Mixed Market To Start The New Year; Reddit, RTX, Comfort Systems In Focus

30:12But the fact that you happen to have a lot of white space with that RS line and its moving averages, that kind of brings it back down. So it's kind of like a B caliber. Let's go down to the quarterly numbers and see what we can pick up there. Well, the sales growth is kind of all over the place. You've got a 49 % in there. You've got some single digits. So that's a mark against it. But you do have some general acceleration 5, 9, 12 on there. So it's starting to ramp back up, but not in a material way. I mean, 12 is pathetic. Let's just be honest. And then the same thing on the earnings. Yes, it's accelerating from 10 to 17, but that's kind of pathetic as well.

30:55So it's a B minus caliber base off of that. But let's go up to the annual numbers. And you always just want to be objective about it, even if you're trading something. What Bill would want to see is at least three years of increasing annual numbers, which is what we have. It went from$2.73 to$4.27 and kept increasing each year. Not in a material way, but it did increase. and then with some estimates that are okay, is high single digits. So the more I look at this from a fundamental standpoint, it's more of a C plus, B minus. Let's go to the monthly, see if there's anything there. Well, I will say one thing to kind of add is that the earning stability of 10, remember one to 99 is the way this rating goes with one being the most stable, 99 being the most volatile.

31:5010 is not bad. I mean, again, a little anemic in terms of 16%, not the blockbuster type of earnings growth that we like to see from the major winners. But again, 16 % is absolutely respectable, especially with that kind of stability. And you kind of see that reflected here in the earnings line. But yeah, let's go ahead and take a look at the monthly. And that's such a good point that you mentioned. And it also kind of goes to the stability of the stock. If the earnings are stable or the sales are stable, margins are stable, the people who trade with more of a fundamental bent than we do, they're going to be in there supporting the stock and it's not going to be all over the place.

32:30It's the story stocks that have the huge ATRs because there's really no true fundamentals there supporting it, just stories. And there's nothing wrong with that. So this one, it's just a different animal. This one on the monthly looks good because you've got daylight between the RS line and its moving averages there. So I like that. So that puts it from a C plus to a B minus. In each thing that I look at, I'm always changing that rating. Let's go to the daily and see what we can see there. And we won't go this slow on the other ones, but we talk about this on IBD Live in the morning all the time.

33:10You know, go into it this way. So from here, you have the constructive base. How deep is that base? Let's see, a flat base at just 8%. Yeah, I mean, Ben, a lot of the stocks we look at trade more than 8 % up and down in a day. So this is making me feel more comfortable. And then what's nice about it is you have an exit. But with today kind of a pseudo upside reversal support in and around the 21-day, in and around the top of the prior base, it should go up from here if it's going to act normal and natural. So I would use today's stop at least for part, if not all of my shares. Certainly use the 21-day or the 180 for the rest of it.

33:59Now, if I was trying, if I had a lower cost basis in there, I'd probably use the 50 day, which is your red line and let it wiggle and wobble. But if it hit the 50 day on Monday, that would look like a broken chart to me. So I'd want to back away. So I would just give it down to the 21 day. And that's what I like is having something where I can have a tight stop on it where I know I'm wrong. Yeah, no, absolutely makes sense. and in a similar way, another R stock here, Reddit, you know, kind of a cup with handle here. Now, one of the things that we have been mentioning is it does have this personality of sometimes getting up there and getting turned away at key spots.

34:41You know, we've seen that a few times here, but today certainly looked good with potential support right there at the 21 day moving average line, kind of breaking a downtrend here in the handle and looking strong for the day. What are your thoughts? So I have a position in it that I did buy today. I what I don't like about Reddit is I don't truly understand it because I don't use it. I pretty much only use like Twitter or that's it. You know, pretty much X, I guess it's called. So anyone in the because I do have the YouTube chat up. If you use Reddit and you like it, let me know. If you use Reddit and you don't like it, let me know.

35:23I'm just curious. But what I like about this is it's a classic pattern. It's kind of like a double bottom within a cup, which we see a lot of, where the 23097 is kind of your double bottom entry. Try to go through that and it stalled around. And then we formed this little handle. Very normal. What's really good about it, there's something that just jumps out from the chart for me from a positive standpoint and a negative standpoint. We've worked long enough together. You know what I'm looking at. What are the two days in that base that I'm looking at from a negative and a positive? Well, certainly, you know, this gap down, you know, on the negative side, you have some, you know, positives that kind of help with that.

36:10I mean, especially this upside reversal at the lows. Exactly. So the upside reversal at the lows was the key thing. So when I look at a base, I always look at how does it handle itself at the lows? Because that can tell you a lot. Was there supporting action in there? And were the shorts getting squeezed? Because just think about it. If you were someone who wanted to short, and you have to understand shorting, even if you don't short yourself, is where would you have shorted it? Well, the good way to short it would have been as it was failing at 230.97 because it was trying to go through a 50-day moving average and got turned away there.

36:52That's the place where you want to short it. But where a lot of people do short it, where Bill would say you shouldn't short it, is undercutting a prior low, like the 189.02. He would always say that was kind of the sucker area. It didn't mean he wouldn't put it on our avoid list or short some there, but you're kind of pushing it. It's like buying a stock that's extended. And when it went through there, the shorts were pushing on it, in my opinion, and it was supported that next day. So that told you a lot, that big day. And then the other day that you mentioned, the gap down on the left side, that as well as the day that it hit 230, Those were the negative ones for me.

37:39Let's look at the weekly and see if sometimes different weeks jump out, sometimes the same weeks. So with this, what I don't like about it is how wide and loose this base is. If you just look at any of the weekly bars, they're just kind of all over the place. A lot of price discovery from the highs to the low. That tells you it's not in equilibrium and no one really knows what to pay for it. but what's good about it is look at that base. How deep is this base? This one is 39%. Okay, so that's on the deep side, but look at that prior base. You know, pattern rank doesn't even pick it up because it's more than 50%.

38:20So from 230 down to 80, you know, I'm not very good at math, but that's, I think, technically a lot is what the term. That is the mathematical concept, yes. It's like high-end calculus and all. But the difference there, that's really a positive. When you have a widespread and then the next base or consolidation is smaller and smaller and smaller, that's a positive thing because it's telling you that people are more comfortable with the price area. But again, this one is totally different than RTX in that it trades all over the place. So you want to be careful with it and realize this is going to have a lot more potential than an RTX if it works out, but huge potential on the downside.

39:10And you can just look at it. It went from 230 down to 80. So that can happen again. It can go from, you know, it's in the 240 range. It can go back down to 80 and below that. So you want to make sure you have stops on there. Now, what's different about this than the RTX is this is a real stock as far as the fundamentals go. Look at the sales growth on that. massive, massive, massive numbers starts off at 25%. And then we end up at 68%. Although it's not perfect acceleration, you get that feel of that ramp of acceleration in sales. And sales mean way more to me these days than earnings do. But I like looking at both.

39:49And the earnings, I mean, that's massive, 400 % in the last quarter. Let's go up to the annual numbers and see what we can see there. So what's problematic there is the annual numbers are all over the place. And you can see that with the green earnings line, you know, is up and then falls off a cliff and then it goes back up. So there might be some funky numbers in there. And so if you're really serious about this stock, you might want to go and look at their press releases and dig through the numbers. but their history on an annual basis is bad. But the estimates, I mean, geez, when was the last time you saw a 67 % increase out a year after a 175?

40:33Like, that's huge. That's why it's all over the place because there's all this potential there. And so anyways, this is something I'm looking at. Well, I've got a small position in it. And again, for the first couple of weeks, I'm probably not going to build any new big positions just because I'm concerned about getting chopped up. But it looks very, very interesting to me. And, you know, someone in the YouTube comments was mentioning, you know, that they've got this huge database, right, of, you know, that's becoming very valuable. A lot of folks are, yeah, Tim Hankeler, our good friend there, he was mentioning how it's kind of turned from an ad business into a AI business because of this database.

41:23They have a lot of, what, 18 years of basically conversations between humans that they have to train, you know, large language models, LLMs. So that's something that is looking very interesting. And, you know, I think they have deals with Google and OpenAI that are licensing, you know, some of that, that, that those conversations to kind of, again, get those learning language models up and running with some actual human, human based stuff. And I should also mention that in terms of when I use Reddit a lot of times, it's because Google seems to favor it a lot when you do a search. It seems to always come up, you know, something from Reddit almost always comes up, you know, near the near the top of the search.

42:16At least that's been my experience. You know, I think you're right. I think that's probably the only time I've clicked in there. And then I'm just like, I just didn't like the layout. Didn't mess with my OCD. Well, because it almost always asks you to open the app, you know. Oh, that must be what it is. And so then it's like, you know, it's a couple extra steps to like, I don't want to download the app. I don't want to do that. But yeah, I do notice it really showing up a lot of my Google search. So, yeah, interesting points. One thing I will say on this, because I thought I saw a comment that someone said that it wasn't hard for me to do both things at the same time.

42:48But I thought someone said it's not really CamSlim. him. Now, this is something the bill would be all over if he were around. Now, what he wouldn't like are the annual numbers being all over the place, but he would be a little bit more forgiving with the fact that it was a recent IPO, relatively recent new issue, be more forgiving. Now, if this was a company that had been around for 40 years, traded, and they have those type of annual numbers, he would probably back away from it. But with the sales growth like that, with earnings growth like that, with a base like this, Sam is going to work out.

43:27But I know him, knew him. We both did. And went over thousands of stocks with him in real time. And he would be all over this one and probably give it to the low from last week as an exit. Well, to round out our stock discussion, let's take a look at comfort systems. Again, not a mattress, but more of the air conditioning and heating products, which, of course, is really important for those AI, that AI infrastructure. You've got all those chips that run a lot hotter because they're doing all those calculations for AI, and that requires more heating and ventilation and air conditioning for the data centers.

44:08So a big infrastructure play in that regard. So what is it that you're seeing here? I mean, we've got the 1 ,000 mark that it just got back above. We got support at the 50-day moving average line. And looking at the weekly chart, it did seem like it gave that 10-week moving average line a lot of time to catch up to it and just kind of it held there, right? Yeah, so I do have a shotgun position in this one as well. I've got mixed emotions on it because from the fundamental standpoint, let's focus on that first because that's what's good about it. This is great numbers. You've got sales going from 19, 20 to 35, major acceleration there.

44:56And the same thing with the annual numbers accelerating. Bill would be all over this just from a fundamental standpoint. That was very important. Three or more quarters of accelerating earnings, he'd be all over it. when you mix that with accelerating sales as well, sometimes he would just buy it regardless of what the chart looked like just because that was a rule that he picked up from an old client from back in the day where you had both acceleration. This is something he was using in the 90s. Wasn't it like American funds or something like that? Yeah, 20th century American. And let's go up to the annual numbers.

45:35The other thing with this is you get that wall of blue on there, those blue percentages showing year over year. And this really was, you know, some really big numbers, 35%, 65%, 67%, 80. What's a little concerning is it's falling off to 17. That's like, that's a big drop off. So I'm not sure if it's mixing apples with oranges as far as the data. So, but as a general thing on here, I would give it a solid A from a fundamental standpoint. The base itself is problematic because it's loose in there for a lot of the base where you've got wide spreads between the high and the low for the weak. and then you go back.

46:26What really bothers me is that breakout failure that it had like a year ago where it was coming out of that cup without handle and just fell apart. So I'd want to understand why that was, what was the news on there? Was it just part of the deep seek thing? Deep seek, exactly. It was only deep seek. Okay, so then it was thrown out with baby with a bathwater type of thing and it was able to come back. What was nice about it is as since it came back, it really looks like a classic model book stock to me, doesn't it to you? Yeah. And you know what I will say also just on that? I mean, this is a phenomenal earnings growth rate.

47:11And, you know, but this is the five year and the stability. If you kind of shorten that to more recent activity, I think it's got even more stability on the three year and an even higher number on that growth rate. So, yeah, very impressive. Yeah, looks like it to me. Let's go over to the monthly because there's another positive thing on here. This is what a leader looks like. Look at the RS. Don't even look at the price. Certainly don't look at that dirty volume down there. It's all muddy down there. Just look at that RS line versus its moving averages. Look how long it was able to stay above that blue one.

47:49That is, in my book, the definition of a leading stock. Doesn't mean it's going to continue leading, but that's got a long history of being a leader. We saw the same thing on the weekly. Now let's go to the daily and make some sense out of this tactically. So here, what's good about it is we've got a solid stop with really yesterday's or our last trading days low on there as your final exit. Because, you know, that's a long way down. It was up 7.5 % today. But you mentioned at the top of this was the fact that it made it through the Livermore number, a round number of a thousand. And this looks like if it's going to work, this is, you know, we look at this three months from now and say, why didn't we buy it today?

48:39And probably the reason would be, oh, it's the beginning of the year. It's already up 7 % and all legitimate reasons. But what I don't like about it is the volatility in this base. Like that really, really bothers me. And it's like, it's up a bunch, it's down a bunch, it's up a bunch, it's down a bunch. And I'm sure I traded it in there and got chopped up. But you got to, you know, do the whole Ted Lasso, you know, be a goldfish and forget about that. And it's set back up. Well, I'm going to go ahead and stop my sharing. Can you see me? Because I can't see you anymore. Oh, I can see you. Okay, you're just frozen pixelated, but that's fine.

49:20Okay. Well, I am going to go ahead and turn the controls over to you and we'll go over our weekly routine with Mike's charts. Okay. Let's see. Trade station. All right. This is our Bob Weir take a step back. Hopefully you've taken this time to look up who Bob Weir was, but we'll talk to you about that after the show. So this is when we want to kind of look at it, rather than focusing on the interdays or the daily charts, to look at the weekly charts using candles to see is there anything that's jumping out at you that's really concerning or very positive. and really neither with this. It's negative week, right?

50:04Obviously, because we close lower than where we opened it, which is what you can see with the color of the candle. Let me blow this up. So we opened up here, closed there, but we did have a longer bottom wick than a top wick. We did shake out below last week's low and we're able to close above last week's low. So it's kind of mixed signals in there. The body itself was smaller than last week. So that's constructive since it was a negative week. But just not really a lot that you can learn from this one. And that's fine. You don't learn something from every single candle. Let's go to the next one.

50:47So much weaker on the NASDAQ, right? Because we closed well underneath last week's low significantly, especially compared to what we saw with SPY. And our spread, our body here, looks like a little bit bigger than last week's body. And last week's body was positive. This one's negative. And unlike SPY, our top wick, the distance here, appears to be longer than our bottom wick, which is not what you want to see. That's more of a stalling type of feel. So our SPY candle, let's just go back to it for a second. This was kind of mixed and, you know, more on the negative side than the positive side, but not horrible.

51:32But with the composite, that just doesn't look good. And that's just the way it is. Let's take a look at IWM. This one looks much better because you've got, even though you have a negative body for the weak, meaning the close lower than you opened. Look at that large wick that we had at the bottom where it shook out below, well below last week's low, obviously. and the week before that and close up above that. Now, not into last week's range, but still into this week over here. So I'd say that one looks better than, certainly better than the NASDAQ, but not as good as SPY. Now we're going to just briefly look at the original regressions we had here.

52:21SPY broke this on October 10th. So did the NASDAQ. So we're not using those for a while. We will start counting on this day, November 21st, assuming we hold that low, and then wait until we get closer to 50 days before we start using that. Again, let's go over, that's the one, the shorter one we're not using. Let's look at our 50 % retracements. This is a technique that you guys should use on all sorts of timeframes, monthlies, dailies, everything in between. Here I'm choosing to use, it's an art, the high from October 29th and then the low from November 21st. And just seeing, are we trading in the upper half, the northern hemisphere, which would be above 670 and change or not?

53:14Or are we living down here? This is a sign of strength. This is a sign of weakness. So that would be just seeing if you're paying attention. Sign of strength. See, you can't do your check. Are you like Bueller, Bueller? Yes, I just wanted to see if you were like, you know, even like you, like if you were you, I would just tune out during this section. But anyway, just seeing. And so this one, Justin, how would you interpret this one? Well, you're in the upper part, right? There you go. What you call the Northern Hemisphere. There you go. I guess it was a little bit too obvious. I thought that you were doing more rhetorical rather than actually running out.

53:53No, I'm having fun. Okay, so here's IWM. And I did this one a little differently because we went up into new highs. And so we're using the high from the 12th of December and then today's low. And we hit a low today. So using that, we're in the southern hemisphere, which we don't like to see. But of course, if I did it from here to here, that would be different. So again, it's an art. Did I do it for RRSP? And I guess, you know, in that case, I would say you would expect when you're at a low and you're potentially bouncing, you're going to be in the southern hemisphere. But what you're looking at is when do you get above the equator, you know, kind of thing.

54:36Exactly. That well said. And so once I put that on there, I'm saying, okay, 251.91 is kind of my target. Now, if we would have left our old ones on here, let's just say here and here, using the high from October 15th and a low from November, that there you're in the northern hemisphere, obviously. But that's why I like slicing it a bunch of different ways to see. And then same thing with the RSP here. If we would have used the bigger ones, this would be in the northern hemisphere. But now it's just underneath the southern hemisphere. But it was able to, this is what's most impressive, is it hit a fresh low within this today.

55:25And we're able to get almost up to the northern hemisphere. So just put that in the back of my mind of the RSP acting stronger than some of the other ones. Now, SPY, I keep on changing these lines and trying to make them as easier to follow. So I removed a bunch of them. But really, when I do this, I have a million lines on here. But some of them I'm really just more focused on. And that's what I'm just sharing with you. So a low from the 17th of December becomes a very important day because that was the day that we tested the 50-day. And so we want to stay above that. It's also kind of in the middle of this range here.

56:07Then the next area would be the low that we hit on November 21st. If you get below there, you get a long way down. Probably the next level would be your 200-day. And then just underneath that is your August 1st low. So if you get below that, then you're in some serious trouble, really. Same thing with the NASSEC. I simplified these. I used today's low here, which kind of coincides with the high from October 10th, which is kind of interesting. And you'll see that a lot where the same levels keep on hitting. Now, the next real line in the sand would be the lows from November 21st. And then really kind of the August 1st low over here, that's underneath the 200-day, so I was just putting some other lines on here.

56:59August 20th low gets you to the 200-day, but that day isn't as important. It's really the 200-day is important. August 1st is a serious line in the sand. I think I did the IWM as well. This one, today's low becomes important because it got support at its 50-day. The next one I would say is the October 10th low. Then you've got your low from the November 20th and below there. You've got some problems. We will do our next one. This is our Fibonacci. I know Fibonacci tends to scare some people. It's just a way of spacing things out. Forget about the name. Forget about the math. Just think of it as it's just equally spaces things out as you go in time.

57:44So we've got the Fibs on here. So we've got a three-day, a five-day, an eight-day, 13-day, a 21-day, 34-day, 55-day, 89-day, and so on. On here, because it's spaces of the mountain, I use the exponential. And I just want to see, is it stacked nicely? Like over here, when it was trending, this is what you want to see. In a trend like this, the three-day is going to be over the five-day, and the five-day is going to be over the eight-day, and so on. And when you start running into problems like we did back over here in February, one by one they start going through each other, and that's not what you want to see.

58:23And then it kind of gets a reverse stack. So let's look at what we've got here. The three is cross-sender and the five is cross-sender, but they're not all rolling over, but it's certainly not what you'd like to see. We want to see a trend, and the trend will have all these going in the right direction. Let's look at the NASDAQ. Same thing there, kind of a little bit worse. IWM, actually, it looks a little worse there, too. Let's take a look at the RSP. Well, it looks a little bit better because you've got this three-day poking starting to come back up there. But it's just another way of looking at things.

59:04This might be too noisy for most folks. So the easiest way is to look at just the 21-day exponential. That's just this blue line on here. And I like to focus most of my time and energy on this. Even though I look at the other stuff, this is really where I focus my time and energy. Candles around a 21-day and interpreting it. Is there anything materially wrong or is it just kind of base building? And to me, this is looking at it from this lens. It's just base building and trying to find support at the 21-day, but certainly not holding that low above the 21-day the way we'd like to see in a nice trend.

59:45NASDAQ's having a harder time. You can see with today's candle being such an outside bar over the last trading session, that's not how you like to end a week. Let's take a look at the IWM. now yesterday's high was or Wednesday's high was underneath the 21 day and we got up to it we really want to get back above it and then the RSP we traded through it and this one you know was able to really have a nice test of the 21 day and pass it today so let's stop sharing there. And I'm going to share my WebE RSI. Okay, so here's the WebE RSI. We'll be quick with this because we still don't have a WebE RSI.

1:00:32The WebE RSI is a little blue histogram at the bottom, and that measures your low versus your 21-day. And we want to see a wall of blue. We'll talk about that on future episodes because we don't have one right now because our low is not above that. Same thing with all of them. IWM, we actually had the burnt orange there for a little bit because when your high is underneath it, we switched that to, and this is measured in ATRs, the distance, that it was stuck under there a little bit. You don't want to see that. Let's see. The NASDAQ, no WRSI on there either. And then let's take a look at, I don't think we did RSP yet.

1:01:21Same thing there. But this one looks better than the others. And what happened to my Bob Marley chart? Oh, shoot. I shared the wrong one. Hold on. I got to stop. Share. We got separated somehow. Okay. Okay. So let's look at, this is the off-high indicator that I built that just measures your off-high in terms of ATRs. And we won't get deep in the weeds on this one today. It's in the green zone, still within four ATRs of your high, sitting there just about 1.75 or so, give or take. Then let's take a look at the NASDAQ. A little bit worse coming in there to three ATRs, but really we wanted to stay above the last time that it came down on the 17th, where we were about 3.7 ATRs from there.

1:02:17And then, oh, I forgot I have the current. It's 2.94. Then IWM, that's 3.35. So that's, we really wanted to stay above this area. We wanted to stay in the green area, but really more importantly, we want to stay above the last low. And this was about five ATRs off the high. And then our final one, RSP, that one is looking solid there. two and a half ATRs off of our high and well above our recent lows. So with that said, I think we've got the first one in the can for the year, man. Yeah, just that easy, right? And again, I think, you know, what we'll be looking forward to in the coming year is when that WebE-RSI has something a little bit more meaningful to show us.

1:03:09Right now, when you see it kind of going back and forth, that's just reflective of the choppy action that we've been seeing over the last few weeks and actually, you know, months, depending on a lot of the times we've been looking at that kind of going back and forth. So thanks a lot, Mike, for wrapping that all up for us. And I just wanted to say Happy New Year to everyone out there. And again, just reiterate, start fresh with this year. Don't pound your chest if you did great last year. Don't, you know, be down in the dumps if you did poorly last year or not as well as you. You always, you never do as well as you wanted to or you could.

1:03:45But just put that out of your mind, start fresh and learn from last year, but just start fresh and should be a fun year. Yeah, there's always looking at those opportunities for improvement. That's how you get better. And yeah, so here's to a profitable 2026. Thank you very much for your insight there, Mike. Appreciate it. And that's going to wrap it up for us this week. Thank you so much for watching. And as a reminder, we'll be back on Monday with IBD Live. So if you haven't checked that out, it's at www.investors.com slash IBD live. You can, you know, join us for, you know, I did see in the YouTube comments, a lot of people asking about, oh, can you look at this stock?

1:04:27Well, we have a lot more time there. We do cover a lot of stocks that the audience is requesting. So that's kind of the vehicle for that. We start 10 minutes before the market opens. So 620, 920 Pacific and Eastern time. And then we go for a full hour at least. you know, actually well over that, more like an hour and a half. And yeah, it's a good time for us to really interact with our audience and, you know, go through live what's happening in the market. So hope you can join us for that. And we'll be right back here for the Stock Market Day video at the close on Monday. Have a great weekend, everybody, and a happy new year.

1:05:04Bye now.

1:05:14Thank you.

1:05:49We'll see you next time.