The Compound and Friends
00:24:58 · Josh Brown, Michael Batnick
[00:24:58] S0: big one, Intel. [00:24:59] S1: It was bit... No. It it was bad. Okay. But, actually, look at this chart from Duality Research. We're looking at a twenty one day moving average of daily advancers in the S and P 500, and it's... We just had the highest reading of 2026. So we showed that chart of RSP divided by S P Y. It just ripped. Doesn't really feel great because these are, like, a lot of these names nobody owns. [00:25:23] S0: The non XLK S and P names. [00:25:27] S1: Yeah. Nobody owns them. [00:25:28] S0: Like, companies that are so off the beaten track from the whole AI theme. So we're going to talk a little bit about some of these stocks, I think, in the next segment. But yeah, I think that's a good message. It's like you have a lot of stocks that are ripping while this AI stuff gets volatile. But if people don't own these stocks or nobody in the media is talking about them, you start to lose perspective and you think everything's crashing. [00:25:58] S1: Correct. So just not true. The S and P 500 equal weight index outpaced the S and P top 20, so the mega mega caps, by the widest margin since 2009. Holy shit. [00:26:10] S0: Yeah. Nobody knows this. [00:26:12] S1: Because... And and nobody owns these tiny little stocks. This [00:26:15] S0: is the... Actually, this is such a great conversation because this is like, how does the market feel versus what is the market actually doing? [00:26:24] S1: Feels horrible. It's fine.
00:26:24 · Michael Batnick, Josh Brown
[00:26:24] S1: Feels horrible. It's fine. [00:26:27] S0: Everyone's favorite stocks are falling like knives and people feel like they're walking into landmines on every earnings report, the market feels much worse than what the median stock in the index is actually experiencing. [00:26:42] S1: Okay. That's key. I want to highlight one more thing. So the NASDAQ, a lot of people, technicians always point this out. The NASDAQ just printed an outside month, which is technically bearish. Right? It got higher than the previous high, closed lower than the previous low. [00:26:59] S0: Alright. In golfing candle. [00:27:01] S1: Bad. Not awesome. Not awesome. Not not what you wanna see. I'm so glad that this guy Steve Depp or Deppie, I don't know how you pronounce his last name, put some data behind this. [00:27:11] S0: I believe it's Deppardieu. [00:27:12] S1: Okay. That's right, actually. You nailed it. So what happens when the Nasdaq Composite records a bearish outside reversal month from a new all time high? Alright? New all time high. And there's one, two, three, four, five, six, seven, eight. I don't know. There's 10 of these. Not a million, but whatever. That's what we got. We got 10. The index never closed lower seven months out. So not exactly end of the world ish. [00:27:41] S0: Don't tell don't tell the professional technicians.
00:27:41 · Josh Brown, Michael Batnick
[00:27:41] S0: Don't tell don't tell the professional technicians. [00:27:44] S1: Not exactly end of the world. So thank you, Steve, for quantifying that. I just wanna talk briefly before we move on about one stock that got kicked in the teeth, and it's Alphabet. Alphabet is now in a 30% drawdown. It's basically in in line with the tariff sell off and then the COVID sell off. Like, it's bad. [00:28:03] S0: This is so bad. And it's so big. Like, that one day It's it's bad. It lost 500,000,000,000 in market cap in a day. Okay. [00:28:13] S1: So Abnormal. So here's why, in my opinion. Search and YouTube both missed. Not great. Okay. So like those are the big ones. But interestingly, show... John, throw up the chart with the red line, the red bar. So Google search year to date is having its best first nine months since 2021. So it is kicking ass. Now I don't know if it's because it's raising prices or whatever. I don't know, like, the the the the click count and all that sort of shit, but it's scamming No. [00:28:44] S0: No. No. Wait. Wait. Pause there. Everyone knows why. It's not a mystery. The monetization rate on AI results or AI mode versus traditional search is lower. So that's it. The monetization is not as good on AI mode. When you go into the search box and you say, I actually just want the result. I don't want links to click. They don't make as much money. [00:29:11] S1: Google just had its best first nine months in a long, long time. Okay. [00:29:17] S0: But we don't care about the first nine months. We care about this quarterly quarter and next quarter.
00:29:17 · Josh Brown, Michael Batnick
[00:29:17] S0: But we don't care about the first nine months. We care about this quarterly quarter and next quarter. [00:29:24] S1: Free cash flow is getting worse. [00:29:28] S0: This is by choice. They're doing this on purpose. [00:29:38] S1: He interviewed somebody at OpenAI. It's on his Substack and you can listen to the podcast. And they said that OpenAI is now doing 20% of the search that Google is. [00:29:51] S0: Yeah. [00:29:51] S1: If AI becomes... Not becomes. It is. Forget about becomes. AI is a threat to Google. I understand that they have their own product, but the search... If the search business, if there is a chink in the armor, I do not wanna own that stock. I don't care if it's down 30% from its size. [00:30:07] S0: Well, this is the thing. People like, well, they're still dominant. Yeah. But [00:30:12] S1: That's not how the stock market works. [00:30:13] S0: They had 95% market share. [00:30:16] S1: Netflix is still dominant. It doesn't work that way. [00:30:18] S0: Right. Exactly. They had 95% market share in search for ten years, and it was the most profitable advertising product in history other than whatever Meta is doing. And they will still be dominant for the next twenty years, but if it's [00:30:38] S1: Yeah. That number could fall to 20% and the stock could go down 50%.
00:30:38 · Michael Batnick, Josh Brown
[00:30:38] S1: Yeah. That number could fall to 20% and the stock could go down 50%. [00:30:42] S0: That's right. That's right. Number one. Number two, the run rate. 19 to 15 to 12. I don't know if that's a Fibonacci sequence. I don't know if we'll do... Please reverse prime numbers. If you tell me the next search print is single digits, then this ain't over. And I'm a tell you the most interesting part about this. Somebody go rewind the tape. Find us in the summer of twenty twenty five lamenting the fact that Google is is about to become the first major casualty of AI because of search moving to the LLMs. And then looking like... This is me. Looking like an idiot, I sold Google at $1.80. I do the It ran to it ran to 400. [00:31:35] S1: Yeah. That was [00:31:36] S0: Whatever it did. But here's the thing. Was I actually right in the end? [00:31:42] S1: No. Stop. [00:31:43] S0: What do you mean? [00:31:43] S1: No. No. [00:31:44] S0: Not as a traitor. Not as a traitor. But [00:31:48] S1: Well, that's what [00:31:48] S0: I worried I was worried about this like everybody else. It was short term wrong, but what if it's long term right? Do you... I'm not saying was I right to sell. It was wrong to sell. [00:32:00] S1: Alright. So so the stock gap down, whatever. [00:32:03] S0: Anecdotally, go to the last 10 things that you typed into Claude or or ChatGPT. [00:32:11] S1: I don't use Google anymore.
00:32:11 · Michael Batnick, Josh Brown
[00:32:11] S1: I don't use Google anymore. [00:32:13] S0: But it's what I'm trying to say. Just you, one person, anecdotally, the last 10 things, ask yourself, out of these 10 things, one year ago, how many of these things would have been put into a Google search box? [00:32:27] S1: All of them. [00:32:27] S0: Is it nine? [00:32:29] S1: Yeah. So, anyway, the stock gap down, fell down, and it... We're now three days removed from the earnings report. Okay? We mentioned Apple closed at the highest today. Palantir, it's... Did you miss this? Google... Hold on. Google is down three days since. There's no bounce. Why did why did YouTube miss? Maybe the same reason why Netflix is missing. Obviously, Netflix is competing with YouTube, but it's because of reels and Instagram. It's because of reels and TikTok. That's Yeah. Like, that's that's it. [00:32:57] S0: It's crazy. It's it's crazy. [00:32:59] S1: And they can't... It... They can't It's [00:33:01] S0: too much. There's just too much. [00:33:02] S1: They can't compete with the with the short term with the short term clips or the short clips. They can't compete. [00:33:08] S0: Tried to do... And they 've actually... Nobody's saying this, but I'll say it. They actually failed. YouTube's obviously unbelievable success. I don't mean the whole business failed. They tried that YouTube Red, which now they call YouTube Premium, which was gonna be elevated content, the good stuff, it didn't really work. It didn't go anywhere. They don't... Right. Well, that's the point.