Tim Knight: Why I'm Cutting Risk Before The Weekend

0:00 Hello everybody. Tonight it is Friday, end of a nice full week of trading. Uh yesterday I painted a picture that and they sort of in the title of the YouTube video summarized it in the same way that basically you know if Friday is a big update, you know, it's over. Well, it isn't. Now, to be clear, ES at the moment is green 200ths of a single percentage point, but it's green nonetheless. And the ENQ is green, rather strong,.3%. But uh we mercifully did not get any sort of follow-through from yesterday. Uh, we got terrifyingly close and the market's being real cute right now because like my time at exactly midnight, happily I was asleep, but at

0:45 exactly midnight, this rally stopped and it fell like nonstop until 3 hours into the trading day and then decided that was enough and it has undone about half that drop and we are near the day's highs kind of sort of Uh for my own positioning, I took profits on my biggest position, diamonds, the diamond short, and trimmed here and there. So I basically dialed the risk down from I was at about 200% down to 125%. All short, still spread out among 21 different positions, but trimming. It's kind of a bad day. I I was kind of hoping for a little little more selling

1:32 than we're getting, but as I say, the good news is still profitable and no kind of rally going on following yesterday's big big rise. So, let us jump into the charts. I've got more charts than positions for a change. So, uh let's plunge in as we end this um this week. So, here is the spider. Let's kind of review what's cooking over here. Uh this was the range we were in. We blasted out of this range. We establish a new higher range. Within that new higher range, we created a right triangle top. The base of the right triangle is here anchored to this price gap. And the descending trend line is up here, which um you know, by definition has not been pierced. Uh the lustiest

2:20 selling we got was on Wednesday. We got lower on Wednesday than we had been in quite some weeks. And we rallied mightily yesterday and today is just kind of a so-s so day. Like at the moment we're down.17% on the um on the spider and on the ES we're up just a few points. So essentially unchanged. Uh but I'd say still positive. We've done some real good damage right here. Uh it would be very nice if we did not push past the highs from yesterday. Um if we did, it's not the end of the world. um the end of the world would come if we pushed above this descending trend line. Uh we're a ways away from that, but uh you know, pretty good week

3:07 on the whole. We continue to chip away at support and um we've got a goodly amount of white space between um present prices and uh what would constitute even rather strong support down here. So, you know, September's not over. And to be clear, I keep talking about September is the bearish month. It's not like, you know October November December it'll just be up all the way. No, of course not. Um it's just that historically September is the weakest. Um but election year shenanigans are going to be in overdrive until November 3. Um you know, for example, Bessant's uh bond buying binge ends strangely precisely on election day. Um, and so, uh, I would

3:53 expect that historical tendencies will be a rough guide, but I strongly suspect we will take out September's lows in the final quarter of this year. Um the ES as I mentioned uh is up a little bit and uh we had a quite a large rally yesterday but on the whole we're still slowly slumping lower um week to week. The small caps continue to be one of the weakest critters in town. The IWM, even with this big rally we've seen over the past two and a half hours, is down on the day about 2/ird of a percent. And we have been slipping nicely. This was the lifetime high uh back on August 14. And

4:40 to spot the trend, you know, I think it's pretty clear what's going on. We are just slipping away as interest rates continue to blast higher. Incidentally, I just finished um about a 10-minute deep dive on interest rates, which we'll be publishing this weekend on the YouTube channel. Uh the diamonds, as I said, that was past tense my biggest short. It was uh very good to me, but I don't want to risk taco time over the weekend. Um we also uh from a charting perspective have reached what has been support uh over the past few months. You know we had bottomed out here and then here and maybe here as well. I just figured that you know as delighted as I would see for

5:25 this thing to to plunge beneath this blue line. I decided to trim uh my risk some. Um so just to recap, it was basically two big trades. shorted here, uh, covered here, re-shorted here, and then covered about two hours ago. So, out of that, and that was the big part of reducing risk. Uh, but to be clear here also, this trend line failure is a pretty big deal. The breaching of this blue line, although it's been undone for the moment, uh, is also it's not a big deal, but it's nice that we are chipping away at that support. But I I'm out. So, if we crash on Monday, shame on me. Um XLI is a different flavor of uh of the

6:12 industrials and uh here too we seem to have found a lot of stability this week. Uh should we rally back to this gap? I think it'd be an interesting place to reshort it. Uh but I'm out of that and um as far as XLK goes, the the tech heavy stocks, we have had a strong week there. Um support continues to be down in this zone. In fact, let's adjust this just a touch because this this was anchored to that price gap right there. I've I've toned it down just a penny or two to take into account this low. Let's make sure we did that right. You're so anal. I know. Okay. So, there's the low there. And then the high is here. That is to say, the anchor point where that gap is. So, that's resistance. So, we're still banging around in that range um

6:57 ever uh every day since August 17. Boop. Boop. Boop. Boop. oop and we're in the high portion of that right now. So going nowhere fast as Mr. Scott would say. Um and then SOXX the semiconductors. This has been the real stickler this week because semiconductors have been strong all week long. They we we plunged on Monday and then it recovered completely and then some. So um I uh have been light still on that. At the moment, I actually don't think I have a single. I mean, maybe Sienna, I guess, counts, but on the whole, uh, I don't Oh, KAC, so BFD. So, but I'm not into anything in a big way except for the SMH January puts.

7:45 Um, that's it. So, it's um it'd be nice if this would start behaving itself, but it's been weirdly stable. Um the AI bubble is still very much in force and um yeah, it's a bit of a mess. Um one really cool trade that I did a post about yesterday that worked out great is EFA. And EFA is essentially a worldwide equity fund except they carve out North American equities. And uh my my view here was that and we'll just reuse this horizontal for the moment. My view was that um the fact that we had broken this trend line and that we tended to be

8:32 trending lower made yesterday's strength an interesting opportunity for a short sale. So I shorted it yesterday with a stop right above that horizontal line. So the horizontal line was at 106.57. So I put a stop at 106.6. It was not triggered. So I came into the day short this. This was my second biggest short. Um and it had a nice tumble. So we're down 1% on this. I'm still in it. I'm I'm kind of wobbly on this um whether to cover it or not and just take profits, but um I think I'll just let it be. Um, I've tightened the stop up a lot and um way down here. So, we're very close to getting stopped out, but anyway, the

9:18 trade worked out. And whether I'll stick with it or not for the next 45 minutes or not, I I just don't know. Um, FXI China is up a little, but my view here is that provided we don't cross above 34.65, I think we're still going to be sinking in the weeks and months ahead on on China. EW. This is behaving itself beautifully. This is Mexico Country Fund. So, just to recap on this, my short suggestion was on this day, which I guess was Monday. Um, yeah, that was the 14th Monday. So, the short sale idea was on Monday. Perfect tag of the broken blue trend line. Perfect gap seal. Uh, nice fall on

10:05 Tuesday, big fall on Wednesday. recovered yesterday to some degree, but the fall resumes. So, we're down over 1% on this. And so, that that's also the the break beneath that symmetric triangle is is behaving itself quite politely. So, yay, Mexico. And as far as South Korea goes, this is weird because even though semiconductors are strong, the SMH is up quite a lot. A lot of individual semiconductors are up. KU is Oh, I forgot to turn my symbols on. Let's do that. KU is down. Um, boink. There we go. They're down 2.67%. It is still a beautiful

10:51 uh potential head and shoulders top. As I sort of realized on the air yesterday, it looks to be about 80% done. Uh, should the day come that we cross below 11.67, 67 that would be phenomenal. Um, so you can see over the course of time there have been three prior big tops on this one. This one follow was followed by a a pretty good bare market. This one was followed by a cataclysmic one as was this. I mean this was uh astonishing. Went from like 25 down to a dollar. Uh so pretty big deal. Um, it seems to me that this top here, which is bigger and better than any of the prior

11:37 ones, could produce some interesting results in the long term. But keep in mind, this is a triple leverage creature. So, you know, dangerous stuff. Um, over in bond land by way of TLT, this is down about twothirds of a percent. Uh, this was um um pretty big week of course with the FOMC. Um, and we peaked on this yesterday and we've given up yesterday and now we're down to Wednesday's bar when the FOMC was doing their thing. Um, you can see here and this does include dividends. It's a kinder chart than just a raw historical price data. Even with the dividends incorporated into this chart, it's looking pretty sickly. And I think we'll

12:23 continue to go lower. I think we'll get into the 70s as the months go on and so forth. And as I mentioned earlier, I've I've done a kind of lengthyish video about this and a lot of other interests sensitive stuff that I think is kind of uh kind of intriguing. Um XLF the financials is barely changed now. We could rally on this, but I think this top here is a pretty firm barrier. Uh something just under 57 I think would be resistance on that. As far as crypto, which I'm staying far far far far away from mercifully, uh it is doing exceedingly well. Uh today is just a huge rally on this and people on

13:08 slope are kind of scratching their heads like um gold and silver aren't doing that great and Bitcoin is just setting the world on fire. Um maybe there's news, I don't know, but um we're back. We're we're basically into new multi-month highs. How how high are we now relative to um yeah, we're getting in the neighborhood of highs for the year? Uh the tippity top for the whole year was not far from where we are right now around um 82792. So, it would only take um about $1,600 more to have a new high for 2026. Actually, strictly speaking, that's not true. We began 2026 with a big plunge

13:55 here. So, excuse me, but but you get what I'm saying. Let's call it since February. Um again, something must be going on to create that kind of move, but I'm delighted to have nothing to do with this. Um we look at Ethereum. It is a very strong uh it may well push past resistance here. That remains to be seen. Um we're beginning to challenge the highs we had seen about a week ago. Uh and as you look at related equities, for obvious reasons, those are doing quite well. Uh STR Michael Sailor Strategy MSTR is blasting higher almost 16%. Um, American Bitcoin ABTC is up also about 16%. Um, Strive ASST, which is the high yield

14:42 instrument based, I believe, on Ethereum, is up over 7%. Weeble, um, which gotten smack down terribly, um, for about 10 days here. It's undoing some of that. This looks a lot more vulnerable, though, because this was a failed bullish breakout. And yes, it's rallying, but it seems to me it's just pushing up toward um that broken horizontal um circle CRCL also up almost 8% but kind of the same idea. It's not really bullishly configured. And um one last example, bullish BLSH, which is up nearly 9%. So, the whole crypto space for whatever reason, I don't know if they revived the cryp uh the clarity act

15:28 or something, but it's having a big big rally. And as I say, I'm delighted to not have a single position related to that cuz they tend to be bearish and that would be a really bad thing. Um, as far as the stuff you can hold in your hands, uh, let's look at that at a bit of a slower pace. Uh, gold by way by way of GLD is up about 0.92%. the futures up about $23. Uh zooming in here. Um if we've bottomed, and that's a big if, but if we've bottomed, it would seem to have been on Wednesday because noting this line here, this was resistance for many, many months. It finally broke through in mid August

16:14 and we blasted higher and we tumbled. But in recent weeks, we have seemed to have found support at that same line. So clearly what we need now is some follow through. Uh this is a good little start. Uh but it needs to follow through. And the ultimate test would be to and this is a ways away to conquer this red line right here. If it can get past that, I think we have a very very well-defined bottom on this. Uh, you know, as I've said, my long-term view on gold is, you know, we'll go into the quintuple digits on this and it'll it'll just rock and roll. But as it is now, it's it's quite dicey. Um, and we'll see if this thing like slumps slower. If it does, you know, we've got to pay close attention

17:00 to that green rectangle down there as as for a base. Uh, as far as silver is also having a good day, up almost 2%. Um, and let's drag this line a little higher. Let's make this the first important test for silver. We'll be a little more conservative. Something like that. If it can get above say 65 on SLV, that would be a very, very positive sign. But it's exactly the same scenario with the trend line. This was resistance. As we zoom in, it broke above it, changing the role of that line to support. Challenged it here and then here and then here. But each time it did recover and we are getting some push higher. But I I don't think we're really out of the woods quite yet. What I really want to see is a very clear split

17:48 between what equities are doing and what what Precious is doing. I want Precious to get a mind of its own. So in a perfect world, we'd see equities really start to sell off and Precious to shrug its shoulders and keep marching higher. That's the perfect scenario. Um XME, uh I'm short on this. Um and it's falling nicely. This is down 2.61%. 61%. Um, a generous stop on this would be based on this gap. I'm keeping a more conservative stop anchored to yesterday's high, but we've got a big fat bearish engulfing pattern on XME. I don't know what's going on with copper. Maybe it's been weak today. It really doesn't matter because it all boils down to whatever um XME constitutes. So, we don't have to overthink this, but I'm remaining short XME. um junior gold

18:36 miners GDXJ up just a little bitty bit. They're still very elevated and this may well be an exhaustion point for this. So, this is part of the reason I'm just so skeptical about um about what's going on with precious in terms of is this the start of something bigger? Um and finally, SIL is actually down a little bit even though silver is strong. This is the silver miners and it too has a gap that it's sealed nice and neat and we could well see this start to sink lower if uh this precious metals rally is just kind of a ephemeral beast. Um over in crude land um it's been uh a week of softness for crude. the the sort of terror peaked on this on the 15th and I

19:26 follow the news probably more closely than most and I it seems to me things have settled down relatively speaking there. um we could see the same sort of uh drop that we saw say back here which and back here which as you can see didn't really mean anything in the longer term but uh this is the new news is good news environment as long as something even worse isn't going on then crude seems to sell off um totally unrelated to that or at least partly uh just from a charting perspective feeder cattle um I know most you don't trade it I just think it's a really cool chart uh it seems to have hammered got a really big top here. And as I've mentioned before, maybe that means cheaper stake in the future. But um we've got a really pretty top going and a tumble taking

20:11 place there after this tremendous rally uh where we trip more than tripled the price on FC. Um let us turn our attention back to tech stocks a bit. So here are the cubes. They are up about a third of a percent. The INQ itself is up not quite 100 points, also about a third of a percent. We are still rangebound on this. Uh zooming in on the ENQ, we uh pierced ever so slightly um on Wednesday this gap level here. So this, you know, it did not really break it. We've never closed below it, but 71.59 remains uh a supporting level there. And if for whatever reason things really

20:57 start selling off and semiconductor restoring the party and all that, we've got a lot of space to work with here um in terms of a prospective drop zone. But as it is now, ain't nothing dropping. We have spent weeks just grinding away in this sine wave and like not doing anything. Um so that cycle still is there. And for the bulls, they would need to conquer this gap as well as this uh slightly descending trend line. So around this 730, the low 730s area is what they would need to beat in order to um have yet another chapter in the bullish saga. Um here's the ENQ itself and you can see the peak on this got terrifyingly close to that trend line, but a perfect kiss of that. Maybe maybe

21:44 this constitutes another one of these creatures here. We had rally rally rally rally and then it seemed to exhaust itself here and then we went into this this uh incessant sine wave that's happening. But this is between yesterday and today it's been quite strong for the ENQ. As I keep mentioning the semiconductors have really shaken off their blas and have seemed weirdly strong. Um speaking of here's SMH. These are up about a percent. And as we zoom in here, the um uh this price gap obviously sealed um a minor point of resistance here would be anchored to this dogee bar, but strictly speaking, let's be a little more generous. I would

22:30 say that this level is the next important one. This is a multi-week high at um 580 57. And then should that be conquered, the next one it would be this gap like so. But we'll just keep it there for now. Um, in terms of a a multi-week top. Um, and the longer we go, the higher this trend line becomes. So maybe we'll tag it without even really falling much if it just kind of just keeps doing nothing. Uh, like a duck on the surface of a pond. Um, what else? What else? Well, let's look at some individual shorts. it it's not a bad day uh on the offshore portfolio here. Just glancing over at my 21 positions. Um five of them are green and uh 16 of them are red. So not not

23:18 too terrible uh a breakdown there. Let's just look at a few of them. Um we have IBM which is falling nicely. It's down about almost 2.5%. Very sloppy chart, but definitely moving in the right direction. So, I've tightened up the stop on that one. Uh, BTU, Peabody Energy. Um, this one was just really attractive to me because this goes back 20 years, and we've got these really clean tops and drops here. So, this is the latest one. We're sinking on that. I assume that crude oil's weakness is helping contribute to this. uh carnival. This is also down having completed a very large and and well-formed uh head and shoulders top right there. I

24:03 mean, I might want to make that even bigger. Uh that's a very good-looking pattern. Major major failure of a trend line going all the way back to the October 2022 bottom. So, pretty big deal there. So, CCL doing just great. Um, relatedly, RCol, I'm short in both. Royal Caribbean, uh, also breaking down kind of a similar setup. Um, as you can remember from the prior one, RCL much, much higher than CCL. CCL, whereas this one was at lifetime highs not that long ago, CCL's been much weaker, relatively speaking, but they're both wellformed. And so, I'm sure both of these and they're both down today, even though crude is down, which is sort of surprising. Um, Meta before the open was

24:51 very, very strong and I loosened my stop a bit to avoid getting stopped out and retightened it right back up once we were open and it was clear that it was uh getting weaker. I'm not sure why they were showing so much strength. But if you consider the range we've been in since all the way back almost a year, we have been banging around this wild range here. And it's not picture perfect, but I've put a horizontal there at uh around 690 as a stop loss. And uh that we're being repelled. We've got a bearish engulfing pattern down the candlestick. And uh maybe that's topped out. It's it's been a surprisingly robust stock, but remains short meta. uh Oracle down

25:39 about one and a half percent slow to move obviously very important in the hyperscaling world and the AI bubble world um but uh you know Ed Zitron who's a person I enjoy reading a lot is crazy bearish on this and so that's part of the reason I'm in this trade uh owl that is blue owl capital is also very deep in the hyperscaling weeds and this has been breaking down not I mean it's Not a very pretty setup at all. It's just, you know, kind of going lower. I mean, as you can see back here, this can this thing can just kind of grind away for weeks in one direction or another, but I'll just tighten the stop up along the way. Uh, a couple more of these individual ones. Um, TMC, the metals company. Uh, this is also down

26:26 just barely. Um, but it's a beautiful top on this one. And even though it was strong earlier today, um I um took advantage of that strength and uh reshorted work day and it's flipped red. Now it's down 2.13%. Um as you can see, this giant pink top here looks looks like it had this massive recovery going up 100% approximately from those lows. I think it's exhausted now because we got all this overhead supply working in our favor. So just to wrap things up, uh ZB weak as you can see on a very long-term basis. This goes back 26 years. So we continue to grind lower in spite of um you know the the government uh efforts

27:14 to you know try to prop this thing up. It is continuing to sink. Uh you can see this reflected in these long-term um shorter shorter u time frame charts like the 5-year uh and like the um like the 10-year. So uh right across the board on those, but I just want to show one last time something we just glanced at to drive the point home. In Q on the one hand quite close to a breakout. It would not take too much for the bulls to just grab this baton and run with it. But we did not get blasted out of anything today. There's been no sea change to take place this week. Uh so we'll just have to see what uh what the weekend holds. But still short 21 positions,

28:01 25 150% commitment level, something like that. Um and watching those stops along the way. So have a good weekend. I'll see you on Monday. Thanks as always for coming by. And um that's it. Bye-bye.