Rebel Traders 070 : Checking the Pulse

The first thing we do before we place a trade is check the pulse of the market. In this week’s show, we show discuss how we do it...

One of the first things we do every morning, before we start trading, is get the pulse of the markets.

It’s a critical thing to understand where the herd may be moving to if you want to pick out a few nice juicy steaks for the day.

We like to look at a few “Markers” such as the broad market futures (Dow Jones, S&P500, Nasdaq and Russel 2000) as well as a few other markets to see how the sentiment and the flow of the markets is looking in real-time before the main trading day starts.

This gives us a kickstart and may provide clues as to how the first hour of trading (The power hour) may unfold and that information could well effect if we place our trades or wait for a wee bit of confirmation first to fine tune our entry points.

So, in this weeks show, we dive in to how exactly we look at the markets to get it’s pulse and check the vital signs and how you can too.

Time Stamped Show Notes

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Sean Donahoe: Before we start trading, we always want to get a gauge of the pulse of the markets. Are you ready to do it? Let's rock.
Automated: Rebel Traders takes you inside the world of two underground monster traders who take an entertaining and contrarian look at the markets 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 welcome to the Rebel Traders podcast. We have a lot going on today and as always, I am joined by my partner in podcasting, the man with some sort of a plan who occasionally gets pissed off when he's reading his book. How are you doing Phil?
Phil Newton: I'm pretty good. That was a reference to my venting just before the show. Apart from that, I'm doing fine. Yes, I'm doing fine today.
Sean Donahoe: Okay, good. Yeah, he was just telling me about a guy who was bugging him for information.
Phil Newton: It was one of those conversations, and it's like, "Dude, I'm reading a book." I don't want to talk to anyone.
Sean Donahoe: Yeah. Don't try to pick Phil's brain if he's got a book in his hand, you're likely to get smacked with it.
But there you go, anyway, it's all good?
Phil Newton: To be fair, Sean, it wouldn't have been so bad if he had said, "Excuse me, would you mind if I joined you?" But no, he went straight in for the leg horn. Remember that scene in ... Doctor Evil and Mini-Me? He was like that. It was just . It was ridiculous.
Sean Donahoe: That's . We all need bleach to get it out of our heads.
But anyway, there you go. Good stuff.
So anyway, yes. Today's show we're going to be talking about game across the markets. Because, you know what, it's easy being a lion, lounging on the rocks, watching the herd roll by, when you know which direction that herd is actually going or what pressures are moving them forward.
It's the same with the markets as we prepare to place our trades. We look over the edge of the rocks to see which way the wind is blowing and the stakes are moving. And what has happened overnight, how the markets are moving, before we place the trades of the day.
We like to get a true pulse of the market, so what we're going to do in today's show is we'll show you exactly how we do that.
Phil Newton: Perfect, yes.
We've also got ... to be fair, Phil's pulse is already racing because of this conversation
Sean Donahoe: He's pulling tachycardia, get the paddles.
Phil Newton: We're gonna continue illustrating this later on in the show as well. We've got our favorite section of the show, well, my favorite anyway, the Trade, Fade or Evade where we take a little peek over our shoulder, we look over across the Savannah, and we say, "I'm gonna trade this today. Which one is gonna be juicy for the pickings?"
Sean Donahoe: Absolutely. And this week we're doing 'stocks that are in their process of post-earning.' We are in earning season so we're gonna be looking at stocks that have reported Monday, Tuesday earnings
Phil Newton: live five months ago when we had last ends.
Sean Donahoe: It's repetitive, and it's getting old, this earning stuff, isn't it?
Phil Newton: Interesting.
Sean Donahoe: Anyway, okay let's rock and roll. Let's start with, first of all, why do you need to check the pulse of the markets? What's the reason for this?
So Phil where would you like to start with this one? Why do we check the pulse of the market? Why do we want to see what's going on in the broad marketplace? That's what we really talk about.
Phil Newton: I've got to admit, I do it less and less, but it's still the first thing I check. 'Cause usually I will check the ... visually I would go through the charts, check the main indexes, and from whatever you're trading. So, you know, if you're a futures trader you check futures, it might be the commodities you check the main commodities. Broadly speaking, you're gonna check whatever your main pulse measurement is. From our perspective, we trade U.S. stocks in the U.S. stock market, so when we're referring to 'the markets' it's usually people talk about the S&P 500 as a representation of the markets.
So with that said, that's to be the first thing that's gonna happen. You know, futures these days, most of them trade 24 hours a day, so it's very easy to see what has happened and the pulse of the global markets without looking at the global markets anymore. You can just check the S&P 500 on the futures ... well it's not quite 24 hours, it might as well be. But you can check the pulse quite easily. You know, has there been a big overnight movement, that would be represented on the cash markets by a gap up or a gap down if there has been. And you can kind of see what is going on very easily.
That's typically the first thing that I do. Has there been any major movements overnight. Because that might influence some decisions that I might make later on, usually from a management perspective. Like we saw most recently where there were some major, major movements and I was spending, because of it, a little bit more time at the desk than I might normally do because there were some crazy things going on.
So knowing that something crazy is going on is gonna be important. It doesn't happen every day, but you can certainly get that pulse. 'Cause like right now, we're kind of like post what everyone was talking about, the apocalyptic movements of last week. And it turns out it's not as bad as everyone was talking about. Surprise. But nevertheless, the S&P futures, as we're dealing with right now, they're down 12 1/2 points and it's pre-market. We're about an hour before the official market opens. And you know we're about 12 1/2 points down.
And that's a fairly reasonable movement by anyone's measure. It's pretty small by comparison to the last several days where we're talking 50, 60, 70 point moves in a single day. But for typically the most quiet period of the day, the overnight futures or the Asian market section of the day, 12 1/2 points, that's a big move, during the least volatile time, the lowest volume period, and the markets aren't officially open yet. And yet there's movement.
So that could be a leading indication of, well, the open of today's probably gonna be pretty exciting. There's gonna be some movement. Maybe there's gonna be a little bit more gapping stocks than usual, that might provide opportunities if you're a day trader. So maybe ... I mean, one thing that I'm looking at at the moment is I'm gonna restart a few other strategies that we were talking about. So maybe, looking for those gapping trades might provide a quick short-term trade, a day or a short-term two, three day swing trade. So knowing that might say, okay, today's gonna be a good day for that strategy because there's probably gonna be a lot of gaps and I can maybe clear my schedule, I can start to plan my day because I know that I might spend, instead of the usual 30 or so minutes, I might want to spend two or three hours because I might want to be a little bit more active, influence the charts, and apply this particular strategy. This is ... does that make sense, Sean? Just trying to give you the insight to what I might be thinking based on what I'm looking at right now.
Sean Donahoe: No, absolutely. That's the essence of what we like to do. We look at, for example the S&P 500, Dow, the Nasdaq, and then the Russell 2000 as well because again, we talk about the different sized boats in the canal, Russell tends to move faster, you can see trends, you can see, okay we've had a turnaround in the last few days, we bottomed out from the nosedive that everyone was saying, you know chicken little, 'Oh the sky is falling, sky is falling.' And it's a wonderful day today, as the news media
Phil Newton: The conversation of talking heads is so amusing. 'Cause it was literally, the world is coming to an end. People out in the streets on sandwich boards.
Sean Donahoe: Exactly.
Phil Newton: And then literally within 48 hours it was, "Ah well, maybe it's not as bad as what we thought."
Sean Donahoe: Indeed. You know, it's crazy ... but it's all hype. It reminds me, there's a ... if you're into comedians, Billy Connolly had a great skit about-
Phil Newton:
Sean Donahoe: Yes, indeed. I don't want to do with that.
Billy Connolly is a little blue in terms of his swearing, which is typical Scottish. But one of the things he was talking about, he was watching ... he had this great skit about watching daytime TV and one of those kind of horoscope psychics on there saying, "Oh it's gonna be the end of the world, it's predicted. End of the world's gonna be this Tuesday at five o'clock. Everything's gonna go, it's gonna be..."
You know, the predictor's or that. And you know, he's talking about this, gonna be the end of the world, one of those kind of just crazy comments. Then come Wednesday, the day after, he said there is like on there, "Oh, if you look at the tea leaves here." And it's just like it never happened.
And he's like, "What the hell?" That's kind of our reaction to the, love with the financial news media. Because we look at that-
Phil Newton: We could literally take out Mystic Meg's name there and just put a Jim Cramer in, couldn't you?
Sean Donahoe: I'm not sure about any of these guys.
And it's just like, they're always talking about what has happened. Like, "Oh, well it happened because of this." Well, no, during it they're scrambling to figure it out, but they're talking about it like they're a massive authority, and then suddenly the markets turn around. It's just the normal flow.
Phil Newton: It's an opinion, and they're there for entertainment, for eyeballs, because, let's go to the output break. Because that's how they make their money.
We're not bashing that as a business model, it's just, you've gotta take it with a pinch of salt. You've gotta treat it for what it is, which is, you're not gonna make investment or trading decisions based off what you see on the TV.
Sean Donahoe: It's got to be filtered. Don't get me wrong, there is information there, there are things you can glean, but you've got to filter it through your cognitive biases.
Phil Newton: As we say, the best way of using it is, if they're talking about something, whatever the something is, use it to raise your awareness. "Oh, I didn't see that in my usual checking of the pulse, you know, looking at the headlines." Or whatever your normal routine is. Maybe you go and take a look at Starbucks 'cause they're talking about it in the news. And then, if it meets your criteria for your usual trade set of conditions and set up flow, then yeah, it makes sense to put the trade on. Your awareness was raised. And if it doesn't make sense, you don't need to do anything with it. That's the trigger.
'Cause most people think, "Oh, well, so-and-So's talking about it in the news. Well maybe I should go and do something with it." And that's why that lemmings-falling-off-the-cliff experience happens, because everyone was ... we saw a great example of that recently. Everyone's talking doom and gloom in the markets and, you know, my default reaction is to look the other way, and I was waiting for the opposite movement. And you know to be fair, we were talking about it as it was happening in real time. It went a little bit further than we thought, but nevertheless the turnaround eventually happened. Because we were waiting for it. We've seen these things happen time and time again.
To be fair, Sean, you've actually raised an interesting point. When you're talking about the indexes, you're looking not just at the S&P or the Dow or the Nasdaq or the Russell, you're looking at the more ... I mean, I'm looking at all of mine in a watch list, and for anyone who's in the Facebook group, you'll see me talk about using it in a watch list. It's kind of like a spreadsheet, it's just a new charting platform. And you can see everything all side-by-side, and I've got the same thing with the stock index futures. So I can see all of them next to each other.
And what you might spot is an anomaly. 'Cause we like to look for those price extremes or when something different has happened. So it might be, as you quickly glance ... it's funny, I always think, Sean, it's longer to explain all this than it is to actually do it. This all happened in a few-
Sean Donahoe: It takes seconds. Five seconds, if that.
I mean,
Phil Newton: You're talking about, from, you have them in a grid from the chart point-
Sean Donahoe: Correct.
Phil Newton: So you've got like a snapshot grid. If you don't have time or the space or whatever, you can have that initial look at the, not just the watch list ... so you've got the symbols and what I'm looking at is net change as a point value, net change as a percentage value, and then I've got the actual current trader price. And it's a percentage, that's what I'm looking at. So you're able to say, maybe ... for example, the Russell is down about .1 of a percent, according to my futures data. And the S&P is down .4 percent, Dow's down .5 percent, Nasdaq's down .5 percent. So what I can see is, there's a little bit of disparity between the Russell, the Russell's holding ground as everything else is selling off about half percent. Half percents run about ten points, a hundred Dow points, hundred and fifty, somewhere around there.
But what I'm trying to highlight is this, a little bit of a mismatch between what's going on through the indexes. And one of them is actually ... it's got really moved. It's around about where it's going to open up, or where it closed yesterday. It's not moved that much by comparison. So I'm able to spot a temporary anomaly. And that might provide an opportunity if I wanted to quickly jump in on the futures, I can then go and highlight an opportunity that, it doesn't happen every day, but you can spot that very quickly. "Oh, there's a trade opportunity."
We spoke about this before, in the past where ... you can do this visually as well on your chart grid, you're looking at six charts, and maybe one of them takes off like a freight train, second one takes off like a freight train, and it's just not 15, 20 minute delay between one index and another index, put into movements. So maybe you can kind of jump on the shirttails of the broad market starting to move because that was led one of the indexes.
And usually there's a leader, one of them starts the move first. It might be the Russell this month, it might be the Nasdaq next month, it might be the Dow the month after. But they all kind of take turns of leading the way. If you're looking at that every day and checking the pulse, and there's no right way or wrong way, but if you can start to see ... we've spoken before, we've seen it quite consistently, that the Russell seems to be leading the way in many instances before the broad market, the S&P starts to put in the movement. So you can kind of take it as a leading indication, and that might provide a quick trading opportunity for a day or a few days or maybe even a week or so, if you wanted to trade the futures. Again, it's still a low-maintenance type of trade. But it just highlights that, something interesting's happened, something that doesn't normally happen.
'Cause the markets usually ebb and flow and move in harmony. And what we've spotted is that this harmonious thing, whatever you've spotted, that anomaly ... again, it raises your awareness because you're just checking the pulse of the market. "Oh, the Russell's doing something a little bit funky compared to everything else. Maybe I go and look at , maybe I go and look at Dow stocks, maybe I go and look at Nasdaq stocks, because something funky is going on, that could provide the opportunity."
Sean Donahoe: Well to give you a case in point, I mean, with the Russell, over the last few weeks it has been dipping faster and harder than any of the other ones. And we were talking about this because it was the awareness of ... how to get the point we like to make is, that the Russell turns in the canal as a faster boat than all the others. So that made my portfolio because I had an awareness of that. I'm like, "Well, you know what, that's making me a little bit more bearish, let me balance out my portfolio with more short positions, because the broad markets take a hit." And they took a dip faster than I expected. We had that little pause and I was bear, I was bullish on the balls back on ... well, Monday, Tuesday, before the big dip on Wednesday.
Phil Newton: I'm not as an aggressive trader as yourself these days, but I remember you saying, you said, "I'm getting a piece of this, Phil."
I was like, "Fine, I'm sitting on the couch watching a movie," 'cause of our time difference, that was my evening. And I'm chilling out. I'm just cashing out on the phone, I'm not looking to load up.
But yeah, it raises your awareness if you've got the means and the ability to do a little bit extra, then you can do. I think it's come back to the point is, having your brief glance of what the overall market is doing that measures whether you look at the futures or you look at the ETF versions of the indexes from a stock point of view. You know, however you appraise the markets, there's an opportunity. And it's not an everyday thing, but when the situation arises, you might just spot that ... well slight differences happening. Or maybe you spot like you were just describing, "Well, the Russell, it seems to be selling off harder and faster than the others. So maybe on the next rally, I get in on that." And maybe that's when you increase your position signs. Because it's a situational thing that you've spotted, a temporary thing, and you fill your bids on the Russell versus the Dow or the S&P.
Sean Donahoe: Exactly. And you know, it just allows you to kind of get a feel for ... because here's the thing, you've gotta remember that a lot of these futures, these indexes, are made up of all the underlying stocks. So what's happening in the broad market is also happening to the underlying stocks, because it's making the move happen. So having a look at, "Okay, well if the broad markets are looking like they're about to turn and be very bearish," well that means the individual stocks underneath are also, again, echoing that same thing so you can then leverage that, which ones make up the majority of them, all that will be Apple, Amazon, stocks, you know. All the other ones that are major components of pretty much all of them. And then again, those are the short positions, "Okay, fine, I can bet position across multiple instruments in multiple ways to leverage the capital in the most efficient way."
So it becomes interesting little way to smell blood in the water, so to speak, or smell the roses.
Phil Newton: Winds of change.
Sean Donahoe: There you go.
Phil Newton: The winds of change. Maybe we make it child friendly and we say it's like that scene in Mary Poppins where the weather vane changes, when the wind of change just turns around and Mary Poppins just floats in.
Sean Donahoe: Well indeed, there you go.
Phil Newton: Mary Poppins being the opportunity for the trade, obviously.
Sean Donahoe: Dear me. That's a mental image that's gonna work. Apparently they're remaking the Mary Poppins, so ...
Phil Newton: Yeah, you know, I'm looking forward to it actually. I've seen a few trailers for it, it feels a little like they've done okay with it, 'cause usually these remakes, they're a little bit, I don't think I'm gonna bother. The biggest disappointment has got to be Ghostbusters, I think they ruined one of my all-time favorite movies.
Sean Donahoe: Indeed.
Phil Newton: Anyway, before Phil gets on a depressive soap box about movies.
Sean Donahoe: Indeed.
So, the other one that we look at, which is, I've gotta throw in there, is the fear gauge. Now this is obviously the Vix, if you've not heard of it, you probably have, the Vix is kind of measurement of volatility in auctions pricing within the S&P 500. And that kind of is referred to as the fear index. And that can give you an idea about which way the feeling of the market is. If it goes up, it tends to be, make all the broad markets a little bit bearish, if it goes down, conversely, that means that the fear is subsiding, that means people are happy and money starts going back into the market. Now there is a strong correlation between those, it can be argued.
Phil Newton: I was just gonna say, just like that children's nursery rhyme, and when it's only halfway up ...
Sean Donahoe: You've got ...
Phil Newton: . When it's up, it's up. When it's down, it's down.
Sean Donahoe: There's no Viagra involved, yes.
Phil Newton: It's a good indication, as you were saying, before I derailed you. Well, it was intentional this time. It's a good indication at fear. Usually when things sell off, that's usually when people get scared, because people start worrying about, "Oh, look at the money I'm losing, look at the pension fund, the retirement fund is disappearing." So that's what you mean by 'the fear.' And because they don't want to lose more money on that investment opportunity they're looking at, then stupidly they close the position. And then that causes more pandemonium, or it can cause more pandemonium in the instruments or the markets.
And that's usually why we see the Dow moves faster, and you've described them as circuit breakers in the past, haven't you Sean?
Sean Donahoe: Yeah, absolutely. I mean if you look at any of these, if you see like a sudden big boom move, that's usually a big change or a big spike going somewhere, and that is, "Oh, circuit breaker time." That's when everything drops or switches off or we kick around around.
Phil Newton: And that's when the bears get blamed, "Oh, it's the shorters doing this." No, it's just stop loss orders being hit, it's just algorithms triggering because conditions are being met. It's the circuit breaker that you've put in for your trade being hit en masse because everyone's got their percentage stop-loss triggered and it's closing a position, it's just causing a little bit more pain in the ... which is what we saw last week. I thought the markets on the S&P futures would stop about 2800, and the reality is it went a little bit further, and it's probably because those circuit breakers were hit, because it went a little bit further it caused a little bit more of a speedier, faster movements. It's bouncing back, it looks like what we were talking about last week. We actually did a little bit of a futures report on this in VO format in the group, we talked about how we think the markets are going to unfold, and so far, three, four, five days later, the markets are unfolding exactly as we thought. And we know this, and the reason why we're not surprised about this is because history repeats itself. And when you start looking at the markets and just having ... I mean, at first you've got to
Phil Newton: ... look at the markets. And just having, I mean at first you're gonna make yourself aware of what's going on but you're not gonna have any benchmark. But when you look at this today, tomorrow, next week, and just have a little snapshot, imagine it like you've got one of those, what are they called, flashcards? Where you've got like a flashcard then every day you've got a new flashcard. Your mind's gonna swallow these little flashcards. Everyday you've got a little snapshot, a little snapshot, a little snapshot, and then eventually in a week or two weeks or a month's time you're gonna go, "I've seen this before."
And that's experience. I mean, you can't take that away because what's gonna happen is your long-term memory, subconscious, however you want to describe it, it's gonna recall that snapshot, that little flashcard and you're gonna say, "You know, I saw this." And a good example is, we saw what happened last week and this past sort of 7-10 days, we saw this exactly happen in not as big a magnitude this time, but we saw it happen in February .
You know, history repeats itself, and if you go back further you'll see it happen again in history. And that's what I mean by this flashcard, we've seen this situation before, and now that you're paying more attention to it, "Oh, this happened before." It's not the same magnitude of what it was back in February, but this same scenario, same situation happened before. Okay great, that's a footprints. Because of that awareness, because you're checking the pulse of the markets and you're making a mental note, you don't have to do anything with it, but next time something happens, you can look back and say, "Oh this happened in February."
Well what happened last time? And what happened the time before that? And what happened the time before that? And because of that footprint and the checking of the pulse experience, then you can say, "Oh, in that case, then I'm expecting this to happen." And it's a smart, sensible viewpoint based on history repeating itself.
Surprise, surprise, history leaves footprints.
Sean Donahoe: Absolutely. Again, you can also look at other sectors as well. I mean, one of the ones I have on a separate grid is the bond markets, the metals and commodities, because again, I like to look at the measuring sticks for other industries as well. I mean a lot of the recent sell-off has been talking about the bond market sell-off because of yields and everything else, and low percentages, commodities are getting more expensive. And again, what the Fed is doing with raising interest rates and everyone's getting a little bit panicky about that.
So another thing I do is I also have a separate grid for the bond markets, metals and commodities, 'cause I like to look at basically the measuring sticks for those other markets. I like to see a little pulse for what is happening in other sectors because that can also affect the main markets, and again, the bond markets and the bond yields have been blamed for the sell-off this time around, and again what the Fed is doing with raising interest rates, which has been well-telegraphed. They've been talking about that for a while, we were talking about that when it happened. And a lot of the pricing was baked in, but again it's still enough to make people think, "Oh, you know what, this is the turn." And take advantage of it. It kind of becomes a self-fulfilling prophecy.
But I do like to get a pulse of those as well. As well as global ripples.
Phil Newton: I was just gonna say, personally I think that telegraphing, I think that's smart and it needs to be done more often. And it's only, I think, a recent thing. When I say recent, I sort of ten, fifteen years. Where that telegraphing of intentions of interest rate hikes is being done on a regular basis. 'Cause what used to happen if we go back pre-2005 is, it was almost like a surprise. Interest rates would just suddenly be increased or decreased and it would shock the markets either positively or negatively. Because it was always a surprise. And I think we're also seeing it with some of the smaller reports, here's our expectations, here's our expectations, here's what we're thinking's gonna happen.
So that when the report or the economic measure comes out, it's not a shock to the markets. And I think that's a big shift that the financial crash in 2008 started to unfold. Because for any economy, having a shock to the economy, and in this case translated from the financial markets, that's a bad thing. No matter which way you look at it, whether it's a positive movement or a negative movement, a sharp, short fast movement either up or down is not healthy for the markets.
Sean Donahoe: Yeah, I agree. Absolutely.
Phil Newton: I was kinda getting on the soapbox about that.
You can see this, thinking about the economy, one thing that springs to mind is if you want to, rather than just think about the bond market or the gold market or whatever else, pick the different commodity sector if you like, but you can stay within inside the stock markets if you want to. And there's such a wealth of ETFs now, you can do all of this from the U.S. markets and use ETFs as a proxy.
So for example, I've got the global economies, I've got the bricks, Brazil, I've got Russia, I've got China, Japan, Korea, Malaysia, all these ETFs are just a very small representation of how that country is doing from a listed stock point of view. So you can have all these ETFs from a country-wide point of view, and I've got them broken down by sector, I've got basically the bricks, referred to, we've got the EU, I've got the U.S., I've got commodity sectors listed so I can look at gold, oil, gas. You can look at the soft commodities, you can look at gold, at minus if you want. Again, the point I'm trying to get to is, you can do this on a smaller scale and find out if there's a corner of the markets, from a sector point of view, that might be underperforming or it might be turning from a bull market to a bear market.
'Cause you can find bull and bear markets in any little pocket corner that you like. It doesn't necessarily have to be a listed ETF, I mean, you could for example ... although there's so many of them these days, it's hard not to find something that's not an ETF. But if you want to have a look at the solar sector, you could have a look at First Solar Canadian, you could look at Sun Power Corp., I mean you can have three, four, five stocks that are a representation of the solar sector from a publicly listed stock point of view. And you can start to get a measure of, "What is the sector doing?"
Sean Donahoe: Now that's great for investment bankers. Because when you've got a good feeling oil right now and I'm seeing a very interesting pattern emerging over the last few weeks or month, everything else. And I'm like, "Okay, let me get a slice of that."
But if it's something bad for solar, then it might be better for broad market, or broad .
Phil Newton: Yeah, it might be that you see ... 'cause I saw Netflix hitting the headlines. They were talking about, it's not actually, I can't remember what the title was but it was something really negative title which was counter to what the stock was doing 'cause even pre-market stock's at ten percent as we're talking right now. And the headline earlier in the day off, I think it was, and it was something ridiculous like some sort of Ponzi scheme, you know Netflix is the latest Ponzi scheme for signups. And it was a weird thing, they're trying to create controversy out of nothing so they can get eyeballs on their ... again, surprise, surprise, they're blowing it out of all proportions, trying to get someone to go and look at their website for advertising.
Anyway, conspiracy theory aside, my awareness is now raised of Netflix. So I can flip over to my little breakdown, and I've got half dozen stocks that are focused on streaming media. So I can look at Netflix, I can look at Pandora, I can look at Sirius Holdings, I can go and look at my little breakdown and my little universe of stocks and get a broad feeling for, what is the streaming stocks doing? Is it just Netflix that's the anomaly because it's the big dog in this arena? Or maybe the sector as a whole, streaming media, maybe I go look at Pandora and see what the streaming app, music, is looking like. And maybe there's a little bit of that rising tide lifts all ships, because everyone's looking at Netflix, there might be something that we can do with Pandora. Or maybe there's nothing we can do with Pandora.
You see where I'm going with this, because my awareness is raised, I've now got my pulse from a sector point of view on streaming media stocks. And I can start to go investigate them. Or maybe it's social media, or maybe it's travel, or maybe it's Chinese eCommerce, or maybe it's the retail sector, or maybe it's some specialty like Nike or Beck's, Decker's or Dick's or GameStop. You know you can do that specialty or luxury retail or investment. You see where we're going with this, Sean?
Sean Donahoe: Absolutely.
Phil Newton: You can check the pulse at a glance. And again, it sounds complicated, and there's a little bit of work to set all this up, and again I've got all this set up. I just did it a little bit here, a little bit there, and over a period of months you just kind of have it broken down how you want. And now I can very easily see that ... well actually, pre-market, computer hardware type companies are looking like they're repulsive. So maybe that's a sector I want to look at. Maybe, as we were talking about earlier, the market, broadly speaking, is negative. We've already spoken about, the futures market's down about half percent, about ten S&P points or you know, 100, 150 Dow points. But yet, computer hardware in pre-markets is going up. It's going counter to the broad markets. That could be a very positive sign for that sector. So maybe I want to focus my direction on looking for something there.
And it's only ... so if you're thinking more about what's going on with the pulse, and if the broad market's selling off but yet there's this little pocket of a sector that's really plowing ahead before the markets open, it's doing the exact opposite, maybe that's an opportunity I want to try and exploit. Maybe that's where I focus my attention. Maybe I don't look at maybe I go and look at Caesar, maybe I go and look at those stocks and see what they're doing, see if there's an opportunity that I've missed from the regular day-to-day scouts.
Sean Donahoe: Yes, absolutely. So yeah, that's it basically. That's what we do to look at the pulse of the markets. Find all the opportunities, raise our awareness of different sectors, raise our awareness of what's going on in the broad markets, what patterns may be emerging, what speed things are moving. Counter to the bigger, the leviathans like the Nasdaq, the Dow Jones, and the S&P 500. What different sectors are playing out, for example, energy, bonds, commodities, currencies, whatever it is that you're into trading. Again, having a good pulse of the markets, seeing what's happening in the world. I mean, we're not even gonna look at the news headlines this week, just wanna see if we can find clues to go down the rabbit hole of what may be causing things. But generally the financial news networks are just awareness raises more than anything else. And again, attention whores.
Kind of like we are with our podcast. Who are we to talk.
Phil Newton: Well it's true, but I think the whole point is, awareness is raised. And that's why you should use the media. I think I just want to underscore the comments that we keep dancing around, is this a thing that you would do, very briefly from my perspective, every day? So that you've got that kind of flash, building those daily flashcards of what's the market and what's the market doing. When it does do something funky and interesting then that's when you can start to dig a little deeper. You don't have to do it, but if you've got time to do it, it's not something that you should be doing, it's just that to have a quick glance what the market's doing, and if you've got time, then yeah, peel back the layers. Go a little bit deeper. Spend ten minutes just following Alice down the rabbit hole and say, "Well the market's doing something funky today, maybe I go and take a look at the sectors and see, is it the whole market or is it just a little segment of the market? Is this something that's going counter to the market?" And just spend an extra five or ten minutes. It's not time intensive, is what I'm trying to say. It's not something to dig deep on every day.
But like today, there was a reason for us to dig deep. You know, we can ... the market's doing something a little bit funky, we're gonna be paying a little bit more attention than we would normally do. But when the opportunity arises, then yeah, put an extra ten or fifteen minutes aside, just dig a little bit deeper. Maybe you do scan the headlines and see what everyone's talking about. Just from an awareness point of view, not necessarily because you want to go and read the articles. It's just, go and just see what's on the headlines, that's all I do. Just look at the headlines, look at the headlines. And just raise your awareness and see what is going on, and then you can go back to doing what I do and then when everything kind of normalizes you can ignore everything.
'Cause that's my default position. Most of it, on a day-to-day basis, where nothing's going on there's-
Sean Donahoe: Exactly. I mean, that's really it. And honestly, this entire process usually takes less than . I mean, looking at the markets and going on, and even if I want to go and scan the headlines, I can do it all in less than a minute before I start placing the trades I've already lined up.
Phil Newton: Think the clues in the headline, Sean, we're checking the pulse. So all you would do, if you were checking your pulse you would place your fingers on your wrist or up the neck on the carotid, and you would just check the pulse very briefly. Yes, we've got a pulse, it's not racing, it's not slow, there's nothing unusual going on. Or maybe we are racing or it is slow and there is something unusual going on. And so, that's all we're doing, we're checking the pulse. Nothing funky's going on, I don't need to dig deeper today. And that's gonna be what happens most of the time. It's just literally check the pulse like you would ... as we keep saying, like you would do in the real world, check the pulse. It's not a spend-all-day-doing-it situation.
Sean Donahoe: Yes. You know, that's it. It's really, really simple but it gives you an idea about which way the wind is blowing, the mistakes you're walking past on the Serengeti.
Phil Newton: Is Mary Poppins floating down? Do we need a spoonful of sugar?
Sean Donahoe: It's all good.
Phil Newton: I mean, it is medicine, right?
Sean Donahoe: You know ... there are so many jokes I could say, but they're not suitable for publishing.
So let's move on to Trade, Fade or Evade. So okay, what we're gonna do here is we're gonna look at a few stocks that have already posted, we'll look at, let's start with Bank of America. Again, all of these ones have reported earnings, what would you do Phil ... oddly enough, a lot of these charts look pretty much the same, because there was a big rally yesterday. But what would you do here with Bank of America?
Phil Newton: Bank of America? Trade it. Every day. Broadly speaking, it's in an uptrend, we've had a consolidation from most this year. It's broken out, moved above the range boundary harness, which is about $380, which can be traced over the last several days, as has the entire market. Usual signs of exhaustion. It actually meets typical trade setup. It would have fired off an entry yesterday with that rally, so yeah, it's Trade It.
I like that one, Sean. As usual, I've tried ... we'll I've not looked at these stocks, so you can get my first impression. I actually like that one, I'm gonna go and look at that later.
Sean Donahoe: Yep. I was gonna go and put one on this as well, after seeing this up so open.
Phil Newton: see what we're looking at.
Sean Donahoe: Absolutely, you can do that, go to
Okay, so next one. JB Hunt, JBHT. Trucking and transportation, cargo.
Phil Newton: So easy to kind of have a Freudian slip and say something different.
Sean Donahoe: I was trying not to very carefully.
So what would you do here?
Phil Newton: It's sort of like that problem with the pheasant plucker and the pheasant plucker's son.
What would I do here? It's gonna be Fade It, which is what we're calling being bearish. It's actually looking very similar to BA in that, we've got a solid uptrend for the last 8 months of, and most this year would be in our range, but this time it's broken down. It's a classic breakout, pull back, setup for a bearish setup, so I will be Fading this.
Sean Donahoe: Yep, I was gonna say exactly the same. Is in a downtrend, had a little bit of a kickback last couple of days, but it looks like it falls nicely there. That looks like it's kind of .
Phil Newton: You've picked Sean, and my awareness ... I've taken my own advice, my awareness is raised, this didn't come up on my usual scan but I like this as well, Sean.
Sean Donahoe: Yeah. It is pretty good. I must've been kind of liking this one as well for a little bit. Again, I only fired these up, and I didn't really look at the chart so I'm doing a lot of first look at these as well.
Okay here's another one
Phil Newton: I like that move on. Jog on, the kids like to say.
Sean Donahoe: What movie was that from? That was from the first one, right? That was Simon Pegg?
Phil Newton: Yeah. It was the short. But I think it was always a veiled reference to the next movie, which was 'Run Fatboy Run.'
Sean Donahoe: That was actually clever, I never would've thought about that.
Phil Newton: Yeah. The 'Hot Fuzz,' if you've not seen it, it's classic British comedy.
Sean Donahoe: Okay. United Health Group. UNH. Now this one .
Phil Newton: This is one of my
Sean Donahoe: This one has a little bit of a gap, it's jumped off. It's ... interesting little ... I haven't got the pre- or the post-market data, or post-market trading here. But this one was .
Phil Newton: jumped up.
I like it, I think I would ... you know, from a trend point of view, there's a classic trend that lasts sort of 12-18 months. It's in an uptrend, there's not hesitation in my mind. I think we've spoken about something similar before where it's not putting in deep retracements, so this wouldn't come up on the usual Bollinger Man scan which looks for deep retracements. This is very shallowly putting in retracements but you've got this very steady, very strong, steady uptrend. And it just broke a new harness, so if you missed the retracements then you can take the break, this is a Trade It for me, every day, without thinking about it. It's just a good, solid trading.
Sean Donahoe: Yeah, it's interesting 'cause I'm looking at this one now, and I'm looking on the hourlys as well, and it had a
Phil Newton: the week. It looks phenomenal. It's just a steady, don't-stop-me-now type of uptrend. It looks solid.
Sean Donahoe: Yeah, look at the hourlys as well, you'll see there was a lot of hesitation in the beginning of the day, then it continued to rally throughout the day nicely, setting those
Phil Newton: To be about gapping stocks, if you do want to look at UNH, we're talking about this on the 17th of October and if you do want to go back to this, depends upon when you listen to the show, this is a good example of the type of setup that I was just talking about with gapping stocks and using short-term trade entries. So on the 60-minute charts you've got this big gap up and what is essentially a double inside bar, so you've got a big gap up, first bar, second bar, third bar, all narrowing nougat or inside capitals, the higher range is inside the previous one, and then you've got that breakout. And that provides a good solid edge, so that's a really good example of a good inter-day setup, which we were just talking about. When you've got those gapping stocks and you've got those big pre-market moves on the futures, it could be a good day to apply the strategy and this is a good illustration from yesterday of the setup that we were just talking about earlier in the show.
Sean Donahoe: Awesome. Here's another one for you, Johnson & Johnson. This is kind of like, well, I'll let you make your
Phil Newton: This is this is half and half. First half of the charts, I'm looking at about 18 months, first half of the charts go up, second half of the chart or the middle part of the chart's going down, the last third of the chart's going up. It's a little bit of everything. From my perspective it's a hodge podge. I like to see one clear picture, it's going up down or sideways, and I mean I can see trades if you look at shorter time slots but from the usual way that I evaluate, this is an Evade.
Sean Donahoe: I was gonna say exactly the same, it's kind of like a halfway between the one we were looking at with JB Hunt and BA, but it looks like it's got a few lower highs. It looks like it's already in a bearish turn, like it was earlier in the year.
Phil Newton: Yeah. If you just looked back at, say, the last six months, I would say we've got an uptrend that's broken and this would be a good example of what sneaking in looks like. 'Cause we regularly talk about, we're gonna do the same thing or we expect the same thing to develop, until something new develops. And this is what 'something new develops' looks like. It's a reversal pattern, is what it might be described as; a one, two, three reversal, it's the head and right shoulders of a head and shoulders pattern. I'm just trying to give you a visual representation of what we're looking at. But if you just took the last six months, it looks like the uptrend is broken, and something new . And this is what it would typically look like, broadly over the last sort of 12 to 18 months. You know, I would step aside from this. You don't need to fight for scraps.
Sean Donahoe: Exactly. There's better things out there, so
Phil Newton: It's a fight for scraps.
Sean Donahoe: Exactly. There's better things out there. So yeah, I would've said the same thing, exactly, . I was wondering if I could catch you out with that one, but I know better. Okay.
Phil Newton: You know, I can switch my opinions on a dime, Sean. You know that.
Sean Donahoe: It's a very big thing, yes. You can change your mind,
Phil Newton: You know, you've got to take your own advice with this. But it all comes down to time horizons. We've locked horns over this many times, in a good way. Depending on your time horizons, you can have a different viewpoint. And we actually spoke about this yesterday in the Facebook group. It depends on the time horizon that you have. And this is why we're always specific with, based on the last 12-18 months, again, Goldman's is another example. Based on the last 12 months, the first half of the chart's gone up, second half of the chart's gone down; it's half and half. It's doing a little bit of everything. It's not conductive to the type of set-up that I'm looking for.
But if you just at the last six months, it's in a downtrend. And you can quite clearly state that, well in the last sort of eight to ten months actually, it is in a down trend. And based on that time horizon, it's sell the rally in a down trend.
Sean Donahoe: Yup.
Phil Newton: And it looked like a great set-up. But different time horizon, different outcome. And this is why every trader can use the same strategy but with just one minor tweak, and all we've one is change how much data are we looking at? And this why we're so far ... this is the first thing that we do when we , we want at least 12 months in our line of sights. And I look at about 12-18 months, and that gives me this broad viewpoint of what is the broad market doing in relation to this particular stock? It is, or needs to be, going up, down or sideways. And if you can't figure it out, then that's when we would say, "Move on. Go and look at something else." And that is ... It's one of the tricks of the trade as it were, but it helps speed up the process. Am I going to invest more time, granted it might only be a few minutes? Or am I going to invest more time to see if there is a trading opportunity? And if there isn't, go look at something else. We've got such a wealth of opportunity, every single day, as we keep illustrating, that we don't have to spend our time unnecessarily in this case, looking at Goldman's.
So now that' we've done that one, what's next on our list?
Sean Donahoe: Okay, I would have said the same thing. Actually, I would have made this one, although it looks like it's going to continue bearish, until I get more solid confirmation of that the rally's over. Then that might be one for the future. But then again, I've got the same ... when you're looking at things like Bank of America, or if you're looking at yeah, that kind of ... that might be ... like JPMorgan Chase, we're going to look at that one in a moment. When one's doing one, I don't want the same trades in different companies doing the same thing, and ... because it's ...
Phil Newton: It makes me a little bit nervous when they all set up around about the same time. I end up, say, in this case, banking-heavy. That said, it's more of a personal thing, where practically, long-term, having gone through it many, many times and come out the other side just fine, it's okay. Just ... let's just class it ... let's just fill our boots on rather than several small ones in the same set.
Sean Donahoe: So okay.
Phil Newton: I know what you're saying, but-
Sean Donahoe: Let's have a look at IBM. International Business Machines Corporation. What would you do here? Me, I'm going to trade it. Ooh.
Phil Newton: . I'm gonna take my first reaction there, which was I sighed and leaned back because it was a little bit messy, a little bit sloppy. I think if I was going to do something, it would probably be evade. I can put the argument for ... It's a messy range. There's no well-defined upper, no well-defined ... Well, there's a more well-defined lower boundary than an upper boundary. It's already started to move away. If there was a trade, it was a few days ago. It's not the best looking trade. If I was going to do something, it would be trade it, but it's not the best looking trade, certainly compared to the things that we've looked at.
So it just raises an interesting point, Sean: when you've got two or three things that you could trade ... 'cause we've looked at one or two, the first two stocks: British Airways and then . Those two stocks that we looked at, they were like, "Hell yeah, I think I'm going to get a piece of that!" There was no hesitation that I want to do something in those stocks. But then when it comes to IBM, well yeah, I could trade it. I know it's just the wording ... Yeah, it kind of looks like it would do if it was in a range, and it's kind of just pushed away from the lower boundary, and it's not looking fantastic.
By comparison, when you've got several potential opportunities, you've now got luxury of being able to say, "You know what? If I had that gun to my head, that I could only choose one of them, what would it be?" In this case, it wouldn't be IBM, it would probably be one of the other two that we've looked at, that we said. The first two actually, that we went, "You know what? I think I'm going to do this. It looks good by comparison." And you'll only get that when you go and look at the stocks that we're talking about, because this is what I would class as a messy chart at the moment. IBM, it's a messy chart. Yeah, it kind of checks the boxes for the things that we'd normally look for, but by comparison, we've seen better examples of the set-up.
Sean Donahoe: Yeah. Now full transparency, I'm actually in this one. I was in it trading into earnings, which I usually don't do. But a couple of -
Phil Newton: .
Sean Donahoe: Well, I did some fundamental analysis again, because I'm more ... I've got my fingers in a lot of tech. This one, I know IBM's got some really good stuff coming out in regards to their AI, a lot of their ... They're catching up in the cloud computing, so I'm kind of ... I was bullish from a fundamental standpoint, and looking at the charts and after the recent decline, I think they've got a little bit of balls in 'em. Again, I haven't got the earnings data in front of me, but again, I'm bullish on these guys, but again, full transparency from multiple aspects here, looking purely at the chart, I agree with you, yeah, this is more of a longer term-
Phil Newton: In which case, the chart is going to be less important if you've got an investment mindset. And this is where looking at fundamentals becomes more important than looking at a chart. The chart's going to help with timing from an investment point of view if you want to go down that road. But from an investment point of view, you've got less of a viewpoint on the technical .
Sean Donahoe: Yeah, I've got a ... Three months is my time frame on this one. Three months probably holding, but it's not a buy and hold, but it's still short. I'm looking at it from a more rounded so to speak, viewpoint. So I'm looking at the chart which was my entry point, but I still had a bullish overview of that, and I'm like, "Oh, you know what? I like that. Now it's time for me to jump in with that one."
Phil Newton: Awesome. But there's additional factors which overweighs my broad strokes of it's a messy chart.
Sean Donahoe: Yes, exactly.
Phil Newton: So I was ... If I had ... yes, I can see why. You can forgive certain things that you would normally have, because you've got extra information.
Sean Donahoe: Yeah, exactly. That's the point there. Okay.
Phil Newton: That's a good example of both views of Phil wouldn't do it, Sean would, and yeah. Because you've got though that extra kind of points of reference to justify ... Oh, it's not fantastic from a visual point of view that we would normally do, but from the investment point of view, the fundamentals look great, you've got an expectation for other reasons that you're going to be bullish.
Sean Donahoe: .
Phil Newton: Yeah, that makes sense.
Sean Donahoe: Okay. UAL. United Airlines. Or United Continental Airlines.
Phil Newton: .
Sean Donahoe: What would you do here? Again, this one is on an uptrend. We are at the bottom. We had a pretty nice rollover, a pretty clean tipping over of the rollercoaster here, and then a snap back. What would you think?
Phil Newton: It's bullish. It's every time for me on this one. This is ... I think we actually spoke about this ... was it last week or the week before, I can't remember. It has come up .
Sean Donahoe: We're talking about ... yeah, we were talking about the incident, and history repeating itself.
Phil Newton: Yeah. I think we used it as an example. I can't remember if we did it on the Trade Day. It's been in a consolidation. It's broken out, rallied, retracement over the last week, 10 days as we've seen. This is your classic breakout, pull back type set-up. I've gotta be bullish if was going to something on this.
Sean Donahoe: Absolutely. Same thing. Agree 100%. Now, Netflix. What would you do here?
Phil Newton: Do you want to pause there, Sean? Can you see how, when you've got a process ... Again, the reason why we're doing this is the highlights. When you've got a process, it's easy to go, "Yeah, check, check, check. It meets that criteria, that criteria, that criteria. Boom, boom, boom," as you like to say, Sean. Or bum, bum, bum, depending on your accent. But when you've got that production line experience, that's what it is. It's done this, it's done that, you've got this, you've checked that, and if I was going to do something on it, I'd be doing this. That's how quick . But can you see how when we were talking about the previous stock, we were talking about IBM, and it's like, both of us, we were back and forth trying to find the trade. Why do you need to be back and forth trying to find ... Why do you need to find the trade? What you want is that hell, yes experience. Check, check, check, trade. That's what UAL looks like for me. All right, it's not picture perfect, but to illustrate the process, check, check, check. It's done this, this, this and this. I'd trade it. That gives me confidence to put the trade on. Today, tomorrow, it could be next month, next year.
And that's what having a strategy, that's what having a systematic approach to find, filter and sort stocks does for you. It gives you the confidence to put ... to open the shop for business, as we like to use the business example. Look, you see what I'm trying to say there, Sean. It just illustrates perfectly, because you dither over one stock. And that's where a lot of newbies and novices get caught up, is they get stuck trying to find the trade on the one shot that they happen to be looking at today. And the first thing that they should do is recognize is that there's no trade here. Move on.
Sean Donahoe: Exactly. Okay. Let's look at something different then-
Phil Newton: .
Sean Donahoe: ... which I think is .
Phil Newton: I like that.
Sean Donahoe: Netflix. Now again, subtle prompting on ... Move on Phil, come on Phil. Stop .
Phil Newton: .
Sean Donahoe: Okay. Netflix. Now, this one is 10% up overnight. It has reported great earnings. There were a few negative stories that they were shouting about, that were a little bearish, but I thought again, looking at the charts ... I was already in this one. This was one of the ones that I took a dip, kind of pretty solidly before everyone else, and once it hit that bottom, I mean ... I'm already in this stock. I was looking, going into earnings .
Phil Newton: I remember you saying last week, yeah. Because you actually put your nuts on the block last week and said, "I'm in this, I'm going to put a trade on."
Sean Donahoe: And I put a decent position.
Phil Newton: . Yeah. To be fair, I like it. It's ... I would be bullish, long-term uptrend. It would be buy the dip. It's hard not to be bullish on a stock that has been going up for the last 12 months at a very minimum.
Sean Donahoe: Yeah, I mean it had a little bit of a hiccup there in the round .
Phil Newton: Seeing the earlier headline that we mentioned, which was, "Netflix is a Ponzi scheme", which ... You've got to look at investing . What a ridiculous headline. It's just click bait if ever you saw it. When you see stuff like that go through your newsfeed on whatever media platform that you use, you've got ... your immediate default reaction should be do the opposite. So if they're just trying to attract headlines by saying it's click bait, and it's a Ponzi scheme, but I'm thinking the exact opposite. It's got to be an immediate buy, just because of the bullshit that you see from the talking heads. Before I've even looked at the charts.
Sean Donahoe: my eyes on, just because of ... just knowing that Netflix is a growth engine. It really is.
Phil Newton: On demand is just the way to go, and they've been primed and positioned for many, many years. But to be fair, I actually ... On the 60 minute charts, just having a flick over to that, it's just flicked over on my time frames. So yeah, all indications is it's going to go up. Retest the recent highs would be about what I'd be thinking of, so maybe keep in mind anything above $400, $410 as first target in the short term, next 30-45 days. Looks like a great trade.
Sean Donahoe: Okay, here's one for you then. On the banking sector: JPMorgan Chase. And looking at this one, I've just got to say, I would ... This would be a trade for me. I mean, it's at the bottom of a consolidation. Nice little kick back. Yeah. Bottom of the range. Yeah, rock on.
Phil Newton: Similar set-up the BA that we were looking at earlier, where you've got that long-term trend, short-term in the last eight to ten months. For most of this year, it's in a range. Priced at the lower end of the range. Again, just going through the process, what's going on: uptrend or range, depending on your perspective. It's dipping in a trend, or it's at the lower end of the range. Those two things marry up; depends on your perspective. So this is why I like the process that we have, 'cause even if you kind of cock it up, if you're always buying the dips in an uptrend, or buying range lows, and you're looking at the context, it doesn't matter too much, because you can get it wrong, and you're still doing the same thing as a trend trader or be doing the same thing as a range trader, because you're looking for those same clues, those same footprints. So yeah, I like it. It checks all the boxes for me. It's bullish at range lows, first target range highs. Until something new happens, same thing's going to continue. It's in a range over the last 10 months, within the context of an even longer trend over the last 18 months to two years. You can't go wrong with it. Well, % of the time, you can't go wrong with it.
Sean Donahoe: .
Phil Newton: for a while.
Sean Donahoe: No, wizards work out nine times out of 10.
Phil Newton: Nine times out of 10? So yeah, 65% of the time, this works every time.
Sean Donahoe: Okay, one more for you: a transport company, kind of along the lines of J. B. Hunt, except this is trains: that's CSX. What would you do on this one? What would you do?
Phil Newton: CSX. Same story. . It's an uptrend: buy the dip in an uptrend. The only thing that we kind of miss is it being at a very obvious, logical stopping point, and there's no sign of exhaustion. But yeah, guns to head, if you had to do something with it today, it would be bullish. I'd be buying.
Sean Donahoe: Yeah, same here. Same here. Again, not an ideal one, no sign of exhaustion. It kind of was range-bound for last couple of months, but hey, you know what? It's still over the year, I'd still ... a pretty clear trend.
Phil Newton: To be fair, it seems like that's a common theme with this stock. It's often described as stair-stepping. It'll do a rally, it will pause for two or three weeks, sell off then rally, pause, retrace, rally ... It looks like that seems to be a common pattern for this one. And this is sometimes referred to as stair-stepping, so if you want to take a look at this one for that particular pattern, it's a good illustration I think. But then, bullish. And while we're on that subject, it looks like, while it doesn't normally have the usual signs of exhaustion after that retracement, it normally ... it looks like it doesn't normally develop them. So because history's set that footprint for this stock, you can let that particular element go on this situational basis.
All I'm trying to highlight here, is you can be flexible. If you appraise the charts, you can kind of like, "Well, I don't need this in the ingredient that I would normally look for, because it doesn't normally look like it gives us that ingredient." So don't ... There's a time and a place for everything, but if you've got that structure and that framework, and you've got your eyes open, and you're looking for these footprints, and you're looking left across the charts, and you make a very quick evaluation, you can say, "Well, maybe I don't need the sign of exhaustion today, because on the dips, and just looking back up at all the retracements of the last 12 to 18 months, it normally doesn't develop it. So maybe I don't need it this time."
Sean Donahoe: Yeah, I'm looking back actually, funnily enough, just flicked it over to the weeklies for the five years-
Phil Newton: .
Sean Donahoe: And yeah, that's looking kind of nice as well.
Phil Newton: Lovely long-term trend. Yeah, it's nice.
Sean Donahoe: Yeah. Rock on. So there you go ladies and gentlemen, that's it for this week's show, and that's it for Trade and Evade, and everything else we're doing here today. So with that being said, I hope you enjoyed the show. This show isn't free, and we do appreciate listening to it though, and it will cost you a five star review. Just go to Find the way you like to listen to the show, subscribe and review us on your favorite way to hear us. And this helps us reach more traders, investors just like you.
Phil Newton: I had a fabulous time, Sean. Thanks for asking. It was an absolutely wonderful show today. I'm glad you joined us for it. So if you'd like to reach out to us and you want a have a chat, you can get us on the Facebook group. Phil now knows where it is and I am more actively involved in it now. So if you want to reach out to us there, you certainly can do. If you want to reach out directly, you can do it via the old-fashioned way, as we're calling it these days, via email: [email protected] And the social medias are at the same link, You can find us there.
And what have we got coming up in next week's show, Sean?
Sean Donahoe: We're going to be talking about politics and trading. I hate talking about politics.
Phil Newton: .
Sean Donahoe: It drives me .
Phil Newton: .
Sean Donahoe: But we're going to . Again, in the US, the mid-terms are coming up. We're going to talk about what effect that might have on stocks, what businesses are going to be reacting to, what they're going to be looking for, and thus are they going to shore up their businesses, which makes trading a little more interesting. Is there going to be any effect, or is it just business as bloody usual? So we're going to be talking about that, and rocking on from there. So with that being said, take care. Hope you enjoyed the show. See you next time.
Phil Newton: Bye for now.
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3 Key Takeaways From This Show

  • Getting a pulse of the markets helps set yourself up for the trading day
  • Skim the headlines, don’t trade per-se on the news, use it to raise awareness
  • Look back at history that tends to repeat itself in regards to the trends and patterns

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