Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisnal and I'm Tracy Halloway. Tracy, you've been
Speaker 1: on vacation for a couple of weeks. Welcome back. It's
Speaker 1: nice to be back in the studio with you. Actually,
Speaker 1: I think it's like our first time recording in the studio,
Speaker 1: like almost a month. Yeah, that's right, because I very
Speaker 1: nicely got to record some episodes remotely. Um. I hesitated
Speaker 1: to say this, but what did what did I miss? Well?
Speaker 1: I mean, in a way, I think you Actually it
Speaker 1: was not a bad couple of weeks to sort of
Speaker 1: to take off and tune. But there have been some
Speaker 1: interesting developments in the market. You know, I would say
Speaker 1: the first half of your vacation, we had this continuation
Speaker 1: of this very powerful rebound off the bottom of the
Speaker 1: stock market that caught a lot of people by surprise.
Speaker 1: And then the second half of your vacation, like over
Speaker 1: the last week or so, we given some of it back. Yeah.
Speaker 1: When I left, stocks were still going up, and now
Speaker 1: I've come back and it seems like we've done a
Speaker 1: round trip to where they were when I left in
Speaker 1: early August. I think it was August eight, And it's
Speaker 1: kind of been a weird summer for stocks, hasn't it,
Speaker 1: Because I think we had the best start to a
Speaker 1: third quarter since like the early nineteen thirties, and we
Speaker 1: even saw a bunch of the meme stocks doing really,
Speaker 1: really well. And then you know, I've come back, and
Speaker 1: it seems like it's just a blood bath across the board.
Speaker 1: I know, while you were gone, like a MC became
Speaker 1: a story again at bed Beth and became a story again,
Speaker 1: and Adam Newman got three fifty million from entries in
Speaker 1: Horrowitz and I was like, oh my god, Q three two,
Speaker 1: this is just like Q one one again or something again.
Speaker 1: It's tricky too, because you know the macro situation, which
Speaker 1: we know is very elevated inflation and a FED determined
Speaker 1: to stamp it out right, and so you know, one
Speaker 1: of the oldest cliches in investing, it's like, don't fight
Speaker 1: the Fed, right, Like, you hear that a million times,
Speaker 1: You hear it all the time, that that is a cliche.
Speaker 1: Remember you made fun of me the other day for
Speaker 1: some cliche that wasn't actually cliche about the gritters anyway.
Speaker 1: That actually is a cliche. So you have the FED
Speaker 1: doing a lot of work to like stamp out inflation,
Speaker 1: and if you're believing they don't fight the FED thing,
Speaker 1: it's like it's very bold to sort of be bullish
Speaker 1: at a time when the feed isn't tightening. But yeah, well,
Speaker 1: I mean it feels like everything is sort of being
Speaker 1: driven by macro at the moment, but no one really
Speaker 1: knows what the macro picture is going to shake out
Speaker 1: as right, because either you have inflation continue, or you
Speaker 1: get a big recession because the FED is raising grates
Speaker 1: and trying to cut demand and bring prices down that way,
Speaker 1: or you know, I think the nightmare scenario for a
Speaker 1: lot of people is that you get both those things.
Speaker 1: But it all seems quite like tail risky, if that
Speaker 1: makes sense. Well, you mentioned the nightmare scenario, and I
Speaker 1: think that really is a good lead in to our
Speaker 1: episode today because sent event has been extremely negative and
Speaker 1: so if you look at various surveys of professional fund
Speaker 1: managers individual investors, you know, Q two this summer maynage
Speaker 1: you an extremely pessimistic overall, which might some of the positioning.
Speaker 1: The Bank of America has a fund managers survey they
Speaker 1: I think at the last survey sentiment was like just
Speaker 1: a little bit better than apocalyptic, was how they characterized it. Well,
Speaker 1: it was worse than the two tho financial crisis, I
Speaker 1: know that for sure. And that was even as stocks
Speaker 1: were recovering, and that's why people were calling this, you know,
Speaker 1: the most hated rally of all time and things like this,
Speaker 1: and so that sort of like gets into our our
Speaker 1: conversation today, which is like what's going on with the
Speaker 1: stock market and how do you like think about how
Speaker 1: investors are positioned. What are the charts saying, what are
Speaker 1: the surveys saying, and yeah, like what is the overall positioning.
Speaker 1: So it should be a good episode for sort of
Speaker 1: thinking about like what we've seen in the stock market
Speaker 1: really over the last several weeks and months. Yeah, I'm
Speaker 1: looking forward to Okay, I am so scited about our guests,
Speaker 1: Like this is like a guest that I've been wanting,
Speaker 1: literally wanting to speak to for literally years. We've never
Speaker 1: been able to quite make it happen with scheduling just
Speaker 1: because you know, it's it's hard. Finally we're going to
Speaker 1: have her on. I'm so excited we're going to be
Speaker 1: speaking to Helene Meisler. She is a columnist for Real Money,
Speaker 1: but also a longtime veteran of markets, having traded at Cowen,
Speaker 1: having traded Goldman Sacks on the equity trading desk, doing
Speaker 1: technical analysis, managing money for Cargill. One of my absolute
Speaker 1: favorite people to follow on Twitter for all things related
Speaker 1: to stock market, but also just generally just one of
Speaker 1: my favorite people and someone I've wanted to hear from
Speaker 1: for a long time and we'll get right into it,
Speaker 1: and someone who has a very distinct way of analyzing
Speaker 1: the market. So Helene Meisler, thank you so much for
Speaker 1: coming on Odd Lots. Oh my gosh, what an introduction, Joe,
Speaker 1: thank you. Um, I just want to say I'm going
Speaker 1: to tell you guys that I have been listening to
Speaker 1: your podcast forever and so when you asked me to
Speaker 1: be on the podcast, I felt like when you have
Speaker 1: a favorite TV show and have invited you on as
Speaker 1: a guest. So thank you, Thank you, Heley, And that's
Speaker 1: very nice. So that's that is extremely kind. There are
Speaker 1: many reasons I enjoy following your work and following your
Speaker 1: analysis and following your sort of assessment of the stock
Speaker 1: market and individual stocks at a given time. But I think, like,
Speaker 1: there's something you do that nobody else I know, or
Speaker 1: at least that I follow. It does in looking at
Speaker 1: the market, you chart by hand, like we all like
Speaker 1: we look, we pull up a Bloomberg terminal chart and
Speaker 1: we like drag a line with a mouse click, et cetera.
Speaker 1: You you like keep it organic, you keep it real
Speaker 1: like you chart by You actually draw out charts on paper.
Speaker 1: Can you talk to us a little bit about what
Speaker 1: that is? Like, what do you do? What that is? Well,
Speaker 1: let's start. I just put a pencil to the paper
Speaker 1: every day. It's not it's you know, and it's a
Speaker 1: high low closed chart. I and I do volume. When
Speaker 1: I got into the business, which was actually forty years
Speaker 1: ago this year, we didn't have computers on every desk.
Speaker 1: We didn't have PCs. You had a quote tron which
Speaker 1: gave you quotes. It didn't even give you news. News
Speaker 1: just scrolled across like headlines. If you wanted to look
Speaker 1: at the charts on the market, you had to post
Speaker 1: them by hand. I mean pretty much what everyone did.
Speaker 1: And then slow and then you had some services that
Speaker 1: you could buy where you got paper charts like O'Neill,
Speaker 1: you know, of ib D fame, did these daily charts
Speaker 1: and you'd get them in a book once a week.
Speaker 1: And then there were some weekly charts you could get,
Speaker 1: but that was the only way to do it back then.
Speaker 1: And then slowly they started to computerize charts on a
Speaker 1: on a screen and um, and then we had computers,
Speaker 1: and you know, then everybody could have a PC on
Speaker 1: their desk. And so I I will tell you the
Speaker 1: story that when I started working with my mentor in
Speaker 1: this in technical analysis, just in Nemis, he had this
Speaker 1: huge pile of charts, handed it to me, and the
Speaker 1: chart scales are semi logarithmic, so it takes a little
Speaker 1: while to get used to them. And he gave me
Speaker 1: one little piece of paper that showed me what the
Speaker 1: scales were and told me to chart them. And he
Speaker 1: left the office and I was still at the office
Speaker 1: at eight o'clock at night, because you know, you can't
Speaker 1: start charting until the market settles, and that was like
Speaker 1: at four twenty anyway, So I I'm charting and I'm
Speaker 1: thinking this is ridiculous. You know, I'm twenty seven years old,
Speaker 1: twenty three, and I'm thinking, oh my god, he's so old,
Speaker 1: and he was probably fifty five, and I'm thinking, he
Speaker 1: is so old, there has to be a way to
Speaker 1: computerize this. So the next morning, I tell him there
Speaker 1: has to be a way to computerize this, and he
Speaker 1: says to me, there is a certain feeling you get
Speaker 1: from putting the pencil to the paper, also from sharpening
Speaker 1: the pencils, imagined only three year old me. I I rolled,
Speaker 1: I did the whole deal, and I said, oh my god,
Speaker 1: I can't believe this. Can we cycle? Can we make
Speaker 1: this a three hour episode? Here like this anyway? Sorry?
Speaker 1: Keep going. I cycle cycle about ten or twelve years later,
Speaker 1: thirteen maybe, and it's I'm still charting by hand, and um,
Speaker 1: my husband gets transferred overseas to Singapore, and so I
Speaker 1: pack up myself and I go. I quit my job.
Speaker 1: And I said, you know what I've got. I mean,
Speaker 1: we only had dial up internet, but I know that
Speaker 1: there are charts sites and I can get charts on
Speaker 1: I'm going to give this up. And all I was
Speaker 1: gonna do is I was going to sit at home
Speaker 1: in trade. I mean, you know, I had no job,
Speaker 1: and um, one month. It took me one month before
Speaker 1: I felt like I didn't know what the market was
Speaker 1: doing every day, and so I went back and I
Speaker 1: actually posted on every single chart the month I missed
Speaker 1: and I've not given it up since. And and of
Speaker 1: course the whole time I'm doing it, I'm thinking, oh God,
Speaker 1: damn it. Justin was right. This is when Tracy should do.
Speaker 1: Have to hurt two weeks off, just like justar chart
Speaker 1: what the market has done and go back, look, pull
Speaker 1: up the clothes, and just just do it by hand
Speaker 1: to really internalize what you missed. I was gonna say,
Speaker 1: you know why it's good to do that is to
Speaker 1: sort of take a set of data for a month
Speaker 1: or two and just literally chart one stock. Is because
Speaker 1: after you do let's say a week, you take a
Speaker 1: look and you say to yourself, what do I think
Speaker 1: this stock is going to do now? And then you
Speaker 1: can see immediately if you're right on that note, what
Speaker 1: is technical analysis and what's the value of it? Because
Speaker 1: I know it has it has its critics, people who say,
Speaker 1: you know, you're just drawing lines on a chart, sometimes
Speaker 1: by hand, as you just described, and then it has
Speaker 1: a lot of fans as well, and you know, there's
Speaker 1: an broader argument that if the market is really about
Speaker 1: momentum and sentiment, then something like technical analysis can be
Speaker 1: very very useful. So how would you describe it? And
Speaker 1: I guess what was the value proposition? You know, when
Speaker 1: you were doing t a technical analysis, uh in the
Speaker 1: seventies and eighties, like what was the elevator pitch at
Speaker 1: some of these banks. Okay, first of all, I'm not
Speaker 1: that old. I know I'm old. I wasn't around in
Speaker 1: the seventies. I started in eighty two. But um, let
Speaker 1: me just say that I think what's evolved over the years.
Speaker 1: Back back when I first started, you didn't have what
Speaker 1: I called today chart readers, because so many people, you know,
Speaker 1: think of I've just told you how hard it was
Speaker 1: to get a chart, and so you didn't have access
Speaker 1: to charts everywhere. They just weren't available. You literally had
Speaker 1: to buy them, and so you really had to be
Speaker 1: into charts to do this. So you didn't have a
Speaker 1: bunch of people who even understood what a head and
Speaker 1: shoulders pattern was or had to draw a line or
Speaker 1: anything like that. And so that that has changed drastically
Speaker 1: now with the fact that anybody can pull up a
Speaker 1: chart on a computer, and so the analysis that we
Speaker 1: did when I first got into the business was what
Speaker 1: I call analysis, not chart reading. How now, what's the
Speaker 1: difference the differences is for me, I start with the
Speaker 1: statistics and indicators on the market. I don't start with
Speaker 1: what the charts are doing, because good charts turn bad
Speaker 1: and bad charts turn good. I mean, you just said, Tracy,
Speaker 1: you just said you left a vacation and the market
Speaker 1: was up near the highs. You come back and everything
Speaker 1: sort of plopped. I mean, so good charts can turn
Speaker 1: bad and bad charts can turn good. So I start
Speaker 1: with indicators, and that's what I analyze. How's the breath
Speaker 1: of the market doing, or what are the what are
Speaker 1: the sentiment indicators, what's the momentum? So if you start
Speaker 1: with breath just recently, we breath was hanging in there
Speaker 1: really well up until about ten days ago. Basically not
Speaker 1: just whether the line is going up, but like how
Speaker 1: many stocks within the index are performing well at any
Speaker 1: given time, right you're looking for You don't want a
Speaker 1: narrow group of stocks taking the market up. You want
Speaker 1: a lot of participation. So what's the breadth of the market?
Speaker 1: And I use the advanced decline line as as a guide,
Speaker 1: but I also use I used the McClellan in summation index.
Speaker 1: I don't want to get to wonky on you, but
Speaker 1: that's sort of like a third derivative of the advanced
Speaker 1: decline line, so it moves much slower. It doesn't it
Speaker 1: takes a lot more to turn it, so you when
Speaker 1: you get a turn, it tends not to be false.
Speaker 1: And I also use the number of stocks making new
Speaker 1: highs and the number of stocks making new loads. So
Speaker 1: if you go back to Tracy's comment back in late July,
Speaker 1: NASDAC had a smidge over a hundred stocks making new highs.
Speaker 1: But by I don't know, about a week and a
Speaker 1: half ago, when when NASAC kept going up, what another
Speaker 1: five percent or something like that, you could hardly even
Speaker 1: get to eighty new highs. So you were already starting
Speaker 1: to see the waning. So you didn't even have to
Speaker 1: look at charts to see that fewer and fewer stocks
Speaker 1: were participating. So that to me is the analysis on
Speaker 1: the indicators, and and that should eventually show itself up
Speaker 1: in the charts. And so now if you go back
Speaker 1: and you take a look at a lot of the
Speaker 1: charts from the last few weeks, you'll see so many
Speaker 1: of them peeked out by early August, and so the
Speaker 1: last couple of weeks were just sort of a lot
Speaker 1: of churning and going back and forth and not really
Speaker 1: doing anything. So it sounds like to me that like
Speaker 1: just naively pulling up a chart, like if you pull
Speaker 1: up a nas deck, a NAZ deck shart or an
Speaker 1: SNP five hundred chart, you're not going to at least
Speaker 1: it sounds like, in your view, get too far by
Speaker 1: just starting with the chart, drawing some lines and say, oh,
Speaker 1: it looks like it's going up or it's running into
Speaker 1: resistance here, etcetera. What it sounds like is that the
Speaker 1: chart is sort of the capstone or the final step.
Speaker 1: I'm looking at these sort of like deeper trends happening
Speaker 1: in the market related to sentiment and breadth, etcetera, and
Speaker 1: so you really have to you know, like the chart
Speaker 1: is like the sort of like the finishing touch of
Speaker 1: like deeper analysis that you really have to do to
Speaker 1: understand the market. For me, yeah, I mean, if I'll
Speaker 1: give you the fundamental equivalent when Apple reports earnings and
Speaker 1: everybody is looking for five dollars and they come in
Speaker 1: at five oh three, Yeah, they beat right, But then
Speaker 1: if you start breaking it down, revenues were a little
Speaker 1: like they did it on share buy back, they did
Speaker 1: it on expenses, they didn't. You start breaking that down,
Speaker 1: and maybe that five oh three wasn't so great. And
Speaker 1: all I'm looking at is the S and P is
Speaker 1: up thirty dollars today, and I'm looking at the market
Speaker 1: internals and going, ah, they don't look so great. So
Speaker 1: it's the same equivalent, so to Tracy, to go back
Speaker 1: to your elevator pitch, it's not much different than fundamental
Speaker 1: anal analysts who are looking at earnings and breaking it down.
Speaker 1: They're looking at growth rates, they're looking at you know,
Speaker 1: they're looking at all the expense ratio, and they're they're
Speaker 1: looking at all the same things I'm looking at, only
Speaker 1: I'm looking at it from what the market actually is
Speaker 1: doing and therefore what individual stocks are doing to make
Speaker 1: up the index. That's a good way of describing it.
Speaker 1: Further to this point, the indicators that you look at,
Speaker 1: do you have different favorite indicators at any one point
Speaker 1: in time depending on like the overall health of the
Speaker 1: market or maybe where the economy is, like, for instance,
Speaker 1: does breadth become more important to you depending on certain
Speaker 1: market backdrops or economic fundamentals and things like that. Good question.
Speaker 1: That is a good question, estan. Um No, So let
Speaker 1: me take you back a little bit to um Joe.
Speaker 1: You mentioned that the meme stocks were coming back in
Speaker 1: vogue just recently, just like the first quarter of twenty one.
Speaker 1: Everybody dates the bear market to the peak in November
Speaker 1: for NASDAC and the peak in January for the SMP.
Speaker 1: I think the bear market actually started in the first
Speaker 1: quarter because if you go back, Okay, there you go,
Speaker 1: if you go back, that was when you had peak everything,
Speaker 1: peaks speculation. You had the most bulls and bear um, sorry,
Speaker 1: the most bulls and fewers bears in the market. You
Speaker 1: had over seven hundred stocks making new highs on NASDAC.
Speaker 1: That's unheard of. Um. You had the biotechs were running,
Speaker 1: the meme stocks were running. You had oh, peaks backs,
Speaker 1: let's not forget about peaks, facts and all of that.
Speaker 1: And then you had what should be what was a
Speaker 1: normal correction into the spring of a big emotional high.
Speaker 1: But after that you started to get fewer and fewer
Speaker 1: stocks making new highs. On every subsequent rally. You started
Speaker 1: to get much narrowing breath. You know, you started to
Speaker 1: get to the point where there were what ten Nasdack
Speaker 1: stocks that were influencing the entire market. Without them, we
Speaker 1: would have peaked well earlier than November in NASDAC. And
Speaker 1: if you go back and you look at all these charts,
Speaker 1: most of them never made new high skin, or if
Speaker 1: they did, they sort of got up there and failed.
Speaker 1: So to me that we are eighteen months into a
Speaker 1: bear market. Now that's what to me the internals can
Speaker 1: tell you. And and so then if I come back
Speaker 1: and I and I say to you, everybody talks about
Speaker 1: the June low this year, but I'd like to point
Speaker 1: out that you had the peak number of stocks making
Speaker 1: new lows on NASDAC at JOSHIV eighteen hundred in January,
Speaker 1: and when you came down in May you had that
Speaker 1: exact same number, which your SEVO you had that exact
Speaker 1: same number. And then when you came down in June
Speaker 1: you only had a thousand or maybe eleven hundred. So
Speaker 1: each time we came down, it was the inverse of
Speaker 1: what you kept getting in one, which was fewer and
Speaker 1: fewer stocks were participating. On the upside, what you were
Speaker 1: getting with fewer and fewer stocks were participating on the downside.
Speaker 1: You mentioned, you know, you go back to the beginning
Speaker 1: of one and you mentioned, you know, pique everything. How
Speaker 1: do you use in your analysis the surveys? And there
Speaker 1: are various surveys. There's a a I I. I think
Speaker 1: it's like an individual investors survey and they just say like,
Speaker 1: are you bullish or bearish? And I guess people respond.
Speaker 1: And then there's like the Bank of America a monthly
Speaker 1: fund manager survey Tracy and I mentioned that in the intro,
Speaker 1: they say like, how are you feeling? Are your bullish?
Speaker 1: Are you bearish? What is your what do you what
Speaker 1: is your high conviction trade, what are your cash levels? Etcetera.
Speaker 1: How do you think about the value of these surveys
Speaker 1: of just going out and asking people, do you like stocks?
Speaker 1: Share enough to me? The gold star in sentiment surveys
Speaker 1: is the investors Intelligence, which no one ever talks about anymore,
Speaker 1: but it's been around since the sixties and it is
Speaker 1: compiled of it's either a hundred or hundred and twenty
Speaker 1: I can't remember newsletter writers. So you have to have
Speaker 1: somebody is actually paying for your advice. That's number one
Speaker 1: so it's not just Willie Nilly. I feel like Mark
Speaker 1: is going up, market is going down. Somebody is actually
Speaker 1: doing analysis and sending out a newsletter that somebody is
Speaker 1: paying for. And and so this outfit compiles each week
Speaker 1: how many of them are bullish, how many of them
Speaker 1: are bearished, But they also take into account how many
Speaker 1: of them are looking for a correction, and those are
Speaker 1: primarily bullish, but they're just looking for a short term pullback,
Speaker 1: and so you can really quantify it. It is very
Speaker 1: slow moving. It doesn't jump around like the aii day
Speaker 1: traders do. And I don't know about the Bank America
Speaker 1: survey because obviously that's proprietary to them, but I I
Speaker 1: or investorous intelligence, like I said, has been around. It's
Speaker 1: got a very long history. I find that to be
Speaker 1: the gold star of surveys. And and if we want
Speaker 1: to take a look at that, back in June, there
Speaker 1: were bulls and nearly fifty or bears. That's bear market
Speaker 1: low kind of stuff. I mean, you just don't You
Speaker 1: just don't see those kinds of numbers often. And now
Speaker 1: what we got as of last week was you've got
Speaker 1: bulls and bears, so they're not out of control. But
Speaker 1: they certainly have flipped. Um, I don't know what this
Speaker 1: week's numbers will be. I assume that when they come
Speaker 1: out tomorrow they'll they'll have come back. The bulls have
Speaker 1: come down and the bears have come up because last
Speaker 1: week was really Yeah, so I shouldn't mentioned We should
Speaker 1: just mention that we're recording this on Tuesday, auguste. And
Speaker 1: so there's a lot happening this week with Jackson Hole
Speaker 1: and the potential for sentiment to maybe maybe change a
Speaker 1: little bit. Right, So now to go back to AII,
Speaker 1: because I have a pet peeve that if I could
Speaker 1: use this platform to scream from the hills for um,
Speaker 1: everybody who was who uses a AII, okay, they only
Speaker 1: seem to use it to give you their bullish case.
Speaker 1: They never once tell you when bulls. When bulls are over.
Speaker 1: In the first quarter, you didn't hear anything about AII.
Speaker 1: But when bulls got down to and May, oh, everybody
Speaker 1: was talking sentiment. You know, first of all, it's it's
Speaker 1: really mostly a crap survey because how many people do
Speaker 1: you know that are members of a AI And if
Speaker 1: they are, they're old than me and I'm sixty one,
Speaker 1: I mean, you know, and and you don't have the
Speaker 1: same people surveyed every single week, and you know, so
Speaker 1: it's sort of a crapshoot. I'll give you one of
Speaker 1: the survey that I think is is quite good, and
Speaker 1: that is the National Association of Active Investment Managers and
Speaker 1: an a ai M name, and they survey their members
Speaker 1: every single week and ask them what their exposure to
Speaker 1: the market is. They survey them on Wednesday morning, the
Speaker 1: results come out on Thursday morning, so they're very fresh,
Speaker 1: and I have found that to be an incredibly useful survey.
Speaker 1: So tell us more about what you're seeing. I guess
Speaker 1: over the summer, so you know, you talked about sentiment
Speaker 1: getting like quite low in June. We've also seen explanations
Speaker 1: for some of the market moves, Lots of people saying
Speaker 1: that the rally was just driven by short covering and
Speaker 1: things like that. What did you see over that time period,
Speaker 1: like how much of it was genuine sentiment versus technical
Speaker 1: shifts such as covering short positions. Well, Bob Prector, famous
Speaker 1: technical technician, once said, all rallies start with short covering,
Speaker 1: and that's true. The question is is whether or not
Speaker 1: after the short covering is finished, you get real buying.
Speaker 1: I suppose that what you could say is that the
Speaker 1: number of stocks making new highs having peaked in late
Speaker 1: July early August probably tells you that the whatever buying
Speaker 1: you had petered out by then, and anything that was
Speaker 1: left over was just, you know, if you will, the dregs.
Speaker 1: So I think sentiment was incredibly bearish. But I think
Speaker 1: it was incredibly bearish in May, and I think we
Speaker 1: got very oversold in May. And if you go back
Speaker 1: to that whole May June period, you were oversold. You
Speaker 1: had a little rally in late May, and then you
Speaker 1: came down again. But again, as I said, you had
Speaker 1: almost eighteen hundred stocks on NASDAC making new loads in May,
Speaker 1: but by the time you came down in June, you
Speaker 1: had a little over a thousands, So that's already a
Speaker 1: contraction to new loads, and sentiment was only getting worse.
Speaker 1: And then you have I talked earlier about the McClelland
Speaker 1: summation index, which is a slow moving breath indicator. I'll
Speaker 1: just use it at that that was actually making a
Speaker 1: higher low and starting to turn up. So you were
Speaker 1: already starting to get people. There were people buying stocks
Speaker 1: in May I don't know who they were, but I
Speaker 1: know that people were or at least they were no
Speaker 1: longer selling them. And you know, you can see it
Speaker 1: now if you go back to the charts, go take
Speaker 1: a look at all those arc names. They weren't making
Speaker 1: new loads. Biotech that stopped making new loads, a lot
Speaker 1: of the software stocks that stopped making new loads. And
Speaker 1: and so was that shorts covering I I can't say,
Speaker 1: but some by he had decided it was enough. And
Speaker 1: I think that's how you sort of got that June
Speaker 1: low was over a period. Now, I will go back
Speaker 1: to one other thing is that everybody was talking about,
Speaker 1: but we haven't seen capitulation that. Lets let's talk about
Speaker 1: the cues for a minute. In one, you could probably
Speaker 1: count on one hand the number of times the Cues
Speaker 1: traded over a hundred million shares. This is the for
Speaker 1: the listeners, this is the q q Q. Yeah. And
Speaker 1: in two you could probably count on one hand up
Speaker 1: until May the number of times the Cues didn't trade
Speaker 1: over a hundred million shares. So everybody is looking for
Speaker 1: that one day when the capitulation had taken place. Over months,
Speaker 1: you know, it was just a hundred million shairs every
Speaker 1: single day you were trading these incredible high numbers of cues.
Speaker 1: I mean go back, or or if you go back
Speaker 1: and you look at Apple, I mean, take a look
Speaker 1: at Apple, and all of a sudden, Apple was trading
Speaker 1: millions and millions and millions and millions more shares than
Speaker 1: it had ever traded. So there were people, there was
Speaker 1: plenty of selling. It just didn't happen, Oh my god,
Speaker 1: in one day. Right. People have this fantasy there's gonna
Speaker 1: be like one day, like a black Monday or something
Speaker 1: at all washes out. But really, if you look over
Speaker 1: a period of time, you see very intense, sustained, widespread pessimism.
Speaker 1: I want to ask you, though, you know, one of
Speaker 1: the advantages that you must have at this point is
Speaker 1: just obviously your experience and having been watching markets, having
Speaker 1: been watching these indicators and volume indicators and surveys and
Speaker 1: charts for decades. Now, can you talk about a are
Speaker 1: there any like periods that you think like, this feels familiar,
Speaker 1: this feels like another time, like you feel it and
Speaker 1: sort of like and be like, do you keep your
Speaker 1: all year old charts such that you could sort of
Speaker 1: go back and look at a comparable period to see
Speaker 1: like how similar some certain timeframe was. That's a great question.
Speaker 1: So I'm going to start by telling you I don't
Speaker 1: believe in analogs, but I do believe history repeats and
Speaker 1: chart patterns repeat. Because if you didn't believe truck patterns repeat,
Speaker 1: why you're looking at charts? But you know all those analogs,
Speaker 1: why do they always end up in the nine crash?
Speaker 1: I've it's we're always one week away according to these
Speaker 1: overlaid charts of like this is exactly like the lead
Speaker 1: of it's. To me, it's just amazing. And and yeah,
Speaker 1: I lived through the seven crash, okay, And I will
Speaker 1: tell you that the only people who tell you, oh,
Speaker 1: look how easy it was to buy are the people
Speaker 1: who were looking at charts and we didn't live through it,
Speaker 1: because I got news for you. It was probably to me,
Speaker 1: it was one of the scariest periods in the market
Speaker 1: I've ever seen, you know, I mean, everyone gets crazy now,
Speaker 1: but the stock market was down in one day, um
Speaker 1: and and it had come on the heels of three
Speaker 1: incredibly bad days prior to that, and and then when
Speaker 1: you opened down again on Tuesday morning. Just so listeners
Speaker 1: know what happened that Tuesday morning, when we still had
Speaker 1: a specialist system in place. Twenty eight of the thirty
Speaker 1: Dow stocks were halted for trading at I don't know,
Speaker 1: around eleven o'clock in the morning, and the specialists said,
Speaker 1: I'm not reopening till life on buyers. And that's how
Speaker 1: come we made the low that morning, because they literally
Speaker 1: closed the market without really closing the market, okay, which
Speaker 1: is what the circuit breakers today are sort of meant
Speaker 1: to do, right anyway, But to me that was pretty scary.
Speaker 1: So again, anybody who tells you that, oh it was
Speaker 1: so easy, please, they didn't live through it all right,
Speaker 1: which is why I look at those nine crash charts
Speaker 1: and I'm like scared. Okay. So history repeats, patterns repeat,
Speaker 1: and so yes, I often will take a look at
Speaker 1: a chart and think, ah, I think I've seen this before,
Speaker 1: and most recently I took a look at UM two
Speaker 1: thousand to two thousand and one, and it's it's quite
Speaker 1: interesting to see how we came down and we rallied
Speaker 1: and we came back. Anyway, if I did a Twitter
Speaker 1: thread on it, and what I found was fascinating was
Speaker 1: obviously no one could have ever predicted nine eleven, and
Speaker 1: let's hope we never have another one again. But that
Speaker 1: capitulatory low led to I can't remember if it was
Speaker 1: about a twelve or thirteent rally in the SNP over
Speaker 1: the next six or eight weeks, and you did not
Speaker 1: turn around and die. We went into from November until
Speaker 1: March or April, we just went into a like a
Speaker 1: ten percent trading range, up and down, up and down,
Speaker 1: up and down, up and down. Now, yes, what came
Speaker 1: out on the other end in April was a complete plunge,
Speaker 1: but forget that. But you really, and and it seems
Speaker 1: to me nobody even entertains the fact that now we
Speaker 1: can just have a market that doesn't have to give
Speaker 1: it all back, it doesn't have to keep going. You
Speaker 1: could really just digest what we just had with within
Speaker 1: the context of ups and downs, ups and downs, and
Speaker 1: I sort of think that's probably likely. So in other words,
Speaker 1: I don't care what jacksonhole happens if if you know,
Speaker 1: like if the market plunges, so it's part of the
Speaker 1: up and down, up and down. Well, this was actually
Speaker 1: gonna be my next question, but can you talk a
Speaker 1: little bit about how you view the relationship between stocks
Speaker 1: and yields, So bond yields at the moment, like, is
Speaker 1: that something that you look at and can you apply
Speaker 1: the same sort of indicators and technical analysis to bond
Speaker 1: movements as you can to stocks, or at least try
Speaker 1: to um draw the relationship between them. Well, when it
Speaker 1: comes to bonds, I just I literally just look at
Speaker 1: the charts because that's all I have personally, I don't
Speaker 1: have anything else. I do have a sentiment indicator that
Speaker 1: I like to use, but it only gets extreme if
Speaker 1: you're lucky once or why a year so um which,
Speaker 1: by the way, it got extreme in June at you know,
Speaker 1: which meant yields were probably at the high. There is
Speaker 1: a direct relationship between interest rates and the stock market.
Speaker 1: As a matter of fact, I will tell you that
Speaker 1: in January, just as Trump was taking office, everybody was
Speaker 1: a little hysterical what was going to happen to the
Speaker 1: stock market? And I went back and I looked at
Speaker 1: how presidential scandals, if you will, or situations affect the
Speaker 1: stock market, and the answer was they don't. And I
Speaker 1: did an attire study on it, and I found out
Speaker 1: what effects the stock market. Interest rates are Obviously the biggie,
Speaker 1: and the other is taxes, so financial. I mean, some
Speaker 1: people would say earnings, but I would say, well, low
Speaker 1: interest rates help earnings, and you know, lower taxes help earnings.
Speaker 1: So it's all related, but it's financial indicators are what
Speaker 1: matters to the stock market. So of course interest rates matter.
Speaker 1: And if you go back and you take a look
Speaker 1: at the low in in June, I'm sorry that the
Speaker 1: low end bonds, the high end yields in June was
Speaker 1: absolutely when not just the stock market stop, but when
Speaker 1: all the growth stocks stopped going down and commodities had
Speaker 1: a little peak you know there. I don't understand who
Speaker 1: you cannot look at the charts and not see it,
Speaker 1: but to me, it's that obvious. And and right now
Speaker 1: I think that if you go back again to Tracy
Speaker 1: left and interest rates were near their lows, and now
Speaker 1: they've crept up, and what's been gotten hit the hardest. Oh, look,
Speaker 1: growth stocks, Tracy go back on vacation again, I'd be
Speaker 1: happy to, all right, for the good of everyone's portfolio,
Speaker 1: I will take that on. Can we actually talk a
Speaker 1: little bit more about you know, we're talking about the
Speaker 1: meme stocks having this sort of like kind of like
Speaker 1: this weird echo of January February one lately with like
Speaker 1: AMC back in the news, bed bath and beyond back
Speaker 1: of the news. It feels like, you know, my recollection
Speaker 1: after the dot com bubble burst and the start of
Speaker 1: I guess it's early two thousand, like the very peak,
Speaker 1: it took a while for people to really give up
Speaker 1: the story. And you did see these sort of echo
Speaker 1: booms where the stuff the high Flyers from. They would
Speaker 1: have these occasional rally I think we were like four
Speaker 1: or five like rallies during that those two years that
Speaker 1: you're talking about, Like it took people a long time
Speaker 1: to sort of give it up and say, no, this
Speaker 1: is really that story is over. Go back and take
Speaker 1: a look at the chart. The S and P came
Speaker 1: back almost to the old high in September of two thousand.
Speaker 1: I mean, so nobody was talking bear market. Um. I
Speaker 1: think I think there were plenty of were talking that
Speaker 1: the dot com bust had happened again. If if you
Speaker 1: take a look at that, and then if I if
Speaker 1: my memory serves, I think it was in December, around
Speaker 1: sometime early December two thousand, one of the high flyers
Speaker 1: maybe in Cisco maybe pre announced a quarter or had
Speaker 1: some announcement, and it was sort of what I call
Speaker 1: a realization when everyone goes, oh my god, maybe things
Speaker 1: aren't so good, and and the and the market started falling,
Speaker 1: and and and I would I would also tell you
Speaker 1: I think that Twitter and the and social media has
Speaker 1: has learned, has has really exacerbated everything we do in
Speaker 1: the market tenfold. We'll talk about that. That's interesting. Well,
Speaker 1: I mean when when I was a child, when I
Speaker 1: got when I got into the business, Um, I told
Speaker 1: you you had a quote tron. You you couldn't even
Speaker 1: pull up a news story on a quote tron. The
Speaker 1: story came across the tape, as we called it. The
Speaker 1: story came across, and if you wanted to read the story,
Speaker 1: you got to get up from your desk, look over
Speaker 1: to the Dow Jones news machine, which was like a
Speaker 1: roll of paper that just you know, spit it out
Speaker 1: and you had to you know, sort of pull it off,
Speaker 1: caught it, tape it, xerox it, and then you have
Speaker 1: to go tape the story back at the machine in
Speaker 1: case somebody else wanted to read it. Think about how
Speaker 1: much time that took just to read a story, whereas
Speaker 1: now you can just pull up any story you want,
Speaker 1: so that immediately just changes the whole timing in the market.
Speaker 1: Things are just accelerated now. Now, picture that if you
Speaker 1: can pull up a story in the market, and everybody
Speaker 1: can pull up a story in the market at the
Speaker 1: exact same time, and then it gets magnified on Twitter
Speaker 1: or Facebook or whatever like that quickly, everything just happened
Speaker 1: so much faster and gets reacted to so much faster
Speaker 1: than it used to be. You know, if you pull
Speaker 1: up a chart of bed, bath and Beyond, for instance,
Speaker 1: which is now a very interesting looking chart with a
Speaker 1: big decline and then a big spike and then another
Speaker 1: big decline in an even shorter time frame. So just
Speaker 1: over the past month, what do you see, like, what
Speaker 1: would you be looking at when you analyze that stock.
Speaker 1: Now you're going to have to give me two seconds
Speaker 1: to pull up the chart. Please do. I will tell
Speaker 1: you I don't look at those charts because to me,
Speaker 1: they're useless. While you're pulling this, I'm looking at the
Speaker 1: q q Q chart from two thousand, just well, you know,
Speaker 1: going back so that it looks like the q q
Speaker 1: Q the NASA on t F peaked at about a
Speaker 1: hundred and twenty in the spring of two thou and
Speaker 1: dropped by May and then rallied another by September. And
Speaker 1: so to your point, like there it was this like
Speaker 1: a really big rebound that I sort of had forgotten about.
Speaker 1: In summer of two thousand were probably a lot of
Speaker 1: people thought, oh, yeah, we're back. Who said that the
Speaker 1: dot com? But that was just a little hiccup, and
Speaker 1: then of course it went to plunge much more, and
Speaker 1: by early two thousand two is down to twenty five.
Speaker 1: But you know, there was this like pretty impressive echo
Speaker 1: boom uh in two anyway. Sorry, yeah, but you know, Joe,
Speaker 1: even if you go back and you think about two
Speaker 1: thousand and seven, two thousand, two thousand and nine, you know,
Speaker 1: we peaked in October of two thousand and seven. How
Speaker 1: many people you think can tell you that we we
Speaker 1: peaked in October of two thousand and seven. How many
Speaker 1: people you think can say to you, oh, most people
Speaker 1: think we peaked in two thousand and eight, because you
Speaker 1: came down then yet a rally I um, I think
Speaker 1: into maybe early January and then and then we came
Speaker 1: down to the bear sterns low remember that, and everybody thought, Okay,
Speaker 1: we're done. That was the problem. It got fixed and
Speaker 1: we rallied into May. Even the banks had a rally
Speaker 1: into May, and then you know, things weren't so good. Okay, Tracy,
Speaker 1: I'm looking at bed Bath and beyond, and all I
Speaker 1: see is a stock that has some serious resistance at thirty.
Speaker 1: Walk us through, walk us through how you make that assessment. Well,
Speaker 1: last September you had a high at thirty, you had
Speaker 1: a higher thirty, and early March had a high. It
Speaker 1: looks like maybe twenty nine in late March, and then
Speaker 1: this time you got to thirty. I don't know. It
Speaker 1: seems like resistance to me. And and usually let me
Speaker 1: just explain to you. Maybe maybe some readers should readers
Speaker 1: listeners should shouldn't understand think of resistance. Um, let me
Speaker 1: think of how to explain this. Okay. I think of
Speaker 1: resistance as a big giant sandwich you're trying to eat.
Speaker 1: And it's the old joke, how do you eat an
Speaker 1: elephant one bite at a time. Okay, So just because
Speaker 1: you got to resistance isn't the end of the world,
Speaker 1: because you have to think of resistance as I own it.
Speaker 1: Here somebody owns it there, and so somebody is saying,
Speaker 1: oh God, just let me get back to even. And
Speaker 1: I pro us I'll never trade that stock again. I mean,
Speaker 1: we've all had that experience and and so and so
Speaker 1: you're always gonna have somebody who says, thank God, I
Speaker 1: got you know, I was down thirty in the stock
Speaker 1: and now it's got back. I swear I'm never going
Speaker 1: to trade this stock again. And so you that's why
Speaker 1: resistance works, okay. And and so just because you back
Speaker 1: off of resistance doesn't mean it's bearish it. You know,
Speaker 1: you do have to keep eating through it like a
Speaker 1: big sandwich. Now, sometimes it's bearish, but not always. And
Speaker 1: and so I often say basis are not built in
Speaker 1: a day. I know everybody wants the bottom to be
Speaker 1: built in a day, but it isn't. Just like the
Speaker 1: top isn't built in a day. And if it took
Speaker 1: nine months to build the top, you can generally expect
Speaker 1: it's going to take six or nine months to build
Speaker 1: a bottom because you have to sort of go from
Speaker 1: weekends to strong hands. Let me ask you about another
Speaker 1: chart that probably is maybe more sort of crucial for
Speaker 1: the future of the market than bed Beth and beyond
Speaker 1: is entertaining as that story is. And then of course
Speaker 1: is Apple And what do you see when you pull
Speaker 1: up the Apple chart? You know, I can sort of
Speaker 1: eyeball A peaked actually January, then it almost came back
Speaker 1: to it ties in April that it had a lower
Speaker 1: high in August. It's come back like is this a
Speaker 1: is this having a hard time? Is it the same story?
Speaker 1: It's a really tough resistance to break through, Like, what's
Speaker 1: the story here? It's a stock that got to resistance.
Speaker 1: That's that's what I see. So let me right now
Speaker 1: because my view on the market is not wildly bullish, Okay,
Speaker 1: right now, I'm I pretty much think you're going to
Speaker 1: have a volatile period from now through September. UM. That's
Speaker 1: just the My indicators say that we're overbought, where intermediate
Speaker 1: term overbought, short term overbought, uh breath has started to
Speaker 1: roll over, so you sort of have to cycle through
Speaker 1: that whole overbrought to over sould period. So you know,
Speaker 1: if I was if I thought that the market was
Speaker 1: overbull oversold here, I would be more positive on Apple
Speaker 1: right now. But I look at the Apple chart and
Speaker 1: I say, Okay, Apple ran from one thirty to one
Speaker 1: seventy five. You know, big deal. If it comes down
Speaker 1: to one fifty and it holds in the big scheme
Speaker 1: of things, it's no big deal, you know, if you're
Speaker 1: an Apple holder. And and I would look at so
Speaker 1: now I look at the chart, and really all I
Speaker 1: see is a lot of resistance at one eight. That's
Speaker 1: all I see. So I think it should correct? Could
Speaker 1: it correct all the way down to one fifty? Sure?
Speaker 1: All right, I have one more stock I want to
Speaker 1: ask you about it. And it's also a very interesting chart,
Speaker 1: and it's one that you and I have a shared
Speaker 1: affinity for this chart, could you and I think it's
Speaker 1: already up on my scres on my screen to you?
Speaker 1: All right? So what what tell me what you see
Speaker 1: when you see the Shopify chart? It's a dot com bust. Okay,
Speaker 1: that's that's the only thing I see there. I see
Speaker 1: a stock that had a huge, massive peak and and
Speaker 1: and in that respect, I'm going to go to a
Speaker 1: little bit of a longer term chart. But we just
Speaker 1: discussed earlier early and that stock, if you take a look,
Speaker 1: got up just over one forty had the big correction.
Speaker 1: Now take a look how it got to one sixty
Speaker 1: and then it just kind of died I and you know,
Speaker 1: then it corrected, it came up to a little over
Speaker 1: one sixty, and then died again. I I think if
Speaker 1: you think about a breakout, like you think about a
Speaker 1: kid running away from home. Okay, did the kid go
Speaker 1: to the garage of the neighbor next door and look
Speaker 1: across the street to see if mom was worried? Or
Speaker 1: did the kid get on a bus and go to
Speaker 1: the next town. The kid who got on a bus
Speaker 1: and goes to the next town as a breakout, The
Speaker 1: kid who went next door to the neighbor didn't really
Speaker 1: want to run away. I just wanted to see what
Speaker 1: was happening. Um. And so a stock that keeps trying
Speaker 1: to break out and can't is the kid who went
Speaker 1: to the neighbor. And that, to me is what I
Speaker 1: see in shopify it. It kept trying to do it,
Speaker 1: but it kept coming. Sometimes those kids, sometimes even the
Speaker 1: kids who come to go to the next town, I
Speaker 1: regret it want to come home. This is true. But
Speaker 1: you know, you can also measure a target there and
Speaker 1: then you don't want to know. It doesn't look pretty,
Speaker 1: looks like I want this to be. This is just
Speaker 1: go through all the This should be mad money. This
Speaker 1: is what mad money should be. A Helene Meisler just
Speaker 1: it's so good. It's so good. Oh stop anyway that,
Speaker 1: you know. So let me just give you about the
Speaker 1: market right now. I don't know what happens in Jackson Hall.
Speaker 1: I mean it just to me, it seems like a
Speaker 1: big wild card right here in the near term. But
Speaker 1: I think we have a market that should see a
Speaker 1: lot more volatility. We have a market that has sentiment
Speaker 1: that is not terribly giddy. Um, it's it's certainly going
Speaker 1: to be barished pretty quickly. Uh. And if you just
Speaker 1: want to witness, every weekend, I do a poll on
Speaker 1: Twitter for the next hundred points in the S and
Speaker 1: P and this past weekend I had only or thirty
Speaker 1: three percent. We're looking for the next hundred points to
Speaker 1: be on the upside. And I've been keeping that poll
Speaker 1: for over two years and that's the the least number
Speaker 1: looking for the upside we've had. So it, you know,
Speaker 1: it tells you something about how fast sentiment will turn bearish.
Speaker 1: To go back to Tracy's question about did we have
Speaker 1: short covering or did we have real buying. You know,
Speaker 1: I think the short covering for the most part ended
Speaker 1: sometime in late July, and it's not clear to me
Speaker 1: that you had a ton of real buying in early August. Again,
Speaker 1: those new highs coming down, so I don't think people
Speaker 1: are position terribly heavily in the market, which means can
Speaker 1: you come down and make new loads. You can, but
Speaker 1: probably not before you get over sold and already too
Speaker 1: much bearishness. So that's I go back to that two
Speaker 1: thousand and one scenario where you could easily have a
Speaker 1: ten or twelve percent up and down, up and down,
Speaker 1: up and down. Helene Meisler, this was so fantastic. This
Speaker 1: was this totally lived up to the hype. Very fun.
Speaker 1: Really appreciate you coming out. I think we should do
Speaker 1: this once a quarter. Actually it's in all seriousness where
Speaker 1: we check in with you on the on the ind
Speaker 1: this seas on some individual names, and get an update
Speaker 1: on the weekly Helene Meisler Twitter poll, which I think
Speaker 1: should supersede all those other poles if it's especially if
Speaker 1: you keep it going several years. So fantastic. Thank you
Speaker 1: so much for coming on the Outlaws podcast. Thanks and
Speaker 1: mail guys. Thanks Helene. That was great. That was really fun.
Speaker 1: I'm so glad we finally had Helena. Yeah, she definitely
Speaker 1: lived up to the hype, as you said. But it's
Speaker 1: great too. You know, I think technical analysis does get
Speaker 1: its share of criticism. And I really like the way
Speaker 1: she described it as basically looking at the fundamentals of
Speaker 1: the market versus the fundamentals of a specific company, looking
Speaker 1: at things like sentiment and breadth and how people are
Speaker 1: generally feeling about the market at any one time and
Speaker 1: how it's actually behaving. That makes sense to me. Yeah,
Speaker 1: there's a lot if you if you think about it,
Speaker 1: I think as an attempt to sort of quantify and
Speaker 1: visualize psychology. We know that psychology is really important in
Speaker 1: the market, and I mean that's that's not even controversial,
Speaker 1: but you know, markets overshooting undershoot the fun fundamentals all
Speaker 1: the time. You know, we're all we're all animals, etcetera.
Speaker 1: Then I think it makes a lot of sense. And
Speaker 1: so combining the sort of visualization of the chart with
Speaker 1: things like the internals with various surveys with volume to
Speaker 1: sort of indicate, Okay, this is a lot of people
Speaker 1: are selling right now, it's not just that markets are down.
Speaker 1: A lot of people are selling. I think you can
Speaker 1: have some real signal from it. Yeah, and I guess
Speaker 1: on that basis we might have an interesting um a
Speaker 1: few weeks coming up. Yeah, totally. And to her point,
Speaker 1: which is like, okay, we've there aren't many bowls right now,
Speaker 1: not a lot of people have entered the market. But
Speaker 1: on the other hand, like there's still a lot of barishness,
Speaker 1: and so it's hard to go down when everyone is
Speaker 1: still out of the market. Like you seem to me
Speaker 1: like useful, useful things for thinking about where the market's
Speaker 1: gonna go next. Yeah, for sure, we'll have to have
Speaker 1: Heny in on again at something absolutely all right, shall
Speaker 1: we leave it there? Let's leave it there. This has
Speaker 1: been another episode of the All Thoughts podcast. I'm Tracy Alloway.
Speaker 1: You can follow me on Twitter at Tracy Alloway and
Speaker 1: I'm Joe wi Isn't All. You can follow me on
Speaker 1: Twitter at the Stalwart. Definitely follow our guest Helene Meisler
Speaker 1: on Twitter. She's at h Meisler. Follow our producer Carmen
Speaker 1: Rodriguez at Carmen Armann, and check out all of our
Speaker 1: podcasts Bloomberg under the handle at podcasts. Thanks for listening
Speaker 1: to