Ep. 326 Shakeouts And Support: Why The Stock Market Continues To Defy Gravity
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Hello and welcome to another episode of the Investing with IBD podcast. It's Justin Nielsen here, your host, and we are coming to you live at 5 p.m. Eastern as we do every Wednesday. Today is June 25th, 2025. We had Mark Minervini on our IBD live show this morning, and we've got a double header for you folks. We've got Jim Ropel coming back to the podcast. He, of course, is the founder of Ropel Capital Management, the writer of the Ropel Report

and a generally nice guy uh you can't really i mean if you're looking for positive uh and optimism i i don't think you can get better than jim to having your corner i i really appreciate um how much i've learned from you and how much i get you know get inspired by your positivity so thanks a lot for being on the show jim love to do it man we we have some of the best shows yeah

And for those that don't know, if this is your first time seeing Jim, which I find hard to believe, but you are also doing a monthly podcast with Allie. So we get a lot of Jim, and that's not a bad thing in my mind. So I'm really happy about that. But let's get right into it, Jim. I mean...

This market, it seems like no matter what you throw at it, hey, you know what? I'm going to throw tariffs. I'm going to throw war. I'm going to throw all sorts of things. And this market just doesn't seem to care. How do you kind of get to the point where you're just like,

You know, if the market doesn't care, I don't care type thing because you read the headlines and everything like that. And we talked about this last show, you know, trend lines over headlines from Ralph Acampora, the founder of the CMT Association. But emotionally, sometimes that's hard to do. How do you do it?

I think you said it. It's just like, look at the tape. Look at the leaders. Look at the power. I mean, this market is so wildly underestimated. It's hard to believe that we've had the rally in magnitude and percentage that we've had, and people are net bears. The institutions are, you know, the hedge funds are shorting this thing. It's so not believed, and I don't understand why. When you look at the fundamentals...

Of all the innovation we're seeing, we'll go over a bunch of them. Like, I think people need to be asking what could go right. I mean, in the market, it's not just like somebody going, well, you know, there's all this innovation going on, but it's not like the market's not responding. And this market's absurdly powerful. I can't get it's so funny because normally human emotion is to chase something.

And and and they're not the public's not doing it. The institutions are not doing it. The money market balances are going through the roof. It's so unusual. I don't know if we've ever seen a condition like this where things have been so good and it's so hated or just it's disbelieved. Right. And I mean, look, I I got to admit, during the covid crash.

I was, you know, I was buying on the April 6th follow through day, but I was holding my nose and wringing my hands as I was doing it. I mean, I was like, there is. And in fact, you know what? I was on Yahoo Finance. I was doing a show that I just so happened to be doing a show that day.

And the guest after me, I was in the green room and, you know, I was talking about, well, this is a follow through day. This is like our buy signal. And the guest that was coming on after me was shaking his head and was like, there is no freaking way this is the bottom, you know, and I'm

I mean, it was off to the races. And I wasn't going to fight him on it. I was like, oh, yeah, he's probably right. But, yeah, sometimes you have to hold your nose and say, okay, the market's doing something else, and my opinion just doesn't matter. But it's always like that. In Gulf War I, it was Iraq has the largest standing army in the world. The government ordered 40,000 body bags. The elite Republican Guard said,

And I mean, there's different levels of fear in the market, but that was really big. And then C-19, I think a lot of people thought we might lose 5% of the world's population. Like, think about no cars on any streets. There was no one outside. People wouldn't shake hands. People were flipping out. Those two levels of fear were wildly greater than the deep sea tariff.

bear market. And that's something else. Nobody, it's almost as if it's been forgotten that we had one of the steepest declines which compressed valuations, it compressed everything, and it created this springboard for the golden goose to let rip and rock. And no one's even talking about it. I mean, the stats of how fast it went down, the levels of oversold, depth,

There are so many the overbought, oversold oscillators. I mean, when you get to those, the extreme magnitude of those variables, it's darn near a guarantee. It's not a guarantee, but it's close to a guarantee. Right. You're going to be higher and wildly higher in 12 and 18 months. It's something else.

Oh, go ahead. We did a thing internally in my shop. Eve did it. And she said, look at our performance. That's Eve Bobak, who has also been on the podcast and is awesome. She's one of the co-authors of the Life Cycle Trade and works very closely with Jim and his hedge fund. She runs my small fund. And she did research on our performance. We've had a couple really good months here. And she said, historically, we have this level of performance. What happens one year later?

It's a 100% that we are way higher down in the future. So there's so many things pointing to, it's almost like, how could you not understand what we're seeing? The tape is agreeing. The proof is there and people still don't believe it. Mm-hmm.

Yeah. Now, now look, Jim, to be fair, you've been, you've been pounding the table for a while on how strong this market has been. And look, for good reason. I mean, we had back to back 20% plus years in 2023 and 2024. So it's not like I'm saying you were wrong by any stretch, you know, but, um, you know, you've been talking about this.

possibility for people to level up their lifestyle, you know, and you say, look, if you, if you are, haven't been affording vacations, you're starting to be able to afford vacations. If you were sitting in coach, you're maybe getting up to business class. If you were, you know, first class, you're maybe getting private jets. Get the PJ. Right. So, so, you know, and, and look, you've been saying this for a while, but,

Like, at least at first, it seemed like it was a little bit tougher in 2023 because as we came out of the 2022 bear market, it was... If you weren't in the MAG-7, you just didn't do anything. You were not performing. RSP, the equal-weighted S&P 500, was dismal in comparison. And for a lot of 2024, to be honest. So...

Does 2025 feel different to you in that regard? CanSlim did not engage. In other words, growth stock investing was not working early in the bull market until November of 23. And then it broadened out well beyond Mag7. But back to back 20% years, do you know when else that happened a bunch?

The internet build out. I mean, I studied internet build out like in depth. I did a whole presentation on it. And what's that thing called? The Founders Club. Founders Club. Yeah. Why would anybody be shocked?

When you have back to back 20 percent years and we're in a super cycle, unbelievable technological revolution of blockchain, digital money, autonomous driving, biotechnology. The world has never seen this many revolutionary technologies get traction all at once ever. So why would you be shocked that the market's responding? Like, what would you why would you think it's going to go down? What would make you think that?

Well, and could you define a super cycle for us? Because I know this is a term when I worked with Bill O'Neill that he used sometimes to refer to, you know, step away from your intraday charts and your daily charts and look at yearly charts. You know, we're talking 18 year cycles. And yes, you have multiple bear markets during these cycles, but you have these phenomenal moves when you're looking on the yearly charts. And we're talking about

Looking at century charts, you know, not monthly charts, century charts. So what is your definition of a super cycle and how do you know when you're in one? It's a secular instead of a cyclical bull trend that can last 20 years. I mean, and when you start counting, usually it's at the high of the prior top. But I also correlate it with innovation.

Yeah. I'm looking – like people are like, well, you know, AI is great. And I'm like, do you think AI is going to take less time to build out than the internet, which was like 20 years? Like would you say that we're close to have discovering all of the uses for internet right now? Like we've probably found 75%, 85% of them. And depending on when you want to say the internet –

Was it the Netscape IPO? Was that the first? Was that the firing, the gun that went off? You guys, if you're not bullish in your life right now, you should probably just never look at the stock market. Well, and just to kind of, you know, kind of put a fine tune on that point is, I mean, we did have

you know, after the great financial crisis, again, a, a huge, huge shake out there. And, um, you know, it was dismal for a while. And I mean, there were a lot of years here, um, you know, six years, you know, and, and usually what happens is you go sideways for, you know, six, eight, maybe even 10 years sometimes in the case of the seventies. Um, and then you have, uh, an even, you know, a multiple of that where you're going up. Um,

Bill was actually saying in 2012, he thought Mitt Romney was going to win. So he thought that could potentially be the catalyst. And look, Mitt Romney didn't win, but you still had a really powerful move here over the next 10 years from 2012 when you got to highs again to 2022. And now here we are. So

Is this part of that super cycle that began back then? Or do you think we kind of started something new after this 2022 bear market? 2022 was wildly more severe than most people think. If you pull up ARK, can we look at ARK really quick? Right. Yeah, if you want to see brutal, what was that off? Like 70, 80%? Okay, so what happened to growth? It was absolutely obliterated.

I mean, when does the growth bear market end? Do we have to get to 160 on ARK? And that's the beginning. Okay, that's the beginning. And also, Justin's very correct. There were multiple bear markets. Specifically, the 98 bear market. In the summer of 98, we had three legs down 30-some percent when I'm using that as the model for what we just went through. And that...

bred so many double bottom bases. Just look at that one, two, three legs down. That is the template for what I think we just went through. Um, and so many of the stocks that have taken off and exploded look just like sun microsystems did back then. There's so many names that, that, um,

And they also didn't have great handles. And we've been in a period right now where a lot of these monsters did not have full, legitimate two-, three-, four-week handles. The buying pressure has been so intense that it just went.

It was like a basketball underwater. The stocks could not stay down long enough to create legit handles. And we've just had a lockout rally that ended into some digestion over the last four or five weeks, which is now giving us our second chance to really engage these monsters. But, dude, you said, you know, when Romney didn't win, but the market continued to work.

It's hard to beat the golden goose of capitalism. It's never going to stop. Innovators are like, oh, there's some type of crisis. I'm going to, what, stop splitting atoms or writing code? The human nature is to elevate innovation.

Everybody in the world wants a piece of the pie, even the people being held down by dictators. But in America, we've been unshackled with free market capitalism. I mean, this is Bill 101. And we have a president who is deregulating. Instead of throwing sand in the gears with regulation, he's throwing oil in the gears by drilling 3 million more barrels a day.

I mean, this is a golden moment and the market is agreeing. It's not just an opinion. It's the look at this market. Are you kidding me? Yeah. And, and, and, you know, again, you know, politics aside, you know, you, you,

The Democrat won in 2012. The market still went up. You know, Trump won in 20, you know, 24. And, you know, if you thought, oh, this is going to be a disaster. Well, the you know, I mean, look, we did have a crash, really, you know, over the the tariff tantrum. But it really kind of.

You know, we're right on the cusp of new highs. So at a certain point, I feel like you have to put your politics aside and just look at what's happening in the market. You know, unless you want to be so dogmatic that you're willing to, you know, not profit because you're like, oh, there's no way this is possible. And I think there's a lot of that right now. But I made a fortune under Clinton.

Under Clinton, my war chest swelled in that period. That set my foundation. And I think investing on geopolitics, they're so negative almost always. If you're following geopolitics, you're just going to have a very difficult time. And all I look at is the trend. It's basic. But

I also have to back up the trend with fundamentals. Why is it doing this? So you can make a bear and a bull case for anything, but you, I look for the variable or the fundamentals that back up the trend. And right now it's bull city. Shocker. I'm there. I'm bullish again. Well, again, I mean, it's, it's again, hard to find times when you're not bullish, but, but,

I want to temper your enthusiasm because what people really need to understand is as bullish as you can get, Jim, and I've seen you crank it up to 11, the fact is you are very good at managing your risk. That's what's allowed you to stay in the game. You know that

As bullish as you are at any given moment, you could be wrong and you have risk management built as such a foundational part of your system. So maybe talk about that and how you kind of have yourself in check just in case you're wrong. Risk management, bar anything, is job one. And it's not just cutting losses at three, five, seven. It's position sizing.

Price will hurt you. Size will kill you. And I am always at the bottom, a raging bear because I'm a trend follower. But the follow through day is what gets me out of my fear mode and makes me turn. But like, you know, I've been a broker or trader or hedge fund manager for 40 years. I'm 60. Now, again, before I understood anything,

Bill, and I had not found Bill yet. I lost all my money three times, all of it. But Bill helped me with the game changer for me was cutting my losses at 7%. Then I went to three, five, seven, a third, a third, a third. But I always picked some good stocks, but my bad ones overshadowed it. It's the second I started cutting my losses, performance immediately improved dramatically. Then with some better selection criteria that I learned from Bill, I

It's just the world turned. And after that, I did. I did. I drew down several times too much off of bull market tops. But it's kept me in the game where nearly every single person who either started a hedge fund when I did or became a broker when I did in my broker class, they're all out because at one point or another, they blew up.

Yeah. 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.

Well, you know, one other part here that I know a lot of people struggle with, you know,

I feel like in some ways the cutting losses, once you get it, it's almost easy. I mean, I can cut a loss and not even think about it. Where I sometimes will still struggle is thinking that I'm all that and that every stock that I touch is gold, especially when you're in kind of a bullish mindset and

I can hesitate to sell things because I'm like, well, it's going up so much and why would I sell this? This could be a big winner. And

You sometimes find so many stocks that you're like, it's hard to make room for new ones because you're like, I don't want to lose the positions that I have. I think everything I have is great. How do you kind of do that part? Because I know Bill told me when I showed him my portfolio one time, he's like,

Why haven't you sold anything at 20% to 25%? And I explained to him how I thought everything I touched was gold, and he was just laughing at me. So how do you kind of do that dance of, okay, I've got my risk management part, but how do I really know when I should start selling some of my stocks into strength and move into some of the new blood?

It's the human condition. My best, my worst days and periods occur right after my best. They do because in here, it's a condition of this market that I say usually I'm stopping out of seven out of 10 ideas at a loss. Now they all work. It's just to varying. They don't all work. That's not true. But maybe it's like two out of 10 are like you don't want anymore. Dude, it's like.

First of all, not all breakouts should be purchased. Like if you look at FIVE, it has a really tight little area and it might break. It might be a great little scalp trade, but it is nowhere near a new leader. It's not even remotely close. I mean, look at the overhead when you go to the weekly. It's so far off. Now, it does have a great wall of blue, but this is no Roblox. This is no hood. This is...

And this is probably going to work, but I'm not looking for those stocks that are going to work. I'm looking for the stocks that are going to work the biggest performance. So there's a lot in there. I'm human. I do get bulled up and I do occasionally carry two big positions. But when I find a new monster...

I have to, it's kind of like the hogs in the trough there. You got to push one out to put a new one in. You got to, Bill would say weed the garden. Yeah, absolutely. But I'm also trying to sit for four to six beaten raised quarters. You want to really change your life. Get 18, 20% of your account in a stock that's going to beat and raise four to six times. You're going to change. You're going to level up from tricycle to bicycle or jet to private jet or whatever, you know?

There was a lot of words in there. Get me back on track. Well, and I mean, I think it's an important thing. I mean, like when we were just looking at, you know, five below, the reality is, you know, I think you make a good point. You not only do you have all that overhead supply, but we've got an earnings line that

is kind of middling. You've got quarterly data that's a little bit all over the place. You know, the revenue is decent, but you've got some single, you know, single digit growth there. It's, you know, certainly there's stronger out there in terms of the fundamental side. There's wildly superior. This is, I mean, this is okay, but I mean, I'm not going to buy this.

I'm not looking, I don't care about making 10 points in a stock. I making five, 10% and I could care less. And bill always counsel take a lot of your gains at 20%. And I just, in my life,

have almost never done that. Unless I have a stock that I don't believe the total addressable market is great, it'll run up and then I'll get rid of it like a pack car or something like that, like a fast and all. They don't have the earnings horsepower to really ramp up performance. Not all breakouts should be purchased. There's quality of the names that are breaking out. We're in a bull market. Stocks are going to break out.

Yeah. And now how much, how much room are you giving stocks? Because sometimes, you know, I, I find myself losing patience. It's like, if, if a stock just doesn't go up for me, like immediately, I'm like, there's so many faster lanes out there. And I'm like, I gotta, I gotta go for those things. Or I, I, I,

Take my money out of the things that just don't work in a few days, move it to the other things. And sometimes I'm looking back and I'm like, oh, I had that leader. I had that leader. I just didn't hold it. So again, it does come down to that quality and sometimes the patience, as you said. So I think it has a ton to do with the evolution of a trader, trader life cycle. When I started trading,

I was ramping up my account 200% long in four names and I was trying to build a war chest and I was a frenetic over trader. I traded way too much. That's a rookie move. Um, you know, we have, we've got to talk about Nvidia, the king of the jungle. I've been holding it. It's been my largest position in my hedge fund for almost two years. I've, I'm 60. I'm not the cowboy I was when I was 24. Um,

I still want to grow my net worth, but my days of two and 300% years are over. Although I was up over a hundred percent last year. That was kind of a fluke. And I think we have a chance to do it again because we just had this bear market. Look at this. Okay. My boss 35 years ago, and he was in world war two as a fighter pilot. That's how old he was. He would say, Jim,

As General Motors goes, so goes the market. And every cycle has its leader. At times, it's been Tesla. It's been NVIDIA for quite a while. Now, NVIDIA is not...

Nvidia may have been reborn today. Now, volume was not there, but price trumps volume. Volume's critical, but it's 55% price, 45% volume. And Bill would say, just make sure the volume's up on the week if it's not up on the day that it breaks out or up massively. If Nvidia's in gear and Netflix is in gear and Microsoft's in gear, it's going to be... I mean, I know Apple looks really, really ugly and Google's iffy,

But the Mag 7 is back. Yeah. Okay. And NVIDIA is the king of all kings. It's the Mac daddy. It's the monster. It's the AI validator. It's the meta. Meta came out and said we have $100 million bonus pool and recruitment dollars. They are meta. NVIDIA's breakout is revalidating AI and saying DeepSeek is not the big bad wolf.

Meta believes this is existential threat to their business. They're spending, they're going all in. Anybody who is not going all in on the most revolutionary technology in history is lost their mind. They don't get it. And today, look at the, although it wasn't wildly superior, it was much larger than last couple of days. Actually, it's the biggest volume in three weeks.

And I mean, it was it was well above average. You know, you had the average volume kind of turning, turning lower here as the market went sideways, which, again, that's what you typically see. Right. And so it almost has an easier comparison a lot of times. But but yeah, the volume percent change was 21 percent. And I don't know, for a trillion dollar company, that's that's pretty that's pretty considerable to get the volume to rip fast.

percentage-wise higher in a market cap like this is really, really difficult. But look at the high close. It's at the dead tick almost. And we have to look at SMH. SMH is the new transportation average. Commerce occurs over the internet primarily. Now, we do have to move hard goods, but the real economy is digital. And SMH...

Breaking out over the December 24 quarter highs, I think we'll be at the all-time high here momentarily. July is an excellent month for the market. I know people go dog days of summer. Look at the stats. I posted on Twitter about July. And look at the world directly under our feet is changing to digital money. Look at Circle. It's going to be ridiculous in...

five years to carry cash or even honestly, I believe use a credit card. It's almost like in five years, it's going to be ridiculous to drive your own vehicle. All right. The innovation we're seeing here in digital money is it's unparalleled. I met the CEO of Tether in New York about six months ago. And he told me, I think what he said to me was they're creating 25,000 new digital wallets a day, a day, a

Three quarters of a million a month. It reminds me of Baidu when like 20% or 10% of the people in China were online and every day 30,000 or 300,000 people were going online a day or something. And it just reminds me of that. The parallels, if you go way back, look at that. Look at that unbelievable wall of blue after the 08-09 bottom. And they just, I mean...

The parallels between Circle and Baidu's adoption are pretty impressive. And you did have that earlier. So it's not like this came out of nowhere. This was a very anticipated IPO. And yeah, when this was coming out to highs, it was getting a lot of

It was the biggest stock my hedge fund ever made. The fund made $30 million in this thing. It was my biggest win. Well, I subsequently have had a couple of good ones, but that's a template. Can we look at some templates for stocks for this year? Yeah. Okay. What do you want to start with? The template I want to use is my stock from last year, APP. Okay. This was a triple for me.

and all my subscribers. But let's look at it. Number one, look at the sales and earnings growth. It's off the rails. Look at the pre-tax and after-tax margins, the return on equity. I mean, it just, it, it ended up in 35. Now granted, I mean, there's, you know, there's a lot of debt there, but yeah. I mean, this thing just, it had, it was an absolute model book template. Look at the skyscrapers on the way up. I mean, look at those skyscrapers of volume.

It's I mean, it's screaming at you. And I don't think I got into it until it broke out around 90. Yeah, probably around here. Yeah. And I loaded up on this thing. I wrote about it in my report like every week for like two or three months before that. And now, OK, can we just really quick go to a daily? Yeah. Do you want to look at this time frame or an earlier? Exactly. Yeah. I did a study over 50 years of the leading groups and the leading stocks.

Only 2.7% repeat after blowing off. So a TML that has, you know, three, four, five, six beaten race quarters, and then climax runs is it's a 97% probability. It will never, ever come back. This, it met all the criteria. It had the blow off. It had the run. It has never acted right. Subsequently, a lot of people were looking at the breakout attempt and

In May. And I'm like, I think it's going to fail. It's already look at SMCI. It's another case of an absolute monster. Yeah, I had that accounting trouble and it was never the same. OK, so that's it. When a stock has a climax run. Now, again, everyone's going to go, oh, Tesla, Tesla, Tesla had three losses.

Monster Bowl runs. It was a TML three separate times, and it may be in the early stages of doing it again. It hasn't emerged yet, but I want to use APP as the template. Now, if we could look at Credo right now, please.

I do have a position in Credo myself. Of course you do. It's the monster. Well, of course, you know, and it's always, you know, smaller than I want. You know, when they work, you know, and you go a little timid at first, you're always like, oh, why didn't I buy more? But let's look at the variables here. Earnings estimates, 116% this year. Sales growth, triple digit. Pre-tax margin. After-tax margin. Return on equity.

estimates, earnings beat, management holds like 13% of it. Every single variable, it checks them all off. There are no flaws. Wall of blue volume, we've got 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 10 or 11 weeks in a row with one down week recently. That is a unbelievable, beautiful wall of blue volume accumulation and skyscrapers in there. Triple digit sales and earnings.

Monster and expanding pre-tax, after-tax, and return on equity. Up-to-down volume is what is up-to-down volume? 2.2. Unbelievable. Let's see. Okay, this is a bit extended here. But do not be shocked if this is one of the – and by the way, it has the perfect market cap and volume. It's at the low end of mid-cap.

catching a move from the low end of mid cap to the low end of big cap is another life changer and this has this has everything and it could fail i could be dead wrong they could who knows maybe they find out their connecting cables are rusty i don't know but black swans do happen just because i'm a raging bull in this name does not give it a guarantee it's that every stock is risky um but

I was talking to up to down volume is one of my favorite indicators. Can we look at roll blocks, which I believe has a 3.2% up to down volume? Uh, yeah, 3.2. Okay. No, not, not percent. It's a, it's a ratio. So 3.2 is the ratio. What's it like a really like a, uh,

really low end car. Like right now, like, like remember the AMC Pacer or a Vega? I was going to say, I used to, I used to drive a Ford Festiva. Three, three cylinders, you know, or the Geo Metro, something like that. By the way, I do have a position in Roplox as well. So,

Okay. When you get to 3.2% up-to-down volume, this is like a turbocharged Ferrari stuck inside a Lamborghini. You get to turn that float over that fast, that high to get that up-to-down volume like that. It's got to be 99 comp, right? The comp is 92. So its EPS rating is a little bit low. I'm sorry. I meant RS. Oh, RS. Oh, yeah. That's got to be 99. This thing's a frozen rope.

Okay, straight up. They have extended reality. They're using AI. They have a new product called Cube 3D. User, average daily users expanded by 27% year over year. And did you really have to know all that to know there was an amazing fundamental story here? Look at this thing. It's doubled in no time. First, one of the first in the new high ground.

Now, it's wildly extended, and I have to admit, when it got 33% over the 50-day, I started shorting in the money calls over about half my position. And I had to roll them out a couple times. So I have not crushed it as the chart would make you think because I have been short some calls here. But again – Now, were those covered calls? So just another way of getting income? But you're saying that you had to roll them out. What's that? I'm very long the stock.

Yeah. So you were getting some income, some covered calls. So you were short on those. And you probably were starting to get to a point where, because you were short, you've got the obligation. And once it starts getting in the money for the call buyer, you're like, oh, shoot, I don't want to lose my stock. I bought them back. Yeah. Yeah. So you're rolling those out. But here's the thing. Could you withstand a pullback to 80 right now? Yeah, that's not something I...

I'm not good at that personally. Okay. So you've got a hedge trim to dampen the pullback because every stock that I've, I mean, maybe there's a few examples that are, they've never reached touch their 50, but they're all nearly all of the TMLs close the gap. Now, maybe the 50 is going to come up to the stock, but mostly the stock corrects. It's a combination of both. So let's say the stock pulls back to 90 and the, and the 50 day comes up to 90. I,

I don't want to withstand that type of pullback with the size I'm carrying. I have to give a shout out to Cubby Bears. We were on a plane going to Bandon, and I bought it off that tiny little stubby thing, and I probably wouldn't have done it if he wasn't, like, goading me on. One of those, hey, you chicken? No, I'm a very – I'm a stickler. I want all the – I want credo. Okay? I don't like stocks with no earnings. I don't like flaws. Yeah. Yeah.

But the power... And you have so many stocks to choose from. A lot of times, you don't need to accept flaws. There's, you know, you can just keep on hitting space bar and you'll find, you know, find something that has, you know, maybe not all of the qualities you're looking for, but...

enough of them are so strong they can kind of forgive the things that are little flaws. Look, price dominates. Price is the leading variable. If you had one thing, it would be price and RRS. But, you know, kind of to corroborate what you just said, my buy list has just grown. I mean, there's so many ideas. You have to be discerning and distill them down to the elite, elite names. Right.

And this market is so much stronger than people think. Please, people, let's get the bulls greater than bears. At least help me. Can you pull that up? Can you show us that?

So, yeah, you know what I can do is let me go over to – I'll share our psychological markets page on Investors Business Daily real quick, if you just give me a moment. There's a few things that we'll look at here. Certainly one of the things that I think has been a little bit bothersome is that some of the –

Some of the breadth indicators, again, I'm finding plenty of stocks that are looking interesting, but the still like the number of new highs versus new lows, you know, that's been a little a little problematic. But let me let me go ahead and share this real quick. Oh, you know what? I have to have to move the platform. I'm sorry you're doing all this. I'll give you this. This is this is the fun part. So it.

I'm going to go to bulls versus bears. This is so awesome. So, yeah, we still have the bears, I guess. They came down significantly. 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.

It depends on what you're looking at. Okay. There's some sort of like AI is different, but I'll tell you the investor's intelligence is okay. When you get a crossover, that's the beginning. Look at it. Once you cross over, you can have more bulls than bears for years. Okay. This is the beginning. Unless this is going to roll over. Okay. Unless we're going to have a black swan asteroid roll into our universe, that's really going to stop this bull. Okay.

Without that, this is the beginning. I would expect, if this is normal, that that is going to open up and stay more bulls than bears for a great deal of time. And the lack of new highs is indicative of the early stages of a bull. Okay? It can get... And that was... In the report, I show...

Very frequently how net new highs expands, expands, expands. And we never quite got into fully engaged at the end of the last bull that just ended. I'm not even sure the bull market ended. Was it just a punctuation, a violent V-shaped, excuse me, a break? Right. Was it really? I don't think, I think we're really, we remain in the bull market that started in 23, right?

And here at the bottom, here's the New York Stock Exchange in terms of the new highs and new lows. So the new highs are, this is a 10-day moving average, so the new highs are above the new lows. But we haven't really kind of gotten the same, like what we got here where new lows were just trouncing and then on highs.

the NASDAQ, you can see that they're about evenly matched. But as you said, a lot of times...

It's going to take some time. So the indexes are close to new highs. So it's funny that there aren't more new highs, but then again, there's a lot of stocks. And this is something that I noticed, at least when we had the April 22nd follow-through day, you had so many stocks that were still below the 200-day moving average line, so many stocks that were still below the 50-day moving average line. And there was this subset that was like Netflix. And I do have a position in Netflix. Netflix,

Netflix just looked so different when all these stocks are below their 50-day and 200-moving average lines. And you've got Netflix on April 22nd, the follow-through day, breaking out. Now, I didn't get it there. Allie did because she's better than me. But, I mean, what more could you ask for right there? Look at the double bottom base. I bought it right there. But I didn't buy enough.

But look at the volume character change here. Okay? I mean, it just changed personality. And this double bottom should be saved. Actually, there's so many of them that we just came out of. Yeah. This looks great. And there's...

It's going to be hard to keep the market down with this meta, specifically NVIDIA. It is the Mac daddy. It is the king of the jungle. Now, Avago looks better. And I do have a position in Broadcom. Now, this looks... It is clearly better than NVIDIA, but it doesn't have the girth. It is not...

It's not the kingpin. It's not the linchpin of the whole market, okay? And if Avago blew up and went away, the market would carry on. If NVIDIA blew up, that would be a death blow to the market. It would take the market down with it, yeah. It would. Like, you know, Palantir has kind of assumed the liquid leader. And Broadcom is no slouch, you know, either. I mean, this is a trillion-dollar company. It's not like, you know, it's nothing. But it's not, as you said, it's not NVIDIA. Yeah.

And, of course, for those that don't know, Broadcom probably holds a special place in your heart because I remember reading that article about you and you talk about your leveling up. Broadcom was – and that was before – back when they had the symbol match the name, now they have the Avago symbol and the Broadcom name. But you wanted to take a look at Palantir, which I also have a position in that one. Okay, so –

This is the liquid TML. Now, it has been slightly lethargic recently, and there's been some distribution in there, but it has the earnings horsepower. It has the product. It is computer software, but it is also a defense stock, which the group of defense is like number what? It's in single digits. Right.

It's a 99. I'll pull up RTX, for instance, and aerospace defense is number eight. So that's down a little bit, maybe, you know. But yeah, it's been up there for a while. I mean, ITA, which is the aerospace and defense ETF. I mean, that's...

That's come out pretty rocking and rolling. And Palantir is a defense company. They're a huge defense contractor, basically. It's software, it's AI, it's defense. It's like, I'll be what you want me to be. It's liquid. The earnings are massive. It's kind of like the magic elixir of monster earnings growth with liquidity. And it's not an uber mega cap. So it has room to grow.

It is not quite as powerful and as robust as something like a Roblox. But Roblox barely doesn't even know if they have any earnings. They're struggling in that department. I think they just turned... Oh, no, they haven't turned profitable yet. So they've got this growth, but this growth is just that they're losing less money, is what that growth is, really. So we can't lose Palantir. We cannot...

Anyway, I think this stock, you have to be patient with it. Being patient. Like, let's say you get out of this name right here. Okay. And then it goes on and you've got cash. Where do you get back in? There are only so many really legit bases with long, you know, really proper bases. Now, are you going to get back in a full position on a two or three weeks tight? That's a high risk entry. That's an ad point.

You want to level up your life. You want to change your life massively. Sit down in a couple of these monsters. Understand what a TML can do in a cycle. Like it's common that they go up two and three and four and 500% in these elite names. Why are you going to, I'm contradicting Bill. Okay. I mean, I'm not a 20% profit. I'm a long ball hitter and I screw them up sometimes. And occasionally I overstay the party.

But my life has been changed by doubles and triples, not 10% gains. I'm not trying to scalp two points out on a 10,000 lot or a thousand lot. You can't, it's hard to get rich that way. You want to get rich by these elite leaders and grab some bench with great risk management and sit down. Livermore said it's in the sitting or no. Oh yeah. Livermore or Partridge. Yeah. Yeah. That was Livermore. Yeah.

Yeah. In liver and reminiscence. Yeah. It's not my thinking. It's the sitting. You hear that? The sitting. That's it. I mean, I tweeted that out today because I think there's a lot of people who don't understand history. They don't understand the power and the life-changing possibilities of TMLs. You take a 20% gain in a stock two months out of a bear market in a TML, I think you've lost your mind. Yeah.

Yeah. And I mean, you know, look, there's, there's different ways, you know, there are certainly people that do very well at the swing trading, but there's also, you got to recognize their, their sacrifice, right? You, you maybe don't have as big of a drawdown when you're doing that, but you also have a lot more activity. So for some people where tax efficiency makes a difference, there's an issue there. And for people that like to golf, like you do during the trading day, you know, that, that,

You can't do that when you're glued to the screen and you have to manage all these positions and you're in and out of stocks looking for that next best thing as opposed to when you're, as you said, grabbing some bench and just sitting there and waiting for those beaten raises. Look, get in these names, get cushioned, stop looking at dailies, flip to the weeklies, and they're going to get extended.

Trim them, hedge them, buy those shares back around the 10-week. The TMLs almost always pull back to the 10-week or the 50-day, and then they reassert themselves. But when a stock gets extended over the last max level of extension, you've got to pull it.

You've got to hedge. Anytime you have a position, you have to ask yourself, can I withstand a pullback to the 50? And when they get wildly extended, you either got to trim or hedge because you're almost not. It's very difficult to take a 20, 30 percent pullback or more with a 20 percent or more position on. Yeah. And you're going to puke the lows if you don't hedge or trim.

That's 40 years of experience of screwing it up. Coming from someone that sounds like he's done it before.

Yeah. I sell the low. And the thing that a lot of people forget is, you know, we, we often talk in terms of, um, what, what happened to this individual stock. You know, we're looking at these individual charts, but what you have to remember is a lot of times when that's happening to that stock, it's happening to your whole portfolio. So you're not just feeling the pressure from that stock. You're feeling it from all sides. And, and that's where, um,

Yeah, that's where the pullbacks of the 50-day are not these easy-to-buy areas that you're looking at as opportunities. They're like, oh, shoot, I've got to protect myself. I'm losing my shirt. What do I do type thing. If you're a canceling practitioner, diversification does not help you. If you have Netflix and Spotify and then you have NVIDIA or Credo or, you know, a Robin Hood and maybe a GEV.

They're all growth stocks. And when you get a bad earnings miss on some one, some all growth gets obliterated. Not like if GEV misses, all growth stocks are going to get pummeled that day. Maybe GEV goes down 20 percent, but your other names are going to go down four and five. And if you're on margin, that's going to be a brutal day. So when when stocks get extended, you have look at this double bottom. Are you kidding me?

This is one of the biggest macro themes is energy. Okay. You want to be the general store in the networking build out. You buy Cisco. All right. When the internet was building out, everyone's connecting computers. Cisco said, Hey, we don't care if your startup succeeds or not. Just buy, buy your network working gear from us. Yeah. And that's kind of like energy. The AI, the bottleneck is energy. It's going to be energy.

And these look at this name. Are you kidding me? And it never really gave you a big handle. It gave you a buy point off the middle of the W. But after that, you were in high risk buy points all the way. It's very rare to get this type of persistent accumulation where it just it just doesn't pull back.

Don't be shocked. And I do have a position in GE Brnova as well. Justin, you need a job with me, buddy. You have all these great names. Yeah, well, you know, maybe if you took me golfing all the time. I don't actually golf. I would need to learn. I can't golf as much as you say, but if you come to work with me, then I can go golf and you can work. Oh, there you go. Okay, perfect.

Nice. Well, you know, gosh, we covered a lot, Jim, and I feel like we could go another, you know, another full hour. But, you know, I think you've made your case. So just to kind of recap, we started out with all of the reasons why this market plummeted.

should go down, you know, whether it's, you know, the, the Iran situation, Israel situation, Ukraine situation, uh, you know, debt downgrades, uh, treasury auction, tariffs, you know, recession coming. Um,

you know it's again the list is the list is pretty long and as you said there are still a lot of a lot of bearishness out there we didn't even talk about the fact that there's still a lot of money on the sidelines um how much seven and a quarter trillion that's absolute and relative the largest amount of money ever

Just sitting in money markets. Just sitting there. Like, dude, people are so bearish. They are going to get squeezed. There is going to be a squeeze. I know it seems we may have to continue to do more digestion. The NASDAQ's right up, you know, the highs. We may have to digest. I think we could probably rally into September. I'm not sure. September, October, generally pretty tough. But I'm looking for another monster Q4, right?

And I think you've got to be, and listen, the market does not have to go down in September and October. It doesn't have to. So is the, if the trend is up, just stay long. Um,

And even if it does go down, it might not be going down for very long. I mean, you know, that's, that's the thing is you have to, you have to at a certain point, get in the mindset of recognizing that some of those could be opportunities, you know, and, and, and play accordingly. We didn't even cover the 50 day just crossed the 200. Are you kidding me? How early this is? It let's look at the last time we had a bear market and it crossed and how long it went.

Please. Yeah, let's see. I'm going to pull up the NASDAQ composite. Yeah, so this is our bonus chart back to the NASDAQ, and we'll go to the daily. So we're just about there on the NASDAQ, on the S&P 500, that 50-day getting very close. Are you using exponential or what?

probably what 23 no uh not not on the not on the 50 and the 200 i just used simple on there but um here was the the golden cross on um you know after the 2022 fair that was in february of 2023 um look at how long it went before it pulled back i'll go to the weekly and i mean you know the

you know, this, this kind of gives you a sense. This is the 10 week and 40 week line. Um, we went from, you know, 2023 until, you know, this, uh, this March. This is why I, my, my grant for that, you know, it was 2020 all the way up to 2022, a huge move there. What does this tell you? It's the, if we don't have an asteroid that blows us out, this is the beginning. Okay. Um,

Dude, I write about this stuff all. This is all I do. Yeah. Well, and to that point, people should know this is a good time to make a little plug. The Ropal Report is something that you send out. You put a lot of time into it. You know, you give up a lot of your weekend in order to do it. But, I mean, you live and breathe this stuff. So I'm sure in some ways it's easy for you to just kind of,

stream of consciousness. This is what I'm seeing out there. You also have a podcast that you do. Are you going to be doing that right after? I can finish this and I'll take everybody's questions. And just for you, for the IBD subscribers, go to RopalReport.com, put in IBD special code. You get a big discount. Buy the bundle and I will take all your questions tonight. Yeah, perfect.

We didn't have too many questions on YouTube as we were going live here. You know, it was mostly, hey, more Jim, more Jim all the time. So, Jim, our audience loves you. We really appreciate you coming on. It's always great to have you. And thanks again for sharing your knowledge. Really appreciate it.

Absolutely. You got it. Uh, heck I could do it just without the cameras being on. So, uh, that's Jim Ropal for folks go to Ropal report.com. And, uh, you can also follow him at uptickin. He's a great follow, always sharing a lot of knowledge. So, uh, thanks for that, Jim. Uh, that's going to wrap it up for us this week. Thank you so much for watching and don't forget to join us next week because we got Ken Shreve coming on the show. He of course is one of our senior markets, uh,

reporters, one of the co-managers of the leaderboard model portfolio. And he's got a lot of insight. He's a frequent IBD Live panelist. So we'll be getting an IBD-er on the show to cover the things that he looks at and how he gets that news out. So hope you join us for that live at 5 p.m. every Wednesday. We'll see you next week. Take care, everybody.

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.