What To Watch With Indexes On The Cusp Of A Power Trend; Seagate, Moog, Heartflow In Focus

27:09And this is not that far out of there. Yes, it's technically extended out from its pivot point. But I still think it looks good. The RS line looks solid. You've got earnings behind you, which is a plus. So this is an area where I think that you could give it a shot. Let's go to the weekly for a second. now on the downside the estimates going out next year are weak like really weak at plus three so that's a little concerning and the um it tells me that maybe it's not apples to apples comparison or some you know it just seems like a quite of a drop off there um but that's the only real flaw I'm seeing in this all the other, you know, all the other numbers on there look adequate or good, you know, coming in at 57 % last quarter up from 38.

28:05I can make that out that that looks, you know, that's solid. The earnings line looks good. And it's just a base on top of a base. So it's kind of a cookie cutter situation. I think you can give it a shot. Let's go back to the daily. If you were to be buying it here, I would use yesterday's low as probably my first stop and maybe a little bit lower than that as my final stop on this because a breakout should work. It shouldn't immediately come right back into those levels. Makes sense.

28:39Mike Webster:Okay, next on our list, a big breakout on Friday, HTFL. This is HeartFlow in the medical software group. This is an earnings breakout. We saw an acceleration of growth on both the top and bottom lines here, Webby. Earnings up 65 % in the most recent quarter. I'm going to take that step back to the weekly here because I think this also gives key perspective. It's now in new high ground, went public about a year ago, and it's now finally at new highs. Yeah, these are the types of things that I like a lot for several reasons. One, when you always have a bias towards recent new issues. And that was something Bill had to bias towards new issues over the last seven years.

29:35You know, I kind of have one over the last three years and through my work, that seems to be kind of the sweet spot because you either have your IPO base that works out and lately those haven't been working out. But it gives you kind of enough time where the stock folks get to learn, you know, how the stock trades. But it also gives it a chance to kind of set up and actually put some numbers out and put some, you know, some good numbers, you know, out there. And that's what appeared to happen this week. Now, I didn't know this stock until today when I saw it go through and then I started looking at it.

30:15And that's my work for the weekend because, you know, I personally have heart related issues, which I'm sure a lot of people do. And this goes into that using AI. So it's kind of a combination. We always think of AI as like, OK, what's going to be the next, you know, chat GPT or Grok or what have you. But it's using it for, you know, other purposes. It doesn't mean, you know, let's go to the daily. when something runs up 46 % in a week, it means it can go down 46 % the next week. It goes up 35 % today. It means it could go down 40 % tomorrow or on Monday. And that's in the cart. So I'm not buying it here, but now this put it on the map for me.

31:02And if it can tighten up and go sideways for a little bit or give me some sort of entry, I'm going to be all over this one because I do like new names. That's always been the thing that with the system, with the IBD methodology of getting the earlier merchandise rather than just buying GE one more time or buying whatever that's been around for 100 years. There's nothing wrong with those if they reinvent themselves. But this is something you can get excited about. And if I trade it, it would be more than a swing trade. Like, you know, if I'm trading something like this is more like with a Peter Lynch hat, if I can get a toehold.

31:40And if you get a toehold in something that you believe in, you know, that and I have to do more fundamental work on it. But then you can just let it bake and let it wiggle and wobble. If you're just trading a chart, then you got to just trade a chart. And that's for swing trading. But so there's position trades and swing trades. And this would be more of if I get into it would be a position trade I'd be looking for.

32:04Mike Webster:Yeah, totally agree with you on the story there. And so you would be looking for what some sort of tight action? What kind of entry makes sense given the power? Okay, so let's go back to the daily. So typically what ends up happening on after a big day like this is the next day, and this would be very normal and natural, the next day to be down a lot intraday. I mean, a lot, 15, 20%. And you actually want that. Let's go to the intraday chart. It might be easier. because, you know, all the way down into 37, 36 or so, even 35, I'd be happy with that movement to clean out any of the stops. Basically, anybody who had the position before the gap up or bought it at the open and were never tested, you would like to get rid of those folks, which would be like me, like, you know, because I would be in there and it would be taking out my stop if I had bought it.

33:03So you want that to kind of clean up and then give you an entry point on like a 60 minute chart. So you can trade monthly charts, weekly charts, daily charts, and interday charts. And so you look for a pattern on an interday chart that would give you some sort of entry point. So what would that be? Typically some sort of like a pause with a shake out because you want to be able to put a logical stop in there. Right now you have no logical stop. Like if you were to buy it here, you don't know you're wrong until it's down to 30 or 32. That's a long way down. And even it could come into that and still bounce back after a move that it had today.

33:48So that's why I don't want to buy it here. So it would be going sideways. it would be great if we don't take out today's high on Monday because then we would have at least Monday's high as some sort of level. So you're looking for ceilings and floors. Right now it blew through the ceiling. Like it's way up there and so there is no ceiling and the floor is so far below us it's just too dangerous to jump on that. So you just want those to tighten up and we'll see. Maybe we'll talk about this, you know, next week on IBD Live.

34:26Mike Webster:Yeah. HTFL. One to watch. All right, Webby. We are ready for your charts. Okey-doke. Let's see. Oops. Wrong one. Tell me if you see it. We are seeing Spy Weekly. Okay. This is our Bob Weir. Take a step back and looking at what we're going to do is go through a bunch of charts. If this is your first time with us in each one, we're going to just let it talk to us and tell us a story. And then we're going to put all those pieces together and kind of the whole mosaic of it. So let's blow this up and see what we can see. So on a weekly candle, it's a good candle, kind of a continuation from last week's move.

35:10in last week's move built on the expectation of the prior week, which was just a great candle where we shook out below the lows of the prior weeks, closed at your highs, your expectation was a big move up. And that's what we got. Yes, last week's move was, you know, gave you the expectation of you could have been down a little bit and that would have still been okay, just digesting these gains, but it was able to build on those. So from this, it just looks like, you know, kind of like over here, you know, just like a continuation move. And it doesn't give you an expectation of blasting forward the next week, but just inching up is the expectation that it leaves us with.

35:52Let's take a look at the NASA composite. Kind of similar. The body is quite a bit smaller than the other one, but it does kind of give you that same general feel of sideways to higher with that. So that's from a weekly standpoint. Now we're going to go to our regressions. Right now we don't have a regression on SPY. So that broke over here. And so we had to kick that out in late June because we had started it over here on April 8th and we'd stopped it 50 days forward, which was on the 17th. So this one we're waiting for a new trend or a new regression. Same thing with the NASDAQ. But as you said, we have one on the RSP that has been intact this whole time.

36:44And when I put that on, I don't know, a few weeks back, it really got me bullish because the same starting point, the April 8th and the same end points of the 16th, or I think that was the 16th. And this came down and tested the minus one standard deviation in a very classic way with when it did that, if this was for real, your expectation was a bounce right up to what I call home base or your white line, your regression line. That's exactly what it did. Then it came back down one more time, held up better than the one before, came down just underneath the one standard deviation And my kind of key is this dash line.

37:29The green is a green dash line is a minus 0.75 standard deviations. And that's where you gun it. And that's exactly what what happened here is exactly what you would expect it to happen. And that gives us so much feedback because it means the average stock is acting normally and still in the same channel that was set back in April. So while we got disconnected with SPY and NASDAQ from its original channel, going back to the RSP, nothing has changed. So the character of this market has remained the same. Song remains the same, some might say. All right, now we're going to go over to the 50 % retracement.

38:15And this really helps you to separate which one is acting better, SPI or NASDAQ, which I think is obvious. So we have our high here from June and our low from June. And the yellow line there, that's your 50 % retracement of that move. And we're above the northern hemisphere. So we're up there in Canada. So that's cool. um now uh you know you know what can i say okay so now maybe i'm gonna go with alaska we're up in alaska yeah i want to do another alaska cruise those are fun okay so now we've got the same basic high in june but our low was more recent here at the end of july and we're in the northern hemisphere up there but we're not beyond uh we're up in like i don't know minnesota or something So that's that one.

39:13Now we'll move on to our lines in the sand. So we're through all the lines. We're up near highs. So on the way back, where would you want to pay attention? So let's just blow this up a little bit. But you'd want to pay attention to the lows of August 6th, the 767.46 low. But that's not super important. But what is really important is a low from the 4th. We don't want to be closing underneath there. That would also put us underneath the 21-day. We would have to really change our stance on the market if we got down there. So it's nice that that line in the sand is not too far from us. Sometimes it gets really far away, and then you could have a lot of damage before you know there's a problem.

40:02And these lines down there, we'll deal with those if we get down there. The NASA composite still needs to get up to highs. The most important level on this, and it's very, very important, is the low from there on the fourth, that follow-through day in spirit. And you do not want to close under there. a test under there intraday would not be ideal, but a close under there would be really, really, really bad. So we don't want to see that. Next, we've got our Webinacci on here. If you're new to this, this is basically a bunch of moving averages using the FIB numbers. So a three, like a three and a five and an eight and a 13 and so on.

40:46You can just Google all of those. and the white line is your current price. And so the bottom, it's very simple. It just adds up if a short-term moving average is above a long-term moving average. So is your three above your five? It gets a point. Is your three above your eight? It gets a point. Is your three above your 21? It gets a point and so on. And that's for all of these. So it can go ranges from zero to 45. And let's just kind of zoom out to kind of get a sense for how this one works. And I do think I did a Webby Rimmel's on this one if you want more info on how this one works. It's on my YouTube channel, Webby 5150.

41:29But in a nutshell, what it is, is you're looking at levels that it's hit before, but also, you know, is it above the 35 level? Is it above the 40 level? Those are some key points to look at. and really is it pinned to the top for a long period of time and those are the type of markets where you want to be keeping that foot on the gas because the trend is your friend as they say so let's look at the nasdaq um and that's back up there as well let's look at the rsp and quite a bit different right i'm going to toggle back um let's do the queues versus the rsp So here's the Qs. It dipped all the way down into the 20s.

42:13And then the RSP, when it dipped down, it stayed above that 35 level. So it kind of tells you, you know, the different environments that you're in. Then we're going to go to our next one. And this is, what is this, Allie?

42:28Mike Webster:This is the 21 only. And we're nicely above it. And the 21's in an uptrend. Okay. Two thumbs up. All right. And let's look at the NASDAQ. We also are trending above the 21-day here. So you can see the clear difference between the choppy action that we had the prior two months, a definite change, at least in the short term, here with the action above the 21-day. And again, circling back to the fact that we are either on the cusp of a power trend Or if you have Webby's lens, you know, Webby's glasses on, he's looking at a power trend in spirit for the S &P starting now. Yep. And you can see, can you see my chart?

43:16Yeah. Okay. So you can see that I programmed in the power trends in green on here, my style of the power trend. And I guess when you invent it, you can modify it if you want to. And so this is restarting here today because it only has the two elements, not the four elements in there. Again, the two elements, 21 day, you're low above the 21 day for 10 consecutive days. And you're 21 above your 50 for five days. I'm having some problems with my charts. Just give me a second to minimize some things. No problem. Sorry about that. Okay, I'm back. All right. So with this, at the bottom, we've got our, what is that?

44:05Mike Webster:It's the Webby RSI version. What does that mean? 5.150. What a silly name. 5.150. I know. Please interpret that for us. Yeah, we're looking at the low versus the 21-day expressed in ATR. And when you get a market turn, you want to see those big blue spikes. Perfect. And you want to see a wall of blue and that's what we're getting here. And so that's just telling you that you have sustained power when you're looking at SPI. Now let's take a look at the NASDAQ. And you've got a wall there, but it's kind of like a baby wall that you can like step over. We want a bigger wall. Just being frank, you know, you want to just call it the way you see it.

44:49And I would like more distance between the low and the 21 day. and that's what you see over here. So I'd want it more like the wall that we had originally. It doesn't necessarily have to get all the way up to three, but I'd like to at least get up into the two range. Let's see what RSP has been doing. And that's been building on itself. Very interesting. Actually fascinating that this is the highest level now that it's had this whole run. And so it's just really, wow, that's fascinating. Accelerating. I had to look at that. Say again?

45:26Mike Webster:I said it's accelerating. Yep, accelerating. And then let's, okay. Now we're going to look at the Bob Marley off high indicator. And this is just measuring those pullbacks. And so for this one, I'm using the VOO instead of SPY because it had that bad print in there. And the way we look at this one is just saying, okay, during that pullback, were those levels held or not? And so this is a measurement off your highs. So on June 9th, it hit its worst level, and that was about four and a half ATRs off of its high. When it pulled back the next two times, it stayed within that, which was telling you it was a very constructive and healthy pullback.

46:14The ones that are unhealthy keep getting bigger and bigger. So let's take a look at the NASDAQ. This is what you don't want to see. And if you were trading NASDAQ during that time, you felt that where it hit a low off of its highs, and then it got worse and worse and worse. And it started off with its worst was at five ATRs. Then down there, it was six ATRs. Let's take a look at the RSP. and that one has held up nicely and at the worst it was 2.8 ATRs off of its high so it's just telling you that that's been a much better interest uh instrument to trade and a lot uh a lot easier so those are my charts and I did it in oh my god 47 minutes wow that's awesome okay so summing

47:08Mike Webster:everything up. Strength in RSP, I feel like, has been sort of a recurring theme throughout today's episode. So what do we take from that in terms of stock selection? Should we just be trading RSP? What stocks should we be looking for? Well, I think yes. And we had had a variation of RSP on Swing Trader for a while, a double of that, and removed it into strength just to basically put money elsewhere into faster horses. I regret that, frankly, you know? And so I'm now looking at a way, trying to figure out how to get back into RSP either naturally or either directly or indirectly, meaning something, another vehicle that's similar, that's very spread out.

48:02because I think what we've been seeing is just this rotation has just been killing us. You know, like I was trading some cyber stuff this week, and they came down just enough to knock me out. Now, if I had a very low cost basis, it wouldn't have knocked me out. But if you're starting late in the game, they kick you out just enough. So I would still say stick with the broader ones. There'll be plenty of time, if this is for real, to pick off your individual stocks or your individual sector ETFs. But I would use as your base more of your broad-based ones, your SPIs or the QAL or the RSP or Qs or IWM or things like that, or even like total world indexes or total market indexes.

48:55There's a million ETFs out there and just put the, have the assets in there and then one by one, just sell those off to buy the stocks as a setup. I would be looking in those areas that we talked about in medical. I would look in the energy space. I do think you don't want to get too heavy there because you could get hit with some headline that knocks you out of your position. So I always leery about being too heavy in something that could have a news event. The charts look good. And I just wouldn't, you know, if you want to dabble in the chip space or in the microns of the world, the memory space, I would do it more through an ETF.

49:44That's how I'm doing it through DRAM. I'm just trying to keep the position size smaller just because it's not a sure thing that we're out of the woods there. We could easily just chop around quite a bit. And I'd be very selective in the chip space. And so I would broaden out. When you screen this weekend, what I would do is just do a very basic screen. Use$10 minimum. you want it to always be above the 50 day and the 200 day. Those are like non-negotiables. There's some exceptions, but for the most part, when you're screening, that's what you want to do. I would say within 15 % of your highs, that'll get rid of a lot of the things that have fallen and have been hit really hard and are bouncing back.

50:33They could have a lot bigger moves, but you're more likely to get chopped in them. So 15 % off highs helps more than you would think. Then you would put some sort of liquidity measure on there. I would use$75 million volume, not share volume, dollar volume or higher. And that'll give you a good list to start with. Now, if that's still too much, then you can put something like the composite rating on there and put a composite rating of maybe you could start off with just 50 and higher. And if that's too many, you can raise it all the way up to 80 or higher. That's going to be your best merchandise.

51:12When I'm screening, I like looking at more stocks, even if it's stocks that I'm not going to trade, because it gives you a feel for what is going on. Like some of the stocks, if you're too tight with your screens, you're just going to miss those. So this weekend, I would do a lot of screening. When you do it, sort of by the IBD's broad sector. So we've got that in market surge. So you can see all of the energy stocks together, all the chip stocks together, rather than on an industry group level. I think it's more helpful. Use the Growth 250. If nothing else, it'll save you a ton of time.

51:51Mike Webster:I know. That's what I'm going to be doing. Going to hit the easy button. So along with that, you're going to be doing that while you're playing with Chloe. So what's going on with Chloe these days? Oh, my gosh. thanks for always humoring me and she's so fun to talk about i can't believe she's going to be one soon and she just amazes i know can you believe it no she just uh amazes me on a daily basis um with her intellect which uh of course every parent thinks their baby is a genius but But she knows how to point now. So she can identify colors, objects, animals with pointing. Even obscure animals like moose, point to the moose, point to the yellow.

52:45Mike Webster:And my husband and I will just be having a conversation or something. And she'll chime in and she'll add, like she in context, she knows what we're talking about. kind of the baby version like yeah you know with golf you know my husband was holding her last week and he's like oh you know this player such and such is on the bubble and she starts going bubble bubble bubble bubble uh yeah she knows how to make an elephant sound so we're like learning beyond just you know the farm animals and you know your standard animals and things but she just amazes me she can point at buttons and she's just the best you gotta get her an ipad or something soon to play with you know like i'm sure there's lots of like kid like age appropriate games for if she can point like you know point to the cat point to the you know yeah get her started and then like point to the cup with handle point to the right i know one day right yeah she was helping me set up my workspace this morning putting on makeup with me so uh oh that's yeah that's wonderful we're so best we're so happy for you that's the is my the highlight of my week i get to to i feel like i'm there watching her her her grow up so that's all it's i it's and it honestly is helpful to have this because i'm gonna have to go back in because i have her little baby book that I've been so bad at keeping up to date.

54:17But since her birthday's coming up,

54:19Mike Webster:you know, the different milestones of, oh, when did this happen? I'm actually going to refer to this show to kind of help me remember, have AI look at all our YouTube videos and tell me when her milestones were. Well, if I was in charge of the video department, what I would do is I would have everyone drop everything they're doing and go to all the Friday SMTs and take that last little, just take the last 10 minutes out and put it together in one reel because that's more important than whatever they're doing. I think it is. It really is. But that would be a fun thing to watch back like at some point, like when she's like 16 or 17 and has her first boyfriend and you really want to embarrass her, you'd be like, look at this old hippie that I used to hang out with.

55:09And he would ask about you. I know. She's very loved.

55:13Mike Webster:Wonderful. She's a very loved child and so much fun. So circling back to the market, everyone for next week, this has the potential to be a very special time. This is the time you want to be building your watch list. And you put things on your watch list that don't necessarily mean you're going to trade them, but you want to observe, and that's very important. I will say anybody who watches IBD Live or subscribes to IBD Live, every day I'm doing the IBD Live watch list again. I paused for the better half of a year as I was working on the ratings and the Growth 250 revamp, but now I'm doing those again.

56:00So I'm spending hours and hours and hours every day putting that watch list together, and that's the watch list I use for myself. So if you want help with your watch list, I'm not saying it's the perfect watch list, but it's my watch list, and there's two of them, and this is what everyone should do. You build your general watch list. I call that a universe list, where you dump anything in there that's important that you just want to watch. Then you go through, when you're done with that, you play through that slowly, and you ask yourself, you look at each chart, not, is this your favorite stock?

56:37But each chart just go, if it did something on the next bar, would I buy that? Yes or no. Yeah. If the answer is yes, you put it in that separate list. We call that our ready list. So I give you every day, I give you my universe list and my ready list. So that ready list, it's not the best ones of those. It's just the ones that are in position. What does that do? It gives you feedback on the market. Because if you've got a ready list, let's say you've got 30 names in there. and all 30 of them break out and fail or the bulk of them, you know, they go through a buy point and then they come down collapsing.

57:12Well, that gives you a lot of info. If they build from there, you know, the majority of them move up through their buy area and continue, that gives you other feel for the market. So getting a feel for the market isn't just what stocks you're trading and how you're doing. It isn't just the indexes, it's also your workflow. and your workflow is probably the most important thing that you do to get a feel for the market. So make sure you're doing that over the weekend. If you're interested, I do have a source of funds video. I think I mentioned it earlier, but that drops tomorrow morning on my Webby 5150 channel.

57:55And it basically walks through that concept. But in a nutshell, you can save your time and not watch it. just say, when the market turns, find your exposure level that you want to get to. 25%, 50%, 100%, whatever it is, look around. If you can't find stocks to buy, buy broad-based ETFs, then those become a source of funds. So as the stocks start one by one breaking out, then you sell off that chunk. If you want to buy a 5 % in XYZ that breaks out next week, sell 5 % of your SPY and you buy it. And then you don't have to increase your exposure. So it's just something I developed a couple decades ago.

58:34And the first time I'm really explaining it. So hopefully you guys watch that this weekend.

58:41Mike Webster:Yeah, I love that strategy. I think it makes so much sense for market turns, you know, getting the exposure that makes sense for that moment in the market. but really thinking about stock selection too. Well, what it does is it helps you with the FOMO because we all have FOMO. Anyone who says, oh, I don't trade with FOMO, go look in the mirror. You trade with FOMO, you just haven't realized it yet. I trade with FOMO, Allie trades with FOMO. Everyone on the team does. I don't care what they say. I think everyone would agree that they do. So what you do is you try to have techniques to keep that in check.

59:23So if you're saying, okay, the market out of follow through day, it's starting a power trend, man, I want to be X percent invested. Let's call it 50 % invested. But I can't find anything, which is really hard to find anything. And so you're sitting in cash. And then each day you see that the market in shop and you're like, then things are even more extended. What happens, human nature is, you just capitulate and then you just go, forget it. I'm going to just buy 100 % and you buy it at the top. Things come in, you get chopped up. So this allows you to get some exposure. And yes, you will get chopped up doing this at times, but it'll give you that exposure so you don't have that FOMO.

1:00:06Mike Webster:Yeah, exactly. And it also means, you know, say the follow through day happens and you know you need to get exposure and, you know, not just buying stocks out of position at that time. Maybe your timing is there, but the stocks, like you said, they're not set up where they need to be. So then you're sacrificing either quality or taking on added risk. So I think it makes a lot of sense. Well, thank you. And I will Venmo you later for saying that. And one last thing that we should start talking about on Fridays, and we haven't talked about it yet, but the Founders Club is coming up on September 26th.

1:00:42It's in Vegas. and Allie can't make it this year because of her little one and we would not want her there with her little one because she's supposed to be mommy on the weekends but next year she's going to be there emceeing it I'm sure or doing a presentation but this is similar to the old workshops we used to do with Bill in Santa Monica it's kind of a two day event Friday in the evening we'll have kind of a get together or reception cocktails water depending on who you are and then the next day it's all day we've got eve we got uh matt we have um the market wizard chris with uh justin and chris are going to be speaking sinclair is going to be speaking i'm going to be talking about follow-through days without volume not about dirty volume but about um really how to use them um and so it's a great event and if you can't make it there, this is the first time we're actually selling, you know, the video, I guess.

1:01:49And so hopefully it's all, I think if you can make it there in person and it fits your budget, I think it's a great event because you're just around a bunch of other people like-minded. It's not going to fit everyone's budget. So don't worry about it if it doesn't. You know, there's plenty of free material that we have here, but if it's for you, It's always fun, and we always dig it there in Vegas. It'll be a good time.

1:02:14Mike Webster:Yeah, so if you want more information, investors.com slash FCVegas. All right, thanks so much, Webby. We always appreciate wrapping up a Friday with you. I'm actually going to be out the next two Fridays. What? No, you can't. For various reasons. You cannot. You were out a couple Fridays. Now I'm going to be out a couple Fridays. Okay, well, Justin and I will hold down the fort. You will more than hold down the fort. It's going to be great. All right. Then we're going to have to have a three-week catch-up. The Chloe three-week catch-up. Yeah. So that'll be fun. That'll be fun. I know. Will she be walking by then?

1:02:52Mike Webster:I hope not. She'll be driving, I think. Because she's going to be sprinting through the house whenever she starts walking. I think so. It's a little scary. We got to talk baby-proofing offline. I know. All right. Thanks, Levy. See you next time. Thanks, everyone, for tuning in. That's it from us for today. We hope you have a great weekend, and the team will see you back here next week. Bye now.

1:03:31Mike Webster:This show is for informational and educational purposes only, and nothing should be construed as a recommendation to buy, hold, or sell any securities. Any securities and investment strategies discussed may not be suitable for all investors. Make sure to consider consulting with your financial advisor before making investment decisions.