Video summary

The NEXT Move in the Stock Market Will Shock ALL Investors

Main summary

Key takeaways

Finance

Finance-focused summary of the subtitles

Market move (timing + magnitude)

  • Last Friday
    • Nasdaq: -4.8% (described as “almost 5%”)
    • S&P 500: almost -3%
  • The presenter frames this as early-June volatility and warns the environment may be riskier for longs (e.g., “one bad day can wipe out months worth of work”).

Why the selloff happened (main cited catalysts)

  1. Broadcom profit-taking / valuation reset

    • Broadcom beat earnings and revenue and raised full-year guidance, yet the stock dropped ~13% the next day.
    • The explanation offered is that fundamentals remain strong despite the drop:
      • 48% YoY revenue (as stated)
      • 54% YoY earnings change (as stated)
      • AI chip revenue visibility out to 2028; described as “more than $30” (units not clearly specified in the transcript)
    • Rationale discussed:
      • “priced for perfection”
      • Q3 guidance was slightly lower

  2. Google equity raise

    • $85B equity raise → Google shares -4% next day.
    • Context: investors disliked dilution in a “frothy” market.
    • Google Cloud backlog: cited as $462B
    • Rationale given: more capital is needed for infrastructure to monetize it; the company allegedly preferred not to use debt because the balance sheet is “excellent”.

  3. Macro + policy/event pipeline

    • New Fed / Kevin Warsh’s first FOMC: upcoming June 17 (market may “test the Fed”).
    • PDT (pattern day trading) rule removal: no longer need $25,000 to day trade → expected to increase participation, especially in options/leverage.
    • SpaceX IPO catalyst
      • Plan mentioned: allocate up to 30% of IPO shares to retail
      • Raise $75B on 555M shares at $135 each (as stated)
      • Subtitle implies it may become a “sell the news” event / liquidity must come from somewhere

  4. Jobs data “sell the news”

    • Non-farm payrolls: 172K vs 85K expected
    • Unemployment rate: 4.3% (unchanged)
    • Interpretation: stronger jobs could support “keep rates as is” / reduce odds of easing (though presenter says Warsh is unlikely to raise rates).

  5. Seasonality

    • June is described as “the worst month historically in a midterm year.”
    • Presenter expects more volatility through June, with the back half generally poor.

Investing/trading framework & steps mentioned

A) Risk-first approach for June volatility

  • June volatility is attributed to events including:
    • CPI
    • SpaceX IPO
    • Kevin Warsh’s first FOMC (June 17)
    • Micron earnings
    • June midterm seasonality
  • Instruction: don’t be over-leveraged on longs
  • Self-check posed: if there’s a -3% day, how would a swing portfolio react? (fear of drawdown wiping months of gains)

B) Technical “trend” framework (moving averages)

Momentum/trend discussion relies on moving averages:

  • 9 EMA (weekly)
    • Not yet hit “on the weekly” (said: it hadn’t been hit since some prior frequency)
    • In 2025 they hit it 5–6 times
  • 21 EMA (weekly)
    • Usually touched 2–3 times/year
    • Hit once in March; expecting further “resets”

Practical rule stated

  • If a stock breaks short-term momentum, use higher moving averages as support
    • Example: Intel 50-day MA around $90
  • If short-term momentum breaks, reduce/avoid leverage.

C) Hedge construction approach (options-based)

  • Presenter says they’ve been hedged since May 20, and that the hedge helped on Friday.

Hedge design principles

  • Avoid too short expirations
  • Avoid too far out-of-the-money so the hedge doesn’t cause excessive drag

Example hedge

  • QQQ 705 put, expiring Oct 16
  • Cost: about 5% of portfolio
  • Described outcome:
    • On the large down day, puts gained strongly:
    • “up like 40% in one day” despite long-dated expiration

D) “Capitulation” / timing caution

  • Friday’s drop is likened to capitulation:
    • “Highest QQQ volume all year”
    • “Hourly RSI most oversold since Aug 20, 2025”
    • Called a “3 or 4 sigma move down”
  • Caution: bottoms aren’t smooth; June likely remains choppy, with further drops/events possible.

“How to invest” guidance (explicit recommendations/cautions)

Positioning: invest vs trade depends on risk tolerance

  • If risk-averse
    • Use more traditional investing principles (valuation, margins, cash flows)
    • Prefer defensive stocks and/or indices on dips
  • If participating in AI without understanding
    • Warning against “random ticker symbols”
    • Hyper-growth AI names can fall 13%+ in a day without breaking the long-term thesis

Dollar-cost averaging / indices

  • Suggested approach: buy Nasdaq dips (e.g., Nasdaq -5%) using DCA rather than concentrated risk.

Separate portfolios

  • Split into:
    • A dedicated AI portfolio (higher risk)
    • A more conservative “responsible” portfolio

Leverage caution

  • If a stock breaks momentum/trend:
    • do not use leverage
    • consider commons/shares instead

When to get more aggressive

  • Wait for:
    • A healthy pullback
    • A shift/break-and-retest on daily charts
  • Example trigger referenced:
    • Price returning near the S&P 500 weekly 9 EMA or 21 EMA

Company/sector and AI capex thesis (where money is going)

Macro/AI spending argument

  • Presenter argues the “AI buildout” is early/mid cycle and should support ongoing spending.
  • AI capex estimate: $4–5 trillion by 2030 (projected)
  • Mega-cap earnings context:
    • S&P 500 forward estimates: described as 23% higher
    • Claim: since 1995, years with >20% forward estimates typically delivered double-digit returns, except 2018 (cited as -4.4% S&P 500)

Hyperscalers mentioned

  • Amazon, Google, Microsoft, Meta, Oracle (as key capex contributors)

Semiconductors / supply constraints

  • Quote attributed to Elon Musk:
    • “No high-volume computer memory fab in America right now” (“zero”)
  • Timeline cited:
    • Micron fab in Idaho not reaching volume until ~2028
    • Other builds in New York not until ’29–’30
  • Presenter’s conclusion: supply likely can’t meet demand, supporting multi-year AI hardware demand.

Photonics as an AI infrastructure trade

  • Presenter highlights silicon photonics / photonics as a scaling constraint/beneficiary.
  • Photonics-related tickers mentioned (examples):
    • AAOI
    • Coherent (COHR)
    • Light (referred to as “Light”; likely LAZR or similar—ticker not confirmed)
    • GLW (Corning)
    • CN (Ciena)
    • Lumentum Holdings (mentioned by name; ticker not stated)

“Trend still intact” examples

Claims these stocks haven’t broken trend despite the Nasdaq drop:

  • AAOI
  • Coherent (COHR)
  • AMD (at/above 21 EMA)
  • ASML (at 21 EMA)
  • Micron (MU) (at 21 EMA)

Contrasting example to avoid:

  • Ciena (CN): said to have broken both the 21 EMA and the 50-day moving average, so presenter suggests it’s not a trade “here” until trend re-establishes.

Valuation metrics / what to look for (explicit checklist)

For traditional valuation discipline, the presenter lists:

  • P/E and forward P/E
  • PEG ratio
  • Return on Invested Capital (ROIC)
  • Operating margin

Intel example (fundamental screen)

  • ROIC: -2%
  • Profit margin: -6%
  • Current P/E: negative (negative earnings)
  • Forward P/E: 64
  • Forward earnings growth: negative
  • Conclusion: Intel likely isn’t behaving like a “traditional company”

General targets

  • ROIC should be >10%
  • Ideally PEG ~1 or lower (as long as earnings/profits are positive)

Alphabet (GOOGL) example

  • P/E: 27
  • Forward P/E: 25
  • Price/Earnings growth: 0.6
  • PEG described as could be ~1 even with “almost double” potential
  • Debt to equity: 0.189
  • Positive signals: net income and cash from operations trending up; gross profit up; “strong balance sheet”

Tool mentioned

  • alphascope.trade
    • Pricing: about $19/month (or less annually)
    • Includes a “free PDF” on AI stocks by subcategory (via email signup)

Risk management & performance/metrics referenced

  • VIX spikes framed as historically favorable for one-month-out performance:
    • “Buying when the VIX pops is much better for your portfolio”
  • Nasdaq performance near highs:
    • Within 20% of all-time highs, buy-and-hold discussed:
      • 12-month change: almost 90% positive
      • Median return: 19%
      • Average return: 21%
  • Sentiment/participation risk:
    • PDT rule removal may increase leverage usage (options participation)

Disclosures / disclaimers

  • No explicit “not financial advice” disclaimer appears in the provided subtitles.
  • The presenter includes promotional/CTA language (subscriptions/services) rather than formal regulatory disclaimers.

Tickers / instruments / sectors mentioned

Indices / ETFs

  • Nasdaq
  • S&P 500
  • QQQ (Nasdaq-100 ETF)

Equities / companies

  • Broadcom (AVGO)
  • Google / Alphabet (GOOGL)
  • SpaceX (IPO context; not a public ticker)
  • Micron (MU)
  • AMD
  • ASML
  • Intel (INTC)
  • Nvidia (NVDA)
  • Oracle
  • Meta
  • Amazon
  • Microsoft
  • Alphabet (again)
  • SMH (mentioned as a fund in the hedging example)
  • Lumentum Holdings (name only; ticker not stated)
  • Ciena (CN)
  • Light / Lightwave (“Light”; ticker not clearly specified)
  • Corning (GLW)
  • Coherent (COHR)
  • AAOI

Fund holding examples (tickers as listed)

  • NVDA, ORCL, AVGO, AMD, SMH

Options / derivatives

  • QQQ 705 puts (Oct 16 expiration)

Macro / volatility instruments

  • VIX

Key numbers & dates collected

  • Last Friday:
    • Nasdaq: -4.8%
    • S&P 500: ~ -3%
  • June volatility expectation: through events
  • June 17: Kevin Warsh’s first FOMC
  • May 20: hedges opened
  • Broadcom: stock -13% after earnings despite guidance raise
  • Google: equity raise $85B, shares -4%
  • SpaceX IPO: up to 30% retail allocation, raise $75B, 555M shares @ $135
  • Jobs:
    • 172K vs 85K expected
    • Unemployment: 4.3%
  • AI spend: $4–5T by 2030
  • Memory volume timeline (attributed):
    • Micron volume ~2028
    • Other builds ’29–’30
  • Hedge:
    • QQQ 705 put, exp Oct 16
    • Cost: ~5% of portfolio
    • Gain described: ~40% on the day
  • Technical reference:
    • Intel 50-day MA: ~$90
  • RSI/volume:
    • “Highest QQQ volume all year”
    • “Most oversold since Aug 20, 2025”
  • Intel valuation:
    • ROIC -2%, profit margin -6%, forward P/E 64
  • Alphabet valuation:
    • P/E 27, forward P/E 25, growth 0.6, debt/equity 0.189

Presenters / sources mentioned

  • Walt (referred to via “subscribe walt.com/thetravelingtrader” / “I go live…”)
  • Elon Musk (quoted on chip/memory capacity)
  • Jensen Huang (mentioned in context of silicon photonics capacity needs)
  • Kevin Warsh (named in context of his first FOMC)
  • Leopold (referenced via “Leopold’s Situational Awareness Fund” 13F)

Original video