Sean Donahoe: Ever feel that traders get a bad rap, that they're unfairly targeted? Well, it's time to stand firm, get out the soapbox, and let's get ready to rock. 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 markets. To cut through the noise of Wall Street, and help you navigate the trading minefield. Together, Sean Donahue and Phil Newton are on a mission to give you the unfair advantage of a rebel trader. Now, here are your hosts, Sean Donahoe and Mr. Phil Newton.
Sean Donahoe: Hey there, this is Sean Donahoe, and as always, every week I am joined by the indubitably interesting Mr. Phil Newton. How are you doing, sir?
Phil Newton: I'm always interesting. I'm absolutely fabulous, as you well know, Sean.
Sean Donahoe: You are absolutely fabulous, you are.
Phil Newton: Fabulous . I am a giant pink flamingo in a sea of pigeons.
Sean Donahoe: Wow, that's the weirdest mental image.
Phil Newton: That is how fabulous I feel today, Sean.
Sean Donahoe: Well, wonderful, and I am so happy for you. Anyway, moving swiftly on.
Phil Newton: As he snaps the fingers with a sassy flick of the wrist.
Sean Donahoe: Absolutely, you go, girl. Okay, here's what we're doing. A lot of the times, it always feels that traders are to blame. We're easy targets for the media, and for politicians. With 2020 elections looming, it seems that every politician has got their eyes on the white house, and screaming blue murder about the evil wealthy traders, and every other target of opportunity.
Phil Newton: They're looking for someone that they can drown. Just throw under the bus.
Sean Donahoe: Absolutely. It seems that way a lot of the time. So, in order to connect with the common people, a lot of the times traders are a target. So in this show, we're going to dig into why we have the big laser target red dot on our heads. What we can do about it, what got us here, how to handle the talking point criticism. I'm going to be honest, there is going to be a lot of soapbox moments here, as we get fired up and ready to roll.
Phil Newton: I think it's deservedly so this week Sean, it's certainly a topic of hot discussion as the politicians sink their claws into it. I think rightly so, that we raise people's awareness of traders under fire. Later on in this show, we've also got our favorite section, which is the trade fade reviewed, you get to look over our shoulder as we firstly try and read the ticket symbol on the chart. We always seem to mess up.
Sean Donahoe: The correct one, the correct one.
Phil Newton: So, the first thing is a reading lesson for Phil, as he mistakes the ticket symbol. Secondly, you get to look over our shoulder, we look at the charts, and we figure out is it going up, is it going down, is it going sideways? Would we trade it, fade it or evade it?
Sean Donahoe: Perfect. Before we get rocking and rolling here, let's have a quick look at, just a quick overview of the markets. Continued I would say, recovery here, and I'm always hesitant as you noticed there, to say recovery. But, from the recent lows again, the end of December and that, we inch onwards and upwards. I'm liking that though.
Phil Newton: Yeah. We're very much back into last year's range, which we were talking about. The other smaller range that we were talking about, was the last couple of months at the end of last year. We're back into the middle of that range. So, I think recovery could generally be an appropriate word. Again, I'm like you Sean. I try, and avoid categorizing. It's impossible when you're describing things not to use certain terminologies, but I think recovery might be the right thing. It looks like a fairly decent recovery. We've got a very strong, if not one of the strongest January's in many a year.
Phil Newton: We're well back in the range, we're not at anything that we would typically refer to as an interesting level, so that you could develop any points on the charts. But usually, it happens at fairly obvious points. We're not really near any obvious points where, you may be thinking will there be a turn here, will it continue.
Phil Newton: I'm just looking at green bar, green bar, green, green, green, green, green. The green, green grass at home ... It's just green all the way and since the beginning of the year. So, has it run out of steam will it continue going? It's anyone's guess the moment, it's really strong markets.
Sean Donahoe: I'm really liking the fact that again, everything from the Russell, to the S&P 500, Dow Jones, which is again just thirty market leaders and blue chips. The NASDAQ, they're all continuous. But also the volatility index, the VIX is setting again. It's continuously lower, and it's heading back into the range of September, August of last year. It's giving it back, so to speak. Fears are settling down and that is-
Phil Newton: Back into complacency. But that could be a danger. I mean it's still elevated for what we saw for most of the last year. It's at the upper end of last year's range. But based off that pop that we saw at the end of last year, we're at the lower end and sinking back into that complacency zone, where we've pretty much been for seems like forever. 15.5 on the VIX, the volatility index, yeah. It's ...
Sean Donahoe: Yeah.
Phil Newton: Again everything's ... I've got to admit though, from the daily charts perspective it's going up. It's clearly gone up. 60 minute charts . Maybe I'll have a little bit of a summary on that later.
Phil Newton: But what just has me pause for thought, is the behavior on the intraday price activity. We're seeing very tight, and very narrow price activity, which it just doesn't look natural of them. Again, it's hard to describe, not sure, it's one of those voices experience things. It doesn't look like it's behaving on the normal circumstances, which is just making me pause for thought, is something going on?
Phil Newton: And we said this before, when price is doing something that it doesn't normally do, that's when I actually go to the news and say, "Well, what are people talking about? What's the pulse of the media? What are they actually commenting on that might explain my observation with price behavior?" Because, price is very narrowly, and it's almost like the markets have been closed. It's paused for a couple of hours at a time. There're no stereotypical bar formations, or candle formations. Depends on how you're looking at the chart.
Phil Newton: So it just makes me think, the behavior it seemed a little bit unnatural. It's just making me pause for thought. Again, I don't know what it's going to happen. It might be that there's some news coming out. It might suggest that there's low volumes going through the markets. Again you could see that on the markets, but, it just makes me pause because it's got something unnatural that doesn't normally happen, certainly on a 60 minute chart on a very popular market. I'm referencing your S&P futures. It doesn't normally happen. It's the long story short, but you can only say that when you've looked at millions of charts, for hundreds of thousands of hours, over a 20 year period.
Phil Newton: It just makes me think that something is perhaps going on in the background. And if it's hit the news media, and the mainstream media ... it probably wouldn't be there yet, but I'm keeping an eye out for something that might be underlining why that behavior is happening. I'm not really sure I'm explaining that to you well Sean, but does that kind of come across? It's just that it's a heavily discretionary observation, which is why I'm struggling to articulate it in perhaps sentence or way, to our loving and adoring listeners.
Sean Donahoe: No, I think you're banging on the nail. I understand where you're coming from. One thing here is, summarize it for the ... the short term here is there's a question mark and you're cautious, and you're waiting for confirmation.
Phil Newton: Yeah, I'm not necessarily going to do anything different with the way that I put trades on, or take them off. I'm ready to eject if something crazy is going on. I might make some discretionary adjustments to targets. Friday for example, I was seriously considering closing out my positions for the weekend on the short term challenge structure that we've got going at the moment, because of that observation.
Phil Newton: I've got to admit, I was really nervous over the weekend. But the only thing that kept me through it is well, we don't back test those discretionary assessments in research for the first strategy. Again, things we've talked about in the past, and it's the only thing I would be deviating from the strand, I've got to put my strategy, I've got to put my personal opinions aside, at least temporarily. Because it's just an opinion, there's no substance to it.
Phil Newton: That was, I think the point that you raised. I'm keeping my eye out for something that might confirm my observations. I'm not seeing any confirmation, but clearly price behavior over the last couple of days is just been a little bit weird from time to time. A quick for example, on a 60 minute chart, you will see at one or two hours, if you just look at the high-low, it's almost like someone is drawing across on the charts. It's a really narrow high-low range.
Phil Newton: And the open, and the closes is also very close together, within a few points of each other. The High, the low, the open, and the close. They're all within a couple of points each other. That's not normally happening, on an active market like S&P futures. That's the type of behavior that I'm talking about, that has been happening for an hour here, a couple of hours, side by side, and it just makes me think, it's the type of behavior that we're used to see back in 2003, four, five, right before a big news event like non-firm payrolls. It's not a big event at the moment, you're not going to see that post news boom, explosion of price movements in one direction, which we used to see way back then. But that's almost what the markets are almost waiting for. It's like something is about to be announced, and the pause, buttons are being pressed.
Sean Donahoe: I was going to say we had the State of the Union yesterday, which everyone was waiting for, which happened last night and that might be what you're seeing there, as a reaction or a waiting.
Phil Newton: Well, it wasn't just last night, it was couple of times last week. We saw it Monday, but that was a feel to it. It had like ... But it was not around though or ahead of those typical ... well news normally comes out around 1:30 my local time. So it's around 8:30 AM just converting it to Eastern you got 8:30 Eastern early afternoon-
Sean Donahoe: Right, as the markets are opening.
Phil Newton: Yeah. L.A. afternoon, one, 2:00 Eastern time. Again, they're the usual is going to be a big announcement. That's when they announce it, just before the market opens, or just after the lunch time period. And it wasn't around those times which is just making me really scratch my head as to what's going on here. It's not a typical announcement is what I was thinking and even today price behavior, very slack, very narrow ranged even before the markets are open or as the markets are opening right now, things are just a little bit funky from my observation.
Phil Newton: And again, it's only going to be a temporary thing, probably things will pick up, but it just might suggest that this upward movement that we've seen, it might be running out of steam. We're not at an interesting point on the chart to make me think that we're there yet, but it's just, against discretion observation. Again, if we think about the things that we ... we're going off in the mid of a tangent here, Sean, just bring me back if you need to.
Phil Newton: But ultimately, it's when you ... right now we've got the ocean liner that we reference, it's sailing down the canal. It's got a full head of steam, on the bullish side of the canal. It's powering away. Most this year, the mark has been powering ahead, but it's trying to do this little old jig. There's still old three points it's almost like pulling the handbrake and it's done a little old sideways skid and then it's trying to pick up the pace and carry on going. It's doing something that ... it's just jigging, for want of a better description on that bullish movements and it doesn't normally do it. That's what makes me pause for thought and to maybe it's slowing down, maybe something's going on. Maybe there's something in the background that's not hit the mainstream news net, but we perhaps need to just keep an eye out for.
Sean Donahoe: And this is where Phil looks at fundamentals.
Phil Newton: Yeah, I mean exactly right. The model standing out, this is the time when I will start looking at headlines. I will start keep an eye out for it, because price is behaving in a way that makes me, "Okay, why is this happening? I'm looking for evidence. I'm looking for ..." I can only do is look at the headlines. I just want to see okay, is my observation ... can it be ... my speakers, but it's just like, "It isn't safe to go back in the water. Yeah, we're going to need a bigger boat."
Sean Donahoe: I had to do a little movie reference there, but it's the thing in the water.
Phil Newton: you nearly knocked me off the soapbox Sean, but it didn't quite happen.
Sean Donahoe: Good stuff. Good stuff that is funny. That is funny.
Phil Newton: I bet my drum's been banned.
Sean Donahoe: There you go. I mean, there is something in the water. Maybe there is a little fin tip showing out, maybe the little Jaws theme is going on in the background. Just have to make sure you churn the waters, and see where it goes. I think that's the bottom line here.
Phil Newton: Yeah, it's always difficult to try and describe the charts, which is very visual thing. When we're just on audio. I'll post it ... maybe I'll post it Sean on Facebook group for you guys.
Sean Donahoe: Yeah, I think that'd be worthy of a video.
Phil Newton: Why didn't you say that, Phil, instead of spending time trying to describe it?
Sean Donahoe: Didn't want to say it, didn't want to say it. But yeah, we'll do a little video, put it in the Facebook group. And if you want to be part of the Facebook group, it's facebook.com/groups/rebel traders. You can see what he's talking about there.
Phil Newton: Yeah, I can see what I'm talking about as well.
Sean Donahoe: There you go. Okay. But anyway-
Phil Newton: Moving swiftly on.
Sean Donahoe: Moving swiftly on, you also have the 100k challenge update, which is now officially one month old. What's the official number as of say, one month?
Phil Newton: Yes my personal challenge is officially one month old. The group challenge we're two weeks into it. We're already getting feedback from the students. My personal accounts, which you got to look over my shoulder, a challenge community group, literally it was from around about thousand pounds sorry, 600 pounds up to 800 and a bit of change. So it amounts to a 38% increase in my accounts.
Phil Newton: New equity highs as of the end of January or the beginning of February more specifically. So yeah, very pleased, very happy to report that. I mean obviously the favorable single direct market conditions, have been a contributing factor, but nevertheless if you've been watching the markets they have been shopping around, so it's not all been roses and easy sailing. But nevertheless, we've had a great run on the markets and we're two weeks in to the group challenge. We've got some individual students reporting back that they're seeing some early successes.
Phil Newton: One or two of our challenge group presenting the one percent on their accounts after a week. Again it's a small trading account so these are great results, we're not risking the shares of our backwards really is exciting. It's a half cents of the account equity risk per trade entry. So we're not using huge amounts of risk, over leveraged over position side, all the things that we're constantly talking that you shouldn't do.
Phil Newton: We practice what we preach. It's small position size, it's single strategy on a single instrument at this stage because of the small account size. And again, we're seeing some fantastic growth. So yeah, really excited we're going to hit our challenge objective of taking that $1,000. For me because of the currency, it's about 600 pound in my account, just a little under $1,000, I want to get mine to the $100,000 mark or equivalent.
Phil Newton: So that's where we're at with the challenge. So yeah, 38 cents up on the account after month one, great start to the challenge both in my own account, and for the community challenge traders as well. So great early successes.
Sean Donahoe: Absolutely, and like you said, this is a focused case study on taking $1,000 to $100,000. It's not based on big portfolios or anything else. This is just to show that you can take a small account, and grow it steadily consistently without taking all the risk and taking it to $100,000 from a very small account. It is possible.
Phil Newton: I'm not going to quit the day job as it were, but I can grow it to a point where I could quit it then. Now interestingly Sean, I had a few messages from people who have got larger accounts, and once you've got 1890, a little over $ 100,000 in their trading account. They've asked can we join the challenge. I've not got a small account. It's still okay. The short answer is yes.
Phil Newton: On the successful conclusion of this challenge, we're going to do that. We're going to take that hundred to a million and see if we can replicate that on the logical. I'm not going to do anything different with a different strategy, it's just I'm going to use the same methodology to take that hundred grand, to potentially a million or half million or 25 ... 250. You can have your goal is whatever you want. I like setting big goals big challenges. So you can take that large account, to an even larger account with the same strategy. So it's versatile to get you whatever your current situation is, to successfully trading. That's really what the challenge is about, to get you trading successfully, profitably, consistently. And I'm just saying that you can start with a really small account, or if your situation is a little bit better than the average person on the streets, you can take a larger account to an even larger account. So yeah, you can do all of these things.
Sean Donahoe: Absolutely and it's a bloody simple strategy that's the whole point. If you're interested-
Phil Newton: let's be bullish.
Sean Donahoe: ... it's not rocket science.
Phil Newton: What a surprise. What a surprise. But yeah, I mean, we outline all of that, step by step. Because you're going to appreciate everyone's ... I think, as well just another side tangent Sean, I think most people have a lot of knowledge about how to trade and what to trade. And I think the missing ingredient for most people is not knowledge. It's just knowing-
Sean Donahoe: It's the application.
Phil Newton: Exactly. Yeah. "Now I know this, what do I do with it? What do I do with that knowledge?" "Okay Phil, you keep talking about buying the dips in an auction, but how do you do that?" That's what we explain. How do you ... step one, do this step two do that. Step three, do this. It's a conveyor belt approach to find, filter, and source opportunities that does not require you to spend all day at the computer.
Phil Newton: So yes, it's technically more active than our main strategy. We aim to get paid at the end of each week or the middle of the week, depending on when we open the trade, but we want to get paid on a weekly basis as opposed to a 45 day cycle. Which is what the main strategy that we use. I want to get paid at the end of the week, but at the same time, I don't want to spend all day at the computer. I don't want sacrifice my other day to day commitments, work life, family, fun, whatever. Whatever your thing is, you can do it from the comfort of your mobile phone when you've got time.
Phil Newton: It's a simple to apply strategy that doesn't require you to be glued to the screen. I think when you know how to put the pieces of the puzzle together, the knowledge that you've got, and you know, "Okay, well, I know this thing, but what order do I do everything in first? What do I need to pay attention to? What do I need to ... I don't need to worry about that anymore."
Phil Newton: Lay all that out in the process. And that's what ... this is what we keep talking about what a good robust positive expectancy strategy should have. It should have everything laid out. What you're going to do? When you're going to do it? Why you're going to do it? When you know those things, it gives you confidence to put the trade on, and that's what we keep talking about.
Phil Newton: So that's what the challenge is about. It's to really get people excited about trading successfully. We're leading by example and we're doing it in real time, and we're growing a small account and you're looking over my shoulder doing it. As you've probably gathered, Sean, I'm really pumped about this. Because, it really gets my blood flowing when we've got a nice group of traders, who are following along or creating their own challenge, and they're seeing results. It's just exciting times and it really gets my hair bongos burst.
Sean Donahoe: bongos burst.
Phil Newton: however you want to phrase it, I'm really excited.
Sean Donahoe: Absolutely. Okay, so that's cool. And again, it is exciting times. I'm really enjoying watching all our students' successes, they're getting started. Again if you want to be part of this, just send us an email it is; [email protected] And he'll tell you more about it, how you can get involved and everything else because it is a private thing we're doing right now.
Sean Donahoe: So, okay, to the main topic of the day, why do we have the red freaking dots on us all the time? Now this is going to be soapbox territory. I'm going to grant and get a little opinionated. This is one of the things that gets my juices going. Because I actually had this conversation with someone recently that is someone I would consider a very good friend. But they became very much full of all of the talking points that are commonly thrown around-
Phil Newton: You mean he bought into the narrative on the talking hats news media?
Sean Donahoe: Oh, well, a little bit a little. Okay, a lot.
Phil Newton: A lot.
Sean Donahoe: Let's just be blunt about it. I'm trying to turn myself back. But you know what, bollocks.
Phil Newton: Bollocks to it, yeah.
Sean Donahoe: So his was good.
Phil Newton: Go for it.
Sean Donahoe: So here's the thing-
Phil Newton: Smithers, release the hounds.
Sean Donahoe: Indeed, here's the thing, I've had a lot of success in my life. I've been very grateful, I've been very ... I wouldn't say lucky because I've made it bloody happen.
Phil Newton: You may get unlucky, or you make your own luck. Being fortunate I've seen success.
Sean Donahoe: Again, I come from a very, very poor background. I come from a tiny island off the North tip of Scotland. Where I would work on a fishing boat kind of like Deadliest Catch. And there's been times when there's been no catch to be had. And I'm lucky to walk away for 60 to 70 hours' worth of work with 50 bucks.
Phil Newton: With the .
Sean Donahoe: Yeah, basically and that went straight to the family to supplement my dad's pension. He was a cripple, he had to walk on two sticks, and he only got 60 pounds a week in pension. So I mean, this is back in the UK, obviously. So I grew up ... I mean, we had nothing and it was a struggle. I came out of that determined to make something work and ended up coming to America. I had success in the UK.
Sean Donahoe: I brought that over here, I had a couple of things happen. When I arrived in America I had $5 in my pocket and half a suitcase full of stuff and determination to make something happen. Got to where I am right now. It's been a hard slog. So when I hear people start putting down people who are successful, who have made it happen, it just grinds my cheese. It really does. It just makes me really mad. Because again, it's like this entire group of successful people are evil.
Sean Donahoe: And with 2020 looming ahead, it just really great because they come out and say, "Oh, well, we need to tax the wealthy, increase." You know that ... I mean, last week, we had two people say, "Oh well, 70%" I think his name was Kamala Harris. "Oh, we need to tax the wealthy at 70%." Then someone else came and said, "No, no, no, we could just go higher than that, 90%." I'm like, "Okay, really? Seriously?"
Phil Newton: What are you going to do for them? I would like a, butler to come around if you're going to pay.
Sean Donahoe: I could take it ruder than that, but yes.
Phil Newton: Yeah, but I hear what you're saying. It's ridiculous demands from the politicians.
Sean Donahoe: It's target of opportunity.
Phil Newton: To chart their eyeballs on their narrative on their story and it's the greedy fat ... Now again this is where it makes me frustrated it's the greedy fat cats, the entrepreneurs, people who have seen success. We worked hard for this. No it's not like we were born with a silver spoon in our mouth and we had it laid out for us. We worked damn hard in lots of different ways physically, emotionally.
Phil Newton: We've had great times. We've had really bad times all the way through. It's like I don't want to go and work for the man. I don't want to go and work for the corporate, the traditional fat cats. We are the trade ... if you're a solo trader. To be fair if you had a business ... let's use the combust move if you're a business on a high street would be a successful mom and pop business owner. We might have our own .
Sean Donahoe: I was going to say if you go from that, if you go from mom and pop.
Phil Newton: Yeah we'd have .
Sean Donahoe: Yeah.
Phil Newton: We'd be uploaded wouldn't we? We'd be a little tick take parade our own mini version of it, but we would be successful.
Sean Donahoe: Celebrated.
Phil Newton: We'd be on interviews, we'd be on local TVs saying how did we become successful? We'd be happy hunch, but because we ... from my point of view because you're trading the financial markets, you're evil. You're the Wall Street bad guy and I'm really, really?
Sean Donahoe: That chops my ... it does chop my ass. It really does here's the thing though if you grow from that mom and pop-
Phil Newton: .
Sean Donahoe: Yeah, there you go, if you hear a grating sound in the background it's me grating the bloody cheese, because it really just does . But here's the thing.
Phil Newton: Ridiculous claims.
Sean Donahoe: Well, here's the thing.
Sean Donahoe: If you go from a mom and pop shop and then suddenly you grow that and then you have three or four outlets you become a franchise. You become a national franchise from that mom and pop now you're evil because you're corporate and it's the thing ... It's just an excuse. It really is a target of opportunity. I mean, both Phil and I know from managers, people who are managing millions of millions of dollars. And Phil was a fund manager, we're actually considering setting up a new fund for trade Ghanaian, but at the end of the day, I was like oh that's the label right there. You're a fund manager oh, you're one of those evil Wall Street pranksters.
Phil Newton: Yeah.
Sean Donahoe: Yeah, and it just becomes a label because that's what the narrative is moving to and unfortunately a lot of sentiment is being again perpetuated by the mainstream media and everything else I don't want to get all political. I'm trying not to desperately it.
Phil Newton: There's a lot of overlap by politicians who are literally looking around-
Sean Donahoe: Driving the narrative.
Phil Newton: ... to throw someone under the bus. I mean they're the ones who short sell us and when we saw that literally at the end of last year, where short sellers have been pushed under the bus, again specifically the one in the mainstream media was with Tesla. Tesla short sellers are causing pandemonium with Tesla ... No, it wasn't. If you looked at the price chart you would see that short sellers were not as they said driving prices down prices were not moving lower. If no one shows selling on Tesla and there's more sellers than buyers' price would literally go lower it didn't. So the narrative of the media was absolute bollocks and the politicians take that as if it's set in stone.
Phil Newton: It's based on how you want to phrase it and they toss that out. Yeah short sellers are the evilest things in the world, but that was the end of last year story. Now this year what's the story? This year it's ridiculous absolutely ridiculous. They're just looking for someone to blame. To rally a group of people behind a cause, but there's no cause there in the first place. That's the issue.
Sean Donahoe: Well, short sellers do get a lot of stick. Here's the thing short sells are nothing more than opportunities to potentially profit from an overvalued stock. It's not always an act of market manipulators or angry activists. I'm a short seller a lot of the time because I see short opportunities. Now if I'm doing it with options it's not really a short sell position. You know it's a short or I'm putting a put down because I believe the stock is overvalued. It's just a different way to express that I'm doing it with stock. Yeah, I'm going to borrow that stock and sell it believing I can pick it up later.
Phil Newton: But here's the thing if it's a shit stock, it's going to move lower it's going to have a price correction and that was going to happen anyway. Whether the short sellers or not. You can't put lipstick on a pig is if it's a bad stock, it's going to move lower. If there's temporary bad news or bad vibe against an instrument, a stock, a commodity, an index it's going to have an adverse bearish movement and we can take opportunities. There's an opportunity for us as traders we recognize that well that could be about to happen. We can profit from it that's not an evil thing. That's not a bad thing.
Sean Donahoe: No, I mean right now I mean with ... Look, short selling criticism is not me. It's not like it's a big thing that's a recent leverage tool used by the mainstream media.
Phil Newton: And I reference my face book, Sean reminiscence of a stock operator. They got flack in 1930. It's not an old story it's going to happen it really is. It's happened for hundreds of years in many different markets, because the opportunity to short sell is available in other markets or the industries, but why doesn't it get the cramp? If it's such a bad thing why doesn't it get the bad press and the headline criticisms and critiques in other industries because it's not really evil thing.
Sean Donahoe: No, I mean, here's the other thing. I mean just to give you an example, 100 years ago, or over 100 years ago, there was a guy called Bernard , I think his name is. I probably, butchered that. But he was testifying before the Committee on Rules for the US House of Representatives in January of 1917. Okay, this is one year before the end of the First World War.
Sean Donahoe: And he was getting criticism and he was testifying because of short selling. And he said "A market without bears will be like a nation without a free press, there will be no one to criticize and retain the false optimism that always leads to disaster." Now think about that for a minute. That's from 1917 again, Congress and politicians sticking their nose in and criticizing and bringing someone to task for their short selling activity and basically saying look you need this. You need criticism of the markets or individual stocks-
Phil Newton: Or another way I see it Sean-
Sean Donahoe: You need a balance.
Phil Newton: ... you need a free market what a surprise?
Sean Donahoe: I know what the hell, Jesus Christ.
Phil Newton: You need a free market. You are without restraints it will balance out. Again, we're seeing this with and the digitization of other industries outside of the stock market, short term rentals, for example, is one that springs to mind. We're seeing that and the first immediate reaction is to regulate and put restrictions and prevent people from doing it.
Phil Newton: Where's the reality is in a free market, it will find equilibrium. It will work out and a good stock will continue to rally and be bullish, a bad stock will be bearish. It will happen and short sellers are not going to impact that. It might speed things up a little bit temporarily, but the reality is in a true market free market, it balances out. It's nothing to worry about. If anything it should be encouraged it really should be encouraged.
Sean Donahoe: Yeah, absolutely, absolutely. But again it's one of the reasons we get a bad rap. Here's the thing-
Phil Newton: We're both trying to balance on the same soapbox Sean.
Sean Donahoe: We are, we are.
Phil Newton: Move over Sean, we're elbowing each other on the podium presentation.
Sean Donahoe: Like I said then this was Sir Bullocks territory even for the-
Phil Newton: It is unjustifiably so. It really is free market power to the people.
Sean Donahoe: Absolutely I mean here's the thing everyone has an opportunity to be part of this market. Everyone has an opportunity to leverage the power of market and money movement. Everyone ... I mean we're doing this with 100k challenge. We're taking $1,000 which is not a big amount in reality. You could start off with 500. You could start off with 100 if you need to, but at the end of the day there are things that you can do to be part of the flow of money.
Sean Donahoe: If you want to catch salmon go to the river okay you're not going to catch it on the top of a fricking mountain. Where you can stand on your high horse and shout out what an evil bastard the traders are and everything else. Look go to where the fricking money is, get a part of it, learn a skill, take a cut of the profits and guess what you now have a stream of income.
Sean Donahoe: I mean, here's the thing. Another thing with the mainstream media is they love to over-hype things. We will always criticize the financial media and everything else. Because they love to over-hype because they're trying to get eyeballs, trying to get attention why because they want you to be aware of their ads click on ads, by products that advertises, paying for space or. They've got their own in ... But then when a common narrative breaks down it now becomes well it's the traders fault or the short sellers fault or it's the best coming out and they're causing this to market crash.
Phil Newton: We literally saw what a one sided market will do in Krypton. Again those mentioned it, it happens market down in the diary. It's a couple of Xs on today's date, but we just saw what a one ... if you weren't able to short sell it would be referred to as a one sided market. You can only do one thing you can only be a buyer one side, you've not got a two sided market.
Sean Donahoe: There are ways to do it. But it's overly complicated.
Phil Newton: There's ways around it now, but for many a year it was a one sided market and we see the repercussions of not having that balance or the market been able to find equilibrium because it creates bubbles. It generally creates bubbles when you there's more people taking action unnecessarily and unjustifiably. So on one side of a market it creates bubbles. It creates an exaggerated ... and you were just saying that in practice a slightly different way, but it creates an exaggeration of the situation.
Phil Newton: It doesn't help it find smoothest, find balance, find equilibrium and I can read them ... it creates volatility. It creates that uncertainty that and that's what we don't want in any market. We want certainty we want prices to cycle smoothly down. In a perfect world that's what would happen in any market, any industry. But it's when you have that imbalance in the markets. When you prevent the short sellers from doing their regular activities or being able to play both sides of the market, it creates an imbalance.
Phil Newton: If you can only buy something and close the position, then you've not got a balance. It creates a bias towards only being the buyer and again the extreme illustration is everyone was talking about crypto, everyone was buying crypto. Crypto is the best thing since sliced bread, which really is only since 1923. We've had that conversation before, but it creates that imbalance and not an exaggeration of a situation in which is only ever going to be temporary.
Phil Newton: And that's happened many times over the decades and centuries. You can go back through history and see the same things keep happening over and over again, but then that bubble eventually bursts. But this time Sean, this time is going to be different. 2020 it's going to be different.
Sean Donahoe: That's it, yeah my God how many times have we heard that over the years, but at the end of the day yeah I mean Bitcoin is a prime example. Because what happened when it crashed oh it's all the whales fault or it's all these big guys there and they're just screwing the little guy and all the rest of every other bloody excuse. We were shouting from the rooftops get out.
Phil Newton: We appreciate there's also more to what we're just glossing over very now. There's lots of other reasons why what happened, happened the lack of liquidity and all the rest. Those are the things that ... Let's just-
Phil Newton: ... sweep them under the carpet for now, just .
Sean Donahoe: Well, the focus is on the sentiment, which was the sentiment shift is the evil big guys who had millions in there. It's all these evil guys.
Phil Newton: Ironically it was the big buyers that were causing the problem. The whales as you were just describing because they're buying all the things, but it's the counter arguments and they were the bad thing. Hold on if you don't want us to short sell and you want us to only be a buyer and all the big buyers come in and buy everything and now suddenly they're the bad guys. It doesn't make any sense. It's just a ridiculous argument when you present it that way unfortunately.
Sean Donahoe: It is because what happened then was and I got flack for this. I actually got hate mail which is not an unusual thing.
Phil Newton: You're doing absolutely right when you get your first set of hate mail Sean. You know you hit a, button.
Sean Donahoe: Well yeah, because I was critical of Bitcoin and because I said, "Look, we told people to get out." And someone who had the old crypto and held a lot of crypto because I'm a trader I was critical of the people who were trading crypto trying to learn the industry and everything else. And my arrogance as a trader like it doesn't matter what the vehicle is the principles does-
Phil Newton: As we've proven many times before.
Sean Donahoe: It's ... look just because you got into the crypto hype and you start becoming one of the crypto bros look, I get it, that's fine and there was money made. I made a metric ton of money in crypto and I was the one calling getting out, get out now. And I held it before it was all hype. I held this back in 2013, 2014, as I've said many times as an investment, and I was very grateful that it ramped up to near 20,000. My God, I made a metric ton of money and I got out.
Sean Donahoe: When I said, "Look, the bubble is about the burst." Okay, great. There's a bubble I'm riding it, but I've been riding a lot longer than most people, fantastic. But I got out, but when I was critical of people who were still hyping it. Who were still saying oh, it'll come back up. It's going to hit hundred thousand. We got John oh, what's his name McAfee who said if it doesn't hit a million or 500,000 he was going to eat his own junk and just wow, seriously, what, it's ridiculous. But when you call it out they're just like, oh no, you're not a believer. You're not a true believer in this religion of crypto.
Phil Newton: I'm seeing a little bit of talk on the socials again over the last few days talking about Bitcoin. Again from some and talking heads that I'll tell you off air I don't want to out him, but it's public out there anyway. But he's talking about he bought in 2014 ... I'll just quickly Google the price and he's bragging about how he bought Bitcoin in 2014. Again, if we just assume that you bought at the best possible price and it was about 450-ish, $500 and he's still got it. He's bragging that he's still got it and he put ... not in substantial amount of money by his own accounts and I'm just looking at the current price right now. It's about the same five years later. Why are you bragging about this?
Sean Donahoe: Well, Bitcoin what is its worth right now? It's 3406. So if he got it at that low price then, then yeah, he still .
Phil Newton: I know, but I'm just looking at the writing was on the wall when we were talking about 18 thousands
Sean Donahoe: Yeah, well where he's come down to is stunning. But even then, even and I've said this many times. Even if you bought at the beginning of 2017 and you still had it today you're still up over 300% well done, wow.
Phil Newton: My counterpoint to always is all right great. Do it again.
Sean Donahoe: Do it again. I knew you were going to say that.
Phil Newton: Find another crypto and do it again. Get in early come back in five years and do it again.
Sean Donahoe: That's it.
Phil Newton: Most people can't that's the trick in it. That's what separates the people who got lucky once and to me my very first trade I got lucky. Comical waterfall I bought 54 shares I sweated through the fact that it went down to 54 a pence per share, sweated through the fact that it went down to 48 and then for the next nine months, densely probably held my breath of all of that time and then not quite double my money in several months. Looking back on it, I got lucky. I really did, but I'm not bragging about it. Look how great I was, look at how fantastic because when I ... guess what Sean, a very quick lesson was trying to do, do it again Phil, do it again. The next four trades didn't quite work out the same way Sean.
Sean Donahoe: No, I mean, we've all learned the hard way.
Phil Newton: There's a good lesson in learning early on. It gave me a little bit of spending money to pitch around the in fairness, but it was a very quick reality check for me. I got lucky on my very first real money like I'm taking this seriously time to trade and it worked out fabulously. And then the next several trades, the next four trades actually were a reality check and it just allowed me to okay there's a lesson here I saw it for what it was, do it again and that's what I spent my career do it again, replicate it, do it again. Anyone can get lucky once and we're bashing and bashing crypto Sean that we've got off the beaten track.
Sean Donahoe: A little bit, but it's one of the things.
Phil Newton: A little bit.
Sean Donahoe: In reality here is-
Phil Newton: Do it again.
Sean Donahoe: There's always going to be criticism for traders it doesn't matter and it's not just because you're a trader it could be because you're successful that you have attained well-
Phil Newton: Pick on an industry, pick on markets, take your free choice.
Sean Donahoe: It could be anything. It could be-
Phil Newton: It happens.
Sean Donahoe: It could be Phil's fetish footwear.
Phil Newton: Phil's fetish footwear, yeah. You see you're picking on me. And I'm going to go up I have like my retirement business.
Sean Donahoe: Funny stuff, yeah.
Phil Newton: My high street shoe shop that I've got my eyes set on.
Sean Donahoe: It doesn't matter what it is. When you're successful you're a target when you rise above the average you're always going to be a target. Everyone wants to pull you down. The way to handle it is to say fu and that's one of the ways I handle it.
Phil Newton: Here's how you do it, Sean, and this is why we go off the beaten track. Prove them wrong. Do it again. Keep doing whatever you're doing if it's trading trade. If it's business, do more business type stuff. From trading point of view, do it again, put another trade on. Prove them wrong and chew it out. Funnily enough, I had this conversation this morning with a guy that I literally bumped into in the coffee shop, because that's where I like to hang out, as you very well know, Sean.
Phil Newton: I literally rubbed shoulders with him. We got talking and it was ... I completely lost my train of thought. But it was ... So yeah, do it again. Just keep repeating the same process, keep doing the thing, just ignore the talking heads, the talking media, that was it. Yeah, so I asked about the ... He was reading the paper, anything interesting in it, and he's like, "You seen anything interesting in the news type things?" "No, I've not read it for years." And his reaction was, "Yeah I really need to stop reading the news. It makes me so angry." It's like, well, why don't you stop reading it then if it makes you frustrated and angry? And then the conversation turns to Brexit, unfortunately, and then we both ejected very quickly after that.
Phil Newton: But ultimately it's like turn of the media, turn it off, ignore it. And for me, that's been some of the best things that I've done because then I'm not caught up in the minutiae of the nonsense that people talk about. Because the reality is the short sellers are going to continue short selling unless there's some regulatory or legislation changes it's not going to happen and it's not going to happen anytime soon. There's nothing we can do about it and if there is there's going to be kickback from the people who can move and influence and make those decisions. They will be absolute on Wall Street, and that's really where, if anything, we want I'm not going to say less regulations, but we want less restraints. And I mean, the prime day trader rule, that's a stupid rule by today's standards.
Sean Donahoe: That is one of the stupidest fricking rules ever, yes.
Phil Newton: It was great for the time in fairness. Tech bubble, everyone was betting the shirt off their back, everyone was leveraging. Everyone ... as it turned out, people were seriously looking back and comparing it to 19th, 20 times 29. People were potentially jumping off roofs and it was a bad time for the people who are on the wrong side of the markets. Because of that the trade rules came in. now by today's standards it's a rule, it's antiquated, it's outdated, people are more savvy. People are more smart yeah people are going to still do stupid things with their money.
Sean Donahoe: As we've seen with Bitcoin I hate to say. That was an example where a patent day trader rule needed to come in or something like that to stop people mortgaging their houses to try and buy Bitcoin.
Phil Newton: Mortgaging their houses I just feel sorry for ... because those people ... yeah we rode, but we mortgaged the house and we're going to live in our backyards the next couple years because we really believe in Bitcoin. And well you're not so clever now are you? Do it again, repeat the process, turn off the minutiae, ignore the talking heads and then just carry on doing what you're doing. Don't worry about the outside world because they're inevitably going to change their viewpoints and opinion depending on which way the winds blowing.
Phil Newton: It really is that kind of philosophy. Don't worry about the criticism you're going to get on the flack if you have people around you who despise what you do because of it. To be fair, they probably don't deserve to be in your life if they despise you for your choice of career or in my case, it was career, but if you're doing it on the side or you're on Wall Street blah, blah, blah. They don't deserve your time and attention and I've caught many people at my life because of their really severely poor attitude towards my choices.
Phil Newton: If they were a true friend, they will respect my choices, whether they agree to them or didn't agree to them. And I don't need those types of people in my life, and I think that's an okay decision to make. If it means that you can carry on doing what you're doing and being successful. I think this goes back to one of your points that you were starting to talk about when you're successful people are going to poo poo on you all the time. That's an old word for being negative. I wasn't saying like actually do that. It's just an old word for the negative and they critique you all the time.
Phil Newton: You need to push those people to the periphery and carry on doing and being successful because people will always try and bring you down. And we started off this conversation talking from a political point of view that trying to bring the trade of the activity to stop the little guy from rising up. It is possible to do it, but you need to push the people around you and it's going to happen in your local people you know in the community.
Phil Newton: As you explained Sean on the social Medias people that normally would, be quite happy to shake it by the hand and bio pints suddenly were very negative towards you because they didn't agree with something that you said. And it inflamed them like you're overreacting dude, calm down. You've got your opinion I've got mine and guess what my bank balance my trading account proves whether I'm right or wrong with the decisions I make, do it again, just prove them wrong by your actions. I think that's the biggest "screw you" that you can give someone when it comes to trading the markets. life and business in general, actually.
Sean Donahoe: I think also as well, one of my thing is, ignore it. Ignore it. It's not ... Why do you have to prove your own self-worth as a trader, successful entrepreneur, as a business owner to anyone? You're doing it for yourself, for your family, for your circle of influence of people who you value and value you. Anyone who doesn't like Phil said, they're not worth the time. And I actually have just ... I've actually cut a lot of people out of my life who just can't see the forest for the trees who are hyper critical or they got the wrong mindset and I cut them out of my life. I'd be brutally honest-
Phil Newton: it's been difficult to do, but I've removed them from my inner circle if you like, and push them to periphery or just blatantly cut them out and never spoke to them again. I think it's worth mentioning my favorite quotes. Again, I use it for reference to the markets, but I think it's just good life lesson is always be prepared to change your mind with new information.
Phil Newton: If you have that open mind ... yeah you can be wrong today and it's okay to change your opinion tomorrow as long as it's justified and you've got new information that can help you become a better person or understands the viewpoint better. And you could be like me on a lot of subjects. I'm openly intently ignorant on a lot of subjects and I'm quite happy to remain that way on those subjects.
Sean Donahoe: Funny, funny I'll give you ... actually I'm going to give you something one of my good friends he's a public speaker Bill Walsh said. And he told me this and I actually used this a long time ago when he first shared with me. I mean it's just like God must be at least eight years ago now., but he said ... okay so he said do you want to cut people out your life that you know are negative, that are bringing you down, that are again that not value you, the negative people. He says here's what you do-
Phil Newton: lots of respect, the present.
Sean Donahoe: Yeah, yeah, so he says do this change your phone number and then change ... if you've got your old one, he says just change your voicemail and he says this, hey, I've changed my number and I've given that new number out to everyone who I feel is worth it. If you didn't get the number, you didn't make the list and that's it. And that was his answer message. And I thought that was-
Phil Newton: That's harsh.
Sean Donahoe: That was brutal, but it worked. But again, I mean, joking aside, at the end of the day, we are going to be targets. If you get successful in trading you know what, don't let other people pull you down. Don't worry about the red dot that is placed on traders. That is the narrative, the criticism and everything else. Shake it off. I'm going to have to quote Taylor Swift, "Shake it off." My god, I've actually quoted Taylor Swift.
Phil Newton: Two days in a row Sean, I'm going to let them know it's two days on the row. You did it yesterday as well when we spoke.
Sean Donahoe: I actually like that song. I'm going to confess, but like I said, in fairness-
Phil Newton: who's got the sassy flick of the wrist now?
Sean Donahoe: I know.
Phil Newton: Go, girlfriend.
Sean Donahoe: I know, but that's only because I like ... There's a guy, Leo if you look it up on YouTube, did a version of it. It was heavy metal version. That was my first exposure to the song. But then I found out it was a Taylor Swift and I actually liked it.
Phil Newton: . I know what you were up to, Sean.
Sean Donahoe: Well, you know, I shake my ass and that's what happens.
Phil Newton: I don't even know if she's on America's Got Talent. I don't know where she came from, but nevertheless.
Sean Donahoe: She was a country singer funnily enough, apparently. But yeah, very talented young girl, but not my usual cup of tea for music, but I actually did like that song, so yeah. Go, Taylor Swift. -
Phil Newton: I can neither confirm nor deny my approval, Sean.
Sean Donahoe: Oh, there you go. Anyway, shake it off. Doesn't matter. Anyway, let's move on with the trade fader evade before this goes on to a weird freaking rant about music.
Phil Newton: I think we're already there, Sean.
Sean Donahoe: I think we have-
Phil Newton: We're already there because we've seen many squirrels and chased them down.
Sean Donahoe: We certainly have. Today has been a squirrel show brought to you by the letters T and C, and the numbers ... I don't know, whatever the market is at, S&P 500, or get the Sesame Street references out. But let's start with Disney, DIS, and we'll have a look and see what is going on there.
Phil Newton: Well, I think we've got ... I think just following up, I don't know why you didn't go for the quote there. We're going to finish this off. If you want to cut people out your life, just let it go.
Sean Donahoe: Let it go.
Phil Newton: Let it go.
Sean Donahoe: There you go. Go frozen. Oh, yeah, there you go. Fine, fine, fine.
Phil Newton: Phil's on the happy juice today, as you can gather.
Sean Donahoe: Yeah, well you ...
Phil Newton: So, Disney it looks a mess. This is probably a good example of what we sometimes refer to as a messy chance. Up a day, down a day. Opens and closes. It's spiky. It's not really doing anything, so this for me is . And broadly speaking it's ... Yeah, broadly speaking center range. It's not really at the upper or lower end range if I was forced to trade it. No matter which way I look at this, it's in a range. It's not doing anything interesting. It's not at an interesting location.
Sean Donahoe: (singing) Damn it. All right, this show has gone completely to shit, but hey, what the hell. Okay.
Phil Newton: it's the guys with the clipboards and the padded jackets.
Sean Donahoe: It is. It is.
Phil Newton: Just go and open and let them in.
Sean Donahoe: that tipped my radar.
Phil Newton: It's a good buy from them because that's ... Yeah, it's a good buy from them, I think.
Sean Donahoe: Yeah. Now, they opened up markets early and had a big up and then a drop just approaching earnings in a couple of days. So what are you thinking, Mr. Newton?
Phil Newton: I like it. I'm going to have to make the assessment .
Sean Donahoe: Yes.
Phil Newton: I wouldn't normally focus on trying to name patents because that's not really what we're about, so I'm just trying to figure out what's going on. It looks like we've got an inverted head and shoulders right now currently in the development of the right shoulder. I think I would have to put a condition that if we went above the approximate neckline, I'm just going to call it an approximately-
Sean Donahoe: 140?
Phil Newton: $143, somewhere around that. 143-ish approximately. If it went above that, I would be bullish based on the potential for the reversal punch. I actually like Spotify, I'm a user. I think Anchor is a good buy for them. I'm trying to influence my decision based on my viewpoint of the company as a whole, rather than just the chance. Again, I think long term, there's good prospects for this. Again, just because I happen to know a little bit about the company outside of looking at the charts .
Sean Donahoe: Yeah.
Phil Newton: So, yeah, I think that's ... It's a good buy. I think conditionally, I'd be bullish above around 143.
Sean Donahoe: Yeah, I'd agree with that. About 140, I think I'd be interested. Yeah, but it's the same kind of principle, same kind of analysis. I will be looking at that. I want to see post earnings, but yeah, that would be one I would put on the side radar. It is less than the one year that kind of is a hard and fast rule for IPO based stocks, but I am liking this as a company. With some fundamental influence it would make an exception there. Okay, cool. Apple, AAPL, again announced that they had a little shift up. This just hit my radar this morning. They had some executive leave to pursue new opportunities, and I mean it's retail operations. Think what's the name? Angela ? No idea if that's even-
Phil Newton: Or is it Lansbury?
Sean Donahoe: Angela Lansbury, that would be funny. Bring in this consultant. I don't even know she's alive. I used to love watching that. Murder She Wrote. My God, that was a-
Phil Newton: Murder She Wrote. broomsticks is what I was thinking of, Sean.
Sean Donahoe: Oh, well, there you go, maybe a new diversion product for Apple. But we've got the iStick, that's it. It's the Bluetooth connected broom. There you go. Anyway-
Phil Newton: Really? That the revolution that they're bringing? Again, look at the 12 or 18 months. It's been a little bit of everything. You've got kind of an upward sloping range for most of last year, downtrend over the last six months. It's doing a little bit of ... There's no definitive one direction. Again, it won't break until one direction, so don't worry about it.
Sean Donahoe: Thank god for that.
Phil Newton: I think on the weekly chart, it looks an easier assessments. I'm just going to flip it over to the weeklies it's bullish, it's by the dip in an uptrend the daily chart. It doesn't look encouraging I'd be worried about a lower high developing so I would be very cautious between 200.20 and be looking for signs of exhaustion that might say it will announce the man and certainly it went above to 14, broke new highs then it becomes really interesting. Again, it becomes that buying hold type of stock that everyone loves to talk about with Apple. I would imagine at that point the talking heads would lose their minds and I think weekly charts that would be bytes.
Sean Donahoe: Weekly chance, I'm already in.
Phil Newton: Daily chance I'm determined.
Sean Donahoe: Yeah. Evade now right now on the dailies I wouldn't be entered for conversion. I have been in on this since about 150 because I thought that was ... it's nice bottom. Again daily chart analysis because I was looking back at this on the ... sorry weekly chart analysis let me correct myself because I saw a nice bottom around 150.41 which was the tip of-
Phil Newton: That's unlike you like Sean.
Sean Donahoe: Well, you know.
Sean Donahoe: Well, there you go.
Phil Newton: It gives you a good ... It gives you a goodbye signal.
Sean Donahoe: Well, this is going to get me in trouble if I go any further on this.
Phil Newton: where'd you go?
Sean Donahoe: I know.
Phil Newton: It's already one of those shows, Sean. We might as well just see that sperm chase up to-
Sean Donahoe: We just roll with it, roll with it, yeah. So, I was looking at a bottom of in September 2017 and February of 2018, I saw that as kind of a level of interest and when it kind of hit there, it gave me a little bit of one of my other strategies or one of my other indicators I use. Flagged up this as a weekly opportunity for all longer term play and probably hold this for a few months. But again, this is where I was stepping back into tech as a semi investment side, but again, holding longer term options here. I did like that, but right now yeah I would be ... I'm still semi-bullish, but I would want it to get above if I was going back in as a re ... I'd probably want to be looking above 180 and then I'd be kind of really bullish on it. I think that's going to be the next level of interest there about 179, 180, that is fairly-
Phil Newton: How bullish?
Sean Donahoe: Fairly bullish.
Phil Newton: Really bullish.
Sean Donahoe: Yeah, that's ... I would be very ... at that level I would expect to see an acceleration because I think it's one of the most traded stocks it's got them some of the most liquidity as a day trader or when I do have...
Phil Newton: It's a great stock I mean long term or short term some little bit of hard time. I think I agree one at level is kind of injured the 2018 highs and where it was around about 2008. I think that's pivotal it stays blue there, the arrow shifted above there I think it's going to be a bullish. So an interesting level to say the least.
Sean Donahoe: Yeah. Okay. Let's move on then one stock I love to hate or one of them EA.
Phil Newton: You've got a personal vendetta against this.
Sean Donahoe: I do if I can be one of those evil short sellers and I were-
Phil Newton: Just on principle for no other reason than on principle. A story for another day maybe when we have a book event and you can get the behind the scenes, the whiskey over the bar war story of a trade gone wrong.
Sean Donahoe: Well, this is actually personal.
Phil Newton: Partners for the future maybe you'll get my Hungarian instant story out of me as well.
Sean Donahoe: Oh my god, yeah, that one is a censored that one has ... it requires a lot of very expensive scotch that's-
Phil Newton: .
Sean Donahoe: Absolutely, so okay, EA has been their estimates for earnings by one cent. Okay so whether they just equally profit of about $1.95 they saw revenue fall below forecasts, but on a basically a lower than expected sales for his battlefield. I've game among other factors, but again a lot of companies a lot of ... But a lot of consumers are having a sentiment shift against EA for some of their practices and everything else. So the company come it's adjusted revenue forecast for the year and noted intense competition within the industry which is a very, very apolitical shareholder way of saying we got nothing.
Phil Newton: for that?
Sean Donahoe: Exactly.
Sean Donahoe: It's brilliant. It's like, yeah, we got nothing.
Phil Newton: I love that. This just reinforces my decision not to worry so much about the talking heads, the fundamentals, the public-facing narrative. And just the facts, ma'am, just look at the facts. Dragnet or whatever it was.
Sean Donahoe: Yeah, Dragnet. Yeah, just the facts ma'am, just the facts.
Phil Newton: Just the facts, yeah. That's reason enough. Got all that a minutia, and then what were the actual figures? And then when you look at price reaction, it says it all. You've got a half and half chart here. First half's going up, second half's going down. It would be sell a rally in a downtrend, keep ... The exclusion is that post earnings we've got a little bit of a gap down. Normally post earnings, price can usually pause for anywhere up to 30 to 40 days. So I would imagine that it's going to be under sideways. That would be my normal expectation post earnings. It's not doing anything new. There's no new grounds despite the gap and certainly doing anything new or interesting to me personally, it would be evaded.
Sean Donahoe: Yeah, I'm going to say evade with a condition. I do look for the gap fill on some of these things post earnings, but I would have to look at the 60s, the 60 minute charts, maybe a quick snap back. We'll see how that center shifts. Usually stuff like this is a shock reaction, but I like to see if they have something in the back pocket that usually I would see news coming out before earnings, which would be a little bit of a hype or a little bit of, "Hey, this is what's coming down on the line."
Sean Donahoe: Usually when I see that pre-earnings, that is an indication that there's negative news coming out on the earnings call. But sometimes a lot of that, if you get a snap reaction like that, I do oftentimes see a revert to mean while not ... because of the dip from July down to here, I think I agree with Phil. I think we're going to see some sideways or range bounding here. It would have to pop above the 92 for me to be bullish, but there might be a short term post earnings. It'd be one that would be on my radar. If I see a couple of positive days or something on the 60s, that may get me in for a quick snap of a reaction, then yeah, maybe. But because it's -
Phil Newton: -
Sean Donahoe: Guilty of punditry there, guilty of punditry. It could go up, it could go down, but it might also go sideways. Yeah, okay.
Phil Newton: Yeah, it might .
Sean Donahoe: Yeah. But yeah, I think there's an opportunity for a snap back, but because it's electronic arts I'm going to evade it unless I have an opportunity to short it, which I don't–
Phil Newton: Just on principle.
Sean Donahoe: Just on principle. This is on my shit list, so anyway. Next one, 3M.
Phil Newton: That's in a range doing nothing, meandering sideways, not at the upper or lower area of the consolidation. It's evade for me.
Sean Donahoe: Okay, so I'm just pulling it up.
Phil Newton: That's a quick one.
Sean Donahoe: Yeah, very quick one. I would be ... you know what? I'm going to ... I like a bullish play on this one. It's actually triggering a ... One day I'm going to release this indicator or one of the other indicator strategies I use privately and actually, looking at this one-
Phil Newton: You've got your super duper ding dong indication .
Sean Donahoe: my J box and it's kind of triggering a short for me. I'm looking back to ... If you look back to January-ish highs in 2018 and then you can almost draw a downward line connecting the highs in September, the highs in November and where we are right now. I would be a little bearish on this one. I would look for a confirmation signal, but I'm liking this as possible a bearish per se. I'm liking this-
Phil Newton: I've just popped the line, Sean, and I see where you're coming from with that and now that I popped the line connected those highs with the trend line. It's right on the trend line-
Phil Newton: ... as a trend line beta. This looks like a great, a dynamic point of interest.
Sean Donahoe: Yeah, that's one-
Phil Newton: Those same connected lows you've got this giant wedge shaped pattern.
Sean Donahoe: That is what I was doing and I'm literally I haven't put the lines on. Yeah, I was just visually seeing it and I'm connecting it right now.
Phil Newton: eyeballing it.
Sean Donahoe: Yeah, .
Phil Newton: I'm just following along as you're describing it. And it was ... As you were doing that and it just did jump out. I'll let just take a quick snap on that one because it's interesting and I'll just pop it in Facebook group just so that people can see what we're talking about. I've left on the line, Sean, so .
Sean Donahoe: Yeah, so it has hit that. It's got that resistance point and that's going to be ...
Phil Newton: Awesome.
Sean Donahoe: I'm liking that one. It's a possible. It's not tripping my radar. If I see a little bit of a roll over and that as a point of resistance or point of interest, then yeah, I might snap a little bit of that.
Phil Newton: Cool, I've got a picture and it'll be in the Facebook group shortly.
Sean Donahoe: Okay. Now, again I haven't looked at these. This is not prepared. He has one we prepared earlier. This was literally just one that stood out to me there real quick.
Sean Donahoe: Another one that is one of my personal favorites because this is wild fricking shot, Tesla. Let's have a look at that. Now, Tesla has cut the price of its Model 3. Again, this was one of the things for 2018 that was a driving force of its production numbers of Tesla, but also making it more accessible, but they've knocked another thousand dollars off of this for the second time this year to 42K or 42.9. but again, what would you do with this trade, fade or evade? Me personally is in the middle of the . Actually I've not actually traded this one this year yet. I was very active on this one last year. And I took several slices out of this because it was a wild volatiles chart.
Phil Newton: We talked about a few of them on the trade fatty. They've quite interesting trade setups.
Sean Donahoe: I haven't really done much with it this year, but I'm like ... But again ...
Phil Newton: I'm going to give two answers for Tesla, broadly speaking, long term range in the middle of the range evade it. That's my defaults evaluation. I'm going to say books from the scratch three points of view actually like this bearish temporarily in a very, very short term. I think we could get to and we're about 315 coming up to it now. I think firstly, we can see a move down to 283 retest that very short term blow and then-
Sean Donahoe: Yeah, I was going to say exactly the same thing, connecting those three recent tops. And I was thinking the same thing is very, very snappy.
Phil Newton: I mean, if you just looked at the last month and a half, it would be seller rally in a downtrend probably be easier to see on the 60 minute chart, but it's very clearly okay. Because my philosophy is when prices in a range and it moves ... It's already been up to the upper boundary of the range that the chances of price continuing to do what it's already doing is highly probable.
Phil Newton: So a move to the lower end of the consolidation is the most likely thing to happen and we've got that push rally another push down. We're currently looking at the rally now and we're around about 315, 320 level. Based on that I'd be thinking if I was already in this I'd be looking to add in is what I'm thinking so it makes a great entry points. So maybe a move down from the 315 level retested recent lows always my first assessment when we're looking at rally retracement type of things. So it's trending inside the context of the long term range and that's why I'm thinking maybe this discretionary trade here.
Sean Donahoe: Yeah, no, I think that I'm definitely agreeing with you on that for the similar reasons. I'm looking at the highs of like 17th of December, around about 376, the recent highs of 349 in mid-January and the kickoff here. And again, looking at that, I would be short term bearish down to about 280. That was exactly my target as well and I might have to do a discretionary pop a little slice .
Phil Newton: I was just going to say, I do like that. I like that a lot. Yeah, well, you heard it here first. I'm going to get bearish probably going to buy some 315 puts, maybe 310 just because they're a little bit out the money because it's exceptionally expensive as stock option.
Sean Donahoe: It is, it is.
Phil Newton: I might buy a little out the money, a couple out the money maybe a couple out of the money and take a little bit of a punt on prize getting down to 260. But yeah, that's looking interesting. I'm liking the look of that.
Sean Donahoe: Yeah, I'm liking that too.
Phil Newton: Yeah, you heard it here first. We're both in agreements, and we both like it discretionary short term trade. Ultimately we're trading the long term range and using the short term trends to get positioned in range. Again, I think this is the thing where discretion can trip people up a little bit. It's been able to switch between different perspectives and viewpoints. I think if you can't do that, again, I'm just picking up on what we did there. There's two very distinct and different viewpoints going on it. That the default set viewpoint, the default strategy would have me evade it, but from an experience from a trading point of view, that viewpoint says, you know what, there's a trade, very short term discretion. It's outside of the usual units of the strategy. As long as you're okay with that, there's nothing wrong with the trade, but we were very clear on separating the two viewpoints. Both of us have that perspective.
Phil Newton: And I think it's important for newer traders or less experienced traders to see that distinction. There's nothing wrong with a discretionary trade as long as you know that it's outside of your usual purview of a regular setup or regular evaluation and put it on the experimental. Put it on the ... And if it goes wrong, don't be pissed off. It's not the strategy that's gone wrong. This is a discretionary viewpoints. I'm going to put the money where the mouth is. I'm going to be bearish. I think the stock's going to move lower and if it does, I'm going to get paid. But that's not a trade that I can reproduce consistently every single day. I'll reproduce it the next time a discretionary opportunity is evaluated.
Phil Newton: That's the difference between what we were saying out in the main topic of discussion: do it again. I can't replicate that trade exactly again. It makes it very difficult. But the philosophy that got us to evaluate the opportunity in the first place was, hey, we're in a range. We've got a short term trend ... We had a little bit of an overlap and we still have that framework that we're all always talking about, that production line evaluation. But then when we got into the weeds a little bit of, well, it doesn't regular clinical evaluation, but there's certainly a discretion little tweak on the end of it. Separate that decision off from your usual trade evaluation.
Phil Newton: I think that's the takeaway for that last trade, fade or evade, and set up there because I think that's an important distinction to make for every trader. Is it something that you normally do or is it something that you do infrequent? Again, you can repeat this, but it's a discretionary evaluation. It makes it difficult to replicate exactly what you did next time, which is what we're always talking about. Do it again tomorrow, Phil. That's why I've got the main strategy with this production line process.
Phil Newton: I can replicate it couple of times a day, every day. It's easy to replicate. You've got that production line experience, it gives me confidence to put the next trade on and know that somewhere I can find a couple things to trade very easily without having to resort to discretion. Because that's what the production line process that we're always talking about, that's what it's for. But when an opportunity arises like Tesla. Hey, I wasn't aware of this, the trade for -
Sean Donahoe: That's exactly what I was going to talk about, is my allocations.
Phil Newton: ... experimental. Yeah, and I think it's an important thing to have if you want to shoot from the hip. We're not saying don't do it, but just recognize when you do do it, it's outside of the usual purview of your regular trading strategy. It's okay. It goes wrong, don't be pissed off that it went wrong, it's discretion. It makes it difficult to go and replicate that, but you can't replicate exactly what you did next time. And that's the downfall of the novice trader. When they try and replicate discretion, it inevitably goes wrong.
Sean Donahoe: Yeah.
Phil Newton: They just can't do it.
Sean Donahoe: Discretion is the better part of valor, as they say.
Sean Donahoe: Yeah, there you go.
Phil Newton: .
Sean Donahoe: Yeah, I mean, there you go. That is it. And I think that's really a good way to end the trade, fade or evade, and a good place to end the show as well.
Phil Newton: For the week as well, from my need.
Sean Donahoe: Absolutely. Ladies and gentlemen, thank you very much for listening. Do appreciate it, and that is it. So please remember, this show is not free. We do appreciate a five star review on whichever platform you are listening to this show on and you can subscribe and review us there. It's always great to hear from you and helps us reach more traders and investors just like you, especially when we get on our soapbox and jump on our wee rants like today. Today was a-
Phil Newton: I had a lot of fun today as well. I mean, there was a few cries, we got angry with each other, a little bit of shoving and pushing, but we certainly had a laugh along the way doing it.
Sean Donahoe: Absolutely.
Phil Newton: It's been a great show. It's just fabulous to have you. If you do want to contact us, if it's a complaint, you can send it to Sean at .
Sean Donahoe: Cheers, dude. Appreciate that.
Phil Newton: If it's somebody's ego that you want to stroke, it's Phil turn this week to be ego stroked. If you'd like to send us some nice things or a question that you might want to appear in next week's show, you can send that to [email protected]
Sean Donahoe: Thanks again. Okay, so I'm going to send Phil some hate mail, just try and do it anonymously. But without -
Phil Newton: week's show, yeah.
Sean Donahoe: Well, okay, next week is going to be similar because we're going to be trading tips that we learned from 80s movies. So, expect a lot of craziness, hilarity, insanity and a whole lot more. With that being said-
Phil Newton: More of the same.
Sean Donahoe: More of the bloody same. We're just throwing caution to the wind and having some bloody fun with it, so-
Phil Newton: We're just letting you know next week, it will definitely be crazy.
Sean Donahoe: Absolutely. So, we'll see you next time, same bad time, same bad channel. Take care for now.
Phil Newton: for now.
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