The Compound and Friends - How to Spot a Bottom in Stocks

Episode Date: January 21, 2025

On this TCAF Tuesday, hear an all-new episode of What Are Your Thoughts with Michael Batnick and special guest Steve Strazza, Director of Research at All Star Charts! This episode is sponsored The Compound Insider. For a chance to win a SIGNED copy of Josh’s new book, subscribe here: https://www.thecompoundnews.com/subscribe   Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews LinkedIn: https://www.linkedin.com/company/the-compound-media/ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of RIDHOLES Wealth Management may maintain positions in the securities discussed in this podcast. Steve Straza, I see you bopping your head in the background. This is so fun. A little, what, Tuesday afternoon live?

What are your thoughts? So I am excited to have you. I'm a big fan of yours. I would say you're like the me of all-star charts. You're JC's counterpart. What's a better word? Conciglieri? That's not the right word.

It's nice to hear you say that because I've always, like, you've inspired me over the years and the way that you do these shows and handle Josh, who's a big personality. I've taken a lot from what you do, dealing with JC. I just joked off air that we try to turn his mic down sometimes. How's that working? It doesn't. It doesn't. All right.

Thank you, everybody, for joining us. It is five o'clock on the East Coast and we are about to have some fun. Josh is handling some business, so I brought in the next best thing, which is Steve Strazman from All-Star Charts if you're not following Steve, following J.C. and the All-Star Charts team. There is a lot of them they produce, in my opinion, the best chart synthesis analysis in the entire business. And I'm excited to have you here today, Steve.

And we have fun. Thanks, Mike. We have lots of fun. Yeah, you have lots of fun. All right, so you got it. You got it. Today's show is brought to you by the Compound Insider. If you want to know who's gonna be on TCaf next week, all you have to do is sign up. You'll get the latest Compound content, a sneak peek on who's on Thursday.

You could already know who's on Thursday, but you don't know if you're not a subscriber. For a chance to win a signed copy of Josh's new book, you aren't supposed to see that. Sign up at thecompound compound news.com slash subscribe. All right, Mr. Strauss, and we're gonna rewind the clock a little bit back to the third week of December. My dad sent me a newspaper article. Yeah.

Talking about the Dow Jones, the industrials had a 10 day losing streak. Charlamagne, John or picture on when dad sends you things, do you pay extra close attention? He really, he almost never ever does with the market. So I just thought this was kind of cute, but this was December 20th Dow plunges more than 1100 points and marked its longest losing streak since 1974. John, we've got a chart for this.

So listen, I don't you see like those 10 red candles in a row. I don't know why this happened. I can't explain it. I didn't try to explain it then. Maybe I did. But it happened. And so everybody got pretty bearish. And before we get to where we are today, I want to have a Steve Strasser chart on to talk

us through where we were, not just the industrials, but the average S&P 500 stock. John, the second chart that Steve put on the bottom, or the first chart? If I could just speak on streaks quick, we've back-tested the streak data because it's interesting. right? And every now and then we'll get something where it's like, oh, you know, we just had it for the Dow Jones, what, like a month ago, right? Where they had eight straight up weeks and we've gone back, Mike, and we've back-tested it and there's really nothing there. Like you'll get a big win streak in a bull market, you'll get a big win streak in a bear market. There's really no signal, but it is a cool data point and does get a lot of clicks and headlines.

Okay. So it did that, but it wasn't just the Dow. Look at this gorgeous chart that you have of the S&P overlaid with the average 52-week drawdown. I mean, we did get a pretty healthy correction. The average stock was in an 18% drawdown. Breath was bad. Breath was like at that point where you had to really start to worry as a stock market

bull, right? And it looked like things were rolling over. And then if you remember, right, Friday, two weeks ago, we had like a decision day where all of these downside resolutions, and then they just came in the next Monday, they reversed it. And then if you can, John, throw up that new highs chart. Not only did they reverse it at the index level, but breadth is now definitely supporting it, right?

This little reaction rally that we've seen, new highs are blowing out, new lows have more or less evaporated. So this was a big, last week was a huge week for repairing some tactical damage. And there was damage, like you had a chart that you shared of stocks at a one month low, like number of stocks at a one month low, and it spiked. It was pretty ugly. There we go. It was pretty ugly.

That's a new cycle high, right? So that's kind of what I'm talking about. This is one of those charts where we were looking at a week and a half ago and being like, uh-oh, Mike Hurley, who is basically like, he's the authority on breath analysis, uh, for our CMT folks. He calls it a fall day and a fall day is like the first shot across the bow where you have some really negative, nasty breath, uh, big price levels are breaking. And it felt that way Friday, a week and a half ago. So again, like they've done over and over and over again. How many bullish wipeouts have we had over the last decade?

Yeah. Right. The best pattern for the last, I don't know, year and a half is the top, but not betting on the top completing, betting on the top failing, but you get all of these topping patterns and they fail and they reverse. And those have been the best entries for the whole bull market, betting on the failure of the market reversing. SIDNEY MENON I love it.

I love it. So, all right. So coming off the back of that 10 day losing streak that got all the headlines, and it wasn't just a losing streak, as we just mentioned, it was legitimate. The breath was really shitty. Jason Gepford, a sentiment trader, just tweeted last week, a week for the history books. The S&P 500 just strung together five straight days with more than 68% of its stocks advancing, which I think happened today as well.

That ties the record going back to 1928. We're close to one of those periods where you're not going to want to go on Twitter, right? Because everything on Twitter is going to be about the breath thrust. What do you mean? We're close to a Whaley thrust to a Whaley thrust. Yeah, right. So we have all these cute names as technicians, right? 68% 70 Whaley is hold on, I got it right here. It's something like 73.58%. So we get really into the numbers here with our breath thrust. Here's the thing to know about market internals and initiation readings. When they're worth paying attention to, the whole world knows. It's like sentiment. Everyone's very loud about it, and my breath indicator is firing, and your breath

indicator is firing, and Whaley's is firing, and Mike Hurley's is firing, and everybody is on the same page. This was a huge initiation thrust. I'm talking about like May of 2020, right, off of the pandemic lows. Third quarter, October of 2023, these huge breath readings where we all agree and all the indicators lined up, something about 68% of stocks increasing. No, that's tough. That's tough.

He's curve fitting that data and it's okay because we have had five consecutive weeks, but we're up in the high 60s. I get it, but it's not. When you say strong breath, I mean, to quote the great Mr. Peretz, how could an overwhelming amount of demand for stocks be bearish? No, it's great. Coming off, a lot of these breath thrust indicators too, Mike, they calculate where we came from,

which is very important. There's context built into them. I think it's the Whaley. It calculates when you come from a- Say Whaley one more time. Yeah, Whaley's good. To an extreme high, right? And it's that corrective mode where the market comes in and basically repairs the damage of some sort of corrective phase that you get some really strong readings. What do you see inside the Russell 2000 or the S&P 600? Because we're talking about

the big boys now, but they haven't made a new high in a long time. I think it's been like 840 days since the Russell 2000 made a new all-time high. It's like the third longest streak ever. Are we seeing some strong internals there as well? I think like every now and then we're lucky and we got like a really clear and clean level that we can trade against. And that's the story with small caps right now. Like there's no reason to overcomplicate it. I wish I brought a chart, but like you could just draw a horizontal line.

I don't know, 240. Yeah. Right. Those highs from late 2020 Where we also peeked out and rolled over a month or two ago now, that's it Right So if we take out those pivot highs and those prior cycle highs, it's go time and that's probably one of like the best Bullish signals we can get for the broader market

But why do people get scared when we when we bullish, when we say it's go time? Are people afraid to make money in a bull market? What's crazy is that there's a lot of that talk, and then we talked about this chart of the Russell 2000 that still has not broken out. Most stocks, the S&P 500, you know this, doesn't do a very good job at showing us what most stocks are doing. It's showing us what 10 stocks, maybe the 50 largest stocks are doing. It's a great representation of most people's portfolios, and that's why we talk so much

about it. I think that's great. However, if you want to know how most stocks, the average stock in the market is doing, you want to look at the Russell 2000 or the value line geometric. They're going to show you, those charts are going to show you what the average investor is doing in one of his investments and really haven't taken out the prior psychological yet. If you paint it that way, we could just be getting started.

You could paint a bullish picture that we're in the third or fourth inning with the chart of the Russell 2000. Steve, I should have done this at the top of the show. Thirty seconds like, who the hell are you? How did you get here? Because you weren't always a technician. No. Actually, I started in the big four.

I have an accounting background, so my early days was all fundamentals. It's been a really nice ride being able to take that fundamental background. I started out as a CPA working for Deloitte and auditing public company financials, and now moving into technicals. It's been a blast. I try to pair the two together. We're going to move on to … Anyway, to put a bow on this, go ahead. You want it?

This is like we've been tracking … You know this. You read our note. We've been tracking these insider filings hardcore for, I don't know, four or five years now. We've learned a lot. We've back-tested a ton. Nancy Pelosi is really good. 95% of the headlines about Nancy Pelosi's insider trading are not real, but it's not

to say that she's not great. She's beating the market. It's fantastic. So she just filed, and I feel like this is the second coming of Warren Buffett for Apple. She just sold $8 million worth of Apple stock. She's a permable, Mike. She just sold $8 million worth of Apple stock. She's a permable. She's only getting long. She buys deep in the money call options on all the magnificent seven names. She's nailed all of these trades. She was in Nvidia way before people were talking

about AI many, many years ago. She's dumping Apple. It's not her full stake, but it's a lot, $8 million. So did they not pass a law or were they just talking about passing a law that these people can't do this anymore? It is such utter garbage that they're allowed to trade. I could not disagree with you more. I think that these people are underpaid in the most disgusting way. We want the best and smartest people to run for public office and to run our country and

to run our states. How can you incentivize good people to run for public office and to run our country and to run our states. How can you incentivize good people to run if, first of all, what did they pay, $125,000 to be a senator? And now you're going to tell them you can't invest in the stock market? I don't think that they should be able to trade off of information that the rest of us have. And dude, it is a golden ticket to riches outside of their congressional duties. Come on.

They're not supposed to do those things though. Come on. All right. But I do appreciate the disagreement. But let me ask you this. Do we know where this is happening? Is this her advisor? Like, is she literally doing these trades or does she just have a phenomenal advisor who's

a terrific stock picker? I like, I found it hard to believe that she's actually logging onto her Schwab account and doing anything. It sounds insane. No, it's a great question. Who's her guy or girl? Like that's the real question. Well, we can only speculate, right?

And what, what people will tell you is that it's her husband. His name, Paul, Paul, Paul's got the alpha. What does he do? It. His name Paul. I think it's Paul. Well, Paul's got the alpha. What does he do? He gets all the credit. He gets all the credit. But we have no idea. And what I will say is that they report these filings and they can give us a lot of detail

or a little detail. Like, for example, like the range for her Apple sale based on the filing requirements, she could have told us it was between 5 million and 25 million. That extra in the description, she tells us 32,000 shares, she doesn't have to do that. So her filings are extra descriptive in a way where we can go back and really trace how she does. And that's fantastic because most of the political people who file these things, they don't give us that level of detail. I love how you say they're underpaid and then she sold $8 million worth of Apple partial stake.

I mean, she's one of the wealthier ones. I don't know what you want me to tell you. She's done well. But do we have, there must be like a composite or like data beyond, beyond Pelosi. Like, do these people outperform or is she just the lucky one or the skilled one? So last year, if you just do it in the most crude way, and there's no perfect way to do this, right? So they have like these trackers, like the Pelosi trackers, it'll get you close. It's an estimate though, right?

Doubled the performance of the market. She was up like 48% last year. So dude, she's an extra cap weighted index is what she's running. She was heavy in Nvidia, Microsoft, Apple. She's got Palo Alto. And then what stood out about this one, some new names, like she's, she's all in on these mega trends and she's usually, usually early. Uh, Vistra and Tempest AI. Wait, is Vistra that's the, that's the giant utility winner?

Yeah. Vistra that's VST, right? It's like, it's like Constellation, right? Uh, one of the best performers in the S&P 500 last year, I believe. And then look at Tempest, E M. I don't know. I don't even know that name. She's YOLO and AI stocks. Tempest. What? Okay.

Tempest. What is that? Is that a small company? Tempest AI. It's something that Nancy just bought is what it is to me. Okay. So it's up 35% today. And that was on this news.

So to be clear, yeah. Why do we follow these filings every day? I mean, you get a pop like that, the stocks up 37% on the fact that Nancy's buying call options. It is amazing how stocks trend and we know this and it's still hard to make money off it because idiots like me get scared to make money. So like Vistra, this thing just made a new all time high today. And we spoke about this like us know nothings. We spoke about this like, I don't made a new all-time high today. And we've, we spoke about this, like us know nothing. So we spoke about this, like, I don't know, six months ago, maybe longer.

That's a utility stock. Yeah. It's a utility. Unbelievable. Um, all right, let's move on to a big story, at least in our world. Um, Nate Anderson at Hindenburg is calling it quits and not sure if anything could more perfectly capture the current zeitgeist than a short seller saying, and Hindenburg was not, their shtick was not like, oh, this company's overvalued.

Their shtick was this company is committing fraud and there is zero. And they were great at it. They were literally the best in the business. And so the weekend of Trump coin coinciding with, all right, I guess fraud doesn't matter. I mean, it's pretty poetic. It's like really chef's kiss stuff. They're forensic accounting experts, some of the best short sellers in the game. And I think this is all you need to know about sentiment right now.

When was it that Chano's shut down to two, three years ago? Yeah. Right. Uh, they're throwing like Andrew left in jail. Yeah. Um, like short sellers cannot survive in this market. Elon Musk, who's maybe the most public opponent of short selling now has the best seat in the white house. It doesn't work. The president just launched a meme coin. I would imagine a boardroom meeting or a company like this or Citron, and they're sitting around like, guys, this is just not a good idea anymore. It's a horrible business.

A company can announce that they're committing fraud and go up 50% that day. So it's not a viable business model. I will say at a certain point though, you start to miss these companies because they do call out and expose market inefficiencies. Oh, I think that the short sellers play a vital role because again, this guy is not shorting expensive companies. That's not what he's doing. He's like, no, no, no.

And matter of fact, he said nearly 100, so he wrote a letter, like a going away letter. He said nearly 100 individuals have been charged civilly or criminally by regulators, at least in part through our work, including billionaires and oligarchs. We shook some empires that we felt needed shaking. Yeah. Yeah. Charlam. So I forget who put this together.

So my apologies. Oh, there we go. Mint research basis. Okay. They almost never miss. So, I forget who put this together, so my apologies. Oh, there we go, Mint Research, Basis, Hindenburg. Okay. They almost never miss. Look at how little green there is on here. This is going back to 2017. 51 of 63 companies now trade at a lower price compared to before Hindenburg.

Put on a note on them, giving Hindenburg success rate of 81%. And if you think about the type of market that we've been in since then, it's been a bull market. And this, I. And this is an unbelievable track. So I think it's a great loss for the investment community because you need people like this because otherwise companies start to get really brazen if there's nobody keeping them in check. Yeah. No, you need some good forensics. And I come out about short sellers and I'm typically on the other side of this. Meaning what?

It's hard for me to understand a short seller's life. You zoom out on the chart of the S&P 500 and I just wonder why would you want to be in that business? Trying to bet against the market. So it's tough for me and usually I come out and I'm like, these guys are terrible. These were some of the good guys, Hindenburg. Really the best in the business and they'll be missed. New shops will keep coming up.

Right. Um, and the new way they're doing it is they're combining the media company with the investment company. And it's a whole liability thing. And it's a whole jumping through all these hoops legally. Um, but they're trying to figure out a way that basically what they were doing at Citron would not be illegal anymore. Do you guys do anything on the short side?

No. We have one scan, so we'll put out maybe 10 short setups a year, but very little, especially in the bull market. Sometimes we'll just kill it. Okay. Okay. All right. So we got some moving and shaking out of the White House today.

Today was his first day in office. How does that work? Is it yesterday's first day? So I don't know. He started doing things yesterday. And I'm trying to pay attention. We have a market holiday, so I'm catching up on work, reading emails. I have it on the background.

I think, anyway, almost 100 executive actions, right? Think about all the talk. Let people say, listen to, don't listen to what Trump says, watch what he does, right? All of the talk about tariffs, all of the scary rhetoric around China, 100 executive actions, I think 68 yesterday, 48 executive actions, not a single tariff. Well, not yet. So they're saying it's going to be February 1st. The point remains

that he comes out and he says there's going to be these monster tariffs. There's going to be a ton of them. We're going to impose them on every country. And then it's going to be a watered down version of that. So the market might react based on what is said, but then comes out here and it's completely different. And then if you think about China and the situation,

China was a huge winner this weekend. Look at what happened with comes out here and it's completely different. And then if you think about China and the situation, China was a huge winner this weekend. Look at what happened with TikTok. They're going to strike a huge deal, I think, the United States and China. And like some of these tech companies out there, they're almost as big as the tech companies in the United States, and they're trading at single-digit price-to-earnings multiples. These are the best tech companies in the world outside of our tech companies in the United States. You'll never get them this cheap. JC was talking about being along China last week. You guys are you guys are in on the trade?

How are you guys playing it? Sentiment couldn't be better, right? It's one of those situations where we're just like looking at this rounding bottom that's still playing out, right? We're still in the sideways trendless mode, but we're building. It's clearly an accumulation phase and sentiment, the kind of sentiment that we're seeing at these lows. Can't get worse.

This is mega trend sentiment. I try twice. I try twice to nibble, but I'm, so when I try and buy bottoms, I'm out really quickly. Yeah, but you're like buying call options in JD. No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no but you're buying call options in JD. No, no, no. No, no, no. No options for me. I'm a common man, common stock.

I think the big dynamic and the big story here is that emerging market money managers ran from China. They fled from Chinese equities and into India. The prices and the valuations of these Indian equities now have been really bit up. There's a ton of money just sitting there on the sidelines waiting to be redeployed back into China. I think we're going to get back in. Yeah.

I think China is the biggest story of this year. Everybody's going to chase it. Two years from now, everybody's going to be talking about it. Yeah, you're right. Let's assume that there's going to be some executive actions, executive wars, I don't know what they're called, on tariff, and that there's going to be some executive actions, executive words, I don't know what they're called, on tariffs and the market's going to be volatile. How do you stay sober throughout the volatility? Do you use weekly charts?

How do you recommend people calm down a little bit? No, you use the trend. It's the same way that you would approach earnings every quarter. You trust the underlying trend. Then you just know that if you do that over and over and over again, you're going to be right and get a 20 or 30% upside reaction more than you're going to get that 20% downside reaction. Why?

Because surprises usually happen in the direction of the underlying trend. Absolutely right. All news events, like reactions to all news and headlines tend to occur in the direction of the underlying trend. Almost always. Not always, of course, but like the overwhelming majority of the time. It's a general rule, right? So it's, it's wrong all the time.

I was in, um, what was it? Love sack. They make couches love love sack. Is that a store? Hold up. Love this perfect base, right? Love. L O V E L O V E.

How is that not taken? All right. The love sack company. You don't know about these couches? No, this chart doesn't look good. Right. But look at it and then zoom out like two months ago. Right.

So I bought this trend reversal pattern and then it gets slammed back in the box. That's going to happen. That's actually a great example because that's like a clean breakout and it wasn't that happens. It was a good breakout. So you buy that and you trust that the earnings reactions that follow will occur in the direction of the underlying trend. Yeah. And every now and then they're not going to write and you're going to get slammed.

You're going to lose 20%. When I try and buy bottoms, which I can't help it. I just it's in my nature. Like I'm not proud of it. I know it's not the right thing to do, but at least to my credit, I'm out. I'm out quick. If it fails them out and I position size it properly, I put on small positions. And you sell quick too, right? I sell too quickly. I'm out like 30%.

You bought some of these bottoms over the years. I nailed a lot of them. Yeah, but like you wrote it like 20%. No, no, no. Netflix and Facebook, I was up 100% on. That's solid. Yeah. It's solid. Netflix, I sold too early. I can't help it.

It's OK. I'm not mad. Stock is up 10% in the after hours. By the way, they're raising the prices again. I'm not mad that I sold Netflix. Who am I kidding? What a fucking winner. You make money in the market.

You did nothing wrong. True. True, true, true. OK. So I've been pointing to this chart as the most bullish chart in the world. I've called this chart out many times. And what we're looking at is the equal weight consumer discretionary market divided by the equal weight consumer staples market.

And maybe I'm wrong. I want to get your take on this. So next chart, please. So Todd Sohn did this great chart that shows consumer staples as a percentage of the overall S&P 500. And it's smaller than Apple and Nvidia. So I guess my question to you is, do consumer staples matter at all? Do they count for anything?

Yeah. Yeah, it's a good way to ask the question. Because my first thought was, isn't Apple a consumer staple? No, Apple is a tech company. You mean literally is it a staple? Probably. The majority of their revenues come from iPhone sales. Your phone breaks, what do you do? Do you shop for a new one?

No. No, it's an emergency. You run and go buy one. It's a staple, dude. Yeah. But you know my point, but like, like, do the McDonald's and Colgate's and Kimberly Clark's of the world, do they matter as a sentiment gauge at all or they just, or is that just like a moment in time and this is going to sound really stupid in a few years?

I think that the classifications have changed. I think that eventually technology won't be a sector because tech will be so pervasive, right? Tech should be in every sector, right? I think they eventually remove it. So I think it is like a sign of the times. So I still do- It probably persists. I still do like this chart as a gauge, right?

Because in a bear market, like this is gonna reverse real quickly, but these are the top 10 names. These are huge companies. These are top 10 names in xlp Costell walmart procter coca cola pepsi philip morris colgate altria mandalase and target. These are gigantic companies And I don't know like what staples do in the future, but this sector, uh going back a century you can go back 100 years From a from a risk appetite perspective, it's hard to get better data from the broader market than from consumer staples. In other words, when you

look at staples on a relative basis, they call every bull and bear market in advance. It's literally one of the best indicators that we have as technicians. So it's one of those things, Mike, where I think we trust it until it stops working. It hasn't stopped working. It's been great just the past two cycles. I mean, it's been great confirmation that we're still in the bull market. There hasn't been a single hiccup recently. They're making new relative lows right now, which is one of those things that we look at and check that box when the market's making new highs.

Okay. All right. Let's move on for the last, second to last topic of the day. Yeah, this is Davos. Have you been paying attention? To Davos, I have not. So if I told you a couple years ago that Brian Armstrong would be at Davos, which is crazy, right?

Crazy. Boy, how times have changed, right? Maybe a new president makes a big difference. I don't know. It doesn't really matter to me, but it seems like this is crypto's moment. Brian Armstrong is there. He's doing interviews, giving speeches and whatnot. They were asking Brian Moynihan this morning. I have a clip of that. We're going to play that in a second. You got that clip? Yeah. Let me show you this. I made a meme. I made a meme. You've seen Gladiator? Love it. All right. Meme on. I guess. So for those who are listening, it's

Maximus talking to Proximo and he says Satoshi Nakamoto had a vigil for Bitcoin Proximo. This is not it. And then he goes and kills some other people. Explain yourself. What does that mean? So I don't think, first of all, I think that the stuff over the weekend with Trump Coin and Melania is just the height of grifterism. It's the grossest shit I've ever seen. And I don't think crypto people are embracing this.

I think most people are like, whoa, that's not what we're doing here. I don't think that they're embracing it. Now, I'm sure some people are, but to me, this is really nasty shit. And the dude who did the pastor after the inauguration, just watch this clip, Steve, and tell me if this is what you think Bitcoin is about. I need you to do me a favor right now. I need you to go buy the official Lorenzo Sewell coin I want you to be able to see politics become manifest not just in a way where we're praying

over political gatherings but we're seeing us become the hands and the feet of the Lord Jesus Christ would you help me would you help us in this endeavor would you go and purchase the coin no I will not sir chart off I can Chart off. I can't take it. I can't take it. It's disgusting. No, it's absolutely terrible. And I couldn't agree more with you. This is a new all time high in terms of grift. But should anyone be surprised? How is this different Mike than like the watches that he pedals on his website? We know who this man is. I know man. Problem is understand what the problem is for most people. First of all, he wants to be the first crypto president of all time.

He better have a meme coin. Dude, come on. You shouldn't for an inauguration. It's so gnarly. And he already cashed out $500 million because sure, why not? Who's going to stop him? All right. So let's not- No, but hold on.. Can we agree it is unequivocally bullish for crypto as an asset class? This is this is the stuff we're talking about. Well, I don't think I don't think I don't think the meme coin pulls crypto forward I don't I think that there are a million other things like this. Go ahead I think the Solana network pulls it forward and everything cool and exciting and innovative That's happened in crypto over the past few years happens on Solana, and this was just another example of that. I think if there's any winner, it's Solana.

You mentioned Brian Moynihan, the CEO at Bank of America, talking to Andrew Vosorkin about crypto. John, if you please. On crypto, we just had Brian Armstrong sitting in the seat that you were in, and obviously there's a lot of excitement about crypto. We just had Brian Armstrong sitting in the seat that you were in. And obviously there's a lot of excitement about crypto. The banking business for the most part has stayed away from crypto. Given President Trump's full-throated support for crypto, do you imagine Bank of America is going to be full on in the crypto business if we have this conversation 12 months,

24 months from now? I'd separate out this sort of crypto versus stable assets and digital movement of money because we already move the vast, vast majority of our money digitally. Consumers do, our companies do. And so the question is, what's the business practice that you have to have to move another type of currency? So if the rules come in and make it a real thing that you can actually do business with, you will find that the banking system will come in hard on the transactional side of it, non-anonymous, transactional, verified, et cetera, because we have to because it's

just another way our customers are going to hold their money. The other thing we were talking about was the possibility that- All right, video off. This is great. So this is bullish. Now they're separating the digital from everything else. So this is bullish. Now they're separating the digital from everything else. So this is bullish. We also got an announcement today.

For immediate release, SEC Crypto 2.0, acting chairman Mark Ayuda announces formation of new crypto task force. So that's going to be led by Hester Pierce. She will lead the task force to develop a comprehensive and clear regulatory framework for crypto assets. So I think the grifting meme coin stuff is gross. I cannot be convinced otherwise. But I think Howard Linson had a great analogy for this. He said people did not stop going west just because they were killed along the way. We're going there and this is a sideshow, but it's coming.

Mike, the big banks and financial institutions, they've been ready. They've been preparing for this. Did you see the look on his face? He's like, we have hundreds of patents in crypto and blockchain. They've been sitting back and waiting. I think now this is the year where all of these things happen very slowly and then all at once. This is the year now where you log into your Fidelity account or your Schwab account and

it's all the same. Yeah. Coinbase links right to it and it's seamless and it's fantastic. There's no reason why this shouldn't be implemented super fast because they've seen this coming from miles and miles away. Given that most crypto assets are at all time highs, I'm guessing you guys are bullish on the prices. Most of them are not.

Like we talk about breadth in the stock market. It's fantastic. Breath is still pretty awful in crypto. Well, but I think most people are accessing it through Bitcoin, ETH, Solana, the big ones. You look at the big ones, just like we focus on the mag sevens, right? You focus on the big ones. If the big boys are moving in the right direction, that's, the big ones. You look at the big ones, just like we focus on the mag sevens, right? You focus on the big ones. If the big boys are moving in the right direction, that's typically the right side.

Do you personally play around with the meme coins? Are you unfair to them buying far corn? No. No. So like, JC was like mocking me today. He was literally not. No, he like called me to make fun of me this morning. I'm not buying far corn.

I didn't buy Trump coin on Friday or Saturday. Come on, man. How much time do you have in the day? Dude, I wouldn't know how to buy it is the truth. Like I don't dabble. I'm on Coinbase. I'm on Binance. Like I don't I don't coup coin. I don't. It's not okay. Okay. All right. I thought of a new segment for you, Steve. It's

called Is This The Bottom? All right. Oh, so we're gonna run through some charts. I brought 123 for you brought me charts. I brought you five charts. Oh, this is fantastic. Two of them are for me personally and three of them are for the rest of the people. All right. First chart, please. We're looking at Apple.

It is in a 15% drawdown. It weird. It went straight line up, straight line down. Your thoughts? My thoughts are that Nancy Pelosi just nailed this trade for like 80%. She almost top ticked it. She got out on December 31st. Okay. And I think you continue to see rotation, right? So you have a long-term moving average. Is it safe to say this is a 200? It looks to me like a 200. Whenever we

get down in this area, right, this is a buy zone and you tend to want to lean in the direction of the underlying trend, particularly with these big leaders. I think you buy this dip in Apple, but it's not, this isn't a chart that I look at and I get excited about. Yeah, I tend to agree. I've been on record saying like, I don't understand why Apple was up 30% in 2024. It did not have a good year at the business. It was all multiple expansions.

So that made no sense to me. I think the pullback is probably, I would say, probably a good entry point, but who knows? Then I look at other mag sevens, right? Shout out Amazon. You could make an investing strategy just around rotating through the mag sevens. It's so incredible. Remember when they used to all move together?

Look at the bull flag in Amazon. Take profits in one, pour it into another. That's been the strategy. That's been what worked. Amazon looks so mean. Remember when Netflix, they just reported. Remember when Netflix used to be included in this whole conversation, nobody talks about them anymore.

Yeah. Okay. Next chart. This one's for me. So I own this. Rates. Did rates top? Did zeros bottom? I own zeros. So why do you own this over other bond funds? A few reasons. Number one, I just thought

that the interest rating went too far, sentiment, everything went too far. I just wasn't buying it. Number one. Number two, if there is some sort of like volatility day, I feel like this will be like good tail risk protection. And number three, all I own is stocks. Like this is the only thing I own that's going to work in a risk off environment. Now, now, now, now, now, if I'm wrong, I'll sell it. So fine. It's hard for me to hate this. I also think there's like some sort of scoop and score situation going on around like 69, 70 level. Nice. Yeah. This is not like a long-term hold for me.

If I make 15%, I'm probably at 15%, 20%. So I was thinking the same way as you. Last year, I got involved. I bought a bunch of these primary trend reversals in bond funds. I got stopped out of like every one, one after the next. Yeah. No, but that chart's got scoop and score written all over it, but I'm excited about the next one I want I want all right, so it's a strong maybe from you

Okay, so dollar tree is a chart that I own and I'm just seeing gaps that I think are gonna get filled I see a gap up at up at 81 if we can get passed out. I see another one up at 94 now Of course, there's some work to do but works been listen They've been done working like they've been working a bottom over the past couple of months. So the company's in trouble, the fundamentals aren't great, but I think it got overdone. What do we think? This is so tradable. And the point that you just made about the longevity of the base is so important, right? Because you get down there and you break down to a new low and there's a key level, but you've only been there for a week. I like that a lot less than

something that's been building a nice base, and you can see clear accumulation like you can here. Then you look above, you just look a couple points higher from Dollar Tree's current price and literally from here to 94, that's a memory gap. Memory gap is an area on the price chart where buyers and sellers have not transacted much. And what happens is once we tend to get back into these memory gaps, they act in much of the same way as normal price gaps, where they get filled very quickly because there is no

price memory there. So around here, gaps get filled. Yeah. We're back. So let me call it 77, 78 for confirmation, but then you're in that gap zone and that's 20%, 20% higher than 94. That could be a killer trade. So if it goes, I'm going to add to it, but let me ask you this.

So like the question is, where's my stop? So is it like the recent lows up at 67 or is it like, I don't know that I want to hold it all the way down to below 60. I don't have that much conviction. Well, on something like this, right? The way I would measure it out, it's all about risk reward, right? So I'm measuring this out as so if I'm right on this trade, I'm selling at 94, right? So I'm out at like a 20% profit.

So I have to adjust my risk. What are we like three to one, three to one, four to one. You want at least two and a half. I mean, it depends on the setup. So I would use the pivot lows here. Yeah. Right. If it lows use the pivot lows here. Yeah. If it lows give 6% 70. Yeah.

You know what? If it breaks below that 68, it's probably garbage anyway. And listen, let's be honest, stocks like this don't serve the benefit of the doubt. They're in downtrends for a reason. And when you're looking for a stop on a trade like this, it's less about finding some like that perfect level on the chart because there is no perfect level. It's more about just adjusting that risk reward to an appropriate standpoint. And if you drop the VWAP from those lows from Q4 of last year, it's going to come in right around that same level, right around. Sometimes it just lines

up. Sometimes the stars align. All right. So obviously I will keep an eye on that one because I look at it every day. All right. Thank you. Okay. This one has implications for everybody's listening. So this one is not selfish. This is selfless. Look at me. Is this, I mean, this is a big one. Is this a double bottom? What do we think? Well, it's also what does it mean? If it doesn't mean double rainbow, like, no, but that's the way that most of us should be thinking. Like you look at the chart like this. So what we're looking at the equal weight S and P 500 versus the cap weighted S and P 500 that we all talk about. So if this line starts moving up into the right, what does it mean?

It means that pretty much anything besides the mag seven is a better place to be than the mag seven. So what that would mean is that what investors learned, people who have been long in this bull market, now you need to change that playbook, maybe even flip it on its head, right? Instead of owning the biggest, best, strongest name so far, you want to buy the dollar tray. No, I'm just kidding. By the way, for the record, most of my bottom fishing does not work out. So if for whatever reason this gives you inspiration, don't, you know, keep it small, keep it small.

No, but it's so, you know what they call it? A stock picker's market. I love it. It's been a while. When that picker's market is moving higher.. It's been a while. When that ratio is moving higher. Yeah, you want to pick your spots more selectively. You don't want to do the Nancy Pelosi portfolio if that ratio starts moving higher. Okay. Another one that has implications for everybody. I could have shown the dollar, but the dollar is not bottoming.

So let's look at the biggest component in the dollar basket, the euro. I mean, this is a big one because if the dollar starts to weaken, boy, things are going to get juicy. And I get information from that in my training, just like I was telling you how about bond funds last year. And I was like, that's really strange. And I thought about that. I was probably talking about bonds.

I was looking at the FXC, the Canada. I don't ever think about buying currencies or currency funds. But some of these charts are set up so nicely, not in favor of the dollar. So I'm talking about fading dollars, whether it's the yen, euro, pound, CAD, Aussie, there's big support levels in all of these charts. And when you think about it, and you think about what happened over the past couple of months, we had a big post-election reaction rally, then there was probably an even bigger fade that came after it. Then we just talked about how breadth, a lot of that damage has been repaired.

It's been really sloppy, really messy market. Then you look at what's happened from an intermarket standpoint during that time, rates have been ripping, dollars have been ripping. If the dollar, the Dixie index, which is the best measure, falls back into its old range, that old box over the past few years. That's huge for risk assets. And imagine a world where the dollar not just falls back into that range, breaks down below the lower bounds of that range. Chinese stocks. China. It's all the same thesis. Yeah, totally. Like, imagine if that dollar retreats and retreats

in a big way. And we're talking about this time next year, dollar in the 90s. What's the name? 110. All right. So are these the things that you guys had also tried to talk about? Yeah, the intermarket is so important. Like we've been watching that range in the dollar forever. And it keeps moving with the bond market.

But you're getting a huge fade over the past week and a half from dollars and rates. That's big. Antique, if JC said he likes Alcoa and Freeport, they look like shit. Do you like them? It's cute, right? This is a cute- It's a little too cute. No, it's a bull market thing. It's something that we only do in bull markets. We'll literally go and No, it's a bull market thing. It's something that we only do in bull markets We're like we'll literally go and like find like the worst looking piece of shit And buy it hoping for like some sort of rebound rally. All right, so what's what's really good? What's like hot garbage? Freeport's really hot garbage. So

hmm The worst the worst garbage is still pot stocks man, like it hasn't changed for so long. Yeah. But those are just like dead. That's what they want. Don't matter anymore. What's that? Easy answer. Solar energy would be another one where it's like, God, and I'm looking at these things like they're going to get up off the floor. Like I think first solar, cause they have a couple of different things going on. They're involved in like the AI stuff too. I think first solar is probably like, you're probably getting a great entry. It looks way better than like the rest of the basket. None of them look good. Even M phase, M phase is one of the best performers, the last bull market. I made the case for M phase like a

year or two ago and just got smoked. The top and M phase, like one of these multi-year massive tops, like you run from those patterns. Those are the worst patterns in the world. What does a multi-year top look like? Like, what does that mean? I'm looking at it right now. It's coming out on end phase. That's exactly what it looks like. Look how nasty that thing is.

You had a clear resolution, a quick retest, and now it's following through. That chart has zero written all over it. I know, this looks like it could go much lower than me. Yeah, I'm saying bearish things about it. Yeah. Not for me. Not for me.

All right. Steve, my friend, did you have fun? This was so fun, man. Thank you for inviting me. Of course. Thank you for doing this. For people that want to learn more about how Straus and JC and the rest of the gang looks at markets, where do we send them?

Go to allstarcharts.com or stockmarkettv.com and join us on the morning show. We have so much fun having conversations like this every morning, 830 to 10 o'clock Eastern Time, Stock Market TV. All right, Steve, you're the man. Thank you. Thank you everybody for listening. Have a great night. We'll see you next week. Whether you're just getting started as an investor or you're managing a multi-million

dollar portfolio, Ridholtz Wealth Management has the solution for you. It all starts with building the right financial plan. To speak with a certified financial planner today, visit ridholtzwealth.com. Don't forget to check us out at youtube.com slash the compound RWM. Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening.