Rebel Traders 060 : Trading Thunderdome

It’s time to step in to the Thunderdome as two traders enter with two different approaches to the same trades and examine what led them to the decisions they made and why...

In this week’s Rebel Traders Podcast, Sean and Phil are jumping in to the Thunderdome as they examine some recent trades they did that were on the same stock but from different angles, different approaches but the same intent. So, they are grabbing the tools in their arsenal, stepping in to the pit and seeing how two traders enter and which trader leaves…

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Sean Donahoe: Two traders enter, but who leaves? Let's do it.
Automated: Rebel Traders takes you inside the world of two underground master traders, who take an entertaining and contrarian look at the market to cut through the noise of Wall Street and help you navigate the trading minefield.
  Together, Sean Donahoe and Phil Newton are on a mission to give you the unfair advantage of a rebel trader.
  And now, here are your hosts, Sean Donahoe and Mr. Phil Newton.
Sean Donahoe: Hey, hey, hey, this is Sean Donahoe, and I am joined here by Mr. Phil Newton, but we don't know who's going to be Mel Gibson or Tina Turner in this, kind of, Thunder Dome special here, because it is time to step into the Thunder Dome. Two traders with two different approaches to the same trade, and we're going to break down, examine, exactly see what the hell led us to these decisions that we made and exactly why. That's going to be the main thrust, to not use any double entendre, of today's show.
Phil Newton: I'm there. I just wanted to rap about the double entendre. Why not?
Sean Donahoe: Absolutely. What else we got?
Phil Newton: We've also got the Rebel Trader mailbox. Your trading questions are answered. As always, we're going to find somewhere on the back on an envelope, it's been posted in with your questions and we've got the usual Bullshit of the Week, we call it the Hype, the Hyperbole, The Shenanigans, the Nonsense, the Nuances, and the general mayhem of the entry.
  I think I just like saying it more than actually having the segment.
Sean Donahoe: At the end of the day, yeah.
Phil Newton: It allows me to sound more articulate than I actually am.
Sean Donahoe: There you go. Poor farm boy. Here we go already.
Phil Newton: The poor farm boy earlier in the conversation. I'm somewhere amongst all of our own shenanigans we're going to answer the call questions. Might even ask it before we answer it as well this week of where -
Sean Donahoe: Absolutely. We've got several trades, recently coming into earnings, oddly enough, that we have been doing and trading ourselves that we've been talking about privately. Kind of setting the stage here.
  One of them kind of stood out from the crowd that, again, we were both on for a completely different reasons. As it turns out, there's actually two or three that we have been trading ourselves privately using the strategy that we talk about all the time and that we train on.
  Again, what I wanted to do is kind of do a comparison between what I was doing and why and then what Phil was doing, which funnily enough, purely strategy-based that accelerated the entire process.
  First of all, we're going to talk about Twitter. Now, let's set the stage here. Twitter recently had its earnings, actually, let me just pull up the chart because I want to confirm when the earnings was. That was, what day? That was the 27th. I can't remember, it was after hours or what have you.
  Again, off the back of Facebook earnings, I was already expecting, I'm laying the stage of why I went into this trade. Now, I was short Twitter. I was also short Facebook.
Phil Newton: Very height of you, Sean.
Sean Donahoe: Absolutely. Yes, yes, absolutely. Vertically challenged.
Phil Newton: We've got to get a reference in somewhere.
Sean Donahoe: Absolutely.
Phil Newton: We've been missing them the past couple of weeks so I thought I'd throw in one.
Sean Donahoe: There you go. That's it. Yeah, vertically challenged here. That's a dwarf reference, by the way, if you're Terry Pratchett, dwarf reference. You'll have to read the books.
  Anyway ... this explanation is probably not going to go anywhere.
Phil Newton:  
Sean Donahoe: No comment.
Phil Newton: I think what you're scared around, Sean, is you have more of a fundamental approach. You have news triggers. You had a little bit of a sympathetic movement expectation from another sector.
Sean Donahoe: Kind of, but there was more to it than that. I was -
Phil Newton: No, I get that. I'm just kind of bringing us back on track seeing as how I've completely
Sean Donahoe: Well, I appreciate those efforts. Absolutely. Just coming at this from a much more fundamental standpoint.
  One of the things that, again, I look at is I'm always future projected. This is based on experience, on knowledge and some .
Phil Newton: But it also stands for the reason of why we ask, where's the trade? Because one of the things that you focus on is there's this thing going on with Facebook, maybe, you've missed the Facebook thing unless you were on before.
Sean Donahoe: I was.
Phil Newton: Exactly. What's the trade? That's why we have that. Is there a trade? Where's the trade? It's that awareness. I'm just trying to kind of sidebar here, Sean, just to illustrate maybe the thought process for the poor farm boy in the room. It's that would be the thing.
  You've missed the Facebook, for example, okay. Is there a trade? Where's the trade? My automatic thing would be, maybe there's some type of sympathetic movement. If Facebook is making active movements, maybe Twitter, maybe some other social media-related type of stock might maybe Snap because that's coming up soon as we record this. Maybe they're going to have a negative move as well.
Sean Donahoe: Yeah, Snap actually had there's last night and again they went down.
Phil Newton: They got, just highlighting my intentional ignorance on the subject once again. I pay very little attention to the side video.
Sean Donahoe: Snap is funneling up. We've been bashing on Snap and I was considering of using that as Bullshit of the Week, funnily enough, but Snap actually went ... funnily enough, a lot last night plus and minus 11% as they beat their -
Phil Newton: By living up to its name.
Sean Donahoe: Absolutely. Yeah, the one thing with this particular trade is funnily enough all the privacy controversy over the last few months with Cambridge Analytical and everything else, and Twitter also got caught up in that.
  Now, I was short both Facebook and Twitter and I was doing it ahead of earnings because I was expecting that, again, that controversy ratifying out in, because again, I'm embroiled a lot with social media and social media marketing you can feel the sediment change, the shift in perception and everything else, but also the ramifications of a lot of the controversy would be reflected in user numbers, would be affected in profitability, which again, would put them on a little bit of a struggle when it came to actually reporting the numbers.
  A lot of analysts I know were already kind of expected. You can see in both Twitter and Facebook that there was the start of a little bit of a decline. Well, actually mostly with Twitter, but there was a little bit of a rally before earnings and I'm thinking, no this is wrong. This is where with Facebook the crowd was wrong and they're not taking into account what would be there.
Phil Newton: Well, not raising an interest in cycle. Your observation is something that I've seen for many years also, just to kind of put some fleshed out a little bit. Typically, the move prior to the move is indicative of the post move movements. The move prior to the news might be, for example, temporarily. That usually leads to the post news movement being in the opposite direction.
Sean Donahoe: Absolutely. Now -
Phil Newton: I'm not saying my observation. That's usually true around six, seven times honestly.
Sean Donahoe: Yeah, I would say that's pretty accurate. I felt, again, pretty strongly, but I mean with Facebook I was really wanting to see what happened there because that would confirm to me what I was likely to see as a side effect with Twitter. Twitter was already trending slightly down from like mid May and everything else and it was ... but it was had a nice rally but now it was kind of trending down.
  I'm like I still feel that that sentiment shift is going to happen. I don't like Twitter as a company. I think, again, honestly, their days are numbered in terms of a social media platform. I didn't expect a lot of positivity from what they were doing, especially on the back of this.
  Again, struggle.
Phil Newton: Struggle over the phone.
Sean Donahoe: They have. They have. For me, my decision to short them was purely fundamental amplified by what was happening with Facebook and I thought this is going to be all of that controversy is going to be ratified in Q2 numbers. Again, that was it. That was my entire reason and I want to underscore several things. That's based on experience. That's based on speculation, and that is it.
Phil Newton: Well, it's evidence-based speculation. It's okay. These events have happened before based on that, that gives me a bearish bias and it was strong enough for you to go and put your money away and go
Sean Donahoe: Absolutely.
Phil Newton: I think that's a key finder.
Sean Donahoe: Yes, and again it's put your money where your mouth is but don't do it if you don't have the data, the evidence to back it up. But flip it around now, Phil, why did you get into the trade, specifically? What was it that made you get into this one and flip it around?
Phil Newton: Well, I'm going to fall back on the production line that I'm always talking about. I'm not just talking about it. I'm actually doing it. I'm a convert of my own system.
  Come into earning season, I have a scan I like to use to find potential candidates that might be good for a particular setup. Properly speaking, this is the setup I'm looking for a news trigger and events that might highlight the potential for an explosive movement.
  Because every three months there's an earnings announcements. Every three months there's the potential for an explosive movements. The second condition is I'm looking for low-implied volatility rank.
  If we look back over the last 12 months, and we're looking at the implied volatility, and we take the highest high and the lowest low in the last 12 months, I'm looking for the implied volatility to be a bit near the lowest low in the last 12 months and certainly in the lower quarter. Does that make sense so far?
Sean Donahoe: Yes, absolutely.
Phil Newton: News trigger on the horizon in the next 25, I'm sorry, about 35 to 45 days, we've got low implied volatility. That's important for the reason and that's if, also, when the news comes out, there will be typically a volatility contraction. If we imagine implied volatility it's like that Christmas excitement. It's Christmas, it's Christmas.
  We say it in the high streets where the top ten toys, for example, they get this hype around them and everyone wants them. Demand goes up. This little black market appears where you can buy the same toy that's usually anywhere from three to five times the retail price on eBay.
  That implied volatility is a seasonal implied volatility in the retail world. The same thing happens with a stock. What I'm looking for is for that excitement to have not been put into the option pricing just yet, because after Christmas, in this case, earnings that volatility is just going to pop. It's going to disappear. It's going to revert back to normal the retail price. That's why I'm looking for that.
  I want to make sure it's low enough that there will be a contraction but I don't want it to have a major impact in the price that I break because any profit that I might make might be eaten up by that contraction so that's why it's important. Can't stress that part enough.
  Then the third part is I want price to be pausing. I want it to be in a contraction phase. It doesn't matter what the long term trend is. This is the only time that I don't really focus heavily on the trend in the last 12 months. I'm looking for a contraction in price.
  Twitter had been contracting at the time of the trade, which was for me, the 25th of June. It's contracting in price for several days. That means that all prices expand and contract so it's contracted. There's low-implied volatility, which means the options are relatively inexpensive compared to themselves and there is the possibility of an explosive movement on the horizon.
  That's my production line for this and the type of trade that I put on is a non-directional trade so I'm going to place a long strangled setup in a very unique and very specific way to take advantage again of the option pricing and then I don't care which way price goes. It can either go up or down as long as it moves, I'll get that.
Sean Donahoe: That's exactly it. Now the interesting thing is that is a simple and a much, honestly, more risk-free approach because there's likely to be a move one way or the other. It is something that Phil has told me about in one of his approaches through earnings because it doesn't matter which way it explodes, if it explodes you get paid. That's it.
Phil Newton: The reasons I mentioned it works around six, seven times out of ten. It's a pretty good strategy and it doesn't matter which way the markets move, or this could be the individual stock move. As long as it moves, and here's the kicker, Sean, what can happen, I don't always trade through the news, trade through the earnings. I just happened to trade through it on this occasion because it wasn't anything.
Sean Donahoe: Yeah, usually we're saying avoid earnings, don't trade through earnings because of the risk profiles unless you've got something like this in your back pocket.
  Now, I broke my own rule because I felt so strongly about Facebook, about Twitter and another one that we're going to get into in a moment.
Phil Newton: Well, it was a situational trader thing is worth pointing out from your point of view. It's not something that you're going to do every day.
Sean Donahoe: It's more of an investor standpoint and timing of how long you're going to do it.
Phil Newton: Well, that's what we ... I think that's worth point that out. Mine was a wanting every kind of quarter type of trade. It's a regular trade, but once every quarter. I'm going to be looking actively for these. They usually go anywhere from 10 to 30 types of trades in that period.
  For you, it may be this situation doesn't happen. It might be once, twice a year that that situation where several factors come together, so it's not an everyday occurrence from your perspective and for me, it's less frequency.
  For me, I've got to point it out because normal style of trading it is we're looking for an everyday type of trade. What sort of that could happen every day?
Sean Donahoe: Absolutely. Now, again, we did a show about this about the top ten traders in the world who for the trades from history that are humbly acknowledged and everything else, like Jones and everything else that we're talking about and George Soros, but one of the things that was common with all of those things is their awareness and their experience and their ability to see things in the future or things, all the jigsaw pieces coming together to create a full picture.
Phil Newton: Looking for history to repeat itself based on the situation and perhaps more fundamentally.
Sean Donahoe: Absolutely. I mean that, awareness raises on certain things. Now, Phil, again, fast tracked and this is really what I wanted to show is if you have the right strategy you have the ability to fast track pretty much everything and gain that experience as you go.
  Again, mine's based on a lot.
Phil Newton: It took me five minutes to find that trade, Sean.
Sean Donahoe: Exactly. Mine is now -
Phil Newton: It took me longer to put the trade on than to actually find it.
Sean Donahoe: That's exactly it. You can fast track that experience with a solid strategy. Again, you gain experience as you're in the markets, as you're doing your things. You raise your awareness and everything else and it can give you ideas that you could then take and evidence, but that is the long form way.
  Again, yeah, I did that because again I'm looking at it from that fundamental perspective and it's something that I already had set in my mind. Actually, I was thinking about it while I was at the gym thinking if I'm thinking about this with the sentiment of Facebook and blah, blah, blah.
  I was on a treadmill like a bloody hamster and my mind is going about these things and so I recorded it.
Phil Newton: You're weighing out the pros and cons. I suppose like a business dealer.
Sean Donahoe: Actually-
Phil Newton: When a person comes, I like it enough, but I'm going to speculate that you probably didn't fill your boots on this, it was it's not an everyday trade. You probably put a little bit more on them you might do normally, but then it's a once in a blue moon occurrence. If you're right, you'll get paid. If you're wrong, the risk is probably minimal.
Sean Donahoe: Absolutely.
Phil Newton: It's an acceptable risk as a part of a small portion, a little segments of your overall portfolio.
Sean Donahoe: Exactly, yeah. I have my speculative section of my portfolio for these kind of trades. Didn't fill my boots up, but confident enough to put a nice chunk on that feeling. Once I got home, and this is what I do guys. Just to give you an idea. When I'm having ideas, which I do all day long, I walk around with my cell phone. I use EverNote and I just record a quick audio note in a folder or in a notepad, as they call it, for trade ideas and then I'll go through and if it's worth looking and researching more, I'll come home and I'll do a little bit of digging. If it works, if it's worth it.
Phil Newton: Little scratch. I've got I do the same for lots of reasons and I have a lot of section as well for maybe trade ideas. I actually do that in my chart platform where something might catch my attention but it's not come veer the usual production line as I've quite commonly say.
  Maybe you've mentioned something. Have you seen anything with this stock, Phil? Maybe no I've not looked at it. I'll make a note to have a look at it. Keep an eye on it.
  Those things, those stocks, those opportunities that are, I call them nearly trades. They're not today trades. I look for today trades all the time. Click, click, pick. The production line, what am I trading today? Then bugger off somewhere and go do something else.
  Then there's always going to be those, well, it kind of looks all right. You put it on a watch list or if it's more of a fundamental you might kind of write down your thoughts and your ideas and then come back. Maybe you'll dig and do a little bit more research.
  Eventually, it'll go onto a watch list for you too. When's the timing right to deploy this trade idea? Because most of the time with fundamental, you don't need to do it today. You can kind of think about it for a wee while.
Sean Donahoe: Absolutely. Again, a good strategy, this is what I really wanted to do with this kind of Thunderdome special here, is compare two approaches, both of which are absolutely valid.
Phil Newton: However, opposite as well.
Sean Donahoe: But polar opposites in approach. Again, full credit here to Phil. His fast track was done in, like he said, it took him longer to execute the trade than it did to find it.
Phil Newton: It took me longer to explain it as well. It's when you've got that, it's a three-step process. When you've got it, it's click, click, click. Are we putting the trade on today? Yes or no. Trade on or come back tomorrow and check it. It literally is a production line.
  I keep going on about this. I'm not just saying it for the good of my health. It is literally a production line.
Sean Donahoe: That's exactly it. It makes everything a lot easier. It fast tracks the need for experience, which means anyone who learns the strategies or has a solid strategy and can be consistently applying that strategy in the markets can gain the experience, the longer term experience, but they can fast track it to get to those trades infinitely quicker. That's really the thing here.
  Let's switch gears, no pun intended, to Tesla. That was a completely unintentional pun, but I'll take it. It sounds like I'm intelligent and it makes it sound like -
Phil Newton: It was an awkward seg way but I'll let you get to it. Another transport, maybe.
Sean Donahoe: There you go. Now, again, I'm coming at this from a fundamental perspective. Going into earnings, I, again, have been following Tesla quite closely because there's been a lot of media about it. It's been -
Phil Newton: It's Tesla.
Sean Donahoe: It's the most shorted company ever. I mean literally it's -
Phil Newton: according to the head, it probably is, but according to the news headlines.
Sean Donahoe: Yeah, I've actually looked at the numbers as well on this. This is actually they're ratified it with actual numbers to show that it is true, but yes, there's been a lot of hype about it.
Phil Newton: Yes. I would have to, again, I would have to call it, is it retail or institutional?
Sean Donahoe: Institutional.
Phil Newton: Fair enough. I just want to know. I'm not trying to be a dick, although, it sounds like that. Well, I am but you know what I'm doing. You've got to ... your point is you've got to qualify it. This is where I suppose this illustrates what we keep talking about. Raise your awareness and then investigate.
  It's the most shorted stock. Well, who says? Who's shortening it? They should be the next logical questions that you ask. Again, sorry. Random little sidebar here, Sean. I think it's important. It just highlighting that we regularly talk about.
  You hear something, qualify it. You don't just take it. We say this with ourselves. Don't take what we say on face value. We know what we're talking about but it might be new for you.
  Yeah, sure, we take what we do for granted in many respects, but go and investigate it and see if it's right for you and use it to raise your awareness. If you agree with it, then do something with that new information.
  For me, I have to qualify that. Just because someone says, well, qualify. Now that I'm on to some extra pieces of information, I'll then go and validate it by seeing if I was going to do something with it, I would then go and confirm the source, if you like, and see if the numbers match what I've been told and what I'm expecting.
  I think the point I'm trying to get to and very long and rambling way is raise your awareness. Don't just take the headlines, whatever the headline is that makes you aware. Tesla's in the news today. Maybe I should do something with it.
  Well, why should you do something with it? Just because it's in the news doesn't mean it's tradable. Just because there's a short interest on the stock that's the largest it's ever been, I would have to ask, why is that the case? Who's shorting? Why would it be interest? What is the reason for that in the first place?
  Because chances are, it might not fall into line with how you normally deploy trade or put a trade on. That's useful information, but then it doesn't fit into the picture that I normally paint when I'm trading. Does that make sense?
Sean Donahoe: Actually -
Phil Newton: I think it's worth pointing. This is a really good illustration of things that we've just talked about. Me being a lot of bit of dick to you by asking two simple add-on questions is what you should be doing when you hear this information. You validate it, qualify it and then go and investigate it. This is what we mean by raise your awareness. Go ahead.
Sean Donahoe: Also shows again that we do what we say. We trust. We verify. We validate. I could answer Phil -
Phil Newton: Just because I trust you, Sean, doesn't mean I'm going to put my trade on in the same way.
Sean Donahoe: Exactly. No, exactly. That's exactly it.
Phil Newton: Too much pressure.
Sean Donahoe: I mean we hear this from pendents all the time, is what their intent the same as your intent?
Phil Newton: . Bit of a croak in my throat.
Sean Donahoe: Absolutely.
Phil Newton: You know, I think he's a good example of do as I say and just go and do it. Don't think about it because I'm right. If you look at his track record, he's not actually that right. The following week he could be saying the exact opposite about whatever he was talking about it's because it makes headlines and that's what his job is. Make headlines, get eye -
Sean Donahoe: He's an entertainer. He's an entertainer.
Phil Newton: Exactly. to entertain. Anyway, where were we? I've derailed again, Sean.
Sean Donahoe: Absolutely. Anyway, coming into the Tesla earnings, I was also looking at it. I know they've been shorted a lot. You can see on the charts, it's very much a red chart with occasional spurts of green because there's been a big battle between Tesla and the short sellers and a lot of jabs at them and every time they have a rally, he pokes fun at those specific companies that are institutions that are trying to short and push down the stock down.
  Now I'm going to get into this in the Bullshit of the Week because actually Tesla is part of Bullshit of the Week. I'm trying not to spoil the fun, but one of the things coming into earnings is, to my mind, again, from the fundamental side again. Looking at the numbers, they're cutting it close to the line in terms of their budgets, the pressure they're under. Again, pressure from short selling as well, which is putting pressure on the company but also to hit the deadlines because he has a
Phil Newton: Responsible to investors again.
Sean Donahoe: Yeah, responsible to investors, but at the end of the day as well, Elon Musk tends to overpromise and under-deliver. This has given the short sellers a lot of heat.
Phil Newton: But he gets away with it.
Sean Donahoe: But he does, he has outside of whether you like or hate Musk, he has an entrepreneur that is dogged and determined. I respect that and I look at that as he will, when I heard he was turning his factory into a 24-hour production factory, that they're assembling cars, even putting tents outside to expand the production facility to actually try and meet these deadlines.
  In other words, this is an entrepreneur breaking every conventional rule to hit those targets, to make things happen. That, I respect. That shows me that they're going to do everything they can to do what needs to be done.
  That, again, when I see that ratified in recent news was they're hitting their production numbers.
Phil Newton: That's general , just for a moment. General Motors, which just missed the numbers.
Sean Donahoe: Yeah, absolutely.
Phil Newton: Because they're trenched in doing it the way that they've always done it. Oh, well. We'll just miss it. I know they're not really saying this behind the scenes, but they're just probably just accepting the fact, "Hey, we've said we'll get this production and maybe we'll just have to miss our numbers this quarter and take a hit." That will probably be the board decision there and Tesla's reaction, Ion's reaction is let's hit them with everything we can. Let's at least be seen to be doing something.
  I always love that. To be seen to be doing something. I think Jeff Bezos did the same thing. They're doing something different. They're trailing, they're breaking a trail in the new direction and trying to be a little bit different and no one knows what's going to happen. They're not doing things the traditional way.
  Look at the results that happened. I think that is a major differentiator.
Sean Donahoe: Here's the thing, and I'm not going to piss all over GM.
Phil Newton: be a little bit farm boy.
Sean Donahoe: There you go. No, I'm not going to piss all over GM, because GM, again, hundred year brand and everything else. Valued -
Phil Newton: Over time was that they're entrenched in a way of doing things, though.
Sean Donahoe: Yeah .
Phil Newton: It was just the first thought that came to mind.
Sean Donahoe: No, no. We talked about GM a few weeks ago with a trade that we brought on. Again, still come home and we had sold options on that at the end of the day with what we've got going on. It's a $58 billion company with something that we're going to be talking about later on.
  Again, we've got to talk about Tesla saying that they're considering taking their company private. That's just put evaluations at, what was it? $90 billion.
  If you compare that, the number one car manufacturer, up to this point, has been GM. GM $58 billion company has been around for 100 plus years. Tesla, not been around that long and with what Musk was talking about yesterday, which was Monday while we're recording this show, he has come out and basically given the company a virtual evaluation because he's offering to buy all the shares. He was talking about this as something we're talking about is possibly taking Tesla private at $420 a share.
  Now, that's put the company evaluation at $90 billion.
Phil Newton: Which was $100 higher than at the beginning of the day. It was around 340 for reference. Then Musk went out and he said 440, you said?
Sean Donahoe: 420.
Phil Newton: Is that what you said?
Sean Donahoe: I think first he was joking and it was a reference to pot. Anyway, we'll get into this in a little more detail later on.
  What's happened was, even discounting that rally, even discounting all of that and after I was trading and everything else, just talking about going into earnings because this is where we were looking and talking at, going into that, looking at from a long perspective, I was thinking they had announced that they almost hit their production numbers. That they're producing like 5,000 vehicles a week and the ...
Sean Donahoe: You're seeing like 5,000 vehicles a week and they're looking to accelerate that out. It was the biggest question was around the model, I think it's called the model three okay, which is their lower end car. Now this is the transition between gasoline and the next affordable wave of electric cars.
  GM is also in the electric car space, their vehicles are expensive. Tesla is traditionally very expensive cars. Having the first affordable one really going out and mass production, and those numbers being hit I thought was transitional, it was just by looking at the numbers what they're talking about for the future. I really thought this is something, and I went , and it's like okay, I think this is, or I feel very strongly going into earnings it's gonna be good news.
  Also, after the last earnings call, where it was a bit controversial, Musk really knew that he had to do something different on that call which is gonna give analysts a psychological boost, which means they're gonna feel better about what they're doing, which means they're gonna come out of that with better news, and as such, I felt that everything was gonna go ... I mean it was just too many check boxes, lock, I went lock.
  That was it and it worked out, it worked out really well, especially after that tweet as well, because that just amplified everything.
Phil Newton: To be fair, Sean, this layup that you are talking about from a fundamental viewpoint, you could create a little checklist for this. All right granted, the fundamental side is going to be a little bit different but, think about it, the move prior to the news was down in this case and the other stock it was very similar and post-news move was up, so we've got that logic that we've acknowledged before is usually quite interesting.
  Then you've also got that there is a news event on the horizon, so that there's two elements that can kind of be mechanical, do I have a news event? Do I have some controversy around it, and then I'm also thinking the third element here is that the herd is talking about one thing. They're very negative on Tesla ahead of any sort announcement and to be fair, if you looked at the news for Tesla prior to a couple of weeks, it was very negative on it.
Sean Donahoe: Yeah, especially 'cause of Trumps tweets and then what everyone's saying, sorry, not Trump, although that is a psychological little shift there. Musk's tweets about what he was saying about the diver and the controversy there and everyone loves to shoot him down but they also, because he's such a controversial figure, again it makes headlines but it also makes fundamental shifts as well.
Phil Newton: I think we also commented on that the reality from what was being spouted in the news. The reality in price action wasn't reflecting the narrative in the news. So, I think that ... I'm just trying to think about our blueprint and where's the trade for the future for our loving and adoring listeners.
  There is a blueprint here, believe it or not, why it sounds fundamental-ish and it will require reading and keeping abreast of events and doing all the things that I don't like doing. It can be, not mechanized, but there is a production line involved. If you're the type of person that loves to read and loves to get a finger on the pulse of the stock and follow all the big ding dong CEOs and if you've got your finger on the pulse, this is a perfect blueprint. What's the narrative? What's price doing ahead of earnings? Is price behaving in a way that is complementing the narrative or is it doing the opposite?
  I mean, we spoke about this narrative in price compared to the headlines a few seasons ago, a few episodes ago, and we also spoke about the fact that for many, many months, prices mean meandering sideways in Tesla and the narrative that was being spoken about wasn't being reflected in the way the price was behaving.
  So for me from a technical, from a chart point of view, that was a very bullish sign and again, I'm just trying to think about, if I was going to look for this type of set in the future, I'm picking apart the detail of how you found the opportunity versus what was being said about Tesla. Does that make sense?
  Yeah, I'm just trying to think about this blue- ... I was going to do it, so I just think it's interesting that you found two very similar stocks but the narrative around that little formula, that little blueprint, that can be replicated.
Sean Donahoe: Yeah, absolutely.
Phil Newton: That's what gets me excited about it.
Sean Donahoe: Absolutely and it is just an awareness of okay, these are ideas. These are thoughts. I'll watch these. What's happening, what's the pressure building into earnings and does that shift my idea or my, I hate to use the work gut instinct but the smarts and experience they have.
Phil Newton: Well let's rephrase it so we sound fancy. It's your subconscious giving you ... I spend a lot of time trying to pay attention to that, as you know, that's why we've spoken about dear diary type entries in the past. I'm feeling this about my trade. If you pay a lot of attention to the subconscious, that is essentially the gut feeling. It's the subconscious mind saying give me a green light. It doesn't talk to you logically, it talks to you with feelings, with emotions which is why it always gets called this gut instinct.
  Really, it's your subconscious mind giving you a little bit of a thumbs up saying okay, yeah, I agree with you. You shall pass.
Sean Donahoe: Yeah, and the final kind of nail in this coffin, so to speak, or the final check box was, has it been at this level before and looking left, as we always say, on the charts, yeah, it's been around this point several times. I felt going into earnings, this was a good kickup point because if you look back into earnings about a year ago, actually it was October, it was Q4, and then looking into-
Phil Newton: I've got $300 approximately all the way back to last April, not the April just gone but 12 months ago at least-
Sean Donahoe: Yeah, 12 months ago at least.
Phil Newton: -and it was a very interesting and logical stopping point which was the basis for raising my awareness for the trend as well.
Sean Donahoe: Yeah, so looking at that level, I felt yeah okay, it's been here a few times. I think form here that just even the slightest positive hint here, it's going to kick up. Now, it's kicked up tremendously and actually I'm probably going to get out of the trade this morning. I should have closed it maybe last night, but I'm waiting, I'm looking at literally live as we're going. I've got it on another screen as when I feel it's good to get out I'm going to get out.
Phil Newton: Just coming back up to yesterday's close as we do with this. . It's just coming back up to yesterday's close.
Sean Donahoe: And then and I'm waiting to do like to capture the last move based on, I sent him a note, that gets there or slightly above .
Phil Newton: I mean you could squeeze three eighty, I think you can squeeze three eighty out of this, Sean. It's at three seven something now, so it's only a couple of dollars.
Sean Donahoe: Yeah, that's what I'm thinking. It's three eighty. I'm probably going to close out at that, in and around that. If it happens during the show and you hear a weird beep, that's why bing.
  But outside of that, what got you into the trade?
Phil Newton: Well, mine was a little bit, I wouldn't say discretionary, but there was an extra layer on top of what I normally look for here. Basic set up is, it's in the consolidation. I wasn't planning on trading the news on this, it just happens that I ended up trading through the news, if that makes sense but it wasn't that planned news trade for that reason.
  But essentially, last 12 months, it's in a consolidation. It's at the lower end of the consolidation around 300 dollars and it was showing the usual sign of exhaustion that I like to talk about with my production line and therefore I was bullish, aiming for a target at the upper end of the consolidation.
  The whole premise for this set up, because it's in a consolidation and nothing new is developing, then the same thing is likely to happen and it's been ranging for 12 months, and to be fair, broadly speaking, that is my philosophy on the set ups and trading that we use. Nothing new is happening. The same thing's probably going to continue, that's the whole reason why you buy the stock which Tesla is. You've got prices at the lower end of the range. It's not breaking out. It's probably going to continue to range and move back to the upper edge which is where we are right now at $380. Surprise, surprise.
  I set my trade up on 6 July for reference. My alerts went out to all our subscribers prior to the new opening, prior to the market opening. I like to sit through a few days of sideways, a little bit of negative movements but eventually pop, it turned around and I exited my own position after the first new pop around about 340, 345 dollars.
Sean Donahoe: Yeah, that makes sense and I'm looking back at the charts. Actually I think I had a similar trade on what I was doing there around that date.
Phil Newton: The news is always my exits. I could get out before earnings, if you like. The news is always the reason to get out of the trade whereas everyone's usually thinking to get in the trade but it's a very classical, we're at the range low, it's going to go to the range high.
  Now the extra layer, just to finish off, Sean, is that it did try and break out of this and I actually traded the breakouts or attempted to trade the breakout. Just on the interest of disclosure, I had one failed trade on this prior to this one but around the end of March, beginning of April, you can see that it attempted to move lower out of that consolidation and up to that point it looked like, the beginning of April that is, it looked like your classic breakout pull back support becoming resistance type of logic and it didn't work out.
  So what happened was price had broken back into the consolidation and then the $300 level now reacting as supports again. So, it's trying to move out, didn't like it, came back in and it's a break in set up which is the opposite to a break out. It's a consolidation, it tries to break out and then moves back into the consolidation and it's that normal ranging behavior resumes.
  So, there's that extra layer on top of the basic set up which gave me extra strength to the position. Because of that, I increased my position in size.
Sean Donahoe: No, that makes sense. Now, funnily enough, I was selling-
Phil Newton: I just feel that was really bullish, to be fair.
Sean Donahoe: Yeah. I was selling on this one at that same date and cashed out a few days later just because I was like, hmm, it's not moving as fast as I thought it would. It's kind of going sideways, so I took a little profit off the table on that one. Closed out for a profit, not outstanding but I still feel this is going to kick in as pressure was mounting towards earnings. So, I kind of double dipped but I changed the strategy rather than, which I'm glad I did because it didn't go lower than it's kick off point and like, I still feel this is going to go along but in a different way. So, it's ironic because I was in at that same point based on technicals but took my cash off the table and like, it's not quite going where I thought about it, no, I'm going-
Phil Newton: Actually re-evaluate, reassess because it tried to break out. It didn't. My thought is, Tesla, if it's going to go, when it goes it goes. .
  And this just confirms and this is why perhaps I was questioning you earlier about the short interest. Price is not behaving like there's a lot of short interest. It's tried to break out. If that short interest was genuine and the selling pressure continued, then we would have seen a breakdown in price after the break out of the consolidation. Price was not reacting like it should do if the selling pressure was as high as what the headlines and the narrative in the news would say.
  I guess this what we mean by price is not behaving according to the narrative that's being told by the talking heads or ... There's a contradiction between the numbers and what price behavior was doing.
Sean Donahoe: Yeah, a lot of the short pressure came in around March and everything else. This is when the real interest in this really kicked off. There was a lot of short apparently selling in and around that and then it became a battle of wills and then all the way through June and everything else. I mean, Musk went to town on them. Mocking them with pictures or the video of who wears short shorts to take the piss out of the .
Phil Newton: You know, I've got to admit just because my immediate reactions always do the opposite, he's not used to the stereotypical, chief executive-
Sean Donahoe: He's not.
Phil Newton: -I'm sorry for my inappropriate comment or my inappropriate tweet or ... He's unapologetic, he's just doing whatever he does. All right, fair enough, he's batshit crazy.
Sean Donahoe: Yes he is.
Phil Newton: But he's doing his own thing and he's not making any false promises which I think is why he's so loved. He's like, hey look, this is the thing, I'm quite literally shooting for the moon. Not just the moon, Mars. We're going to go to Mars.
Sean Donahoe: I'm going to say, I bought a roadster in space.
Phil Newton: Yeah but it's batshit crazy. When you're going and put a vehicle in space and you kind of think well maybe you could get to Mars.
Sean Donahoe: Lovely stuff, lovely stuff.
Phil Newton: But that's the thing, he's not behaving the way that your traditional executive and, you know, price behavior and the confidence in the stock is still with him as far as I'm concerned. Again, this is my whole argument for I don't really need to know what the headlines are because the behavior in price will tell me what the people with money and influence are really thinking and I just can't take the typical narrative in the news media seriously because it's all in front of me. Oh, there was a big jump in price two, three days ago, maybe there was a news item. I don't need to know what that was, it happened, but the whole point is you don't know there's going to be a news item that would cause that reaction in price so you've got to trade according to a methodology that gets you in before that every happens. You can't trade after the event so there's no point trying to figure out what the event was because you'd never know it's going to happen.
  It's such a weird thing to realize when it comes to your trading but as soon as you can let go of that, you're going to improve on your trading because otherwise you're just going to be chasing moves all day long. You're going to be like Wile E Coyote in the Road Runner. You're always chasing the Road Runner. I'd rather be the Wile E ... I'd rather be the Road Runner. You're always ahead on a straight road rather than Wile E, falling off the edge of a cliff. That's the scenario.
Sean Donahoe: Absolutely. No, that makes sense. That makes sense.
Phil Newton: That paints a picture, doesn't it?
Sean Donahoe: It does and the bit that kills me is both my wife and my father always refer to me as Wile E Coyote. So, I'm suddenly taking that as an insult now but there you go, okay. Well, I'll go and put my Acme rocket pack down.
Phil Newton: Beep, beep.
Sean Donahoe: Abso-bloody-lutely. Funny enough. Okay, so with that being said, I think that really puts an underline over that. Two different approaches. Two different angles both of the valid and that leads us nicely into the rebel trader tip of the week.
Automated: And now, it's time for the rebel trader tip of the week brought to you by tradecanyon.com. You ready to take your trading game to the next level? Discover where smarter traders come to get coached by the best and learning to trade just got way easier. Trade Canyon. Smarter traders live here.
Phil Newton: So, the rebel trader tip of the week. Ideas can come from anywhere. It can come from when you're at the gym, like we mentioned. It can come just from awareness, from maybe a news item. Financial news networks. Maybe a blog post. Maybe anything else. Anything else that can make you think, hmm, what if?
  Maybe you see an advert for McDonald's, driving that on the billboard and you just think, you know what, I think I'll take at McDonald's stock. It can be really silly and might be . I mean, we've spoken about this as well, haven't we, Sean, where I was like, I heard on the radio today about such and such and it was just their regular adverts but made me think, you know what, that little jingle just stayed in your mind for whatever reason. I think I'll go and take a look at the stock and oh, holy smokes, something's going on.
  It's a good way until you've got your own production line, it's a good way to raise awareness. I like it.
Automated: Absolutely and the-
Phil Newton: I was just going to add on. I've said that to many students who are just starting out and, because sometimes having a big universe of stocks is quite overpowering, overwhelming for a lot of new traders. So, just inch yourself into the water. Just go and, what are you familiar with? Look around your house. Look at the household stocks. Maybe you go and look at Unilever because you've got a lot of domestic cleaning products in your kitchen. It just whets your whistle to the opportunity that is all around you and then, when your eyes are fully opened, you can really jump in feet first when you're ready.
  But just raising your awareness, I think that's a great place to start if you're absolutely brand new. Just look around at what's familiar. Okay, I've got a microphone here. I've got a microphone. Who makes that? See if the company's listed on the stock market and if they're not, go and look at he ancillary companies. Maybe there's support industries. Maybe there is a company that is listed on the stock market that makes these types of products.
  It just suddenly opens the world of opportunities.
Sean Donahoe: Absolutely. I've actually did that recently with device manufacturing. I'm looking at Samsung and everything else and I was looking at Apple when I found out that a lot of Apple's components are actually made by Samsung and their subsidiary.
Phil Newton: A subsidiary of Apple. That sounds ... I know you've bashed on this a few times.
Sean Donahoe: I frickin' loved it. The iPhone X. The best phone Samsung ever made but at the end of the day, I look at, it's like okay, that's interesting. There's a lot of hype around these. They're all switching to, one trade I was doing not too long ago is, all the phones are switching and even laptops are switching to OLED and I'm like, what exactly is OLED. They're all bragging about this one feature, this new type of screen. So, I went to find out, okay, who's the primary manufacturer of OLEDs and is there an opportunity. Are they publicly listed and everything else.
Phil Newton: Who's got the patent? . Who's got a license for this?
Sean Donahoe: Exactly and are there any sub-licenses? In other words, are there any other companies that are now making it. How is this going to go into mass production? Who's likely to be the primary producer or the number two. The number two growing and trying to get market share.
  It could start you on a little path but again, back up your ideas with evidence and unbiasedness. This is one thing. A lot of people may be fan boys of Tesla. I enjoy the whole Elon Musk thing because of the entrepreneurship and he's a fantastic entrepreneur. I give him a lot of credit for that but I'm not going to put my money on it just because he's an entrepreneur. I want to back it up with evidence.
Phil Newton: Just because it's Elon and you like him. It's like saying I'm going to buy some shares in whatever Virgin's interested in because I like Richard Branson. All right, fair enough, he's a really smart guy but he's also had a lot of failures. What if you're buying into the failure.
Sean Donahoe: Exactly.
Phil Newton: You've not done your research.
Sean Donahoe: Yeah, exactly. My money is more important than my opinion.
Phil Newton: I think as well, make sure it aligns with your values because hey maybe you're not a rootin', tootin' gun toting, card carrying member of society. Maybe you're the other .
Sean Donahoe: I was like he's going to do here, okay.
Phil Newton: Did you like that? Rackin', frackin' varmints everywhere. But may you're not into the military. Maybe you're not into ... So, you don't go and invest in Smith & Weston, as an example. Maybe you want to do something green. Maybe you want to do the exact opposite to that. Maybe you don't like green. Maybe you don't care. Maybe you want to go and invest in oil industries. I think the point there is, make sure it aligns with your philosophy, the things that you like and maybe approve of because personally, I don't care. It's a number on the screen. I'm looking to benefit from the movement in price. I don't care what that stock is personally but if you were investing, maybe you want dividend paying stocks. Maybe you want to invest in green dividend paying stocks.
  So, that means that it would align with your personal philosophy.
Sean Donahoe: Absolutely and the main point here is trust and verify and back up your ideas with numbers. We talked about that then last segment. We talked about how you can fast track that with the right strategy but generating ideas, investigating things, allows you to go down little rabbit holes that other people may have missed because your awareness was triggered and that always can present opportunities that other people miss. So there you go.
Phil Newton: All good?
Sean Donahoe: Rock on.
Phil Newton: And it's a great idea, yeah. Just keep your eyes open but do the research, do the homework. It all revolves around research. For me, I've got my strategy, that's my research model. I've already done the hard work so I've got the production line. Maybe you're not there yet. Certainly do the research. If you're not sure whether you should be putting the trade on, guess what, do more research. That's a great place.
Sean Donahoe: Absolutely. So, let's get to the mail bag.
Automated: If you've got questions, they've got answers. Sean and Phil dive into the virtual mail bag for this weeks rebel traders quick fire round.
Sean Donahoe: Okay, so I'll go through this one first at you because I know that you're going to have a smart arse answer. Unsurprisingly but what is a dead cat bounce exactly?
Phil Newton: Well, the first story ... Does the snigger and the laugh say it all or do I have to expand on what's going through my head?
Sean Donahoe: If you're talking about Garfield at a third story window-
Phil Newton: I promise you with Garfield there's no lasagna involved. A dead cat bounce is typically a term that is ... When you've seen a stock or an instrument have a big sell off that's usually quite sharp and possibly unexpected. It might be news driven and the reaction when it's hit bottom and we don't know where that is which it always makes me laugh, I'm trading a dead cat bounce. You don't know, dude, how can you trade ... It's one of those after the event patterns that gets called it's a dead cat bounce and all it is, it's the reaction of when whatever sell off has happened after it's kind of finished it's momentum down move in this case, there's a little bit of a bounce. A little bit of a reaction and there's no more selling. There's a little bit of buying and it just has this kind of a little hopeful reaction.
  And that's often what a dead cat bounce is referred to, at least my interpretation of it. I always think a lot of these patterns, and this comes onto kind of my conspiracy theory of don't worry about what it's called because you never know the name of a patent till after the event. You don't know that a dead cat bounce has happened, notice the word, happened, past tense. Until after it's happened. It's difficult to trade some of these things in real time, particularly this type of pattern because usually it's a fast move downwards. It's always a downward move. There's not a dead cat jumping pattern is the opposite. There's none of that. You only know after the event when these patterns have happened. Doesn't matter whether it's a dead cat bounce, triangle, head and shoulders, all the rest of it, you can only say for certain that it was, again note the wording statements, it was this type of pattern, until after the event.
  As they're developing in real time, they can mutate and unfold and evolve into differently named patterns. So, don't worry about what it is but a dead cat bounce is essentially a reaction in price after a sharp sell off that is just a little bit of a bounce.
Sean Donahoe: Absolutely, perfect. And just for reference, I closed out my Tesla trade. It hit 380 and I'm going to ... I actually took off 50% of my position there, I'm leaving 50% on, see if I get a little more out of it because it's got the momentum right now. It's looking a little more, but I just closed out half my trade at 380 there. So yeah, that's interesting.
  But yeah, absolutely that dead cat bounce. You can't explain it better than that so okay, what else is in the bag?
Phil Newton: What else have we got? A question that I think comes around quite often is, it's very similar to which is the best tool, which is the best charting platform and in the same category is which is the best brokerage and in this case, questions about which is the best brokerage for trading intradale day trading.
Sean Donahoe: Okay, I have no answer because I have no bias. It's going to be the standard answer. It doesn't matter really .
Phil Newton: Most of them have a demo account, I think. Go and try them.
Sean Donahoe: Absolutely. It's horses for courses, as we say. We don't have any recommended broker that we work with in any specific way. We have ones that we use. We could tell you which ones they are. We have no agreement with them or backhanded .
Phil Newton: Yeah, you see this question all the time. I mean, you could insert, take brokerage out and insert your four charting platform. Which is the best tool. Which is the best widget. It largely doesn't matter and it's going to vary. It's such a difficult question to answer because it largely depends on your situation and your requirements. It's like saying which is the best car to buy.
  Are you a family guy? What's your budget? Do you have a five person family or have you got a one person family? Are they all teenagers or have you got young families because that is going to reflect the car that you buy. Does that make sense, Sean. It's the same principle here. What do you want it for. Sure, you can put a baby seat in the back of a, or in the passenger seat of a McLaren car but-
Sean Donahoe: No, you strap it to the roof. You strap it to the roof of that. Get the full experience for the kid.
Phil Newton: Yeah, yeah why not. But you see the point here? You can buy the big super ding dong sports car or you can buy Rolls Royce but that baby chair still looks a little bit funny in the back of a Rolls Royce. It doesn't matter as long as it does the job. What do you want it for? I think that's just generally, not just necessarily for the broker for . What's your situation and most of them have some sort of, in this case, well to be fair, most of the platforms and such have some sort of trial or demo account. Go and try them. That's what I did and to be quite honest, when I started out all those years ago, there was a new broker ... because the technology back in 2001, there was the transition from phone sales and actually phoning an office based broker to go and push the buttons for you. There was that transition to the DIY where you go and do it yourself and there's an online platform.
  So there was a broker appearing every other week seemingly, offering some latest technology or some extra discount so what you'll end up doing is you'll end up trying a few brokerages that suit your purpose. That maybe are in your price range if there's a fee involved. Make sure that you've got the right tool for the right job and go and try them and see which ones you like because some of them are like having a piece of software out of the '90's, whereas some of them are a little bit more up to date and user friendly.
  But maybe you like the one out of the '90's that looks like it needs a bit of a paint job and maybe a little bit of an overhaul because it's got a long track record, it's got other facilities. Maybe you've got your secured deposits, they've got extra wizz bangs and widgets which makes you overlook the fact that the user interface looks like something out of the '90's. If you don't mind that then go and use that one but you won't know until you try it and it's the same with any charting platform actually. I'm quite passionate about this, the answer to this question, Sean, because it largely doesn't matter what I, or which is ... Let go of the which is the best questions because there's no single right answer here and I think that's the bolshie answer, the flippant answer. Just give it up and just go and try some.
Sean Donahoe: Absolutely. Again, horses for courses. It's going to depend on your needs.
Phil Newton: It frustrates the crap out of me, Sean, if you can't gather.
Sean Donahoe: I kind of did gather that, yes.
Phil Newton: Do I have to answer this? It's like, I don't mind answering it but it's like, think for yourself, dude. Part of what we're trying to do here is get you to think for yourself. Don't worry about what we think and what we do when it comes to the tools and technology. Go and try it and find out what's best for you.
Sean Donahoe: Absolutely.
Phil Newton: That's the truthful and honest and only best answer that you can have.
Sean Donahoe: Absolutely. Okay, so the next one here and this one is one that I get all-
   
Sean Donahoe: ... here. And this one is one that I get all the time. I know, Phil, you've tackled this one many .
Phil Newton: I'm on my soap box already, Sean. Just fire it at me.
Sean Donahoe: I know. I need to get him a ball gag here, and not for any other purposes other than keep him quiet, in case he likes that kind of thing. But is it true that trading options is riskier than trading the underlying stocks? Now okay, we've just got to kind of get that rip cord on the back of his shirt, pull it, and let him go. Go ahead.
Phil Newton: I'm going to try and be a little bit serious here. Yes and no. The answer is yes and no, depending on what you're doing with options.
Sean Donahoe: Yes. Okay, good.
Phil Newton: But then the same could also be said ... let's just change the words around. Is trading stocks riskier than trading options? Yes and no, depending on what you're doing with stocks.
Sean Donahoe: Is crossing the road more dangerous than flying? Yes.
Phil Newton: I think it's the same category of question with the, "Which is the best?" It depends on what you're doing, it really does. I think if you're buying options and you're only a net buyer, and its risk defines ... Well, the clue's in the name, it's a risk defined trade, therefore, it is not riskier. But then, just because you're buying something that's less perceivable risky doesn't mean that you're still gonna make money. Because if you still don't know what you're doing, then it doesn't matter what you do and how you buy, you're still not gonna make money if you don't know what you're doing.
Sean Donahoe: Yeah, I think you've just hit a nail on the head there, is because a lot of people really don't understand options and the specifics, the mechanics of options well enough, that at the end of the day they're creating their own extra risk profiles by not understanding the way that options really work under the hood.
Phil Newton: I think to finish off, so on the assumption ... let's make an assumption here to try and put a little bit more rounding on. On the assumption, which we normally do, we're going to assume that you have a positive expectancy strategy, you're making money, and you're just looking for the best way to deploy that strategy. Trading stocks, it's more capital intensive, which means that with whatever cash that you've got, often you can't trade with the same type of portfolio experience that I like to suggest, which is anywhere from 20 to 30 stocks, one or two trades a day.
  Unless you've got exceedingly deep pockets, you're not gonna be able to trade that way with stocks, so you can't get the benefit of all the things that we're looking for in an average of 65% success rates and all the rest of it. However, with options, assuming that you're a buyer of options, then your risk is defined. You don't have to worry about stop losses, it's less capital intensive, and you get to trade with and control similar positions sizes for considerably lower margin requirements and risk up front, as it were. And your risk is defined, so if you're wrong, it doesn't matter if the black swan event happened the day after you put all your positions on, your risk is defined. The worst that could happen is you ... I rephrase it as ... you lose your deposits, like in the real world. You can't ever lose any more than the defined risk on the entry.
  However, same assumption with a positive expectancy strategy, as the seller of options there is naked options, if you're in that seller and it's naked options, meaning that there's no defined risk elements, then ... again the clue is in the name ... it's undefined risk. There is an extra element of risk involved. For example, if that black swan event happens and you're not able to exit your position, you can be liable for a large loss. So there is that extra element of risk involved, but the chances of that happening are very slim, which is why people do it.
Sean Donahoe: Absolutely. And again, trading naked is always risky. Someone might walk in on you. And you've got your obvious ... The way we trade is, we're very risk averse. We're very conservative when it comes to risk, but we try and capture the majority of any -
Phil Newton: You can't get the benefit of aggressive trading without time investments or capital investments. We're trying to find that blend of all the good things about aggressive trading and high risk, with a low risk and low capital twist. It's quite a unique blend, the way that we do it.
Sean Donahoe: Absolutely. And at the end of the day-
Phil Newton: I am biased of course, but it works.
Sean Donahoe: Yes, it does.
Phil Newton: And the proof of the pudding, an average success rate of 65% and many, many years of doing this, it seems to work out all right, Sean. Again, to refer back to my usual strapline, I am the poor boy that's figured out which buttons to press and in what order, and I've continued over the last 20 years, so it must be working odds.
Sean Donahoe: Absolutely. And just for reference, as well, just because I'm kind of doing this in real-time here, I closed out the rest of my Tesla trade. It went back below 380. It was starting to kick back a little bit on the five minute charts, and I felt, "Okay, it's reached its top. A lot of other people are thinking the same thing. 380 they capped out." So I capped out, that's it.
Phil Newton: To be fair, that's a good exit. I mean, 380 it's the upper end of the consolidation looking left across the chart. That's the target area that we were aiming for anyway. I think it moaned through it and not look back, which it had to the opportunity to do yesterday. It would have been great to, "Okay, this is the breakout. Strap in, boys, here we go." And it didn't do that. You saw the reaction yesterday. Today's probably -
Sean Donahoe: Yeah, looking at that, so thank you.
Phil Newton: It's better than mine. I exited a little bit long.
Sean Donahoe: There you go. But that's all good, so there you go. Anyway, but that really is, again, what we do. We look for risk defined trades. We look to avoid those headaches that most people get into with options, because they go about it wrong. They introduce a lot of extra risk where they don't need to and by doing so, just they can shoot portfolios full of holes. We don't wanna do that. We'd look a lot more production line, a lot more consistent, lot more solid approach, and again, that allows us to trade anywhere from 65-72% wherever we are, on average, and that's what we do, day in, day out. So, with that being said, I think that's it.
Phil Newton: That's good. Before we do , I just wanna quick tip, an extra tip, just because it was kind of relevant, talking about Tesla and the exits. Whatever happens now, it was a good exit. Pro tip for exiting in the future for our loving and adoring listener ... listeners is, making an exit, when it's reached your profit objective or a level that you're comfortable with, "Okay, I think I'm gonna take some profit here. I'm happy with that," usually do it at the end of the first 30 minutes or the end of the first 60 minutes.
Sean Donahoe: Which is where we are right now recording.
Phil Newton: Which is why I thought it was ... It just prompted me to mention it. Typically, because I try and make that decision at the end of the first hour of trading, because I'm usually sending an announcement in our newsletter to let our subscribers know, "Hey, this is what I'm doing." And after the first hour, I'm trying to do it in a way that means that I'm not looking at that reaction that there's a first hour yo-yo of price. It's like whatever happens at the first hour, that's probably gonna be where it is at some point through the day. So it's pretty fair for everyone, is all I'm trying to say.
  So the end of the first 30 minutes is usually a good time to evaluate, "Okay, should I take something?" You might get that first 30 minute rally, say, or movement, as it were. Same thing with the first hour. You're gonna get that first hour movement either up or down, and most of the time that's the bulk of the movement for the day. Obviously, it can trend for the rest of the day, but usually, the bulk of the movement on the day has been done in that time and it's usually a good time to exit.
Sean Donahoe: Absolutely. And again, like I said, what I was doing there, just to reaffirm, is there was a lot of momentum there from 377 to 380 and it went beyond that, and I thought, "Let's see if it's got -
Phil Newton: It was on a level that you were interested in, yeah, and it was the end of the first 30 minutes and it was kicking away from 380, let's get it.
Sean Donahoe: Yeah. So taking half a position off and let's see if it goes up or if it kicks back. And my goal was if it goes up, great. If it comes back to 380, I'll take the rest of it off. It went to 379.50 and that was my, "Okay, get out now, and that's it." And I just did that automatically. While we're talking, it automatically wanted to do.
Phil Newton: . And it ties in nicely with it hit the objective or the area, and we were in the first 30 minutes, or just after the first 30 minutes of trading in this case, as we're recording this.
Sean Donahoe: Yeah, that's it.
Phil Newton: Just a little side tip, if you're wondering how to exit, that's typically what I do.
Sean Donahoe: There you go. So, okay. With that being said, let's get onto our favorite piece.
Automated: Don't forget, if you have a question you want to ask Sean and Phil, just go to tradecanyon.com/rtquestions and your question may be featured on a future show. Uh-oh, what's that's smell? It's time to call out the Wall Street shenanigans, mainstream confusion and outright high jinks and hokum of so-called experts. Yep, it's time for Bullshit of the Week.
Sean Donahoe: Okay, so this should be called The Musk Show here today, I'm guessing, because this one is all about what happened yesterday, being Monday. Elon Musk's latest antics have Tesla hurtling into uncharted territory and could have legal ramifications for the CEO. So here's the thing, there's a lot of "controversy" and I put that in quotes, you could also call it hype or bullshit, about what Elon Musk actually did and why. On Monday, he put out a tweet saying he's considering taking Tesla private. Now, I said this weeks ago. I don't know if it was either to you, Phil, or to Andrew, I was saying this to, because we -
Phil Newton: Might have been Andrew. I don't recall you saying.
Sean Donahoe: I was saying that really the-
Phil Newton: that much attention.
Sean Donahoe: Could be. One of the things I was saying is, one of the smartest things Musk can do, if he had the opportunity to do it, was take Tesla private so he gets away from all these short battles and he's stopping having to be responsible to shareholders and actually build his company. Again, I get involved a lot with venture capital and investing and startups, and one of the things involved with that is when you take as company public, you're primary responsibility ends up being to the shareholders, not the company.
  Musk has several companies, obviously. He has SpaceX, which is not public, it's private. And they're going great. They're shooting for the moon and to Mars and every other part of the solar system, and they're doing fantastic. Their focus now, all the employees are shareholders, but it's a private company, which means as that company grows, everyone's got a vested interest. Similarly, with Tesla, most of the Tesla employees are shareholders. They get that as part of the business. So by Musk tweeting out ... absolutely. By-
Phil Newton: I'm just looking at the Business Insider article. I'm just really quickly reading the headlines. I've gotta admit, I'm shaking my head. The legal element, it also quotes Business Insider, UK, "It also raises some legal red flags, especially if any part of Musk's tweet is found to be untrue, according to a legal expert interviewed by Business Insider." Personally, I think that comment is bullshit in and of itself. The very fact that he's tweeted, "I'm considering this," is evidence that he considering it, therefore, it must be true because he's just tweeted that, "I'm considering it." Now how can there be legal ramifications of it not being true if he's just said, "I'm thinking about doing this?"
Sean Donahoe: Well, there's an aspect ... There was actually what the former head of the SEC was saying, because he's coming out making these statements ... and I'm no legal scholar. I think it's bullshit, as well. But he was saying, because he says he's secured funding to do this, if he hasn't secured funding, there's actually an opportunity there, or there could be an argument made by all these short sellers who he's just swiftly kicked in the balls. All the short sellers, the guys who are putting millions and millions of dollars and shorting this company, putting that downward pressure on them, by doing this, what he's done is he's raised the projected stock target to $420, which means ... And he ratified this with a letter later in the day saying, "This is our plan. This is what we've said to our employees. This is what we're looking at. This is the reasons why. We don't wanna be legally beholden to shareholders. We wanna focus on building the best company, the best products and ."
Phil Newton: Make perfect sense. I can see the logic for it, completely.
Sean Donahoe: Absolutely, and it's exactly what I was saying would be the best for Tesla, is because they're always battling for shareholders every quarter to keep the stock price-
Phil Newton: Accountable to them or, "What are you doing here?"
Sean Donahoe: ... it takes away focus from the building and the growing of the business. it's exactly what I'm saying.
Phil Newton: Yeah. Let him do what he's good at doing, which is ... He's batshit crazy, just let him go and do it. Just let him do it. He's going to Mars, for crying out loud. You bought into that. It's your fault.
Sean Donahoe: Yeah. The funny thing is, you're saying, "Oh, this could be stock manipulation." Well, here's an extra level of bullshit, all of the short sellers who are shorting the company are appearing on the news networks saying why they're shorting. They're putting out big news articles or press releases, "We're shorting because we feel this. We're shorting ..." So they're getting lots and lots of-
Phil Newton: Who are they trying to convince, the public or themselves?
Sean Donahoe: The public ... Well, here's the thing, they're creating that sentiment of shift, thus manipulating the stock perception, investor sentiment, and manipulating things. So when Musk comes out with less than 140 characters and says, "I'm considering taking the company private at $420 per share," in less than 140 characters, "No, that's stock manipulation right there." Okay, you're appearing on every news network you can, swinging your Johnson at the screen, telling everyone, "I'm shorting the stock and here's why we're putting millions against Tesla. This is what we think about Musk and this is what we're thinking about their business." This is-
Phil Newton: Who's that hedge fund dude that's famous for going on TV saying that and he's got a very vested interest because he's just gobbled up all the sort interest on whatever he's talking about?
Sean Donahoe: This one who did ... he was Shopified, everything else. I can't remember his name.
Phil Newton: Yeah, I can't remember the guy's name either, but there's a typically famous ... He's famous for being famous in the hedge fund world, isn't he?
Sean Donahoe: Yeah, pretty much.
Phil Newton: Just because he's on TV talking crap about something. I've gotta admit, whole thing is, it's blown out of all proportion-
Sean Donahoe: Here's the beautiful thing, as well-
Phil Newton: ... because I think that's the only thing ... Just the way that ... I'm struggling to find something to talk about here, Sean, in an articulate way, without getting on my soap box here, so I might just have to step back and just go, "Oh, fuck it," basically.
Sean Donahoe: Well, here's the thing-
Phil Newton: It's exasperating when you see stuff like this, because it's the way that the news talk, the media, the talking heads, talk about this and then suggesting that it's not the , but he might have broken the law and the SECs gotta investigate it. They've not said that, but they've suggested it enough that when you relate the conversation to someone in polite conversation, "Oh, it looks like Musk's broken the law again," you're on the that confirmation bias that we're talking about. If you're negative or a short seller, you're gonna run with, "He's broke the law and SEC's going to investigate him." And whether he is or he isn't, it's Chinese whispers. The media, the talking heads, are the worse propagators of it. This is what frustrates the crap out of me.
  The very fact that he put that tweet out there is evidence that he is thinking about it, and if he's secured funding, well, what if he's just secured funding for one and it's start of the campaign. He only has to have someone give him $420 to start the campaign, and there's your evidence. It's complete ... in those cases, it's bullshit on both sides of the fence, if that's what's actually happened and someone's given him $420 to secure one share and start the process off. Equally, it's bullshit by saying that he's broken the law and blah-blah-blah and all the other stuff that's gone on in the news. Either way, depending on your perspective, whether you're for it or against it, you can spin the argument anyway you want.
Sean Donahoe: Exactly. It's bullshit. It's bullshit, it's chicken shit, it's a whole pile of shit, at the end of the day. I've actually published-
Phil Newton: It's in the news. It's all bullshit.
Sean Donahoe: For me, I've published the letter he posted on the show notes, so go check that out.
Phil Newton: Perfect.
Sean Donahoe: You can go see-
Phil Newton: I might just do that, as well.
Sean Donahoe: You can go and have a look at that and you can see the rationale. I think the rationale is absolutely brilliant. It allows the shareholders to, if they want to, the public shareholders to become private shareholders, which allows the company to do ... what it is, you become more of an investor than a trader. You've got the option or they're talking about those-
Phil Newton: -
Sean Donahoe: Which, when you consider most people getting in to private deals usually can't do it, they have to be public, this is a great, I think, investor opportunity. I would certainly consider it, because I think, again, Tesla has a long way to go in terms of what they can do and I think they're only just starting on a fantastic journey.
Phil Newton: Which could go all the way to Mars.
Sean Donahoe: Absolutely. Including colonizing the damn planet, which you can't knock. Well, that's more SpaceX more than anything else, but again, when you think about Tesla technology and everything else, I think that's an interesting thing. It was something I would seriously consider. But in terms of what's happening right now, which is what we're talking about, a lot of hype and a lot of bullshit. A lot of people swinging their Johnsons back at the screen. Again, just look at the-
Phil Newton: Measuring maybe be involved, but we can other confirm or deny that.
Sean Donahoe: Exactly. But again, I think it's a very smart move if Tesla did go ahead and do that. I would feel bad because I've made a lot of money with Tesla, trading it with all this volatility and all this activity, but for the company itself, I think it's a smart -
Phil Newton: He's doing what's best for the company, yeah. I think that's the interesting thing. He's trying to think what's best for the company, not the shareholders.
Sean Donahoe: I saw, there was someone went ... there was a few ... and I put them ... they call themselves market professionals, read hacks, that were saying, "Oh, he doesn't want to be the CEO of a public company. He doesn't have what it takes. He's shown that he doesn't care about shareholders." I'm like, "No, he cares about this company that he's building."
Phil Newton: exact opposite, personally.
Sean Donahoe: I think he's actually taking care of, again, his employees, who are shareholders. He's taking care of the company and focusing on the company growth, which is-
Phil Newton: The fact that he is allowing the opportunity for private investors, which is kind of like saying you're gonna have to do it, probably, through some type of venture capital type fund, but you'd still have the opportunity to invest. It's just gonna have to be private. You're gonna have to buy in . There's that doorway is open. And I think that's interesting because, "Hey, you can still be a shareholder, you can be an investor, but it's just not gonna be publicly limited. I want people who are in it for the long haul." I think that's an interesting idea, an interesting prospect. Not just looking for the quick buck to trade Tesla. If you're seriously invested in the company for the long term, then you'll be quite happy to probably your money in and join them for the ride. Again, lots of puns and they're all intended.
Sean Donahoe: Yeah, absolutely. Now, the interesting thing is, a lot of the companies I'm involved with, I wanna keep them all private. I would never want to be, per se, and I put this in quotes, "a publicly traded company," because of this very reason that he's outlined, is that you are responsible then to the shareholders and to the executive board and everything else.
Phil Newton: Yeah, and that's for the company. I think that's what publicly, he's constantly fighting against, which makes it an interesting ... again. I just quickly skimmed up. But it does make it interesting looking at some of the details that I've read through there. I think it's a good thing. I'm always in favor when executives are talking about buy backs. I personally think it's a good thing. It's good, instead of sending out dividends, they should operate a share buy back scheme, or pay down your debts. I think there's better things to do with company profits, because if you have got a company that's in debt and you're paying dividends, I don't get why they would do that, because you're gonna continue to be in debt. Maybe they should pay it down, do some buy backs. That's good for the shareholders. It really is. I just don't agree with some of the ways that businesses, publicly traded companies, get operated. That's your argument for not being involved on that side of the investment equation.
Sean Donahoe: No, again, outside of ... I could go in to a little bit of a soapbox rant myself, this ... holding a lot of debt can actually give you a lot of leverage in different things, different strategies, from a business side, but in general, if you're working the cash positive and you're working in the black all the time, you're not working -
Phil Newton: But that's the point of debt.
Sean Donahoe: Then again, that allows you to have more capacity to do more things and operate at a profit, which at the end of the day, all businesses should be. However, in the growth space, if you look at Amazon, spent many, many years at no profit because they were plowing everything back into building and growing a business. Jeff Bezos spent most of his time talking to shareholders and investors trying to convince them to, "Stick with it, stick with it. We got a plan."
Phil Newton: He had a long-term vision. He had a plan. That, I can completely buy into.
Sean Donahoe: Again, Musk is in that same situation, convincing investors to, "Stick with it, stick with it," but he's doing it on a constant battle with shareholders against the short sellers. And basically, what he's just done is all those short sellers who have literally millions or even billions, tens of millions to billions, in short positions against the company, putting all that pressure, he's just basically turned round and given, in less than 140 characters, a swift kick in the balls. If they were trying to short the company, they are hurting right now, and they're look for payback, either ... probably through ... there's conversations about suing Musk for this tweet and everything else, and there's sorts of bullshit going in and around it. So I would say continue to watch this episode of General Hospital here, or Emmerdale.
Phil Newton: I was just gonna say, it's like some daytime drama. When you put it into that context, it is a daytime drama, isn't it?
Sean Donahoe: It is, but at the end of the day, look behind the story. Look at the fundamentals. Look at -
Phil Newton: If the talking heads presented it in that way, I would wholeheartedly watch that soap opera.
Sean Donahoe: There you .
Phil Newton: But at least you know it would be like 100% entertainment value that they're just painting a very comedy driven narrative about ... that would be a very interesting way to view the markets.
Sean Donahoe: Yeah, there you go. Today, on Musk Time, Elon Musk, did he do this? Did he do this? Yes, indeed. So yeah, it's ridiculous. It's ridiculous. But there you go. That's Bullshit of the Week, and that's it for this episode of Rebel Traders Podcast. Hope you've enjoyed. There's a lot of ground we covered there. A lot of ideas. But again, please remember this is not free. Go to tradecanyon.com/rebeltraders, leave us a five star review on whichever platform you like to listen to us on, and you can also subscribe, review us there, and you can also get access to some free training, some cool stuff that we do. We kind of break down some of our strategies and everything else. Lots and lots of ways to make things happen.
Phil Newton: Sure. You can also click to this on social medias, the Facebooks, the Twitters, at the same link. You can find the links to the links at tradecanyon.com/rebeltraders. If you're like me and you're not so much of a social flower, you wanna send me an email, you can get to me at [email protected] If you wanna shoot me a message over, that'd be quite interesting. I'd like to make myself accessible, as we said in last week's show, and we realized recently that because I'm not too social, it's not as obvious to get to me on the social medias, because I've missed a few messages and I don't wanna miss the messages from our loving and adoring listeners.
Sean Donahoe: Absolutely.
Phil Newton: Anyway, with that said, what have we got coming up in next week's show, Sean? It'd better be interesting? What have we got? What have we got?
Sean Donahoe: We're gonna be talking about dirty tricks and filthy secrets. Sounds like an episode of, "Ooh." Can we act like a bloody ... not a daytime soap opera, but-
Phil Newton: Ooh, titter. Bit of a Frankie Howerd thing with like Up Pompeii or something.
Sean Donahoe: Yeah, absolutely. We're gonna be looking at, basically, the sneaky things that happen in the markets with brokers, with, basically, this entire industry. We're gonna call out a few of them and have a little fun with them. So again, with that being said, I look forward to doing that show with you. We'll see you all next time. Take care for now.
Phil Newton: Bye for now.
Automated: For more cutting edge trading advice and a free trader workshop to help you build a personalized trading plan and make smarter decisions, go to tradecanyon.com now.
Automated: Futures, options on futures, stock and stock options trading involves a substantial degree of risk. It may not be suitable for all investors. Past performance is not necessarily indicative of future results. Trade Canyon Incorporated provides only training and educational information. If you actually understood and listened to this, then that means you are awesome. Congratulations and well done. Notice, this product may contain nuts.

(Click the time stamp to jump directly to that point in the episode.)

[00:05] Show Introduction

[00:00:45] Sean: It is time to step into the thunderdome, two traders with different approaches to the same trades. We’re going to break down and examine exactly what led us to these decisions that we made and exactly why.

[00:02:00] Sean: We’ve got several trades recently that we have been doing and trading ourselves and one of them stood out from the crowd. What I wanted to do was do a comparison between what I was doing and why and what Phil was doing. First of all, we’re going to talk about Twitter. Off the back of Facebook’ s earnings I was already expecting this. Now, I was short on Twitter and I was also short Facebook.

[00:03:55] Phil: You had more of a fundamental approach, you had news triggers, you had a little bit of an expectation.

[00:04:16] Sean: One of the things that I look at is future projecting.

[00:05:48] Sean: The one thing with this particular trade, funnily enough with all the privacy over the last few months, I was short both Facebook and Twitter and I was doing it ahead of earnings. A lot of analysts I know were already expecting, there was a little bit of a decline mostly with Twitter. There was a little bit of rally before earnings but with Facebook the crowd was wrong.

[00:07:14] Phil: Typically, the move prior to the news is indicative of the post-news movement.

[00:08:50] Phil: These events have happened before, it gives me a bareish bias.

[00:10:30] Phil: When the news comes out there will be typically volatility contraction.

[00:14:30] Sean: We did a show about the top ten traders in the world and all the trades from history that are public knowledge. One of the things that was common was their awareness, their experience, and their ability to see things in the future or the full picture.

[00:15:12] Sean: If you have the right strategy, you have the ability to fast track pretty much everything and gain that experience as you go.

[00:19:35] Sean: Let’s switch gears to Tesla. Going into earnings, I have been following Tesla quite closely because there’s been a lot of media. It’s the most shorted company ever.

[00:20:19] Phil: According to the news headlines.

[00:20:20] Sean: I’ve looked at the numbers on this and they ratified it with actual numbers.

[00:21:10] Phil: You hear something, qualify it. Don’t just take what we say on face values. Go and investigate it and see if it’s right for you.

[00:23:13] Sean: Is their intent the same as your intent?

[00:24:38] Sean: Looking at the numbers, they’re cutting it close to the line in terms of their budget, the pressure they are under.

[00:28:49] Sean: Just talking about going into earnings, looking out from a long perspective, they had announced they had almost hit their production numbers. Having the first affordable one and mass production and those numbers being hit, I thought it was transitional. I really thought this was something and I went long, I feel very strongly going into earnings it’s going to be good news.

[00:32:11] Phil: If you’re the type of person that loves read and get the finger on the pulse, follow all the big CEOs this is a perfect blueprint. What’s the narrative, what’s price doing ahead of earnings, is price behaving in a way that is complimenting the narrative.

[00:35:22] Sean: It’s kicked off tremendously and I’m probably going to get out of the trade this morning. I’m looking at live as we go.

[00:37:16] Phil: I set my trade up on the 6th July, my alert went out to all our subscribers prior to the markets opening.

[00:41:05] Sean: A lot of the pressure came in around March, this is where the interest kicked off and there was a lot of short-selling. Then it became a battle of wills and then all the way through June, Musk went to town on them.

[00:42:30] Phil: this is my whole argument, I don’t need to know what the headlines are because the behavior in price will tell me what the people with money and influence are really thinking.

[00:44:03] Sean: Two different approaches, two different angles, both of them valid.

[00:44:12] Rebel Trader Tip of the Week

[00:44:31] Sean: Ideas can come from anywhere, it can come at the gym when, it can come from awareness, maybe a news item.

[00:44:59] Phil: We’ve spoken about this, it’s a good way to raise awareness. Sometimes having a big universe of stocks is quite overwhelming for a lot of new traders so edge yourself into the water.

[00:48:16] Sean: My money is more important than my opinion.

[00:48:22] Phil: Make sure it aligns with your values.

[00:] Quickfire Round

[00:50:40] Sean: What is a dead cat bounce exactly?

[00:51:04] Phil: A dead cat bounce is typically a term that is when you’ve seen a stock or an instrument have a big sell-off that’s usually quite sharp and possibly unexpected, it might be news-driven, and the reaction when it’s hit bottom, we don’t know where that is which always makes me laugh because you don’t know. It’s one of those after the event patterns. It’s the reaction when whatever sell-off has happened, there’s a little bit of a reaction.

[00:53:36] Phil: Which brokerage is best for trading intraday?

[00:53:55] Sean: The standard answer, it doesn’t matter. We don’t have any recommend broker, we have ones that we use, we have n agreement with them. It’s just what we may use because it works for us but that may not work for you.

[00:55:14] Phil: What do you want it for? Let go of the ‘which is the best’ questions as there is no right answer, just go try some.

[00:58:20] Sean: Is it true that trading options is riskier than trading the underlying stocks?

[00:58:35] Yes and no depending on what you’re doing with stocks. If you don’t know what you’re doing you’re non going to make money.

[00:59:37] Sean: A lot of people really don’t understand options and the mechanics so that at the end of the day they’re creating their own extra risk profiles by not understanding the way that options really work.

[01:07:22] Bulls**t of the Week

[01:07:33] Sean: This one is all about what happened Monday,Elon Musk's latest antics have Tesla hurtling into uncharted territory — and could have legal ramifications for the CEO.’ Here’s the thing, there’s a lot of controversy about what Elon Musk actually did and why. He put out a tweet saying he’s considering taking Telsa private. One of the things I’ve been saying is one of the smartest things Musk could do is take Tesla private.

[01:10:19] Sean: The former head of the SCC was saying because he’s coming out and making these statements, if he hasn’t secured funding to do this, there’s an opportunity there or an argument made there for all these short-sellers who he’s just swiftly kicked.

[01:11:40] Phil: Just let him go and do it, he’s going to mars, you’ve bought into that.

[01:14:54] Phil: It’s bulls**t on both sides of the fence if that’s actually happened.

[01:16:25] Sean: I’ve posted the letter on the show notes so go read that. I think the rationale is absolutely brilliant.

[01:23:04] Sean: Okay, that's it for this episode of Rebel Traders Podcast. Thank you for listening to the show!Please remember that this show is not free.It will cost you a five-star review, just go to tradecanyon.com/rebeltraderswhere you can get access to previous and future shows, subscribe, and review us on your favorite way to hear the show.

[01:23:36] Phil: You can also connect with us on social media on Facebook and on Twitter also attradecanyon.com/rebeltraders What have we got coming up in next week’s show Sean?

[01:24:24] Sean: We’re going to be talking about dirty tricks and filthy secrets.

Resources & Links Mentioned in This Week's Show

3 Key Takeaways From This Show

  • A good strategy can be worth years of experience
  • Trust and Verify your ideas. As you gain experience you will be able to see opportunities and know how to validate ideas.
  • Only allocate a percentage of your capital to speculative trades to minimize risk exposure

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