WEBVTT - Stephen Suttmeier on Chart Portfolio of Global Markets 0:00:02.040 --> 0:00:06.000 This is Master's in Business with very Rid Holds on 0:00:06.240 --> 0:00:07.320 Bloomberg Radio. 0:00:10.280 --> 0:00:12.840 This week on the podcast, I have a special guest. 0:00:13.160 --> 0:00:17.960 Steve Suttmeyer has been in the technical analysis game for 0:00:18.000 --> 0:00:22.800 a long time. He is chief Equity technical Strategist at 0:00:22.840 --> 0:00:25.640 be of A Securities, and he is a double threat. 0:00:25.800 --> 0:00:30.280 He has both a CMT and a CFA. Looks at 0:00:30.280 --> 0:00:34.120 the world from a very interesting perspective I get via 0:00:34.200 --> 0:00:38.920 a research. In particular, I really enjoy Steve's monthly chart 0:00:38.960 --> 0:00:43.519 blasts as well as his overview. Every now and then 0:00:43.600 --> 0:00:46.000 he'll do a deep dive into things like sentiment or 0:00:46.040 --> 0:00:49.560 sector rotation. I find his work to be very informative 0:00:49.600 --> 0:00:52.479 and very useful, and I think you will also. With 0:00:52.600 --> 0:00:56.920 no further ado my conversation with be of A Securities, 0:00:57.360 --> 0:01:01.760 Steven Suttmeyer, Thank you very much. All right, So yeah, 0:01:01.800 --> 0:01:03.640 I'm glad to have you. So, so let's talk a 0:01:03.640 --> 0:01:06.240 little bit about your background. So you get an MBA 0:01:06.360 --> 0:01:09.080 from Fordham. What was the original career plan? 0:01:09.800 --> 0:01:15.240 Yeah, so I went to Fairview University undergrad and it 0:01:15.280 --> 0:01:16.400 was right. I didn't put it this way. It was 0:01:16.440 --> 0:01:19.320 right right after nineteen em crash. I was there from 0:01:19.319 --> 0:01:22.360 not eighty nine to ninety three. Right, So instead of 0:01:22.360 --> 0:01:27.080 pursuing business, I pursued pre med and since my writing 0:01:27.120 --> 0:01:30.119 skills weren't all off the snuff, I just dove in said, 0:01:30.160 --> 0:01:31.399 you know, let me get a double major and do 0:01:31.440 --> 0:01:34.360 English writing. So I wanted to challenge myself improve my 0:01:34.400 --> 0:01:38.280 communication skills, you know, through through the writing process. Long 0:01:38.280 --> 0:01:40.080 story short, you know, get out of college. It was 0:01:40.120 --> 0:01:42.320 a tough time. You know, it was the early nineties, 0:01:42.360 --> 0:01:44.480 and you know it was hard to find, you know, jobs, 0:01:44.520 --> 0:01:47.440 and I was not a good standardized test taker, right, 0:01:47.480 --> 0:01:50.440 so my MCATs were bad, but I took them three 0:01:50.480 --> 0:01:53.040 times but I managed to jump my score, right, So 0:01:53.120 --> 0:01:55.080 I still was able to get a few interviews in 0:01:55.120 --> 0:01:57.360 med school. But I kind of changed my mind. I 0:01:57.360 --> 0:02:02.400 want I wanted to do so after So what I 0:02:02.400 --> 0:02:04.600 did was I was looking around for finance jobs and 0:02:04.600 --> 0:02:06.600 obviously you're not going to hire you know, a pre 0:02:06.680 --> 0:02:10.120 med bio major in English writing major, you know, right 0:02:10.160 --> 0:02:13.680 off the street. Right, So so I just answered ad 0:02:13.720 --> 0:02:16.040 from the paper and guess where I wound up. I 0:02:16.080 --> 0:02:18.760 wound out out of the boiler room right across from Strattonopemont, 0:02:18.840 --> 0:02:20.239 oh in nineteen ninety four. 0:02:20.520 --> 0:02:22.440 What were you doing there. I was one of those 0:02:22.440 --> 0:02:24.240 coal callers, no kidding, and. 0:02:24.080 --> 0:02:27.640 You know, quite frankly, it was a very interesting learning experience. 0:02:27.720 --> 0:02:28.840 I was only there for a year and a half 0:02:28.919 --> 0:02:31.560 because if you've see in the movie boiler Room, sure 0:02:32.240 --> 0:02:33.720 I lived it was. 0:02:33.400 --> 0:02:34.600 That was that accurate. 0:02:34.760 --> 0:02:37.120 I mean, their office was a lot nicer than ours, 0:02:37.160 --> 0:02:40.160 but generally speaking, was fairly accurate. And I remember when 0:02:40.160 --> 0:02:42.280 he was studying for the series seven. In the movie, 0:02:42.320 --> 0:02:45.320 He's like he's realizing, wait a second, you know, they're 0:02:45.360 --> 0:02:47.799 doing things that are not right. And I'm sitting there like, man, 0:02:47.800 --> 0:02:51.160 I'm glad I'm not licensed yet, because the last thing 0:02:51.200 --> 0:02:53.080 I want to do is, you know, get booted out 0:02:53.080 --> 0:02:54.440 of the business before I even start. 0:02:54.560 --> 0:02:57.239 So, you know, you know that scene in Wolf of 0:02:57.280 --> 0:03:00.480 Wall Street where where DiCaprio sits down the room and 0:03:00.520 --> 0:03:04.639 makes that first call. I worked with guys who were 0:03:04.800 --> 0:03:09.000 that good but came from that same sort of background, 0:03:09.000 --> 0:03:11.760 and they all seemed to be too impatient to get 0:03:11.840 --> 0:03:15.600 rich slowly. But a lot of these things really resonate, 0:03:15.720 --> 0:03:18.840 really come across as that was a real thing in 0:03:18.880 --> 0:03:19.959 the eighties and nineties. 0:03:20.320 --> 0:03:22.800 It was, and you know, I just learned that, you know, 0:03:23.000 --> 0:03:25.360 I just just the antennas were off, and I'm like, this. 0:03:25.280 --> 0:03:26.960 Is not where I want to be, to say the 0:03:27.040 --> 0:03:27.520 very least. 0:03:27.560 --> 0:03:29.480 And then and then the funny thing about it was 0:03:29.520 --> 0:03:31.760 when when I see those movies, both Boiler and Man 0:03:31.760 --> 0:03:34.239 Walf of Wall Street, the script that they're reading from 0:03:34.320 --> 0:03:35.960 is exactly the script that they gave us. 0:03:36.480 --> 0:03:39.320 You know, whoever did their research, you know, they found 0:03:39.360 --> 0:03:41.920 a bunch of stuff and it was it was pretty amazing. 0:03:41.960 --> 0:03:45.000 So you work, you leave that world, and you go 0:03:45.080 --> 0:03:47.440 to a few boutique shops, that's right. You work at 0:03:47.560 --> 0:03:51.640 Capital Growth Financial and informer global markets before you join 0:03:51.840 --> 0:03:55.800 investing Giant Merrill Lynch in two thousand and seven. What 0:03:55.960 --> 0:04:00.480 was that transition like from smaller shops to a really 0:04:00.520 --> 0:04:01.080 big one. 0:04:01.480 --> 0:04:03.400 Well, I mean, that's that's a great question. Let me 0:04:03.440 --> 0:04:06.839 just spend thirty seconds before answering that. I was lucky 0:04:06.880 --> 0:04:08.720 to have a dad in the business, you know, so 0:04:08.880 --> 0:04:12.240 he didn't take me on, you know, initially, and I 0:04:12.280 --> 0:04:14.520 had to go through kind of like that that McDonald's thing, 0:04:14.600 --> 0:04:17.400 working the fries at the boiler room kind of thing, right, 0:04:17.480 --> 0:04:19.480 And then in nineteen ninety six I actually worked for 0:04:19.520 --> 0:04:21.400 him for a little while and we went down to 0:04:21.400 --> 0:04:23.520 a firm in Florida, and then you know, I made 0:04:23.520 --> 0:04:26.320 friends with some people in the research apartment there, and 0:04:26.520 --> 0:04:29.280 that's when I started to focus on research. So first 0:04:29.279 --> 0:04:32.320 it was a hybrid technical fundamental, and then and then 0:04:32.560 --> 0:04:34.320 you know, went to fundamental and then went back to 0:04:34.360 --> 0:04:36.760 technical full time. So the reason why I went on 0:04:36.800 --> 0:04:40.600 to Merrill Lynch was, look, I was, you know, entrepreneurial. 0:04:41.320 --> 0:04:45.080 I worked for small firms that that we could have 0:04:45.080 --> 0:04:48.360 built into a big business. But the problem was we 0:04:48.360 --> 0:04:51.520 were charging four cents a share, and you know that 0:04:51.520 --> 0:04:53.520 make a long story short. Everybody else was charging one 0:04:53.720 --> 0:04:55.520 or you know, even less than that, and you know, 0:04:55.560 --> 0:04:57.719 we weren't able to compete, and that makes sense. It 0:04:57.720 --> 0:04:58.960 was very hard. So I'm like, let me get to 0:04:59.000 --> 0:05:02.799 somewhere more stable, big mother Merril in two thousand and seven, 0:05:02.920 --> 0:05:06.679 right stable, Perfect, little that I know what was gonna 0:05:06.680 --> 0:05:08.320 happen two years later? Perfect? 0:05:08.320 --> 0:05:11.840 Well, let's talk later. Let's jump ahead to a question 0:05:11.880 --> 0:05:14.680 I was going to ask you later. You join Merrill 0:05:14.760 --> 0:05:17.520 in March of two thousand and seven, right on the 0:05:18.240 --> 0:05:20.840 you know, verge of an epic a cusp of an 0:05:20.880 --> 0:05:24.919 epic meltdown? What was that year at Meryll like that 0:05:25.040 --> 0:05:26.680 had to be kind of wild. 0:05:27.839 --> 0:05:30.360 Yeah, of course, I mean it's just I just remember 0:05:30.440 --> 0:05:32.400 because I was a little bit more season, you know. 0:05:32.440 --> 0:05:36.320 I've been in the business fifteen sixteen, seventeen, no, no, 0:05:36.440 --> 0:05:40.400 fourteen years, fifteen years when that hit, and I just 0:05:40.440 --> 0:05:44.159 remember the weekend of you know, the shotgun wedding, you know, 0:05:44.200 --> 0:05:47.159 in two thousand and eight. I just remember sitting down 0:05:47.200 --> 0:05:49.080 with some of my colleagues who are a lot younger, 0:05:49.120 --> 0:05:52.000 and they're like, what do we do. I'm like, well, 0:05:52.040 --> 0:05:54.440 you know what, you do your job until someone says. 0:05:54.200 --> 0:05:56.719 You can't because your head down keep working. 0:05:56.800 --> 0:05:59.320 I mean, you know, I've worked at other firms where 0:05:59.320 --> 0:06:02.039 they had LAO like every few months, and you know, 0:06:02.080 --> 0:06:04.719 we knew when they were coming, and just like, you know, 0:06:04.760 --> 0:06:06.479 you just do your job until you told you can't. 0:06:06.600 --> 0:06:07.960 And that's that, you know. 0:06:08.040 --> 0:06:10.800 I mean, I have a vivid recollection of what was 0:06:10.800 --> 0:06:13.840 his name? Thane was the CEO of Merrill at the time. 0:06:14.120 --> 0:06:14.840 Yes, I believe so. 0:06:15.440 --> 0:06:18.360 And I remember that Whenning comes off and people were 0:06:18.400 --> 0:06:20.719 like really upset about it, and I was like, what 0:06:20.760 --> 0:06:23.120 are you talking about? He just saved the firm. How 0:06:23.120 --> 0:06:26.240 are you possibly? Oh, I'm sorry, your stock options are 0:06:26.279 --> 0:06:29.560 worth a lot less as opposed to zero. Something is 0:06:29.600 --> 0:06:30.960 better than nothing, right. 0:06:31.000 --> 0:06:33.320 Well, I mean, you know, look at the news on 0:06:33.360 --> 0:06:35.760 the weekend that weekend seeing everybody taking boxes out of 0:06:35.800 --> 0:06:39.440 liman embarrassed. So it's like, yeah, it's it's a totally 0:06:39.560 --> 0:06:40.520 it's it's very different. 0:06:40.640 --> 0:06:43.200 Door number one was much better than door number three 0:06:43.320 --> 0:06:44.520 in the circumstance. 0:06:44.640 --> 0:06:46.480 Yeah, I mean, of course, you know obviously after that, 0:06:46.600 --> 0:06:49.040 you know, emerging the two together, you know, the redundancies 0:06:49.040 --> 0:06:50.720 and things like that, and and you know, they took 0:06:50.720 --> 0:06:54.120 the opportunity to you know, at least in you know, 0:06:54.440 --> 0:06:57.640 on on teams that were big, you know, cut them 0:06:57.720 --> 0:06:59.280 essentially in half, right, you know. 0:07:00.080 --> 0:07:03.800 To take the people who they think are the top performers. 0:07:03.839 --> 0:07:06.400 And but that's pretty typical. And that's the way finance 0:07:06.480 --> 0:07:08.960 M and A. Right, that's how it goes. This just 0:07:09.000 --> 0:07:11.840 happened to be done so rapidly. There was hardly any 0:07:11.920 --> 0:07:14.480 time for planning. It seemed like everything was on the fly. 0:07:14.800 --> 0:07:16.920 Yeah. So the biggest thing I was we were worried about. 0:07:16.960 --> 0:07:18.800 So I was working with Mary on Bartell's at the time. 0:07:18.840 --> 0:07:22.160 Oh sure, she was running the department, and you know 0:07:22.200 --> 0:07:24.280 the biggest thing we were worried about. We weren't worried 0:07:24.520 --> 0:07:26.360 in one regard because you know, b of A did 0:07:26.360 --> 0:07:28.920 not have a dedicated technical analysis team. But at the 0:07:28.920 --> 0:07:30.480 same time we were worried that b of A did 0:07:30.480 --> 0:07:32.440 not have a dedicated you know what I mean because. 0:07:32.280 --> 0:07:35.680 Me, they may not appreciate the exact value of it, but. 0:07:35.240 --> 0:07:37.320 But they did. Then they kept us, they kept you know. 0:07:37.440 --> 0:07:40.280 So let me roll back. I jumped ahead. What was 0:07:40.320 --> 0:07:42.760 it that you know, you have a background as both 0:07:42.760 --> 0:07:48.800 the CFA and eventually CMT. Giving your background and fundamentals, 0:07:49.080 --> 0:07:51.720 what was it that attracted you to the technical side. 0:07:52.040 --> 0:07:55.120 Well, I started off technical, which is unusual. Normally is 0:07:55.120 --> 0:08:00.320 the other way around, and it was you know, my 0:08:00.920 --> 0:08:04.760 first research boss. His name was Stefan Haber. He worked 0:08:04.760 --> 0:08:09.679 at Williamarr Huffing Company, and he encouraged me to take 0:08:09.760 --> 0:08:14.520 the CFA exam. And I remember that first level was tough. 0:08:14.560 --> 0:08:18.040 I had no finance background. Accounting was very difficult. 0:08:18.080 --> 0:08:20.600 So it's about a fifty percent fail rate something like that, 0:08:20.840 --> 0:08:21.600 maybe even more. 0:08:21.760 --> 0:08:23.600 I mean the level one was I don't remember at 0:08:23.640 --> 0:08:25.840 that time, but all I do remember was the first 0:08:25.840 --> 0:08:27.800 half of the test. I felt like you know, I 0:08:27.840 --> 0:08:30.040 failed it. So then there on lunch, I guess I 0:08:30.040 --> 0:08:32.320 pulled the Harlem glob trotters and regroups and was able 0:08:32.360 --> 0:08:35.440 to get through the second part pretty easily. So but no, 0:08:35.679 --> 0:08:37.920 it it's that's that's what turned me on to And 0:08:37.880 --> 0:08:40.439 then you know, we had a very fundamentally oriented research group. 0:08:40.480 --> 0:08:42.080 Now I was a technical analyst, so he kind of 0:08:42.600 --> 0:08:45.200 you know, brought me on as a hybrid analyst and 0:08:45.240 --> 0:08:46.800 it was good. I mean I learned a lot from 0:08:46.800 --> 0:08:48.800 when I worked there. You know, I covered you know, 0:08:49.280 --> 0:08:51.800 the first stock I guess I was jointly covering with 0:08:51.840 --> 0:08:54.319 another analyst was J Bill Be you know, which was 0:08:54.360 --> 0:08:56.800 based in Saint Petersburg, So you know, so that was 0:08:56.880 --> 0:08:58.800 kind of fun. Yeah, so I got to learn a 0:08:58.840 --> 0:08:59.319 lot there. 0:09:00.120 --> 0:09:04.400 So so how do these compliment each other? How do 0:09:04.679 --> 0:09:10.200 the fundamentals complement the technicals and does one sort of 0:09:10.240 --> 0:09:11.160 dominate the other? 0:09:11.360 --> 0:09:12.079 Or you. 0:09:14.160 --> 0:09:18.600 Are you a technical analyst with a fundamental sort of 0:09:19.320 --> 0:09:22.080 in your back pocket? Not what the key driver is. 0:09:22.760 --> 0:09:26.680 No, my my primary work is technical. In terms of 0:09:26.679 --> 0:09:29.400 fundamental I rely on our analysts ratings at the firm. 0:09:29.520 --> 0:09:33.240 You know, I look and see, you know what stocks 0:09:33.280 --> 0:09:36.679 they like, what they don't like, and I look at 0:09:36.679 --> 0:09:39.680 the charts, and if it melts with what they're saying, 0:09:39.720 --> 0:09:41.200 I go with it, or if it looks like it's 0:09:41.240 --> 0:09:43.000 going to turn in favor what they're saying, I go 0:09:43.080 --> 0:09:45.520 with it, and vice versa. Of course, there's other times 0:09:45.559 --> 0:09:48.280 where I have a really compelling chart looks bullish, where 0:09:48.280 --> 0:09:51.480 they have underperform on it, I'll publish on it. But 0:09:51.520 --> 0:09:53.520 I always say, hey, here's here. You know, fundamental view 0:09:53.559 --> 0:09:55.200 is different, here's the research. I don't to look at that, 0:09:55.240 --> 0:09:57.199 you know. So I respect the work that they do, 0:09:58.440 --> 0:10:01.200 and you know, I try to try to enhance it 0:10:01.200 --> 0:10:05.000 as much as I possibly can. So for me, though, 0:10:05.480 --> 0:10:09.120 technicals are always first and foremost because that's my role. 0:10:09.640 --> 0:10:11.520 But I mean, obviously you want to own something that 0:10:11.559 --> 0:10:14.520 has some sort of intrinsic value. So I think that's 0:10:14.559 --> 0:10:16.400 the way I would probably think about it, you know, 0:10:16.440 --> 0:10:18.480 more of a you know, of a can Slim type 0:10:18.520 --> 0:10:20.760 of approach, because I was always a whim O'Neal fan, 0:10:20.840 --> 0:10:23.240 and he just passed away a few months ago, so 0:10:23.640 --> 0:10:25.200 that was kind of sad because I was I have 0:10:25.280 --> 0:10:27.600 that book on my on my shelf, you know, as 0:10:28.320 --> 0:10:31.040 we all do. So yeah, I mean it's it is 0:10:31.120 --> 0:10:34.040 a yeah, I mean, I look, I mean, I know 0:10:34.880 --> 0:10:39.040 in another world, you know, if you know, if I've 0:10:39.040 --> 0:10:41.560 ever moved on to somewhere else where, I was, you know, 0:10:41.679 --> 0:10:44.240 doing you know, something in a smaller shop. I'm sure 0:10:44.240 --> 0:10:46.040 I would put that fundamental a hat on a little 0:10:46.040 --> 0:10:47.600 bit more often than I do now. But I don't 0:10:47.640 --> 0:10:48.959 have to now because I got a whole team of 0:10:48.960 --> 0:10:51.320 fundamental analysts that that we rely on. 0:10:51.440 --> 0:10:55.760 You're reminding me of the Ralph akampoor A quote fundamentals 0:10:55.800 --> 0:10:59.600 tell you what to buy. Technicals tell you when accurate. 0:11:00.440 --> 0:11:04.520 I mean, I love the quote, but I don't necessarily 0:11:04.600 --> 0:11:07.520 believe it's entirely accuarate. And here's why I think technicals 0:11:07.559 --> 0:11:09.400 can tell you what to buy as well. Oh really, 0:11:09.600 --> 0:11:12.880 because if you can see a price pattern, you know, 0:11:12.920 --> 0:11:17.120 you can see a trend, and if a stock's building 0:11:17.160 --> 0:11:22.720 a big base, and say the analysts are ninety percent 0:11:22.840 --> 0:11:27.200 cell ratings and a lot of volume is surged down, 0:11:27.520 --> 0:11:29.600 you know, when the stock first declined to say five 0:11:29.679 --> 0:11:32.679 dollars from twenty right, and then volume surge, and all 0:11:32.720 --> 0:11:34.520 of a sudden, you're trading sideways for a long period 0:11:34.520 --> 0:11:37.559 of time unless volume you know your fundamental works saying hey, 0:11:37.600 --> 0:11:39.559 wait a second, you know this seems to be undervalued, 0:11:39.679 --> 0:11:41.480 or or maybe the earnings are going to improve next 0:11:41.559 --> 0:11:44.280 quarter or something like that. You know, that's something I 0:11:44.280 --> 0:11:47.400 would look at to potentially buy, even though technically speaking 0:11:47.440 --> 0:11:50.040 it's not very strong, but it is building a big base. 0:11:50.160 --> 0:11:53.360 And if the relative chart could I do absolute relative work. 0:11:53.640 --> 0:12:00.079 If the relative start chart starts showing outperformance versus you know, 0:12:00.160 --> 0:12:02.880 when compared to the absolute, meaning the market's corrected a lot, 0:12:02.920 --> 0:12:04.880 but this stock is starting to lead, that tells me, 0:12:05.200 --> 0:12:07.719 you know what, somebody may know something I don't, and 0:12:07.920 --> 0:12:10.280 I should, you know, maybe build a position in that name. 0:12:11.480 --> 0:12:14.120 So I think technicals are helpful with what and when. 0:12:14.160 --> 0:12:16.080 In fact, I'm probably more of a what to buy 0:12:16.120 --> 0:12:18.280 than a when to buy type of guy, because look, 0:12:18.320 --> 0:12:20.360 I have to put out a research node, and it's like, 0:12:20.840 --> 0:12:22.680 you know, I can't just say hey, buy this name 0:12:22.760 --> 0:12:24.800 here at this price. It may never hit it. So 0:12:24.840 --> 0:12:27.200 I just kind of say, hey, here's something that looks 0:12:27.200 --> 0:12:30.400 attractive technically. You know, our fundamental analyst has either a 0:12:30.400 --> 0:12:32.920 buy or sell on it, But technically it's attractive. You know, 0:12:33.040 --> 0:12:35.760 I think it's a stock to buy. And you know what, 0:12:36.080 --> 0:12:37.640 I would put the levels in there. If it hits 0:12:37.679 --> 0:12:40.640 these levels, then then it becomes you know, more time 0:12:40.640 --> 0:12:43.200 to buy. But either way, you know, I'm building a 0:12:43.200 --> 0:12:45.079 position there, you know, based on my research. 0:12:45.440 --> 0:12:49.679 So your title is chief equity technical strategist. What is 0:12:49.720 --> 0:12:52.320 a day in the life of the chief equity technical 0:12:52.360 --> 0:12:54.520 strategist at a big shop like Merrill? 0:12:54.640 --> 0:12:57.760 Look like yeah, so b of a when we you know, 0:12:57.920 --> 0:13:01.920 it's it's a combined hybrid world, right, So we service 0:13:02.520 --> 0:13:07.120 the global private clients. So the financial advisors are you know, 0:13:07.160 --> 0:13:08.640 a big part of what we do. We talk to 0:13:08.720 --> 0:13:13.160 them a lot. I do a weekly webcast on Wednesdays 0:13:13.160 --> 0:13:16.560 for them twelve noon. You know, you go on the road, 0:13:16.600 --> 0:13:20.600 you see offices, they ask you question about market stocks, 0:13:20.600 --> 0:13:22.040 things like that, and you try to help them out 0:13:22.080 --> 0:13:24.160 as much as you possibly can. You know, there are 0:13:24.160 --> 0:13:27.720 some financial advisor teams that have me do webcasts for 0:13:29.080 --> 0:13:34.000 you know, clients, you know, periodically, sometimes quarterly, sometimes monthly, 0:13:34.800 --> 0:13:37.400 and sometimes just internal you know, just so they can 0:13:37.600 --> 0:13:40.520 because one thing financial advisors say about the research that 0:13:40.559 --> 0:13:44.120 we put out on the technicals is that I may 0:13:44.120 --> 0:13:47.240 not be a technical analyst, but when I read you know, 0:13:47.440 --> 0:13:50.560 be of a technical research report. It gives me something 0:13:50.600 --> 0:13:53.280 intelligent to tell my clients, especially when times are tough, 0:13:54.000 --> 0:13:56.720 and even if they're not using it other than that purpose. 0:13:56.760 --> 0:13:58.000 I mean, that's a victory right there. 0:13:58.200 --> 0:14:00.800 Right, No, that makes a lot of sense. So let's 0:14:00.800 --> 0:14:04.880 talk a little bit about how technicals work. And I 0:14:04.920 --> 0:14:07.640 want to start just by asking, how do you define 0:14:07.760 --> 0:14:11.760 technical analysis? I've heard lots and lots of different definitions. 0:14:12.160 --> 0:14:12.760 What's yours? 0:14:13.120 --> 0:14:15.680 Yeah, it's a great, great question. I mean, I'm sure 0:14:15.720 --> 0:14:20.360 it's changing as days go by, But for me, I mean, 0:14:20.400 --> 0:14:23.960 we're we're you know, you're using mathematics quantitative methods to 0:14:24.040 --> 0:14:26.920 identify and spot trends and patterns in the financial markets. 0:14:26.960 --> 0:14:30.160 I guess that keeps it pretty simple. So for me, 0:14:30.320 --> 0:14:34.560 it's really just trend following and pattern recognition. I will 0:14:34.600 --> 0:14:38.280 occasionally throw in second derivative type of indicators a price like. 0:14:38.240 --> 0:14:41.600 You know, an RSI or relative strength in that's right. 0:14:41.520 --> 0:14:45.480 Relistrate the indicator generate overbought, over soul, but also involves 0:14:45.520 --> 0:14:49.240 things like breath sentiment. I do a lot of credit 0:14:49.240 --> 0:14:51.720 market work too, you know, just looking at credit spreads 0:14:51.720 --> 0:14:51.960 and things. 0:14:52.160 --> 0:14:54.320 So let's define our terms along the along the way, 0:14:54.320 --> 0:14:57.640 when you're talking about breath, we're talking about the numbers 0:14:57.680 --> 0:15:01.320 of advancers versus decliners. Is is it a broad markets 0:15:01.360 --> 0:15:02.280 in a narrow market? 0:15:02.680 --> 0:15:05.200 And that's one of bob Arrels ten rules. Remember, you know, 0:15:05.240 --> 0:15:08.240 markets are stronger when they're broad and weaker when they're narrow. 0:15:08.320 --> 0:15:11.280 So again, way us a measure market breath would be 0:15:11.360 --> 0:15:14.040 the advanced of client lines you just mentioned, also new 0:15:14.080 --> 0:15:16.080 fifty two week highs, new fifty two week lows. You 0:15:16.200 --> 0:15:18.960 also use four week lows, twenty four week eyes and lows, 0:15:18.960 --> 0:15:22.680 things like that. The other things would be diffusion indicators, 0:15:22.680 --> 0:15:25.440 like the percentage of stocks above moving averages. So if 0:15:25.480 --> 0:15:27.760 you have I mean, you know, interestingly, if you have 0:15:27.760 --> 0:15:30.200 the SMP, you know, above a two hundred day moving average, 0:15:30.240 --> 0:15:32.400 yet you know a few and the fifty percent of 0:15:32.400 --> 0:15:34.480 the stocks are above it, and it kind of tells 0:15:34.520 --> 0:15:36.120 just something about breadth of the market. You know, the 0:15:36.160 --> 0:15:39.080 markets stronger, but more stocks are below the moving averages, 0:15:39.120 --> 0:15:40.760 So I mean, I think that's something to look at. 0:15:41.000 --> 0:15:43.280 So some of these indicators, like the percentage of stocks 0:15:43.280 --> 0:15:46.360 above ten day movement averages, can also be used as momentum, 0:15:46.600 --> 0:15:48.760 you know, so sometimes you can use breath as a momentum. 0:15:48.800 --> 0:15:52.040 So the other thing I mentioned was sentiment, So that 0:15:52.120 --> 0:15:55.400 basically is sentiment and positioning lump and positioning as well. 0:15:55.480 --> 0:15:59.240 So if you're watching sentiment, it's a surveys, you know, 0:15:59.360 --> 0:16:04.920 the the Investors Intelligence Survey, bullbear and correction, and then 0:16:04.960 --> 0:16:09.600 you got aaii bowlbear and neutral you have. So those 0:16:09.640 --> 0:16:12.320 are centiment indicators. What are they telling us what investors 0:16:12.320 --> 0:16:15.360 are doing? Now? Hopefully investors are saying, I mean, what 0:16:15.440 --> 0:16:18.120 investors are saying right right, not doing. Hopefully what they're 0:16:18.160 --> 0:16:20.440 doing is close to what they're saying. That's what sentiment implies. 0:16:20.680 --> 0:16:22.280 But then you overlay that and look at something like 0:16:22.280 --> 0:16:24.280 a POOT call. You know, that tells you more what 0:16:24.320 --> 0:16:26.120 they're doing. You know, the volume of puts are higher 0:16:26.120 --> 0:16:28.360 in the volume of calls that goes above one, that 0:16:28.400 --> 0:16:31.520 means investors are fearful. Another one I look at that 0:16:31.600 --> 0:16:36.520 I find very useful for tactical lows in the market. 0:16:36.520 --> 0:16:39.160 But sometimes more meaningful and tactical would be taking the 0:16:39.200 --> 0:16:43.200 three month VIX the volatility index and dividing it by 0:16:43.240 --> 0:16:46.840 the one month miix. So when that is high like 0:16:46.920 --> 0:16:49.640 one point twenty five or above, investors are like I'm 0:16:49.640 --> 0:16:53.400 not concerned about volatility in the immediate future. I'm more 0:16:53.400 --> 0:16:55.840 concerned about it, you know, later on. But when that 0:16:55.880 --> 0:16:57.800 goes below one, that means the VIX is higher in 0:16:57.840 --> 0:17:00.200 the three month bix. So investors are more concerned about 0:17:00.400 --> 0:17:03.160 volatility now, which means are more fearful. And when you 0:17:03.160 --> 0:17:05.080 have that set up, the market is often closer to 0:17:05.160 --> 0:17:05.359 a lot. 0:17:05.800 --> 0:17:10.679 So everything you've just described as a loaded series of 0:17:12.160 --> 0:17:15.399 follow up questions you've given me. I want to talk 0:17:15.440 --> 0:17:19.720 about sentiment. But you mentioned Farrell. And for folks who 0:17:19.720 --> 0:17:23.240 may not know who Bob Farrell is, tell us a 0:17:23.280 --> 0:17:26.119 little bit about the legendary Bob Farrell. 0:17:26.359 --> 0:17:28.880 Well, I mean he was the dean of technical analysis 0:17:28.920 --> 0:17:32.919 at Merrill Lanch, you know, for a better part of 0:17:33.640 --> 0:17:37.679 had to be forty fifty years right. He has his 0:17:38.080 --> 0:17:39.680 ten rules to remember. 0:17:40.160 --> 0:17:44.119 Which, by the way, have become you know, almost biblical 0:17:44.280 --> 0:17:46.080 for a lot of people in markets, a lot of 0:17:46.119 --> 0:17:47.919 tech technicians, for sure. 0:17:48.240 --> 0:17:50.919 I mean, those are you shoes to Phil There's no 0:17:51.000 --> 0:17:53.720 question about it. And if I mentioned any of these things, 0:17:54.000 --> 0:17:57.040 any of his rules to follow my research notes, it's 0:17:57.119 --> 0:18:00.240 like my readership doubles, you know what I mean, Like 0:18:00.280 --> 0:18:02.119 forget about him. I mean, I mean, forget about me. 0:18:02.200 --> 0:18:03.880 It's all about him, right, you know, I just kind 0:18:03.880 --> 0:18:06.840 of have to invoke that presence, you know, in my job, 0:18:06.880 --> 0:18:09.600 I guess because some financial advisors actually, when you know, 0:18:09.640 --> 0:18:12.679 you see some of the commentary they write. The greatest 0:18:12.720 --> 0:18:15.720 compliment I think they ever paid me was he he 0:18:15.840 --> 0:18:19.720 invokes Bob Farrell pretty well. And I know that's not 0:18:20.040 --> 0:18:23.399 one true because nobody can do that, But just to 0:18:23.440 --> 0:18:27.000 have half of that, I think is is a compliment. 0:18:27.080 --> 0:18:31.280 That's great. What other technicians do you admire? Who else 0:18:31.320 --> 0:18:34.359 in the business do you think does a nice job? 0:18:35.040 --> 0:18:36.800 I mean, look, I mean, I you know, I obviously 0:18:36.840 --> 0:18:38.879 I compete with a lot of guys that do good work. 0:18:38.920 --> 0:18:42.359 But going back to the day, some of the folks 0:18:42.359 --> 0:18:45.719 that have influenced my work influenced my work the most, 0:18:46.160 --> 0:18:51.600 I would say initially was John Murphy with the book. 0:18:51.640 --> 0:18:54.400 I mean, I have the torn up, dog eared book, 0:18:54.520 --> 0:18:57.399 you know, Technical Analysis of the Futures Market. You know 0:18:57.440 --> 0:18:59.840 that was you know now it's called Technical Analysis of Financials. 0:19:00.280 --> 0:19:02.440 So I got an old, dog eared copy at my desk. Still, 0:19:03.680 --> 0:19:05.760 I would say Martin Praying I learned a lot from, 0:19:05.840 --> 0:19:08.879 you know, through his pray, oh really, and you know, 0:19:08.920 --> 0:19:11.920 some good cycle stuff there. Momentum. I got his book 0:19:11.960 --> 0:19:17.439 on Momentum, which which I found very useful. And I 0:19:17.440 --> 0:19:20.440 guess a third one I think that that impacted me 0:19:20.560 --> 0:19:24.080 quite a bit was doctor Alexander Elder, who wrote Trading 0:19:24.080 --> 0:19:27.919 for a Living, and what I liked about that was 0:19:28.080 --> 0:19:31.400 a there's a lot of market psychology, investor psychology in there, 0:19:31.440 --> 0:19:35.480 but also how to run a you know, trading systems 0:19:35.480 --> 0:19:37.760 based on indicators. And I think that helped me out 0:19:37.760 --> 0:19:42.080 a lot. And much of in that book has influenced 0:19:42.119 --> 0:19:46.280 the way I thought about markets and picking stocks, you know, 0:19:46.400 --> 0:19:48.919 as the equity technician, that's kind of what I need 0:19:48.960 --> 0:19:50.639 to do is identify stocks that I think can go 0:19:50.720 --> 0:19:54.240 up or down or at a minimum, you know, underperform 0:19:54.359 --> 0:19:57.000 or outperform. And you know, I use some of the 0:19:57.040 --> 0:19:58.800 techniques that he put in there, in particular, like a 0:19:58.800 --> 0:20:02.760 triple screen trading system where you have your your you know, 0:20:02.760 --> 0:20:05.600 your weekly time frame, but you you make your decisions 0:20:05.640 --> 0:20:08.040 off the daily. But I managed to do it all 0:20:08.080 --> 0:20:10.080 on a weekly chart because if you put three different 0:20:10.080 --> 0:20:12.040 movement averages on a weekly chart, you can look at, 0:20:12.119 --> 0:20:14.360 you know, a long term moving average and a short 0:20:14.400 --> 0:20:16.439 term moving average and do it that way. You know, 0:20:16.480 --> 0:20:18.960 where you decline below the shorter term one and hold 0:20:18.960 --> 0:20:22.320 the longer term one. I generally can I generally view 0:20:22.359 --> 0:20:24.040 that as a positive for a stock and look to 0:20:24.080 --> 0:20:24.440 buy it. 0:20:24.520 --> 0:20:27.440 So you're mentioning folks who've been around a while, like 0:20:27.560 --> 0:20:32.320 John Murphy and Praying and Farrell and I took the 0:20:32.320 --> 0:20:35.520 class with Ralph Akmpora. I know a lot of people 0:20:35.640 --> 0:20:39.200 back in the day who used to do their charts 0:20:39.680 --> 0:20:45.840 by hands every day, and now there's just so much 0:20:46.200 --> 0:20:53.080 computing power around. How has the computerization of everything change 0:20:53.119 --> 0:20:56.920 technical analysis? What do we do with all this horse power? 0:20:57.200 --> 0:21:00.920 Well, I mean it definitely can allow for more rules 0:21:00.920 --> 0:21:04.440 based signals. In some regard, it allows us to do 0:21:04.520 --> 0:21:09.760 things with a greater universus stocks, and I think, I 0:21:09.800 --> 0:21:12.639 think it is useful to have that. But when I 0:21:12.720 --> 0:21:15.320 first join Merrill Inch in two thousand and seven, we 0:21:15.320 --> 0:21:17.440 were still we still had point and figure charge that 0:21:17.440 --> 0:21:20.280 we were updating by hand x's and o's. 0:21:20.400 --> 0:21:22.760 You know, of course, Tom Dorsey, that crowd. 0:21:22.760 --> 0:21:25.240 Yeah, I mean they they, I mean they, yeah, Tom Dorsey. 0:21:25.320 --> 0:21:28.240 I believe investment intelligence also has a product on point 0:21:28.240 --> 0:21:32.119 and figure I mean, very popular among the financial busor crowd, 0:21:32.160 --> 0:21:35.399 but not so popular among the institutional crowd. You know, 0:21:35.480 --> 0:21:37.480 the intuitional crowd probably looks at It's like I'm looking 0:21:37.480 --> 0:21:39.119 at a letter from my grandmother with the x's and 0:21:39.160 --> 0:21:40.560 o's on it, you know, and she gives me. 0:21:40.640 --> 0:21:43.000 Huggs, and it's at precise. It's not as. 0:21:44.520 --> 0:21:45.440 I mean, it depends. 0:21:46.080 --> 0:21:49.479 It seems to be more general than I mean. 0:21:49.520 --> 0:21:51.320 You can make it more precise if you want to, 0:21:51.400 --> 0:21:54.000 but that requires a lot more effort and work, and 0:21:54.080 --> 0:21:55.639 you know, with the computing power and a day, I 0:21:55.680 --> 0:21:57.800 think the one thing that's changed is, you know a 0:21:57.800 --> 0:21:59.600 lot of people can think they can pull up at 0:21:59.600 --> 0:22:01.600 Bloomberg and all of a sudden call themselves a technical 0:22:01.600 --> 0:22:04.440 analyst because it's just very easy to create these things. 0:22:04.640 --> 0:22:07.560 I'm glad you brought that up because I recall when 0:22:07.600 --> 0:22:10.639 I started on a desk in the nineties, if you 0:22:10.760 --> 0:22:15.520 wanted to put charts on a computer screen, you had 0:22:15.520 --> 0:22:21.040 to subscribe to a very specific package, even the terminal. 0:22:21.080 --> 0:22:23.520 Back then, you couldn't do what you could do. Today's 0:22:23.760 --> 0:22:26.879 light years ahead today kind of Now you go to 0:22:26.920 --> 0:22:31.080 any website and have unbelievable access to all sorts of 0:22:31.560 --> 0:22:37.240 technical studies. I'm curious what sort of impact does charting 0:22:37.320 --> 0:22:41.960 software for free everywhere have on the practice of technical analysis. 0:22:42.160 --> 0:22:44.359 Well, I mean it's again, it's still a market where 0:22:44.400 --> 0:22:47.960 people will you know, trade and you know, make decisions 0:22:47.960 --> 0:22:50.159 to buy and sell. I mean I do look at 0:22:50.200 --> 0:22:52.240 stock charts dot com. I mean when I'm on the road, 0:22:52.280 --> 0:22:56.000 that's very easy to pull up and work with. I mean, 0:22:56.080 --> 0:22:58.639 does it make it more of a self fulfilling prophecy? 0:22:59.400 --> 0:23:02.800 Who knows? I mean, but I think the general it doesn't. 0:23:02.960 --> 0:23:06.639 It wouldn't negate. You know, the one major thing that 0:23:06.680 --> 0:23:09.879 dominates financial markets, it's fear and greed, you know, and 0:23:09.920 --> 0:23:13.159 maybe it accelerates that process a little bit more. I 0:23:13.200 --> 0:23:15.400 mean the other thing, it's really not just technical analysis, 0:23:15.400 --> 0:23:19.240 but the availability information and instant analysis, right, you know, 0:23:19.280 --> 0:23:21.919 analysis can be done. I mean, just let's face it, 0:23:21.920 --> 0:23:25.040 there's there's businesses built on that premise where you know, 0:23:25.040 --> 0:23:27.920 they have high frequency trading where they calculate things and 0:23:28.800 --> 0:23:30.600 you know, millisecond I don't even know, but you know 0:23:30.640 --> 0:23:31.080 what I mean. 0:23:31.000 --> 0:23:33.680 It's like really fantantly. 0:23:33.760 --> 0:23:36.560 Yeah. Probably the more accurate way of saying that nanoseconds. 0:23:36.600 --> 0:23:39.399 So I mean it just makes things very quickly, and 0:23:39.440 --> 0:23:42.720 you know how I adapt it to it. I focus 0:23:42.800 --> 0:23:46.360 more on a long term timeframe, not not like monthly, 0:23:46.400 --> 0:23:48.960 but weekly. I you know that daily gets a bit noisy, 0:23:49.119 --> 0:23:51.439 very noisy. Back in the day, it was inter day 0:23:51.520 --> 0:23:53.760 charts that got really noisy. But now daily charts have 0:23:53.800 --> 0:23:57.240 gotten noisy. You know. I hope weekly charts don't get noisy, 0:23:57.240 --> 0:23:59.160 because that would complicate things even more. 0:23:59.359 --> 0:24:04.200 I'm curious if the zero day options that expire every 0:24:04.240 --> 0:24:07.399 single day have an impact on trading and have an 0:24:07.440 --> 0:24:08.520 impact on charts. 0:24:09.000 --> 0:24:11.919 Probably, you know, I'm not sure what the impact exactly is, 0:24:12.000 --> 0:24:16.560 but but yeah, I mean I think just instant you know, 0:24:16.960 --> 0:24:19.800 you know, instant what you know, whatever the term is, 0:24:19.800 --> 0:24:23.760 I can't even know, but just instant information. I mean, 0:24:23.760 --> 0:24:27.040 it just it just makes things more volable. Generally speaking, 0:24:27.080 --> 0:24:29.159 you wouldn't know by looking at the fix, but it 0:24:29.240 --> 0:24:31.800 looks like inter day price action, day by day price action. 0:24:31.840 --> 0:24:34.919 It's like you got stocks that have multi billion market 0:24:34.920 --> 0:24:37.600 caps that are moving like two to three percent, you know, 0:24:37.680 --> 0:24:39.920 within the span of fifteen minutes. I mean, that's that's 0:24:39.960 --> 0:24:40.919 that's a lot, you know. 0:24:41.240 --> 0:24:44.359 I mean, you mentioned fear and greed, tell us a 0:24:44.400 --> 0:24:48.480 little bit about how you can use technical analysis to 0:24:48.720 --> 0:24:50.320 look at sentiment. 0:24:51.080 --> 0:24:54.360 Yep, so a lot of different ways. First and foremost, 0:24:54.400 --> 0:24:56.800 I mean, you got the surveys that we talked about earlier, 0:24:56.880 --> 0:24:58.679 got the book call Ratios, you got the bill. 0:24:58.800 --> 0:25:00.760 Let me interrupt you and ask you about the surveys 0:25:00.800 --> 0:25:04.399 because I always find that what people say they're doing 0:25:04.680 --> 0:25:07.720 and what they're actually doing on those surveys don't always 0:25:07.760 --> 0:25:12.160 seem to line up right how how and they seem 0:25:12.240 --> 0:25:14.560 to spend most of their time in a sort of 0:25:14.600 --> 0:25:18.960 nomend's zone where there's no signal. It's at the extremes 0:25:19.280 --> 0:25:23.440 when they're useful. How How useful do you find sentiment 0:25:23.480 --> 0:25:27.000 surveys generally where we're asking people how bullsh are you? 0:25:27.320 --> 0:25:29.159 How much equities do you have, how much bonds do 0:25:29.160 --> 0:25:29.840 you have, et cetera. 0:25:30.640 --> 0:25:34.879 I would say it's more useful in calling lows and 0:25:35.080 --> 0:25:37.280 it is in highs because when you think about a 0:25:37.359 --> 0:25:40.000 low in the market and fear in the market, there's 0:25:40.040 --> 0:25:44.120 more urgency. Complacency by definition is not urgent. So that's 0:25:44.160 --> 0:25:48.320 why I think that sentiment surveys work better when you 0:25:48.359 --> 0:25:51.040 know bear surge about fifty five sixty percent, which is 0:25:51.080 --> 0:25:53.280 where they stood September of last year. 0:25:53.560 --> 0:25:58.359 You know, complacency is not urgent, It's not that's that's 0:25:58.359 --> 0:25:59.240 a great sentence. 0:25:59.400 --> 0:25:59.600 Yeah. 0:25:59.640 --> 0:26:02.119 I always think of it as it's hard to identify 0:26:02.200 --> 0:26:05.639 when people kind of get bored and stop buying. But 0:26:05.760 --> 0:26:08.480 it's easy to see when everybody's panics sell exactly. 0:26:08.840 --> 0:26:11.240 That's what sentiment shows you. Uh, you see it on 0:26:11.240 --> 0:26:15.160 the book calls. You can see it also in futures positioning. 0:26:16.080 --> 0:26:18.520 H what what are you looking at in futures positioning 0:26:18.600 --> 0:26:20.960 in order to identify a bottom? 0:26:21.320 --> 0:26:26.120 It's it's usually it is aggressive shorts from leverage funds 0:26:26.200 --> 0:26:27.240 on SMP futures. 0:26:28.119 --> 0:26:32.520 And are these professionals or these punters and amateurs. 0:26:32.600 --> 0:26:36.240 No, they're professional. They're professional. But even professionals can form 0:26:36.240 --> 0:26:38.040 a crowd and a hurd. I mean, that's that's the 0:26:38.080 --> 0:26:42.040 point of the indicator. You know, that's the reason why 0:26:42.119 --> 0:26:44.400 you know there's a hedge funk. You know, clients that 0:26:44.400 --> 0:26:46.679 that you visit outside New York City they want to 0:26:46.880 --> 0:26:50.840 you know, avoid the herd. Right. But the other factor 0:26:50.960 --> 0:26:54.040 is asset manager positioning. Those are the smarter I think 0:26:54.080 --> 0:26:56.680 I view them as smarter. So when they're over sold, 0:26:56.720 --> 0:27:01.480 the market's usually down as well, but when the market 0:27:01.520 --> 0:27:05.000 starts to bounce, they start to go with it, and 0:27:05.160 --> 0:27:07.480 you know, they hit their lows two of them last year, 0:27:07.560 --> 0:27:11.679 one in June and one October, and it was great. 0:27:11.720 --> 0:27:15.000 It worked out really well using that sentiment indicator, So 0:27:16.160 --> 0:27:19.000 I think there is still use for them, I will admit, 0:27:19.080 --> 0:27:23.639 though sometimes I do wonder whether sentiment, you know, becomes 0:27:23.800 --> 0:27:26.520 more of a momentum indicator, which which I think makes 0:27:26.560 --> 0:27:29.840 sense because let's face it, I mean, if the market 0:27:29.920 --> 0:27:33.280 rallies fifteen percent and the asset matters are still here 0:27:33.800 --> 0:27:37.760 and not buying the rally, then something else is happening, 0:27:38.200 --> 0:27:42.160 you know, So sentiment does need to turn into momentum, 0:27:42.320 --> 0:27:45.680 meaning that sentiment needs to start to confirm price action. 0:27:46.880 --> 0:27:51.600 Can can everything be charted? I mean we're talking about sentiment, 0:27:51.640 --> 0:27:54.679 we're talking about trend What about things like fundamentals? Can 0:27:54.760 --> 0:27:58.520 you chart the rate of change on earnings? Where do 0:27:58.560 --> 0:28:00.920 you draw the line of Hey, technicals aren't going to 0:28:01.000 --> 0:28:01.480 help you there? 0:28:02.119 --> 0:28:04.280 No, I'm sure you can. I mean I haven't done 0:28:04.359 --> 0:28:06.600 that much work. I mean, you know, a pe ratio 0:28:06.680 --> 0:28:08.600 you can chart that, I mean pretty easily and do 0:28:08.640 --> 0:28:13.159 analysis on that. I think I think it's probably more 0:28:13.240 --> 0:28:19.840 useful in economic indicators like the unemployment rate or the 0:28:21.320 --> 0:28:26.040 claims data. And you know, we actually did some scenario 0:28:26.119 --> 0:28:29.159 analysis around that recently, just talking about, hey, what happens 0:28:29.200 --> 0:28:32.199 if the employment rate rises versus falls? What environments does 0:28:32.240 --> 0:28:34.679 the SMP work better in? And you know the obvious 0:28:34.720 --> 0:28:37.840 the answer is the obvious answer, right, So, but it's 0:28:37.880 --> 0:28:40.240 not necessarily true because there's some periods of time where 0:28:40.240 --> 0:28:45.080 the unemployment rate does rise where the SMP actually does rally, 0:28:45.800 --> 0:28:48.000 and there's other peerogs where the SMP does not. And 0:28:48.040 --> 0:28:50.720 I really you know, it's it depends on what your 0:28:50.760 --> 0:28:51.480 market tide is. 0:28:51.800 --> 0:28:54.600 How do you think about intermarket analysis? So you're looking 0:28:54.640 --> 0:28:57.320 at the stock market is doing this relative to what 0:28:57.360 --> 0:29:01.000 the bond market is doing? How important are looking across 0:29:01.040 --> 0:29:03.880 different Here's what the US is doing, Here's what's developed 0:29:03.960 --> 0:29:06.480 x US, Here's what emerging markets are doing. How do 0:29:06.520 --> 0:29:11.280 you consider different geographies, different sort of asset classes? Do 0:29:11.360 --> 0:29:13.040 they do they interrelated? All? 0:29:13.640 --> 0:29:15.280 I mean I think they do. I think we've seen 0:29:15.320 --> 0:29:19.920 that over the last year or so. So so here's 0:29:20.000 --> 0:29:22.480 here's a whay I'm looking at it in your term 0:29:22.520 --> 0:29:25.000 not not making any sort of forecast or anything like that. 0:29:25.080 --> 0:29:28.719 But last year where we stood, market was very nervous. 0:29:28.800 --> 0:29:31.840 SMP around the two hundred week moving average finally started 0:29:31.840 --> 0:29:34.800 bottoming out. But what was the ingredient to get that 0:29:34.960 --> 0:29:38.000 low in the market. It was the. 0:29:38.000 --> 0:29:39.840 Dollar topping peak inflation. 0:29:40.480 --> 0:29:42.400 Yeah, that that, Yeah, that happened I believe in June 0:29:42.400 --> 0:29:46.480 of last right, right, and that that's helpful. Also yields 0:29:46.520 --> 0:29:49.880 topping out as well in September October last year. So 0:29:50.400 --> 0:29:56.280 there's a negative correlation between the dollars and between stocks. 0:29:57.560 --> 0:30:01.320 The dollar in bonds, so meaning you know, higher interest rate, 0:30:01.520 --> 0:30:04.400 lower stocks, higher dollar lower stocks. That's been the trend. 0:30:04.440 --> 0:30:07.640 So the SMP rally from last October ran into trouble 0:30:07.680 --> 0:30:10.560 this summer, you know, and you know which is where 0:30:10.560 --> 0:30:13.360 in the dollar bottomed out and yields started to really 0:30:13.480 --> 0:30:15.840 rise again in earnest and now here we are. 0:30:15.920 --> 0:30:19.240 Oh god, it was a massive surgeon yields from August 0:30:19.240 --> 0:30:22.440 September October and stocks one's the exact opposite direction. 0:30:22.600 --> 0:30:25.440 Yeah, have had a ten percent correction, and you know, 0:30:25.440 --> 0:30:27.800 we'll see what happens going forward. But I would think, 0:30:28.280 --> 0:30:30.240 you know, not that this is a prediction or anything, 0:30:30.280 --> 0:30:33.920 but if that correlation holds, and if the S and 0:30:34.000 --> 0:30:36.880 P gets a seasonal bounce, which normally is something that 0:30:36.920 --> 0:30:39.920 happens around this time of year, one would think that 0:30:40.000 --> 0:30:43.520 if this correlation continues to hold, that a seasonal bounce 0:30:43.560 --> 0:30:48.280 for stocks likely requires yields to be stable to lower 0:30:49.080 --> 0:30:53.640 or the dollar stable to lower. And you know, we'll 0:30:53.640 --> 0:30:55.440 see how that plays out. But that seems to be 0:30:55.480 --> 0:30:58.680 the correlation, the innermarket correlation that that seems to be, 0:30:59.040 --> 0:31:00.960 in my mind, the most important one right now. 0:31:01.440 --> 0:31:04.440 So what do you think generally people misunderstand about texting? 0:31:04.560 --> 0:31:06.360 Yeah, I mean I think I mean sometimes I get 0:31:06.400 --> 0:31:08.560 emails where they think I'm like a you know, a 0:31:08.640 --> 0:31:10.600 magician trying to pull a rabbit out of a hat. 0:31:10.640 --> 0:31:13.080 You know, they're asking for something technically didn't do right, 0:31:13.120 --> 0:31:15.400 you know what I mean. They're like, they're you know, 0:31:15.560 --> 0:31:16.840 I mean, look, I mean, if you give them a 0:31:16.840 --> 0:31:18.760 few good calls, they think you can predict the future, 0:31:18.760 --> 0:31:21.200 but we can't. You know, we're just gauging risk and reward. 0:31:21.640 --> 0:31:22.560 And I think that's. 0:31:22.400 --> 0:31:25.520 What's a really good way to express that. You're looking 0:31:25.560 --> 0:31:29.840 at various patterns and setups to identify your best risk 0:31:29.920 --> 0:31:30.720 reward set. 0:31:30.960 --> 0:31:33.800 And I think that's a big misunderstanding because most people 0:31:34.040 --> 0:31:36.920 are of the mentality in the DraftKings world that you know, 0:31:37.000 --> 0:31:39.800 technical analysis is a good way to enhance their gambling habit, 0:31:40.120 --> 0:31:42.800 you know, But what we're really looking to do is 0:31:42.960 --> 0:31:45.760 manageer's reward. I mean, you know, I always tell like 0:31:45.880 --> 0:31:48.840 hedge fund clients when I'm talking to them, you know, 0:31:48.920 --> 0:31:50.760 they're I mean a lot of them along short. But 0:31:50.800 --> 0:31:53.520 they're like, I'm like, here's how you identify. Here's how 0:31:53.600 --> 0:31:57.200 I would identify a corelong. You first and foremost, you 0:31:57.240 --> 0:31:59.720 identify what your benchmark is. How are you measuring your 0:31:59.760 --> 0:32:02.640 before ormans? And you take your absolute price, and if 0:32:02.680 --> 0:32:05.240 the absolute price is trending up along with the relative price, 0:32:05.520 --> 0:32:07.280 that's where you look for core lungs. And if it 0:32:07.320 --> 0:32:10.320 got good fundamentals there even better on this other side, 0:32:10.480 --> 0:32:13.400 you know, weak relative weak absolute, that's where you get. 0:32:13.400 --> 0:32:15.400 You call it core shorts. And I tell them, like, 0:32:15.440 --> 0:32:17.960 you know, where it becomes really interesting is when you 0:32:18.000 --> 0:32:19.800 have a stock that's been trending up for a while, 0:32:19.840 --> 0:32:22.560 but all of a sudden, the relative ratio starts lagging, 0:32:22.640 --> 0:32:24.840 meaning that if I'm a fund manager, at the end 0:32:24.840 --> 0:32:27.000 of the quarter, oh my god, you know, Apple's up 0:32:27.040 --> 0:32:30.440 fifteen percent. Oh wait, but the market's up twenty I'm lagging, 0:32:30.720 --> 0:32:32.200 you know. Then they kick that out of the beforeil 0:32:32.200 --> 0:32:34.360 and guess what happens. You know, the stock starts the 0:32:34.400 --> 0:32:37.120 former top because of selling pressure and the same thing 0:32:37.160 --> 0:32:39.240 on the other side. So it's like you and. 0:32:39.240 --> 0:32:42.400 To be to clarify, you're not saying this about Apple, No, no, 0:32:42.440 --> 0:32:44.640 you're just using as a example as. 0:32:44.520 --> 0:32:46.920 An example, not not talking about Apple or a prediction 0:32:46.960 --> 0:32:50.160 there at all. But you know what I'm saying is 0:32:50.160 --> 0:32:55.000 it's like you can find a time using technical analysis 0:32:55.040 --> 0:32:57.720 to say, you know what, I've been bullish this stock, 0:32:58.360 --> 0:33:01.080 but it's starting to lag the market. Maybe it's time 0:33:01.120 --> 0:33:04.120 for me to revisit my fundamental thesis. And that's and 0:33:04.120 --> 0:33:07.200 that's good, that's useful information to somebody, because what I've 0:33:07.240 --> 0:33:11.280 noticed is when a stock and an ups trend starts 0:33:11.400 --> 0:33:15.120 underperforming the market, guess what they I mean, I haven't 0:33:15.160 --> 0:33:17.280 tested this yet, but the theory is. And if I 0:33:17.280 --> 0:33:20.920 test the hypothesis and the theory and this theory works, 0:33:20.960 --> 0:33:25.800 the theory is a weakening relative often precedes fundamental information 0:33:25.960 --> 0:33:29.160 that's less bullish than people expect. And I've seen it 0:33:29.200 --> 0:33:31.480 happen a lot. And on the other side too, a 0:33:31.560 --> 0:33:34.200 stock trending down all of a sudden, the relative ratio 0:33:34.280 --> 0:33:36.040 is starting to improve. In fact, I mean this is 0:33:36.080 --> 0:33:39.120 the environment now with the market correcting, where you look 0:33:39.120 --> 0:33:41.840 for names like that, you know, where the relative charts improving, 0:33:41.880 --> 0:33:43.959 meaning that, oh my gosh, you know the SMP's corrected 0:33:43.960 --> 0:33:46.600 ten percent, this stop's only down five All right, why 0:33:46.680 --> 0:33:48.959 is that? Is there something going on? Fundamentally I need 0:33:49.000 --> 0:33:51.280 to look into And that's and that gets you know, 0:33:51.320 --> 0:33:54.160 the fundamental analysts thinking. And if I was doing more 0:33:54.200 --> 0:33:55.840 fundamental work, it would tell me, all right, I really 0:33:55.880 --> 0:33:57.600 got to look at these companies to see, hey, what's 0:33:57.640 --> 0:34:00.160 going on or estimates coming up? Or are the revision 0:34:00.280 --> 0:34:03.280 improving or you know what I mean. So, and I 0:34:03.280 --> 0:34:06.480 think that's how not only not only a good way 0:34:06.480 --> 0:34:09.160 a to interact with some of the institutional client base, 0:34:09.239 --> 0:34:12.120 but also and private client base as well, but also 0:34:12.239 --> 0:34:18.040 just as a process because technical analysis is nothing, you know, 0:34:18.200 --> 0:34:21.600 without fundamentals. I mean technical analysis somebody once coined it 0:34:21.719 --> 0:34:24.680 lazy man's fundamental work, you know, and. 0:34:24.719 --> 0:34:27.560 Free writing on other people's number crunch. 0:34:27.440 --> 0:34:29.440 Because think about it. I mean, you know, if it 0:34:29.480 --> 0:34:33.040 stocks rallying, it's doing it for a fundamental reason most 0:34:33.040 --> 0:34:33.600 of the time. 0:34:33.840 --> 0:34:35.319 I mean, and you may not know what it is, 0:34:35.520 --> 0:34:38.320 but you can identify the footprints in the charts. 0:34:38.400 --> 0:34:39.839 I mean, think about where we were a year ago. 0:34:39.880 --> 0:34:42.279 One hundred percent of economists calling for recession in the 0:34:42.280 --> 0:34:43.279 market rallies. 0:34:43.280 --> 0:34:46.240 Two years, right, I mean, that's been ongoing, the calls 0:34:46.280 --> 0:34:46.880 for recession. 0:34:46.960 --> 0:34:49.160 And guess what I mean. Guess when the markets started correcting, 0:34:49.239 --> 0:34:51.279 when people started taking those calls off the table and 0:34:51.320 --> 0:34:55.040 calling for a soft landing. So, you know, as as 0:34:55.080 --> 0:34:58.040 the market was rallying, it was telling us something, and 0:34:58.080 --> 0:35:00.960 then as soon as the economists start confirming what it 0:35:01.040 --> 0:35:03.359 was telling us, that's when it correct it. So now 0:35:03.400 --> 0:35:06.000 we need to see what event that we're discounting now 0:35:06.360 --> 0:35:09.800 and hopefully eventually, you know, we discounted completely and things 0:35:09.800 --> 0:35:11.120 can get a little bit better. 0:35:11.280 --> 0:35:14.600 Huh. Really interesting. Let's talk a little bit about what's 0:35:14.640 --> 0:35:17.560 going on in the current market environment. We're recording this 0:35:18.040 --> 0:35:22.040 Halloween twenty twenty three. Where are we today? Are we 0:35:22.080 --> 0:35:24.719 in a secular bull market or bear market? Are we 0:35:24.760 --> 0:35:27.799 in a cyclical bull or bear? What's the state of 0:35:28.000 --> 0:35:30.880 equity markets and bond markets today. 0:35:31.800 --> 0:35:35.720 Well, I mean, I keep it simple with those sort 0:35:35.719 --> 0:35:40.080 of trends. So whenever we go on television, we always 0:35:40.080 --> 0:35:42.040 pull up the same chart S and P. Five hundred 0:35:42.160 --> 0:35:44.680 with a forty week moving average and a two hundred 0:35:44.680 --> 0:35:47.319 week moving average. The forty week moving average for those 0:35:47.360 --> 0:35:49.719 who look more at daily charts, can associate that with 0:35:49.760 --> 0:35:52.480 a two hundred day moving average. So we gauge the 0:35:52.480 --> 0:35:55.720 cyclical trend of the market using the forty week moving average, 0:35:56.239 --> 0:35:59.960 and we gauge the secular trend as the two hundred 0:36:00.040 --> 0:36:03.279 week moving average. So when you have a rising forty 0:36:03.280 --> 0:36:06.719 week moving average, which we do now, and a rising 0:36:07.160 --> 0:36:10.480 two hundred week moving average, which we do now, the 0:36:10.520 --> 0:36:14.560 pattern is a cyclical uptrend or bowl market, and a 0:36:14.600 --> 0:36:18.160 secular uptrender bowl market. Where are we now in the 0:36:18.160 --> 0:36:21.000 context of that, Given the ten percent pullback that we've 0:36:21.000 --> 0:36:24.760 gotten since the July highs, it is a correction of 0:36:24.840 --> 0:36:28.000 that pattern. The we are below the forty week moving 0:36:28.040 --> 0:36:31.480 average around forty two to fifty. So that's on the 0:36:32.040 --> 0:36:33.280 that's on the S and P. Five hundred. 0:36:33.440 --> 0:36:37.160 Yes, what about how does the NASDAK clock a little. 0:36:36.920 --> 0:36:40.399 Stronger, stronger, stronger. Yeah, I mean, so when we look 0:36:40.440 --> 0:36:44.560 at then the Nasdaq one hundred, for instance, it is 0:36:44.640 --> 0:36:47.160 still I mean it just tested the forty week moving 0:36:47.239 --> 0:36:51.239 average last week, so and well about the two hundred 0:36:51.239 --> 0:36:53.560 week moving average, so still stronger. If you'll get relative 0:36:53.600 --> 0:36:57.600 strength charts, you know, the the NASAK one hundred still 0:36:57.600 --> 0:37:01.359 has a stronger pattern than the SMP at this stage. Technology, 0:37:01.440 --> 0:37:03.719 you know, the sector itself a technology still has a 0:37:03.760 --> 0:37:08.120 stronger relative chart patterns been sideways, but in a stronger trend. 0:37:09.000 --> 0:37:11.160 And you know, you look at the r RG on 0:37:11.200 --> 0:37:12.840 Bloomberg for instance. 0:37:13.120 --> 0:37:16.759 Which is our lego yet, listeners, what what is that? 0:37:16.920 --> 0:37:18.239 What does that show you? 0:37:18.320 --> 0:37:20.920 Oh, it's a great it's a great it's a great tool. Actually, 0:37:21.000 --> 0:37:22.759 I think I use it a lot in my work. 0:37:23.000 --> 0:37:24.080 RRG stands for. 0:37:24.160 --> 0:37:28.239 Relative rotation graph And what it's telling us now is 0:37:28.280 --> 0:37:33.120 that some of the cyclical sectors, like financials, materials, industrials, 0:37:33.400 --> 0:37:36.600 they had a chance to rotate into a bigger leadership 0:37:36.640 --> 0:37:40.800 position and failed where and technology and discretionary and comm 0:37:40.840 --> 0:37:43.480 services had a chance to rotate into a more bearish 0:37:43.880 --> 0:37:48.920 leadership position and did not do that. So looking at that, 0:37:49.040 --> 0:37:51.719 it's like you just got to think about what is 0:37:51.800 --> 0:37:56.239 the risk here? You know, to investors that are, you know, 0:37:57.280 --> 0:38:01.200 looking to get more part in the not participation, but 0:38:01.239 --> 0:38:03.800 more outpha in the market from a greater number of stocks. 0:38:04.440 --> 0:38:06.720 The risk is that doesn't happen. If this pattern holds, 0:38:06.760 --> 0:38:09.120 the risk is that tech can continue to lead, comp 0:38:09.200 --> 0:38:13.120 services continue to lead, and the cyclical sectors can continue 0:38:13.160 --> 0:38:15.560 to lag since they weren't able to take on the 0:38:15.600 --> 0:38:20.000 mantle of relative leadership in the relative rotation graph, so 0:38:20.440 --> 0:38:23.280 they were not able to move into an upshrend, and. 0:38:23.400 --> 0:38:26.280 So industrials have looked like they've been on the verge 0:38:26.320 --> 0:38:28.440 for a while. They have, hasn't happened? 0:38:28.480 --> 0:38:29.080 Hasn't happened. 0:38:29.120 --> 0:38:32.239 On the other hand, same with financial same thing looks like, 0:38:32.400 --> 0:38:35.600 oh now there's some spread. Financials can make more money. 0:38:35.960 --> 0:38:39.440 Hasn't really happened. On the other hand, energy seems to 0:38:39.719 --> 0:38:42.920 really be cleaning itself up. What's going on in the 0:38:43.040 --> 0:38:43.760 oil sector? 0:38:43.880 --> 0:38:46.319 Oh yeah, so that's that's the one cyclical sector that 0:38:46.440 --> 0:38:48.960 has started to work. In fact, it does look an 0:38:49.000 --> 0:38:51.719 awful lot like the pattern that we had for that 0:38:52.600 --> 0:38:58.400 on a relative basis, meaning outperformance off the low relative 0:38:58.440 --> 0:39:01.840 low from ninety eight to two thousand, and that relative 0:39:01.880 --> 0:39:02.919 uptrend continued. 0:39:02.640 --> 0:39:06.200 Ninety eight to two, Like we're looking back twenty five years, 0:39:06.239 --> 0:39:07.600 twenty plus years. 0:39:07.480 --> 0:39:09.239 And it was a similar pattern that we have now 0:39:09.280 --> 0:39:11.800 and it's it's maybe a third of the way through it. Wow, 0:39:13.040 --> 0:39:15.840 because that if that continues, you know, energy should be 0:39:15.880 --> 0:39:20.960 able to outperform if history rhymes, right, I mean the 0:39:21.000 --> 0:39:25.120 oil chart, and it looks like it could be building 0:39:25.120 --> 0:39:27.080 a base. You know, it broke out and moved back 0:39:27.120 --> 0:39:30.520 and retested some some levels of support. But yeah, we'll 0:39:30.520 --> 0:39:33.399 see how that pattern develops. I mean, you know, I mean, 0:39:33.440 --> 0:39:36.839 but it does. It does have more of a a 0:39:36.920 --> 0:39:40.560 look of building a base within an uptrend for that. 0:39:40.680 --> 0:39:43.319 So if that does work in oil stays stable to higher, 0:39:43.440 --> 0:39:47.799 energy should work to some extent. I mean, obviously this 0:39:47.840 --> 0:39:51.200 week or last couple of weeks, there's been some m 0:39:51.239 --> 0:39:53.640 and A activity where some from the bigger names start 0:39:53.680 --> 0:39:55.760 to get hit a little harder, but it didn't derail 0:39:55.800 --> 0:39:56.800 the sector at all. Huh. 0:39:56.800 --> 0:40:02.120 Interesting, I couldn't help but notice that very quietly, a 0:40:02.160 --> 0:40:08.239 lot of cryptocurrency, most specifically Bitcoin, hit new fifty two 0:40:08.280 --> 0:40:12.120 week highs. Nobody's talking about that. Really, What does that 0:40:12.200 --> 0:40:17.200 mean when not only a particular stock or asset hits 0:40:17.200 --> 0:40:19.560 a fifty two week high, but it seems to be 0:40:20.000 --> 0:40:22.360 off the rail, blow the radar. What do you what 0:40:22.400 --> 0:40:23.000 do you make of that? 0:40:23.080 --> 0:40:24.960 Well, I can't talk about bitcoin. I don't think I'm 0:40:24.960 --> 0:40:27.400 allowed to do that at via a security of the course. 0:40:28.239 --> 0:40:30.640 But yeah, I mean, look, I mean if that and 0:40:30.680 --> 0:40:34.200 we're seeing that in you know, in other areas in 0:40:34.239 --> 0:40:37.879 the market as well. No, it just means nobody's there. 0:40:38.600 --> 0:40:39.360 Nobody cares. 0:40:39.840 --> 0:40:42.560 And which is now? Is that bullish or bearish? If 0:40:42.640 --> 0:40:45.040 nobody cares that something's making a fifty two week high, 0:40:45.680 --> 0:40:49.160 that might mean a lot more people could come into 0:40:49.160 --> 0:40:52.799 that space. Forget bitcoin, any type of any type of 0:40:52.880 --> 0:40:54.800 quiet fifty two week high. 0:40:54.960 --> 0:40:56.840 I mean it happened. I think it probably happened with 0:40:57.000 --> 0:40:59.279 energy names not long ago, you know, coming off the 0:40:59.280 --> 0:41:01.399 lows of twenty two twenty, you know, they they moved 0:41:01.480 --> 0:41:04.239 up a lot. Oh it's already up thirty percent. Well 0:41:04.239 --> 0:41:06.000 it went up another fifty percent after that, you know 0:41:06.000 --> 0:41:10.040 what I mean, that's that's people People actually have that argument. 0:41:10.440 --> 0:41:11.880 Oh I missed it, So I'm gonna wait for it 0:41:11.920 --> 0:41:14.400 to dip. And it doesn't dip. I mean, that's what 0:41:14.480 --> 0:41:16.799 happens in that sort of environment. You know when when 0:41:16.840 --> 0:41:20.239 you start to see that happen. So I'm sure over 0:41:20.280 --> 0:41:23.239 the next few weeks there's gonna be patterns developing in 0:41:23.320 --> 0:41:26.600 other pockets of the market where things that have been 0:41:26.719 --> 0:41:28.680 left I mean, I don't want to use the term 0:41:28.760 --> 0:41:30.319 left for dead, but I guess that's the only term. 0:41:30.440 --> 0:41:33.400 It's Halloween, so might as well, right, I mean that, 0:41:33.560 --> 0:41:36.240 you know, though they can rally quickly twenty thirty percent 0:41:36.239 --> 0:41:38.160 and people be like, oh, I missed it, and then 0:41:38.239 --> 0:41:40.440 three months later it's up another twenty or thirty percent. 0:41:40.480 --> 0:41:42.040 I mean that that's the path, that's the way those 0:41:42.080 --> 0:41:43.040 patterns tend to work. 0:41:43.360 --> 0:41:47.040 You mentioned Halloween. What's the scariest chart you've seen recently? 0:41:49.160 --> 0:41:54.560 Well, I what I don't want. There's one breath indicator 0:41:54.600 --> 0:41:57.760 and I don't like right now, and it's just I mean, hopefully. 0:41:57.680 --> 0:41:58.680 What's the breath indicator. 0:41:58.680 --> 0:42:01.400 It's the percentage stocks pepture movement averages. They had some 0:42:01.480 --> 0:42:04.000 devilish divergences in the summer and they broke to new 0:42:05.600 --> 0:42:06.880 you know, year to date lows. 0:42:07.080 --> 0:42:09.279 Mm hmm. Now and you don't like that. 0:42:10.239 --> 0:42:12.160 It just I mean, I don't know. I mean, we 0:42:12.239 --> 0:42:14.759 have to let's see if they get back to you know, 0:42:14.840 --> 0:42:19.360 over soul levels. But you know, yeah, that's that's something 0:42:19.360 --> 0:42:21.520 that's a bit challenging, you know. But they again, I 0:42:21.520 --> 0:42:24.520 think it all has to do with the fact that, 0:42:25.360 --> 0:42:27.600 you know, the equal weighted index has been lagging the 0:42:27.600 --> 0:42:29.640 cap weighted index pretty much all year. 0:42:29.800 --> 0:42:33.000 You're anticipating my next question, what does it mean when 0:42:33.040 --> 0:42:36.000 you have this divergence between the S and B five 0:42:36.080 --> 0:42:38.560 hundred the way we think of it as market cap 0:42:38.600 --> 0:42:42.640 weighted versus the what is an SPW the that's equal 0:42:42.680 --> 0:42:46.319 cap weighted. Uh that that divergence is about as big 0:42:46.400 --> 0:42:48.000 as it's ever ever gets. 0:42:48.280 --> 0:42:50.040 I mean, and that is a scary chart when you 0:42:50.080 --> 0:42:52.760 look at it, relever the S and P scary because 0:42:53.800 --> 0:42:57.800 if the technicals work on this, there's still more underperformance 0:42:58.000 --> 0:43:02.120 coming for that the powder meaning that if you look 0:43:02.160 --> 0:43:05.439 at the pattern going back a decade or more, there 0:43:05.480 --> 0:43:08.360 is a potential that the equated index is forming what 0:43:08.480 --> 0:43:10.920 would be called a head and shoulders top versus the 0:43:11.000 --> 0:43:14.080 SMP the cap weighted index. I hope it doesn't work 0:43:14.120 --> 0:43:17.879 because in our firm, you know, we have strategists that 0:43:18.719 --> 0:43:20.200 you don't want to see the equo weight to work, 0:43:20.239 --> 0:43:21.640 and I think it would probably be healthier for the 0:43:21.680 --> 0:43:22.960 market if it did work. 0:43:23.320 --> 0:43:27.400 It suggests that the market is relatively narrow at present, right, right, 0:43:27.520 --> 0:43:30.719 I mean if the cap weighted is radically outperforming the 0:43:30.760 --> 0:43:34.960 equal weighted, it means the biggest twenty stocks are the drivers. 0:43:35.080 --> 0:43:37.680 Yeah, that's where you're getting your alpha. I mean in 0:43:37.800 --> 0:43:39.880 terms of market breadth itself, I mean the advanced the 0:43:39.920 --> 0:43:41.399 client on the S and P went to at all 0:43:41.400 --> 0:43:44.400 time high over the summer, should be bullish, right, it 0:43:44.440 --> 0:43:50.680 should be bullish, and it gets warisomewhere in my world. 0:43:50.800 --> 0:43:54.520 When this lack of performance for equal weight versus cap 0:43:54.560 --> 0:43:58.000 weight leads to weakening breadth indicators, which is why that 0:43:58.000 --> 0:44:00.279 percentage of stocks about two hundred tay MoveOn average, it 0:44:00.320 --> 0:44:04.279 seems scary to me. Now, I will say, when you 0:44:04.320 --> 0:44:10.080 look at the equate versus cap weighted ratio lagging equate 0:44:10.200 --> 0:44:14.560 lagging cap weighted, Guess what period of time that happened 0:44:14.600 --> 0:44:17.080 in the past where the equity market was really strong 0:44:18.040 --> 0:44:19.759 nineteen ninety four to two thousand. 0:44:19.600 --> 0:44:23.000 Yeah, right, that that that was all driven by the 0:44:23.000 --> 0:44:24.680 biggest tech companies at the time. 0:44:25.080 --> 0:44:27.879 And also I think pharma was involved in that too, 0:44:28.800 --> 0:44:32.120 and other large cap stocks here's the other interesting thing. 0:44:32.239 --> 0:44:34.320 You look at the S and P one hundred index 0:44:34.400 --> 0:44:39.319 right now, it does appear to be breaking out from 0:44:39.360 --> 0:44:44.960 a multi year bottom versus the SMP meaning megacaps leading 0:44:45.120 --> 0:44:47.799 large caps. The last time I saw a breakout like 0:44:47.840 --> 0:44:51.480 that was nineteen ninety eight. I find it curious that 0:44:51.840 --> 0:44:55.600 it's half that's happening and the equal weight lagging the 0:44:55.600 --> 0:44:58.959 cap weighted because in the late nineties or the middle 0:44:59.000 --> 0:45:01.480 eate nineties, the FED did hike rates quite a bit 0:45:02.040 --> 0:45:04.560 and then they took some off and then hiked into 0:45:04.840 --> 0:45:08.520 you know, ninety ninet two thousand with this environment for 0:45:08.560 --> 0:45:11.080 these particular names. So it just seems to me with 0:45:11.160 --> 0:45:15.160 these particular you know, size fragments working better than others. 0:45:15.200 --> 0:45:20.359 So megacap market potentially at this point, just looking at this, 0:45:20.400 --> 0:45:22.880 if it changes, I'll change, you know, I'll change my 0:45:22.960 --> 0:45:25.399 view pretty quickly if it starts to change. But right now, 0:45:26.400 --> 0:45:28.480 you know, I know a lot of people really want 0:45:28.520 --> 0:45:32.320 to see more alpha generated by more stocks, but the 0:45:32.440 --> 0:45:34.600 DERISA doesn't happen. But I do think instead of being 0:45:34.640 --> 0:45:38.440 the magnificent seven, maybe it's a nifty to fifty because 0:45:38.480 --> 0:45:39.759 the oex is breaking out. 0:45:40.000 --> 0:45:42.320 Well, well, we also know how the nifty fifty ended. 0:45:42.360 --> 0:45:45.319 So but it takes time, you know, it takes time, 0:45:45.480 --> 0:45:47.279 a lot longer than people think. I mean, I'm sure 0:45:47.320 --> 0:45:50.120 people were calling for a bubble in nineteen ninety eight, right, 0:45:50.120 --> 0:45:51.160 and you had a huge run up. 0:45:51.160 --> 0:45:54.879 They said, a long time, a long way to go. 0:45:55.480 --> 0:45:58.120 You mentioned the Fed raising rates. Let's talk about the 0:45:58.160 --> 0:46:01.040 bond market. What do you see in in treasuries and 0:46:01.120 --> 0:46:03.440 the fixed income half of the portfolio. 0:46:03.840 --> 0:46:05.799 Well, I mean, obviously that's not my call, is the 0:46:05.840 --> 0:46:09.680 equity strategist at BFA. But when you look at the 0:46:09.760 --> 0:46:14.120 tenure yield, the view is a secularize and interest rate. 0:46:15.200 --> 0:46:19.840 And if I'm putting on my equity hat, and I 0:46:19.920 --> 0:46:21.319 have to say, all right, what was the last time 0:46:21.360 --> 0:46:25.480 you had interest rates rising from you know, levels around 0:46:25.560 --> 0:46:27.200 one percent? I mean here we went a lot lower 0:46:27.280 --> 0:46:30.839 during COVID, obviously, but mid nineteen forty, so nineteen forty 0:46:30.880 --> 0:46:33.719 six into sixty six, a twenty year rise from about 0:46:33.760 --> 0:46:37.360 one and a half to about five seven five over twenty. 0:46:37.200 --> 0:46:40.680 Years, it's about about this, maybe a little smaller than 0:46:40.719 --> 0:46:41.560 the current range. 0:46:41.960 --> 0:46:44.960 Right. You know. The interesting thing is, I mean, if 0:46:44.960 --> 0:46:47.279 COVID didn't happen, where would your yield low be, It's 0:46:47.320 --> 0:46:49.640 either twenty twelve or sixteen, you know what I mean. So, 0:46:50.239 --> 0:46:53.319 I mean maybe this secular rise and yielded a little 0:46:53.320 --> 0:46:55.760 longer than people think it is. But I mean again, 0:46:55.800 --> 0:46:58.319 the market did drop on the ten year note yield 0:46:58.360 --> 0:47:01.840 to like what point three on the ten during COVID. 0:47:01.920 --> 0:47:04.279 So and this is when you look at the yield chart, 0:47:04.320 --> 0:47:07.040 it's like the fastest rise we've ever gotten. So if 0:47:07.040 --> 0:47:10.920 we are going to follow you know, that period in 0:47:10.960 --> 0:47:13.520 the fifties, I mean, right now, I think we're probably 0:47:13.560 --> 0:47:16.000 I mean, if I'm looking at stocks and overlaying it 0:47:16.040 --> 0:47:19.520 with interest rates and just trying to think about how 0:47:19.760 --> 0:47:23.000 most you know, where we are in that particular analogue, 0:47:23.680 --> 0:47:29.120 it's probably late fifties, early sixties. In some regard we've 0:47:29.120 --> 0:47:32.880 been secular bulls. But what is not a characteristic of 0:47:32.920 --> 0:47:35.840 a secular bull Its interest rates above five seven five, 0:47:36.280 --> 0:47:39.600 and it's inflation, you know, surging again. You know, we 0:47:39.680 --> 0:47:42.520 can't have that happen. It's very interesting when I get 0:47:42.719 --> 0:47:46.200 people asking me stuff like when is the market going 0:47:46.239 --> 0:47:49.200 to get back to normal? I'm like, well defined normal? 0:47:49.280 --> 0:47:51.880 Well interesting, its need to be lower, you know, one percent. 0:47:51.880 --> 0:47:54.480 I'm like, well, that's not normal, and you know, I 0:47:54.520 --> 0:47:58.160 find out right, five is pretty normal. 0:47:58.280 --> 0:48:00.440 I mean the average ten you note, yell, going back 0:48:00.480 --> 0:48:03.239 to nineteen twenty, if you know, looking at the data, 0:48:03.320 --> 0:48:05.040 is around four points seven. 0:48:05.280 --> 0:48:06.719 So we're a little elevated. 0:48:06.760 --> 0:48:08.760 We're right there, right, not not terrible. 0:48:08.880 --> 0:48:12.880 Right, We're kissing five as we record this. What's a 0:48:13.000 --> 0:48:16.680 quota point between friends? Right, it's not that. That's a 0:48:16.840 --> 0:48:20.319 couple of days of you know, whild trading action, right. 0:48:20.440 --> 0:48:22.040 So I mean, I mean, look, I mean get a 0:48:22.080 --> 0:48:24.160 return on your cash, which is great. A lot of 0:48:24.160 --> 0:48:26.880 people have taken advantage of that. So you know. The 0:48:26.960 --> 0:48:29.960 other factor is, I mean, when is that record level 0:48:30.000 --> 0:48:31.680 of cash going to be put to work in stocks? 0:48:31.719 --> 0:48:33.920 You know, I mean with people making five to six 0:48:33.960 --> 0:48:36.239 percent of money market funds, it's it's going to take 0:48:36.280 --> 0:48:38.640 a little bit more, which is by design. You know, 0:48:38.800 --> 0:48:41.000 the FED a lot of people take on risk with 0:48:41.160 --> 0:48:43.200 rates at zero. Now you know, they don't want people 0:48:43.200 --> 0:48:45.560 to take on as much risk in some regard, so 0:48:46.080 --> 0:48:48.600 it's going to take a little more confidence, you know, 0:48:48.719 --> 0:48:52.440 and equities too, because you get your hurdle retire, you know, 0:48:52.600 --> 0:48:54.799 So it makes sense. So I mean that's the reason 0:48:54.840 --> 0:48:57.680 why I think we are moving into a more normal environment. 0:48:57.719 --> 0:49:00.560 We're actually getting a really normal type of correction rather 0:49:00.680 --> 0:49:03.640 than something that lasts only you know, three to five percent, 0:49:03.680 --> 0:49:06.760 We're getting a normal ten percent plus type of pullback. 0:49:07.280 --> 0:49:11.640 You mentioned how COVID changed when what the lows were 0:49:11.920 --> 0:49:16.320 in the bond market. It's a fascinating piece in the 0:49:16.400 --> 0:49:21.680 Economists this week about in the post COVID world sentiment 0:49:21.800 --> 0:49:24.480 data has you know, just gone off the rails. In fact, 0:49:24.880 --> 0:49:28.040 if you look at the bottom of the sentiment data 0:49:28.080 --> 0:49:31.719 in twenty twenty two, and I've been struggling with this 0:49:31.840 --> 0:49:35.239 for a while, worse than the eighty seven crash, worse 0:49:35.280 --> 0:49:39.520 than the dot Com implosion, worse than September eleventh, worse 0:49:39.600 --> 0:49:44.319 than the Great Financial Crisis, and worse than the COVID lockdowns. 0:49:45.200 --> 0:49:48.600 What do you make of this wildly noisy sentiment data? 0:49:48.960 --> 0:49:50.560 So wait, which which data points were? 0:49:51.000 --> 0:49:56.640 I believe it was the University of Michigan sentiment data. 0:49:57.040 --> 0:49:58.839 And now it was the worse during COVID than any 0:49:58.880 --> 0:49:59.719 other period. 0:50:00.000 --> 0:50:03.359 Twenty two at a record low, worse than COVID, worse 0:50:03.400 --> 0:50:07.200 than GFC, worse than dot COM's just unprecedented levels that 0:50:07.800 --> 0:50:12.880 we've never seen. The economist is implying COVID just disrupted 0:50:12.960 --> 0:50:13.799 our sense of the world. 0:50:14.160 --> 0:50:16.880 It probably did. It probably did to some extent. And 0:50:17.040 --> 0:50:20.720 I think, you know, in twenty twenty two you started, 0:50:20.840 --> 0:50:23.520 I mean, I mean, you're already in a bear market 0:50:24.040 --> 0:50:27.280 from peaks in twenty twenty one. You already had indicators 0:50:27.320 --> 0:50:28.960 topping out in twenty twenty one, in the middle of 0:50:28.960 --> 0:50:30.360 the year and then late in the year. So we 0:50:30.440 --> 0:50:34.520 were well entrenched with economists looking for you know, you know, 0:50:34.640 --> 0:50:36.759 a massive hard landing at that point. So it would 0:50:36.760 --> 0:50:38.759 make sense the sentiment would be off the rails to 0:50:38.840 --> 0:50:41.920 some extent, you know, give given that. 0:50:42.000 --> 0:50:46.960 Outlook makes some sense. You frequently use a phrase that 0:50:47.160 --> 0:50:52.839 cracks me up in your research. Let's discuss your indicators. 0:50:52.920 --> 0:50:55.040 The Good, the bed, and the Ugly one of my 0:50:55.120 --> 0:50:58.359 favorite movies of all time. Looking at the world that's 0:50:58.400 --> 0:51:01.120 out there today. What's good, that's bad, what's ugly? 0:51:02.000 --> 0:51:04.960 Right? So, yeah, we we just you know, wanted to 0:51:05.000 --> 0:51:06.520 be a little tongue in cheek with some of our 0:51:06.520 --> 0:51:09.440 stuff here. So so we noticed that the percentage of 0:51:09.480 --> 0:51:12.000 stocks of a fifty day moving averages on the SMP 0:51:12.360 --> 0:51:15.400 actually did not go to a lower low, as the 0:51:15.560 --> 0:51:19.160 SMP went to a lower low just last Friday, so 0:51:19.280 --> 0:51:21.839 that has the potential to be good, you know, maybe 0:51:22.120 --> 0:51:28.719 triggers a seasonal rally. Another indicator we threw in there 0:51:29.040 --> 0:51:36.040 was the I think they call it the NAAIM exposure Index, 0:51:36.280 --> 0:51:39.239 that around twenty four percent versus over souls in the 0:51:39.320 --> 0:51:43.760 low twenties. That's getting closer. So so exposure among asset 0:51:43.840 --> 0:51:46.959 managers and market participants in equities is a lot lower 0:51:47.040 --> 0:51:48.920 than it was. So a lot of the I mean 0:51:48.960 --> 0:51:50.439 I always use the term a lot of the froth 0:51:50.520 --> 0:51:52.960 has been blown off the cappuccino, you know, over the 0:51:53.040 --> 0:51:56.040 last three months. So those are those are some you know, 0:51:56.320 --> 0:51:59.799 better looking indicators. I would argue that when you look 0:51:59.840 --> 0:52:03.400 at the Chicago Fed Financial Conditions Index, it's held in 0:52:03.520 --> 0:52:06.520 like a champ. So that's not what does that mean, Well, 0:52:06.680 --> 0:52:09.120 just means financial conditions aren't deteriorating, you know, to any 0:52:09.160 --> 0:52:13.080 great extent based on that indicator, you know, which is 0:52:13.080 --> 0:52:16.160 an indicator I like to use. Credit markets haven't blown 0:52:16.200 --> 0:52:18.880 out either, you know, So that's that, you know, spreads 0:52:18.920 --> 0:52:20.160 haven't blown out either, at least on. 0:52:20.400 --> 0:52:22.360 And there are people were warning that that was about 0:52:22.400 --> 0:52:25.960 to happen in the spring when Silicon Valley Bank and 0:52:26.080 --> 0:52:28.560 First Republic blew up. This is it. You're going to 0:52:28.600 --> 0:52:31.800 see credit markets turned go upside down, and that'll be 0:52:31.880 --> 0:52:32.680 it for equities. 0:52:33.200 --> 0:52:35.400 Not so much, not so much. I mean the corporate 0:52:35.520 --> 0:52:37.640 BAA to ten year spread is one I look. 0:52:37.520 --> 0:52:41.160 At a lot, meaning investment grade to just below investment grade. 0:52:42.960 --> 0:52:45.839 It's the tenure spread versus that. So I look at 0:52:45.880 --> 0:52:48.439 the lowest tier of investment grade versus the tenure yield 0:52:48.640 --> 0:52:50.719 versus the treasure got Yeah, And what I'm trying to 0:52:50.760 --> 0:52:53.000 say is, all right, when does stuff start to creep 0:52:53.040 --> 0:52:55.279 into investment grade, you know, the lower tier, and it 0:52:55.320 --> 0:52:57.760 hasn't happened. I mean that is well below two percent, 0:52:58.920 --> 0:53:01.719 and when you get aboup two point five, that's when 0:53:01.800 --> 0:53:03.160 things really start. 0:53:02.960 --> 0:53:06.279 To Let's talk about your sector work. How do you 0:53:06.920 --> 0:53:10.080 utilize different sectors and how does that work into your 0:53:10.760 --> 0:53:13.560 overall approach to macro. 0:53:14.040 --> 0:53:15.800 Well, I mean the sectors. I mean this is this 0:53:16.000 --> 0:53:20.839 is I've been shying away from having bold sector calls 0:53:20.880 --> 0:53:23.840 this year, and the reason why is you can find bullish, 0:53:23.840 --> 0:53:26.880 embarrassed stock charts everywhere no matter what sector you're looking at, 0:53:28.200 --> 0:53:29.520 even utilities. 0:53:29.520 --> 0:53:31.920 What does it mean when a sector is strong and 0:53:32.080 --> 0:53:36.080 an individual company is weak. Is it just reflecting that company? 0:53:36.440 --> 0:53:37.840 How do you draw a conclusion from that? 0:53:38.040 --> 0:53:40.040 No, I mean what you want to see. I mean, sure, 0:53:40.120 --> 0:53:42.520 that's a good question. So you know, if you have 0:53:42.600 --> 0:53:44.560 a bullish sector, I mean, I would argue tech is 0:53:44.640 --> 0:53:47.280 still a tech and comm services are still in quite 0:53:47.440 --> 0:53:51.600 bullish position. So if you have a stock and a 0:53:51.640 --> 0:53:54.319 bullish sector is not acting well, jazz are it's an 0:53:54.360 --> 0:53:58.560 idiosyncratic problem with that stock or chart, you know, probably 0:53:58.600 --> 0:54:00.560 a fundamental reason for it too, more so than a 0:54:00.640 --> 0:54:03.400 technical reason, because you know, the technicals are reflecting the 0:54:03.480 --> 0:54:07.680 fundamental situation to some extent. So I mean, I think 0:54:07.760 --> 0:54:10.560 right now, just looking at sectors and looking at you know, 0:54:10.680 --> 0:54:14.040 the way things look on the relative price charts along 0:54:14.080 --> 0:54:16.600 with the absolute price charts, it seems like, you know, 0:54:16.719 --> 0:54:21.160 tech is holding in fine comm services, holding in fine 0:54:21.239 --> 0:54:27.640 semi conductors, trying to hold their trend industrials, you know, trying, 0:54:27.920 --> 0:54:31.080 but you know, not not really convincing energy holding in 0:54:31.200 --> 0:54:34.160 just fine materials. It depends on the stock. You can 0:54:34.239 --> 0:54:37.399 find some winners, find some losers, and financials. It's really 0:54:38.040 --> 0:54:42.120 challenging because you know, you know two things. One, the 0:54:42.160 --> 0:54:46.000 absolute chart looks okay as long as it can hold 0:54:46.080 --> 0:54:48.520 those prior highs from two thousand and seven, which it 0:54:48.600 --> 0:54:53.640 has done, but the relative chart not okay. But within 0:54:53.719 --> 0:54:57.120 that group, you can find winners in things like exchanges 0:54:57.160 --> 0:54:59.840 and stuff like that that look really strong relative to 0:55:00.600 --> 0:55:02.560 the laggers of the group, which just happened to be, 0:55:03.280 --> 0:55:05.080 you know, the sector near and dear to my heart, the. 0:55:05.120 --> 0:55:08.239 Banks, you know, you know, just because you work for that, 0:55:08.640 --> 0:55:12.600 just to set you up to really like right, I mean, 0:55:12.640 --> 0:55:12.920 why not? 0:55:13.040 --> 0:55:15.480 I mean it's like, you know, it's you know, you 0:55:15.560 --> 0:55:17.400 want to see your companies, you know, Yeah, well of 0:55:17.440 --> 0:55:17.920 course you know. 0:55:18.040 --> 0:55:22.200 It's like so, so let's talk about the macro what 0:55:22.400 --> 0:55:26.480 goes into what you look at most when you're doing 0:55:26.560 --> 0:55:29.320 an overall view of the equity markets. 0:55:29.680 --> 0:55:32.719 Yeah. So, I mean, one of my favorite indicators, and 0:55:32.760 --> 0:55:34.480 I would lump it in with the good, would be 0:55:34.680 --> 0:55:38.840 the seventy three country Index of market breadth. So the 0:55:38.880 --> 0:55:41.640 advanced a client line for seventy three country indices. The 0:55:41.760 --> 0:55:42.640 US is one of those. 0:55:43.040 --> 0:55:46.440 So it's not just looking at the domestic equity markets. 0:55:46.520 --> 0:55:48.480 You want to see the whole world doing well at once. 0:55:48.800 --> 0:55:51.160 Yes, and that advanced a client line broke out during 0:55:51.200 --> 0:55:55.120 the summer, and even though the market correction has taken 0:55:55.239 --> 0:55:58.600 a lot of indicies below the summer breakout points, this 0:55:58.760 --> 0:56:01.799 particular advanced to Client I remains above its breakout point, 0:56:01.920 --> 0:56:04.239 meing that there are pockets of the world that are 0:56:04.280 --> 0:56:09.160 working better than others, you know, out there. So yeah, 0:56:09.200 --> 0:56:11.080 I think I think that's important to point out. And 0:56:12.440 --> 0:56:15.800 and so global breath has a roll over, So it 0:56:15.880 --> 0:56:18.160 tells us that we're in a corrective phase within what 0:56:18.280 --> 0:56:21.080 could very well be a market that may yet have 0:56:21.200 --> 0:56:23.480 another upleake to it, not just in the US, but 0:56:23.640 --> 0:56:25.680 also you know, globally. 0:56:26.160 --> 0:56:30.520 So since we're talking about global the world always is 0:56:30.760 --> 0:56:34.640 kind of a scary place lately. You flip on the news, 0:56:35.120 --> 0:56:38.840 geopolitics is everywhere. It's Russia and the Ukraine, It's the 0:56:38.920 --> 0:56:42.080 things that are going on in Israel. It's the economy 0:56:42.480 --> 0:56:46.919 in Europe and especially China seems to be falling into 0:56:47.000 --> 0:56:50.520 its own problems. How do you think about all these 0:56:51.040 --> 0:56:55.520 big geopolitical events or do you not? It's really either 0:56:55.600 --> 0:56:56.560 in the charts or not. 0:56:57.640 --> 0:56:59.719 No, I would say it's a latter, and the charts 0:56:59.760 --> 0:57:03.800 are not. So I mean, put it this way. Market 0:57:03.880 --> 0:57:08.360 is a discounting mechanism, and sometimes it discounts things in advance, 0:57:08.440 --> 0:57:12.880 of course, but when things are surprised, it discounts things quickly. 0:57:13.760 --> 0:57:15.920 And I think that's really the way to think about it. 0:57:17.600 --> 0:57:21.160 And what's interesting I've noted. I mean maybe there's a 0:57:21.240 --> 0:57:24.320 little bit of gold taking on to old fashioned. 0:57:24.960 --> 0:57:29.880 Safe harbor, a little apocalyptic currency. 0:57:30.080 --> 0:57:31.440 Yeah. I mean, if you look at the research that 0:57:31.600 --> 0:57:33.760 you know, my colleague puts out, you know, policy on 0:57:33.960 --> 0:57:35.760 I mean, there's like a huge base on gold. You 0:57:35.840 --> 0:57:38.520 know that that if it ever breaks out, it can 0:57:38.560 --> 0:57:42.720 go up a lot. And the events of the world 0:57:42.960 --> 0:57:45.120 have enhanced that pattern a little bit. 0:57:45.400 --> 0:57:48.240 So the question I have for your colleague is, Hey, 0:57:48.320 --> 0:57:51.560 the past decades, so a lot of really crazy things happen, 0:57:52.440 --> 0:57:55.360 and gold, you know, quote a little bit of a bid, 0:57:55.560 --> 0:57:57.760 but never really could get out of its own way. 0:57:59.040 --> 0:58:01.840 In fact, I don't think it got over the two 0:58:01.880 --> 0:58:05.440 thousand and eight nine highs. What do we make of 0:58:05.680 --> 0:58:09.400 gold sort of forming this long? Is this a base 0:58:09.520 --> 0:58:10.280 or is this a top? 0:58:11.640 --> 0:58:16.600 No, it looks like the mother of all cup and handles. 0:58:17.120 --> 0:58:20.400 You know, coin and a cup and handle pattern looks like. 0:58:20.480 --> 0:58:22.480 Yeah, I'm gonna define it because it's like it's it's 0:58:22.680 --> 0:58:25.160 bill and Eel coined it right, right, So the cup, 0:58:25.400 --> 0:58:29.120 the handle, the cup is this big rounding type of 0:58:29.200 --> 0:58:32.200 base stock rally. Sometimes it goes to a new high, 0:58:32.200 --> 0:58:34.120 which it did, so I did go above where it 0:58:34.320 --> 0:58:37.240 was briefly, right, yeah, a few times though. Now you 0:58:37.320 --> 0:58:39.960 have three probes up and then and the probe down. 0:58:40.000 --> 0:58:42.120 So you got the cup and now you're forming the 0:58:42.200 --> 0:58:46.600 handle and the handles a lot shalloiler in terms of price. 0:58:46.440 --> 0:58:49.360 Decline, meaning buyers are coming in higher. 0:58:49.200 --> 0:58:52.760 Prices, meaning that there's demand for gold at higher prices. 0:58:53.360 --> 0:58:58.080 And if this technical formation works, I mean, and gold 0:58:58.120 --> 0:59:01.320 can clear those hives that have heard over the last three, 0:59:01.400 --> 0:59:05.200 four or five years, then you got the pattern and 0:59:05.520 --> 0:59:08.840 you can go much higher than where gold is today 0:59:08.960 --> 0:59:11.800 if we do complete that pattern. And gold was interesting too, 0:59:11.880 --> 0:59:14.560 because if I put my equity hat on and look 0:59:14.560 --> 0:59:16.400 at gold the way I look at a stock, it 0:59:16.480 --> 0:59:20.040 tagged its two under week moving average perfectly rising two 0:59:20.080 --> 0:59:23.920 under week moving average, which means secular uptrend. You know, 0:59:24.040 --> 0:59:28.000 even though gold is consolidated, it just lends more confidence 0:59:28.080 --> 0:59:31.040 that the pattern we're in now is more more likely 0:59:31.080 --> 0:59:33.560 to break higher than breakdown, and you know, just looking 0:59:33.600 --> 0:59:37.480 at just evidence based type of technical analysis. 0:59:37.360 --> 0:59:40.680 And you mentioned towards the end of twenty one there 0:59:40.720 --> 0:59:44.520 were lots of warning signs. What did the technical say 0:59:45.320 --> 0:59:50.000 about twenty twenty two, And let's revisit the June and 0:59:50.120 --> 0:59:54.200 October twenty twenty two bottoms. What were the technical saying? Then? 0:59:54.440 --> 0:59:58.240 Sure, so we put out our year ahead for twenty 0:59:58.320 --> 1:00:01.120 twenty two. Buckle up, it's going to be a rocky year. 1:00:01.320 --> 1:00:02.800 That's a pretty good, pretty good call. 1:00:03.480 --> 1:00:07.520 Yeah, I mean, you know it was. Yeah, I felt 1:00:07.560 --> 1:00:09.960 good about it. I mean, look, when you're looking at 1:00:10.000 --> 1:00:13.280 credit spreads peaking in the summer, you're looking at financial conditions, 1:00:14.400 --> 1:00:16.600 you know, hitting their best levels in the summer twenty 1:00:16.680 --> 1:00:18.800 twenty one and then deteriorating through the end of the year. 1:00:19.360 --> 1:00:21.280 When you're looking at the percentage of stocks for two 1:00:21.320 --> 1:00:25.400 hundred day moving averages diverging for six months, you know 1:00:25.440 --> 1:00:27.280 a few other indicators I could point out, but it's 1:00:27.280 --> 1:00:30.840 a laundry list. And the SMP going to a new 1:00:31.520 --> 1:00:35.919 high in January, whereas the Nasdaq one hundred NASDAK comp 1:00:36.000 --> 1:00:38.880 topped out in November. It's telling you something's going on, 1:00:39.600 --> 1:00:42.640 and it just suggested to us that the rally that 1:00:42.680 --> 1:00:45.400 we've gotten from the COVID lows was at risk and 1:00:45.520 --> 1:00:49.160 we were entering into a corrective phase. And you know, 1:00:49.240 --> 1:00:52.760 we were targeting levels like thirty eight hundred, and we 1:00:52.880 --> 1:00:55.880 also throughout the two hundred week moving average, which you 1:00:55.960 --> 1:00:58.320 know when it eventually tested, it was like thirty four 1:00:58.320 --> 1:01:00.080 to ninety, you know, around thirty five hundred on the 1:01:00.080 --> 1:01:03.720 two hundred week we would average. So that was the pattern. 1:01:03.760 --> 1:01:06.280 And then we looked at twenty twenty throughout the year 1:01:06.480 --> 1:01:08.840 twenty twenty two, and you did hit a nice low 1:01:08.880 --> 1:01:11.800 in June and you were able to rally, and then 1:01:11.840 --> 1:01:14.680 guess what happened. You stalled a declining forty week two 1:01:14.760 --> 1:01:18.520 hundred day moving average in August, and then you went 1:01:18.600 --> 1:01:22.520 down and undercut the June low I just by a 1:01:22.560 --> 1:01:24.600 little bit. And I would say that was a nice 1:01:24.840 --> 1:01:28.760 retest of that low. There were some indicators. I believe 1:01:28.800 --> 1:01:31.680 the fourteen week RSI had a higher low, meaning price 1:01:31.840 --> 1:01:35.720 momentum improved even though the SMP went to a lower low, 1:01:36.280 --> 1:01:39.200 so it was so that was a positive. I believe 1:01:39.240 --> 1:01:41.960 there are also fewer new fifty two week lows, and 1:01:42.040 --> 1:01:44.160 the other ingredient was that we just talked about earlier, 1:01:45.320 --> 1:01:48.040 you know, versus June and November. You actually started to 1:01:48.120 --> 1:01:52.760 see the dollar peak and yield's peak in October, so 1:01:53.000 --> 1:01:56.120 that helped the market stabilize and bottom out. So was 1:01:56.200 --> 1:01:59.200 their capitulation, because that's what a lot of people, you know, 1:01:59.720 --> 1:02:03.320 hung on. We didn't get the capitulation in October twenty 1:02:03.400 --> 1:02:05.640 twenty two, and I would argue we did. The one 1:02:05.680 --> 1:02:10.000 indicator I would point to to support two indicators. First, AAII, 1:02:10.200 --> 1:02:13.880 Bears went to the highest level the most bears since 1:02:13.960 --> 1:02:15.080 early two thousand and nine. 1:02:15.440 --> 1:02:16.840 That's pretty big level. 1:02:17.040 --> 1:02:19.800 That's a huge level. So that's one, and the other 1:02:19.880 --> 1:02:22.360 one is that three month miix versus vix went below 1:02:22.440 --> 1:02:27.200 one late September early October of twenty twenty two to 1:02:27.320 --> 1:02:31.080 suggest to us that the tactical medium term you know, 1:02:31.440 --> 1:02:37.520 momentum of medium term sentiment did capitulate. So bears capitulated 1:02:37.600 --> 1:02:41.160 from institution from retail investors h and the three month 1:02:41.600 --> 1:02:45.640 versus vix moved below one to suggest, you know, capitulation 1:02:45.760 --> 1:02:49.080 on that indicator. And the other thing that was very 1:02:49.120 --> 1:02:53.800 interesting about October of last year was that entering the month, 1:02:53.880 --> 1:02:58.760 we had two extraordinarily bullish breath days ninety percent up 1:02:58.840 --> 1:03:03.479 days on the NYFC in a row, and that helps 1:03:03.480 --> 1:03:06.840 slidify a bottom too, even though the first few sessions 1:03:06.920 --> 1:03:09.240 after that it gave up all the rally from those 1:03:09.280 --> 1:03:12.440 two days, but the market did find support, you know, 1:03:12.760 --> 1:03:15.400 with those days. So it was a very complicated market. Normally, 1:03:15.440 --> 1:03:17.000 when you get those two types of things, you just 1:03:17.120 --> 1:03:20.520 rip to the upside. But huh, it's just so volatile now, 1:03:20.720 --> 1:03:20.880 you know. 1:03:21.160 --> 1:03:25.800 So let's sum up the secular view of the markets. 1:03:26.280 --> 1:03:30.040 We had a thirty four percent downturn in twenty twenty 1:03:30.520 --> 1:03:33.960 during the pandemic. The rest of the year from those lows, 1:03:34.000 --> 1:03:36.640 I think we have plus sixty eight percent the following 1:03:36.720 --> 1:03:39.880 year plus twenty nine percent, and then we come into 1:03:40.000 --> 1:03:44.120 twenty twenty two. Where are we broadly? Have we been 1:03:44.360 --> 1:03:49.760 in a cyclical correction within a longer secular bull market? Is? 1:03:50.160 --> 1:03:52.800 Is that how you're describing this? And if we are, 1:03:53.280 --> 1:03:56.440 how long could that secular bullmarket run for? 1:03:56.880 --> 1:04:00.680 Yeah? So it's a great question. So first, the view 1:04:00.840 --> 1:04:04.880 of the twenty twenty two correction was secular cyclical, cyclical correction, 1:04:05.480 --> 1:04:10.160 secular bull market. We made comparisons with the year zone 1:04:10.200 --> 1:04:13.959 crisis in twenty twelve very similar to that. Also twenty 1:04:14.040 --> 1:04:18.120 sixteen Brexit and the election that year and trade war 1:04:18.160 --> 1:04:22.200 in twenty nineteen, and one can even argue COVID twenty 1:04:22.280 --> 1:04:25.240 twenty similar setup where you went down tested the two 1:04:25.320 --> 1:04:27.960 hundred week m cross above the forty week and then 1:04:28.000 --> 1:04:30.520 corrected to undercut the forty week. You did it twice 1:04:31.080 --> 1:04:33.680 twice in twenty twelve, once prior to summer rally and 1:04:33.760 --> 1:04:36.560 once prior to the year on rally twenty twelve. Twenty sixteen, 1:04:36.920 --> 1:04:39.280 you hit it right when the brigs of vote happened 1:04:39.280 --> 1:04:42.240 and then boom ripped into a summer rally fall correction 1:04:42.680 --> 1:04:45.120 year end rally after Trump got e liket to president 1:04:45.120 --> 1:04:47.400 of twenty sixteen and then tried to trade war. Two 1:04:47.440 --> 1:04:50.320 similar type of dips, one in the right ahead of 1:04:50.320 --> 1:04:52.240 a summer rally and one ahead of the year end rally. 1:04:52.720 --> 1:04:54.680 So here we go. We had one in March, which 1:04:54.680 --> 1:04:57.080 is a little early, but it happened. You rallied above 1:04:57.120 --> 1:04:59.520 the forty week, then moved below it, and then rally 1:04:59.560 --> 1:05:01.720 back up by the time you're in April, and you 1:05:01.800 --> 1:05:04.480 got a nice summer rally and then right on. C 1:05:04.720 --> 1:05:07.600 seasonality always says going back to nineteen twenty eight. Well, 1:05:07.680 --> 1:05:10.000 you know, seasonality says, going back to nineteen twenty eight, 1:05:10.360 --> 1:05:12.440 the worst three month period of the year is August 1:05:12.520 --> 1:05:15.280 through October. And that's exactly what's going on right here. 1:05:15.360 --> 1:05:19.160 We're getting that traditional correction which usually proceeds the best 1:05:19.200 --> 1:05:22.120 three month periods of the year of November through January. 1:05:22.240 --> 1:05:24.920 So I think that's where we are now. So we 1:05:25.040 --> 1:05:29.240 could very well be ending this cyclical correction soon if 1:05:29.320 --> 1:05:32.320 we follow seasonal patterns. Now, how long can the secular 1:05:32.680 --> 1:05:38.160 bull market last? Well, there's a financial advisor who helped 1:05:38.200 --> 1:05:41.280 me coin this term. I guess he was a Marilyn 1:05:41.360 --> 1:05:46.040 Monroe fan. The seven year itch, So seven years after 1:05:46.120 --> 1:05:49.680 the breakout of twenty thirteen was COVID and the marketer spike. 1:05:49.520 --> 1:05:53.960 Low and thirty four percent is normally considered a pretty 1:05:53.960 --> 1:05:55.200 substantial bear market. 1:05:55.520 --> 1:05:57.360 I mean, the only only one in the secular bowl 1:05:57.440 --> 1:06:00.120 trend that matched it was the eighty seven crash. And 1:06:00.160 --> 1:06:03.200 guess what eighty seven, seven years after the eighty breakout, 1:06:03.360 --> 1:06:06.480 So seven year itch there, I call it halftime. You know, 1:06:06.600 --> 1:06:09.680 not everybody knows Marilyn Monroe is, you know, I mean 1:06:09.680 --> 1:06:12.800 I did a Jaws reference in one of my Morning 1:06:12.840 --> 1:06:16.040 call appearances, you know, talking about how the market needed 1:06:16.040 --> 1:06:18.600 to build a bigger base. You're going to need a 1:06:18.640 --> 1:06:20.960 bigger base, and sure enough, I bet you if that 1:06:21.080 --> 1:06:24.560 trading floor, probably google what's jaws? Because no, think about 1:06:24.720 --> 1:06:27.000 think of the average age down there. But bottom line 1:06:27.080 --> 1:06:28.760 is this, and I just digress, So let me get 1:06:28.800 --> 1:06:31.040 back to what I was talking about. So the seven 1:06:31.080 --> 1:06:35.720 year low eighty seven will market lasted until twenty two thousand, 1:06:35.760 --> 1:06:38.840 and then fifty seven fifty breakout in the SMP above 1:06:38.880 --> 1:06:44.040 the thirty seven high, and then you rallied into you 1:06:44.120 --> 1:06:45.960 know prior to nineteen fifty seven, had a correction in 1:06:46.040 --> 1:06:50.600 nineteen fifty seven, which was recession and a pandemic, so 1:06:50.800 --> 1:06:54.440 go figure. And then that lasted another nine years. So 1:06:55.640 --> 1:06:59.080 I mean, if I'm just saying, hey, midpoint twenty twenty 1:06:59.720 --> 1:07:02.800 from twenty thirteen, maybe it lasts until twenty twenty seven, 1:07:03.240 --> 1:07:06.000 but some of these other bowl markets lasted longer. Maybe 1:07:06.000 --> 1:07:07.640 I have to get a little bit of haircut. Given 1:07:07.680 --> 1:07:10.959 where inflation interest rates are. I mean that's quite a possibility. Sure. 1:07:12.200 --> 1:07:14.480 In fact, I mean for order for the secular call 1:07:14.560 --> 1:07:17.320 to really work, I mean, let's face it, inflation does 1:07:17.400 --> 1:07:22.360 need to come down and cannot spike you know, ten 1:07:22.440 --> 1:07:24.360 twelve percent. I mean, if it does, that's not what 1:07:24.480 --> 1:07:28.080 happens during secular bowl markets, you know what you know, 1:07:28.160 --> 1:07:30.800 the nineteen fifty secular bowl market started with you know, 1:07:30.880 --> 1:07:33.520 inflation high, and then it went down and stayed fairly contained. 1:07:34.120 --> 1:07:36.760 You know, higher interest rates not what you want to see. 1:07:37.520 --> 1:07:37.640 You know. 1:07:37.760 --> 1:07:40.560 Nineteen eighty short started with interest rates double digits, but 1:07:40.720 --> 1:07:43.280 our friend Vulker, you know, did what he needed to 1:07:43.320 --> 1:07:47.080 do and solve that problem, or heights went down. So 1:07:47.560 --> 1:07:49.640 you know, ten to to note yield is trending through 1:07:49.920 --> 1:07:52.360 five and a half five point seven five, and inflation's 1:07:52.360 --> 1:07:54.680 going back up. You know, I think it's going to 1:07:54.720 --> 1:07:57.680 be very difficult for this secular bowl trend to be sustained. 1:07:57.720 --> 1:08:01.120 Because it hasn't happened before. It doesn't mean it can't happen. 1:08:01.720 --> 1:08:04.040 But I can't find, you know, you know, any history 1:08:04.120 --> 1:08:05.360 to support that case. Huh. 1:08:05.520 --> 1:08:10.320 Really interesting. So let's talk a little bit about what 1:08:10.600 --> 1:08:14.400 follows the worst three months of the year. You mentioned August, September, 1:08:14.480 --> 1:08:18.680 October tends to be seasonally the worst part of the year. 1:08:19.560 --> 1:08:24.080 I've seen all sorts of explanations for why that is harvest, 1:08:24.320 --> 1:08:28.240 people distracted with summer vacation, going back to school, whatever 1:08:28.360 --> 1:08:32.679 it is. The last three months tend to be pretty good. 1:08:33.280 --> 1:08:35.559 What are the odds that we're going to see Santa 1:08:35.600 --> 1:08:36.840 Claus come to Wall Street? 1:08:38.560 --> 1:08:41.439 I hope they're pretty good first and foremost, When you know, 1:08:41.520 --> 1:08:45.559 we use traditional seasonality work, So traditional seasonality, what does 1:08:45.600 --> 1:08:48.800 it tell you? You know, everybody talks about selling May 1:08:48.840 --> 1:08:51.320 and go away, but do you ever see anybody go 1:08:51.400 --> 1:08:53.840 on the media and say, hey, buy in October and stay. 1:08:54.640 --> 1:08:56.439 They don't because that doesn't sell. 1:08:56.560 --> 1:08:59.080 And it doesn't rhyme. That's you know, it's true, and 1:08:59.200 --> 1:09:00.800 it runs. That's the key. 1:09:01.160 --> 1:09:01.800 Yeah, that's true. 1:09:01.840 --> 1:09:04.080 Buy in October trend as your friend. If there's no 1:09:04.200 --> 1:09:07.400 rhyme there, it's no good except for the bend at 1:09:07.439 --> 1:09:08.200 the end of course. 1:09:08.520 --> 1:09:10.600 Yeah. But it's really what's really funny about it is, 1:09:10.680 --> 1:09:13.680 I mean, November starts the best three and six month 1:09:13.760 --> 1:09:15.760 periods of the year for the S and P, which 1:09:15.840 --> 1:09:17.760 I think, going back to ninety twenty a is really 1:09:17.840 --> 1:09:20.960 encouraging for those looking for the market to stabilize. But 1:09:21.400 --> 1:09:24.360 when you think about where we are in the presidential cycle, 1:09:24.800 --> 1:09:28.200 we're in year three, so year two to year three 1:09:28.439 --> 1:09:32.400 has the best part of the cycle, from fourth quarter 1:09:32.560 --> 1:09:34.880 year two, which was last year around this time, through 1:09:35.040 --> 1:09:37.360 the middle of year three. So and we fought, we 1:09:37.479 --> 1:09:40.960 did that perfectly. And now we're you know, we're doing 1:09:41.280 --> 1:09:44.479 the getting ready for year four. We're getting ready for 1:09:44.560 --> 1:09:48.439 year four. But right here, right now, it's tough in 1:09:48.600 --> 1:09:55.040 year three August, September, October, November, so seasonality might be 1:09:56.360 --> 1:10:01.360 pushed into December. We could struggle into November because that 1:10:01.680 --> 1:10:03.880 can happen in the third year of the presidential cycle. 1:10:04.360 --> 1:10:07.360 So in the third year of the presidential cycle, positive 1:10:07.439 --> 1:10:12.679 Q four performance is typically a Santa Claus rally event. 1:10:13.640 --> 1:10:18.679 So and then the next part of the cycle calls 1:10:18.800 --> 1:10:24.519 for a choppy pattern into May of next year. But 1:10:24.600 --> 1:10:28.880 then you follow traditional seasonal patterns summer rally, fall, dip 1:10:29.080 --> 1:10:32.439 and correction and rally after the election, and it doesn't 1:10:32.439 --> 1:10:34.960 matter who wins or loses. I mean, in twenty sixteen, 1:10:35.000 --> 1:10:38.800 everybody thought Trump was a disaster. Everybody thought Biden was 1:10:38.840 --> 1:10:41.599 a disaster, and the contested election was a disaster. 1:10:41.720 --> 1:10:44.240 Market loth cases, market did well, market. 1:10:44.040 --> 1:10:47.760 Did well, So I think, you know, granted, I mean 1:10:47.840 --> 1:10:50.840 that we're into an interesting period of time here where 1:10:52.040 --> 1:10:54.880 it may take a bit longer for the market to stabilize. 1:10:55.080 --> 1:10:58.439 But I do think if we follow, you know, the 1:10:59.200 --> 1:11:01.240 pattern were December should be good. 1:11:01.600 --> 1:11:05.200 So let's talk about another sort of historical pattern, not 1:11:05.360 --> 1:11:08.679 quite seasonal. I've seen a lot of studies that suggest 1:11:08.800 --> 1:11:14.640 when the FED finishes its rate hiking cycle shortly thereafter, 1:11:14.920 --> 1:11:17.640 we're off to the races and the equity side. It 1:11:17.960 --> 1:11:21.760 almost feels like the market isn't sure if the Fed 1:11:21.880 --> 1:11:26.080 is done, and once the market is comfortable, hey, we're 1:11:26.160 --> 1:11:30.479 done raising rates, the next leg up can begin. Does 1:11:30.560 --> 1:11:32.600 that sound reasonable or what are your thoughts on that? 1:11:33.360 --> 1:11:36.960 I mean it does sound reasonable. I mean clarity around 1:11:37.000 --> 1:11:41.559 when that final rate cuts happening probably would be helpful. 1:11:41.720 --> 1:11:43.360 I mean, I think that's one reason why the market 1:11:43.439 --> 1:11:46.439 is struggling a little bit, because there's that last hike 1:11:46.600 --> 1:11:48.400 just sitting out there creating uncertainty. 1:11:48.520 --> 1:11:50.880 Plus you have a lot of Fed governor's jaw boning 1:11:50.960 --> 1:11:53.920 back and forth. It doesn't seem like there's a consensus 1:11:54.000 --> 1:11:54.439 there yet. 1:11:54.880 --> 1:11:58.120 Yes, I mean, my dad was a bond guy all 1:11:58.240 --> 1:12:02.120 his life, and he point he told me FOMC stands 1:12:02.160 --> 1:12:05.120 for Federal open mouth Committee, meaning they talk a lot 1:12:05.640 --> 1:12:07.760 and sometimes confused markets. And back when in the day 1:12:07.800 --> 1:12:09.720 when he was trading bonds, they didn't tell you what 1:12:09.760 --> 1:12:11.439 they were doing either at the FED meetings. You had 1:12:11.479 --> 1:12:12.559 to figure it out from price action. 1:12:12.880 --> 1:12:16.200 They didn't even announce that. People don't realize when you 1:12:16.320 --> 1:12:17.960 talk about some people who have only been in the 1:12:18.000 --> 1:12:21.280 business for ten or twenty years, the FED didn't even 1:12:21.360 --> 1:12:23.400 tell you were hiking rates. You would just have to 1:12:23.439 --> 1:12:26.360 see what would take place in the in the bond market. 1:12:26.439 --> 1:12:29.200 Suddenly it's like, hey, who's uh, who's buying all these 1:12:29.240 --> 1:12:32.120 equities or who's selling all these bonds? You had to 1:12:32.160 --> 1:12:33.280 figure out what was going on. 1:12:34.040 --> 1:12:36.040 I mean, we are spoon fed, that's for sure. I 1:12:36.120 --> 1:12:38.240 mean then, you know, I don't know whether that's a 1:12:38.280 --> 1:12:40.760 good or bad thing. I mean, you know again, I 1:12:40.840 --> 1:12:44.479 mean information just comes at us so quickly, quickly digested. 1:12:44.520 --> 1:12:46.680 You got machines that help you digest the information and 1:12:47.000 --> 1:12:50.000 do and make trading decisions. But yeah, the environment has 1:12:50.040 --> 1:12:53.320 definitely gotten, you know, more complicated. I mean, my dad 1:12:53.720 --> 1:12:55.439 taking the train back in the day, he wasn't getting 1:12:55.720 --> 1:12:57.840 emails on the you know, he could he could actually 1:12:57.880 --> 1:12:59.760 play bridge with a few other guys on the train, 1:12:59.800 --> 1:12:59.920 you know. 1:13:00.240 --> 1:13:02.439 So let me let me ask you a related question 1:13:02.600 --> 1:13:07.920 to that about the Fed spoon feeding us. Say what 1:13:08.080 --> 1:13:12.760 you will about Jerome pal and the Federal Reserve. He said, 1:13:12.880 --> 1:13:15.880 we're going to raise rates, and he started raising rates. 1:13:16.439 --> 1:13:19.400 In fact, he said we're going to raise rates aggressively 1:13:19.640 --> 1:13:22.840 to combat inflation. Now we could say they were a 1:13:22.840 --> 1:13:24.880 little late to the party. They should have started a 1:13:25.000 --> 1:13:28.320 year earlier. But hold that aside. It seems like the 1:13:28.479 --> 1:13:32.320 equity market didn't believe the Fed chairman when he said, 1:13:33.439 --> 1:13:36.040 hold my beer, watch what I'm about to do with rates. 1:13:36.120 --> 1:13:37.240 Nobody seemed to believe him. 1:13:38.200 --> 1:13:39.840 Well, I mean, I think it's good that the equity 1:13:39.960 --> 1:13:42.280 market was able to you know, I mean, obviously at 1:13:42.280 --> 1:13:45.960 first it corrected, but he will rally again because again, 1:13:46.040 --> 1:13:48.839 I mean, you know, people say, hey, rates, they're increasing 1:13:48.920 --> 1:13:51.200 rates drastically, and I'm like, no, I would I would not. 1:13:52.040 --> 1:13:54.240 I would call it normalization of rates. 1:13:55.000 --> 1:13:55.160 You know. 1:13:55.520 --> 1:13:58.160 You know, I think it's a freely what's going on. 1:13:58.479 --> 1:14:02.920 It's not. It's not I mean, as aggressively hiking they did, 1:14:03.120 --> 1:14:06.600 but they got it to a more normalized level. So 1:14:06.760 --> 1:14:08.920 I and you know, again I mean, is it normal 1:14:09.040 --> 1:14:12.040 to get a return on cash investment? To answer that question, 1:14:12.080 --> 1:14:15.000 I would argue is yes. So this is the most 1:14:15.080 --> 1:14:17.160 normal environment we've been in a long. 1:14:17.040 --> 1:14:19.400 Time, which is kind of crazy to think about the 1:14:19.520 --> 1:14:24.320 previous two decades. We're abnormal. And think about everybody who's 1:14:24.840 --> 1:14:29.000 you know, first started investing in these twenty years. You 1:14:29.080 --> 1:14:32.200 had a ten year bear market right from two thousand 1:14:32.280 --> 1:14:38.080 to I don't know, cold twenty twelve, twenty thirteen. Is 1:14:38.560 --> 1:14:42.240 this normal or is this normalizing? We may not quite 1:14:42.280 --> 1:14:43.280 be it normal yet. 1:14:43.200 --> 1:14:45.840 Are we Well, we'll see. I mean, it takes time 1:14:45.960 --> 1:14:48.680 to really figure that one out, but you know, I 1:14:48.760 --> 1:14:50.519 think I think we're a lot more normal than we 1:14:50.600 --> 1:14:51.400 were ten years ago. 1:14:51.760 --> 1:14:56.080 You mentioned different market cycles in the fifties and the sixties. 1:14:56.560 --> 1:15:02.200 Use a lot of historical references. How informative is going 1:15:02.280 --> 1:15:06.320 back decades or centuries The world was so different, you know, 1:15:06.600 --> 1:15:10.439 in an era of telegraphs and railroads. Can we really 1:15:10.720 --> 1:15:15.800 carry forward lessons from that era from chart action to 1:15:16.160 --> 1:15:16.880 the modern world. 1:15:17.520 --> 1:15:20.200 I mean, I think you can. The primary reason you 1:15:20.280 --> 1:15:23.000 can is because dynamics of human nature and fear and 1:15:23.080 --> 1:15:25.760 greed haven't changed. Now people will say, well, there's more 1:15:25.800 --> 1:15:29.000 mechanical trading this you know these days with high frequency 1:15:29.040 --> 1:15:31.000 trading and things like that. I'm like, well, who created the. 1:15:31.040 --> 1:15:32.960 Programs, who's running those algos? 1:15:33.120 --> 1:15:35.080 It's human beings who created it. So I mean, there 1:15:35.160 --> 1:15:38.719 is a human element touching all of that. So maybe 1:15:38.760 --> 1:15:41.160 if we're coming back in ten years, twenty years and 1:15:41.800 --> 1:15:43.880 the machines are creating things, then maybe we have a 1:15:43.920 --> 1:15:46.400 different argument to talk about. But one would think if 1:15:46.400 --> 1:15:48.479 the machines were working the market, it wouldn't be as 1:15:48.520 --> 1:15:51.679 emotional as it is. And yeah, it is very emotional. 1:15:51.880 --> 1:15:54.479 It very much is. You know, it's funny. I read 1:15:54.520 --> 1:15:57.080 a book a while ago. I think it was published 1:15:57.120 --> 1:16:00.880 in the nineteen twenties by Richard wa Cough How I 1:16:01.000 --> 1:16:06.800 Trade Stocks, And what was so shocking was Okay, it 1:16:06.920 --> 1:16:10.880 was about railroads and telephone companies, but you could swap 1:16:11.000 --> 1:16:16.960 in internet and technology and nothing is different. It reads 1:16:17.000 --> 1:16:19.680 as if it was written last month. It's it's really 1:16:19.800 --> 1:16:22.799 quite fascinating. That is human nature, Isn't it exactly? 1:16:23.120 --> 1:16:25.679 Progress? I guess is the term. I mean, maybe maybe 1:16:25.720 --> 1:16:29.240 we fear greed and progress, and I hope progress continues. 1:16:30.160 --> 1:16:32.160 I mean, look, I mean maybe this is maybe the 1:16:32.560 --> 1:16:36.720 secular driver of this is the AI theme or you know, 1:16:36.840 --> 1:16:39.240 things like that. I mean, because every secular bowl trend 1:16:39.360 --> 1:16:41.439 has some sort of theme behind it. 1:16:42.080 --> 1:16:45.320 You think, give us some examples. I like the concept 1:16:45.400 --> 1:16:45.560 of that. 1:16:45.800 --> 1:16:48.840 Well, well, I mean, you know, obviously, I think the 1:16:48.920 --> 1:16:53.240 fifties was more of a build back after World War two. 1:16:53.160 --> 1:16:57.519 Post war right, and for people who may not know 1:16:57.600 --> 1:17:00.439 their history. You had the build out of the interested 1:17:00.800 --> 1:17:04.519 highway system. You had the rise of suburbia, the rise 1:17:04.560 --> 1:17:11.599 of automobile companies and the commercialization of passenger air travel 1:17:12.080 --> 1:17:14.160 and the electronic insurt There were a lot of things 1:17:14.200 --> 1:17:16.800 that took place in the fifties and sixties that drove 1:17:16.880 --> 1:17:20.160 everything forward. Every time we have a secular bull market, 1:17:20.240 --> 1:17:22.200 do you see something similar. 1:17:21.800 --> 1:17:23.560 To this should be? Yeah, I mean I think so. 1:17:23.680 --> 1:17:25.760 I mean because the eighties, you know, you know, I 1:17:25.800 --> 1:17:29.679 guess acknowledge of birth out of the computer and thing internet, sure, 1:17:30.120 --> 1:17:31.200 and then yeah. 1:17:31.439 --> 1:17:34.880 Mobile, Yeah. You just that twenty year period saw a 1:17:35.000 --> 1:17:37.040 lot of new industries pop into existence. 1:17:37.120 --> 1:17:39.120 And then when it gets too exciting, such as the 1:17:39.200 --> 1:17:41.800 tech bubble, that's when things change and it doesn't seem 1:17:41.880 --> 1:17:45.400 like we're there now. Because we talked about these indicators 1:17:45.479 --> 1:17:47.800 peeking out in advance of the market in twenty twenty one, 1:17:48.479 --> 1:17:50.840 I don't really have that here, you know, as we're 1:17:51.120 --> 1:17:53.760 on this corrective phase, except for the percentage stocks about 1:17:53.760 --> 1:17:56.000 doing in a day movement averages that does have the divergence. 1:17:56.720 --> 1:18:01.080 But credit spreads confirmed the rally. Financial addition confirm the rally. 1:18:01.479 --> 1:18:03.559 You know, a lot of other indicators confirm the rally. 1:18:03.680 --> 1:18:06.280 So you know, there's you know, a little different than 1:18:06.840 --> 1:18:08.280 say two years ago at this point. 1:18:08.360 --> 1:18:11.080 So I'm glad you brought that up. I want to 1:18:11.160 --> 1:18:17.320 talk about what you called the Magnificent seven and compare 1:18:17.360 --> 1:18:21.360 it to prior eras when you take the seven biggest 1:18:21.400 --> 1:18:27.639 companies on the SP five hundred, their revenues collectively are 1:18:27.720 --> 1:18:31.519 something like one point eight trillion dollars. Their profits are 1:18:31.560 --> 1:18:35.080 a quarter of a trillion dollars. Put on your CFA 1:18:35.200 --> 1:18:37.599 hat for a moment, and let me ask you, hey, 1:18:37.680 --> 1:18:40.479 they're a disproportionate part of the S and B five 1:18:40.600 --> 1:18:45.000 hundred with good reason? Is that a fair statement? We've 1:18:45.120 --> 1:18:50.000 never seen any group of seven companies make so much 1:18:50.479 --> 1:18:54.160 in revenue and so much in profits. How wrong is 1:18:54.200 --> 1:18:58.519 it that these are? You know, the the Darling stocks it. 1:18:58.760 --> 1:19:01.519 Might not be wrong, and quite frankly, I would argue 1:19:01.600 --> 1:19:05.599 that could very well be a factor of a secular 1:19:05.640 --> 1:19:09.760 bowl market. And here's why. During secular bowl markets, what 1:19:09.960 --> 1:19:12.439 outperforms large caps are small caps. 1:19:12.680 --> 1:19:16.960 Large caps, you know, they're international, they have a broader reach, 1:19:17.400 --> 1:19:22.200 they have great access to capital. Small caps graduate, that's right, 1:19:23.160 --> 1:19:26.320 graduate to mid caps. Mid caps graduates slash gaps, sluge gaps, 1:19:26.400 --> 1:19:27.599 become big caps. 1:19:27.840 --> 1:19:29.760 So you know, the interesting thing is like in the 1:19:29.800 --> 1:19:32.800 equal weight, you know, had its best period during the 1:19:33.280 --> 1:19:36.560 two thousand to twenty thirteen bear market for equities. So 1:19:37.240 --> 1:19:43.120 one would argue that having a greater concentration, you know, 1:19:43.280 --> 1:19:45.800 not not to the extent I mean, you know, maybe 1:19:45.840 --> 1:19:48.840 it's magnificent fifty, maybe a magnificent one hundred going forward. 1:19:48.880 --> 1:19:51.000 I mean that I would take that as a bullet 1:19:51.080 --> 1:19:53.799 sign if if we went from the seven to the twenty, 1:19:54.120 --> 1:19:57.920 maybe even more. But but you're rewarding the winners and 1:19:58.120 --> 1:20:00.439 and you know, I guess that's capitalism for you in 1:20:00.479 --> 1:20:01.240 some regards, you. 1:20:01.240 --> 1:20:04.680 Know, so makes a lot of sense. Before we get 1:20:04.720 --> 1:20:08.240 to our favorite questions, let me throw you one curveball. 1:20:09.000 --> 1:20:13.720 You you you do both broad analysis and I don't 1:20:13.720 --> 1:20:16.679 know if I would call them just outright market calls, 1:20:16.760 --> 1:20:22.320 but you certainly share opinions about where we are and 1:20:22.400 --> 1:20:25.080 where we could go. What were some of your most 1:20:25.240 --> 1:20:28.840 memorable calls that have stayed with you? What do you 1:20:29.080 --> 1:20:31.080 what do you remember most fondly and what are you 1:20:31.920 --> 1:20:34.120 not so keen on prior calls? 1:20:35.160 --> 1:20:37.680 Well, I mean, I think the Secular Bowl market call 1:20:37.760 --> 1:20:41.040 has been a great one since that. What are the 1:20:41.120 --> 1:20:43.880 dates of the twenty thirteen when we broke out and 1:20:44.040 --> 1:20:45.600 twenty twelve we broke out in the S and P 1:20:46.479 --> 1:20:47.200 and the Nasdaq. 1:20:47.640 --> 1:20:50.320 I'm twenty thirteen on the S and P above the 1:20:50.400 --> 1:20:54.080 two thousand and fifteen seventies yep, seven highs yep. 1:20:54.320 --> 1:20:56.800 And you know that was that was that was really 1:20:57.120 --> 1:20:57.679 the big call. 1:20:57.880 --> 1:21:00.479 And a ton of pushback, right I remember remember twenty 1:21:00.560 --> 1:21:03.240 thirteen people were like, no, no, no, this is just 1:21:03.320 --> 1:21:04.920 a bare market rally and it's going to end. 1:21:04.960 --> 1:21:06.640 So well, we did a radio show on that. I 1:21:06.720 --> 1:21:08.920 remember back in the day, you and me talking about it, 1:21:08.960 --> 1:21:10.640 and I was explaining, well, I mean, you know, a 1:21:10.720 --> 1:21:12.400 big trading range you break out of it. You know, 1:21:12.520 --> 1:21:15.720 this is like nineteen fifty, nineteen eighty, it should continue. 1:21:15.400 --> 1:21:19.559 For a while, and it did for seven years until COVID. 1:21:19.880 --> 1:21:21.960 I mean the call I want to forget though, is 1:21:22.040 --> 1:21:24.559 being so bold up on value over growth entering this year, 1:21:24.560 --> 1:21:26.639 because quite frankly, it looked like a classic double top 1:21:26.680 --> 1:21:28.840 that supported the case for value to beat growth, and 1:21:28.960 --> 1:21:29.920 obviously that didn't work. 1:21:30.160 --> 1:21:32.960 That value did have a good cup of twenty one 1:21:33.080 --> 1:21:36.839 twenty two, pretty good years compared to the prior decade. 1:21:36.920 --> 1:21:39.960 In fact, that might be the longest run we've seen 1:21:40.040 --> 1:21:43.479 of value underperforming growth until twenty one. 1:21:43.640 --> 1:21:45.400 That is that a fair yes, I think so it was. 1:21:45.479 --> 1:21:47.200 I think it bottomed out in two thousand and six. 1:21:47.320 --> 1:21:50.720 So and you know, one would thought that you would 1:21:50.760 --> 1:21:52.960 have seen a peak in that, you know, not that 1:21:53.040 --> 1:21:55.160 you have to sell all your tech names and buy 1:21:55.200 --> 1:21:57.879 all the value names, because you know that is obviously 1:21:58.040 --> 1:22:01.479 not what you want to do. But but yeah, it 1:22:01.640 --> 1:22:07.080 was surprising that that technical formation did not work, you know, 1:22:07.160 --> 1:22:12.280 a nice classic double top formation on growth relative value. 1:22:12.800 --> 1:22:16.120 A little bit surprising, and the NASDAC stall I'm not 1:22:16.160 --> 1:22:22.200 the knavesac yet. The technology sector stalled at its two 1:22:22.280 --> 1:22:28.639 thousand high relatively SMP entering this year. And then, of course, 1:22:28.840 --> 1:22:32.599 when growth versus value didn't work. I mean, when value 1:22:32.960 --> 1:22:35.040 beating growth did not work and growth took the mantle 1:22:35.080 --> 1:22:38.160 leadership again, gets what happened? Tech broke out to all 1:22:38.240 --> 1:22:40.960 time highs of relative to the SMP, going all the 1:22:41.000 --> 1:22:43.519 way back to two thousand. I mean, maybe that's the 1:22:43.600 --> 1:22:45.400 message we need to take here. As long as that 1:22:45.520 --> 1:22:49.639 breakouts in place. You know, how is how is value 1:22:49.640 --> 1:22:50.280 going to be growth? 1:22:50.760 --> 1:22:53.640 Huh? Really really interesting? All right, let's jump to our 1:22:53.720 --> 1:22:57.839 favorite questions that we ask all of our guests, starting 1:22:57.920 --> 1:22:59.960 with what have you been streaming these days? 1:23:00.120 --> 1:23:00.679 Give us your. 1:23:00.600 --> 1:23:05.120 Favorite podcast or Netflix Amazon type of shows? 1:23:05.960 --> 1:23:08.680 Sure? So, in terms of TV shows and things like that, 1:23:08.880 --> 1:23:14.960 I uh, well, I've been watching Loki Disney plus a 1:23:15.200 --> 1:23:18.280 big Star Wars fan, so obviously I watched the Mandaloria 1:23:18.320 --> 1:23:18.879 and Ahsoka. 1:23:20.240 --> 1:23:22.600 I'm way behind on Ahsoka, so no, I will not 1:23:22.760 --> 1:23:23.400 say anything. 1:23:23.680 --> 1:23:24.800 Yeah, but it looked really the. 1:23:24.840 --> 1:23:26.719 First couple episodes looked really interesting. 1:23:27.000 --> 1:23:30.240 Yeah, solid show. I mean I'm into all those superhero 1:23:30.400 --> 1:23:32.360 shows like I mean even some of the gory and 1:23:32.520 --> 1:23:34.240 vraunchy ones like The Boys. 1:23:34.400 --> 1:23:36.479 The Boys was great, and the second season, you know, 1:23:36.520 --> 1:23:38.280 there's a third season coming also. 1:23:38.160 --> 1:23:40.760 I hope so and now I'm watching this v university 1:23:40.840 --> 1:23:45.040 show or something like that with same same concept, same 1:23:45.240 --> 1:23:49.559 same people, but young kids that are in school. 1:23:49.920 --> 1:23:52.559 Oh okay, I saw a preview few. It looks interesting. 1:23:52.760 --> 1:23:56.679 It's gory, you know, so as The Boys was totally gory. Yeah, 1:23:56.840 --> 1:23:59.240 and then you know, of course I'm sitting this looks interesting. 1:23:59.280 --> 1:24:02.599 It's about kids, you know. Splat, and I'm like, turn 1:24:02.680 --> 1:24:04.960 it on, and all of a sudden, oops, it's turn 1:24:05.080 --> 1:24:05.400 that off. 1:24:06.400 --> 1:24:06.560 You know. 1:24:06.960 --> 1:24:08.560 My son was in the room. He wasn't watching it, 1:24:08.640 --> 1:24:10.400 but he was doing something else, right, And I'm like, 1:24:10.400 --> 1:24:11.680 all right, this come right off. 1:24:12.320 --> 1:24:17.280 So if you liked The Boys, there are two shows 1:24:17.280 --> 1:24:20.920 that were on Amazon Prime that you might like. I 1:24:21.040 --> 1:24:24.000 think everybody knows The Expanse was pretty popular. 1:24:24.160 --> 1:24:25.840 I didn't see that one yet. It's a great sci 1:24:25.960 --> 1:24:27.400 fi and that's right. 1:24:28.360 --> 1:24:31.320 But something that's a little more eclectic and not well 1:24:31.439 --> 1:24:35.440 known was Altered Carbon. It was only two seasons. Amazing. 1:24:36.320 --> 1:24:39.400 Yeah. Last year I was into a Stranger I went 1:24:39.439 --> 1:24:40.880 through I binged Stranger Things. 1:24:41.920 --> 1:24:42.400 How'd you like that? 1:24:42.520 --> 1:24:44.920 Oh? I love that show because I was in nineteen 1:24:45.080 --> 1:24:47.720 eighties Dungeon and Dragons Kid. So now I'm playing it 1:24:47.800 --> 1:24:50.519 now with my son, some of his friends. So COVID 1:24:50.600 --> 1:24:52.840 actually brought a few things out. You know, he got 1:24:52.880 --> 1:24:55.000 that into some old hobbies, you know, just kind of 1:24:55.000 --> 1:24:55.240 a fight. 1:24:56.040 --> 1:25:01.560 During COVID, we broke out all of the kitchen appliances 1:25:01.640 --> 1:25:04.880 and winning gifts that just had not been touched. Like 1:25:05.200 --> 1:25:09.200 that's literally like the Jonana things like that where you're 1:25:09.240 --> 1:25:12.599 putting frozen fruit into this device and turning it into 1:25:12.800 --> 1:25:17.120 that's so cool scream and the air fryers and it's 1:25:17.160 --> 1:25:20.120 really funny. Everybody went to the basement or garage or 1:25:20.160 --> 1:25:22.680 were at storage room and pulled out the stuff that 1:25:22.800 --> 1:25:26.400 had been gathering dust for years. It was that was 1:25:26.479 --> 1:25:27.799 the best part of COVID. 1:25:27.840 --> 1:25:30.439 I found. I found, yeah, my dungeon master's guy, my 1:25:30.560 --> 1:25:32.960 player's handbook with the duct tape holding it together. And 1:25:33.160 --> 1:25:35.280 you know by the time, yeah, I mean, you know, 1:25:35.520 --> 1:25:37.760 my son taught my son. My daughter played for a 1:25:37.800 --> 1:25:39.600 little while, but wasn't her a thing. But right, and 1:25:39.680 --> 1:25:42.519 now now we're continuing a uh. I started a little 1:25:42.560 --> 1:25:44.439 club in town, so we got a few people playing 1:25:44.479 --> 1:25:46.559 every other Saturday. So it's fun. It was a good 1:25:46.560 --> 1:25:46.880 thing to do. 1:25:47.120 --> 1:25:50.080 That sounds like fun. Tell us about your mentors who 1:25:50.200 --> 1:25:51.799 helped shape your career. 1:25:52.680 --> 1:25:54.760 Yeah, sure, I mean, you know, obviously all the people 1:25:54.800 --> 1:25:57.120 I mentioned earlier in the podcast. Of course, you know 1:25:57.200 --> 1:26:02.160 my dad, Marriyan Bartel's uh uh, you know my boss 1:26:02.200 --> 1:26:05.920 at Whereamar Huff, Stephan Haber, very very you know, helped me, 1:26:06.680 --> 1:26:09.320 you know, steer again into the fundamental side of the business, 1:26:09.439 --> 1:26:12.720 you know, as far as like technical analysts and things 1:26:12.760 --> 1:26:15.599 like that. Books I've read, I mean, mostly influential by 1:26:15.680 --> 1:26:19.559 John Murphy, Martin Bring, and doctor Alexander Elder. I mean 1:26:19.600 --> 1:26:23.720 that's those are my go tos as far as uh yeah, 1:26:23.840 --> 1:26:26.120 the Norman Farce back too. I have that book Stock 1:26:26.200 --> 1:26:27.800 Market Logic. I love that book. I open. 1:26:28.000 --> 1:26:29.599 I have that book. I've had that for a long time. 1:26:29.640 --> 1:26:32.840 It's very really an interesting book. So since you mentioned books, 1:26:33.560 --> 1:26:36.160 what what are you reading currently? What do you read 1:26:36.240 --> 1:26:36.559 for fun? 1:26:37.240 --> 1:26:41.840 Well, I mean right now, yeah, it's a I don't 1:26:41.840 --> 1:26:44.040 want to sound too dorky, but it's really it's a 1:26:44.080 --> 1:26:46.479 dungeon and dragon. It's what's the name of the book, 1:26:48.760 --> 1:26:51.200 Water Deep Dragon Heist, Water. 1:26:51.120 --> 1:26:54.479 Deep Dragon Heist. So that doesn't sound dorky at all. 1:26:56.040 --> 1:26:58.320 Now, it's a part of the adventure and stuff like 1:26:58.400 --> 1:27:01.800 that that you know, running the running the campaign through. 1:27:02.680 --> 1:27:06.920 By the way, I know guys in our industry that 1:27:07.040 --> 1:27:10.200 you would never in a million years. Guess still do 1:27:10.360 --> 1:27:13.080 a weekly d Dungeons and Dragons and have for like 1:27:13.240 --> 1:27:14.160 twenty thirty years. 1:27:14.280 --> 1:27:17.240 Geez, sign me up. I'd do that in a second. 1:27:17.479 --> 1:27:19.880 It's fun now. But other than that, I mean, obviously, 1:27:20.439 --> 1:27:22.600 when I was in college, you know, part of the 1:27:22.720 --> 1:27:25.919 English writing major is you had to take literature classes. 1:27:26.920 --> 1:27:30.240 And my favorite literature classes was the epic hero So 1:27:30.920 --> 1:27:33.960 it was The Hobbit, Lord of the Rings. You know. 1:27:34.000 --> 1:27:35.719 Of course I read the Hobbit prior to that class, 1:27:35.720 --> 1:27:36.880 but I read it again. I read some of the 1:27:37.040 --> 1:27:39.160 Lord of Rings prior to that class. It was a 1:27:39.360 --> 1:27:41.120 lot of intense reading. I mean, it's Lord of the Rings. 1:27:41.479 --> 1:27:43.200 I can't even say it, this Summarian, I can't even 1:27:43.240 --> 1:27:47.679 say it. But and then also the Odyssey and the Iliad. Sure, 1:27:47.880 --> 1:27:53.360 and in high school I read the Iliad in Latin. 1:27:54.880 --> 1:27:57.800 You're not fluent in Latin, no, no, no, no, that's 1:27:58.600 --> 1:27:59.360 it was high school. 1:27:59.600 --> 1:28:01.879 But it did help me out with the English language, 1:28:01.960 --> 1:28:03.600 so which was what you know, a lot of the 1:28:03.920 --> 1:28:09.200 words get derived from Latin, and you know, and obviously 1:28:09.320 --> 1:28:11.960 German too, so I did take some German in college. 1:28:12.360 --> 1:28:15.479 Unfortunately forgot most of that as well. 1:28:15.640 --> 1:28:19.240 But that's really that's really interesting. So let's let's jump 1:28:19.280 --> 1:28:22.559 to our final two questions. What sort of advice would 1:28:22.560 --> 1:28:25.720 you give to a recent college grad interested in a 1:28:25.840 --> 1:28:29.120 career in either finance or technical analysis? 1:28:30.240 --> 1:28:34.320 Well, I mean finance, I think, believe it or not, 1:28:34.680 --> 1:28:40.480 specially we are now. Creativity is very important. Also, curiosity 1:28:40.560 --> 1:28:44.599 is very important. When I was looking for a job 1:28:44.680 --> 1:28:49.519 in finance, coming from a different background, it was tougher, 1:28:49.720 --> 1:28:54.479 you know, and I just didn't I really, I didn't 1:28:54.479 --> 1:28:58.679 really start making headway until I was up on the news, 1:28:59.400 --> 1:29:02.160 you know, the Wall Street Journal and consistently reading that 1:29:02.360 --> 1:29:04.120 for like a month. Then I was ready to go 1:29:04.200 --> 1:29:06.719 in and talk to people about careers to some extent, 1:29:06.800 --> 1:29:08.600 you know, obviously not an expert on anything, but just 1:29:09.320 --> 1:29:10.280 expressing the interest. 1:29:10.360 --> 1:29:14.280 But I would say not meaning not not professionally relying 1:29:14.360 --> 1:29:17.160 on the media for information, but to be able to 1:29:17.200 --> 1:29:20.320 have interview an intelligent conversation. 1:29:20.040 --> 1:29:23.240 Because that comes up. I mean, because when we interview people, 1:29:23.840 --> 1:29:27.479 you know, there's always you know, there's always Hey, did 1:29:27.520 --> 1:29:29.640 you read that story in a while? And Most of 1:29:29.680 --> 1:29:31.559 the time people say, no, I don't do that, listen 1:29:31.560 --> 1:29:34.200 to podcasts, but they still get the same information, you know, 1:29:34.520 --> 1:29:35.840 similar information. 1:29:35.720 --> 1:29:39.439 Not quite as in depth, not quite as you know focused. 1:29:39.560 --> 1:29:43.000 But that's a good advice. Going prepared and be able 1:29:43.040 --> 1:29:46.400 to talk about that you're up to speed and ready 1:29:46.479 --> 1:29:49.040 to start knowing what's happening. 1:29:49.120 --> 1:29:51.280 And whenever I interview people, I always want to know 1:29:51.360 --> 1:29:54.320 what they're doing outside of business and finance. Could I 1:29:54.400 --> 1:29:56.720 find that more interesting in some regards? You know, it's like, 1:29:56.800 --> 1:29:59.200 you know, if you have like I think, let me 1:29:59.280 --> 1:30:02.679 think the last like if they were professional cross player, 1:30:02.760 --> 1:30:05.559 not professional, a college Division one lacrosse prayer, that's kind 1:30:05.560 --> 1:30:07.479 of interesting. You know, it's like they know how to 1:30:07.520 --> 1:30:09.680 be part of a team. You know, you know some 1:30:09.800 --> 1:30:11.800 of those intangibles. So I would say, you know, some 1:30:11.880 --> 1:30:15.200 of the intangibles and things outside you know, you know, 1:30:15.320 --> 1:30:18.280 are interesting. I mean, somebody looking to get into technical analysis, 1:30:18.320 --> 1:30:20.920 I mean I would say, probably avoid that, like the plague, 1:30:21.439 --> 1:30:26.000 why not? I mean, are there a lot of technical 1:30:26.120 --> 1:30:29.560 analysts on the street these days? You know? Probably not. 1:30:30.160 --> 1:30:32.040 You know, you can count them on maybe two hands. 1:30:32.720 --> 1:30:36.800 But I would say, if you want to get a 1:30:36.960 --> 1:30:43.000 role in finance or as an analyst or as you know, 1:30:43.120 --> 1:30:49.200 financial advisor. Learning technicals will save you, it will help 1:30:49.280 --> 1:30:50.960 you a ton, but you're not going to be getting 1:30:51.000 --> 1:30:53.679 a role as a technical analyst. It's just that there's 1:30:53.760 --> 1:30:57.040 just not that many of them, and often they're just 1:30:57.200 --> 1:30:59.400 placed at the back of the bus. And as Ralph 1:30:59.439 --> 1:31:01.760 affanpoor Or said, that's where they have the beer is. 1:31:01.800 --> 1:31:04.080 So I'm perfectly happily being in the back of the bus. 1:31:04.560 --> 1:31:07.320 But still, I mean, I would say, you know, again, 1:31:07.360 --> 1:31:09.800 here's another quote. I don't remember who I heard this 1:31:09.880 --> 1:31:13.080 one from, but it says the CFA designation will get 1:31:13.120 --> 1:31:15.680 you a job, but the CMT designation will allow you 1:31:15.800 --> 1:31:19.120 to keep your job. So I look, I mean, if 1:31:19.160 --> 1:31:21.360 you want to become a technical analyst and work at 1:31:21.360 --> 1:31:26.240 a Bowls Bracket research firm as a technical analyst, it's unlikely. 1:31:26.800 --> 1:31:28.719 You know, I'm very lucky to be sitting where I'm sitting. 1:31:28.800 --> 1:31:30.720 You know, it's like and who knows how long it's 1:31:30.760 --> 1:31:32.640 gonna last, you know what I mean, It's like, you know, 1:31:32.720 --> 1:31:34.400 I mean the business is tough. 1:31:34.520 --> 1:31:36.679 I mean, yeah, I know, it's definitely and it's gotten 1:31:36.760 --> 1:31:41.320 tougher on the institutional cell side because of the advent 1:31:41.479 --> 1:31:44.280 of either free or practically free trading. 1:31:44.560 --> 1:31:46.800 But it's very interesting though, because you run into a 1:31:46.880 --> 1:31:49.719 lot of folks on the institutional side that aren't technical 1:31:49.800 --> 1:31:53.800 analysts but use technical analysis, and some of them, you know, 1:31:53.920 --> 1:31:57.759 even pursue the CMT designation, which is Charter market technician, 1:31:57.800 --> 1:32:00.880 the credential that's the equivalent of the the CFA Charter 1:32:01.000 --> 1:32:05.479 financial analyst, and you know they do it. I would say, 1:32:05.479 --> 1:32:08.040 if you're interested in a career where you're going to 1:32:08.080 --> 1:32:10.479 be doing some technicals, I mean, obviously a trading desk 1:32:10.560 --> 1:32:13.360 type of role might be suited for that. An equity 1:32:13.400 --> 1:32:16.439 analyst would be suited for you know, I know a 1:32:16.479 --> 1:32:20.799 few equity analysts that do not that they're making fundamental 1:32:20.880 --> 1:32:24.679 views based on technicals, but if they want to upgrade 1:32:24.680 --> 1:32:26.439 a stock and they look at a chart saying, wow, 1:32:26.439 --> 1:32:28.360 I love the fundamentals on this company, but the chart 1:32:28.439 --> 1:32:30.519 looks like it can break below fifty and head to 1:32:30.600 --> 1:32:32.439 forty five, maybe I should wait for that to happen. 1:32:32.760 --> 1:32:36.120 Let me ask you a question that I love asking 1:32:36.240 --> 1:32:40.640 people who use both fundamentals and charts. If you're going 1:32:40.720 --> 1:32:44.760 to buy a stock and in our hypothetical you can 1:32:45.040 --> 1:32:49.559 only either read a fundamental research report or look at 1:32:49.600 --> 1:32:51.160 the chart. Which do you do? 1:32:51.840 --> 1:32:54.720 Yeah, that's obvious because it's look at the chart, no 1:32:54.880 --> 1:32:59.000 question why, Because the chart reflects fundamental information. I don't mind. 1:32:59.200 --> 1:33:01.120 I mean, look what is the price reflect It reflects 1:33:01.840 --> 1:33:04.120 you know, you know, a little bit of the funny 1:33:04.120 --> 1:33:06.439 money from the high frequency trading, which we have no 1:33:06.600 --> 1:33:10.040 idea what that's all about. But it also reflects people's 1:33:10.080 --> 1:33:12.920 opinion on price action to summary some extent. But it 1:33:13.000 --> 1:33:16.479 actually reflects what fundamentals are to some extent too, you know, 1:33:16.720 --> 1:33:21.960 So it's psychology and you know what actual factual information is. 1:33:22.080 --> 1:33:25.679 I mean, it's discounting what the fundamentals are or will 1:33:25.760 --> 1:33:29.080 be in the future. So you know, I would say, 1:33:30.560 --> 1:33:33.200 you know, you could have an analyst note saying sell 1:33:33.280 --> 1:33:37.519 this stock like it's you know, it's unholdable or you know, 1:33:37.800 --> 1:33:39.880 hard sell on this name, but you look at a 1:33:39.960 --> 1:33:41.639 chart and it looks like it's forming a double bottom. 1:33:42.120 --> 1:33:44.040 I may look at the chart more so on the 1:33:44.080 --> 1:33:46.920 fundamentals because you know, if the chart works, guess what 1:33:47.000 --> 1:33:47.880 that analyst has to do. 1:33:49.000 --> 1:33:52.200 We'll eventually you have to change that sell to a hold, 1:33:52.240 --> 1:33:53.200 and that hold to a buy. 1:33:53.479 --> 1:33:55.720 And if there's forty of these analysts doing that over 1:33:55.760 --> 1:33:57.680 a period of time, guess where that stock's gonna go. 1:33:57.920 --> 1:34:01.439 Do you look at you know, the analysts collective ratings, 1:34:01.479 --> 1:34:03.400 how many buys, how many sells, how many holds? 1:34:03.720 --> 1:34:07.200 I do say, yeah, there's there's a feature in n R. Yeah, 1:34:07.240 --> 1:34:10.000 exactly an R. And also there's like I have this 1:34:10.760 --> 1:34:14.680 recommendation ratio line on my Bloomberg chart I pull up 1:34:14.680 --> 1:34:17.000 every once in a while. Sometimes I find it really informative, 1:34:17.040 --> 1:34:19.680 other times I don't. But but there are times when 1:34:20.160 --> 1:34:22.479 when I can, when I can see a chart like 1:34:22.560 --> 1:34:25.800 bottoming out and everybody hates it, and then it breaks out, 1:34:25.880 --> 1:34:29.760 and it's like, it's amazing how the analysts start. And 1:34:29.880 --> 1:34:31.599 you know, you've got a lot of time when that happened. 1:34:31.600 --> 1:34:33.960 So I would I would always gravitate towards a chart, 1:34:33.960 --> 1:34:37.479 and I would say, it's really funny, like even even 1:34:37.560 --> 1:34:41.920 folks that consider themselves fundamental investors do the same thing. Huh. 1:34:42.120 --> 1:34:45.040 Really really interesting. And our final question, what do you 1:34:45.120 --> 1:34:47.680 know about the world of investing today? You wish you 1:34:47.800 --> 1:34:50.360 knew twenty five years or so ago when you were 1:34:50.400 --> 1:34:51.320 first getting started. 1:34:51.880 --> 1:34:55.400 Yep, I think the biggest thing I wish I knew 1:34:55.400 --> 1:34:58.519 when I was first getting started is and you can 1:34:58.760 --> 1:35:02.360 say it in technical mumbo jumbo and fundamental mumbo jump 1:35:02.400 --> 1:35:05.040 with the same thing a stock. An oversail stock can 1:35:05.040 --> 1:35:08.080 always become more over sold, and an undervalue stock can 1:35:08.120 --> 1:35:12.519 always become more undervalued. And when I learned that, I 1:35:12.640 --> 1:35:15.080 think things improved a lot. You know, I wish I 1:35:15.120 --> 1:35:15.760 knew that early on. 1:35:16.280 --> 1:35:18.599 I learned that as cheap stocks can always get cheaper, 1:35:18.640 --> 1:35:20.759 and expensive stocks can always get more expensive. 1:35:20.960 --> 1:35:22.960 Right, Yeah, that's right. That's probably a better way of 1:35:23.040 --> 1:35:23.360 saying it. 1:35:24.640 --> 1:35:27.680 Really interesting, Steve, Thank you for being so generous with 1:35:27.760 --> 1:35:31.439 your time. We have been speaking with Steve Soutmeyer. He 1:35:31.720 --> 1:35:35.800 is the chief equity technical strategist for b of A Securities. 1:35:36.320 --> 1:35:39.200 If you enjoy this conversation, well check out any of 1:35:39.240 --> 1:35:42.920 the previous five hundred interviews we've done over the past 1:35:43.040 --> 1:35:48.800 nine years. You can find those at Apple Podcasts, Spotify, YouTube, 1:35:49.120 --> 1:35:52.840 wherever you find your favorite podcasts. Sign up from my 1:35:52.960 --> 1:35:56.040 daily reading list at ridolts dot com, follow me on 1:35:56.160 --> 1:35:59.840 Twitter at ridolts, follow all of the Bloomberg family of 1:36:00.080 --> 1:36:04.240 podcast on Twitter at podcast and be sure and check 1:36:04.280 --> 1:36:09.439 out my new podcast at the Money, coming January first 1:36:09.880 --> 1:36:13.160 on Apple Podcasts. I would be remiss if I did 1:36:13.200 --> 1:36:15.800 not thank the Cracked team that helps put these conversations 1:36:15.840 --> 1:36:20.720 together each week. Rich Subnati is my audio engineer at 1:36:20.760 --> 1:36:25.360 Tika Vlvron is our project manager. Anna Luke is my producer. 1:36:25.960 --> 1:36:30.000 Sean Russo is my researcher. I'm Barry Rittolts. You've been 1:36:30.080 --> 1:36:33.160 listening to Masters in Business on Bloomberg Radio.