Ep. 322 Bullish Markets Show These Signals Before Heating Up — Why Joe Fahmy Sees Them Now
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Hello and welcome to another episode of the Investing with IBD show. This is our show where we talk a lot about Investors Business Daily, our methodology, and we have some great guests on to kind of share their thoughts on what's happening with the stock market. Today is May 28th, 2025, and we've got a special guest for you today.

He's known as follow through day Fahmy because it seems like every time he's on, we get a little follow through day action. But it's almost like we didn't need you this time, Joe. So, of course, Joe Fahmy is from managing director at Zora Capital. Welcome back to the show, Joe. Thanks so much for having me on. We got the we got an additional follow through day yesterday in anticipation of me being on.

Yeah. So, you know what? I think that's exactly what we were looking at. You know, whenever we get those strong days, FOMI has got to be just right around the corner. And of course, you know, because of that, it's probably a good time to talk a lot about follow through days and the signals that we use to get us back in the market. But kind of first, I want to just kind of, you

you know, pick your brain a little bit. It was such a dramatic drop that we saw. And, you know, I mean, first you had kind of the December 18th and I'm just going to pull up a market search chart real quick to kind of go through this. Yeah.

And make sure we're all on the same page. This is the NASDAQ composite. So, you know, just as a reminder, we had this December 18th kind of jolt with the Fed. You know, it wasn't what they did. It was kind of what they said. We had deep seek in here on January 27th with a big hit to AI. And then

I don't know what the news was exactly, but February 21st really seemed to be where a lot of things fell apart. Of course, we had in here a lot of tariff talk, whether it was the Liberation Day or the pause on April 9th, a lot of volatility. How do you handle things when you get that dramatic of a drop and how do you just not, you know,

think to yourself, it's time to buy canned goods and never, never invest in the market again. I think we have to put a little bit in perspective of coming off of the lows. We had two amazing years in 2023 and 2024. So when you have back to back over 20, 25%, whatever they were each year on the NASDAQ S&P,

I actually put it even on my blog to start the year for my preview for 2025, basically saying, keep your expectations realistic. And I wouldn't be surprised to see a 10 to 15% correction in the first half of the year. Now, all right, I got lucky that I called that, but the whole point is,

Even after big moves like 2003, after a huge move off of the lows, you had a nine-month consolidation in 2004. So off of these moves...

A consolidation or some sort of a correction is actually not that surprising considering the big move that we had. Like you can see there, yeah, in 2004, we just went sideways for a bit after that big move in 2003. We just went sideways for a while. So it doesn't have to be a bear market. It's just –

The whole concept is after a market or a stock makes a big move, don't be surprised to see some sort of consolidation, correction, digestion, which in my view is actually pretty normal. Yeah. And I mean, part of this is that you've not to make any age jokes, but you've been around for a while. So you've seen a few cycles. And so you kind of know what's normal. I'm going to reset it to today and just, you know, even back up a little bit more to this monthly chart.

Because, I mean, at the end of the day, on the monthly chart, this kind of looked like nothing, you know? Yeah.

in the overall scheme of things. Yeah, just the velocity of the move scares people with machines taking over and program trading and so forth. So it just people, I don't want to say anyone enjoys a decline, but no one really likes a really fast, swift decline like what happened in March of 2020 when we dropped over 30% during COVID or, you know, what happened recently. So

It was a quick decline. I'm not saying I expected it. I just wasn't surprised to see. I didn't know the reason. Nobody knew at the beginning of the year, but I just wasn't surprised to see some sort of digestion. And in a little way, there's some psychology behind it because a lot of people came into the year with huge expectations because of one thing, and one thing mainly is recency bias.

So when things just go up and that's all you're accustomed to, we as humans tend to think they're just going to go up forever. And I think the market had a convenient way of unfortunately keeping the bulls in check and shaking out some of that excess bullishness.

Yeah. And it's so interesting you bring up the psychology part, because as much as a lot of us love looking at charts and stuff, it really, the psychology part, I mean, in some ways, that's what is shown on the chart. It's shown when things kind of get a little bit extended beyond their norm, a little bit beyond the mean, the average. So we talk about mean reversions, but there are those elements of expectations, I guess, from

from your average person. And it's the sum of those thoughts and feelings and emotions that really go into the market. And sometimes it's easy to forget that.

Yeah, it's very simple concept of human behavior. When things go up, for the most part, we tend to get pretty bullish. And when things go down, we tend to get scared and get bearish. And that's the, to your point, the Jesse Livermore line of nothing's changed over the past hundred years. The same human emotion of fear and greed that existed a hundred years ago exists today and will exist a hundred years from now. So it's,

It's not the main thing that drives the market, but it's definitely something that a lot of people don't give enough credit to when...

One of those surveys, I forget which one it was exactly, coming into the year had the highest number of people expecting a double digit gain coming into this year. It was the highest ever. So, you know, again, that just sort of showed you where the sentiment was because 2023 and 2024 were so strong. Some people forget that the market can actually correct. Right.

And, yeah, that's certainly – the market is there to remind us. And, of course, Jesse Livermore, the wise words that you quoted, those were made 100 years ago. So it is interesting to that point. And for as much as people wring their hands about algos and program trading and whatever, at the end of the day, there is a lot of human emotion still in there because –

Look, the algos, they're programmed by humans. Who programs the computers? Right. Right. So you can't really get away from that human thought and human belief. But you also mentioned kind of how bullish people were, but I was a little surprised at how quickly...

they turned bearish. I mean, it was some very quick, I mean, even before things got ugly, it seemed like the bearishness really took hold in terms of investors' intelligence, your AAII, your CNBC fear greed. A lot of those things seem to get bearish awfully quick. Is that something you've seen before? I think it's two factors. I think, as I mentioned, the velocity of the drop

because after 2003 on the S&P, we just went sideways on 2004, and it wasn't a velocity. It was just sort of not more than a 10% correction. So I think number one is the velocity of the drop, and the second thing is politics, because there was obviously a lot of what sparked this drop and the gap downs and the volatility were tariff headlines. And this is where...

I'm reminded of the, yeah, that's the 2004 in the S&P. You can just see it went sideways. It wasn't a big velocity drop there.

But going back to the politics part, I'm reminded by Warren Buffett's line, which is when you mix your politics with your investing, you're making a big mistake. So I don't want to get political about this, but clearly the elephant in the room is if you don't like a side or you do support a side, it sparks a lot of emotion and people start to maybe sell because of their political beliefs, which I agree with Warren Buffett is a big mistake.

Yeah. So, of course, a lot of times when we talk about the pitfalls of emotions, we kind of have, okay, what is the way to combat that? What is the way to overcome those biases, recency bias that you mentioned, the political bias that you might have? What's your...

Turn off the news and turn off social media. Done. But then also we rely on rules a lot of times. It's kind of those things that you come up with to combat that. And you've shared some slides with me that I want to also share with our audience about some of the, I guess, unusual aspects of this most recent, this recent pandemic.

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Putting the pulling that up. I mean, just as far as like combating the emotions, I think one word is acceptance, accepting. I mean, you did allude to I've been trading almost 30 years. So accepting cycles of the markets like Peter Lynch has talked about bull markets, bear markets, corrections, accepting that that's going to happen. And the second thing that comes to mind is knowing your time frame, because that can help reduce those emotions when you understand your time frame.

And just so people understand your timeframe, what kind of timeframe are you looking at, Joe? I like to trade those power trends or those two to three times a year, the market's healthy. And I like to try to trade, they usually last about six to 12 weeks. So that's that whole line, you make 80% of your money in 20% of the year. It involves some patience, it involves putting in the work and identifying when things improve because I wanna try to,

invest or trade anywhere from a few weeks to a few months of holding swing trading stocks. I want to do that when the wind's at my back. And as William O'Neill said, you know, four out of five stocks and maybe said three out of four stocks move with the general direction of the market. So when the winds that are back, I want to be involved when the general direction is in an uptrend. Yeah.

And I did misspeak. I accidentally credited CNBC. It's actually CNN that has that fear and greed index. Oh, the CNN fear and greed. Yeah, that's right. I was just thinking CNBC because of markets, but CNN deserves the credit for that fear and greed index. But go ahead and talk a little bit about this. Now, this is...

Marty Zweig, breadth thrust. And these are signals since World War II. This is data that you got from Ryan Dietrich that posted a lot of this from Carson Investment Research, Ed Davis Research. What are we looking at here? What is the breadth thrust? So it's interesting that it combined with the follow-through days we had on April 22nd and 23rd on the NASDAQ.

Anyone can just Google or go to Investopedia to get the definition. But the gist of it is over a 10-day period, an incredible surge in buying from the institutions. So the biggest takeaway here is that line that –

The big institutions control the markets. That's bottom line, period, end of sentence. The big pension funds, hedge funds, mutual funds that are trading hundreds of thousands, if not millions of shares, they control the markets. So when they are distributing stock and selling consistently, I want to get out of their way. And when they are buying, I want to pay attention to that. So the bottom line here is this wide breadth thrusts.

invented by Marty Zweig is that surge in buying over a 10-day period. It's only happened 19 times since World War II. So it's something to pay attention to, a rare signal. And every time, 12 months later, the market's been higher. So it's important because it's rare and it's also been consistent when it happens. But

The whole point is it was a surge in buying that also coincided around those 10 days from mid to mid-April, whenever it was, those 10 trading days, when it also coincided with the two follow-through days that we saw.

Yeah. And just to, you know, put put an exclamation on that point, the average and median right around 23 or 24, 25 percent. So as much as you said, oh, don't expect much after a two 25 percent back to back years average.

We could be looking at, because of the breadth thrust, potentially, you know, another big year. It's possible. Yeah, I was just, my whole point was of just keeping the expectations realistic after back-to-back 20 plus percent years. Yeah.

I hope we get another 20 plus percent year and it's possible. We could, anything is possible, but just to my whole point of that was to expect some digestion. But again, this shows out timeframe being the key word here. This shows that six to 12 months from now, uh,

from that breath thrust, which would take us to about October to next April is when you can expect it higher. And to your point, if the S&P average does about 8% to 10% a year, depending on dividends, the fact that it's more than double that and an outsized gain is something to really pay attention to.

And also, sometimes people forget that in order to get that 25%, it's not a nice straight line up. There's a lot of, you know, that's just taking from one point to another point when you're looking at 12 months. There can be a lot of movement in between. Yeah, well, you can see three months later, sometimes the market's flat to down. So great point. It's never a straight line. The market is...

designed to fool the majority of people, all those quotes, it's never easy. So again, remind yourself of the timeframe and also accept there's going to be pullbacks and normal corrections along the way.

Absolutely. Now, there's another rare signal. So it's and you were telling me that you had like seven. You chose three, but there were all of these kind of were a lot unusual signals that all kind of happened at the same time. So this is I didn't know what else to call it except for a three day jump. Yeah, this is three consecutive gains of greater than one and a half percent on the S&P.

As you can see there, what, nine, 10 times? It's very rare. It also coincides with the breath thrust, coincides with the follow-through days. The bottom line, again, if anyone wants to take anything away from this, the big institutions control the markets and they came back in aggressively in the second half of April.

And it's very rare. You get three consecutive gains, tying it into psychology. A lot of sentiment measures. CNN fear greed was at three. That's measured from one to a hundred or zero to a hundred. It was at three, which is fairly putrid, uh, sentiment. Uh,

NAIM, the active investment managers, all across the board, a lot of different sentiment measures showed people fearful, reducing exposure, buying puts. And it's amazing that when everyone throws in the towel, the market just comes back and you usually get these incredible gains when people are caught off guard in cash or short. And that's when it's a rare signal, again, leads to gains 12 months from now.

Yeah. And it's worth noting that a lot of times...

I like that this is using a three day because a lot of times people will point to one day and certainly April 9th, you know, being up over 12 percent in a single day is notable. And I think that was the third biggest percentage gain. You know, President Donald Trump mentioned how it was the best day ever. Point wise, yes. I think if you look at percentage gain, I think it was the third. So right up there.

But a lot of times those do happen around volatility. And there was a lot. I mean, what were we down like five or six percent the next day? But this is different because it's looking at three consecutive gains of one and a half percent or more. And that was the concept of a follow through day is you are like those one or two day bounces. So exactly when you get three consecutive and it's not exactly one and a half percent.

So collectively over four and a half, 5%, at least, that's a pretty nice surge in buying of, again, maybe facts changing, people getting too negative, but the whole point is a huge surge in buying. Right. And since you mentioned the follow-through day, it's probably worth putting that signal in here as well. Just for people that are maybe not aware, what we look at is we look at a low and then we need a rally day. Now, sometimes we will choose

choose a pink what we call a pink rally day where the day didn't close up, but it closes in the upper part of the range. And so we did get that on this day. This day didn't count because it was too early. That was day three. And then you kind of doodle around. But this day right here, April 22nd, I mean, yeah, April 22nd, we had a gain of over, you know, well over 1%.

Volume was heavier than the day before, both on dollar volume and trading volume, I should add. And then you got another strong day. So back to back follow through days the next day. So that's our follow through day concept that we're talking about. And again, why you got the nickname follow through day FOMI is because you seem to just waltz around right around that time. And this day right here, while not a follow through day, it had all of the elements of it.

So you were close. Yeah. But I'm glad you pointed that out because, again, follow through days combined with the 10 day Zweig breath thrust, the three day indicator advanced decline on all of NYC. There was so many different measures there.

The whole point, though, is signs of the institutions coming back in. And when they come back in, you have to respect that. If you're short and you hate the news, you hate the politics, you hate whatever's going on, COVID, whatever the case may be, you're supposed to ignore that. And what's the line? Pay attention to what the market's actually doing, not what you think it should be doing. So that's where...

Paying attention to facts and paying attention to what the institutions are actually doing is very, very important. And at the time, it's hard to shut that out when the emotions are swirling and so forth. Yeah. I mean, to your point, that 2003 time period that you were talking about earlier, it's not like –

all the news was rosy. We were about to go to war in Iraq and, you know, weapons of mass destruction, you know, potentially blowing up oil fields. Saddam Hussein is a crazy man. There's always, there's always those elements. And talk about time wearing on people, 36 months from March, April of 2000. I know we technically bottomed in October of 2002, but

whether it's, you want to call it 30, 36 months of just, you had 9-11 happen after the dot-com collapse. Talk about wearing on sentiment and people at that point just threw in the towel and then all these stocks set up and then the facts change.

That's why, you know, as O'Neill said, be ready springs around the corner and be ready and always be ready for that because there will always be new opportunities, especially coming off of those big bear markets. Yeah. And I mean, look, some people didn't have a choice but to throw in the towel because they didn't have any risk management. They got over levered and they've

They basically lost it all. And, you know, they couldn't come back from it emotionally or with their capital because of how much they lost. You've got to remember the NASDAQ itself was down 79% from its peak. I mean, that's...

That's not nothing. Yeah, you don't have to manage risk if you don't have anything to manage. I guess that's right. There you go. It's just that simple. I wanted you to also before we kind of switch to switch gears here, this six day Whaley signal. And I hope I'm pronouncing that last name properly. Wayne Whaley. He looks at six days and whether it's four of six days up half a percent or three of six days up one and a half percent. This is another signal that just doesn't happen that often. But we got it on April 25th.

Yeah, it's a spinoff of that three to up days. So it's when four of the six are up at least and three of the six –

And again, it's just, again, the basic concept. If anyone hopped in late, big institutions come into the markets, breath thrusts, various thrusts, advanced decline, fall through days. And what they do is same with this one. 12 months down the road was 30 and one. The only time it was down 12 months later, as you can see, there was 2001. To your point, a 36 bear market decline.

where you had 9-11 happen later that year. So that's a very, very rare 36-month bear market, you know, two and a half, three years, whatever you want to call it. But I'll take 30-1. That's like you from the foul line, right?

I was going to say three-point line, but that'd be too aggressive. I think, yeah, let's not overstate. That'd be Steph Curry territory. But yeah, I'll take 30 and one, 30 out of 31 times higher. So a year later. Yeah, no, absolutely. So switching gears a little bit, you've brought up some analogs here. 2003, and again, rightly noting the 2004 pause, which again,

At the end of the day, the 2004 pause wasn't a disaster. There was this little known company called Apple, right, that was basing during that time and came out in 2004 while everything else was kind of basing. So you also shared some charts with some analogs, and I thought this was really interesting. So I want to share these as well because –

A lot of people are talking about the similarities with AI and the Internet. And, you know, there's been a lot of talk about this, but I like how you kind of put it towards some actual numbers here and and kind of let's let's look at how it traces to an event. And in this case, an invention, a technology.

Yeah. This is from Bespoke Investments. And when I saw this, I just thought it was fascinating because

I've talked on IBD Live and in previous podcasts about what fuels bull markets are inventions, things that revolutionize and change our lives, whether it's the railroads back in the 20s or television, airplanes, drug discoveries, PCs, smartphones, the list is endless. The more recent analogy is the internet,

New invention revolutionizes our lives. And what do all of these things have in common is increasing productivity as well.

So simple example, railroads getting from New York to LA took faster than walking clearly. So the internet had a productivity and the internet, as far as in a major invention in recent memory or recent years that revolutionized our lives led to an incredible bull market from roughly 1995 to the early 2000. So,

As I continue to digress, the analogy is what's the new, you know, amazing invention of the time, which people way smarter than me. And I know that's a large sample size. People way smarter than me, Marc Andreessen, people like that saying that this AI and artificial intelligence is going to be bigger than the Internet.

Um, so the analogy is if you have a new invention and it roughly started around 2022 to early 2023, it's very, very possible that this could be again, another, you know, history could rhyme with another really nice five year bull market. However, uh,

you've made this point earlier, it's not going to be straight up. There's going to be incredible corrections and volatility along the way. It's not going to be a smooth ride. Just like from 95 to 2000, you had a major correction in 97 with the Japanese debt crisis. And then in 98 with the Russian debt crisis and long-term capital blew up. So-

If you fast forward to today, you're going to have a hiccup with tariffs and maybe a year or two from now, you might have another big pullback as well. So, but this was fascinating because it was tracking the NASDAQ

After every Netscape release with chat GPT release, comparing the original internet browser with one of the leaders in AI as well. So AI applications. So I don't know. I mean, I find it fascinating. I'd love your feedback on it.

No, absolutely. And for a while there, we were actually kind of looking at this most recent period and kind of lining it up with 1998. But look, I mean, this is tracking pretty close. I mean...

you got to remember things don't track exactly, you know, when, when you, when you put these charts next to each other, but if, if you can kind of see, oh yeah, it's tracking close. It does give you a sense of the potential. And I think that's worth, worth noting. And,

As you said, look, we had kind of a period in there in 96, 97 that was a little rough. And of course, at the end of 97, again in 98. So it doesn't mean that it has to be smooth sailing the whole way, but there's a lot of potential here. And it was interesting too, because Netscape came out and I'm thinking of that big N before Netflix, right? They had the big N. And

you know, using the Netscape Navigator. But there were also a lot of companies that were coming out and huge, huge gains. AOL, of course, but there's also these companies that no one remembers anymore. MindSpring Enterprises, I remember trading that one. And there's a whole host of them that just went out of business. Or other competing browsers with Lycos or search engines and all that stuff. Yeah. Right. Ask Jeeves. When was the last time you used Ask Jeeves? You know, so...

And sometimes, you know, chat GPT is out there and we have kind of a lot of people fighting for top dog status. And we don't know who that is going to be. And some in some ways, we don't even know the power of AI, just like we didn't know the power of the Internet in the late 90s. There were so many things between mobile apps, phones, everything like that that came later. And who would have thought that in the 90s that AI?

were going to be the way they were 15 years later with social media and everything. Yeah, that's a great point because it's not just that boom from 95 to 2000. There were so many inventions and things connected where you had Dell, Microsoft, Cisco, Intel. Those are some of the big four that made the PC leader, the software leader, the chip leader on the PCs, and Cisco connected them all. So you had that.

as part of the fuel with a lot of the internets and browsers and search engines and as well as Nokia and Ericsson with smartphones becoming more prevalent. I mean, so there was a whole bunch of things with communications and with technology going on. But,

But I really want to hammer this point, which we just made, is that from 95 to 2000, there were several corrections and scares and growth scares along the way. Sound familiar? Where just a few months ago, there were growth scares with AI until Microsoft evolved.

And Meta came out with their most recent earnings saying, nope, we're still spending. We're still full steam ahead. So there's going to be shakeouts. It's not meant to be easy. It's not meant to be X equals Y with a straight line up where we just sit back and everyone makes money. It's going to be if this is going to be a similar analog.

There's going to be a lot of shakeouts along the way. And before I forget, one other thing is moves in the markets go on way longer than we can expect. Because someone might say, are you saying we're just going to go nuts for the next two or three years? I'm not saying anything. I just know in both directions, just when you think things can't go higher...

They usually do. And in bear markets, when you think things can't go lower, they usually do. So just keep in mind, the market moves tend to be exaggerated in both directions.

Yeah. And as a reminder for folks, you look at this chart. I can't remember when exactly, but it was in 1997, at the end of 1997, I believe, that Alan Greenspan, the maestro of the Fed for many, many years, gave his irrational exuberance speech. And while there were corrections there, you know, and some letting the air out of the bubble, I would argue that there was maybe a little bit more irrational exuberance to go.

Yeah, when he gave that irrational exuberant speech, I think the Dow, he was talking about the Dow, I think it tripled after he gave that speech. At least two or two and a half X. So that just proves the point.

That just proves the point. Moves get exaggerated. A really quick story. I remember a friend of mine, CMGI was another name, that internet incubator. Split adjusted, it went from one to 120. And it was actually, this guy was a famous, big hedge fund manager. And he told me, this is a zero. And you know what? He was dead right. Went from one to 120 and it was a zero. The problem is it went to 360 before it went to zero. So the analogy again is,

I mean, split adjusted, a thing goes up 120 X and then still triples after that. So he was dead right. But the timing was not right because again, moves get exaggerated. So just keep that in mind, you know, and keep things in perspective. And another thing is in how to make money in stocks, which you helped mark up the fourth edition. You can study some of those past winners to help give you a little bit of perspective.

Yeah, I'm glad you brought that up because I threw in this slide. This is from page 389 in How to Make Money in Stocks, the fourth edition. Actually, in the third edition, in The Successful Investor, Bill wanted to put this chart in. Mike Webster had kind of noted this similarity. I put the chart together and it was like so close. This is 1920s, the roaring 20s.

you know, versus the 1990s. And again, it got even more exaggerated on the NASDAQ when you put those, when you line those up, came down in a very similar way. The Dow corrected 89% in the, you know, after the 1929 crash, whereas the NASDAQ came down 79%. And then you had a

really great run. Now, you didn't kind of follow after that because in the late 30s, you had this guy Hitler kind of messing things up in terms of the global world order. But, you know, we are beyond this. But it's interesting how sometimes this stuff repeats.

Um, you know, I was, I was kind of thinking back to what, you know, some of the things that Bill told me and his dad was a RCA salesman. And of course, radio was a big thing, you know, back in the twenties and commercial radio broadcast. So to your point on communication, um, you know, a big thing there, um, you know, radio

your point on the railroads and what that did. I mean, you started having in the airlines, Wright Aeronautical was a big, you know, a big company, a big stock move, you know, around this time. So there's definitely a lot of,

A lot of similarities. The stocks, they look very similar. The names change. The technology changes. But there's a lot of similarities there. Yeah, no, I weren't there like 300 railroads that went crazy and then only like five or 10 survived, just like they were, to your point, 300 dot coms that no one even knows about. But, you know, the AOLs and eBay's and a handful of them survived. So it's literally the same in it.

Same thing happened in the auto industry, right? There were hundreds of auto companies and then it got down to, you know, five, right? You know, you had the big three here and then you had Honda and Toyota and a few others, but it was very consolidated. And now with EVs, you're kind of swelled up again. You're back to, you know,

hundreds of different car companies each. Yeah, this is also a chart of my blood pressure trading in the 90s. I remember that too. Yeah, yeah, I could see that. Yeah, that's what I thought of. Yeah, so if anyone else in YouTube that is watching live, if you have some thoughts about, you know, some of these analogs, I'd love to hear them. We've got some folks that, you know, one guy is, it's midnight in Italy and he's like, well, I don't care that it's midnight. I got to watch Joe Fahmy. I'm going to,

I'm going to stay up late for that. Thanks for digging out the one nice comment. I appreciate that. Oh, no, there's plenty. There's plenty. There's plenty. I'm kidding. I appreciate everyone's kind words. And hopefully they're getting some nuggets from our discussion.

Yeah. I also wanted to take a moment because two years ago, of course, we lost Bill O'Neill, the founder of Investors Business Daily. As Joe said, I worked very closely with him. I marked up a lot of those charts. And one of my prized possessions is the third edition of How to Make Money in Stocks because in here were kind of all his notes to me about what he wanted to do for the fourth edition. So on this page,

Here were the 100 charts that he wanted in the front of the fourth edition. And then he even had, you know, in certain spaces like, oh, I want to make these charts bigger. So he kind of outlined, you know, oh, this is where we can find some space. You know, if we just cut out this part. And he really...

he really liked filling up stuff. So he saw this, this, this last page, that's the cover of the book. And he put three letters here. Use, you know, he wanted to use this back, you know, back cover to do something, not the back page, but the actual cover. Uh, he's like, why is this white? We should, we should use this. So I wanted to just give a quick remembrance, uh, cause you know, Bill O'Neill of course was important in my life and so many lives in terms of what he shared, uh, with, um, you know, with,

the paper and his whole system of investing. No, that's awesome. And thank you so much for sharing that. I know you work closely with him, so it's much appreciated. Yeah. Okay. Let's get into some stocks. So this IBD podcast is brought to you by Directions Daily Leveraged and Inverse ETFs. Whether you are a bull or a bear, you choose the direction. Visit direction.com.

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Before investing, carefully consider a fund's investment objectives, risks, charges, and expenses contained in the prospectus available at direction.com. Read carefully. Distributor, Alps Distributors, Inc. Where do you want to start? You brought some stocks along, and there's this little stock called NVIDIA that had earnings. Maybe we start there because there is certainly, in terms of chips...

That is a big one, right, for the chip makers. Here is the after hours right now. This is on my Thinkorswim platform. Yeah, I think I hit all my account numbers and everything. But, you know, here was the day. It was kind of a ho-hum day. This is a 15-minute chart. Earnings came out. We got the conference call. It might be going on right now. But a pretty good reaction. So

Nvidia has been this big winner. Do you hold through earnings? Do you just wait? How do you handle it? I mean, to the point I made earlier, after a stock or a market makes a big move, it's not a surprise to consolidate. It's been going sideways for about a year. So let's not forget split adjusted. It went from whatever it is, 10 to 150 with many corrections along the way.

And when you look at the weekly chart, it's just been consolidating between that sort of 90 to 140 for a long time. But that's actually pretty normal considering the explosive move off of, you know, when it really had that insane earnings in May of 2023. That was the first time where 30 something analysts were following it and they weren't even close. Yeah, that was like.

Like it was one of the greatest beats as far as numbers wise in the history of Wall Street. So since then, I think it was around 200 at the time, 10 for one split. So 20 to 150. That's that's since that earnings, you know, to digest for a while.

is perfectly normal. Now it's widely held. It's one of the top market cap names. I don't think the growth story is done. They're growing at a slower rate, but still the growth is insane. Jensen Wong is one of the best CEOs on the planet and is one of the best visionaries. And, you know, they're worried about Blackwell sales when he's already thinking two or three more products in the future right now. So, um,

I think it'll do well. And if this bull market led by AI continues, I think it can do well, you know, for the next year or so, but probably still going to be in this range and consolidate for a little bit. But at least the the strong earnings is good. Yeah, absolutely. Another kind of AI darling right now is Palantir.

Palantir Technologies, I do have a position in this. I forgot to mention that in case you forgot, Joey, we're going to disclose anything we have positions in. So Palantir Technologies, PLTR, this has been another one of those with just a phenomenal move since 2023. Pretty deep base here, 47%, but shook it off pretty quickly.

I was going to ask you, do you forgive a deeper base when you don't want it to go much more than, let's say, 30? Do you forgive that because of the velocity of the correction in the markets? Yeah. I mean, you have to put it in the perspective of what happened in the market. And to your point, in 1998, that long-term capital management fiasco, I'm just going to go back there real quick. I'm going to go to 1999. Oh, I have to...

We did this, Charles and I, after last week, because, you know, you had this really kind of ugly base right here with Charles Schwab, 40% deep, but the handle, 27% deep for a handle. That's very unusual. But if you put it in the perspective of what the NASDAQ did, you know, the fact that the NASDAQ undercut and Charles Schwab didn't, I mean,

Can you forgive a 27 percent handle because of that? Yeah, that's not a big handle. Yeah. And look, that happened in 2009, too. There were a number of stocks that when the indexes took another leg down, they held up. Apple, you know...

held up pretty good looking. It was Priceline at the time. Look at that. This was the move down that the market had, and this was already on its way back. So sometimes it's not just the depth, but it's kind of how it comes out of it to me. Yeah, that's a great point. So Palantir, you know, and I'm glad, thank you for answering that and clarifying it for my own knowledge, but Palantir is,

Yeah, it was a deeper base, but the velocity that it came back towards those new highs, I thought was very, very impressive, you know, as far as bouncing back where it just it's, you know, right back towards those highs. So.

So I like that it's one of the leaders in AI and the earnings and sales are strong. Profit margins are strong. There's a lot of bullish options activity, good bullish flows going out into year end. And I think it's consolidating well. It pulled back to its 21 day after the earnings, made a new high. It's just been consolidating now.

I think it's acting well. Full disclosure, I do have a position. I own a position for my money management clients. So all three of the stocks I'm mentioning, by the way, I do have before I forget, I do have positions in all three of them. But I mean, I've been in this one since it gapped up back up back into it when it gapped up back above the 50 day in the low 100 range. And I've been in it. I have a full position and I'm going to try to play it out as far as my time frame, you know, until year end and see what happens.

Yeah, that's when I was buying it as well. I did scale out a little bit ahead of earnings, but then I was buying it back. And sometimes I have to sell things when we put it on SwingTrader, and then I have to wait 30 minutes and then buy it back. But yeah, I was buying it just as it went through 100. It looked pretty powerful there. But I think it's, again, understanding the more you look at charts and understand history, a big run-up.

maybe buy the rumor, sell the news, even though the earnings were strong, it pulled back, but look where it pulled back to pull back to the 21 EMA, that green line there. And then a nice consolidation so far. I think the price action is pretty good. And I still like this one over the next, you know, probably three to six months into year end. And then we'll assess it from there. You mentioned how dynamic a CEO Jensen Huang is. Um,

Palantir has its own kind of rock star with Alex Park. I'm jealous of his hair. Right. Is that an element for you? Do you kind of look at the, I don't know, sometimes the cult of personality behind a CEO? Not just the personality, but again, the ability to deliver and motivate and really kind of share the vision. Yeah.

as some of these CEOs are able to do. Yeah, I know. If they're brilliant and they're – it's tough though because sometimes you can have a brilliant CEO that's not a great –

not great at managing the business. So you either need one that's good at managing the business or surrounds him or her, surrounds themselves with a great team that helps to supplement their vision. So again, management is definitely key in this and the management's strong here. Yeah. It's sometimes recognizing their own weaknesses and being, I guess, humble enough to

hire to supplement those weaknesses sometimes, uh, for, for some, for some folks. Um, you know, another one that I, and I do have a position in this as well, Dutch brothers or Dutch bros, I should say. Um, I, I've never been to their coffee shop, but, uh, I, I just hear a lot, uh, about it. And it really seemed like the retail restaurant group, um,

yesterday was on fire. I mean, you had Cheesecake Factory up 5%. Yeah, Wingstop, Shake Shack, Texas Roadhouse. I mean, just a lot of these. You name it. It was huge moves yesterday. And look, for the most part, they retained those moves. What did you think of Bros and why is this one interesting to you? So I like the concept of one of the...

what's the word I'm looking for, categories or sectors of big winning stocks is retail. Yeah. And it's not just retail clothing and apparel, it's retail restaurants. So if you can

have a concept like a Panera Bread, which went private, but that thing went from split adjusted four to 300 and something before they went private. When it came out of the 03, I believe, bear market. Anyways, my point is, if you have a concept and you can replicate it, whether it is Chipotle or McDonald's or Panera Bread, I like that. Starbucks, obviously. So in studying that blueprint, I'm trying to find the next one.

Their conference call recently, they have about 1,000 stores, and they used an expression 2029 by 2029. And what that means is they want to grow to over 2,000 stores by 2029. Wow. So they're mostly concentrated on the West Coast and Northwest and so forth. But I like the whole concept of...

big winners can come from fast casual from restaurant space. And number two, when you have a concept that proves itself and then you can replicate it domestically. And in the case of McDonald's internationally, even things like that, um, um,

I like that for potential big winners to stick with for longer term. Again, full disclosure, I own a position and this is one I just think can do well, you know, longer term, you know, not just six to 12 months, but longer term. And again, you can see with corrections along the way, the thing went from 80 down to below 50. It's going to build.

If it's, let's say it does go higher in the next three years, it's not going to be straight up. It's going to have your normal corrections and pullbacks when the market corrects and so forth. But longer term, I do like this one. Yeah, no, absolutely. And, you know, that expansion thing too, when I see something that's only in 18 states and

Hey, there's a lot of states left. Now, maybe you're not going to go to Alaska, but there's still a lot of states. There's 32, and if Canada becomes its 51st state, there's 33 states. There you go. Canadians hate that, by the way, so I just upset an entire country. One more stock for you. Let's take a look at Rocket Lab. I thought I had a position in this, and I don't, but...

With SpaceX, you know, and everything that's going on with space and not just, again, it's not just about the space exploration side, but here again, we're kind of in that communication side where you're getting these payloads of satellites up there and, you know, what that does for communications. What is it about Rocket Lab that is kind of exciting for you?

Yeah. I mean, I've been in this for a while and I identified it. I even put it out for free on my blog at Joe Fonby.com. And there was a high tight flag at $10 in October. So, and I've been talking about it for my educational members since five bucks and I, I full disclosure, I have a position and it's not, I mean, it's speculative. And again, when you play something longer term, it's not going to be easy as again, this thing corrected from over 30 down to 15 recently, but,

and at least it held the black line there, the 200 day. But,

Most of their stuff has been with their Electron rocket, which to your point about payloads, it can only handle a certain weight. Their new Neutron rocket, which is coming out the second half of this year, is going to be competitive with SpaceX to be able to carry some of the larger satellites and larger projects and so forth. Barron's has called this the next closest competitor to SpaceX, even ahead of Boeing. And I honestly think

if anyone has a timeframe of, you know, more than seven seconds, this is like a 2027, 2028 story. They've executed everything they've said so far. I like it. I think it has huge potential. If SpaceX is last round of, uh,

funding was around 350 billion, and this is trading at 13 billion market cap. I'm not saying it's going to catch up to that, but even if it does 10% of SpaceX's market cap, I think it has potential, again, in the next two to three years, even though most people want something for the next two to three minutes after hours to trade. I'm just putting things in perspective with a lot of these ideas. They're either three to six months or longer. Yeah.

Yeah. And to your point on the payload side, they just made, I don't know if it was yesterday or the day before, they just made a recent acquisition. I'm not sure how to pronounce it. Yeah, it was yesterday. Okay. Geost with that electro optical and infrared payload manufacturer. So yeah.

Yeah, it was cash and stock, but the market seemed to like it because it was up after hours and, you know, the market was down today and it just showing relative strength. I could see a handle being built here as, you know, people who might have got in around 30 and they got buried in it. That's kind of what creates the cup with handle. Maybe they come back up, creates a handle. And again, just have a little patience. Yeah.

No, great stuff, Joe. It's always a pleasure to talk to you. And I just want to make sure that you know that it wasn't just Italy giving you a shout out. There was also Belgium and Taiwan. A lot of folks really appreciate your insight. And I really want to make sure that people know how...

how much education you give out there. You've got a great podcast yourself, Joe's Happy Hour. You just had Mike Webster on, what was it, two weeks ago? Yeah. Really kind of diving deep with Mike. And you've got just like this...

Such a fascinating guest list of all walks of life. You know, some Hall of Fame musicians talking about option investing and just crazy stuff. So great stuff there. You've also got your blog, JoeFahmy.com. Man, what am I missing? Oh, your tweets.

at JFAMI, a lot of great information there. You just really share a lot of that wealth of knowledge that you have. And I appreciate it. Thank you so much for the kind words. I enjoy this. I'm passionate about it.

I love talking markets. If I can find some fascinating people to talk markets with, and if I can try to do my best to pass along some of the knowledge and explain things, because the O'Neill book is three, 400 pages with an insane amount of content. And,

And you have to read it and reread it and go through the charts and reread it and then trade the markets for a couple of years. Oh, yeah. And then come back to it, read it again and say, I need to refresh myself. The learning curve is a lot. And Al,

If I can help, and I know you guys at IBD Live and your team there and all through all the different platforms and content you do there, I know you try to help with that as well. But if we can all help to speed up some of that learning curve for people, then mission accomplished. So hopefully I'm helping with that as well. Absolutely. And I got to say, you're also a great host. I was out in Vegas in February. Joe took me out to dinner along with...

A very interesting array of people that you collected. Just a fabulous dinner. It was one of those things where I got back to my hotel and I knew my wife was asleep. And so I had to call my daughter in Hawaii because I knew that, you know, three-hour time difference. I could chat with her about it because it was just such a fun night. Ironically, the magician friend of mine is on the podcast coming up this Saturday. Oh, really? Okay, this magician was...

Just amazing. I'll send you the link. He does a few tricks on the podcast. I will definitely watch that. Yeah, Brian Shannon and I were trying to figure out the pattern of these cards that he had. And it wasn't until Lindsay, one of the other guests, said, wait, that's my phone number in the cards. And I'd be like, oh, that's something completely that we were not expecting.

Yeah, the mentalism and the magician. I love that stuff. And like I said, I'm blessed to know some great people and try to bring some of those conversations and personalities to life through the podcast. I'm having fun with it. Yeah. So again, Joe, thank you so much for all that you share. And thanks a lot for being here today. Really appreciate it. Thank you for having me. Great.

That's going to wrap it up for us this week. Don't forget, we're going to be back next week live at five with Mike Webster. So Joe Fahmy just had him on and we're going to be diving into ATRs because it's one of those things that Mike is really trying to make a push for changing the perspective from percentage gains to ATR gain. So we're going to dive deeply into that topic next week. Hope you join us. Thanks for watching this week. We'll see you next time.

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