK)
- KLAC: Up almost 5% (very close to new highs)
- Teradyne: Up 7%, just about breaking out
MEMORY/COMPONENTS:
- Micron: Up $30 (+10%)
- Taiwan Semi: Breaks out of 12-week range, up 5%
STORAGE - MASSIVE MOVES:
- Western Digital: Up 9%, just about breaking out
- Seagate: Up 4% (hasn't broken out yet)
- SanDisk: Up 16% to $275 - Gary's wild ride summary: "$284 → $183 → $250 → $190 → $250 → $200, up 16% today to $275, may take out the old high soon"
- "They have really expanded their earnings and sales growth going forward"
OTHER AI/SEMICONDUCTORS:
- LITE: "Arguably the most strong stock," up 4.75%
- Coherent: Up 5% (hasn't broken out yet)
- Sienna: Up 5%
- Caterpillar (AI name in Dow): Up 4.4%
- JBL Circuit: Breaking out today, up 5% (electronic components)
WEAK AI NAMES BOUNCING:
- BE: Up 13% (all trading below 50-day, big corrections)
- CoreWeave: Up 10% to $79 (still down from $187 high)
- POWL (Powell): Up 10%
- GEV: Up 4%
- Construction types: "Very weak, but a very good day," seeing 5-7% moves
Gary: "Holy crap... I'm going to be walking in Monday with a crap load of things to be looking at. I'm thinking, we'll have a little back and filling, calm down, beginning of the year. No, they jumped on the AI semiconductor data storage trade."
"Amazing. Not many new highs, not many breakouts, but of course, if it continues."
💀 BIG TECH/SOFTWARE: BRUTAL REVERSALS & BREAKDOWNS
Gary's Setup: "I just named eight, top eight in the NASDAQ 100 that account for a gargantuan amount of the NASDAQ 100 and the S&P."
THE CARNAGE:
MICROSOFT:
- Broke 200-day moving average to the downside
- "Relative strength leading down. Microsoft, whoa."
APPLE:
- Opened up $6, finished down
- Finished below 50-day with bad reversal
TESLA:
- Opened up $6-7, finished down $12
- Breaking below 50-day
AMAZON:
- Opened up $5, finished down $4+
- Breaks below 50-day on big reversal
META:
- "Trying off the lows. Looks like it's starting to roll over today"
- Breaking below 50-day
NETFLIX:
- "Continues, doomed, into another low today in its bear phase"
SALESFORCE.COM:
- Down $11 today
- "Just had some good insider buying. Looks like it's hot today" (sarcasm)
ADOBE:
- Down $17 today
- "Totally cracks"
BROADCOM:
- Opened up $15, finished only up $1
- "Got sold down as it tried to move towards the 50-day"
- "Big reversal today"
COSTCO:
- "In a brutal bear market"
- Top 10 name
STILL HANGING:
- Google/Alphabet: Finished +$2 (was up $9), "I don't have a complaint about this one"
- NVIDIA: Was up $6 early, finished +$2, "ain't going anywhere"
Gary's Summary: "Apple reverses below the 50-day. Tesla reverses below the 50-day. Netflix is in a bear market. Meta breaks below the 50-day. Microsoft breaks below the 200-day. I forgot to mention Costco in a brutal bear market. Amazon reverses and finishes below. Adobe croaks, and Broadcom, big reversal today."
"And the QQQ finishes down today with the semiconductors, the SOX, up 284."
"Just put that down in your file manager. Software and mega cap tech. Market may go without them."
🔴 SOFTWARE: "HORRID RELATIVE STRENGTH"
All in Bear Markets/Breaking Down:
- CrowdStrike: Down $15 today
- Palo Alto Networks: Bear market
- Zscaler: Bear market
- Snowflake: Bear market
- GWER: Bear market
- Autodesk: Big top
- Workday: New yearly lows
- HubSpot: New yearly lows
- ServiceNow: Breaks another level of support today (very important)
- SAP (German software): "Almost into new yearly lows and breaking down in this bear phase"
Gary: "I think we'd avoid the software, kids."
"We can tell you, just reporting the news, horrid relative strength versus the market today and some very suspect patterns."
🟢 BANKS: STRONG DAY
- Citigroup: +2%
- Morgan Stanley: +2%
- Schwab: +1.5%
- Goldman Sachs: About +3%
Gary: "What did we tell you about the semis and the banks? If they ain't going bad, we ain't getting no bear markets. We'll have bear market areas. We ain't getting no bear markets."
📊 OTHER AREAS
CHINA STOCKS - BETTER DAY:
- Baidu: +15% (AI chip spinoff news)
- Alibaba: +9%
- FUTU: +14%
- Netis: +9%
- "And that's been pretty weak"
CRYPTO:
- Had an up day
- Gary: "I'm contemplating whether the last seven weeks lows are going to be it for now. There is that chance, though. Just remember, it's been in a bear market, and other coins you never hear about are down 70, 80, 90."
- "Because just remember, they hate you. I can't believe what they did with this crypto business. The amount of money lost on these coins, 32,000 they brought out, 32,000. Unbelievable. Scammers."
FROTH BOUNCING:
- Nuclear, quantum stocks bounced today
- Gary: "Just remember, as we tell you, they're going to bounce around. But they're all in brutal bear markets. And remember, if nothing changes, you got no sales, you're all going back to where you came from. And some of them already have."
- Bitcoin miners stronger today
🔴 AREAS TO CONTINUE AVOIDING
Bear Markets:
- Payroll (ADP, Paychecks)
- Waste management
- Consumer staples (food, drug, beverage, tobacco, household products, alcohol)
- Housing
- Exchanges
- "A bunch of the medical"
- "A few ickies in the insurance"
- Restaurants (mostly)
- SOFTWARE (new addition to avoid list)
Gary's Key Quotes
On the Divergence: "Tale of two cities today."
"A lot of Jell-O moving on the plate today, kids."
"Concentrated day, got less concentrated at the end of the day, but I think it may be, never 100% sure, and Januaries can be a pain. We've seen a lot of volatility in Januaries in the past, so maybe we have wide and loose pullback starting next week."
On Semis/Banks: "What did we tell you about the semis and the banks? If they ain't going bad, we ain't getting no bear markets."
On Big Tech: "Software and mega cap tech. Market may go without them."
On Crypto: "32,000 coins they brought out, 32,000. Unbelievable. Scammers."
On the Media (Minnesota fraud story): "The media is not upset with the criminals. The media is upset with the people that found them out. What did we say? The media sucks. They pick and choose. They don't give a crap about you. Just remember that. Do your own investigation. Do your own homework. Believe nothing. Seriously."
On Mid-Caps: "We own the mid-caps. We're down and still down a little bit. We bought the breakout that failed quickly, but hanging in there."
Strategy: "Stay with what works. Get the heck out of 1-8 (areas to avoid)."
"I think it's going to be an interesting January."
What to Watch
CRITICAL DIVERGENCE:
- Semiconductors breaking out to new highs
- Mega cap tech (8 of top NASDAQ 100 names) breaking down below 50-day/200-day
- Can market rally without Apple, Microsoft, Amazon, Tesla, Meta, Netflix?
KEY LEVELS BROKEN:
- Microsoft: Below 200-day (!)
- Apple, Tesla, Amazon, Meta, Broadcom: Below 50-day
- Workday, HubSpot: New yearly lows
SECTORS TO WATCH:
- Semiconductors: If this continues Monday
- Software: Complete breakdown
- Banks: Holding strong
- Crypto: Possible bottoming after 7-week decline?
January Volatility Warning: "Januaries can be a pain. We've seen a lot of volatility in Januaries in the past."
Proviso 📢
Gary: "We have a proviso for you. Notice the big word. Every now and then, we use these big words. Proviso, because there may be quite the important area to avoid that we haven't had to bring up, and we do want you to know that."
(Referring to software/mega cap tech becoming new avoid area)
