October Ends With A Treat; Amazon, Cloudflare, Robinhood In Focus

28:38ITA Aerospace and Defense, this is looking pretty good. Got to highs earlier this week, and a little bit of a reversal here around the 10-day. Yeah, we almost added that to Swing Trader today, but pull a Boeing. I was just going through, you know, different ones in that space. And that's what kept us away from it. Just because it being such a big, you know, big part of that space that I think better just pick the individual ones than have that be a drag on it. Right. And then in terms of where things are falling in line, RSP that we talked about earlier, that was up two tenths of a percent. XLI, the industrials, that was up about a quarter percent.

29:22And relative strength not looking great, but it is, you know, just kind of hanging out there right by this top around 155.15. So not looking broken by any stretch, just a poor relative strength. XLF, the financials, this is below the 50-day moving average line being weighed down by some of those regional banks. And also, I think Berkshire Hathaway kind of, you know, that's been a little bit weaker below its 200-day moving average line. And that's a big component in XLF. But, you know, some of the individual stocks in here are looking okay. You know, your Morgan Stanley's, your Goldman Sachs. I do have a position in Goldman Sachs.

30:04You know, and some of your big banks are not looking bad. SPY that we talked about, this is where that falls in our list. XLC. Now, this is kind of a little bit of a push and pull because the two biggest players here are Alphabet, which had a, you know, has been having a pretty strong rally. And then you also have that contrasted with Meta that had earnings earlier this week and just really kind of fell out of the bed there. Yeah, Zuck, we'll stop talking about your stock. Yeah, I know it's down. You'll be okay. You're worth billions, dude. You've got enough money, right? I'm sorry. Zuck calls me every time we talk about it.

30:44Yeah. Just because he's listened to all your stuff, right? Yes, he does. He's got nothing to do. So with the meta, let's go back there for a second. What I would suggest folks do is just look at the largest market cap weighted stocks, which obviously this is one of them. And then kind of see what would be normal and natural for them to where they should go. And you can kind of back into where the market should go. So this is a drag on it. pull up microsoft for um which had a disappointing week it was set up really nicely but they came back but this still could come you know come back um and go up to the 550 next week and still be normal and natural whereas meta let's go back there it's a broken chart in the in the short term like how does this resolve itself it normally doesn't just go straight back up to 800 in a blink of an eye, it needs to form.

31:44When a stock this big gets hit that much, it normally needs time. You're talking months to kind of resolve itself. But at least you've got the Google on the other side and then videos and the other mega caps that are still hanging up near new highs. But if we start having a lot of these fall this way, then you're more concerned about the market. One or two, not a big deal three or four then you start getting worried um queues uh fell about uh at the half percent mark again half percent up i shouldn't say fell this is where it ended up half a percent up and the qq ew um you know actually right around the same so nice to see that the the breadth on the nasdaq 100 equal weighted is is a little bit better uh xbi the biotechs that we talked a lot about, that just keeps on going up without me.

32:36Thank you very much. I do have a position in that, yeah. Okay, lucky you. I'm just kidding. No, and again, I sold it because I was writing about it last week and I just didn't get a chance to buy it back. I think this is the place to be looking, the XBI, but not the individual bios unless you have a stomach made of steel, man, because they can, like, on bad news, they can fall a lot, 50 % or more. So whether it doesn't have to be this ETF, but I would look at other ones as well. I mean, this is one that I like, but it's just the one I'm used to. Yeah, there's a few to choose from, including IBB.

33:16And you can just, you know, look at the holdings and it gives you a sense of where they are. And if you want a little bit of leverage, there's always the BIB, which is a 2x of the NASDAQ biotechnology index. That's the IBB, but doubled. So yeah, that one looks look strong as well. XLE Energy, gosh, it's still a lot of back and forth action on the energy stocks. And, you know, this isn't just Chevron and Exxon, the two biggest components making up 40 % of this that are that are that it's causing this. If you look at RSPG, it looks very similar. And that's the equal weighted energy sector for the spiders.

33:54FNGS, as we talked about, That was up nicely with a half percent move higher. And IGV, the software, a lot of the computer software enterprise and just, you know, the cybersecurity, a lot of those looking decent. CIBR was added to Swing Trader today. This is up 1.3 percent. So, yeah, software looking interesting. XLY, this was helped a great deal by Amazon that we're going to cover in a little bit. This was up 2.6 % for the day. And then two more. I do have a position in Amazon. Okay, let's look at iBit, which is the Bitcoin trust. That's trying to get back to its 50-day moving average line. That was up about 3 % today.

34:40And taking the top spot. Can you stop? Go back to the iBit for a second, because I saw some people that I really respect making comments about volume on iBit. Dude, don't do that. If you're going to use volume, which I don't use, but if you're going to use volume, don't use it on an ETF because you would have to use all the volume. This is representing something else. This is representing what Bitcoin is doing. So you would to interpret the volume on it, you'd have to look at the GBTC. You'd have to look at anything that is also doing mirroring Bitcoin in any way, shape or form or leverage versions, as well as the futures market and tally them all up to to understand and interpret the volume.

35:25Please don't use ETF volume. That's my public service announcement, please. It's so silly. Yeah, because I mean, yeah, as you said, there's a lot of different ways in which people could be playing Bitcoin. But, you know, you just don't know, oh, is this the favorite? Yeah. And also with the hedging, that makes it even more complicated the way people use hedges sometimes. But taking the cake was Cathie Wood's ARK Innovation Fund, ARKK. This one was up about 3.85 percent. Been kind of just tracing along its 21 day moving average line, but still well above the 50 day line. And I do have some of that as well.

36:03Savvy 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 health care needs next, Medline strives to make health care run better. See how Medline is woven throughout healthcare and learn more at Medline.com. Okay. And let's go ahead and talk about Amazon. As you mentioned, you have a position in all three of the stocks that we're going to be talking about today.

36:40But Amazon, big move, gap up on earnings, off its highs. But still, I mean, it's hard to complain about a 9.5 % gain unless you were buying it at 250, in which case you're like, okay, I'm down a bit on this, but not in a disastrous way. How do you play this? You know, I bought some early on, but just a little bit. And I was going to be doing a T-WOP throughout the day. But then when it pulled back in enough, I said, you know what? It makes more sense for me to sell those shares and put it on Swing Trader and wait the 30 minutes, knowing that this was a potential risk of closing near the lows. Or even, you know, we might get kicked out of it if it comes all the way into the pivot, the 238.85.

37:21That's probably where we'll, you know, back out of it. But with gap ups, you never know how they're going to play themselves out. Are they going to just gap up and can keep going? And so you either let them all go or sometimes you try to get a toehold in it and see if it can go sideways a little bit, have an upside reversal to add to it or to initiate your position. It's a personal preference. When you look at something like this, you'd say, well, why would you want to buy it on a gap up? It's extended now. Well, it's a 2 % extended out of that base, but there's less risks now than there was yesterday, even though it's extended.

38:02It was a much better price yesterday, but you were stepping in front of the potential freight train of it being just like Meta and having a gap down or some of a pull up. What was it? LRN. I think that was one of the ones we were talking about earlier this week that the gap down on earnings. It's like when you buy something in front of earnings, that could happen. Yeah, it could have gone up to$200 as well. But now let's go back to the Amazon. When you have the earnings behind you, you have less risk there. But then you have that gap risk, right? So it could close the gap and then go back up and then you have to be willing to buy it back.

38:41So I would say folks should study these and find the right method for you. It's not going plowing in with your full position on a gap up. It's kind of you just slowly get your toehold in there because sometimes they never look back. Let's go to the monthly on this one for a second. What I find interesting about this one is it's kind of been dead money for a long time. I know it's gone from, you know, the left side of the chart all the way up to the right side, but it's really dead money. And why I say that is look at that RS line versus its moving averages. it's pretty much it never really stays a leader it's a general uptrend um but kind of marking what the S &P is doing with a little bit of a little bit more of an up move than that but it hasn't had that real disconnect from its moving average like let's look at uh NVIDIA for a second which is kind of the poster child for a stock that's been a true leader look at the distance It's a white space between your green line and those moving averages, truly leading for a long period of time.

39:49So this could happen. Doesn't mean it's going to happen. Could happen with Amazon. Let's go back to Amazon on the monthly where this is just the very beginning of it. Now, what folks would probably say is, well, and look, I did have Amazon had that look back here. Right. So, yeah, it's not like and certainly a lot of people could say, oh, well, this is a mature company. It's a huge company. certainly in 2014, there's no way it can make a move like that. And look, it did. Exactly. And they're diversified because they, you know, they've got their retail space, but they also have their, their Amazon video and, and AWS is like the biggest, you know, like, that is what everyone is truly trading when they're trading it.

40:34But then you've got this other stuff to buffer out if AWS kind of has some issues because you're really trading AWS. I mean, At some point, they're going to probably break the company up in between their different divisions. But we'll see if that ever happens. But we talked about on the show this morning, Apple back in 2004, when it started its move, it had a relative strength of around 50, 55 or so at the beginning of that move. So when they're dead for a long time, you're going to have a low RS out of that little cup with handle down there. And, you know, things change. It was the very beginning of the move, and then it ended up being one of the monster stocks of all, you know, greatest stocks of all time, frankly.

41:19And so that could happen with Amazon. We'll see. We'll keep an open mind. And, yeah, if we get stopped out, we get stopped out.

41:34I can't hear you. Are you saying how great I am? I think, yeah, I was. Yeah, so I just don't want everyone else to know. Oh, thank you. I appreciate that. So here's Cloudflare NET. Strong breakout, again, on earnings. More of these earnings are getting behind us. This was a big week for earnings. We still have another big week next week. But talk a little bit about this breakout and how to play it. Yeah, so I do have a position in this. I bought a token position in it yesterday in front of the earnings, which was on the risky side of things. but I wanted to have a little bit of a toehold in it so I could add to it if it had a good reaction or if it gapped down as much as, you know, it was up 13 % or whatever.

42:16If it was down 13 % or 20%, it wouldn't have gotten that hurt because it wasn't a material size coming into the day, but it did allow me to have some lower cost basis. And this is a very clean breakout. This is just a cookie cutter, flat base, breaks out. You have a clear expectation. It should stay above the 230 area, you know, if this is for real. And let's go to the monthly on this one. What I like about this is it was a monster stock when it came public. I mean, that was such a big move. And then it fell out of bed for a long time, but it did hold above. Thank you. It did hold above, well above its original IPO area when it came down.

43:02And it's just, you know, this is a giant cup that it's breaking out of. And I think it has a long way to go, but we will see. It's not, this one is not for the faint of heart because it can get wild, but it looks good. Yeah, very good. And let's round it out with Robin Hood. You and I both have a position in this one. You know, this is, you know, obviously been one of the leaders of this rally. You see that strong relative strength. It's had its breaks along the way and most recently here, but it's almost right back up there at highs. Earnings coming up in about, well, next week. So this to me looks like a mini cup with handle.

43:46Now, Bill wouldn't call that a cup with handle because it's too short, but I'm calling it a cup with handle in spirit, where now we have a clear expectation that it should stay above yesterday's low. Now, you've got the big risk event with the earnings next week. So some people might not want to trade it at all until the earnings are out. But then if there's a good reaction, this will be 165 plus. And if it doesn't work out, it'll be$100 minus. So you've got to adjust your size accordingly. But I think this is one of the true market leaders of this part of this bull market right now. and is very reminiscent to me of Schwab back in the 90s.

44:31And let's go to the weekly on this one. We always get that question if Bill were around, you know, what would he be trading? And I think we would both agree that he would be in this one and probably in a very big way because he would kind of go back to the well. He would say, oh, wow, I traded Schwab and that was one of his biggest winners, you know, back in 98. And let's just go to, yeah, I read my mind. I can't go to Hood back in 1998, but we can do Schwab. And this is actually when it came out of its – what at the time I was like, why is Bill calling this a cup with handle? It took me a long time to mess with us.

45:11Right? Are you sure that's not a faulty double bottom because of how deep this handle was? A 27 % deep handle. But, man, it came out of this and just didn't look back. This was a 400 percent move plus in six months and was phenomenal. And one of the things about this was, look, you know, Schwab, if you looked at the other brokerages at the time, Schwab looked different. Schwab looked like AOL. It didn't look like the other brokerages because it was revolutionary in becoming an online broker. And that's what was, you know, really behind this move because it was all about the online moves. Yeah, it seems like that's what, you know, Hood is just doing that same thing all over again.

45:55And he was able to top tick that, you know, on the way out, which is not an easy thing to do. And it is worth noting that out of that cup with handle, that unusually looking cup with handle down there, that was the bear market of that 33 % bear market that he didn't sit through. He got out, you know, because that's what you were supposed to do, but then got back in and got back in in a big way. And that's that's something that folks should study over the over this weekend. Yeah. And it's one of those times where, again, you know, at the time, I mean, there was there was so many concerns with long term capital management taking the entire market down with it because of, you know, how many how many fingers it had in so many pots.

46:40And I mean, you also have the Russian, the Asian, you know, currencies. You know, there was a lot of problems at the time. But yeah, so back to hood. That's that's kind of a precedent there looking at Schwab. But hood, you know, you're saying is something that's potentially setting up and, you know, earnings coming up next week. But we'll see how this handles it. And again, both and I have positions in this. Mike, are you ready to take over? We're running a little late. Yes. Yeah, I will be I will be fast with these. I guess I blame it all on you. Like, I'm always to the point. I never go off on tangents ever.

47:19You know, so the fact that you call your podcast Webby Rambles On, that was just satire. Right. You know, because of your conciseness. That's what I do. Yes. OK, so here's Spy. This is our Bob Weir. Take a step back. and we're just looking at this on a weekly candle basis to see, you know, is there anything unique here that it's telling us? Is it doing anything abnormal to really worry about? That's a stalling candle, right? It goes up in the new high ground. We've got a negative body, meaning that it closed lower than it opened. And you've got a longer top wick, meaning it traveled up there, but then closed down.

47:56That's a bad looking candle. Is it a horrible looking candle? No. And why is it not a horrible looking candle? because the spread isn't that wide. These happen on the way up. If this was the only thing you looked at, your expectation would be lower next week, but not materially lower. Like if you look at this, normal and natural would be somewhere in the middle of last week's candle. And that's what you want to do as we go through this. You're just painting a picture in your mind of all these different pieces of what would be normal and natural. and then you walk away with a better picture. So on the NASDAQ, much stronger, right?

48:35And why? Our close was above our open for the week. You can tell that by the blue candle versus the pink candle we had on the other one. You kept that gap up. You know, on the negative side of it, you do have a top wick that is much longer than the bottom wick. But really, that bottom wick is the true candle wick goes all the way down to the close of last week. So with that in mind, it actually looks better, but you have the gap in there. So let's just look at IWM, see if there's anything there. Not so good, right? Because I was getting all hot and heavy on this one, but it is proving to be a very difficult one to trade.

49:18And this looks significantly different than the other ones. So now let's move on to our regression. This was the original regression lines that we were using with the May 12th and the July 22nd or 23rd endpoints. And that is dead because as of this day, the October 10th, it fell out from those regressions and stayed underneath them, tried to come back up in here and got turned away a little bit. But it was really dead a couple days after that. Let's say by the 15th, you had to put that one bed, same thing with the NASDAQ. Now, for the IWM, we started switching to different dates. And with that one, we were using this time where it undercut the 50 here on, looks like, what was that, August 1st.

50:10And then we went out 50 days from there. And that point was the October 10th, right? Right. And here it's back. It tried to go up through the 0.75 minus 0.75 standard deviation, which is the green dash line. The way I interpret that is when it goes up through there, you should have shot up to your your what I call home base or your line of best fit, your your regression line, the white line. And it backed away. So that was that's actually acting weak. and your high is now underneath your one standard deviation. So IWM is looking on the weak side now. Let's use those same dates, but do it on SPY and NASDAQ.

50:55And you'll see a little bit of a different picture. This is acting a little bit more normal and natural. Let me blow this up. And again, we are using that August 1st starting date. This did exactly what you would have thought it would do is as it went through the 0.75 or the green dash line, it went straight up past your white line up near your red dash line, which is half a standard deviation above this. Forget all this jargon. Just what happens is it wiggles and wobbles and it wants to mean revert. Mean revert means go back to the white line. That's why I call it home base. if it's in a trend that's healthy, it wants to go to that white line when it gets too far above it and wants to come back to it, gets too far below it, wants to go back up to it.

51:46So what it's doing right now is normal and natural in hugging that new regression that we're using. And then the same thing with the NASDAQ, but a little bit stronger. So that's telling you, now we have a couple things that are telling us that NASDAQ is stronger than SPY because this one went up through your point, your half standard deviation above it, pulled back into your white line, but is still up there. And it can really live in this kind of channel in here for a lot longer than you think. So we'll see how that plays out. Now we will move on to our 50 % retracements. These will be quick.

52:25I was still using the October 10th high and low. We're on the northern side of that. So all is good on NASDAQ and SPY. They're both well above it. IWM, we had a little bit different dates. We were using the October 10th low and then the high on the 15th. And that's just right around the midpoint right now. So we really wanted to be living up in this space to be healthier. Now we'll move on to our lines in the sand. And now we've put a new line in there. And this on SPY, the 673.94, which is the high of this area that it broke out of. And if it comes into that, it will line up with our 21 days.

53:10So we want to stay above that. And then next would be the low of October 10th. The rest we'll worry about if we get there. NASDAQ, same basic thing. the high from the 10th, it becomes our line. And that's lines up well with the 21 day. And we'll look at IWM. In this one, there's a lot of lines you could put on there. And probably the first one is the low from the 22nd, but really the material one would be the low from the 10th. Then we are going to do this thing where I look at all the moving averages from very short-term to very long-term. And I just use the Fibonacci numbers. So, you know, three, five, eight, 13, 21, and so on to see, are they, are they stacked properly or not?

54:00And when they're stacked properly, you want to lean offensive. When they start rolling over, you want to start getting concerned. That's why I was getting concerned over here because my instruments were telling me to, now that we're getting back above it, we're saying, Hey, you know, don't be as concerned. The trend is your friend and all that good stuff. And so same thing on the NASDAQ. And let's take a look at the IWM. Not so good, right? So now your shorter term moving averages are underneath your kind of intermediate ones. And let's look at RSP. I haven't looked at that one yet. And that's a bit problematic.

54:35So this is your average stock. So for each one that your shorter term moving averages underneath a different one, that's concerning. So let's look back at like the cues. And this is what you want to see. Each one is stacked above it. Then for the simplest view, if you're saying, all this garbage, why do I have to look at that? That's why we have this. This is our favorite chart. And I think this is Ali's favorite chart. We did get a new picture of her little baby dressed up for her first Halloween. So that was wonderful to see. And she's doing well, as we've heard. So that's great. SPY with just the blue line on there.

55:14The blue line is your 21-day moving average. When you do this, you just want to keep it simple. Is your low above it or not? Is your high underneath it or not? Or low is above it, and it looks very healthy. And let's look at the NASDAQ. Same thing there. Just looking at the distance, and we'll look at the IWM, and not so much, right? Because now we're back in that chop zone. When your low is not above your 21 day, you're kind of in your chop zone. And let me stop sharing with that and I will go over and share the other one. I'm making up some time here. I'm trying to be fast. Let's see. Yeah, no, you're doing great.

55:54I'm trying not to interrupt and get in your way. Okay, there you go. So we will go to the WebE-RSI, which is the little thing at the bottom. And what this is, is just if this is your first show with us, welcome. It's measuring the distance of your low versus your 21-day exponential in terms of ATRs. So this is, it'll only show up there in blue if you actually have some distance there. So like with the IWM, there's no histogram down here because your low is not above it. So let's go back to SPY. So SPY, this is healthy, but you would be fine with it actually getting stronger. You want to see a wall of blue like we had over here during this run.

56:43Now let's take a look at the NASDAQ. I like this one here. It's getting much stronger. And if you went back and you looked at what happened in that 1999 timeframe in October, it had this wall of blue and it got a lot higher than what you would think. So I know some people are using some indicators and saying that you're stretched and it's a selling point. But the way I interpret this is at this point, you actually do want this strength because we broke out and you don't want to just meander. You really want to kind of have a very strong move. It doesn't have to be as strong as 99, but something along those lines would be healthy, in my opinion, based on my observations.

57:26So let's look at the Bob Marley off high one. And this is just what you want to do is just focus in on the green area. And the green area is saying that your low is within four ATRs of your high. And then as long as it's green, then you want to kind of interpret, is it acting normal and natural? So here's SPY when it came down in August, came down around, you know, let's call it just generally three and a half ATRs off the high. So the next time you have a pullback, you want to see is that in and around the same area, that would mean the character is still the same. And that's exactly what happened here on the 10th, a little bit worse, but still in that same ballpark.

58:10And then we bounced up. So it's just a way of measuring the character of the index. Is it acting normal and natural in the same thing? It doesn't feel good in the moment. Oh, God, it feels terrible in the moment. Even though it's still green and it's like, oh, this is normal. It still doesn't feel good in the moment. Oh, no, it's terrible in the moment. I think every time it's down there, I'm thinking 1987, and so was Bill. Like that's, you know, and that kind of keeps you in the game because you always like kind of worry and everything. And worrying is a healthy thing. well, maybe a psychologist out there.

58:45Let's say everything in moderation. I'm not very moderate with anything. And here's the IWM. That's a little bit of a different position because it's coming up from the dead. And let's look at the RSP. So this is your average one. And with the pullbacks here, you can see they were a bit more severe. And this came down a little bit over four ATRs that time. This time was a little bit better there. But so what does all this mumbo jumbo mean? What it means is if you're just kind of summarizing, we went through new highs. Go back again. I said it at the beginning of the show. Go back to last week's show.

59:25Fast forward to the end. We have some dates on there and a little Excel spreadsheet. Go back and study those dates. What the two of us found is when you break out of one of those ranges, that you tend to continue in the initial direction. Down, continued lower. Up, continued higher. So everything that we're looking at tells us that we should be moving higher. Is it scary? Yeah, it's really scary, man, because RFP isn't looking that good. IWM is giving us trouble again. We're in the middle of all this new stuff. They never said they were going to make it easy. So what do you do? You follow your indicators.

1:00:02Trade your way. I lean heavily on this show and on the IBD Live talking about swing trading. I also position trade. If you position trade, take a step back. Look at the weekly charts. Are the weeklies looking normal? Are your RS lines above your moving averages on your weekly chart? Using my quick, quick, saying grateful dead. If so, you can hold those. So you don't have to swing trade just because we talk about swing trading a lot. You can just position trade and just interpret the market. If the market's really in trouble, then you need to start backing away. But right now, go back, study 1999.

1:00:40It feels very similar. Yeah. Well, hey, Mike, appreciate all your thoughts. And to everyone out there, hope you have a great, safe Halloween. If you're trick-or-treating, have a great time with that. And it's going to be, I think, in my area, we have a lot of man caves. so because the Dodger game is uh going to be on during trick-or-treating time prime trick-or-treating time I think yeah so who are they playing who are they playing this is the World Series right it is the World Series yes the Toronto Blue Jays so I'm sure there's going to be a lot of stops along the way in the neighborhood uh with TDs on in the man cave garages uh in the neighborhood so uh do they yell goal when they when they yeah exactly when they hit it goal yeah that's how Every baseball game, you're going to hear that.

1:01:29My dad right now is yelling at the screen. They think you're serious. Right, exactly. Well, thanks again, Mike. Hope you have a great weekend. And thank you, everyone. Especially, gosh, I got to tell you guys, I really get amused by all these YouTube comments. What a great community you guys have in there. Everyone's like, oh, hey, how's this going? How's this doing? And just wonderful watching some of it. I get distracted sometimes, but it's fun to watch. So have a great weekend, everybody. Have a good, happy Halloween. And we will see you all on Monday for our IBD Live and on the Stock Market Day video.

1:02:03Don't forget, if you haven't checked out Don Bannerboard's appearance this morning, you can go to investors.com slash IBD Live for a trial there. Also, Mark Minervini was on the podcast a little bit earlier. We spent a lot of time talking about breath. So those are some of the things that you can take a look at. Have a great weekend. See you next time. Bye now.

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