Ep. 301 Look For Changes In The Market With These Strategies and Signals
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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're coming to you on a holiday week. It is December 23rd, 2024, a Monday. Usually we do our thing on Wednesday, but who wants to do that on Christmas Day? So we're rescheduling things a little bit and doing it a little bit early. And of course, to help me out with this, my trusty friend,

Arusha Paris. So Arusha, of course, is a portfolio manager at O'Neill Global Advisors and also an analyst for William O'Neill and Company. And man, Arusha, we've been... I was just thinking about this. We've been friends for a while here now. It's been...

Well, friends, I guess, is maybe a loose term, you know, rivals, because, again, you have that SC helmet, you know, always showing. I finally put up my UCLA diploma to kind of contrast that. Education over sports. Is that what you're saying?

Right. And you know what? We should have put on our Christmas hats or something. I at least try to get like my Santa beard going a little bit. You know, this was in honor of I watched Christmas Chronicles with Kurt Russell.

Have you seen that one? I've never heard of it. No. Yeah. So my wife likes it. And Nicholas, my son, likes it a lot. And it was 80% his real beard in that. Oh, wow. It's something I learned. So yeah, maybe next time. But you don't have as much gray in yours. No, I have my Grinch mask on right now. OK, the Grinch. Oh, well, as long as you don't go with the other mask that you started on the other day. That's right. I almost did that. Yeah.

So, well, let's get into some market stuff because, you know, there's always look, we've had we've had Jeff Hirsch on so many times. And, you know, the thing that you think of at the end of the year is the Santa Claus rally, which actually begins just after Christmas and goes to the, you know, the start of the new year. Yeah.

A lot of people are talking about tax loss harvesting, what you're doing in taxes, avoiding the wash sale, all these different things that can kind of go into the end of the market year. Are you paying attention to any of that? No, I never really –

pay attention to it. Well, I mean, I'm aware of it, but I don't make it a huge part of my trading strategy or anything like that, I'll say. But yeah, it obviously can have definitely an effect in the market, especially after a good year. A lot of people want to push it off until the beginning of January and then sell. But it's not very dependable. It's always kind of like that poker game where it's like,

Do I try to sell before everyone else sells or do I try to hold it for the taxes? So, yeah, so it's not a huge part. I'm just using the price and volume. And, of course, last week, I wish I paid a little bit more attention that the Fed was actually going to talk and that, you know, that scenario could be happening there because it would have saved me some pain.

Yeah. Yeah. Well, we had we had Kathy Donnelly on the show, you know, directly after that Fed meeting. And of course, Kathy Donnelly, you know, she's kind of like, well, let's see what happens, you know, Friday. You know, she actually had all these holding rules. And, you know, here's here's what I'm going to be looking at on Friday and Friday. We got a pretty decent bounce now. Look, we had a lot of recovery work to do. So I guess, you know,

One of the ways I look at it is when you've got something so damaging and there was a lot of damage done on Wednesday, you came down below your 21-day moving average line on the NASDAQ. If we look at the S&P 500, that sliced through the 21-day moving average line. It sliced through the 50-day moving average line. So a lot more damage there.

So for me, at least, I'd like to say, OK, well, if you've got this ugly thing on this side, you've got to have something kind of to balance it out. And Friday seemed to be a pretty good start to that. And with today's action kind of following up on that, the NASDAQ did get above Friday's high. So making progress there. The S&P 500? Yes.

you know, at least close at the high end. It looks like it could make a run at 6,000. So what is it that you're looking for to say, hey, you know what? Wednesday is kind of done and over. We've gotten past it. What do you kind of have to see happen here?

Well, I think those kind of decisions or analysis would be more of the individual stocks because the reality is that we did lose a number of stocks. And they broke – I don't want to say necessarily – I mean, they broke decent support levels, right? Yeah.

it, what that tells me is, okay, they probably need to build new bases. Yeah. But there were a handful of stocks, the, the, the high flying stocks that have done, that did insanely well, uh, in Q4, uh,

They came down to their 21 days, but they kind of held them. And so as long as they're hanging in there, what that tells me is that there's still speculation in the market. And we might have that chance for a bounce and maybe we can recover a little bit quicker than anticipated. Now, the trick is...

you have to stick with those stocks that held up better, right? The, some of the other ones that really got taken out there, there, you just got to respect that and let them set up new bases and let them settle down. Well, and as strong as the NASDAQ looks, um, and, and the S and P 500, look, even though it's a little bit weaker, it's still by no means broken. I mean, the fact that we're getting that support, um, and, and back above the 50 day moving average line, I,

I look at that as a positive, but it's also important that we take a look at RSP because to your point, Arusha, with a lot of stocks that were breaking support, you know, and some of these had already started. This is what the, you know, the equal weighted S&P 500 looks like. And that just kind of goes to show you that like there's the stocks that are doing OK are not your average stock. Right.

Right. Yeah. So we definitely. So I think if you're looking kind of from the bigger picture, it's you want to be a little bit more cautious here, especially if your stocks broke support. You have to respect that. You have to manage your risk at that time.

And so a lot of those stocks did break support, and you can see with this RSP. So you have to be more cautious here on a lot of stocks. And the other thing I think that made me a little bit more cautious is, gosh, look at the small caps, right? Breaking their 50-day. Look at the mid-caps breaking their 50-day. Now,

So if you're in any of those stocks, now the good news, I think, for both the small caps and the mid caps, they were starting to lag in the short term, right? On the short term timeframe, they're starting to lag a few weeks before the

They really broke their 50s. And we could see a little bit more of that rotation into larger cap and larger cap tech stocks, especially. And it made sense since we were going closer to the end of the year. People want to go into more of the quote unquote safety stocks, right? The apples and all those kind of stocks. But yeah.

So when you kind of take all of those charts and all of those different areas of the market together, that's not leaving with you a lot of area to say, hey, yeah, these are the stocks that are doing well. And now if you have some of those high-flying stocks, then yeah, keep going for those. But if not, play small, be a little bit more cautious. This is no longer the time to be aggressive. I know for us at

O'Neill, um, we moved the market to under pressure. I don't know what, I can't remember what you guys did at, uh, IBD. So we're not using under pressure so much anymore. We're kind of going with our percentage range percentages, but yeah, we, we, we did scale back, uh,

I will tell you on SwingTrader, we're still using kind of a three-tiered system, and I did move it to sideways there. It's worth mentioning for those of you that are on PowerTrend Watch 2024, the PowerTrend did go under pressure.

Not because of... Well, on the S&P 500, it would have done it with the break of the 50-day moving average line. That's one of the things that puts the power trend under pressure. But for the NASDAQ, it was actually distribution cluster. That's another thing that puts...

you know, puts it under pressure. And that happened on Wednesday where we have basically four distribution days within a eight day span. So yes, certainly not all of those distribution days looked bad. And this is also one of those tricky things. We talked about this at the founders club where if you use dollar volume, there were some of these days where the dollar volume wasn't, you know, wasn't that big a deal, but Wednesday by all measures, you know,

Dollar volume, trading volume, stereo volume. I don't care what kind of volume you're using. It was bad. So that was distribution. That's not something that you can kind of avoid. But so, yeah, the power trend is under pressure. But that's something like at least on the NASDAQ can –

if we start trending above the 21-day moving average line, it can come back pretty quick. But you know what? I want to back up real quick because you mentioned Apple and some of those large cap, mega cap companies. And I mean, you look at Apple and

I don't even know where Wednesday is. Where is Wednesday on this chart? Because it just doesn't look like anything happened there. And if we look at FNGS, which is the NYSE FANG Plus index, this is the non-leveraged version. I do have a position in a leveraged version of this. I mean, you know, it looks like the NASDAQ, but it's on the stronger side. So...

With things like this, to your point, this was getting support of the 21-day moving average line. Whereas, again, when we look at RSP, that just looks so much worse. I mean, it was just kind of relentless selling there. And also, it was just the amount of time it took, too, right? It was just like...

It seemed like a couple hours or maybe less than that. And I'm switching to an hourly chart here. You can just see just how brutal it was and just how quick it happened. And so no one was staying around at that point. And so that was, I think, the bigger concern. There was no one to buy at that point. They just let it fall. Right.

Right. And, you know, look, we do see that happen very frequently, you know, around Fed meetings. The algos kind of come in very quickly. It was interesting to me that the selling, you know, it seemed muted at first, you know, because, yes, everyone was expecting a cut. Everyone was expecting it to be a hawkish cut. There really wasn't a surprise there. But then,

It, you know, didn't seem like it hit immediately with the with the announcement. But then as you know, as typically is the case, once the press conference got started and, you know, every now and then, OK, now we're parsing the words, you know, how hawkish, you know, what can we really expect? What is this? What's what's going on? You know, things got worse on that day. But again, a lot of damage had already been done. RSP was already below its 50 average line.

um so uh you know you you mentioned rotation you know and i you know it's not really rotation necessarily to mega caps because it seems like those have continued to be strong are you seeing rotation anywhere else like um you know definitely not in the small caps uh but what are you seeing out there so so uh so here's the the the crazy thing um

If you look at, so quick answer, no. I don't, besides those large cap tech stocks, I don't see too much obvious rotation. But if you look kind of like go through like the S&P sectors, right? And we can just walk through them right now, right? Here's communications acting okay, right? It's not terrible, but still above its 50-day. You have discretionary testing its 21-day right here.

You have Staples, which you would think would have a rotation in, breaking the 200. So it's not like people are going to defense, right? Exactly. XLP you usually think of as defense. Right. Yeah. We know healthcare. So here's energy. We know how bad that's been. Here's healthcare consistently making lower lows. Financials, which was a hot spot.

Starting to break. It's 50. Industrials. This has been selling off for a little while. Materials have been selling off also and breaking below a lot of key support. Obviously retail with the rates going up. Breaking. And you know about housing. So it's really just kind of like

XLK hanging in there and maybe a little communications. So it really comes back down to just everyone's like, oh, let's just go and buy the FANG stocks right now. That's what it seems to me. It's interesting. Okay. So you brought up XLK, XLY, and XLC. Yep.

No, those three are dominated by – so XLY, it's Amazon and Tesla, 40% weight there. XLK, what is it, Microsoft and Apple, or NVIDIA now I guess is up there. And then XLC is Meta and Google. In the NFGS, FNGS, right? So basically you just took a long time to say FNGS, I think.

Basically. So just to kind of wrap up this segment. So what do you do here? I mean we – even in the YouTube comments, some folks are asking about should we expect tax loss harvesting. You said you don't try and guess that. One thing real quick I just want to say is … Well, what do you think, Justin? I mean you probably have a better answer than me on that. Well, one of the things I just like to refer to is that …

For all of these seasonality things, all of these averages, while that can kind of give you an idea, I always look to the chart itself, look to the price and volume. And a great example of this was in 2011. Do you remember this? The December 20th, I think, was the follow-through day. Yeah, the half day where Bill called it a follow-through day.

Completely caught me off guard. I mean, I was doing my, you know, my kids were young. You know, I had a six-year-old and a 10-year-old. I'm like panic Christmas shopping. I was not thinking of a follow-through day. And I mean, we had, you know, it was like a 17th day follow-through day. You know, it was, you know, so late. It was like, okay, it's not happening. And...

And lo and behold, we get the follow-through day, and I'm kind of scrambling to not only get Christmas presents but try and get – give my portfolio a Christmas present too. And yeah, it's just so many times I've found myself being like trying to outsmart the market, and it never works out well for me. Right, right. I think just the – I think the consistent answer –

that we've always given and really just stays true is you have to go to individual stocks, right? It's never a general answer. It's like if you're in some stocks that are still hanging in there and you're up on them, you still can give them room to run. You can take some off. But for those stocks that you were owning that broke key support, that's where you have to lighten up. Or if you're down on those positions, that's where you really have to

should start risk management and maybe even cutting those and getting out of those ones, right? So raising cash. So yeah, I think the market definitely forced me to raise cash last week. And so, but there were some stocks that were hanging in there. You know, let me just lighten up on those and continue to hold on to those.

Yeah. And a lot of times it comes down to you let the market kind of tell you, OK, you lightened up on a few things. If they kept on going down, then you'd probably lighten up more. If they just bounced back and skyrocketed, then you're like, oh, you know what? I'm going to buy some of those shares back because it looks fine now. This message comes from Viking, committed to exploring the world in comfort.

Journey through the heart of Europe on an elegant Viking longship with thoughtful service, destination-focused dining, and cultural enrichment on board and on shore. And every Viking voyage is all-inclusive with no children and no casinos. Discover more at viking.com. So for this segment, you know, maybe we can get into that a little bit deeper, how you kind of go about

I mean, we always say it, like rolling with the punches, you know, and kind of letting the market tell you what to do. And I mean, at this point, you've got a lot of episodes of this podcast under your belt. So maybe talk a little bit about...

How it kind of started, because for those that don't remember way back when, you started the podcast, hosting it. You got to do in person. I'm so jealous. You were a guest on it. You were sitting across the table and actually chatting face-to-face with people. So maybe kind of talk a little bit about that, how things started and what you learned in terms of rolling with those punches with the market. Yeah.

Yeah. Well, yeah, it was, I mean, we were talking about doing the podcast probably for like a year before we actually did it, maybe even longer than that. And there are a number of different kind of formats we were talking about. We were even thinking about doing it in another studio. So there are a number of different things. But we finally ended up just, I think, just making the decision and saying, let's just start off doing it.

it. And so in the beginning, Allie was the producer, right? And you all know Allie from IBD Live. She was the producer of the show. And I

I was the host. So you're talking about the in-person experience and stuff like that. What I saw, Justin, so when you were the guest, and I remember you would come in like dressed up, like in a suit. Yeah, I'd wear a sports coat. I'd wear a blazer. I was like, you're making me look bad here, Justin.

But but I would see behind you, Ali, like shaking her fist when we go when we go over like 15 minutes or whatever. Give me signals and the end of the episode. So you do have the luxury of not necessarily having to see that. Get those threats in person there. But a menacing face. Exactly. Yeah. Nothing's more menacing than Ali, you know.

But Ali was great. Ali taught me a lot. Ali was so good with the transitions. It was so frustrating because you're like, just say it like this. And it was like, perfect. And then I would try to say it and it would just be awful. But so it was... A lot of those things...

were learning lessons about how to do transitions, how to figure out the format of the podcast. It didn't necessarily start off with stocks, then learning lesson, and then stocks. We had it pretty close, but...

But it really kind of evolved just through just playing around those first few months with kind of what the format was. One thing that we didn't necessarily early on with those first like year or so is a lot of the guests were all new. So we had to introduce some of the audience. We would start off with, you know, going to your background, right? How did you get into investing and stuff like that? And so that was always a really cool opportunity.

Cool story here because a lot of times you would get to hear how IBD played a role in them learning about stocks. And I think that was one of the big eye-opening things was just how impactful IBD was.

was to so many people, including me. I was a customer, uh, for, for many years before, but just, you know, John Jerrion, like when, when I spoke to him, he's like, Oh, you know, he's like, I've been reading IBD forever. And the, and then also the daily graphs, chart books, um, uh, having those that, uh,

he was, he did use those when he was like in the pits in Chicago. So I would, for those that don't know daily graphs was the original product that eventually became market Smith, which eventually became market surge. I should have said daily graphs online first in there. Yeah, but not daily graphs online. Yeah, but yeah, exactly. Exactly. Yeah. So let's start off with the chart books. I went to daily graphs online and I still miss those chart books, but the chart books would be mailed to everybody and,

every weekend. And, and so that, that's how people would look at the charts. And it was really cool. Like when I started, by the way, I was in customer service. And so we had, you know, there was the blue book and then there was the green book, right? You know, one was the NASDAQ. One was the NYC and customer service. We would get, I think two copies and we would share them amongst all of us. And, and,

those were your charts for the week, you know, you didn't get an update on your charts until the next week. And so, you know, sometimes we're like writing in there kind of like, Oh, this is roughly where, where it is. And, you know, here's, here's what the breakout would be. Um, so yeah. So, yeah. So, so just hearing those kinds of stories. Uh, and so with the, with the podcast, uh, just trying to figure out the format, trying to make it kind of concise for everybody, but also I think, um,

One of the learning lessons is just that how people consumed it. A lot of people didn't necessarily sit at their computer and watch it. They were working out. They were walking their dog. They were driving, obviously. And that was more the majority of it versus sitting at a screen and watching the charts that we were showing all the time, which is why a lot of times we'll say, hey, when you're back at your computer, watch the charts. Right.

Hearing the impact of IBD, then learning how people's learning lessons on what they learn from trading. You have to get comfortable with making mistakes and learning from the mistakes because the reality is, especially if you're going to use our methodology,

You're going to be wrong more than you're right. And that's a hard thing to kind of – that kind of goes against everything we want to do as a human. Yes. Going into something where you're going to be wrong that often, like who wants to do that? Exactly. Yeah, and it is very difficult. I remember the –

Well, I just remember the first few trades I made, I refused to sell at 8%. And I ended up selling those at 80% losses. And then I was like, okay, that's why you have that 8% rule. That's why that rule is there. Okay. Now I get it. Yeah. But once you got comfortable with cutting those losses quickly –

and also getting comfortable with them going up without you, right? Because it's almost guaranteed once you sell them, they're going to go up without you. You get more... You become much more nimble and keep out of the trouble like a 2022. So hearing that, but also...

Also learning that there are so many different ways to make money in the markets and so many different ways to look at stocks and look at markets. That really kind of opened my eyes and made me kind of more well-rounded on just how many different ways and how versatile the markets are. And we've got all different types of traders. And initially, I think...

our kind of first concept with the podcast was let's just keep it IBD, right? We're just going to keep with stick with the methodology, just have either people working at IBD or just some of the hardcore customers who come attend the seminars and the master's program that Bill used to teach in Santa Monica years ago. We'll have them kind of like, you know, like you had Kathy Donnelly on last week, you know, people that, and those are, that's great, but yeah,

We also realized that, hey, if we wanted to grow this, we had to kind of expand beyond. And that's when we found out, wow, a lot of others are listening to IBD or using IBD. They're not necessarily always following the methodology, which is fine, but they are finding ways to incorporate it into their trading style.

And so that was a big thing too. Yeah. And by the way, you can go ahead and unshare the chart real quick so that for those that are watching, instead of getting distracted by the chart, they can just see you and your earnestness, which is – I think it's better to just show the chart. Right. Exactly. Well, and this is something that – as you said –

It wasn't about necessarily just sticking with IBD, you know, internal guests or even external guests. But I mean, there's people that are very heavily influenced by IBD, you know, the, you know, Jim Ropels, Joe Fahmy, you know, John Najarian that you mentioned.

And, you know, I mean, we've got a lot of folks, you know, David Keller that we've met throughout the years that, you know, they might be using a completely different platform, but they're still kind of using some of the methodologies and stuff. And it should also be mentioned that as a CMT, you did have a group that you could kind of pull from. Yeah, for sure. That helped. But even like the money shows, right? So I would go to the money shows and

And that's how Jeffrey Hirsch, right? Jeff with Stock Traders Almanac. He had a table there. And I walked over and I said, I'm with Mark Smith and IBD and stuff like that. And he used the products, right? Yeah. And so that's how we got in touch. And it's like, you have to come on the podcast. Tom Lee, right? Who's a superstar on CNBC right now. And he was really starting up and coming at that point. And he loves IBD. Yeah.

And he said he uses it and is kind of like they would. I think when he was working at maybe one of the big banks, that was part of their analysis. Like, what's the status that IBD has the market in? And they would throw that in there every week for their market analysis. So. So, yeah, just that kind of that reach was pretty amazing.

So, you know, in kind of having all of these these guests and as you said, there's they might be using IBD, but they might be using it in very different ways. Some taking a little slice here or a little slice there. Anything that you kind of found in common that was like, oh, this is all of these great traders, all of these great analysts or what have you. This is something that is like a common thread throughout.

So, yeah, when you're like traders and analysts, they're going to be a little bit different, right? Because just different approaches to the markets. Traders are actually trading the market. Analysts are analyzing it, right? But I think the one commonality is the passion for the market. And we would see this just kind of in our prep calls. And you're just going to know the people are seeing if they're even interested in doing the podcast. They're just excited about the markets.

And I think you have to have that kind of curiosity and that passion about the market. That really helps a lot. You're essentially incorporating it into your life. So when you're out and about and you're shopping and you see a Crocs store, like Mike Webster, that's how he discovered Crocs as a kid's

Love the shoes, right? Or you might discover the iPod by seeing someone buy a really expensive iPod back in the day. Or a Tesla, right? The Tesla seeing the Model S. Just all these guests. Really what you were seeing on the actual podcast was a snippet of our conversations. Because we were talking offline too. And just about the markets and just kind of like

our paths throughout the markets and our lessons and stuff like that. We made it a concise show for the actual recording, but the excitement and passion

Yeah.

And so I think with that, that's kind of the one commonality is people are just – the ones who come on our shows, they just have a real excitement for it. It's not just – I don't know. I mean, yeah, they just have a real excitement about the markets. And they're usually optimistic too. I don't want to – I don't know how many pessimistic guests we had. We might have had some here or there, but –

Like, I don't know how many bears we've had. We generally have bulls on it because in the end, they might be temporarily bearish. It might be temporarily bearish, but long term, kind of like Bill O'Neill, right? You have to be optimistic about America, about entrepreneurship, about innovation, because that's what drives the stock markets. And that's it's super exciting and amazing to learn about all these technologies that can change the world.

And that was certainly something about Bill O'Neill, the founder of Investors Business Daily, that even when he was bearish, he was almost excited for the opportunities that were going to come in the next cycle. Like, oh, yeah, I'm bearish now and I'm all in cash, but man, I can't wait until the next cycle. Can't wait to see what happens next, who the next leaders are going to be. Well, IBD would put out these – and this is what I remember starting when I started there –

There was one article about in the Depression, all the innovation that came out of the Depression, right? The toothbrush, the washing machine. It was like 30 different things. And IBD wrote a really awesome article on it. I think that might have been actually a guest article from W. Michael Cox, who used to be at the Fed, the Dallas Fed. Oh, wow. Okay. And he was actually – when O'Neill had the O'Neill Business and Journalism at SMU, which Ali –

Ali Corum, of course, went through that program and W. Michael Cox was was head of that. Yeah, he he he wrote a very, very, very interesting piece on that. You know, how many innovations came from, you know.

Whether it's Wizard of Oz, you know. Yes, yes. I mean, it was just, you know, a lot of things that you wouldn't even think of, you know, nylons, like, you know, toothbrushes. Like, what? Yeah, so it is. I think that's the other commonality. It's everyone's really optimistic about the country, about the innovation and about the markets in general that they're in.

There's just a temporary pause. It's healthy. Corrections are healthy. And they're going to set up and the next great leaders are going to show themselves just using all the screens and the lists that IBD has. And of course, all the shows now, especially IBD Live, right? All these shows that IBD is producing that are going to surface all these amazing leaders for the next run.

And at the very heart of it, a lot of, again, what we got from Bill O'Neill was that education component. He did so many seminars and like for free sometimes, you know, I mean, he would have, you know, even the ones that he charged for. I mean, for the longest time, you know, you had the Advanced Investment Workshop.

It's like 700 – that's what I went to. It was like $700 or something. And you could see Bill O'Neill and David Ryan talk the whole day. Like, what? And then every now and then he would be like, oh, you know what? I want to do free seminars. And he'd go out and just do three-hour seminars. Like the meetups here, right? And around the Southern California area. Yeah.

He'd pop up into Santa Monica. Yeah, that's right. He'd stop by the Santa Monica one, but he went around to the Manhattan Beach one. All the ones nearby here to promote the meetups and Amy Smith was running it at that point. I remember going to the Manhattan Beach one. I went to a few of them just to hear him speak. You speak for three, four hours and stay until everyone left. It's just incredible.

incredible what the kind of the knowledge that he was sharing and I think that's also another kind of thing to take away for 2024 is all the stuff that Bill spoke about and taught us and taught all the listeners and readers out there it worked to a T

This time around, right? The best stocks are showing the relative strength at the beginning of September that held in there. They're right near new highs. They broke out. Pound tier. All of them just took off and didn't look back. And then all these new names...

IPOs finally started to come back and all these brand new names started to go through these amazing runs. And of course, some of the classic ones had some really nice runs too. But it just worked like clockwork. Just exactly how he talks about in the book, how he's talked about it for many, many years. And I guess that can be one of the challenges is depending on when you start on your own investing path,

you might not get immediate success. In fact, I think it's very rare, right? You almost have to, even for me, I remember, look, I had no exposure to the stock market before getting the job at IBD. I got this customer service job. I'm like, I'm going to do this for a year. Then I'm going to go on to teach. And I got really interested in it. But I read the book. I did some trading.

And then I read the book again. It was like a completely different book. It was like, oh, now I understand why he said this. Oh, now. And I mean, that was very early on because I've read the book.

A lot more times. And each time it's like, oh, yeah, it's like, oh, you talked about this in this book. You talked about that. And so, again, you like get this, you know, these trading experiences. And unfortunately, it's not one of those things where you just like get into it and like, oh, I can immediately apply all of this. Right. You know, some of the stuff it's like you're not going to see for another decade. Right.

But it's in there. Yeah. Yeah. So, so you, I was told for me, the guy, when I really started learning about it was 2000. So the, those first couple of years, uh,

All I learned to do was sell and sell, you know, cut my losses quickly. And I don't know. And it took two and a half years before I saw like a real bull market in 2003. I don't know how I lasted that long because there was no successes. There was no money being made in my account. But I think it was just kind of that belief and seeing all the previous examples. So that part. And then I think the other hard part, the other hardest part is kind of what you're talking about.

These windows aren't there that often to kind of get experience. They open up for a few months, then they close really quickly, and then you have to wait another three, four months. They might open up again. But that's the hardest part is that you need to go through a number of cycles before you can even wrap your head around it. And then you have to go through a few more cycles to try to slowly get better at it. So it really takes years to...

Start putting everything together. And then even then, you're still never going to do it perfectly. Well, and again, back to those windows that you kind of have to take the market that you're given, right? Yes. It's not like one of those things where, oh, you know what? I'm going to work out and I'm going to get myself up to this level. It's like, okay, well, the market –

is, is just going down. So I can't work on my buy side. You know, I can only work on my, on my sell side, on my protection, you know, mode. Um, and I'll, and, and so some people ask like, Oh, how long is this going to take? And it's like, depends on the market you're in. You know, if you're in a, if you're in the right market, you know, you can really be hitting on all cylinders pretty quickly. Um, but sometimes that's even worse. I mean, I started in the late nineties and I thought I was a genius and it turned out that it was just

It was a good market, not anything having to do with my smarts. So kind of getting that humility in there is also important, recognizing you're not as smart as you think you are and you're not as dumb as you think you are a lot of times. The market is such a huge, huge impact in that. And then another kind of thing just seems like – this applies to both.

and also people who've been on the podcast over the years, the ones who eventually put it together are the ones who just hung around long enough.

They were able to keep picking themselves off the ground. Yeah. Because there were so many times I wanted to quit and go, what am I doing? And we would talk about this. Like when we were at Markets, Scott St. Clair and I, we were just like, what are we doing? Right. But there were times like, what are we doing? Because the markets are so tough, you know? It's like, why are we just, why don't we just go and do something else?

Well, especially those years when you're like, you do all this work and then you look at your performance versus the S&P 500 and you're like, I could have just bought Spy. I know. And I could have, you know, I could have done just as good and gone to the beach this whole time. Not put in all these hours and, you know. Yeah.

It's so true. So it really is the ones who end up getting good at this or getting better at it are the ones who just hang around the longest. So most people will quit after a few years. And honestly, I don't blame them. This is a really hard thing to do, but you need to have that kind of belief in

I think that's the big thing to carry through those tough years. And then eventually you'll find yourself in a great market like we just had the last few months where you really don't have to even be that good. You just have to have money in the markets and it's going to go up. So those are kind of the big things. Just tread water and hang around long enough for those big waves to come.

Yeah. And I mean, it's again, sometimes we use poker analogies. It's the, the, the chip in a chair, you know, just don't let your, don't let yourself get knocked out of the game, you know, do whatever you can to stay in the game because, um, you know, we're certainly not in here to match the S and P 500. You know, we're, we're here to beat it over time. We understand that that's not going to happen every year. Um, but when we really hit it on all cylinders, um,

We can more than make up for a couple bad years. And again, the long-term performance will make it well worthwhile. And I guess you and I have just, you know, we've seen it so much, you know, maybe in our own lives, in other people's lives, in subscribers, in traders. You know, you see people that have made it work and you're like, oh, yeah, this is great.

This is life-changing. It's life-changing, but also the ones who I think who – you know people who have been around for a while and have survived a number of cycles and stuff like that because they have a humility, I think, to them. It's not because the market's just beaten the crap out of them. Yeah.

It's like even when you do well... You get beat up that much and you can't be like, I'm the best. Exactly. But even when you have success, you know that I shouldn't really brag or anything because you know that we're going to get knocked out soon if we keep our head up like this and think we're the greatest thing ever. So even a lot of the guys...

at O'Neill and stuff like that, they've had good years and stuff, but no one's bragging. No one's talking. No one even talks about it. It's just like, okay, because you know that it's one of those windows just opened up, everything lined up, we were there, you rode those waves as best as you can, but now you know that other part, it will eventually come where you go through a correction and you just kind of have to tread water again.

Right. And, you know, I'm just looking at some of the YouTube comments. You know, folks are kind of enjoying, you know, the discussion and, you know, kind of reminding them, oh, yeah, maybe I should go pull out that How to Make Money in Stocks again. Every year you should be reading that book. Yeah, definitely reread that. And also don't forget to really pay some attention, you know, in the orange book or the green book, the first chapter with 100 charts, you know, that's

there's so much you could just learn from that, that single chapter because he's, you know, Bill O'Neill marked up these charts and said, okay, here's, here's kind of how you trade. But it wasn't just about that. A lot of times we're writing about the story. This is what was going on with this company. So it wasn't just about the chart. It was,

it was that kind of combination. So I guess, I guess a lot of this conversation is a long way of saying that you're going to be unfortunately having to step away from the podcast. So yeah, you know, people may might have recognized that you were, you know, stepping away here or not, not on as frequently. Apparently you have another job that is not IBD related. The podcast is in good hands for sure. Yeah.

Yeah. So, I mean, and, you know, for those in the audience listening, you know, don't forget, Arusha left before and he came back. So I'm not promising anything. I'm just saying, you know, this is, you know, there was the old song that we used to sing at camp. You know, the cat came back, you know, the very next day. I'm not sure if you ever heard that one. No, I haven't. But I might be like...

in star Wars, emperor Palpatine, you thought that he was right when he got thrown out down that hole or whatever, somehow it comes back or, you know, any, any zombie movie that you want to pick from. Uh, uh, so, but, uh, it certainly has been, you know, uh, a great time doing these with you. Um, you know, we're going to continue on the tradition and, uh,

We'll have you on as a guest whenever we can. Absolutely. But any kind of, you know, before we wrap up this segment, you know, any, any other kind of things in terms of that, that market side of, because again, I think that, you know, more than just what's happening right now, there is that mentality, you know, those rules that are kind of timeless that you have to kind of get drummed into you so that you know what to do. And I think,

We kind of made this theme like letting the market decide, do a lot of decision-making for me, right? Yeah, and in the end, it's listening to the markets, right? Yeah. And that's another timeless thing that I just hear Bill saying, the market is always right. Yeah, I remember he just kind of, market is always right. The market is always right. You just say that over and over again, and that's the most important thing. Listen to the market.

I see some questions here about this market. What do you think? It seems a little overvalued. What's your opinion of the current market? Maybe we're in 1999. We don't know. Mike has brought up a number of good reasons for that. It does seem kind of crazy like that. With valuation and where we are,

I don't even try to worry about that stuff. I try to just look at what's actually happening now and let the market tell me because...

If you think about it, whenever I've overthought something too much about the market, I'm always wrong. I'm always wrong. I'm always caught flat-footed. And it's hard for me to adjust. So if I think the market's really bearish and there's no way it's going to come back in the next couple of months and now it takes off again, I'm going to be so slow to adjust to that.

So same thing here. The market's gone up a lot. A lot of these stocks have just gone vertical. Can they go up further? Sure. I was like, I have no idea. But I know that's a possibility. And so in the end, the market will tell us. Now, the key is if you don't have good positions in some of those stocks –

you can't buy them now, right? Or you have to keep really, really tight stops and do it how you guys do it with SwingTrader and stuff like that, where you'll try something out of shorter bases, but you guys are really quick to cut your losses too on that. So you're going to have to adjust to those kind of styles and make sure you know how to cut your losses and manage the risk. So in the end, though, listen to the market. The markets are always right.

And when they're going against you, when the stocks are going against you, always protect yourself. It's always risk management first. And another thing is, too, you have to be careful of if you build up your case, which a lot of times that's the way people approach it. You think this is 1999? You're going to build up your case for it, right? You're going to look for the evidence. A lot of confirmation bias comes in there. And as you said, Arusha, this is so important for people to understand.

You have to be very careful that you don't get so invested in your opinion or in your case that you built that you ignore other signals because the market can turn. The market can prove you wrong very quickly. And if you've spent all this time and energy building up a case one way, you often find it very difficult to switch. Now, some of the greatest traders I think you and I have met

Do it like that. Yes. You know, they're like, oh, I was wrong.

the market's doing this instead of this. And I mean, you and I both saw Bill O'Neill do that numerous times. Yeah. And Justin has great stories. That's what I said last week, you know, and he just wouldn't even care. You know, he would send out a message to 500 clients and he was like, well, that's what I said last week. You know, the market changed, you know, no, no apologies. So, yeah, but you know, let's,

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Let's go ahead and, you know, because I do know that a lot of people are wondering about this market. And again, a lot of these leaders that we're talking about. So maybe in this segment, we can talk a little bit about how to apply some of this, I guess, flexibility to some individual stocks. And, you know, maybe we can start with NVIDIA because and I do have a position in NVIDIA. But this is.

This has been my biggest winner of the year, you know, but it certainly hasn't been necessarily my biggest winner of last quarter or even the last half of the year. It's been, you know, my wins in NVIDIA have been...

you know, in those windows, those windows of opportunity. So I guess a lot of people are looking at this big run that NVIDIA has had. And I'm going to put myself in that camp as well and are wondering, hey, can this go up more? The AI boom, this, you know, the infrastructure and everything like that. And so is this an area where NVIDIA starts looking interesting again? I think it is looking more interesting. I like

I think you guys were, I don't know if it was SwingTrader or, I want to say SwingTrader with the ShakeOut Plus 3. Yeah, we did put it on SwingTrader today. And look, we've tried it a couple times recently and they haven't worked. To your point, it looked good. And then the next day, no follow-up or a couple days. And then boom, we're out. Yeah. So it's an interesting one because I think for a number of us, we had it pretty early on.

And I never hold a lot of stocks through bases and stuff like that. But for NVIDIA, I was holding it through a number of these bases. But then I finally got shaken out almost right at the lows at that 90, 69 on that day. Almost right there. I finally closed out my position. But then I started, as it got back up through the 50, I'm sure, just like you, Justin, just buying it, starting to slowly accumulate it. And then I had a pretty good position as it was breaking out again.

And then it just didn't work. Yeah. And it was so frustrating. And then over, what, a few weeks ago when all my other stocks were going up and I was like, why is my portfolio up more? And then you see Nvidia just holding it down. Yeah. And so finally I cut it probably right around where that 131, where the shakeout part was. But yeah, I think a few days ago, yeah,

what was on, oh, that was, that was the Fed day. When, when, when NVIDIA started moving at that point, I used to shake, I was using kind of shakeout plus three. It looked great. Yeah. And so I bought a little bit there and then I bought a little bit more throughout the day. Then the Fed happened and I cut it. And then, yeah, then today started buying it again and just buying a small amount. If it breaks above the 50, I'll buy a little bit more. But, um,

What I'm thinking is maybe, you know, what I'm looking at is first shakeout plus three, and then maybe it's this double bottom that it's forming. Maybe it's too short. I don't know if it's, you know, if it's going to be long enough for double bottom, but one, two, three, four. But it definitely has the spirit. And again, a lot of times that shakeout plus three, you would find around double bottom areas. And so for people that aren't familiar with it, this is something that Bill O'Neill would talk about that he got from Jesse Livermore. Just another proof point that

A lot of these things just repeat over and over again, just the same patterns, different stocks. But the idea was that a stock would come down, and then when it recovered, plus added three points, and that was for a $30 stock, that was kind of an area where you could buy it. Now, for a $130 stock, you would maybe add seven to ten points, something like that. And that's kind of right there. We can never get a...

We can never get an exact answer from Bill on that. I know a number of people asked about that. How do you apply it to $100? Yeah. He's like, uh. Yeah. He didn't commit to 10%, though, because I always kind of use 10%. Yeah, 10%. But I remember he didn't commit to that, though, too. He just kind of, you know, you just got to adjust or something like that. He didn't give a great answer to it. Yeah.

And this is something that he did use. I mean a classic case was with Apple back in 2009. That was off a daily chart. Oh, yeah. He was buying that at 92, and it was that shakeout plus three, again, adjusted for the fact that this was a $90 stock at the time. It was right here, right? Right.

Yeah. It was, it was, I think it was coming up here or me or maybe it was this one. No, no, no, no. It was in March. It was this one. Yeah. Yes. Right there. So, and you know what's interesting? I want to say it was in the first edition of the orange book, the fourth edition, but

I don't know if it's in, maybe it's in the other Orange editions too. But there was one edition where it had, I think it had the Shake-Up Plus 3 and it said add to the US Focus list or the Nesme list or something like that. I don't know if they removed it in the later versions of it.

Uh, but that's the, they added it to the institutional list using that shakeout plus three for Apple too. Yeah. And it's in one of those, in one of those books. I remember I was looking, I was going to try to find more copies of that book. Cause it was, it was really, it was really cool to have that. Yeah. Uh,

Um, so NVIDIA, again, the relative strength had gotten a little poor. Um, and that was, that was telling you something, right? That, okay, maybe, maybe this is not leading right now. It's basing that can happen, right? You know, when, when stocks base their, their relative strength, uh, will falter a little bit. Um, but yeah, now that it's getting kind of back above its moving average lines, um, and, um,

Getting back to the 50-day moving average line, we did put it on SwingTrader. I did buy a position myself back after the restriction period. And yeah, it's looking interesting again. And I feel like not a lot of people are talking about NVIDIA as much now, right? Right. So that might be another good thing, hopefully. Hopefully that means good things for NVIDIA. Well, and I mean, NVIDIA is my only chip play, right? Yeah.

Astera Labs has been looking very interesting. Broadcom, I mean, it just roared out of that earnings gap up and really didn't give much up. And Broadcom is probably the – well, either ALAB or Broadcom are probably the leaders in some of the conductors. And when you look at SMH too –

It hasn't really done much, but if SMH actually gets going, and this is the ETF for the semiconductors, if the whole group gets going, maybe that could help NVIDIA too. And also recognize that NVIDIA is a big component in SMH. They'll have to work together. So you have to kind of know what you're getting. You know, another one that you brought up that I thought was really interesting was Wix. Yeah.

In this computer software enterprise group, there are so many stocks that seem like they held up so well. Even when tech overall was kind of out of favor, the enterprise group just seemed like it was still strong. And look at the flat action. I mean, this just is not giving up any gains here. So talk a little bit about how this got on your radar.

Well, it had that strong move after earnings. And just like you said, it's been holding tight here. But it was really, I want to say, it was just kind of that earnings got that surprise. First, it did a lot of good work going sideways here, tightening up and then gapping up on earnings. And then you can see on the daily chart how constructive it's gotten here, staying above its 21-day. So that part, the fact that it hasn't,

given up a lot, especially after last week. It's really just gone sideways while all these other stocks have been breaking support. So showing some good relative strength. But the other kind of, it's in a strong group where a number of these names within this group have done really well. But every time I see Wix, you know, it's not, it's really, I guess, Wix's daddy is GoDaddy right here, right? Which has just been nonstop.

Right.

And so I know over the last year, a lot of people have been asking me about Wix and something like that. When is this going to get going and all that stuff? So after that earnings gap, that's when I thought that, okay, maybe now it might start waking up and doing okay. So those are the things that kind of just stuck out. It just held up pretty well in this type of market.

Yeah. And now going outside of technology a little bit, something that we talked about on the Stock Market Today video today was United Airlines. You know, travel has been one of those interesting things. And, you know, I was listening to Joe Fahmy's podcast and he had Josh Brown on. Yeah, that's a good one. And, you know, Josh Brown was kind of talking about how, you know, all these people that were, you know, kind of calling for a recession. He's like, look at Marriott, you know. Yeah. Look at the airlines. Yeah, exactly. Yeah.

These do not scream recession, you know, when you've got this many people kind of traveling and doing this. But, man, you know, it's amazing to kind of think of, you know, and I can't believe I missed this because I was watching it. And then I'm like, oh, yeah, I'm going to wait until this happens. And it just took off. And, you know, there I was standing at the gate, you know, watching the plane go. Yeah.

But another one where – Well, I know why I missed it because there's no way. I'm totally biased against –

and there was no way I was ever going to... Oh, that's right. You're a Delta guy. Yeah. You're a Delta guy, yeah. When we were going to trips, you know, we would be both speaking... I think everyone would fly on United except me. Yeah, yeah. And he would be in his Delta lounge because you have the Delta lounge access. And, you know, I'd be like, you know, sitting there, you know, watching from the window. Looks awfully comfortable in there. So...

So, okay. So you've got a bias against United, but it's hard to... But it's also for airlines in general, right? It's like, unless it's a newer airline. I remember JetBlue in the past. Spirit Airlines once upon a time did really well. So maybe some of these newer kind of... They're trying to be a little bit more innovative and things like that. But jets... I mean, the airline business in general...

It's just such a tough business, and you're not going to find too much growth in it, unless you're kind of a newer airline. Yeah. And for those that are looking for, wait a minute, wasn't Spirit Airlines, wasn't that Save? You have to add SaveQ now because it's 41 cents is what it trades at. So as you said, it's a tough business. It really is a tough business. Oh, and it looks like you lost a lot of the history now.

for it. Yeah, but it went on an amazing run at one point. And JetBlue, I guess, is JetBlue still around? You can see JetBlue. JetBlue, I remember like in

Here's 2003, went on a really nice IPO, right? And then it also went here in 2011 through 2015. But JetBlue made more sense because they were really kind of disrupting the whole industry at that point. And, of course, the classic disruptor is Southwest. Instead of going to LAX, they were doing Long Beach. Which is great.

I love Long Beach Airport. Oh, I love Long Beach. And then the classic one is Southwest, right, where they went on so many, many runs just by they get executed better than a lot of other airlines out there. So looking at United, I mean, week after week after week up, and now it's almost like this high-type flag where it just isn't giving up any ground. It's gone up 100%.

not giving up any ground, supported the 10-week moving average line. Fundamentals, like, look, EPS rating 18. Do you just trade off the chart here, or what do you do? I think you have to if you really want to participate in this. And there's definitely one of the strongest charts out there, I think. And it does look like a high-tight flag to me, which is scary. Something is going on here. Now,

The one concern that I have about it is if I switch over to monthly, well, actually, maybe not even that, too. Like, I thought maybe it was running into, like, major, major, like, kind of like the all-time resistance, but it got through that.

So something's going on here. The market is saying that just maybe with consolidation and United's going to really start pulling on ahead here, or maybe just the dominant players are just going to really just continue. They're going to maybe be able to raise prices more, and that's going to help them out in the bottom line, down the line. But

There are a lot of institutions and there are a lot of people who are more than happy to just dry the stock up. There are zero IBD mutual fund owners buying the stock, though. So that's a negative right there. But if you wanted to trade this, this is a very strong chart. I think that's fine. But you're better off...

Trying to look into it a little bit more and trying to figure out, like, why is United acting like this? It's very, very strange. Right. And, you know, maybe, again, with the strength of jets, you could look at some other airlines that maybe are also looking very strong. Yeah, I mean, I want to say, like, SkyWest, right? SkyWest makes a little bit more sense because it's like, here's another younger—well, it's not really a young airline anymore, but it's a smaller airline, and they're kind of doing different routes and all that kind of stuff.

And look at the strength that this has had. And look how strong this has been, right? Yeah. But this might have already left the gate a long, long time ago, right? Yeah, this has left the country. It's back. It really did its round trip at this time. Yeah.

Well, hey, Arusha, thank you very much for kind of sharing your thoughts and especially on the podcast, what you've learned over the years now. When did you start it? I want to say 2019. 2019 is what I was thinking too. Yeah, March 2019.

Yeah. So again, you know, a nice run that you've had and again, building up the audience. So hopefully we can take it to the next level. It's in good hands now, Justin. And then you'll come back and you'll say, you know, you'll, you know, wrestle it away and say, look, I'm back, baby. And look at what I built. And by the way.

I don't think anyone would be happier to have you back than me. Well, I must say my Wednesdays are now happy days. A lot less to worry about. It's like, oh, yeah, this is why my other job was saying, hey, how about you quit that job that you're doing for IBD? So, yeah.

But hey, we've really appreciated all the insights that you've given us over the years, everything that you've shared. And again, what you've gotten out of the guests too, because I think you've...

you've got the smiles that you bring to it and makes people feel at ease and willing, willing to share. So thank you for everything that you've gotten. No, and thanks for sharing the podcast with me, Justin. You didn't have, you didn't have to do that. So, so that, yeah, it's been fun. Thanks to all the listeners out there. It's always great to interact. There's a, there's a power to the podcast too, which I, which I learned, especially when I went to Mark Minervini's events and,

over the years after the podcast. A lot of people knew me from that or just randomly running. Justin, you'll probably see it this time when we go out there. People are just going to recognize you because it's amazing what a podcast can do and just kind of that reach. So definitely thanks to everyone who listened for all the years. And thanks to you, Justin, for being willing to share the spotlight here on the podcast.

Oh, absolutely. Been nothing but fun. And we'll try and see if we have something else that we can get into trouble with together. Yes, definitely. I mean, since the fantasy football thing is done, you know, but that one wasn't rough, but we'll find something else to do together, I'm sure. So, okay. Well, thanks a lot. And again, thanks for sharing your knowledge.

That's going to wrap it up for us this week. We are going to be off next week since New Year's is on a Wednesday. So we're going to take a little bit of break. I've got my sister coming down and her kids. So I'm going to do some family time. But never fear. We're going to be back in the new year and we're starting strong. We've got that producer with the menacing face. You know her as Allie Corum. She's just done such a great job.

with videos. I mean, we're going to talk a little bit about her journey. And for those of you that haven't watched her on IBD Live, she has gotten so good herself as a trader. You can tell her knowledge just from the way she marks up charts, the way she can anticipate what our guests are going for. She's got a lot of great stuff. And so we're going to kind of get a

her journey and a great trading year that she's had. So how she did it. So we're going to kind of do a little 2024 year in review with Allie. So hope you join us for that on January 8th in the new year. So take care, everybody. And we'll see you next time. Bye-bye now.