Long Overdue Break Of Key Level; Meta, DoorDash, Urban Outfitters In Focus

26:15Mike Webster:Yeah. Okay. I think we're getting close here to moving on. Consumer staples up on the day. So it tells you a little bit about the market tone here. But overall, this is not an area that growth investors are focusing on. So one day of outperformance, I think we're not seeing a meaningful sector rotation into this safety area at the moment just yet, Webby. Agree. XLV. Healthcare continues to lag pretty badly, and we're now at the end of our list. Anything else to comment on before we go to our individual stocks? I think you did a great job, as you always do. Okay. Well, thank you for the assist there, as always.

27:11Mike Webster:Savvy investors understand consistent growth is built on scale, resilience, and trust. For more than 60 years, Medline has proven this, driven by an unrelenting commitment to their customers. Today, Medline is proudly NASDAQ-listed and is the largest provider of medical, surgical products and supply chain solutions serving all points of care. With a focus on what healthcare needs next, Medline strives to make healthcare run better. See how Medline is woven throughout healthcare and learn more at Medline.com. Meta, let's take a look at the day two earnings reaction. We know on Thursday, its first regular session after the report, a very impressive gap up, Webby, up in the double digits percentage wise, 11%.

27:56Mike Webster:The report was very compelling. We had some nice acceleration on both the top and bottom lines. So this was a great signal for the AI ecosystem. But even a strong earnings gap can't always hold up when you get broad market weakness like what we saw today. So what are you seeing here currently for Meta? What should traders be watching for? Well, I'm looking for an upside reversal, you know because this is one that I want to uh get into I did try it midday yesterday um because yeah I think it's one of the best things out there but then when it started fading again and the market was a drag on us I'll just wait for a better entry point so I think the best entry point would be an upside reversal meaning you know if it maybe took out 7 30 and then turned it back up or that would be a nice entry.

28:56Or if that doesn't happen, yeah, it's kind of, it needs to give me something to trade against, meaning I don't want it, my stop to be just random seven to 8 % because that just doesn't make sense to me. I want it to be somewhere on the chart where it shouldn't come down to. And really right now, the only thing it shouldn't come down to would be 700. And that's too far away in percentage terms. So I want it to come down and then kind of stabilize. And even if it's not a classic upside reversal, because I think this is an A-caliber company and you've got the earnings behind you, this is what I'm itching to get into and probably get into it in a big way.

29:44And I always keep my Peter Lynch hat on. And I'm for the first time in six, seven years thinking about going back and opening up a Facebook and Instagram account. So I don't think I'm the only one, you know, doing that. And plus, they have their whole AI thing. And, you know, it's everyone else is on there. But yeah, I think this is also good for the market that it's holding up there, even though it was down a lot. It's not a broken chart. It was just doing what you would expect it to do after that big gap up that we had yesterday. Yeah.

30:23Mike Webster:I mean, beyond the social media aspect and adding AI to its advertising capabilities, Meta is investing very heavily in the entire artificial intelligence revolution, poaching big name hires from other tech giants. So, you know, trying to be really aggressive here with the AI rollout and, you know, boosting their CapEx guidance as well. So we'll keep an eye out for that entry. And I will say, I always poke fun of Zuck, you know, because he likes to listen in on my phone, which you need to stop doing, Zuck. But that guy is really smart at seeing the future. And you saw that early on when, you know, with the WhatsApp and the Instagram purchases and, And, you know, and he was, you know, trying with the goggle thing for a while.

31:17And, you know, like he really sees the future. I think he's very much like, you know, like with Amazon and Bezos of kind of looking forward years, if not decades, and trying to ride that wave. And he doesn't always get it exactly right, but I think he certainly has a lot of incentive based on the way he's structured his shares there to keep doing the right thing for his shareholders, including himself.

31:49Mike Webster:All right. Next on our list, let's check out DoorDash, another stock that had a nice close on the day. So not like Meta, but we were talking about some of the AI utility type names that had some really nice closing ranges today. Dash closed down less than 1 % and it has earnings coming up Next week, the chart is looking pretty good here headed into that report. Yeah, if it wasn't for the earnings, I would have been buying this yesterday and probably sitting through it today because that looks so good and it's disconnected from the rest of the market. And you can tell that by it was up yesterday with the downside reversal on the market.

32:34And it wasn't up today, but it closed, you know, just down fractionally and got support at the 21 day closing in the upper half. Like that is so tight. You know, that little base, the little shelf that it's forming there is so tight for what I would classify as heat. Now, I don't use DoorDash. I know you use it and you like it. So that's my Peter Lynch hat of hearing people who use it and are happy with it. And that's an important part of picking stocks. It's not just the chart. It's what does the company do and are they real? And I think there is probably some fear early on that Waymo and Tesla's full, you know, like what they were doing with the robo taxi was going to be hurting this.

33:22But I think we all realize that it's a long way away. And so they still have, you know, room to go with this. So I think it looks great. But, you know, just pull up that Amazon chart again. For example, like this, this was a mild reaction to earnings. I can't think off the top of my head some of the other ones. But when I was going through some old watch lists earlier today, there were a lot of things that got really hit on earnings. So even a stock that wasn't giving you a warning sign, because Amazon didn't have a warning sign, that could happen with Dash as well. So I'm not going to step in front of that freight train, but it looks really good to me.

34:00And if it breaks out the way Meta did, then I'll just be looking for an entry, might even buy it on the Gap.

34:08Mike Webster:Yeah, I think this is a good one to watch for next week. Fundamentals are compelling here. I'm a big fan of the story. I think a lot of millennials, you know, we're getting old now, too, but are using this. I anecdotally, Kelly Evans over on CNBC, she's she's about to have a baby. She was she's all over Instagram talking about how, you know, I really don't want to meal prep. I think I'm just going to DoorDash for a couple of weeks. So I think culturally people are relying more and more on the DoorDash services, whether it's for meals or groceries. or sending flowers to loved ones. It's come in clutch, I will say.

34:54And speaking of Kelly, I did meet her once. And when I went to the New York Stock Exchange, she was very kind. And I'm sure she does not remember me because it was just a handshake. But I always appreciate people being kind.

35:07Mike Webster:Absolutely. Okay, we've got one more stock to look at. Then we're going to pivot to Webby's charts. and that is Urban Outfitters. A really nice looking upside reversal at the 21 day today. Yeah, I almost bought this today, but it was, in fact, we almost put it on Swing Trader, but just because we've got earnings a ways away, 25 days, so you got enough time there. Nice upside reversal. Part of me is regretting not doing it. Frankly, it looks good, but I was just, the weather outside was frightful, So I decided to, you know, not do it. But nice little downtrend over the last four or five days. If it can go above that, you know, this is high up on my list.

35:53For a few reasons, you had your breakout from the last base. You went up 24 % within a short period of time. That's a positive. And then what's the depth of that base is only 14%. What was the consolidation before that? So 32%. So that's what you like to see. tighter basis on top of each other and power and really respecting that 50-day. So I think it has a lot of things going for it. And it's not a name that people really talk about. And you've had really good trades in this space. What was ANF, right? That was your biggie a couple of years ago or last year?

36:36Mike Webster:It was. It was. It was in that 2023, early 2024 period. Yeah. And then Ralph Lauren had been looking good recently and you had the old coach, whatever that TPR or something like that. So you had a lot of things in this general space that have been looking good. So that's what you want as well. You don't want the one hit wonder or you don't want the one stock in a sector that's doing well. You'd rather have it a relatively strong sector. So you have that tailwind. So I I think it looks really good. Yeah. And just really quickly before we move on, one thing, earnings. We've got a couple of weeks until you get all the bulk of your retail earnings.

37:15Mike Webster:But also, when you think of Urban Outfitters, it really isn't that brand that's driving the bulk of their revenue. It's their anthropology business that's the biggest share revenue-wise and driving the most growth, at least on a same-store sales basis. So something to think about there. If thinking urban outfitters gives you a bias against it, thinking of it being for teens or college age students, which, hey, there's nothing wrong with that either. I'm too old to be going into an anthropology store. They'd be like, I'm sorry, could I see your IT? You are way too old. You can't be in there. I think anthropology is more for your Gen X than your millennials.

38:03Really? Yeah. Maybe not dudes. Okay. I'll go in there and see if they kick me out.

38:10Mike Webster:All right. Webby, are you ready to take over your screens? And then we'll come back to Market Surge and look at those historical dates. I hope this is going well. I've been having PC problems. I'll let you know. Let's see. We'll cross our fingers. Can you see? It looks good. Bi-weekly. Okay. Doing the Bob Weir Take a Step Back and Happy Birthday. to Jerry, wherever you are. So let's see here. We've got our weekly candles on here. And this is the time we like to kind of just step back from, you know, lots of times we're looking at interday and daily charts. And we'd like to look at the weekly candles to see what it's telling you.

38:52Is it a broken chart or not? And this is not a broken chart. It's just a, you know, it's a bad candle. It's not a horrible candle. We've seen horrible candles, you know, over the last year, But this is a bad candle and those happen and those kind of refresh things. So at least from this, you're not expecting it to move up next week. But seeing an inside week next week also could be a base case because when you have these kind of wide spreads, sometimes when the market is really firm, it'll just trade within that range for a little bit. And that would be something to look for. But, you know, I really think we're going to have an upside reversal, which would mean that we'd have to take out this week's low.

39:36Now we'll move over to the composite. Same thing there. This candle looks a little bit worse than the last one because your wick at the top isn't as, you know, just looks worse than the last one. So it kind of tells you maybe it wants to come into that 20 ,000 just looking at this alone. And that's why we're kind of putting this mosaic together. So we will go over to our next set of charts. And this is going to be a little bit different. Yeah, updated. So we're going to start with SPY. And this is going to look a little different than most people would have thought I would do the regression. So typically when you have an intermediate, like a short pullback or a mild intermediate correction, I'll start my first point down at the lows.

40:26When you have a bear market like we had here or a really deep intermediate correction, I'll wait for the follow through day, which was here on the 422. And that's initially I was using that as my first anchor point. Just so if you've never seen these before, this is just a regression. There's a line of best fit through through the data set. And what I like to do is do it over a 50 day window to kind of see what that trend is. And with looking at this, it really just broke out of this basing structure that you could call a cup with handle. You could call it a double bottom. Regardless, there was a serious character change here on 512.

41:07So that's one anchor point. Then we go out 50 trading days from there. So it puts it at 520 or not 527. What month are we in? I don't know. What year are we in? I did. I'm not even kidding. I asked my daughter that two days ago. I said, I thought, what month? Where am I? I'm getting old. I wish I was kidding. And so I think I have this off by day. It's supposed to be 723 is where that is supposed to end, but I was having some issues. But essentially what we're looking at is we've come down into the minus one standard deviation from that line a best fit. What does that mean? This means that we've got this white line that is our general trend and it wants to hug that.

41:57And you can see how it did that. Then when it goes above into the red areas, that's when it's getting a little bit too hot and you want to take your foot off the accelerator, maybe tap on the brakes. When it comes down into this area, you're acting defensively as it comes in, but if it can make it back above this negative 0.75 standard deviation that is essentially near the highs of today's trading, that's where you want to gun it because then you have something to trade against. So let's say we don't get that upside reversal that we're hoping for next week, that we just have some positive news over the weekend and we start moving back up, if it takes out today's high, then I'm going to be gunning it using today's low as my stop.

42:51Yeah.

42:51Mike Webster:There's a reason why that lower regression channel line or both of those are green. There's a reason for that. There's a reason for everything I do. It's not always clear. It's not always clear, but there's a lot of thought put into it. I just don't explain it well. that's why you are here to help me. So the same thing on the NASA composite and we're in the same basic area. So you don't necessarily have to get all the way to today's high before you gun it. But then again, and you want to keep in mind, if you're doing it this way, your expectation is that it quickly moves back up to the white line.

43:30And typically when it moves back up to the white line as it did over here, because this was kind of textbook, moves up to the white line and overshoots it. So that's what you want to be able to participate in, but you also want to have your exit. So I lean heavily on these. And I was just going to say, you were pointing out

43:50Mike Webster:the late June timeframe for our Spotify listeners, just so we can paint the picture for them. Yes, I'll paint that masterpiece. So we will move on. One person got my joke. I know you didn't. It's okay. So now we're doing the 50 % retracements and there's lots of ways of slicing this. So let's start off first with the basic way of your absolute low back in April and then our highs this week. And where is that midpoint, which is a mile below us 560. So it's just telling us we're still trading in the Northern hemisphere, which is a good thing. So, you know, you look at this and say, okay, well, that's normal and natural.

44:27We're still well up in the top part. We're going to do the same thing with the nasa composite 18 ,000 115 for your spotify listeners is the midpoint there and that is again a country mile below us so what i decided to do is put this on the queues and just going to let's go to intraday time frame and here's a 30 minute chart using our high from yesterday and our low from today, that puts the midpoint at 563 and change. So that's where we want to get to on the queues and trade above that. And you can do this for the, you know, you can do this for SPY, you can do it for NASDAQ, you can do just about anything that had a big, you know, downside reversal yesterday, and then had a weak action today, your stocks, indices and just look at that and just say it's still weak until it can get above that midpoint and trade above it.

45:26This isn't a precise thing like a pivot where it gets at 563 and change and you gun it. You want it to live up in that area. So now we'll move on to the levels. This one is tricky because there were really a million levels on here and I did that at first and it just was too busy. So I just wanted to kind of have some basic ones on here. So from this standpoint, we really want to get, this is SPY, you want to get over that 628.34, but that's not the perfect level, but basically the mid-July highs there. And then your next level really would be the lows from July 16th, but I didn't mark that there.

46:09So the next level that I marked was 605.06. which was your high there from June 11th. So there's lots of other places that you can mark. And the concept of doing these levels is just reacting to them. So this is more for a position trader because a swing trader would have already taken a lot of action. But position trading, meaning you're holding things for weeks to months or years, that then you can let it have a little bit more damage before you start taking real action. So down here at the 590, 93, which is your low from looks like 623. That's a key level. And then one of the last lines in the sand would be the 575, 60.

46:56Let's toggle over to the NASDAQ and look at the same basic thing. um so the first level on here i marked was um that i left on was the it looks like the july first low or thereabouts of the 20 ,105 which all and i left this one on there because it coincides with your 50 day which is that red line then we've got the lows here um from june 23rd the 19 ,334 you know that would be well underneath your 50 days so we don't want to see that like I should have put that really in a red dashed line. And then your last one down here from that gap up on 512 to 18 ,472. And we'll just toggle over to my most basic way of looking at it because we've done a lot of jargon stuff.

47:45What do you see here, Ellie?

47:47Mike Webster:This is my favorite. I love the keep it simple chart 21 day only. First close below that level in a while. So something to pay attention to. exactly and then we will look at the composite there and the same thing so i'm going to stop sharing there and we will toggle over to if i can get there um let's see you make this stuff look so easy everyone doesn't realize what a great job you do it all the behind the scenes stuff you're doing great you're doing great well let's look at the my favorite indicator created by some random dude out in Austin. And this is the Webby RSI. And what we're looking at down here is the histogram of what we were just looking at.

48:38And this is just measuring your low versus your 21 day when it's in that teal color. And you can't tell, but there's nothing there today because it has gone away because our low is now below it. So we don't have a histogram there. Now, Now, if our high gets underneath it, that's when you start getting this kind of, you know, orangish histogram and that measures things in a completely different way. And it's more of like, you know, for lack of a better word, kind of oversold type of way of looking at things. So this is normal. You know, you don't get that wall of blue for forever, but we want to see that pop back sooner rather than later in next week or the week after that would be ideal, meaning our low gets back above that 21-day.

49:28Let's look at the NASDAQ. And similar thing here where it's just gone away and there's a lot of other things that we could talk about on here, but we don't have all day. So let's move over to the Bob Marley indicator. We'll start off with SPY. This is, oops, that didn't work. This is measuring your, how many ATRs, average true ranges you are off of your highs. And I actually use the low of the trading day for this. And this is telling you that you're still in the green area, but you're coming down quickly. and just above four ATRs on there. Once you start getting into a time where you're more than four, that's not a good thing.

50:18But more importantly than just kind of arbitrary levels of four and eight ATRs is how has it been trading in the past? And in the past, this has kind of stopped right kind of at this level back in late May. It was pretty much at this level and didn't get worse. So that helps us with character changes there. And let's look at the NASDAQ. And somewhat similar there, almost four off there. And let's look at the broader-based RSP. And that's already getting into your yellow area. But then again, this one wasn't as strong as the ones before. So that's, again, why you want to look at the context of the chart, not just the level itself.

51:10Mike Webster:Boom. All right. That was pretty fast, man. It was. So as promised on IABD Live this morning, we said we would take a look at some historical precedence for when you do get, you have a similar situation. Why don't you tee this up for us? We're looking at past power trends and closes below the 21-day line. Also, I want to bring back that factor that I I sort of teased at the beginning with the length of time, right? That's also a consideration in terms of studying historical moments. Yeah, time is a key element. And we learned that from Jesse Livermore in his book back in the 1940 timeframe of the time element.

51:55It's not just price, it's price and time. And so when we had our downside reversal, our first one earlier in the week, I reached out to Justin and say, hey, let's take a look at all the times where our low had been above the 21 day for an extended period of time. And then I said, you know what, why don't we do this? We're all used to looking at things from a 1 to 99 rating, because that's how, you know, Bill liked to do things. And that's how I like to do things to kind of put things in context. So I said, let's look at the data set of the full NASDAQ history of the low versus the 21 day. And sometimes you just get above it for one day, and then sometimes you get above it for a long period of time.

52:35And let's see where we're at at that point versus things historically. And we were in the 98th to 99th percentile. So that was also telling me, okay, yes, I think when we were doing this, we were at 60. I think we ended up at like 63 days, give or take, that our low is above the 21 day. And our extreme, I believe, was 109 days. So there weren't many that were above this. It was 109 days. I'll just say the dates. So folks, jot this down or go back and listen to this again. I'll give you the dates as well as the number of days. So September 26, 1980, that was your longest one at 109 days. 12, 13, 1982, 80 days.

53:31Then 2, 8, 93, 79 days. 8, 12, 1997, 73 days. And we're going to look at a few of these in a minute. 6, 1978, 72 days. 4, 25, 91, 69 days. then you get underneath this, which was January 12th, 99 at 60 days, August 1st, 23 at 60 days. And then when we ran this on July 28th of this year, it was 60 days at that point. So those are the only times that they were longer. And when the two of us started looking at those, we're like, wow, when they come in and we're going to look at some of those in a few minutes, there was kind of a character change. So when I saw that and I knew where we were, And that's why we like to use precedent analysis.

54:21Sure, we could have gone to 109 days, but we were really pushing it. So you can't stay above the 21 day for a million days. You know, they have to come down and test it. You know, that's a sad truth. So that kind of was helping me to get more defensive, even though we're still in a power trend. So do you have anything to add to that before we look at a few?

54:44Mike Webster:No, I think that's a really great setup. So let's start looking at some of these. So we're going to go to the 80s. So you mentioned this timeframe. The first date we're going to punch up is 9-29-1980. Look at this power trend and character change. Yeah, so that was the longest one. And we do have some issues with some of our historical data that we're working on cleaning up. So you're going to have to forgive us on that. But just get the general gist of what's going on. You're above it for a long time. And look at that. You had that serious correction before. This is a very similar setup. So from 165 and change down to 124, straight down pretty much, and then coming back straight up.

55:30So this is as close of a precedent as what we have for our market that I've seen. And you just inched up. And just imagine everyone every day, I'm waiting for the pullback. I'm waiting for the pullback. Things are too extended and all this nonsense rather than just looking at the chart and not fighting it. But then at the end, it accelerated, you know, kind of climactic type of action that reminds me of like when the VIX blew up in what was it? I think it was early 2018 or 2019. It's all blending together a little bit. I think 2018. 2018, okay.

56:06Mike Webster:I think that sounds right. That sounds right. So you have that little thing where it goes a little bit faster than normal. So you want to ride that until it rolls. So then it rolled. And as it was starting to roll, it was meeting what your expectations would have been, just like what we had today. It's like, that's normal and natural. So let's see what ends up happening after this with the next date that we have. Yeah, the next date is 2-2-1981. one. Okay. And so, cause the scaling looks different. Okay. Yeah. Thanks for pointing that out. So that's where we were and notice how, and you'll see this on pretty much all of these examples and why you really want to go back and, and re-listen to the dates that I said and go and do this homework, really go day by day.

56:53That's going to be your, you know, go into market surge, do a change date one day at a time, ask yourself how you would trade it. So that came down and And then without really any warning, without an upside reversal, it just started moving back up. But it looked different. It wasn't ever trending above the 21-day in a nice way. So this tells you that what we were doing prior to us breaking through the 21-day, we were kind of leaning heavy on ETFs and less on individual stocks. Now, this would be more of a time where you're going to want to do the reverse. lean on individual stocks and less on ETFs.

57:34Doesn't mean you exclude one completely, but where do you lean if this is one of our potentials? And there's still money to be made in there, but it's much harder. So the reality is if this is what's going to happen, you want to be involved in that market, but you're always going to have one foot out the door because it just is not the the same animal. So we can go to the next one.

57:59Mike Webster:I was just going to quickly say it also seems key Webby to be paying attention to those downside reversals off highs, the closes below the 21 day and, you know, the times that you retake that area or find support roughly around that 50 day line to, you know, catch, catch some moves. 100%. And I totally agree with that. And that's why, you know, as part of the market school rules that I developed with Chuck and Justin, downside reversal is one of those signals because we just sat for forever and just went through the NASDAQ day by day and looked for signals like that. And those downside reversals, do they always work?

58:39No, but they are very helpful to tell you what to expect. Yes.

58:45Mike Webster:Okay, moving on. Let's go to 12-15-1982. two. Okie dokie. So some bad data on there, but still you get the feel of this market that has moved up and it had been in bearish phase underneath the 200-day and then came back up. So similar type of setup, not as ideal as the last one we looked at, but above it for a long period of time. And then when it starts coming down, you kind of expect that. So that last day, that down 2.44, this kind of looks in line with what we had today. It was normal and natural because you had been expecting that and you had an attempted the day before bounce off the 21 day that ended up failing.

59:32So if you were trading during that, you would have wanted to back away if you were swing trading or being very active. So let's go out and see how this played out.

59:40Mike Webster:Yep, to 7-28-19-83. Okay, so yeah, thanks for pointing to that. So this one is very encouraging that once you regained and then your lows started getting back above your 21-day, you did have a lot more progress and easier moves where, and I think of an easier move is when your low is above your 21-day for a long period of time. So think in terms of a Webby RSI, you would have a big wall of teal or blue underneath there for a long period of time that tells you, hey, yes, you might be scared, but keep that gas on until it gives you a reason not to. And up at that top, that top day, that 329.11, it's following your expectations, right?

1:00:29And that's kind of like what my normal base case is, is two and a half days of selling, you have that little mini upside reversal and then bounce up. So I would be getting aggressive there. But then if you put on a 50 % retracement there, it's living in the lower hemisphere. So while you're gassing it right away because you don't know what's going to happen, when it can't move into the upper hemisphere, you're backing off of that gas. So as you're going through and studying these, think of all the tools in your toolbox, the Webby tools, the Alley tools, the Bill tools, your tools, whatever. Look at it through those lenses and try to transport yourself into, in this case, 1983.

1:01:15three.

1:01:16Mike Webster:Yes. Best song of that year? I can't think off the top of my head, but I was just thinking like four years before one of the best albums of all time was released. Oh, okay. All right. And you know what that is. Of course. Now what is it? Well, Appetite. You've got an appetite for destruction. Guns and Roses. I'm sorry. Okay. Let's move forward. All right. Let's go to - Stop slowing us down, Allie. I know. I'm slowing us down. 8-15-19-97. Okay. So with this one, again, you were underneath your 200 days. So we're seeing a theme here. And then you come back above it and you're trading nicely. You know, above it, you have that downside reversal at your peak.

1:02:02You come down to your 21-day, try to get support and it can't hold. and then, you know, it's not as much of a warning there and it's selling off. And you can tell, we don't have to go there, but you can tell by that RS line how much stronger this is than the S &P. Ah, let's just pull up the S &P, see what that's doing. Because I didn't look at that earlier, but yeah.

1:02:26Mike Webster:So it was breaking the 50 day when the NASDAQ was breaking the 21 day. Yeah, so then that was telling you how much stronger that one was. And for those people who are hardcore, I would play that three-dimensional chess when you're doing it. Look at the, this is, all these dates are based on the NASIC, but also look at, you know, you can look at the New York composite, the S &P, whatever you want during that same timeframe. Let's go out and see how this played out. Okay. We're going to 10-28-1997. Okay. And if you could point to where, yeah. So again, you had this nice upside reversal. You gas it heavy there with that as your stop.

1:03:05And then it's a bit tricky. It's a little bit of a different animal for a few weeks. Then you start trending back above it. And then as our good friend Scott Sinclair would say, rinse and repeat. You come back through your 21 day and you have to start backing away. Now, you didn't know that it was going to just fall apart the way that did. I mean, that is a big, that's real data there of how bad that came down. I mean, that's some serious damage. And so you want to go and study and think in terms of you're a position trader going, God, they're really looking at all the noise and the wiggles and wobbles.

1:03:39Why would I want to pay attention? Well, this is an example of why you'd want to pay attention. I mean, that's some bad action. And a 50-day then could be your guardrail if you don't like the 21-day as much. And that's fine. Pick what works for you.

1:03:54Mike Webster:Yeah. But this is why you take action. Pick a level, whether it's the 21, the 50, both to take some action. because or even a five five day on the other extreme you know we've got a good friend brian shannon who leans heavily on the five-day simple and there's nothing wrong with that so you just find what works for you okay let's go to the 1999 time frame we're going to 113 1999 1999 great album by prince not as good as purple rain but it was up there so here you have that move. Wouldn't you agree? Yes, wholeheartedly. Okay. So you have this nice trend above it and look again back underneath your 20 or back underneath your 200 day at the very beginning of it.

1:04:42So it's kind of not as surprising that you get these trends up because everyone's off size. They got too short or they got too light and then they're chasing it up and then you finally come up. And this was just a test of the interday test of the 21 day, but it did hit it there. That 1766.27, that's bad data, didn't come down to the 21 day that day. So let's go out to the next date. Our next date is 323.99. Okay. So this was odd, right? This was your outlier that it just kind of traded differently here. It's just, so this was our unique, and that's why you want to look at all the examples. It's just different.

1:05:35It's your, let's go out. I didn't give you a date, but let's just go out to September or October of that year. 99 was a tricky year. It really was just how choppy it was. It's just no matter how you slice it, looking at the averages, That was much more of a stock picking market than it was trading. Like if you were trading the Qs or Spies during that time frame, you'd frankly have a very hard time trading it. You're better off trading individual stocks. And again, that's what I think we're going to be in for in the next little bit.

1:06:07Mike Webster:Yeah. So Qualcomm, an example, I just punched up. Qualcomm. Oh, my gosh. That was a stock that Bill made more dollars on than I think any other stock in history. And that was such a beautiful move. I would suggest people go and study this day by day through this move. You will learn so much from it. There's probably few stocks that, not too many stocks that you can learn as much from as Qualcomm in 99. Yeah, this one and Taser. I know Taser. Taser. You love that. I love that one. You love that model book move. But yeah, perhaps this in conjunction with looking at the NASDAQ day by day, what the index is telling you and then what the stock is telling you.

1:06:52Exactly. Another one that was big during that time was JDSU, which is VIAV. Another powerful move. and um you know that one was a little bit of a different type of animal and it was more it was sticking more towards its you know its 50 day for a while just kind of like going up and and you can just go through a ton of names during um the 99s that is we're studying now yeah okay

1:07:21Mike Webster:so one more period that we want to look at and that's just from a couple of years ago so we're going to go to 8-2 of 2023. Okay. So again, recovery from being underneath the 200-day, and that was a really tricky time for all sorts of reasons. And you're moving up and you're trading above your 21-day, but not as nicely as some of the other ones. But then you finally break it and you need to kind of shift gears. So let's look out to the next date. Okay. And then the next State is 11, 14, 23. Yeah. So this was, again, one of the unique times where then you were in that classic three waves down like we had back in March of 2003.

1:08:12And then you were off to the races after that. I mean, it was a really, really powerful move. I know you did a great job with your TQQ position during that. And if we see something like that, like this is why we wanted to show this example as well, because this is the one that doesn't come back right away. That's a long time. And if you're position trading and saying, oh, this is just noise, study how your stocks would have done during that time frame. And it doesn't mean you have to go to cash, but you need to adjust.

1:08:46Mike Webster:Okay. Some great examples. So let's wrap everything up here, Webby. In closing, and I also do, before you give us your sort of closing battle plan, look ahead with everything with the mosaic, the picture that we just painted for everyone. I do want to give a heads up for earnings coming up next week. We've got more big reports. We did preview DoorDash as a watch list stock headed into earnings next week. But other big names include Palantir, which I own. I know you owned it. I do too. Okay, so you currently own that. we've also got amd shopify i've got a little bit of that one as well uh a lab smci anet fortnet mercato libre gilead axon disney and caterpillar yeah i still have some of the the a lab all my positions are much smaller now but um yeah so it's going to be a busy week so when you're in earning season you want to always know is your stock reporting and then you don't want to be like, oh, my stock reported today, it's up 10 % or it's down to 10%.

1:09:54Don't be caught off guard and just know ahead of time, if you want to just exit that position because you don't want that risk, there's nothing wrong with that. You can always buy it back.

1:10:04Mike Webster:Yeah. Okay. So now as we have that preparation in mind, let's also talk about what to expect for the week ahead from the index level. You did mention earlier, be on the lookout for a potential upside reversal. But we also just looked at a bunch of these historical precedents of different scenarios that could play out once you do get that first close below the 21 day after an extended power trend period where you're above that. Yeah. So the first thing to do is have an open mind that anything can happen. And that's important going into any weekend. study your your uh how i would do things is from the biggest priority look at your holdings because that's where you actually have money at risk make sure you have a game plan for yourself on each one and you don't it doesn't have to be all or none you know let's say you have 100 shares of something you can say okay i'm going to sell 10 shares of it here another 10 here another 10 here there's nothing wrong with having 10 different stops if that's too much for you five different stops you can just put those in, go to cancel, leave those in there and just let it, you know, if it hits it, it hits it.

1:11:17That's one way of doing it. Or you can, some people don't like those stops and like to, you know, because if you get a big gap down, it goes through all your stops and turns back up. That bothers some people. That bothers everyone, you know, but I will still put the stops in there. So that's the first thing. Rate all of those stocks and then email that to yourself. So you have a record of what you were thinking. So let's say you've got a massive position into some stock going into earnings and you're only up 2 % on it. Just write that down and say, I'm willing to take this risk because, because.

1:11:52And then as Bill would always say, one way or another, you're going to learn something, right? And so have a record of it. It helps for your post analysis. Then just look at the market and say, what are the key levels? So for me, I would love an upside reversal. It doesn't mean I'm going to get it. But what you are going to get if the market comes back is you're going to get your low above the 21 day one way or another. That will will happen. So that is my fail safe. If I don't get a perfect entry, if once that low gets above the 21 day, I need to stop. You know, I need to start putting that foot on on the gas pedal again.

1:12:31Again, and so just also study these historical things. If you study them with an open mind, being intellectually honest, don't look at it afterwards and go, okay, it went way back up, so now I'm going to be bullish. Just pretend like you don't know what had happened and you will learn so much. Please, please do that. But for screening, this is a critical time to screen. Look for stocks that showed relative strength. By that, I mean they closed in the upper part of the range today. They were down less than the market. So if the market's down 1 % and your stock is down 0.9%, that's showing a little bit of relative strength.

1:13:09If it's only down 0.1 in that same case, showing a lot of relative strength. If it's up 1%, then it's showing a ton of relative strength. So I would also use your weekly charts, a closing range of 40 % or higher. You can do all of this in market surge. We make it very easy. So a closing range of 40 % or higher on the weekly, 75 % or higher on your daily, still above your 50-day, your 200-day, decent liquidity. So either$25 million volume or$75 million volume are the two key levels that I like to look at. And just look at those stocks, go through each one of those and then put them into a list, especially the ones that were up today.

1:13:52You know, and if it is high closing range and up today, those are telling you they're disconnected from the rest of the market. And even if the market goes down, those might buck the trend. And I could keep going on and on, but I know that we don't have the time.

1:14:09Mike Webster:I know. Do you have a song for the week? I don't. I was relying on you for that. Okay. So I have a few for you. Okay, great. So you brought a couple. Good. And really just kind of an excuse for two things. One, again, for Jerry Garcia's Heavenly Birthday would be the one song that non-deadheads probably know is A Touch of Grey. Because we will, you know, we will survive this. And then the other thing, because we have lots of changes going on and kind of just thinking about Ozzy and Ozzy's passing. And, of course, we've got changes, which from his Black Sabbath days. So just rest in peace, Ozzy, and all the best to his family and all the fans out there.

1:14:57It was a big loss that we suffered. and so but I'm so happy that he did that concert on July 5th 190 million dollars given to charity like what a great way to go out so you know be kind and do something kind like that like Ozzy left us with it was a wonderful thing good stuff Webby we had a lot to talk about this week so we

1:15:23Mike Webster:did go a little long but I think it was worth it so thank you so much for all of your expertise that you share with us on this show. We really appreciate it. And thanks everyone for tuning in. That is it from us for this week, but we will be back with more Monday morning on IBDLive, investors.com slash IBDLive for all the details on our daily morning live stream starting 10 minutes before the opening bell. We'll see you there. And then we'll also see you right back here on Monday after the close, everyone. Thank you.

1:16:29Mike Webster:by MassMutual's 175-year legacy. Learn more at MassMutual.com.