The Daily Ticker EP1: Has the Stock Market Bottomed?
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The Stock Trading Pro mission: How to know what stocks to buy.
Hey everybody. Good morning. I hope everybody's having a nice start to the weekend. I will say, boy, this has been a exhausting week. There's no doubt about that this week, between earnings and price shocks and financial crisis, whatever you wanna call it, I think everybody's labeling it contagion right now in a big way.
It was a really exhausting week. It was a week where you really had to be on top of your game. This was really a week where you had to do. Tape reading than order flow and you could get a picture of this. And one, one of the things that I actually had mentioned to somebody yesterday, if you take the closing price, where we were at the end of the week, we're literally at the same price that we were last May, so 11 months ago we're in the same price.
Which kind of begs the question have. Already seen the bottom and we just aren't feeling it yet because we're not really breaking out. We're still hovering around this downtrend right now. Or I think an even bigger question that we have right now is, are the large cap stocks that are rallying right now masking underlying weakness of inflation and the financial contagion that's going on right now?
Spoke to a ton of people yesterday afternoon and obviously reading like everybody else does. The big question right now is the rally in Apple, Microsoft, meta, Google, even Amazon to a little bit of a degree, is that masking all of the other underlying problems that we're seeing in the market right now on a bigger picture?
And I don't think, honestly, I'm not even saying that there's an answer right now, but it's a really good question. Of whether or not, because a lot of the DFS sector ETFs, they're so heavily weighted towards a smaller group of stocks. Sometimes it can be a little deceiving. Sometimes it can be a little deceiving, which is why I want you to really expand a little bit outside of just the standard, which is why we break down when we start to look at the other picture where it's not necessarily weighted towards individual.
Core group of stocks breaking this down a little bit deeper to get a little bit better visualization of where we are and how that map is actually unfolding. And if we go out for the last week and then we break this down even deeper, and I'm gonna really filter it cuz we want to, stocks that are above the 20 period moving average.
We actually had mentioned this yesterday that the vast majority of stocks that are meeting. What we might call harmony or better quality order flow. Most of them are in technology right now. If we break down the amount of stocks that are in the technology group, if we take this even further of the 1 40, 1, 45 of them.
So really a third of the stocks are all in one sector. So we were talking about that yesterday as well. The money is not hiding right now. It is in technology, and if you haven't been involved in technology over the last, actually not even say the last anything for 2023, you're making things much, much harder than necessary.
There's no reason to be going to find. Stocks that you've never heard of. There's no reason to be buying stocks that are getting crushed, hoping they turn around. The money has been there, there's no doubt about it. We even got some nice rallies in Oracle and a couple of other stocks recently. We've obviously, we had the Medi Tradee we got out of last week, C R W D P A N W had a nice breakout as well.
So I'm speaking to you, the traders that are in the back of their mind right now saying, wow, I missed that. How did I. We've pretty much been talking about it every day. Literally every single day. And if you haven't participated in any of the tech rally, you really gotta be rethinking how you're choosing to get involved.
I understand as traders for the whole reason we became traders is where contrarian, right? We are like, no, I'm doing things on my own and that kind of thing. But I found in the market, that's not necessarily the best thing to do, is to go and try and find something that nobody's heard of, just to be. It makes a lot more sense to go find the stocks that have good revenue, increasing revenue, meet the liquidity requirements, meet the volatility requirements, and just say, no, that's where the money is right now.
Why would I make this more difficult? So for those of you that might not have participated in some of these rallies in tech stocks in 2023, so far, you just gotta really think about how you're choosing the stocks that you're in. And I even see it sometimes in the game plan meetings, whereas somebody will call out a stock that I've literally never heard.
Not that there's anything wrong with that, it's just that are you making it more difficult than it needs to be? That's really the thing that I want to get across because we even get some kind of these kinds of moves here where we all know the calendar trade. We all know that we're looking at stocks and reading the order flow and looking for separation from the hour to the day, to the week, to the month, and you start to get some of these ideas that just from Monday through Friday, Don't even pause.
It's just a straight move to the upside. So I'm gonna challenge you a little bit to really think about, if you haven't participated in some of these moves that we've seen from 2023, you gotta ask yourself, what am I missing? And then come to the coaching sessions with those kinds of things. Coming to the coaching sessions and asking basic stuff that's in the course that you could Google.
That's not really what you wanna do. You wanna come to the coaching session and say, what am I not getting? What am I missing? Or, I was looking at it this. And I missed it. Why? Why didn't I see it? Why didn't I hold longer? Why didn't I get out quicker? What part of reading the tape and setting that trade expectation did I miss?
I will say that there is a few stocks that broke out recently, but I just wanna highlight a couple of them. Ai, for example, where it was stuck here for the better part of a week, and I think I saw a little bit too much trading in the middle of this while nothing was going on. Even Tesla. Same kind of thing where it was stuck in a box for about five days and people still like trading it while it's stuck inside this box.
We gotta really be more cognizant of whether or not from one day to the next there's something new. And especially like we can get a visualization of this if we're stuck here, that's the right price. And trying to continue to pick entries where there's really no bias. You're gonna get chopped up and you're gonna grind your account down.
And then when it finally does break out, you're gonna be making that money back that you threw away because you weren't paying attention. And just drawing these simple lines and saying, oh my gosh, it's in the middle of nowhere. What am I doing? As opposed to bid day after day, and hopping on board of that ride.
So I just wanna make sure that everybody. Not overlooking some of the foundational elements and really what we talk about a lot, which is the only two patterns you need to know. Volatility and contraction. Contraction and volatility means we continue to get tighter price action, and then from that contraction and volatility, we get an expansion.
We also call it the push and the pause, however, whatever language you're comfortable with. But I think that I just, there was a little bit too much trading in conversations around either stocks that were in Barish order flow, looking for them to reverse, or stocks in the middle of nowhere. And I could visualize it cuz I've seen this, I've done it.
You're like, it's gonna break out. It's gonna break out. It's gonna break out. And you keep getting a head start and you're like, A week later, you threw away far too much money and then when it finally did break out, you were gun shy and didn't take advantage of it in the way that you should have because you shouldn't have been in it in the first place.
So don't discount these, even these simple tape reading structures where you have to say to yourself, is it obvious? Is somebody in charge of this stock right now? And I'm just looking to catch a ride? That's really the. And then when you start to get it into deeper conversation about separation and separation from the hour, separation for the day, separation for the week and the month, and then you start to add bid and well offered and all of those kind of things in there.
It's really a simple progression of stacking that order flow, but it's overtrading during this kind of price action that you're gonna lose your confidence, you're gonna drain your account, and then when the real move happens, you're gonna be gun shy. Do that little bit extra before you're about to hit that buy button.
Ask yourself, is somebody in charge of this stock or am I hoping that it reverses? That's the big thing. When it starts to be obvious, it's a lot easier to be patient. I do want to touch a little bit more on the bigger picture of the market and. Mindset and dealing with many might call adversity right now, which is a really big part of running any business.
And again, for those of you, I know we have a lot of people in our community that are entrepreneurs like myself, I've been an entrepreneur since 1988, and I could absolutely tell you that it's not sunshine and rainbows all the time, that there's not even a question about that when it's going good, but you're on top of the world.
And when it's a little bit more challenging, you have to. You have to really think big picture and treat your capital as your inventory and you can't put your inventory out there in harm's way just because you're open. When we had, when my family owned the deli, my family owned the pizzeria and I had all these other businesses, there's plenty of times when you're just standing around wiping the counter down and you're drinking like tons of coffee cuz there's really not a lot to do because you're preserving your capital for when those opportunities come and your I.
To get paid, and it's a subtle thing that I teach in a really big way to our community because I made those mistakes. I traded for the sake of trading. I traded because the market was open and it drains it. The more important part is it drains your confidence. You start to, then you start to go down this path of maybe what I'm looking at is wrong.
Maybe what I'm using isn't working, but it's not necessarily. You don't know anything or you're not you looking at it correctly. It's just that the, you're not spotting that. The opportunity is lower at that particular moment. I know Cynthia, actually good morning. Cynthia had mentioned last week, which I thought was really smart.
Prior to the F O M C, you're like, I'm not doing anything until this gets out of the way. There's, don't wanna put myself in that position where it's just not obvious. We want to take risk. We want to accept risk, which is a better way of putting it when the odds of moving in our favor. Are really strong and whether it's an earnings announcement, which again is not a super obvious moment unless there's something else going on in between there, we have a pretty good feeling it's gonna move in one particular direction.
Earnings plays, F O M C, announcements, all those kind of things. They're not high probability trades to get into. They are where if you have a headstart on a trade, and we have had this conversation recently as well, so again, just. Put a lot of this stuff into a formulaic mode. We get a lot of questions about trading into earnings, and we've really come to a conclusion that it's okay to trade into it, but you really gotta have that starter position because taking pretty big risk right now with the kinds of overnight.
Gaps that we're seeing right now are 10, 15, 20%. And to put yourself in a position where the only edge you have is you think the earnings are gonna move in your favor, that's a tough edge. That's not really an edge. Okay. So what we've been talking about as far as trading into earnings has mostly. If we have a two times a t r trade, meaning if you buy it and it's now moved at least double the average true range into the earnings announcement, you could feel relatively comfortable holding that position.
It's when you put the trade on and it's at your entry price into earnings. Where is your edge? What are you leaning on to say There's a really good reason for me to accept this risk, hoping earning. Come out in your favor is not a strategy. It's not, let's remember about why we trade, why we take risk, why we're doing this in the first place is because the edge says most of the time it will work out.
And I challenge anybody right now, and especially in the current market environment, to say, I have a really good idea what's gonna happen after earnings. That's not gonna happen. It's just not reality, especially the way the market is right. So just think about that, whether you're holding into earnings, whether you're holding into a GDP report, which is actually, we're gonna talk about that.
We got some economic data coming out next week. All of this, everything that I'm talking about right now is getting you to focus on your mental capital as much as your financial capital. You have to be thinking about for the week, for the month, for the quarter, for the year. Stop thinking about getting paid by the hour stop thinking about, I have two hours to trade and I have to do something during that.
Your number one priority is it obvious right now. Nothing else matters if you don't get a definitive answer to that question, nothing else. And then we tie that back into the market and where we are right now. And I was talking to, like I said, I had a meeting with somebody yesterday afternoon and I was like, he was asking me, is the bear market over?
Is we just starting all this negative news? How long do you think it's gonna last more? And I'm gonna give a little bit of a thesis on that. But if you really consider the fact that we're in the same place that we were 11 months ago. Maybe 10 months ago, whatever that, whatever it happens to be, you gotta factor that in to the ease or difficulty of the way that the market has been trading, and you have to be nice to yourself about whether or not you feel like you have progressed or whether or not you need to keep seeking the answer.
And I want to touch on the coaching call from Dustin yesterday, Thursday, actually the Dustin's coaching question on Thursday, which was basically I'm doing game planning and Dustin's been with us for a couple years now and I just obviously super grateful for that. The point that I wanna get across though is Dustin's question was, I'm doing all this game planning, I'm putting in all the work, and I don't see anything like, there's nothing I really love right now.
Am I seeing it? Number one, that's the right kind of question to ask and that is exactly what we have the gameplay meetings for this one and the ones that we have Monday through Friday. And especially with the coaching sessions of four, that's a getting out of your own head and saying, am I looking at, am I seeing this properly?
Is a monster part. Speeding up your growth as a trader, speeding up your ability to earn while you're learning, because you're getting a better context for the distinctions that you're making in price action. By far, the people that struggle, especially the people in our community, are the ones that hide in the background and are struggling continuing to.
Make money or even lose money, and they're trying to figure it out on their own. They're, I'm afraid to ask a silly question, get that garbage out of your head. That is literally the mission of our community is for you to say, am I looking at this properly? And then us to have a conversation about it for you to be trying to figure it out on your own.
If you happen to be struggling right now and not participating in coaching session, Shame on you. It is literally the most valuable part of what we do because that's where we are saying, okay, let me make sure I got a grip on this and make sure it's not me. And sometimes I'll come back and be like, yeah, that's absolutely a fantastic trait.
And then there's other times we're gonna be like, what are you looking at? But this thing is going straight down. You got all these, you're trying to pick a bottom in something that you're hoping reverses to catch the start of the. Versus all these other stocks that are going higher and higher every day.
You're choosing to fight Mike Tyson in his prime instead of just hopping on board the ro, the sailboat on that beautiful calm lake, pick the right fights. The second part of Dustin's comment was the fact that he was seeing it. Not only did he participate and ask the question, but he is seeing this correctly.
Look at what we're looking at right now, and if we zoom this out a little bit further where you can, we've basically been in a trading range for, we're talking about going back to November. November. We've had some weeks that have been just amazing, right? We started out 2023, and then we had a week of indecision, a week, an inside week, and another week of indecision, and then a bearish gap in selling and a melted candle in a big bearish selling, and then coming back in the other direction, right?
So he was seeing it properly. But again, I'm speaking to everybody right now. That's maybe a little disappointed, maybe a little bit beat up, maybe a little bit. Maybe I should have stayed in college, like that kind of thing. It's not you. This, I'm telling you, this is a challenging market right now, and your job right now is to maintain your sanity, continue to actively participate in the community with anything that you want to contribute, anything that you want to ask, anything that you're observing, to throw it out there so we can have conversations about it, whether that's on a coaching call, whether that's inside of discord.
Lean on the community and lean on me. Lean on Joe, lean on Lynn. Lean on the other members of the community that have been here for a while and ask, am I seeing this properly? Instead of trading. And then three weeks later you're like, oh, I got my head beat in. And then we're like, what are you, what were you doing in that stock?
It didn't move for three weeks. Of course you got your head beat in. Prevent that from happening by getting out of your comfort zone and asking in real time, those kinds of things. Please take advantage of the time that we have together, which I hope is forever. Quite honestly, I think that we have the most amazing people in our community.
I think we've attracted the right people who take this seriously, who put in the hard work. But I know better than anybody from having my trading firm, and especially from having traded myself and being an entrepreneur for as long as I have. Things you can get messed up in your head and LA and your confidence can get shot and you start to get downer on yourself and you start to doubt things.
That's also what I'm here for, to get you outta that. That's also what the community is here. This is a tough condition. This is not easy, and what we're leaning on right now is more week to. As opposed to month. And that just means that we need to be aware of that until this road opens up a little bit more and we get out of this that we, whether, however, why do you wanna say this thing is but what weeks?
Three weeks of sideways, two weeks of up a week of nothing. Two weeks of up, two weeks of sideways. We can't argue with it. Our job is to simply pay attention to it and. Take what's available instead of forcing it. Take what's available. If we have, like we talked about in some of the trades that we unfolded the other day on the swing trade side of things, heading into the FMC announcement where we're talking about the alerts of booking some of those profits.
Look, we'd like to be making a lot more than this on a trade, but you know what? $13 with the market going sideways, $12, 9%. 7% in a. That doesn't suck. It doesn't suck. And if and when, which I think when the market does finally uncoil from this thing right now, and we start to pick a direction, pick directional volatility is what we called it prior to the FMC announcement.
Those of you that are remaining diligent in asking questions, diligent in preserving your capital, diligent in taking what's available. When we have directional volatility, you are going to clean up. I'm telling you, I, this is on a video. It's being recorded. I don't say anything that I wouldn't want repeated.
I am telling you for the same way that when the market was like it was in 2021 and we're not gonna have quantitative easing again and have that ridiculous thing where it just went up every day and knew all time highs every day. That's not gonna happen again. But when we do pick directional volatility, that lasts more than four.
I'm telling you, you are going. You are in such good shape because you maintained your sanity, you maintained your accounts. You didn't blow up your account because you didn't overtrade the last few weeks. Maybe you took advantage of all those tech stocks that have been having this raging rally. To the upside, staying away from some of the industrial stocks, which are now, quite frankly, a decent amount of them are leaning into bearish territory.
Right now, we actually have Boeing, which is one of the stronger stocks. Below the 50 period moving average for a while now, if you paid attention and you used the resources that we have to watch the flow of money from one day to the next, one week to the next, and you did not make it harder than it needed to be, you should be okay right now.
It's if you weren't paying attention and you forced. Too much trading. And look, I'm the first person to tell you during the day, especially I'm telling you, when I'm pulling back, I'm telling you when I'm sizing up, I'm telling you when I'm doing nothing. I'm telling you that because it's an experience that I want to give to you in the moment as opposed to you watching the video that I put out at seven o'clock at night and I describe it again.
I'm telling you and posting it because I'm trying to help you with trade expectation. Sometimes to size up, sometimes to take it off the table, sometimes to use profit maximizer. And again, probably that trade in SQ, I think is the poster child for this whole conversation where. The entire community was on this after this big move to the downside, and we were super clear.
We are using the momentum profit maximizer. After it broke the opening range here, and that trade became a little bit more clear, broke the opening range, broke the opening price. We had to pause here. This was probably one of the easiest profitable trades for the community to manage the entire way because we weren't guessing, we were just as a community the entire time saying, based on the conditions, based on the gap, based on the market, we're not looking to add to this position in a big way.
We're looking to ride this short covering rally until the profit maximizer tells us we're slowing down. And not only did it work in this particular moment, it in one of the. Beautifully executed trades that I think the entire community has made together in a tough condition. It kept us out of this. Look at that.
What happens after, which is the reason we were using the profit maximizer in the first place, and this applies to daily charts as well. We just happened to be using this one as a extreme example because of the size of this gap, the depth of the news, and we were like, look, this is a short or rally. Take advantage of this as a group together, and you can see, I know some people were posting, I got $3, some people posted, I got $2.
And to capture $2 on the long side in a stock that just got battered like that, and all of us to be seeing the same thing, I gotta tell you, it was pretty. Awesome to watch as the moderator of the community, watching the community understand this was not a perfect trade, but we were managing it together.
We were managing the expectation together, and we all understood the reason why we were not looking to add to the position. We all understood the reason why as soon as that thing slowed down, the right thing to do was to say, I'm gonna take this off the table and be okay with that, regardless of what.
Other than that, now this ended up happening in a bullish environment. You bet your bottom dollar, this pause would've been, look, let's keep adding to this thing until it starts to reverse. And we would've been looking for a much bigger move and quite frankly, probably for this thing to be getting back up into this range.
So that part of what happened on Thursday was very exciting to watch unfold, not only to participate in, but to watch everybody in the community understand that was not an order flow. It was a tape reading situation based on the entire market condition, and the reason I'm spending so much time on this right now is because that's a microcosm of everything we should be doing in any timeframe.
I don't care if you're looking to hold the trade for an hour or if you're looking to hold the trade for three months, assessing the conditions and what that means for position sizing, building the position if it means we're building the position and what kind of profit. Strategy we're using has to be dictated by how you put the pieces together, how you build the argument for the idea.
Is the market obvious? What's going on with the market metrics? Are we looking better from a advanced client perspective? Not really. Are we looking good from a new, high, new, low perspective? No, not at all. I would love to see this become a little bit less. We're not seeing that either. And high low difference.
We flipped up there one day and we're still down there. So again, for the swing trading perspective, if this is what we're looking at and this is what we're looking at and we're okay over here, I know a lot of people lean on the advanced decline more than anything because it's a little bit truer read, but you can see that we're still clearly.
Pointing bullish on any of these metrics, and then we lean on a little bit the last four weeks. Again, putting this in perspective, we did have one good week at the end of February, which that last pushup in tech stocks, and you can see Barish neutral, I guess you would say. You really had to, I'm gonna hop, I'm gonna hop on this one for a second, and then you have the way the last four weeks unfolded.
So it's critical that you start to measure. Your results from what's available in addition to whether or not you traded flawlessly. It's gotta be both of those. It can't only be I didn't make enough, or it can't only be I'm struggling, you have to put, I didn't make enough, or I did make enough, or I'm struggling into the context of what's going on in the market.
You can't get med that you didn't get to where you want to be in 30 minutes. If there was a car, You can't get mad that you didn't get there in 30 minutes and it took you 45 or 50 because there was a car accident. You have to factor it in, which then will take this even a step further. The reason this gets posted every single day, and we mention it every day, is because it's literally the first thing I do, which is pointing you in the direction of where the money is flowing.
At that moment, it becomes the easier. When combined with what the Power Pyramid is doing, the very first thing that we need to do is assess what's the market doing. This has to be the first thing that we talk about. You wanna be l if this is obvious, you hear was saying the three majors. If the three majors are obvious, Then the next part is simple.
What's doing the same thing as this? Cuz then you got two thirds and the most solid foundation under your idea. And then you could be looking to hold those trades a little longer, add more position size, maybe even trade multiple positions in those in the sector. Make sure you start here. After you ask the question, what's going on in the market?
Is it obvious? And then you go straight into, okay, that's where I'm looking at that had some good push. And then you start to break that down in a little bit deeper. Detail on what stocks are making up, what's pushing and trading with the markets. I'll actually bring that out to the last five days, and you can see that a little bit deeper.
Okay. So I wanted to, I spend a lot of time thinking about when I had my trading floor and we got the current market conditions that we have right now. I can absolutely tell you with fond memories as owning the office, being around everybody every day. When the market got tough like this, most of the conversations were about managing your mental.
It's the most important thing because the market's always going to offer opportunity. Sometimes it's abundant opportunity and you couldn't mess it up if you tried. Sometimes it's selective opportunity. We really have to be on top of the best ideas and really think about how we're gonna manage those positions because sometimes the market's just a little bit tougher.
Those conversations, keeping traders mental. In the game and not allowing short-term blips in that long-term career, in the long-term skill that you're building for yourself, not allowing those short-term blips of adversity. To negatively affect the path that you're on. It's too easy to throw a pity party, and I'm not gonna let that happen as long as you're in my house.
I'm just not gonna let that happen. It's easy to get into that. It's easy to say, this is too hard. Yeah, you know what? It is challenging. That's why there's also unlimited upside, because if you nail a couple of trades per month or per week or per day, you could end up making more in a week than most people make in.
It's just a question of managing your mental capital and your real capital and paying attention, and I'm gonna use AI again as an example over trading when the stock is stuck for a week and continuing to push it when there's no bias here at all. You gotta notice that when it's happening, not after the fact, because then when it does finally break out and the stock ends up moving $3, you're gonna be like, oh, I just got beat up on this breakout.
I got beat up on this break. And you're not gonna be there to take advantage of it. So it's not a lot to think about, but you do need to think about it. That's really the point. It's not a lot, it's not hard, but you do need to take the steps and it just can't be trading for the sake of trading. Okay? So again, that mental part of what we do is what's gonna separate you from everybody else who's getting their head beat in right now, simply because they want to do something for the sake of doing something.
All right. Very important conversation this topic, because if you are here right now, you have a burning desire to make this happen. But it's, again, like I said, it's not sunshine and rainbows every day. Everybody knows how to celebrate when it's going awesome. You will find out what you are made out of when it's a little bit tougher, and I gotta be honest with you, that's a superpower that most people will envy when you can acknowledge how tough it.
And you laugh at the adversity because your fortitude is stronger than that is a special place for you to be, and that really is the mindset that you'll take every, there's a quote that says How you do anything is how you do everything. And if you always handle adversity as a lesson, as a direct feedback on what's unfolding at that moment as opposed to.
This means I can't do it. If you see everything as feedback and you laugh when it gets tougher, you're the person I want to hang out with. That's the group I want to be a part of. So I thought it was very important to discuss the type of market that we're having right now and how I know it's probably wrecking mental havoc on a lot of people.
