Ep. 325 Street Smarts: Manage Headline Risk And Rotate Into Bullishness With Lessons From These Trading Luminaries
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Investing in the funds involves significant risk and should only be utilized by investors who understand the impact of leverage and actively monitor their portfolio. They are not designed to track the underlying index for more than a day. 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.

Hello and welcome to another episode of the Investing with IBD podcast. It's Justin Nielsen here, your host, and it is another Wednesday where we're going live at five on YouTube. And of course, you can get the archived version in whatever your podcast form of choice is. Please like and subscribe that. We've got a great show for you today. It is June 18th, 2025. And tomorrow we've got a holiday. Just a few hours ago, we had a

Fed meeting with a press conference. I haven't gotten a chance to look at that yet, but we're gonna talk a little bit about the headlines and how you handle them, 'cause we've got a lot of them right now. And certainly there's a lot of ways in which we would wanna simplify things.

And who better to make a picture worth a thousand words than two CMTs? We've got Ralph Acampora coming back on the show. He, of course, is called the godfather of technical analysis. He is a founder of the CMT Association. Welcome back to the show, Ralph.

Thank you, Justin. Glad to be here. Great to have you. And we're also having another CMT, Jay Woods. He's with the Chief Global Strategist at Freedom Capital. How many years was it? 25 years that you were on the floor of the New York Stock Exchange?

It'll be 33 in July. Let's not go there. 25 is just a nice round number, but yeah, it's been a while. Yeah, been a while. So, of course, in addition to that great experience with the New York Stock Exchange, what were you called? The mayor of NYSE for a while there or governor? No, no, no. I mean, it

I was just a market maker and a Florida governor and it was 28 years as a trader, now five years as an analyst and I'm still down there every day. Yeah, that's awesome. And well, of course, you do so much PR for the NYSE. It's great to see you have so many learning lessons that you've done. And of course, your passion for that great institution shows through. So it's great to have both of you gentlemen back on the show. Let's get right into it. We've got

so many headlines, you know, whether you're looking at World War III around the corner, you've got Fed, you've got, I mean, even before that, we still have tariff news, all of this stuff, yet we're looking at an uptrend, a strong market. And

climbing that wall of worry. So Ralph, let's start with you. How do you handle headlines and all the scary things that they might entail when the chart is telling you something completely different? Justin, I'd like to start with a quote from the 42nd president of the United States, Bill Clinton. He said something I'll never forget. He said, follow the trend lines, not the headlines. And that's what we do as technicians, uh,

the trend's your friend. Yeah. You know, as long as you can feel comfortable one way or the other, I go with the flow. And that's what I've been doing. Yeah.

all my 60 years in Wall Street. Yeah. Okay, so 60 years now. So you have seen a number of headlines. I mean, you know, for all the wringing of hands on oil right now, you probably are like, hey, you know, you think you got it bad now, let's talk oil in the 70s, you know, when gas lines were, you know, were, you know, blocks and blocks. So do you ever use that kind of experience of...

I've seen this before type thing? Sure. My father told me when I was a young kid, you get on the gas line and you had to have odd and even plates. Yeah, that's how I got gas. Yeah. And then when I was in Wall Street in 1970s, the Arab oil crisis and Dow dropped 45 percent. Those were those are tough days. And compared to today, this is a layup. Yeah.

Yeah, so putting it in perspective. So, Jay, of course, you are not quite at the 60-year mark on Wall Street, you know, so... But you had the benefit of having an uncle that had a lot of knowledge that he was able to share with you. Of course, we have that uncle on right now, Uncle Ralph. When you've been on the show before, you've referred to that. So...

What kind of started you on your path of really kind of diving into charts and understanding them? Did Ralph just force you to? No, no. He opened my eyes. I mean, I started charting at eight years old when he got me two shares of IBM, and it was handwritten charts. Oh, wow.

That was a story I think I've shared on this show, but our career paths were very different. I was a trader. I used the charts to go to work and make money. I mean, that was what I wanted to do. They paid me. Ralph was more analytical and didn't trade like I was trading minute by minute.

and trading and charts had evolved so much where Ralph was the great baseline, but it's that baseline that he taught. He taught all of Wall Street. I took his class three times. In fact, my firm, Spiraleats and Kellogg, had him come to our great, like, you know,

up floor uh you know i don't even know what we call this uh area on uh 115 broadway and he would come up and all the traders would congregate and he would do a presentation just just for spear leads and kellogg and then uh at new york institute of finance everyone it was mandatory to take that class so uh he gave us the baseline and then you continue to grow from there and uh

you know anytime he comes down to the floor hey Ralph I took your class in 1982 I took your class in 1989 uh it was it was crazy so the influence was there but the the paths were different and now it's ironic that I'm in that analytical role and I'm the one who goes and talks about charts on TV like he had done before most people ever had done that so it's very weird but I was a trader

I don't think Ralph had the stomach to do what I did. He kept more hair than I did, which was nice. But those charts, as trading evolved and I lost that crowd and those humans in front of me, it was all about the charts. So I was at a huge advantage using them every day just to go over my support resistance levels, breakout breakdowns, and then throwing a few indicators in there. So when we lost that human touch,

the charts were telling me a story that I had already known by seeing humans there and all it is is price action behind human behavior so to me it was what really gave me an edge to maintain my you know career because to put in perspective when I was with Goldman Sachs we had 330 employees on the floor

by the end of the financial crisis and the you know implementation algorithms and technology we were down to 15 now yes I may have had some pictures of someone very important that kept me down there no I know seriously I was able to adapt and you know it was relationships and his ability to consistently make money hit singles hit doubles in the charts were would enable me to do that so the technical side of things

It was great. I didn't get my CMT until 2017. And Ralph never yelled and screamed about it, but other people in the organization did. You know, you use them all the time. You're an advocate for the practice. Why don't you have your CMT? So I got the designation. I've been very involved with the organization for years now as a CMT since 2017. I'm extremely proud of what the organization does and how we continue to grow. And now we're getting younger, and that makes me very excited. Right.

Right, exactly. So Ralph, maybe you could share a little bit with us. What kind of got you motivated to create the CMT? What was it that you felt like this is something that we need to kind of codify the people that understand this? Yes. Well, years ago, I'm dating myself in the late 60s.

to get the price reversals for our point figure charts, I had to go to a company called Morgan Rogers and Roberts because they worked all night and they put together all the one point moves in all the stocks on the New York Stock Exchange. And I met a young fellow there who was doing the same thing for another firm. His name was Johnny Brooks, a little feisty Irishman. And he and I were basically...

the computers for our companies. We were plotting the charts. And we were also members of the New York Society of Security Analysts. But they treated technicians like second-class citizens. They said, what are you doing? You're wasting your time playing little X's on a chart. These fundamentalists really upset us.

What really, really got Johnny and I was that we were jealous of those analysts. They would have breakout groups. The drug group would meet once a month and the auto group would meet and the chemical group. So Johnny and I said, well, gee, why don't technical groups

people get together once in a while. And that was the start of it. So he went to Bob Farrell at Merrill Lynch, the famous Bob Farrell. And I went to Alan Shaw, my boss. He was also a very famous guy. And that's how it started. And you know what? I was on the TV show called Wall Street Week with Louis Rukeyser. Oh, right. I remember that. Yes. And he called technicians elves.

When I first got to meet Lou, we had dinner, and I sat down and said, "Lou, where'd you get the word elf from?" He said, "I made it up." I said, "Well, why'd you do that?" He said, "I don't think my viewing audience knows what you guys do for a living."

How profound. That was 1981 when he said that. And here we are now, many years later, and you watch TV with all these talking heads talking out Liberace Fibonacci numbers and they're talking about moving averages and support levels. Does the viewing audience really know what they're talking about? No. That's why you need the CMT. That's why we need more people to be educated. And that was the thrust behind everything we did. And I am most proud of

Friday, December 17, 2004, when myself and three other technicians stood in front of ten SEC, NASDAQ, FINRA lawyers and fought for technical analysis.

And three months later, it came out. The law of the land. There are officially two analysts in Wall Street now. One's a fundamentalist, follows companies and has a CFA. The second one's a technician who follows stocks and has a CMT. I am so proud of that. And that's what we have today. And that's what Jay is so proud of. And rightly so. I mean...

These young fellows like Jay and everybody else, Tyler Wood and all those fellows at the organization have the same love, passion, and dedication to the subject as we did in 1969, 1970.

And I've got to say, again, I worked very closely with Bill O'Neill, the founder of Investors Business Daily, and that was something very early on in his career. He's like, you know, okay, I see the value of fundamental analysis, but without technical analysis, you know, and the timing of it, you know, the fundamental gives you the start of the good companies, but the technical gives you that, you know, that element of when to buy. And

you know when he was doing that in the late 50s early 60s as you said it was you know the the merging of those two was just not something that was done at the time so i i can't tell you how much i appreciate your work and again we have so many cmts on the show frequently you know david keller bryant shannon katie stockton i mean the list goes on uh we we have you know the regulars yeah they're really great yeah um jay you

Oh, I'm sorry. Did you have something else? No, no. I was saying that they're quality people and they're really respectful of what they do and how they share it. I'm very proud of them. Yes. So speaking of Brian Shannon, I know you're friends with Brian Shannon. He talks a lot about multiple timeframes. And I think you guys have done some videos together, you know, like from the floor. I think I saw one of you guys on the floor of the New York Stock Exchange doing something.

But you also really kind of do that multiple timeframes looking at the technical analysis and those support and resistance levels. Do you gravitate towards one particular timeframe or is it very situational like, oh, this market calls for shorter term charts versus a different market that's maybe a little bit easier to play where you can kind of coast a little bit and

Lean on the weeklies a little bit more and not be bothered too much by the intraday wiggles and wobbles. 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. Investing in the funds involves significant risk and should only be utilized by investors who understand the impact of leverage and actively monitor their portfolio. They are not designed to track the underlying index for more than a day.

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. If you bear with me, we'll use a real-life example of a stock I was looking at. We're talking energy stocks. Everyone's concerned about what's going on overseas. And you start off the show, Fed Day.

and you know uh possible war with iran and the s p was down a point it was just you know the headlines don't don't really justify uh what's going on in the market but let's look at occidental petroleum let's look at a one-year daily chart first and foremost all right so i always go to the one-year chart all right

This stock has gone nowhere. We know it's Warren Buffett's, one of his favorites, so we want to treat it with kid gloves. We don't want to upset Uncle Warren. But we have continued to make a series of lower highs. It's in a downtrend. It's below its key moving averages. But if you go back over the last three months, it looks like we've had a bottom.

If you go now short term in this longer term one year time frame, we've got a series of higher lows. Something's changing. We're coming to an inflection point. So let's look at now on a five year weekly, if you don't mind. So we go from a one year daily to a five year weekly. And this will give us more of a story. Hello, we've got a huge base. It was support and then we broke it and hence the downtrend. So we've got a two year base where

guess what the support was it was Warren Buffett it's around 55 dollars uh if you can't see on that screen and I just yeah I kind of remember numbers very well um and what has happened all right we're coming to a point where we're about to break this near-term weekly downtrend now you put the fundamental story behind it all right we may go to war oil spiking it hasn't gone really above 75 we get to 80. this thing could go from a risk reward setup

I like my chances here. So I went small term time frame. See, we're kind of coiling. We're at an interesting inflection point. The stock, Baker Hughes, BKR is doing the same exact thing. When you look at the stock on a one year time frame, all right, look at you're so quick. BKR,

Alright, we've just broken the near-term downtrend. This is a yearly chart. If you go from that top peak, which was in February, we've finally broken it. And now we're slowly making higher lows, and we're getting to an inflection point. We're also at a key moving average. But if you look at it over the near term, over that three months,

We've already broken out of that ascending triangle. I like that. Now we've got some room to run and a downside target. If you use that 50-day moving average, I believe that line is green. The risk-reward setup is the red one. I see I'm colorblind. What can I say?

But anyway, we've got risk. Oh, you have a 21 day moving average. Yeah, what that green line is that I'm looking at? All right. All right. I like that even better. I'm trying to keep it simple. But from a risk reward set up, we know there's news. We know oil is noisy and there's a chance something could happen. And

what has happened when we've gone to war when there's been conflict let's go back to 2022 I went back to the charts I examined Ukraine Russia what happened oil spiked the sp500 went down six percent the sp500 comes down six percent it comes back to key thresholds within uh

you know, a good technical buying opportunity, a dip, a retracement, if you will. So I put all the technicals, timeframes, the news story that caused some of these movements, and then where's my risk, where's my reward? If something bad were to happen, yes, we don't want this to happen, but there is opportunity to make a quick 10% to 15% in some of these stocks. Do I think this is the end of it? If Oxy rallies a little from where it is, we've got clear sailing to 55%, 55%,

45 was that two-year Channel on the weekly that oh crap crap you know we've got some major overhead supply so old support will become resistance but I'll take a move from current levels which I'll use my own chart above you 45 to 55 that's a good return and it could happen very quickly where the downside all right if we we don't go to war one that's great so I'll take that and two

All right, I'll stop myself out around 41.50, around the 50-day moving average, and I'll take a little bit of losses. You just have to avoid the big losses because maybe it resumes its downtrend and energy continues to weaken. But there are setups and then a story behind it that could cause this downtrend.

to move and move quickly so I want to be ready and have a little position in and maybe increase that position if we get a follow through to the upside and use it for a week to two because these trades don't usually last long when we have knee jerk reactions.

But that's what I'm looking at. And then, you know, you said multiple timeframes. I was looking at Uber. I look at that from the beginning of when it started. Now, it's not an oil stock. We all know that. But you want to look at that near term and then long term. And long term, this thing is flagging nicely. This 80 is a major support level now, was resistance.

And I think it's a great opportunity to buy this stock on a dip. And if it breaks below 78, okay, I'll get out. But I think the upside leg can take us to 100. It's one of those stocks that has been resting. And then later in the show, and I'll let you get back to Ralph, we'll talk about some of the MAG7 names and one in particular that is doing something remarkable today.

which is nothing it's doing nothing it's going sideways but it has the potential to break out and uh take us higher and take this whole market higher so i'll tease you with that and uh throw it back to ralph for a little bit well and and one of the things that you said jay that i think is so important is you know how you use charts to manage your risk and at least for me that's everyone that i've

interviewed on this podcast, it seems like the most successful traders, one thing they all have in common is that risk management. And it just seems like a chart is a great way to be able to do that because you have kind of, okay, it starts up an expectation and then you kind of know when you're wrong.

based on whether the chart does one thing or the other. So are there any tricks that you've learned over your years of experience here, Ralph, in terms of your own risk management and how tight? Because of course,

You can't have it both ways, right? You have a tight stop and you're going to get stopped out more often. You have a loose stop and you're not going to get stopped out as often. But when you do, it's going to hurt a lot more. So how do you approach risk management with charts? Well, it depends on what style of trading or investing that you do. You know, if you're a short term intraday trader, you're

by all means, you're going to be in and out a lot quicker. I've never, in all my years, that was not my orientation. I was always an analyst. And when I wrote a market letter, the company always wanted me to go out. Every year, I had to put under my client's Christmas tree my forecast for the next 12 months, my annual forecast. Then I did a weekly letter to update that.

So that would be like the long term would be monthly, weekly, monthly charts. And then weekly, I do the update and see that we're still on course. And then I always had one of my team members would do a daily bar chart, a daily market letter. So I try to cover all aspects. And in doing so, I would use different kinds of charts. So if you're doing daily, it would be daily and weekly.

intraday charts but that was not my orientation as an analyst i was always intermediate to longer term oriented and so were you looking more at weekly charts for that weekly newsletter that you were doing i remember correctly wasn't that like on sundays with a glass of wine or something yeah and my below in mansfield yes oh you heard about that story i remember i remember chatting with you about it yeah yeah well the mansfield charts

You know, that was a service that I had hand delivered to me on Saturday. Most people got it mailed to them. And I would sit there on Sunday and go through all the charts. They had all the S&P 500 stocks in there. And I'd try to find the breakouts, you know, and that was...

That was a weekly look. So those were intermediate to longer term moves. That was my orientation. Jay Woods is just the exact opposite. His was minute, minute, second by second. So this is good dialogue that we're having today because you've got two different aspects and two different uses of charts. But bottom line, risk management was what technical analysis is all about. You know when you're wrong.

Yeah. Yeah. Oh, yeah. You can see it, right? I call it data visualization. You can see the data and you can see when it breaks down. You can see when, oh, boy, my trend is gone or my moving averages are gone, you know. So...

Well, and last time you were on the show, Ralph, you were on with Tom Dorsey. So both of you had that experience of we've got to do our own point and figure charts. You know, it's not like you could have a computer do it for you. It was you've got to do your own X's and O's on all the charts that you're interested in. And I mean, you know, it's a great training thing. I actually miss those days, you know.

You did it by hand. I have it now where I catch, I have it on my program where I have all the support and resistance levels of everything. So I'm getting breakouts and breakdowns all day. I'm updating. It's almost like doing the chart by hand. But today you can have it

You know, use it. I encourage everybody to do that. Yeah, at least, you know, I mean, for me, at least when I try learning point figure, the only way I could do it is you have to get some graph paper out and do it. Otherwise, it just doesn't make sense to you until you actually do it yourself, at least for me. You got it in your feeling in your fingers. Right, right.

So, Jay, you know, you didn't have to do that as much. You know, you and I both. I mean, I had to do a little bit. We had a daily graphs chart service, but it came out weekly, right? So we had to kind of do our own, you know, stuff there. But you've kind of grown up with the technology. And, you know, you saw the change in the NYSE, you know, going from fractions to decimals and, you know, everything in between. And, I mean, I remember the first time I was on the floor, you know,

I think they just expanded to five rooms. There was the garage, the blue room, the new... They kept on having to expand and then it was like, whoop, now you've got a new room. The new room is the hidden gem. They're not very clever with their names. They had the blue room and had blue walls. They had the EBR, which stood for extended blue room because it extended off the blue room. And then...

in the dot com bubble they needed new space so they created this new room across from the blue room he had to go across exchange places little hallway and this new room had new technology new floors even the newest brokers were in this new room and they called it just that the new room because you know they're they're not very clever and uh that was the peak that was uh you knew when we extended it that was that was the peak so uh you know we we we've

shrunk to just one room that main room we sell the garage but we keep you know we keep the deviants in the garage that's usually just for surveillance and we don't want to you know we don't want to deal with surveillance at all and so on the floor you saw from you know kind of like again getting that feel from people and everything to you know starting to get that communication with those big you know big packs that you were carrying around and and and so how did you kind of start

using it or relying I guess more on charts rather than kinda the crowd the feel of the room yeah I mean when you had a crowd support was the guy in front you kept buying the stock in the when you had an idea when he was almost done as a market maker you take them out and boom we have a breakdown and hey you had an advantage you saw support and there's resistance coming in here selling it at this level and

That was it was it was easy. I didn't like to admit it back then. I thought we were really smart and we were. I mean, we had to have a skill set to understand how to deal with all these people. But once you lost those people, support and resistance were in price patterns and everything was price related. So if you didn't and you come down to the floor now, all you see are people, the market makers that are there that still have an important role. They just don't deal with people.

they've got 50 charts of the 50 stocks they're trading right in front of them uh without the charts it's like you know trying to drive you know from point a to point b across the city without having ways or your apple maps uh you know good luck you know we don't have that road map uh like we once did but the charts give you that road map and just to circle back you talk about risk management

I'm blessed that I now teach technical analysis at Fordham University. And one of the first things I say, just like a realtor, jobs number one, two, and three are location, location, location. In technical analysis, jobs number one, two, and three, risk management, risk management, risk management. You're not going to catch the meat of every trade. You're not going to catch every bottom. You're not going to catch every top. In fact, you're rarely going to catch the top or the bottom. But you're going to catch the meat of a trade, and you're going to

hopefully minimize the risk the setups we talked about earlier in the show with occidental and baker hughes you know i'm more concerned okay if this doesn't work out where am i pulling the ripcord and getting out i take

take in losses all the time but in order to survive in this industry you have to avoid one thing and that's a big loss because you can't recoup from that so uh you know when you teach technical analysis when you utilize it if you're going in there i'm going to make all this money now i know the charts

That's great. I hope you do, but you better know the downside and use the charts to protect you from that downside because bull traps and bear traps happen quite often. And we could break out in this S&P 500 and get to 61.50. I think it's 61.4415 is the number. But, you know, we get there and we close above there. Okay, risk on. Let's go. But if we fail to hold...

I'm gonna bail and that's okay. I've been stopped out too many times to count and yes, I've missed some trades by trying to get in too early, but that's it. But when you are in a winning trade, you let those winners run and you let the trend dictate it and you take profits along the way. You're not gonna hold something for the duration of a trend.

You want to take profits and then go to other places where you see some strength. So to me, it's all about that risk management to circle back. And as the floor has changed, one thing has always remained true. It's the only thing that matters and that's price.

And that price action is where we make money. And, you know, I don't want to sound callous or anything, but that's what we're in this job to do. We're here to make money. The traders here that watch your show want ideas that set them up to be in a favorable position. And that's what I try to give an audience. And I try to do it quickly and, you know, without going through, as Ralph said, all the intricacies. Like, yes, I'll use Fibonacci levels to basically justify what my initial thoughts are.

But the initial thoughts are simple. And if you can keep it simple and be relatable to an audience, then they're going to ask you back on the podcast or on the show that you're doing. And you can be respectful and you don't want to go on there being arrogant because the market will kick you right in the you know what if you think you're better than the market. The market is a very humbling place and you just got to...

take it day by day. And that's, that's what we do. Yeah, no, absolutely. And Ralph, to that point, I think one of the things that, you know, with Louis Rukeyser, saying that your group was a, you know, a bunch of elves, sometimes, you know, some, some people might think that there's some magic to it, and that there's kind of a 100% guarantee, oh, if you see this in the chart, that, you know, this is what's going to follow, but nothing to be further from the case.

Jay just shared you might try something multiple times get stopped out get stopped out and you know That's just that's just the way it is. You just don't take the big loss. So how how did you kind of? Get to the point where you were okay with oh, yeah, you know this this this gives me an edge But I know that it's not you know that 100% Guarantee I remember when I was first

plotting charts. I mean, my background is history of political science. I didn't have any economics in college or anything. It's a long story how I got into business. But I remember after maybe six months of plotting charts, first time, my first six months in the business in the late 60s,

and someone said what do you think of gold i said looks good to me the guy said what do you know about gold you don't even know what it looks like i said no but i i could see it's going up here's the prices it's going up technical analysis empowers you all of a sudden you have an opinion and something you you never you never knew about yeah and uh i

I respect that. I really do. And I like what Jay was saying that on the way up, you're going to start taking profits. I'm going to quote my father. He used to say, remember, Ralph, you never lose by taking a profit. So if I'm early getting out, fine, you know, so be it. Yeah. As long as I'll just add the addendum, as long as you're cutting your losses. Wow.

Yeah, because you can you can take profits, you know as much as you want. It can be great But if you let that one big loss get away from you. Oh, yeah, there go all your profits So Ralph I want to I want to go just throw up a market chart. Let's let's go ahead and start with the S&P 500 You know Jay already shared some thoughts. We're gonna get back to him on this as well. But you know break it down for me because this

you know, this chart to me, I mean, it was a little reminiscent to me of 2020, you know, with the COVID crash, how quickly we came down, and then how quickly we came back up. We lost 20%. Look at that from top to bottom. Yeah, February to April, 20%. That was the fastest bear market I've seen in a long, long time. Right.

And again, just as surprising, if you use the 20 percent aggregate as a as a bear market, you know.

In hindsight, that was just a nasty correction, I think, in the secular bull market that started years ago. So I'm a long-term bull. And look at the recovery we've had. And so far, I mean, what, S&P is, what, about 6% below making an all-time new high. Yeah, I don't even know if it's that much below. Yeah.

Yeah, closer to two. Is that what your your hand signals were? 333. Okay, yeah. I think a couple days ago, it was it was under two. And yeah, we Yeah, we're at three. You know, and of course, with all the headlines and scaring information that we're getting, you would expect it to correct

And actually, it's doing a lot better than I would normally think and expect. And the trend's still up. And, you know, we're starting to get some look at the 50 look at look at the 50 day moving averages close to crossing about the 200 day. And that's the golden cross, as they say. Right.

If that happens, that'll only, again, support my feeling that we're going to make a new high. Jay is right. There's a lot of supply up there. December, January, when the

when the S&P was churning at that level. - So I'm gonna go back in time just a little bit here. And again, like I'll go to April 9th, just as an example. Certainly I don't think anyone was like, oh, okay, well we're up a huge amount this day.

you gotta get back in, obviously that's the bottom. You never really know until you have more evidence. So I'd like to hear from both of you. Like when does it start saying like, oh, this is worth giving it a shot? 'Cause I know Ralph, you shared with Jay when he was young, that kind of simplicity, the eight year old simplicity about, hey, just, if you're looking at the chart, can an eight year old tell you what direction it's going in? At what point do you kind of get that sense?

Well, just looking at your chart right there, that last spike up in the S&P was, you know, fill the gap. And you got my immediate attention. Right. But from the from a disciplinary point of view, I need that downtrend to be broken. And it's not broken at that point. Not yet. Right now. So do you have to wait for it to get above? And it goes down and retests the lows. I like that.

Yeah, I expect to retest the low. And in fact, now you get there right there. Now you start to break that downtrend from the February high. Yeah. So that's April 25th. Near term resistance and you got higher lows. Yeah, I'm very excited at this point. Right. Yeah. And again, I actually did invest at that time. I got more aggressive. Yes. Perfect. Anything to add there on that, Jay?

- Yeah, I mean, it's the traitor in me as well. When you get that nervous feeling, that panicky feeling, we were down 5%, 5%, and then another 5% intraday, the Thursday, the Friday, then the Monday, which I believe was April 9th, after Liberation Day and a lot of the rhetoric, and then we were gonna fire Powell, remember that? When you get that knot in your stomach, that's when you gotta buy. It's just, like with the COVID crash,

I was buying SPY. I was three days early. I was three days early into this trade, and I got a little on day one, a little on day two, and a little on day three. But five days later, I was up money, and I was all right. I also used Chinese candlesticks, or sorry, Japanese candlesticks. How dare I? Yeah, Japanese candlesticks. That bullish engulfing candle we got on April 9th was epic.

and right then and there I knew that the low was in. The question is, are we going to retest the low or is this going to be a V bottom? And V bottoms are the hardest thing to call and Craig Johnson and another CMT called it during COVID. I thought

I thought it would take more time given the fact that we're still not resolved any tariffs. You know, we have one deal in place. We're supposed to do 90 deals in 90 days. So this is the fundamental side. But the technical side, when you start looking at what we've done and where we've come, I know we still have the tariffs and that could cause us to fail to go to new highs right now. But price action and then when you break it down to the biggest stocks within the index, to me, this is constructive.

when you have those horrible days and you break some major support levels, you want to, you know, feed into it and then look for the extreme. The extreme to me was, uh, you know, was broken intraday, uh, which was, I can't read your charts here, but, uh, it was around 4,800. Yeah. We quick. Yeah. We, we got below, I think it was like 48, 80 at the time. And we got below that and then we rebounded. So, um,

Those scary times to me are really when you feel on edge, when sentiment, sentiment, talk about contrarian indicators, all-time lows.

That to me was also telling us this is the washout. We're waiting for the washout. Now the question became, how big is this snapback rally going to be? Is it going to be like COVID? No one thought it was going to be like COVID. No way. And we still are kind of like COVID because it took us two months during COVID to break back to new highs. We're not there yet. It's been...

April to May, May to June, we're almost two months away. Will we do it again? The setups are there to say we possibly could, but the headlines are there to say it would be crazy if we did. And the same thing happened during COVID. The headlines were disastrous two months after COVID. I still, we didn't get back to the exchange until May. We were out of work. We were electronic at the New York Stock Exchange. And then...

The worst was, you know, we were living the worst, but the market had already shrugged it off. And now the market is shrugging off tariffs. It's really not caring about this Iranian situation right now. I still think we could get some pullback, which could be bought if things escalate. And I have a feeling they will. I hope I'm wrong.

But yeah, the V bottom is the hardest thing for us to say this is going to be a V bottom because you always want that retest, that double bottom. But in this case, we have almost the semblance of a V. It won't be officially a V until we get new highs or at least touch that new high.

This was a little overreaction, as Ralph called it, a secular bull market. And we weren't down 20% on a closing basis. We were only down 18.9%. We did get there intraday. So we could debate that all you want. And those are fun, stupid debates to have at the bar with your friends.

really are because you I'll take either side of that trade just to tweak the person I'm talking to oh we were down 20% it was a bit of the market it was you know definitely a bear market or I'll yell at you and say no it's closing basis whatever you want I'll take the other side I don't care that's what I did as a market maker anyway but

we had opportunity and when opportunity knocks in its the old adage at the stock exchange when the market goes on sale it's the only marketplace in the world where people rush for the exits and we got a nice recovery and people rushed in and now we're mumbling we're going sideways and we're waiting for the next catalyst to take us higher or which I think would have already happened now to

Maybe give a little bit back and fear that we'll retest the lows. I don't think we are going to retest the lows. I think the lows are definitely in. And now we've got to figure out what's the catalyst to break us out to new highs and finish this year on a positive note. 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.

Investing in the funds involves significant risk and should only be utilized by investors who understand the impact of leverage and actively monitor their portfolio. They are not designed to track the underlying index for more than a day. 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. To that end, let's talk about some ideas. Ralph, one of the things that you've been looking at is some of these larger cap or

I guess large cap doesn't really encompass it, right? When you're trillion dollars market cap, you get that special mega cap status. And of course, that's the Magnificent Seven. This is the Roundhill Mags, M-A-G-S is the ETF here that encompasses the Magnificent Seven.

What's getting your attention here on these stocks? And we can definitely talk specifically about Microsoft that has broken out to highs. If you look at the MAG7, that's the one that's at an all-time new high. Microsoft, yes. And that looks like it's got a lot more room to go.

My next favorite on that would be Nvidia, which is about 5% from its high right now. And I think Nvidia, with little corrections and all, which is normal, I think also it's going to follow the path of Microsoft. My next favorite, and that would be Meta,

which is also about 6% off its February high. And I think with a little consolidation here, I think it's going to follow Microsoft. And my next favorite in seven is Amazon. Although Amazon is

a lot lower from below the high. It's about 13% below its high. Right. High was made in February. But I like the action. In fact, it almost looks like you completed a right shoulder, the head and shoulder bottom to get very technical for a second. And...

I think it has a good shot, at least 240, maybe all-time new high. And I have the same feeling for Google, which is also deeply below its... Google is, I think, 17% from its high.

But I like that rounding action, and I think it's going to play a game of catch-up. The ones that have me worried or I'm avoiding is Apple and Tesla. They have a long way to go. Yeah. And again, it's back to that simplicity. You know, if you ask an eight-year-old, hey, what direction is, you know, can you draw a line here? And the line on Apple is...

is still down. Jay, NVIDIA is one that definitely has your attention as well. Yeah, I teased this one out. Yeah, no, I teased this one out because of multiple timeframes. And NVIDIA...

Believe it or not, over the last 52 weeks, it's only up 6%. It's up, I'm going to give you exact, 0.94%, almost 1% for the year. And thank you, look at that. That is a neutral base going back a year. Now granted, this is a wide base. And then you go back to June.

from June 2023 to January of 2024, the stock was up 200% for the year, but it went sideways for the last six and a half months and then broke out. We are consolidating and now what's going on with price action in NVIDIA, all right?

you you can put the fundamental story okay we broke down deep seek it's a real competitor no no it's really not let's let's think about it we haven't heard about deep seek since we had that panic but deep sea causes to break the uptrend and that's when things changed uh and then you had the tariff tantrum and the tariffs may not be as bad as they were China they've adjusted so I'm giving you fundamental thesis for why the stock has gone nowhere

But earnings wise, you look at the numbers, you look at the revenue it generates, they're still crushing it. They're still crushing it right now. But

But price action has stalled. And what is it doing? It's consolidating and it's ready to break out to the upside. And now you don't want to say one stock is the one stock that's going to lead us to the next level. But let's talk about how important this stock is. It's the number one stock in the XLK, the technology sector. It's now in the Dow and that's probably what's cursed it here because it's gone nowhere since it's been added to the Dow.

It's the number one stock in the S&P 500. It's in everyone's portfolio. It's in everyone's 401k. And guess what?

it's starting to break out. If this stock breaks and closes above 150, the S&P 500 is going to be breaking out to new highs. It's going to go hand in hand. It's the number one stock in the semiconductor index. That index has yet to really break out. We're seeing pockets of strength, but it's, sadly, it's a stock picker's market. They're not all going up. But you look at Broadcom. Broadcom should be in the Magnificent Seven. Kick out Tesla, give me Broadcom any day of the week.

and I would be happy. It's a trillion dollar company. It's in the same space as Nvidia, but guess what? Now I'm going to cheat and look at my little screen over here. It's up 38% over the last year. It's up 8% this year, but technically it's already broken out. It broke out ahead of earnings and then earnings caused it to retrace where old resistance became support. So technically I love this stock. This stock is leading. It's not Nvidia right now. And guess what?

This is the stock as well as in video when it breaks out that you're going to want to chase because when these stocks move as seen historically in one of the first charts you put up they move 30 to 35 percent every single time so

Now, NVIDIA is, to me, poised to be a second half story. Now, what is the catalyst? Is it going to be earnings? Is it going to be something else? I don't know. But right now, price action is starting to narrow, and it's narrowing at that high end of the range.

and one catalyst and people have been waiting for this thing to go i think it's going to cause a breakout and a run and this is a stock that can go from 150 to 175 180 within a couple weeks and then you're poised to 200 at the end of the year and guess what you had a normal year in nvidia in fact it's worse than the last two years if not three

Actually, it's only worse than the last two. The third year was not so good if you look at 2022. But it's setting itself up to have a strong second run, second half run. And if you're going to see the S&P 500 rally, yes, it's going to be a story of the most heavily weighted stocks. And that would be Nvidia. Microsoft's already broken out. Meta is getting close. Meta could go. As Raoul said, Apple and Tesla, let's get

get some new players in and we can give you Berkshire Hathaway that slow and steady goes up. It's not magnificent because it's not tech. It's boring as hell, but I'd buy it right here. This looks like a good entry level for me in Berkshire Hathaway.

And these are stocks that will lead us because their value and their valuation within the index are so important. So to me, that is why I still remain bullish and more on guard to catch a breakout

then watch this thing go back and retest, you know, and maybe we retest the 50-day moving average, definitely the 200 if things get a little scary from a global perspective. But overall, right now, I think we just, it's a question of when and not if this breaks out. And the timing is what's going to be tough because we could go sideways for a while. And as I always tell you, Justin, sideways is a direction. And to me, at this point in the cycle,

it's a positive thing. Yeah. You know, uh, speaking of kind of a tough one, uh, the small cap, I want to get your thoughts on this. Cause I know, um, you know, if you just look at the Russell 2000, uh, Ralph, we've got, um,

this just seemed like it's gone nowhere for so long. It's had all of these breakout attempts that last for maybe two weeks and then it fails. And I've gotten sucked into a few of those myself. So what's kind of looking interesting to you about the Russell 2000 or the small cap market right now? You talked already about the mega caps, but is there anything to do here with the small caps?

I'll get very technical for a second. In early March, you had a left shoulder. In April, that was the head. And we just completed the right shoulder. So I'd say you've completed a major bottom in the stock. Now it's pulling back. You know, rotation is the lifeline of every bull market.

And if indeed you have the leadership that Jay and I talked about and the technology, and that's wonderful, but you've got to start seeing rotation into other areas. And I think the small and mid-cap stocks are going to play a game of catch up and you're going to see the same thing in financials. Yeah, there's your neckline.

um you know i'm getting very technical for a second but uh i like what i see yeah and here's here's xlf uh again you know if you kind of look at this as a double bottom or whatever it's it's right there it's it's kind of just been hovering in that in that space and look that's despite the fact that you know berkshire berkshire hathaway is uh the largest component here and

That did get hurt when Warren Buffett said, oh, you know what? How old is he now? He's basically saying, okay, in my 90s, I'm going to retire. 94, yeah, that's I think deserving. So

Yeah, it's interesting that you mentioned the IWM. Jay, I know that Generac is a stock that you're very familiar with. Not that this is a small cap, you know, it's $7 billion, but I guess smaller compared to a trillion dollar company, right? Yeah.

You were a market maker for this one, so you kind of knew the personality. It's like, you know, you guys are friends and you know when they're mad, you know when they're happy. And what's kind of getting you excited about Generac right now?

Yeah, when you're forced to look at the same 30 stocks every day, you kind of get a good feel for them. You want to do ice next, we can go there, which is breaking out to new highs, and I love that stock. That's Intercontinental Exchange, not the people at the border. But Generac, to me, is a seasonal play, and I went back and I looked this up before I came on the show because I want to be factual. Six of the last seven years, the stock has had a better second half than first half. So I'm like, all right, let me

look at this technically right now. Well, we just broke a near term downtrend. So if you connect that line from the top, that double top, nice double top, we see that we finally broken out and now we're starting to round about and make a series of higher lows. Why is this a seasonal stock? Well, Generac does well, unfortunately, during hurricane season. And guess what?

June to November is hurricane season. So the stock technically is poised to continue this uptrend. And what do we do? We rally to the 200-day moving average, which is rolling over. I don't like trading stocks under rolling over 200-day moving averages. I don't know who says it. Brian Shannon, Dave Keller, me now. Bad things happen under the 200-day moving average. But I see a mean reversion play, and I see a stock that historically –

does well in the second half of the year has a fundamental story behind it but technically is starting to turn step one it stopped going down step two it broke its downtrend step three it's now formed a little bit of an uptrend when you go back and then it has something to reverse so if it mean reverts back to the 200-day moving average all right we've got a nice you know 20-point rally and that's uh what 15 i'll take that and then you have

fundamental story behind it with headline risk of hurricanes and we overreact to the upside when there are hurricanes and power outages so generac to me is a good play and it's a great company over the long term uh but it just has its ebbs and flows and this is one of those times where it's going to flow to the long side uh and i think the risk reward is favorable for someone entering the name

Yeah. And you know what? With that, I am having such a good time. I could do this forever. So I'm going to have you start with your wrap up and final thoughts, Jay, and then we'll give Ralph the final word.

Yeah, well, first of all, thanks for having both of us. I don't know if we've done some live shows together, but a podcast that's recorded for all time is pretty cool. We look at things the same, but we definitely have time frame differences.

But right now this market is a technician's dream because the headlines are nightmares and sometimes I get in my own head like, "Oh my God, yeah, we're going to go to war. It's going to sell out." And I've lived through this for 30 years and I still get jittery when I'm going to Twitter and I'm seeing the sentiment. But when you study it and you're disciplined and you know risk-reward,

There are opportunities when there are some jittery markets and you have to know your support levels and know when you're going to cut your losses if there are losses. And you have to have patience in these times. Now, we didn't talk about the Fed one time. Why? Because the Fed doesn't matter. We're looking at the charts. We're looking at price action. And that's what matters to me. Yes, Fed policy will dictate the direction of certain things, especially some of the financial stocks.

But right now, the leadership that we're watching, if you're looking for this market under a big scope,

there are some potential changes that are still positive, not negative. And, you know, that's what's fun about being a technician. If you just look at the price, don't tell me what I'm looking at. Just give me a chart. I don't need to know what they do. And I'm better off sometimes just following the price action, knowing risk rewards and getting the heart of a trade and then using momentum to ride it out. So to me,

This has been great. I love talking about current markets. I'm sure Ralph had some old stories he probably wanted to tell to embarrass me. I'm glad he didn't. But thanks for having me. He said he would do the podcast after dark. Is there an after show? Bonus material for your viewers?

Yeah, yeah, but no, I like the quote that opened it, you know, basically the trend is your friend, and right now the trend is a little choppy, but we took some big hits, and I think, you know, we may not be running to new highs across the board, but there's some really good pockets of strength, and the technicals are what leads me to those pockets. Yeah, absolutely, and Ralph,

Great having you on the show again and want to let you have the final word here. Well, I...

I want to say it, but I'm going to say it. I totally agree with what Jay had to say about the market. You know, maybe a little ahead of itself and it's going to correct a little bit. But in the light of all of this news, I mean, give me a break. Every day there's another headline that scared the heck out of you. And the market's hanging in there, you know. So wall of fear.

uh i think that's all of worry well yeah and that's that's and the market is doing very well yeah you know and the stocks that we shared and the rotation that we talked about and the leadership that we talked about it is real so um i'm hanging in there you know and uh willing to participate and i think our listeners should uh you know

take a look at the stocks, take a look at the charts and find the ones that you feel comfortable with and go with the flow. Yeah. And then just just for, you know, again, for for some of our subscribers or listeners that don't aren't as familiar with the CMT, where should they go for information to kind of get get that? And, you know, I know you've got your own X for the CMT, right? If I'm not mistaken.

yeah handle and maybe jay maybe you know that better yeah you can talk yeah let me let me take this one so cmt association is at cmt association uh they'll update you on current events we just planned uh not announced i'll break it here to you justin uh july 10th our new york chapter is getting together uh we're ironing out speakers i'm going to moderate i'm done speaking at these events today people have heard enough from me uh but it'll be cocktails and uh

some good times down on Stone Street here on Wall Street. So if you go to CMT Association, that should come out to you soon. You can get on their mailing list if you want. I'm on Twitter at jwoods3 as well as Instagram because I share my market commentary videos. And I have a newsletter. So if you go to Freedom Capital Markets and then you go newsletter, you can subscribe to my weekly newsletter that comes out every Monday. And it's a quick recap of what we have to watch for every week, plus three stocks.

And StockCharts is nice enough to publish those as well. So what we're watching. And, you know, Baker Hughes, Occidental, and the XLE were those stocks last week. And, Ralph, are you on X or anything? Well, no, but next Tuesday, the Minnesota chapter of the CMT organization is hosting Katie Stockton.

Okay, yeah, I've had her on the show. Oh, yeah, she gets a nice crowd, and we'll go out and have a beer after it. Okay, so that's June 24th. June 24th, the Minnesota captain. Right, yeah. Well, you know what, maybe I'll have to get my CMT so I can be one of the cool kids and get invited to some of these awesome events. Oh, you're not a CMT? I'm not, no. Arusha was. Why are we talking to you? We should be...

I just got a finger wag. I got a finger wag from Ralph.

The events are open to non-CMTs. We welcome everybody. You don't have to have the exams, which are tough, under your belt. You can just come and just join. We just talked about the markets. That's how it started 50 years ago. Just a bunch of guys getting together, having some drinks, talking about the markets. And it's evolved immensely where it's a global organization.

I don't know how many countries we're involved in, but that's what I want to get back to, just the grassroots. Let's talk about stocks. Justin, I helped write the first exam.

okay so I can come to you for the answers right if I had to take it today I don't think I'd be able to okay well and and the fact that Jay the fact that you got yours just what eight years ago I mean there's there's there's hope for me there's not too late so uh gentlemen I want to thank you oh go ahead yeah

No, no, no. It's a lot easier. There are study guides. It's online. You know, when I got it, even in 2017, read these 10 books, and we're going to give you a test on it. And the material is fascinating. It's so many different indicators and oscillators, some I don't believe in or use. But it's good to know them, and it's good to know what my fellow CMTs are looking at because when someone breaks out like Katie, the Ichimoku cloud, I roll my eyes. Yeah, right, right. It works.

but it works for her and I understand it but uh to me I I have other things I use and to each their own if it works for you if it makes you money then God bless yeah yeah uh did you have something else you wanted to add there Ralph yeah I I just you know just to add what Jay was saying you know everybody has different you know we were talking about so many indicators and all I'm I'm a very simple guy I like the MACD and the RSI

and you know some some other people i encourage you to look at them use them but don't

You know, don't have a bushel full of charts on your lines on your chart. You know, come down one or two or three indicators that you like and go for it. Keep it simple. Keep it simple. Well, I think we're ending right where we started. So, gentlemen, thank you so much. Was glad to have the double header with both of you. Really appreciate everything you've done for educating not just our listeners, but, you know, folks, folks worldwide. Thanks for having me on.

That's going to wrap it up for us this week. Thank you so much for joining us ahead of the holiday. Tomorrow, it's Juneteenth, so trading will be not happening. So we'll see you back here next week. And we're going to have Jim Ropel back on the show. So for those of you that need your bullish punch, usually Jim Ropel is exactly the guy to do it. He is, of course, Jim Ropel from Ropel Capital Management and writer of the Ropel Report. So it'll be great to get his thoughts. Hope you join us for that. We'll see you next week. Take care.

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.

Investing in the funds involves significant risk and should only be utilized by investors who understand the impact of leverage and actively monitor their portfolio. They are not designed to track the underlying index for more than a day. 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.