How To Handle Bull Market Extensions And Rotations; Flex, Fortinet, Snowflake In Focus

27:45But it's the best thing I've ever come up with. And I decided to share it with the world because I think that's what Bill would do. And don't want to get into it now, but this was our third anniversary of him passing. And so in the spirit of Bill always sharing, I decided to share my best thing. And it is to solve a problem that I have. My worst problem is holding winners. I get in the short term, I'll end up selling stuff because I'll go, oh, it's going to come down, you know, some and I can interpret the chart. And yes, I'm right most of the time. But then I lose my position and don't get it back.

28:26So I wanted to have something that worked. And I explained it in the original one as well as the updated one. But we were limited to just two RS lines on there. And so now in the new version of Market Surge, I asked for four because I wanted to put in a third, maybe eventually a fourth. But I walked through that for folks to know on the daily. It's a 21 and a 34 and a 50. And I lay out exactly how to do it. you know, over the thing, but essentially each one of those becomes a cell. So let's go back to the daily. So I'm sorry for my breathing, but I'm just trying to keep from coughing. So with this one, and let's go to the AAOI.

29:17And then we can go back to the light. So with this one, as it breaks through your orange, or what, yeah, that orange RS line moving average, that is your quick signal, which would say to sell a portion of it, one third of your core. Then as it goes through, as it goes lower, you would sell another third. And that became very tricky to look at. So that's why I put a third moving average on there. So it would have gone through that today as well, where you would now just be holding on to one little part of your core position until that RS line goes through its 50-day, its slowest line on there, what I call the Grateful Dead line.

30:04And then you exit the position. Let's go to the light that you had up there. So with the light, it looked like it went through the Grateful Dead yesterday. So this would actually, a week ago, it went through it. So over there, that's where you would have thrown in the towel on this one if you're using your quick quicksand great dead holding rules now please keep in mind these are not for new positions this is for something that you have a gain on never ever ever under any circumstances look at these lines if you're at a loss at something and rationalize holding it it is for how the whole point of it is you've got a low cost basis stock and you want to try to hold onto it with some wiggles and wobbles along the way, because that was my weakness.

30:58So what folks should do is one, watch it, integrate it in with your trading after you've studied it. But two, write rules for yourself of whatever your unique problems are. Like that's my unique problem. Someone watching might not have that as a problem at all. So create indicators or create rules to solve your problems. And that's what Bill would always do. He would do a post analysis and then he would figure out what his key, you know, two or three things were. And then he would write a rule around it. That's where the 20 % power from pivot came from. He messed up certainty, got shaken out of it and said, no, I'm going to write this rule.

31:38I'm going to hold it for eight weeks if it goes up 20 % within three weeks. And that's just how we'd like to operate around here.

31:44Mike Webster:Mm-hmm. And I know you'll explain this on your YouTube channel, but looking at daily signals versus weekly signals in the different timeframes, right? So something to look forward to with that as well. All right. Well, wanted to give that a little shout out. And we'll talk even more about it on IBD Live next week. Yes. Which you should be watching IBD Live, Allie. It's been a while. Everyone. There you go. I know. It has been a while. Yeah. So next Wednesday. We'll update everyone. Great. All right. Let me share my stuff and we will see what we've got to see. All right. So you can see it? Yes.

32:27Okay. So this is our Bob Weir. Take a step back. Look at the bigger picture. Look at the weekly candle. And even though, you know, I said what I said about the daily, this candle doesn't look bad at all. It looks great. You've got a gap up there, a decent size bar, tiny little wicks. There is not a problem at all with this. And that's why we do this mosaic thing of we look at all these different things to see, are we putting too much weight on one thing and not the other? So that's really good to look at monthlies as well as weekly. Let's look at the monthly on this.

33:03Mike Webster:Yeah, I know. I kind of mentioned the monthly, so that'd be great. So, I mean, that's a beautiful, yeah, you mentioned it at the beginning. That's a beautiful monthly. You had a really powerful one last month and you built on this this month. And in the prior ones, when those happen, you know, lots of times you think, oh, it's gone too far too fast. And look, that train just keeps on trucking. And the thing there is just that momentum. You know, it's an object in motion tends to stay in motion. So let's go over to the NASDAQ. We'll see if there's anything different there. And yeah, you know, the top wick is a little bit bigger than the bottom wick.

33:42But come on, that looks great. I mean, it's beautiful action. So if I was only looking at weekly charts, weekly candles, I'd say all systems go 200 % long, frankly. I've just got to be honest. So now let's go to our next one. This is our regression channel. And what did Justin tell me? I think it was like 37 days or something like that now from our first anchor point. Our first anchor point is the 4-8 follow through that gap up. So going all the way out to here. So what does this tell us? We're right at home base. So home base is your regression line. So we're trading right in line with that. And so if it comes down, the thought process, if it comes down into this green dash line, which is minus 0.75 standard deviations from here, from home base, that's where if you turn and go up, you have an upside reversal or come down below it and then move up through it.

34:44That's where you really, really gun it. And the other reason why I was kind of backing away is this is just kind of hugging that line now. It just kind of went up to it and it's back at home base, but it's not really moving in a really nice way the way it was over here during that time frame. So it's not that it's weak. It's just not overly strong, you know, from this particular context because it's just staying underneath that line. and confirming 37 trading days okay thank you i just asked gemini so you're so yeah i like asking

35:23Mike Webster:justin you know justin gemini justin interchangeable there you go um and jeopardy he's jeopardy justin um here um okay so let's see we'll go on to the next one i'm gonna cough so why don't you explain what we're looking at. Okay. We are looking at a 50 % retracement on the S &P daily chart. Since we are at highs, the top one is at today's high. And then the low is from that three-day pullback. The yellow line is the 50 % level. And then, of course, we are in the Northern Hemisphere because we're at highs, Webby. So a pullback, you know, let's see if and when we do pull back Like where we are, are we going to be living in the northern hemisphere or do we see a little bit more of a pullback than that?

36:20Well said. And so the 744, which is your midpoint, that is an area where I actually would kind of like it to come into to to test and see and kind of have this like kind of sine wave at an angle. So we went up and came down and then go up and then come down, but doing it in milder ways each time. So we'll see how that plays out. Let's look at the NASDAQ. You can see a little bit more of the stalling there, but the same thing, the 26 ,400 is your midpoint there. Let's move on to the next one. Here are our lines in the sand. And so the line in the sand, or at least a cautionary one, would be the lows from, you know, earlier this week.

37:12But certainly if we came and undercut this area, the 519, that would be a major, major, major character change. Because we're doing higher highs and higher lows, and that would be switching that. Then we would have lower lows, and that's not what we want to see. So the other lines aren't as important since that's the key one.

37:42Oh, man. Sorry about my coughing. And so... Or maybe.

37:47Mike Webster:Hope you get over your cold. I hope so, man. What are you going to do? But that's when you get on cruises. You go on a cruise, you get a cold. It is the way of the world. So same thing here. Coming into this week's low, undercutting that would be From this standpoint, you would want to be backing away. But honestly, as long as you stayed in this middle area of this, you would be fine. You just don't want to be hitting a lower low than that. So now let's go over to the Webinacci indicator that I've been talking about recently. And this is just all the different FIB moving averages on here. The white line is your current price.

38:27So it's all stacked. You're at 45. You're maxed out. Looks great. So from this context, no problems at all.

38:39Same thing here on the NASDAQ. And so that's why we look at all of these. Let's look at your favorite one. Let's do SPY first. What do you see there?

38:50Mike Webster:Okay, so this is the 21 only, 21 EMA. And we're on the SPY daily. So we are in a very strong power trend. It's been a great environment for using those power trend rules that you and Justin and Charles Harris developed, where if you can get your toehold in some of the leading stocks early on in the trend, using the rising 21 day as a great guardrail for you, giving your winning stocks room to run. And I think that that was especially useful in that three-day pullback that we had, Webby, because from that perspective, for those positions that maybe folks have had since that early April timeframe, they were able to hopefully better withstand that pullback because we didn't even come down to test the 21-day in that case.

39:50Perfect. Well said. And then the same thing there on the NASDAQ. So we'll switch over and we'll do the Webby RSI. Let's see.

40:03Okay. Oops. Wrong stock. Let's see. Spy. All right. So in the green shaded area, that's the power trend, at least the modified power trend. So we're still early on. If you scroll out and see, you know, this, it might feel like it's been going for a long time, but it really hasn't. I mean, look at some of these times, you know, back in 2020 where it really went for a long time. All that green shaded area, those are the power trends. So we go in here and we're looking at it saying, okay, from this lens, this looks very early on. And then you go down below and look at the Webby RSI, that is your low versus your 21-day express as an ATR.

40:47And there are no problems there. Like, I look at this and I go, why am I not on full margin? I mean, honestly, like, from this lens, it looks great. You know, there's no issues. Let's take a look at the NASDAQ. And same thing here. And that's why we look at multiple things to get different points of view on here. And this really powerful WebE RSI over three right out the gate, that's exactly what you want to see. And then it went even higher over here. And a thing that we don't talk about very often, but it is this what looks like a moving average on here, this orange line. Let me just blow this up a little bit.

41:32What that is, is your high versus your 10-day simple. Really want it to be the eight-day exponential, but there's technical reasons why it's the 10-day simple. You're high versus that. Because what I've found is when you get a real extension from there, it's climax action. Not a climax top. You can have climax action all the time. It's just something you reduce into. So how would I interpret that? But if this line gets, you know, well above where we were over here, which was like a, you know, a little bit over three, call it three and a quarter, that's where you would probably want to be looking to reduce into that.

42:11But from this lens, all looks good. Let's go over to our Bob Marley. And why don't you explain this while I cough again?

42:22Mike Webster:So this is the off high indicator. And I know something that Webby has been pointing out is with the pullback that we had, you want to take a look and see where that stopped. And that's where we have that orange line down there. So for future pullbacks in this power trend to see if it's still in character, is it coming down to the same level or are we seeing a little bit more deterioration there? That'll give us a potential clue. Exactly. Well said. So that and just for folks to know that this line down there is measured using the lows, not the lows and not the highs. And so if we get down to 2.33 ATRs off the high, then it's normal and natural.

43:15Anything materially below that, then it's a character change. So materially below that would be more like 2.75 or so. So what does that tell you from a standpoint of, you know, most people who aren't being as active as I am looking at it going, there's no problem here. All looks great because, you know, we wouldn't know that there was a problem until you get down into this range over here. And so it's just another way of looking at things to kind of help keep you in or to know when things are normal and natural or not. And then the same thing here with the NASDAQ that came into about 2.6 or so.

43:57And so that becomes your line in the sand. And I did recently do one on this as well on my YouTube channel explaining it. My goal is to all these charts that we go over quickly to do an episode on each one. And, you know, I've done the 50 % retracement and then the Webinacci stuff. So if people are interested in this, they can go and watch that in more detail than we have time here. But in summary, what I'll say is most of those charts looked really good. You just got to call it the way you see it. I might be just being a little bit of a worrywart. And I had some positions that, yeah, I wasn't liking how they were acting.

44:41And so sometimes it's you're just looking at your own account and what you're doing in making decisions off that. That's not a bad thing. But then you also do your market analysis. Go. Nothing looks wrong there, but it does look like. And why don't you share your your chart one last time, if you don't mind?

45:03Mike Webster:Sure. And let's go to the cues again, which I do have a position in. But just when you're up near highs and you're going into a Friday and you're stretched and you have a closing range, what's the closing range on there? Let's check it. The closing range, 48%. Okay, so just a little bit less than half. That looks and feels like stalling action. And it doesn't mean that we're going to collapse or anything, but it's just one of those things that you always look at. And Bill would always say there's distribution on the way up. And he's right. And there's sometimes subtle distribution that you end up seeing.

45:51We have not had much distribution in this market, even the way I measure it, because I don't use volume in there. I'm just using the price action. And this is, yeah, probably the worst day we've had since the first day of that pullback, the three-day pullback. Because that was bad. That was an expectation breaker because you had closed the day before. You closed, you know, mid-range, you know, looked good, looked like it wanted to go higher. But then when you came in, you know, that was a mini, mini expectation breaker. And so all that told you is, okay, we were looking for a three-day pullback.

46:32that's about when it should happen, when you get an expectation breaker. The fact that it firmed up the way it did around 700, that tells you so much. So let's go to the 60-minute chart. Sometimes that's helpful.

46:52So on here, you just want to look and say, okay, what would a bear want to do to this chart? A bear would want to close that gap in there. So looking at it, you know, I would be very interested in how it handles itself around 720. And, you know, that would be a place where if I got an upside reversal in that area, if we come down, we might not come down, then I'd be wanting to gun it again. And you just kind of, if you're a very active trader, you're like slamming on the gas, you're backing off. Sometimes you have to, you know, pump the brakes a little bit, but let's go back out to the daily. We are in a power trend.

47:36So I'm just telling you the way I think, but the reality is most people who are watching, you trade slower. And at this point, if you've got a low cost basis stock, you just let it wiggle and wobble until we materially break the 21 day and just keep it simple that way. Sometimes I'm, you know, a little too, get a little too cute for my own good, you know. But, you know, it is what it is. You know, if you if you live on the edge, on the razor's edge, as far as, you know, pushing it, you do have to be willing to back away and be flexible out there. What are your thoughts on the market, Allie?

48:14Mike Webster:I mean, just picking up on that, you know, if you are an aggressive, experienced, aggressive trader trading these high ATR, high octane stocks with non-traditional entry points, then yes, exactly. You have to be faster. You have to use those faster rules in and out. So totally agree. And because of the research that you and Justin and Charles did for market school, I am following the power trend rules. And I've said that my strategy for handling TQQQ, which I entered on the follow-through day, a material break of the 21 day is what I'm using for that. And I think that if I wasn't using that, there probably would have been days where I would have thought that we were too stretched or going to come in more.

49:08Mike Webster:But because I am following that rule based on your research, based on my experience in past market cycles, past market trends, that's definitely one of the core rules that I'm using for holding as well as for adding to the position. Because like you said, the chart that you showed with the Webby RSI and the shading of the power trend zones, we could see this last a lot longer. It could end a lot longer. So I'm trying to keep that perspective as well. So if we do see it last longer and pullbacks in a power trend are normal and natural, then it is those pullbacks. You know, so maybe it's not the 60 or 65 minute chart where I'm going to be gunning it on a reversal, but that 21 day, that is key.

49:58Mike Webster:And I love how you have kept us so focused on this show as well as on IEBD Live, looking at past power trends and studying those. And I know that's always what you emphasize, Webby, is look at charts, study history, ask yourself what you would have done on those key days, and then you can kind of learn, okay, this is the preferred action when you get a certain scenario and how to manage your risk if it breaks your expectations. yeah well said i'm so so proud of you with your tqq trade i mean that's just a monster i should just do what you do yeah make i make you're doing okay i think you're doing okay uh too difficult for myself because when folks who listen should really pay attention to what the way ally does this because she's super busy like probably most people who are watching you know managing a group of people and all this video stuff that you put out and, you know, helping with the market surge and all this stuff.

51:02So you're super busy, like most folks. And so you keep it simple. You go for the bigger plays, you go with the TQQ, you have your exit strategy and you have your places where you're going to add. And I think that's how most people should follow it. So if I were in your shoes trading it that way, I'd be doing nothing now because it would just be like, okay, if it does pull back into the 21 day that's where you're going to assuming it gets support around there that's where you're going to be adding to it not necessarily selling a decisive bad break below certainly if the high got underneath the 21 day you would certainly be reducing if not getting out of the well getting out of a substantial amount power trends are something that people should go back and study because you can go underneath your 21 day, um, even, you know, even for some time and still have that power trend working and have it move higher.

52:04I mean, that happens all the time. It's just when you're above the 21 day, that's when you really, and especially when you're low is above it, which is why we have the Webby RSI. That's when you really want to be, you know, pedal, pedal down. but again I'm going to repeat it every week until this market you know is in a different environment I would go through 1998 1999 during the power trends through that go day by day through there and ask yourself what would you do along the way and you will learn so much I learn every time I do it it's the best way going bar by bar through stocks as well as the averages

52:47Mike Webster:mm-hmm well said webby all right well i've got a question for you it's been two weeks what's going on i know what's going on with the baby well if you can't tell i'm a little low-key today that's because i didn't get much sleep last night baby is uh gonna be getting some teeth here soon She better get them sooner than later because they're close. But I'm like, these teeth better happen because I'm losing my mind. Now, she's so sweet, though. But, yeah, she's getting very close to getting some of her first teeth. Chloe, she's nine months old now. Nine months already? How did that happen? That's crazy.

53:32Mike Webster:I don't know. And then did I tell you? Yeah, go ahead. Be very careful. Lots of parents, when they're teething, will put that stuff on their gums because it works like wonders. But you really want to avoid that if you can. I'm not a doctor. I don't play one on TV. But there's some homeopathic things. But that's like— We're all into the homeopathic. Okay. You would approve. Don't worry. Good. If the brand is called Earthly, I think we're good. There you go. We're all about it. Well, so I hope she gets some teeth soon so you can sleep because we need you, you know, at full capacity. Tip-top shape.

54:16Mike Webster:Yeah. I hope so, too. And also, did I tell you we got her a little kiddie pool? No. So maybe that's something else that you missed. So she loves the water. She loves drinking water, putting her hands in water. She loves baths, loves everything about water. So we got her a little pool for the backyard. and she just had the time of her life. She sat up independently for the longest streak ever. She just, and she didn't want to get out. She wanted me to hold her. But then when I held her, she turned back and kept wanting to play in the water. So a little water baby. How does she do with her face in the water?

54:53Is she fine with that?

54:55Mike Webster:I have avoided putting her face in the water thus far. Okay. Yeah. I'm scared of the ear infections without her being able to verbalize. Oh, yeah. You know, so. That's a good point. I did teach kids how to swim. And so, and adults how to swim. And so it is a very, you know, it's so much fun seeing them be able to, once you can teach her how to float on her back when that day comes, that's like a water safety thing. That's huge for kids to learn how to float. Yeah, this was like two inches of water. But my parents do have a pool. But, yeah, did you learn for teaching kids the chicken airplane soldier method?

55:44Mike Webster:That's what we taught. Chicken airplane soldier. That's how you teach kids how to swim on their path. We had varying things on that. I'm old, Allie, so we were like horse bugging and whip type of thing. All good. Well, yeah. So that's what we're up to. It's going to be going to be a fun summer with little Chloe. Oh, great. Oh, speaking of the summer, I almost forgot. June 28th, Allie is flying out with Chloe. I wish. No, maybe next year. Next year. June 28th in Hermosa Beach at the statue at the beginning of the pier, 8 a.m. We're doing a Webby Walk, West Coast Webby Walk, our first one. So many cool people are going to be there.

56:32Charles Harris is going to be there. Justin is going to be there. Scott Sinclair is going to be there. I think Dave Hatman is going to be there. And Alexis is going to be there. I think Rachel is going to be there. Hopefully even more folks from work. And then from my podcast, Mike Ash, the gentleman who was a quadriplegic and can now walk, He is actually working with his PT folks to try to be able to do that hour-long walk. I told him, just go there. Everyone would be happy to just see you. So come out June 28th. It would be a lot of fun just getting it. My folks are coming. So it would be, you know, you could tell them, say, what did you do wrong?

57:20How did you end up with this deadhead as a son? So I'm really looking forward to it.

57:27Mike Webster:Yeah, I know. I'm having such FOMO. Such FOMO. Well, it'll be what it'll be is it'll be a really great reunion when I'm able to reunite with all the team down the road. It'll be a great time. Yeah, yeah. But you guys have y 'all all have fun. All y 'all have fun on the Webby Walk. Join Webby. Alright, good stuff. Well, thank you so much Webby. That is it from us for this week, but we will be back with more Monday morning on IABD Live as always, investors.com slash IABD Live for all the details on that. We'll see you there. And then we'll also see you Monday after the close. And Webby and I will be back on IABD Live on Wednesday together and then back on this show next Friday.

58:21Mike Webster:See you then.

58:56Mike Webster:Transcription by CastingWords and finance. I'm Telus Demos. And I'm Miriam Gottfried. We break down the big trades and speak with the key players. I'm very focused on making sure that we can get inflation back to target. Let us help you start your week. With WSJ's take on the week, subscribe wherever you listen to podcasts.