Episode 42: Frank Cappelleri, CMT, CFA
01:09:21 Share

Welcome to Fill the Gap, the official podcast series of the CMT Association, hosted by David Lundgren and Tyler Wood. This monthly podcast will bring veteran market analysts and money managers into conversations that will explore the interviewee's investment philosophy, their process, and decision-making tools.

By learning more about their key mentors, early influences, and their long careers in financial services, Fill the Gap will highlight lessons our guests have learned over many decades and multiple market cycles. Join us in conversation with the men and women of Wall Street who discovered, engineered, and refined the discipline of technical market analysis. ♪

Fill the Gap is brought to you with support from Optima, a professional charting and data analytics platform. Whether you're a professional analyst, portfolio manager, or trader, Optima provides advanced technical and quantitative software to help you discover financial opportunities. Candidates in the CMT program gain free access to these powerful tools during the course of their study. Learn more at Optima.com.

Hello and welcome to episode 42 of Fill the Gap, the official podcast of the CMT Association. My name is Tyler Wood and I'm here, as always, with my good friend David Lundgren, CMT CFA. How are you doing, buddy? Well, I'm still a little bit shocked from the volatility of the market, but things are settling down, so I'm getting better. That's good. I might have my first cup of coffee in two weeks because I haven't needed one.

know what you're talking about, Dave. We're flat. Have the markets done something? Today's guest, not only did we talk about current markets, but sitting down with Frank Capolari to understand the volatility cuts both ways, to understand where we're at in this market and how to maybe systematize the tools that we've got to stay evidence-based, to avoid some of that emotional turmoil, I think was really powerful to me.

Because certainly we all needed a reminder last Monday as the market was hitting a VIX 55 and generally free fall, right? Yeah. What were some of the things that stood out to you, Dave, about today's conversation?

Well, I mean, if you've ever met Frank before, you, you love him and he's just a sweet, wonderful guy. And, and, uh, he's just such a great addition to our community technicians, but just, uh, you know, anybody that gets to know him, he's, he's just a really, really wonderful guy. His background with Alan Shaw and Luigi Amata is such a great journey to, to, uh, kind of walk through with him. Um, but to me, it's like, uh,

the first time that we've ever spoken about Nicholas Darvish and the Darvish box. Yeah. Right. Right. And here we are speaking with Frank about that. So I was really excited about that because that's one of my favorite forms of analysis. It's one of my easily hands down, one of my favorite books ever written on the market. We'll put, we'll put a link in the show notes to it because everybody should read it. I've read it. As I said earlier, I've read it probably 10 times and I'll read it 10 more times. So to me, it was just a really great, um,

far-reaching, multi-topic type discussion. And just it's what I love about this podcast. We bring so much varied discussion for our listeners. Totally. Frank is no Luddite. He uses every tool under the sun, right? Embraced DeMarc indicators. He's looked at lots of different technologies, but still comes back to...

Edwards and McGee and some of the classical pattern recognition. And I think there's something really powerful about using those when you've got the professionalism and the polish that Frank clearly learned from great mentors and has established himself over 25 years on Wall Street, but also to have a sense of markets and use some of these

you know, time immemorial kind of tools as opposed to tracking every tick and, you know, just looking at algos to systematize everything. I think he has a real feel for the markets, which is,

Not something new entrants are necessarily capable of doing. You need to have a few. Yeah, it's hard to develop early in your career to begin with, but it's even harder to retain it because the temptation is so great to just rely on computers. But you lose so much. Right. You lose so much. Yeah. And with that, I hope our listeners enjoy this episode number 42 with Frank Capillary, CMT CFA of Capthesis. Thank you.

Welcome to Fill the Gap, the official podcast of the CMT Association. My name is Dave Lundgren, and I am joined by fellow CMT Charterholder and Executive Director of the CMT Association, Tyler Wood. In this month's discussion, we're joined by Frank Capilleri. He's the founder of CapThesis, where he provides technical research to active investors and

Frank is both a CMT and a CFA charterholder, and many of you may know him from financial news programs as he's recently become a CNBC contributor. So I can't wait to learn more about learn more about that.

Prior to starting his own shop, Frank was at Instanet for 22 years, and perhaps more important of all of this is that he had the great fortune of starting his career with Alan Shaw and Luis Yamada on the city technical research team. Frank Capolari, welcome to Fill the Gap. Thanks, Dave Tyler. Pleasure to be here. Good to see you, Frank. Likewise.

So we're going to jump into a lot of things, much to talk about. You cover a lot of different markets. You've got a lot of different approaches. So really interesting conversation I'm sure we'll follow. But before we really get started, maybe talk a little bit about your career path and perhaps even in more particular, working with Alan Shaw and Louise. I mean, that must have been just...

I don't know if you probably appreciate it more today than you did at the moment, but what an incredible start to an incredible career. - Oh, without a hundred percent. You know, I really fell into that not knowing that I was walking into interview with two pioneers at the time. But I wanted to actually start two years before that. I don't wanna talk about this as much, but I think it's good to give it some foundation. So for two summers, I interned at Bear Stearns when I was still around. So on the training desk there, I was studying institutional sales.

And so two things really struck me about that experience other than the fact of being around chaos because as you know at the time They were thriving at that point. Completely thriving. And so when I first started that it was the summer of 1995 so right at the beginning stages of the internet boom and Remember we coming out of a period of time when the market was really trending at all or coming back from recession in just a few choppy years and

And so but for me 20 years old witnessing this it was a market was going up It seemed to be you know relatively calm and good summer even though again amongst all these crazy traders but I remember asking a few of the other people are was was working for what they thought of the market and so one particular answer from a Woman who was probably in her 40s at the time. She looked at me and said This is ridiculous

I didn't know what to take from that. What do you mean it was ridiculous? The market can't continue to go up like this without a break. And as you guys know, in 1995, we kind of looked at that in 2017 as one of the most consistent strong uptrends that, as we know, lasted for almost five more years, a year and a half even before Alan Greenspan called it rational exuberance. So even back then, it just shows you that human nature is what it is, and behavioral finance is...

is with us no matter what timeframe we are in, what markets we're trading in. Even someone who's been there before like that didn't believe it had as hope that it changed their mind going forward. Now, the other part of that experience was that I was working at the time on a project for institutional sales team. They were basically ranking the fundamental analysts.

So their calls, but also their responsiveness, how they were to clients, so forth and so on. So I was interacting with the research sales team and research analysts. And one of the opportunities I had back then was to attend an analyst lunch upstairs on their boardroom with gourmet meals. And again, college kid sitting there, all you can eat. It was the best thing I could do. Yeah.

The food was good at Bear Stearns back in the 90s. It was great. Oh, my gosh. But as you can imagine, this person or whoever it was, the analyst at the time, would just pepper with every kind of question you can imagine. Product, service, what they think about earnings per share over the next year, what do they think about products, what do they think about the economy, how is that going to affect companies X, Y, and Z, and could you rank them? But every single time, the person, of course, had to.

had an answer and a very eloquent way of answering it at the same time. And it really struck me is that how great would it be to become an expert on something, to be the authority? And of course, didn't know much at the time, but clearly that went down the line where the research analyst had to

come up with a concept and have it coherently then conveyed to the sales team, but then had to do the same thing to their clients. So that was the base I had. Again, very small, but at the same time, it stuck with me now all these years. So then in 1997, of course, two years later,

I interviewed with the Smith Barney research technical analysis team. Also had a job offer with the other part of the research area to be an auto analyst, auto analyst assistant. So in my mind, I'm attending auto shows, like test driving supercars, as you know, it was just going to be late nights of spreadsheets and all that. Yeah, yeah. So, you know, I've...

Was I guess smart enough to know what I didn't know which I didn't understand the market So in my mind I felt that at the very least this was a really cool area with a lot of real estate on that floor right down at Granite Street big chart room, maybe not as big as Fidelity's but pretty big and just

People seem really, obviously, nice, endearing. And also, it was fascinating to me. They could look at the market as a whole and not focus on one area. So my mind is I would do this for a little while, understand which fundamental sector made sense to me.

pursue the CFA and, you know, leave and do something else. Needless to say, I was hooked from the very beginning, especially because it was during that time, right? So now you're in the middle of the internet bubble and all you hear about are people quitting their jobs, becoming day traders, just manias. But at the same time, sitting in that chat room with Louise and Alan,

Great personalities and they really, you know, they really worked off each other very well. And one particular thing amongst many that we did was look at the relative strength lines of the industry groups for their allocation model. Just one time a week to decide whether to either buy or stick with things that were working. As you know, probably 10 of the 15 that were in it at the time were technology basically rolled the entire way up.

And again, it doesn't matter how far you were in your career, understanding that both of them were there were 20 or 30 years, even though it was a mania going on outside of us, they kept it very, very strict to the point where I vividly remember,

During you know one of the crises 1997-98 David get peppered with calls like Alan will get called by not just clients like executives of the firm What the hell's going on and he'd you know have us listen in and explain it, you know, I hear it and then Alan, you know Maybe rest in peace is such a big personality. So another thing I took away from that is I

You can be smart. You can understand what's going on. But if you especially if you're on the sell side, you have to sell it. But you have to be speak with authority. Right. Alan has his own way of had his own way of doing things. Very entertaining. But he kept everyone's attention, whether it was someone like me just starting off or someone who's been in the industry for many years or even like teaching in front of all the different financial advisors, you know, year after year.

He made them understand it as well. And the other part of it was that he used this for his own investing as well. I remember when he was watching rates continue to go down and down and down. It comes in one weekend and says...

The Alan Shaw profit sharing pension fund went deep into the margin on zeros over the weekend. I'm like, what are you talking about? So he was obviously betting on rates going lower. Yeah. Frank, did you have any exposure to technical analysis in undergrad, like before you started the internship with Bear Stearns?

No, I don't remember hearing about it. And again, we're talking about pre-internet at that point, just close to it. So, you know, Tyler, you don't remember that time. Dave, you may. Oh, yeah. I remember the screaming AOL. Yeah.

That was really new. But, you know, that was that was clearly just an outstanding spot to start. And plus, it was more than just the two of them. It was the whole team. And, you know, they supported everyone there. And to the point where you remember that was it got a little crazy at that time because Internet bubble was going. I went through two different mergers within a year and a half between Salomon Brothers and.

and city corp jack rubman was there like i remember oh yeah so if you recall yeah there were two different buildings there 388 was the tall building uh granite street which we were in i think it was on a 24th floor and then the training desk was right next to it on 390 so on occasion you go down there and what the fundamental calls or people talked on was usually right

Right outside the training desk there on 390. And the rule was everyone could have two minutes. I remember going down there. This must have been right before 1999, considering what I'm about to say. Grubman took the mic and stayed there for 30 minutes without even answering a question. I was like, wow, this guy's really riding it. So that was basically the top back then. Right, exactly. What was your...

What was your sort of day in a life working with Alan and Louise? I mean, I just can't even imagine what that must have been like. You know, it was my, I was doing groundwork initially, right? Of course, of course. But even still, I mean, it must have been like lesson learned after lesson learned, especially in that moment of time. I mean, that was just incredible to be a technician in that period, but to cut your teeth in that period.

And to be working with Alan and Louise as your guides to the journey, you were just so fortunate. So fortunate. And not only that, it's how they conducted business at the same time, too. Yeah, exactly. That was a big part of it, showing respect for everyone again. And just looking at the different pieces. Alan clearly was the man for a long time.

But he had no problem when Leigh and Louise kicked the helm as well. And she ran it for a long time. But for the most part, when I was there, they were running it together. And so that was really cool to see as well because Louise came from a spot where she knew formal training and she really worked hard to get to that point. So we would go through, my day-to-day was looking at specific data points, literally taking my little cup of crayons and markers, walking it to the massive –

I'm 5'9", my best, probably not now, 20 years ago, using a ladder going all the way up to the top.

And then standing with, you know, Louise, let's walk through history. Let's look at when this happened last. And then walking over to the gentleman that was doing the pointing figure stuff right in the center. And then Bill Rafferty, who was talking to all the financial advisors calling in as well. Then Jonathan Lynn, who now runs, you know, Louise's old stuff was now he was doing the computer analysis. And so everyone had their role at the same time working to make sure that the product was always safe.

top notch. And toward the end of it too, like I was getting very interested in things and I mentioned to them, you know, I was very proud of the fact that I had majored in English. So I had some writing capabilities like, can I please write something? Please write something. Not knowing that was like still probably too, you know, I shouldn't be doing that just yet. But toward the end, I was only there, you know, two and a half years, but you know, they allowed me to do that as well. And that was, that was a really cool experience.

of them considering again, the history that group has had and the reputation both of them has had. And at the same time, a few times, Alan invited me down to a few meetings downtown and same type of thing. I'm trying to relate this as a human part of it as well, because just how he dealt with the cab drivers as well, just so much respect. And that really sticks with you because you can go through Wall Street, as you both know, and come across,

all different personalities, a lot of them not on the positive side. And some of them do very well regardless. But there are plenty that...

do everything correctly they treat people the right way and they're positive and they build people up and so again from early stages i saw that as well at bear student i saw that again an incident where you know one over there soon after to surround yourself with good people that work hard are successful because there's no other reason why you shouldn't yeah and that was a great uh great group to start with in terms of surrounding yourself with just top top people

So when did you leave there? Did you leave there during the bubble burst or just after? Oh, the week before.

That's excellent. Yeah. I mean, I remember it. Timing is everything. No, without a doubt. So the interesting part about that is that, you know, when I was at that with the reason Yamada, the reason Allen, excuse me, and the market was moving up, being overbought was the best thing possible, as you can imagine. And so that was great. A little bit of pullback, buy it, buy it, buy it. And they were very focused on a long term. Most of the pieces were weekly and some monthly purchases.

I went to InstaNet, I worked with a gentleman named John Schlitz. Now, John was a former over-the-counter Nasdaq trader at Lehman Brothers, who then got into technical analysis. And he's much more short-term based. And he also wrote a daily note out, whereas, again, coming from a place where we just put it weekly, it was just different. And so, if you think about it, John was at Lehman Brothers same time Steve Shulman was there as a head technician.

But it just tells you that there are so many other people potentially, especially at a big firm like this, that uses technical their own way. And so when he was sitting amongst his colleagues back then, they understood what Steve said. Obviously, very big picture and just his reputation precedes himself. But-

John had a different way of looking at things, and his work was extremely helpful to the traders because they cared more about the short-term swings than anything else, where you could wait for that breakout, the big base breakout that Mr. Shobin was waiting for, but at the same time, maybe get five different mean reverting moves before you got there. And so-

Coming into to instant at as market was rolling over, sitting in the midst of 20 and 30 year olds, testosterone driven, yelling, see my own personal accounts go down at the same time and trying to write something in the middle of the chain desk like this extremely different.

You are experienced when we have before but it taught me again those first six years straight up straight down the the need to adjust Strategies that you're using and again the technical toolbox and you know, we're gonna get to you in a little bit You don't have to use every single one every single environment and so those first six years were you know very instructive of that matter and then from there and

Actually, I didn't move out of technicals, but that wasn't the main focus for a while. I was a sales trader for 16 years. And so what that helped provide with was talking to buy side traders every day, understanding the strategies they use and why they were using it from their PMs and or the algorithms they chose and.

It really helped me understand why those trends were happening as opposed to just witnessing them from a distance. And so in the middle of the great financial crisis and things that came afterward helped as all of us looked at COVID crash from our home offices, which I'm still in now. And so I understand and thinking about what was going on during those times. And then just toward the end of that,

Started doing more technicals John had left the firm. So I assumed more of a Technician's role again got to the point where it just got to be too much doing both roles and I understood that and I had some pride that I wanted to make sure my trading clients got the coverage that they deserved and did very unpopular thing of intentionally moving out of trading and

and being the best strategist there for the last two and a half years before leaving a starting cap thesis. Right. Awesome. And I mean, I can only imagine when I think about Louise, obviously think about big bases. She still to this day loves to talk about them. And I think Steve Shobin and John Rook worked with him, right?

Yes. I think about big bases. So was that did that was that a legacy for you as well? Like, do you think about you like known for identifying big bases as well? Because it would seem like that might have been planted in your mind at an early age. That definitely was. And since that point, too, I would add on that then learning about Peter Brandt and everything he does to really understand.

confirm the fact that the pattern analysis is really the first and last thing that I look at. We can talk about that a little bit later as well. Yeah, we should kind of like maybe morph into your process discussion, but maybe you can be a strong advocate for pattern recognition because obviously there's a lot of back and forth on that. And my take on it is that the whole

science or art of pattern recognition stems from the fact that technical analysis has been around since the 1800s, late 1800s, and there were no computers and there was no language to describe what we were seeing. So it was just nomenclature that came about to help root everybody in the conversation as to what it is. So if somebody said to you, head and shoulders top, they would know what you meant. It would have meanings like what if you can identify almost in your mind the support and resistance levels that might compose that pattern, etc.

But obviously since as time has passed on, we've been able to systematize it and what really matters now is highs and lows, regardless of what it looks like in between. And so now there's a bit of a debate about whether or not there's a place for pattern recognition as opposed to just identifying trend change and not really caring what happens, not really caring about what you call it. How do you come out on that discussion?

Well, I use pattern analysis for trade ideas, but also to help identify market's trend. And so I've written about this a few times in different places. But the way I view this is that, number one, to understand what type of trades you have to put on, you have to understand dominant trend. We know that. And so that could be up, down, sideways. And so what happens in an uptrend? Well, bullish patterns work. So the question is, why do bullish patterns work?

And from my perspective is that you need, say, low-to-weight volatility. We talked about this before, and that's just looking at the number of 1% moves over a month-to-month basis. Because it just means that there's fewer whipsaws and clean breakouts. So when clean breakouts happen, you have low volatility. And when that happens over and over again, that leads to an uptrend. In terms of volatility,

how that relates to individual stocks, I just think it's human psychology. You know, if we were looking at whether it's inflation or something else, if you just talk about one point,

I'm not telling you guys anything you don't know. It means nothing. You hear about history, you may have an idea. When you put a chart on it, you will understand. And it can change someone's mind completely about buying something at 10 if it was at 1 two weeks ago as opposed to 100. There's a story there. And that's why I look at it and

For instance, in looking at something like, you know, XBI biotech ETF. I'm sure you guys know that, too. It's like fell apart like everything else did in early 2021 and basically been coming back, but didn't start to look good. Technically, it's still bullish pattern starting to work.

And so that's the type of thing where you can say I bought a year and a half ago with the same price. Well, you probably had some opportunity costs along the way. So we always hear the term, it's not the lowest price, it's the best price. And I think the best traders always know what that really means. It's when you can identify when the character changes. And from my perspective, that happens when bullish patterns start to work. Probably coincides with longer term moving average starting to turn higher at the same time as well. So when you put all that together, I think...

That's where it makes sense. And from my perspective, it just it's easy on my eyes for that part. And it can easier to manage risk, too. Yeah. You know, Alan had such a knack for taking really complex ideas and putting very simple language to them.

like his famous quote of, in price there is knowledge. So you could unpack that for the next 10 hours about all of the fundamental information in the marketplace and why price reflects everything that folks know and everything that they don't know. And Dave and I have had a lot of long discussions about exactly that inextricable link between fundamentals and technicals. I think the challenge for technical analysts at large is that

Pattern recognition is seemingly pretty easy to do, right? Everybody on Twitter could pull up a chart and say, hey, look, there's about to be a head and shoulders. And they lack the idea that until there's follow through, there's no pattern there. And the fact that you need some history and some context to use something like pattern recognition to know how that fits into the context of the dominant trend, but also what market is.

history is going to tell you. Did you immediately start gravitating towards pattern recognition or was it is it something that you felt more comfortable using having been on the street for 25 years?

I think it's a combination of the both, Tyler. You know, I just go back to that Bruce McGee books. It just seems so, I wouldn't say easy, but simple to see. And you could just apply it to any timeframe, you know, in terms of looking at something, you know, a minute, day or weekly, what have you. But also you look at those charts, they look exactly the same as something that's happening now. You couldn't tell which was what.

And going back to like the Darvish box is the same thing where, you know, he was doing like he was making Nicholas Darvish was doing that strategy, this very simple strategy, you know, decades ago. But if you use it in the right environment, like we have right now, it works the same way. It's because, you know,

Again, as you know, what causes uptrend? Well, we know markets have been going straight up. It seems like that. But not really. It's always about one concentrated move, a digestive period, which every digestive period

could be either a continuation pattern or reversal pattern. It's always up for discussion. And so another part of the uptrend trait is that bullish patterns work, bearish patterns don't. And it just means that there's just very few resolutions to the downside. In one chart I've been showing over the last two years that the biggest bearish formations for the S&P specifically

Haven't played out. Now, that may not work out all the time, but this, you know, you have to respect it for as long as it happens. So I think, you know, when you see a big move like we just had, you're more apt to buy it until one of those bouncing efforts just fails dramatically. Right, right, right, right.

Can you maybe give us a little bit of background on the Darvish box? I think a lot of us might know what it is, but I think that's probably one of those. This has got to be, Tyler, the first time we've discussed it on this now in our fourth season, I think. So that to me is when I'm asked to recommend books, that's one of the four books I recommend.

Um, so you look a lot like Nicholas Darvish. Can you dance like Nicholas Darvish? And what the heck is Darvish boxes? Oh man. Yeah. I don't remember how it came across that book. It just probably popped up on Amazon as I'm looking through Jack Schwager's books or one of those, but it just resonated. And the fact that I think it's really interesting for a few reasons. Number one, it's so simple to understand. It's again, a consolidation zone and,

And the way that, you know, you buy the breakouts and then you raise your stop based on that. And to me, that can be applied to other structures as well. Whereas if I'm putting on a trade based on a cup and handle breakout and, you know, one easy stop is just to sell it if it goes underneath where the cup was, something like that. Or it could be much more aggressive. It just when you see specific level like that.

On a geometric shape. It's easy on the eyes, once again. Now, the other part of it, which I found even more fascinating, was that Darvish was conducting these trades by being all over the world 50 years ago. So that means that he had no emotion attached to it. This is all done. Didn't have any news stations to tie into. He wasn't getting pinged by anything. He used to get his barons mailed to him.

In emerging market countries as he was doing these dance shows with his with his wife, right? And the Barons would be a week old when he got it. And that's what he would use to make his trades. There's a lot of there's a lot of wisdom embedded in that that situation. But I'm hoping what you're going to do is you're going to also tell about what happened to him when he went back to New York, because that's the best part of the book, I think.

In terms of his trading falling apart because he got so close to it, you know? Yeah. Well, yes, exactly. So that, that was, that was the, that's the biggest punchline of the whole thing where we think we need all these, these tools and whistles and all that and Twitter, whatever it is. But the main, main point of it is that you want to be as removed from it as, as you can. And now we can't do what he did.

but just coming up with our own rules on process, that's going to get us close enough. And, you know, I don't do a lot of active trading like that and day trading. So I'm either looking for trades for clients or,

Or from my personal account, that's when I talk about, that's why I look at things when the market's closed. That's when I put in trades. A lot of our buy stops, sell stops because of that reason and not worrying about it afterward. Or David just mentioned, you know, if you get too close to it, then everything falls apart. And then you wonder what happened, right? Whether it was a different market environment or not. But same thing. You just need to make sure that just by looking at something going against you is going to change your philosophy. Right.

Yeah, I think for every new trader who thinks they need to pay up for real-time market data on whatever platform they're on, you might be missing the point, right? Yeah, that's right. Reed Barron's a week in arrears. Yeah. Yeah.

Yeah, you know, Dave, we haven't done enough history combing with our guests and Nicholas Darvis and many others. I mean, a lot of the concepts that are still covered in the CMT curriculum, you know, when candidates are going through and they're like, man, what am I doing reading about these guys in the 20s and 30s? You know, how could that possibly apply today? And I think the overwhelming consistency is that human behavior hasn't changed.

And so markets are going to do what markets do because humans are still governed by these heuristics and biases and all that. Frank, there was another piece of your toolkit that you mentioned earlier with respect to relative strength. And so with Alan and Louise, once a week, you would chart the relative strength line of each of the industry groups relative to the benchmark. When you went to the trading desk and the timeframe was a lot faster, was relative strength still a part of your toolkit or were you more focused on absolute price action?

Always use relative strength. You know, again, it still matters. And I think especially now, too, just because of the things, the way that the Mach 7 and such has become so much of an influence that you have to understand what's going on underneath the surface. And sometimes you don't even have to use relative strength lines. So one of the things I've been looking at just over the last year

few months was recognizing that as technology was having a few rough days here and there, that the market responded well. So, okay, fine. You can see that sometimes with the market itself, but specifically looking at the S&P 500's breadth. So, there was a time from April to the end of June, early July, when technology, the XLK ETF, was the worst performing sector. And every single one of those days, the S&P had positive breadth. And so-

at least identifying that, told us what was going on. And during that time, you recall that last whaley breath thrust occurred as well. And so, you know, the back of our minds, of course, we were thinking about that as a market was falling apart for the early time in August. So that I think is extremely important. I think it's probably the most important things considering how much of an influence technology has right now is to understand that not only have you seen positive breadth, but some of those other areas

Never even pull back too much from their highs and that's extremely important to understand whether whether you're looking at the indices or not just having a feeling that the market itself has a foundation that can support a big pullback like that because you know we've seen in the past where especially coming into to this looking at the the mags 7, you know ETF and

It was just way extended. We know it's not, hasn't been around for that long, but to the point where it, you know, it just got spiked so much in front of,

Right when everything was going to report and then everything else that happened in Japan so forth and so on and then you know the unemployment number it just kind of set up a perfect storm at that point easy to see in hindsight but as we can tell from Seven days in a row potentially eight up straight and the market was looking for something like that to at least latch on to as a dip of a probably more than a dip but You know a buying opportunity

Before we move on to anything else, I want to jump into the Frank Capillary technical dictionary and just give us a quick, for those that don't know, what is the Darvish box? Because I think it's something people should look into because it's really the predecessor in a way to the turtle trading, right? Because it's basically breaking out of new highs, but it's more like visually defined. And then maybe just as quickly as you can, the Whaley-Brett thrust.

Just to kind of center our listeners.

Sure. So the way I understand the Darvish box too, is just you're looking at, so the market or any stock will go in different steps along the way. So once it is, say as a, for instance, a stock is trading between 90 and a hundred keeps on bumping up against a hundred can never get there. So you're going to respect that resistance until it's broken. Once it's broken, potentially new box, new trading box, a new Darvish box is being formed. And so you can then trade and buy that as it goes up.

and manage that risk

where it goes below that box, get out of it. And you repeat that process over and over again. And I believe the way Nicholas Darvis was doing it is that he was very aggressive, basically trading only a few stocks at a time, sometimes one or two, and also had the benefit of a strong market. But he didn't know at the time, just like now. You go back and look what happened in November of last year. Still, there was not many people thinking this would occur. But I've been using the box strategy for quite a long time.

Is that, can I just, is that, in many ways, is it sort of like, it's sort of like pattern recognition without actually labeling the pattern. You just recognize that there's a box that is formed, whether it's a rectangle, a triangle, or any other, you know, head and shoulders continue, whatever it is, we don't really, we don't find the need to label it. It's just identified that there is a box, right? And then when you exit the box, that's the trait.

Exactly. And then if you look at it, like I've been looking at it just from a S&P 500 perspective, very simple. The ones that we had positive resolutions are blue. The ones that, you know, to the downside, red. And the ones that are in the process of being formed are green. So I've put those on Twitter a number of times or X and just got a ton of commentary, as you can imagine. But I keep on reposting, like seven blue in a row, eight blue in a row and all this. Yeah.

What does that tell us, guys? And it's like, you know, whatever it is. Let's keep it simple, right? Right. But at some point, it's going to change again. And so I think that's another way of, you know, pattern recognition, but also a way to determine the trend. Right. You don't know which one's going to happen, but that's the thing. It looks like the market's going to shut up, but it has probably five or six days worth of spurts like this. And now we're not going to be surprised at all until the end of August through Labor Day. This box is going to be formed from now. Yep.

And now the Whaley-Brett thrust. The Whaley-Brett thrust, honestly, I don't know the particulars of it, but I believe it has to do with having a certain amount, I think 75% stocks in your stock exchange a few days in a row being positive. I would say I was looking at it from my own perspective.

What I noticed as the Whaley breath thrust was being talked about was that the S&P 500 had 80 percent breath three straight days, but had not happened at all, even from the beginning stages of the rally. So that's why I was looking at it. So it's more like a persistence of day after day breath would give you like a Whaley breath thrust. Yeah, I think it's like a burst, burst of breath. Interesting. Yeah.

And so for all of our listeners, we'll throw the 2010 Charles H. Dow Award-winning paper from Wayne Whaley, who's a CTA operator and did the original work on those breadth threats. So you can have a little weekend reading after you're listening to this podcast. Go to the source. Go to the source. Yeah. Fantastic. Okay, so...

You're, again, having started with Louise and Alan, classic technical analysis, pattern recognition. It sounds like that's played out through your career. You really adhere to it. And I think Tyler's point earlier on about how these things have been working for over 100 years. And there's probably information in that, right? The fact that these very simple, very rudimentary, let's not overthink it type of approaches are

are what actually can sustain themselves no matter what the environment throws at them, right? As your career has progressed and as computerization has kind of ramped up, have you adjusted your approach at all to take advantage of computers and backtesting and things like that? And then we can even talk about AI. Are you doing anything in the field of AI as it relates to technicals?

Well, I would say use technology in the way that many others do in terms of running screens, you know, just to get things in front of us. And I think that's where it comes from, science to art. So no matter what you use, whether it's AI or something else, any kind of screening tool that we see in all the trading systems, it just gives you potential candidates. And if you just use those blindly, you may do well, but...

I think it's much better served taking those and then looking to see what the differences are. Because something could be trading above a 200-day moving average or there could be hundreds of those, but you may not be close to a breakout in that regard. And so I kind of do both. I'll look at screens and then just take some time to go through S&P 500 or something else and just quickly go down and see what pops up, whether it's going through sector by sector

industry by industry. And I remember being at one of the CMT events

association symposiums and Peter Brandt and my favorite technicians was there. And someone asked them, how long does it take you to decide whether you like to chart or not? He's like, two seconds. Next question. If you can't tell right away, it's like, you shouldn't be looking at it any longer. Next. Next. So that's, that's really true though. Sometimes if you go through it, you're like that to extend it, to extend it, to extend it. Oh, that looks interesting. Write it down and go back and check.

And use other areas, other charting systems as well. I started looking at one indicator. Tyler, you may have heard of it. It's called Go No Go. I have heard of it. Yeah. I recommend everyone look into that. Go No Go.

But in all honesty, you and Alex created a really great system. And what I use that for is, you know, when I see potential breakouts or breakdowns to look at it and to tell me, is the trend still strong based on all the indicators that you look at? And that sometimes is the overriding decision whether to pick one stock over the other. So I think that's another point is that there's always new things out there. Don't ignore them. You can just test them out. It may not be for you, but whatever it is, I find, you know, I think it's worth trying because for a long time I used DeMarc.

One reason I don't now, I'm not in Bloomberg and, you know, I have I have a small company budget right now. But at the same time, I understand the kind of what is going on. I'm looking at a market that's extended, kind of know the mean reverting signals that are being flashed either from that or from something else. And again,

Yes, they do matter. Yes, people have done very good with them, but if you're an uptrending market like that, how many MACD sales things have you seen in the S&P 500 the last year and a half? I think there's been like 12 or so and only nine have played out. So that type of thing where understand what trend you're in and utilize the indicators accordingly. Right. Maybe we can transition a little bit to your current view on what's been a

kind of wacky five years, frankly. But where are we, to your point about starting with the big picture view? How would you characterize the markets over the past, say, five or six years? I mean, we've had a lot of crazy things going on. Where are we? We've had a little bit of everything, haven't we? Well, I think I look at this from very completely different angles. One is the very long term and

One of the things that I utilize are just simple long-term moving averages, right? Whether they're 13, 26, 40, whatever. I think it was Mike Hurley who brought those up, right? Yes. So I've been using it ever since. He talked about that at CMT Symposium. Not to make this a big commercial for people to go, but –

Some very good things are being related. Yeah. That's where I go to learn all the best stuff. Yeah. But if you just look at what those moving averages have done with the S&P 500 over the last four years, it's,

they've nailed major turning points. And so when I was just talking about this in the pieces over the last two weeks, as the market was pulling back pretty strongly, is that it was going to take a little bit more on a more consistent basis of deterioration to have the 13 week, which is basically one quarter of action undercut the 26 week. And then all have all of them undercut the 40. But once that happened in early 2022, you know,

S&P stayed below most of those moving averages until things changed again. So you have to be patient for the major turns. Now, the other side of it is understanding underneath the surface, in a very short-term point of view, going back to trading days, is that

When portfolio managers are aggressive, it gets reflected in the trading strategies they use, whether they're telling their traders to buy, you know, manually, aggressively, or use certain algorithms to reflect that in the marketplace. And just sitting in front of it every day, utilizing the algorithms myself and understanding the types of environments that we did so in,

it forces the market a lot of times to close near the highs and near the lows, right? And so one of the things that really key on every day is tracking this basically on a 20, you know, day rolling basis of what's the percentage of time the S&P has closed, you know,

near its highs or at least above its midpoint compared to not? And does it confirm or diverge from what the S&P 500 is doing? You can also put in the fact that what's the breadth doing at the same time, but there are certain amount of times, especially from the very beginning stages of this rally through the

late March, where the S&P closed above its intraday midpoint 70% of the time, 70%, just in crazy amount. Went to 40% from the pullback to that point, and then it was down to about 20% as the most recent market rolled over from late July until early August. So

And some people will say, well, that just happens. It's not really a leading indicator. At the same time, I feel that it's just something that confirms what's going on. And what I was saying is if this doesn't improve soon, then it's just going to feed upon momentum. And we could have an even worse effect. And of course, since that point, it's been markets up seven straight days. We've seen closes above midpoint six out of seven days, positive breadth six out of seven days. So I think it's going to be more interesting to see how that develops during the next five

you know consolidation phase which probably would be surprising to see that happen relatively soon as the next darvis box is constructed all these things all play together right i mean speaking of darvis boxes i i um i've been following this index for 30 years uh but at the uh um guideline geometric average i hate talking about it because it's not really a great index represent representing

What's happening in the market from a wealth accumulation of wealth destruction perspective but it's one of the best ways to measure breadth in the market. In this index is basically going sideways for three years approximately that's still down just recently was still down 17% from its highs.

So, on the one hand, we have the S&P doing what it's doing. And on the other hand, we have the value line geometric average basically tells you what the average stock is doing. So, to me, again, it's the best representation of breadth. And that thing is still in a bear market. It's still, to use your phrase, Frank, it's still in a very large three-year Darvis box, if you will. So, when you look at, like, on the one hand, you have the market telling you that it's been a very robust bull market, oddly enough, since the banking crisis. But on the other hand...

most stocks are still down. Close to 20% 15 10 10 to 20% spending on the stock from their highs in 21. How do you rectify that me what what what are we in a we in a bull market is a highly divergent market that's kind of on the brink of. Of rolling over like maybe John Huston might have us believe or is it. Or should we just just be bullish.

Yeah, I guess it all depends on what stocks there are. I mean, needless to say, there's a lot of small stocks in the value line, I would think as well, that probably resembles the Russell 2000 more than S&P 500. And so I think that's the biggest thing. And I know we've probably talked about this with every episode that you've had. Unfortunately, yeah. It keeps going on and on and on. It's a big box. It's a big box. One of the things that looking at or kind of switching gears to the Russell, kind of the same discussion is because I look at that more. Yeah.

You know, with that crazy move a few weeks ago, people were saying, this is it. You know, we're about to break out and it is what it is. So it may be. But I would say that there's one chart I've been talking about recently is that we've seen this four different times going back to the last 10 years with the Russell where it's taken its time.

It's finally broken out. And we've seen a follow through on the breakout every time. So even after a big move. So if that were to happen again, the Russell will only be up 50 percent to his last high. So even though it's maybe underperformed and not been able to go above its high like so many others have, it's done a pretty good job participating even before that happened.

The problem or the issue is that if you look at that same chart and you look at the relative of the Russell versus the S&P, right, every time that relative strength starts to fade as that absolute breakout happens.

That's going to be, I think, the one thing we have to look for if and when that occurs. Because unless something really changes with the large cap tech leading that way, I can't see a Russell breakout continuing to be relative strength at the same time. Yeah, no, if you put on your CFA hat, which I mentioned earlier, Frank has his CMT and CFA. But if you put on the CFA hat, I mean, it's like you think about what's in the Russell 2000.

It's a lot of money losing biotechs and a lot of smaller companies are just losing money. And at this time, the index actually has its largest percentage of money losing companies in its history.

So, you know, if the market is what I think is the best fundamental analyst on the planet, is it shocking that the market, that fundamental analyst has left this index going sideways for three years when most of these companies, not most, but a good, very solid minority of them are losing money? And then I think it's 25 or 26 is this big wall of refinancing. They're highly levered on variable rate debt.

So at the end of the day, maybe the small caps are just supposed to be doing this like nothing. They're supposed to be in a box while the rest of the world parties on. Maybe that's the story. Yeah, I think you're right, Dave, about that. Because, again, going back to what Alan said, in price, there's knowledge. Exactly. You just mentioned you see that first, and then you back and fill and understand why. And even if you go just looking at, say, the top 50 S&P 500 names versus the bottom 50, they look like completely different charts. Right. Mm-hmm.

regardless of what they are. It just shows what's going on underneath the surface. So I don't know how long it's going to last. I do know going back to the MAG-7, if you look at that ETF, it's just interesting that every breakout that it's had has been retraced to undercut the past breakout zone. And that did not look like it was going to be the case this past time because it got so extended, but needless to say, it happened again. So I think what that shows is investors may want to stay in those names and you obviously can't

you know, talk too badly about what's happened over the last number of years, but there's going to be shocks like that, even if they come back. So, you know, the question is like, do you trade these or do you own these? And I, you know, the answer is you're either a long-term investor, you're a market agnostic and don't worry about anything we're talking about probably here, or, you know, you're an active trader and recognize the fact that that's going to happen and try to capitalize, you know, when those, you know, disturbances occur.

Yeah, I think the distinction between identifying, you know, you don't necessarily have to do this and stick to it, but you should do this with every single investment you make. You just acknowledge up front, are you swing trading in this example or are you long term trend following? Because there are two totally different approaches. And for me, when I look at these these mag seven stocks in there, you know, if you took the mag seven and you made it a country, you'd probably be bigger than Europe.

So that tells me that I probably don't want to own these for the next 10 years. So I will buy these things, but I'm not, I have stocks in my portfolio where I can, if I think about the fundamentals and how it's trending and relative performance and everything else, I can see myself holding these 10 years from now, five years from now.

But if I buy NVIDIA on this pullback, I don't see myself owning it for five years. So I think that's the only way that I can get myself to buy these MAG7As. Because if you actually look at the history of the S&P, if you just buy the 10 largest companies every year and that's it, it's a bad strategy. The other 495 tend to beat the S&P through the course of time. So owning the five or the 10 largest companies is a bad strategy. So-

That's how I come up on it. I actually saw a piece you put on LinkedIn or YouTube, Dave, talking about that. You did a very good job. It was good because you want to be the outperforming name because it doesn't have to be the biggest one. It doesn't have to be. In fact, you can make the case that it's better for it to not be. You're going to find very few companies that have NVIDIA's fundamentals today, but in two

Let's not forget what Jeffrey Bezos said. Your profit margin is my future opportunity. That's how he thinks about it. So, you know, NVIDIA might have a 50 percent profit margin, but that's not going to last. I mean, that's why Apple's thinking of making their own chips. If I'm NVIDIA's customer.

And they basically rake me over the coals on pricing. And then I look at their annual report and they have a 50% profit margin. I'm a little angry right now. You know, I'm going to do everything I can to shrink that profit margin. But if you have companies that have comparable or at least very solid fundamentals and it's a

$10 billion company growing top line revenue growth, 20% a year with no, you know, maybe negative net debt or something. And you can combine that with technicals where it's strong trend over multiple timeframes, strong industry group, et cetera, et cetera. I can see owning those things for five years, but Nvidia, I just, I don't know. I can trade around it, but I don't see myself holding it. I'm going to probably pay taxes on that game before I pay taxes on the other. Yeah. I mean, incredible. Yeah. It was, um,

doing a Trader talk video for CNBC a few weeks ago one of the questions was someone who recently owned in the video and how does it compare to what Cisco did you know back then and Cisco was up 7,000 percent, you know in a time frame I didn't remember it was up that much. Yeah, but the point being is that everything changed once it rolled over an undercut It's towards a day moving average. So sounds good on all that if you can ride it from the beginning to the end, but

But that pullback from that top down to the 200-day moving average, that's a big move, especially if you're late. Probably 50%. Yeah, especially if you're late to the game, not even late, just later innings. Yeah, that's a hard one to swallow because the way Cisco topped in 2000, in March of 2000, as it went into its peak, its top-line revenue growth was very fast and accelerating.

So then the stock topped and the revenue growth continued to not just grow, but accelerate. So you're a fundamental analyst and you nailed it. Right. The fundamentals keep going. They're not they're not just going up. They're just getting better and better. But the stock topped. And when the when the top line revenue growth decelerated, still a great number, still crushing, probably one of the best, fastest growing companies in the market. That's when it went on its 90 percent slide while it was still great.

That's the difference between a great company and a bad stock. It's almost always the valuation you pay for, right? Exactly. I mean, it was 37 times sales. That's right where NVIDIA is today. So let's talk...

Let's talk about that for a second. How much does sentiment play into your mosaic approach, Frank? Do you care what the AAII Investor Survey or the Name Exposure Index or the Fear and Greed Index, how do you use those tools? When do they play an important part in your analysis?

I do look at those. Again, I would say probably secondary. But one of the things I always focus on is a fear and greed index. And I think that's interesting because there may be factors that go into that that people don't really look into. You know, number one, they're not looking at the S&P 500, the New York Stock Exchange.

And so that looked completely different, right, as a market was rallying. And so we were in extreme fear or fear for a long time because, Dave, as you mentioned, so many other names weren't participating. So there was fear in that sense, at least how they label it. Right.

And again, one of the things I was looking at as a confirmation of that is what the market was doing when technology was lagging. When that switched, that's when things really switched. And that's, you know, when the rest of the market caught up. So sentiment, I would say that it's very similar to any other market.

overbought oversold indicator where it could be pinned for a while and so you have to you can't ignore it it has to be there understand you're on the other side of the pendulum but that pendulum may stay pinned for long though we think and i just think the last 10 months have proven that to be the case but on occasion we can see when that gets even more extreme again hindsight is 2020 but coming into july same type of thing where the way i looked at it as well

there's been at least one, mostly two live bullish patterns, the S&P 500 in play live since the very beginning of this. And so when we finally had one, the last one I was tracking back then, his upside target on July 5th,

looked at that and just said, you know, we're operating without an upside target right now. And so what Markets needs to prove that the next phase, whatever it is, can construct one. That was the same time when a Darfus box, right, gets got exited from on the downside. But looking for a classical formation, nothing occurred until those first few days after the comeback. And I had to use a 30 minute chart to show that. Still nothing really from a

Ideally charged. So when all those things kind of line up, sentiment was saying one thing or the other, max seven up, wake sentiment versus the S&P 500 and no bullish pattern. That's when, at least from my perspective, the risk reward scenario wasn't that favorable.

Right. It makes perfect sense. So if you think about the risk-reward today in the market, depending on how you measure it, you could easily say it was a record volatility spike. And we've rallied very swiftly back across the range. What's the risk-reward here, do you think?

Well, I just think you need to see the number of 1% moves decline again. It's just too much. Can you flesh that out a little? Because I think that's a really, really important point. I think you're talking about the character of healthy markets, right? Can you talk about that a little bit? Sure. So just to give you some perspective, in 2022, as we know, bear market, and so there were 128 1% moves for the S&P 500. That's a lot.

And 65 of them were declined. 63 were up. Right. So like a massive amount. Just the crazy amount. And so 2023 came a low hit in 2022. But the volatility remained from that perspective until through the first quarter of 2023. So with average, say between, say around 10 per month, we're staying completely fall of a cliff here.

in April, 2023. And then that's when my works are to show bullish patterns started to work again, just because what we talked about before, two-way volatility started to lessen and that lend itself to bullish patterns working again. And so if you go through all those timeframes from there, the only two months that have more or seven or more was October of last year than this past July again.

And so what that means is now, again, August, because on the upside, we've had seven already, not just basically through halfway through the month. So what I look at it is that in the most stressed environments, you're going to have the highest volatility, whether we're measuring the VIX or something like that.

But you also had that in the beginning stages after a pullback. So that's where we're at now. So it's given the benefit of the doubt that it had to use a burst like that to get us back to where we are. But really, in essence, you want that to stop at this point. You want to see consolidation. I wouldn't be disappointed if you see one or two more 1% gains through October. Not going to happen. But we went through a time, though.

Didn't I think it was over 50 days that 1% decline, only one 1% gain in something like 40 days. That was, needless to say, from the April low to through June. And that was one of the best times of trend for the market. And so where we are right now, I would still I would say, you know, we're still bullish pattern still working. Uptrend still there.

but i want to be more confident in buying breakouts across the board until we see what this next phase is and i hope it's you know a higher low again they can identify more bullish patterns that have clean breakouts yeah and you i'm thinking like when you're thinking about the environment in which you're buying these breakouts i'm assuming based on what you're saying that if you prefer to see between now and the moment we're finally buying these breakouts you're going to want to see the volatility come down to indicate that when these breakouts happen they're actually

likely to sustain versus just being another mark of volatility. Exactly. Yeah. Exactly. Because you go back to, again, 2022, where huge moves in the direction, but I couldn't identify too many bullish patterns. And the biggest ones that got formed were at the very end of those moves. Yeah. And so it was treacherous if you just relied on that. And that's when...

Mac D. Stelzner knows the word. That's when DeMarco was killing it. And it's just nature of what we're in. I think that the most difficult part, again, is the transition phase here. Because it does concern me a bit that you had that big downturn and just it looked like a reverse crash, right? We had just that point. So we got the short-term bullish pattern target hit. But now I think we have to do some work underneath the surface for a bit, I think, to get more comfortable with the next phase. Yeah.

And on that front, in terms of transitions, are you seeing anything transition-wise from a leadership perspective, or is it just so far so good? I mean, we can see that utilities have done well, but they're kind of supposed to do well. The world's falling apart, at least in the short term here. So they're supposed to do that. But are you seeing anything else that has you more optimistic or negative on leadership transition?

I think financial is very interesting. They led twice last week and it's a profile number of those ETFs recently. XLF, right? Close that new all time high massive base. You guys see that and healthcare too, whether it's drugs, whether it's, you know, healthcare providers, you know,

Just holding in there. Now, sometimes you sometimes hear health care as a defensive type option. I'm not really sure I agree with that. But at the same time, I think two big areas like that of the economy holding up relatively close to their highs in the midst of all this, where the biggest names got really, really hurt. That's a positive for now. Hopefully they can do something with this because both of them, XLF and XLV, are on a long-term basis just percolating above XLV.

areas that they failed at so many times in the past. Yeah. And of course, if that XBI, the biotech index gets going, that's kind of a risk on measure too, right? So something to watch. Definitely. That's been, and as you know, biotech and regional banks are the biggest components within small cap. So they both need to work as well. I think one area though that

We need to work for us to say there's really getting a little crazy is that is ARK, right? If you think about like a biotech and ARK, those two ETFs look very similar up until earlier this year. And or I should say this, probably the beginning stages of 2024, where ARK had a very strong move until and then just has done nothing. And whatever one...

So everyone can have their own view on this, but that's when you know things are really getting extreme greed if that actually starts to work. So I think there's enough that hasn't worked, and those are the ones that shows that, yes, the big cap tech are leading, but they're considered a safe haven as well, because everyone knows about them as opposed to everyone going after the likes of whatever is in ARK at the moment. Any thoughts on real estate?

Well, I do think that XLR can continue to do well, best performing one in July. And it all has to do with rates, as you know. But in terms of what that chart looks like, I like it a lot. And who knows how far down rates will have to go? There's another discussion. But I'm not surprised that the Fed waited. Powell, through his administration, has been overly patient to the point where he's forced to do something.

which I think obviously you will do relatively soon. Who knows how aggressive that will be, but longer, big, big picture. I do think rates are going higher, but you know, looking at, as you guys know, looking at the 40 year trend of rates, even though things were moving lower at that time, you hadn't counter trend years. And so anyone who's like pounds a table on a rates, just got to pump the brakes a little bit. It takes a while for those to move. Yeah. Yeah. Yeah.

Just in terms of pattern recognition, XLRE, XBI, the regional banks, I mean, they're all forming some of those similar basing patterns. If you cover up the tickers, there's some similarities there.

Yes, 100%. So they just have to work now. Now they just have to get to work. That's kind of, Tyler, I think it's worth spending a couple seconds on that because that's what I was talking about earlier, that we're all fascinated by the Mag 7 and we're kind of like, we've gone to sleep on the rest of the market. But you step back, Tyler, to your point, look at the XLRE. That's a

gigantic base that's just broke out last month. It's like back to the beginning of 2022, early, late 21. That's a big base that's just breaking out. Yeah. Yeah. Right. And that was hanging in there too, even when rates were rolling over. Yeah. It kind of hit a little bit in March to April, but then- Yeah, the relative suffered, but the chart's been fine. Yeah. Yeah. Exactly. And I think for the most part, the market overall seems to be okay with rates-

Obviously moving lower but at the beginning stages of this rally to moving higher, but just not in an aggressive way I mean doesn't 22 was all about just like shock and awe Whether the Fed was to blame for that or not But the way rates and dollar moved your market can't can't deal with that where you know dollar Just look at this been such a big range for a long time long as it I think just continues to you Meander around there whether up or down a little bit. I think it's probably that's probably best case scenario, right? I

Yeah, I think it was Gina Martin-Adams who was pointing out that a lot of the folks who are only looking at the yield curve inversion as their bellwether for a recession are failing to look at dollar and oil, which are both stable, if not gradually falling, which is a pretty favorable tailwind, right? Yeah.

I will listen to her every day. Yes. Yeah, she's great. I think we can all agree on at least one thing, which is we should listen to more Gina Martin Adams. Oh, 100%. Yes. Frank Cavallari, it is such a pleasure to talk markets with you. I'm looking forward to getting back down to the city and maybe grabbing another cold one soon. But really appreciate you taking time this afternoon to chat with Dave and I. And man,

I wish I had gotten my start in the war rooms with Alan and Louise. I would have had a 20-year head start on what I'm still trying to learn right now. You're doing just fine, Tyler. And guys, listen, it's been a pleasure, Dave, great seeing you again as well. And I hope to see both you guys in person soon. Appreciate it. Absolutely, Frank. Thanks so much.

Fill the Gap is brought to you with support from Optima. In addition to candidate study of the official CMT curriculum, Optima provides a full video course on all of the material that candidates need to know for each level of the CMT exams. Each course is broken up into modules ranging from 15 to 45 minutes, depending on the complexity and length of the topics being covered. Learn more at Optima.com. ♪

Bye.