Investor's Edge with Gary Kaltbaum - Pullback Time

Episode Date: November 14, 2022

Follow Gary on GaryK.com or http://garykaltbaum.com

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Terms apply. Lounge access is subject to change. See Capital One.com for detail. Investors Edge with Gary Coltbaum. Straight talk about you and your money. Now from the BizTalk Studios, here is Gary CultBomb. And welcome once again to Investors Edge. I'm Adam Sarhan in for Gary K.

Who's out today? Today is Monday, November 14th, 2022. We've got a great show for you tonight. As always, we want to thank you very much for being here first and foremost. As you know, this is a show about you and your money. we'll just give you some housekeeping points before we dive in. I've got a lot to cover for you today, some timeless advice, some market current advice, and some notes from Gary.

But just as a quick reminder, if you don't get the show in your city, you can go to GaryK.com and listen live or archive. We are live Monday through Friday, 6 to 7 p.m. Eastern. Also at GaryK.com, you can follow Gary on Twitter by just pressing the button. You can subscribe and get Gary's morning notes sent to your inbox every day. No charge there. You get the show as well. sent to your inbox there and you may email Gary ask about his money management services or

inquire about anything else you want to ask him about he's uh he's an open book and he's a great great resource if you want his premiums membership or his premium service you can get that at garyk.com also it's a big button says click here for uh convictionleaders dot com or you can go straight to convictionleaders dot com and get gary's notes there he updates members several times throughout the day does webcast several times a week where they're in-depth. They show, he shows charts, sector, stocks, so on and so forth. And it's a really, really good service.

So that being said, all of that is available at convictionleaders.com. Now, let's talk about the major indices, talk about the market, talk about some notes from Gary and a whole lot more. So first off, let me give you the notes from Gary. First thing he wants me to mention is that the market just had a huge rally, right? It's from Thursdays low after CPI came in. Friday was a, I think it was a five standard deviation move in the S&B 500, for those of you that like statistics. It was a massive, massive rally. Let's put it that way. The NASDAQ 100 was up 7% on Thursday, which is, it doesn't happen like that in bull markets, right? Usually that happens in bare markets.

So where you get these huge short covering rallies. I'll talk about the three factors in a few minutes here of why we get these big moves. Because I know people ask me, they ask all the time, hey, Adam, why do you think, you know, why does this happen in bare markets? and I'll tell you, because it is a little confusing out there. And then after, sorry, so again, back to Gary's notes, after all the big move in the last two days, you know, Thursday and Friday, now we're, Gary's expecting some petering out or some backing and filling to unfold. It's easier now to gauge weakness, and already he's not thrilled with the bounce and bombed out technology names.

Why is it easier now to gauge weakness? Because the things that didn't rally are very weak. Let's just put it that way. Or names that, you know, tried to break out and fill. failed, very weak. So it's something that he's saying, he wants me to share. The other thing is he's just not thrilled with the bounce he's seeing, especially these bombed out, beaten up technology stocks, things that are down 70% plus they pop 15, 20% in two days. But the charts are so terrible. I mean, something that falls 70%. You want to buy it after it jumps 10 or 20 or 15% in a day or

two days time. So just be very, very, very, very careful. Continue to watch. the dollar and the 10-year yield. The lower the better so far, but he doesn't want to see those run back up. If the dollar reverses starts to rally, the 10-year yield, same thing. He's mentioned that several times of how important it is to watch the yield and the dollar in this environment. Not always, but in this environment, keep, you know, stay, stay focused because that matters. Also, Amazon, about two weeks ago said they were stopping, they stopped hiring people. Well, all right. Today they just announced they're firing 10,000 people and that we're seeing a lot of this from a lot of other technology companies as well. Why is it a little strange? Because we know that the economy is slowing, or at least that's the narrative out there, but we're entering, well, we're in Q4, we're entering the holiday shopping season. And typically Amazon and other retailers tend to be hiring during the even temporary workers, not firing. So this is a slight but important shift and subtle shift in complexion to use the word that Gary likes to use. So, a few thoughts here. Why are stocks, why do stocks

rally so much when you're in a bare market? Well, there's three important factors that happen. There's a confluence of three things. First, you have a lot of people that are short. They have to cover their shorts when the market goes up because they make money when stocks go down. So when stocks go up, the way they exit their short is by buying. So when you sell something short, you sell it first, then you buy it back second. It's just a mirror opposite of buying or going long. I don't want to go too far into the explanation there, call your broker, ask them about how it short works, look it up online. But it's just suffice to say for the time that we have today is when you short something, you sell it first, you make money if it goes down, you lose money

if it goes up. So when you have a lot of people that are short, a short squeeze is what it's call they get squeezed when stocks go up because they're forced to exit in order to protect their money and either lock in profits or make sure they get stopped out for small losses, they have to buy their positions back. So that's what's the first force that's there? The second force is you have value investors show up who say, oh, stocks are cheap, I'm buying, right? They always exist out there for the most part, especially when stocks get clobbered, right? On Wednesday of last week, the market looked awful. And stocks were down and down big. Then Thursday came. You had the big reversal, the big, you know, not even reversal, was a gap

up on the CPI number. Well, that's fine and dandy. But what happens is you get these value investors that show up and say, oh, stocks are cheap, I'm going to buy. So that's another force that comes into the market, a buying pressure. The third force that comes into play with these massive short squeezes that could happen in the major indices or individual stocks or what have you is you get momentum traders that jump on board. Why? Because stocks are going up. There's momentum and they'll buy. So those three forces are really, because I've studied, I've gone back and studied all the major bull and bear markets going back, I mean, over 100 plus to the early 1900s as far as data as I can get. I've studied economic cycles going back to the third century and

the tulip bubbles and I can go on and on, but I want to stay focused here on these short squeezes. The actors change, right? The short squeeze, back in COVID, it was GameStop and then AMC and then, you know, L-M-N-O-P and you had Volkswagen 10 years earlier and Tilray and you get these situations where these short squeezes occur and stocks go to the moon and go to infinity and beyond, like Buzz lately likes to say, get these massive moves that don't last, by the way. You know, GameStop was, I think, it hit like somewhere around 500. It's now at 26.

So back to where it was more or less before the squeeze started. And a lot of these squeezes, they're very short in nature. They're very erratic. They grab headlines. They suck people in and then they roll over and they spit them out because it just, they're not sustainable. But you get these exaggerated moves. And here's the point during bear markets. I don't know of a time in history.

And if you do, please let me know. you can email me at info at finleading stocks.com and tell me a time where the market, the NASDAQ 100 or any of the indices, a major index, was up 7% in a bull market. That's what happened on Thursday. The NASDAQ100, the QQQQ, was up 7% on Thursday. Well, we're in a bare market. We know that, even with the big rally we had off the low on Thursday and Friday, it's two-day rally. We're still in a bare market.

So the question becomes, is this the beginning of a new bull market? Or is this yet another bear market rally? Nobody knows the answer to that question. But we do know is it when a new bull market emerges, you can see the indices do basically a mirror image of what they're doing now. Instead of making a series of lower highs and lower lows, they're going to make a series of higher highs and higher lows. Instead of trading below the major moving averages, the 200 day, the 50 day, the 150 day, all these moving averages you look at,

or a lot of these longer term moving average, let's just use the 200 day. And these moving averages are pointed down, like the 200 days pointed down in all of the indices. I think the Dow is the only one that's actually above the 200 day, and that's kind of flat lining, meaning it stopped going down, but it's still sloping lower, upper left, lower right.

But the Dow is actually above the 200. But the other indices, for the most part, are still below the 200. Well, all right. The indices in bull markets are above the 200, and the 200's going up, and the 50-day moving average is above the 200-day, and the 50-day moving average is pointed up.

So if this is the beginning of a new bull market, folks, we're going to have a lot of time. Because bull markets just don't start and end in two days. The Russell 2000 is right near its 200-day moving average. Close. I mean, fraction below it. So we're in a situation now where, yeah, 186, 184 is the IWM. So close just below it, no just near it.

More situation where time will tell. But we need, like Gary says, more bullish cards to come out of the deck. And just take your time. Be patient. Up next, I'm going to talk to you about some stocks, some sectors, some timeless information about how to, you know, get your head straight here and a whole lot more. I'm Adam Sarhan. This is the one and only Investor's Edge. Hi, I'm Gary Kalpom, hosted a nationally syndicated radio show Investors Edge.

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bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet? Terms apply, lounge access is subject to change. See Capital1.com for details. This episode is brought to you by Spreker. The platform responsible for a rapidly spreading condition known as podcast brain.

Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Spreaker distributes it everywhere people listen. Apple Podcasts, Spotify, and about a dozen apps your cousin's swears are the next big thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast. might someday pay for, well, more microphones.

Start your show today at spreeker.com. Sprinker, because if you're going to talk to yourself for an hour, you might as well publish it. It's time to switch on the integrator units and get the brain cells working. You're listening to. Hey, this promises to be fun. Investors Edge. The last bastion of quality programming. With Gary Coltbaum.

It doesn't get better than this. And welcome once again, too. Investor's Edge. I'm Adam Sarhan, in for Gary Kay, who's out today. In case you're just joining us or missed any part of the show, you can go to GaryK.com. Rewind, fast forward, listen at your convenience, live or archive, any time from any device. So, we spent the first part of the show going over short squeezes, how they work, my opinion, at least, everything I say here is my opinion, my thoughts on the market, and equally important, how the three forces unfold that really dominate the underlying conditions that lead to these big squeezes, short squeezes,

these big rallies, so on and so forth. So let's do the market wrap, give you an update for what happened today. The major indices ended lower. It was a seesaw day where they opened lower, tried the rally, ended off getting some heavy selling in the last hour or so. And for the day, Dow ended down 211 points, closed at 33, 536, down about 0.6%. The S&P 500 closed at 3957, down 35 points. The NASDAQ composite closed down 127 points, closed at 11,196. And the Russell 2000 closed down about, what was that? Let's see, 15-ish or so, about 20 points to 1862 in that.

range. So what's the important lesson here or the takeaway is we just had a huge rally. The market needs to digest that move. The key going forward that I'm paying attention to is to watch that digestion. If the market has a vicious violent sell-off, like what happened, by the way, in June, on June 8th, June 9th, June 10th, you basically had a rally off the May low from once look at the IW on the Russell 2000 168 to 190 and then you rolled over from 190 in four or five days all the way down to 162 which undercut that May low and that hit that June low right so if we get this vicious violent shakeout in three four trading days and we erase all the gains and then some that we just had you know because the market tried to bounce from May into early June and then it just

failed and failed pretty hard. Same thing happened in August. You rallied hard from June to August. And in the middle of August on the 16th for the IWM, you kind of hit a wall near the 200 day. And then you started falling. And then the losses accelerated, the end of August into early September,

just heavy selling. And volume picked up across the board for the major indices. And same with the S&P and NASDAQ and all that stuff. So if you start seeing another wave down of just heavy violence selling, that's not going to be a good sign. Now, if you see a light, there's three ways of market can pull back or digest and move up, right? The first way, which is the weakest, is that it just falls and falls hard. It's not really digestion at that point.

It's just a failure, right? The rally failed. All right, that's one scenario I'm watching for. We see sellers show up. We see distribution days show up. We just see the market getting pounded. and just bam, bam, bam, bam, and you'll know it when you'll see it. And it's just heavy selling, heavy volume, down, down.

The good news today, I don't have the final figures for volume, but it looks like at least volume was below, somewhat below average. We'll see, it needs to update in a few hours here, but the good news is that the action today was down less than a percent, right, across the board and the major indices. Not the end of the world, especially if you just rallied about 10 percent. in two days. So the first ways that the market sells off and sells off hard, it's not really a digestion, that's just a failure that really didn't work. Now a digestion or a pullback,

a healthy one, the first one's unhealthy. The next two that I'm going to give you are healthy ways of market can digest. First, you get a light volume pullback. So let's say a stock breaks out, you know, just blasts off and it goes from, I don't know, 80 to 100. And then, then it's going to digest. And instead of, you know, it just pulls back. So let's say it goes down to 95, 96, 97, slowly. It goes 99, 98, 97, goes up to 98, 99. That goes down 97 again, 96, 95. And just kind of pulls back in a three, four, five percent range for a week to three, four, five, six, seven, doesn't matter. It just, there's time and price, right? There's two elements. But it's a small pullback compared to how much it just rallied. Let's say it just

rally 20, 30 percent. Pulls back four or five. Great. That's considered a healthy pullback, especially if it does it on light volume. The second way, which is the more bullish way, the most bullish way you can get a digestion or consolidation, is for it to tighten up and go sideways, dead side just sideways. That is extremely bullish, where you don't see any bearish pressure. Any selling is just absorbed by the bulls. And that happens. It happens in bullish environments.

It happens in healthy stocks. It happens in, you know, when demand, for lack of a better word, for the stock or for the market, outpaces supply. Plain and simple. Again, I don't make any of this stuff up. I'm just interpreting and sharing with you what I've seen happen of observing the market, trading it actively since the 90s and observing it going back to the early 1900s. In this weekend's report on Findleadingstocks.com, I spent an hour going through price bare markets, a video of, you know, showing members of like, hey, listen, here's the last

seven or eight, nine bear markets. And I took the time to annotate them on charts so you can see them and say, okay, well, during, in the last 20 years, we had two big bear markets, the 08 meltdown, and here, I'll share it with you, and the 2000 and 2002.com crash, right? Those were the two big bear markets in the S&P 500 going back the last 20 plus years since the 2000s. Well, in 2008, it lasted around 17 months. And the S&P 500, not the average stock, not Lehman or Bear, the average stock, the S&P 500, excuse me, fell 58% from the high in October of 07 to the low in March of 09. Again, give or take 17, 18 months, depending on when you want to start counting,

the beginning when you want to start counting the end. 2008, that whole great financial crisis, 58% decline in the S&P. Now, In dot com lasted around 31 months, depending on the index you look at. And again, depending when you start counting the beginning of the end, but around 31 to 32 months-ish, March of 2000 to October of 2002, was down 51%. Now, the NASDAQ back then during dot-com bear crash was down more because the NASDAQ was where the bubble had really, you know, inflated and burst. If you know, NASDAQ 100 was down like 80% or 84% something crazy like that. But I'm just using the S&P 500. Just to keep it simple.

This bare market we have now in the S&P, the high in the S&P, was last November of 2021, 48, 18, 62. If the low was in October of this year, that was a correction of 28%, more or less, 27.54. 11 months, November of 21 to October of 22, if that is the low. Could be. We're open to anything. And that's the answer to the question. We're open to anything. Stay flexible in your approach. Always respect risk. All right. Up next, I've got a lot more to talk about. I'm Adam Sarhan. This is the one and only investor's edge.

This message is brought to you by the Capital One Venture X card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet? Terms apply, lounge access is subject to change. See Capital One.com for details. This episode is brought to you by Spreaker.

The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confuse. used relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Spreaker distributes it everywhere people listen, Apple Podcasts, Spotify, and about a dozen apps your cousin's swears are the next big thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones. Start your show.

today at spreeker.com. Spreaker, because if you're going to talk to yourself for an hour, you might as well publish it. This message is brought to you by the Capital One Venture X card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide.

The Capital One Venture X card. What's in your wallet? Terms apply. Lounge access is subject to change. See Capital One.com for details. We're listening to. America is talking. Investors Edge.

He's got to be pleased with that. The crowd is just on his feet here. He's a Cinderella boy. With Gary Colbomb. It comes highly recommended. You're going to feel better if you talk to him. And welcome once again to Investors Edge. In case you're just joining us or missed any

part of the show, you can go to GaryK.com, rewind, fast forward, listen live or archive. Everything is there on GaryK.com. So if you're just joining us, we spent a lot of time going through some short squeezes, spoke about prior bear markets, the factors that, you know, come into a short squeeze, the forces that play, if you will, spoke about some news of the day, some Amazon firing and what Gary's looking at, markets and pullback. And, you know, markets and pullback. mode right now. The key is to assess the health of this pullback. Is it a nice light volume pullback or sideways digestion after a huge rally in Friday? Or is this going to be another failed rally attempt and just immediately fails? We don't know. And that's okay not to know, right? That's okay.

But we do know is we focus on what we can control, which is risk. And if you plan, if you respect risk and plan your trades, you'll be there for when this bear market finally ends and when the new bull market begins. And if you stay tuned, stay in sync and listen to Gary's telling you, because he's got his finger on the pulse of the market, you'll be way ahead of the game. Way ahead of the game. So, spoke about some bear markets, spoke about the 08 crash, spoke about the 2000 crash and the percent change for the S&P. I know this fan favorite going through history. I like history. I like studying history. They say, you know, markets, history doesn't rhyme. It repeat. Or the sorry, it doesn't repeat it rhymes. I think sometimes it repeats also.

But anyway, that's beside the point. I love to learn from it, right? Because it gives you opportunities to see what happened before. So going back, I'm going to go back even further here. I've got one, two, three, four, five, six bear markets from the, the S&P 500 started, I think, in like, 64, 63 or 64. So I'm going through all of the bare markets in the S&P 500's history, literally every single one of them. And the reason why I'm doing this is because I want to show you the average, well, this is what I did over the weekend, really. I wanted to see myself is what is the average length of a bear market? Got the S&P starting in 1962, in July of 62, according to the data that I use. So you basically rallied hard from 62 all the way up until the first bear market I'm going to show you here. which was February of 66, all the way to October of 1966.

It was around nine months, so it didn't last a long time. The S&P was down 24%. All right, no big deal. Then you have a huge rally from 72, all the way to 109. That's what the S&P was at back in the 60s, and I'll go through it with you. So you get a huge rally there. Then you top out in December of 68, and then you go for the next 18 months into another bear market, where the S&P loses 38% of its value, going into the low in May of

1970. Then you rally from 68 all the way up to 105, pull back to 89. No big dealish there. It's just a pullback. Then you rally to 121. So really, from 68 to 121, huge rally, last from 1970 to 73. Notice, after every bear market is what? A monstrous, ginormous. gargantuan, using words Gary likes to use, rallies, bull markets. The key is to protect your capital during the bear market. So you'll be there for when the inevitable bull markets come. So you've got January to 73 to October 74 was the next bear market, 22 months down 50%.

That's the S&P. Goes from 121 down to 60, more or less, 121.774 down to 6096. That's a 50% bare market. That's the S&P, not the average stock, which goes down more. This is the, not the average stock, but some stocks go down a lot more. The darlings of the leaders tend to get really crushed. You could see that in today's market or some of the Johnny Come Lately's or the ones that got overextended or over-loved or over-owned, you know, that kind of stuff where they get really,

really hit hard. But anyway, after that, the market bottoms on October 74. Then you get a bull market from October 74 where the S&P's at 61, all the way up until September of 76, where it ends up at 108. Again, huge move, just about doubles, almost. Then it goes from September of 76 to March of 78, 21 months, into another bear market where it loses about 20% of its value. Goes from 108 down to 86. Then it goes from 86 to 141.

Huge bull market. in the late 70s, 78, 79, 80, up until November of 1980. So from March of 78, up until November of 80. All right. Tops out at 141.996 in November of 80. Bottoms in August of 82, 21-month bear market down 50%. So I'm going to recap. I showed you 1, 2, 3, 4, 5 bear markets so far in from 60s, in the 60s, 70s going into the early 80s.

The first one, the S&P, was down 24%, second one, it was down 38, then it was down 50, then it was down 20, then it was down 50. Then you had a brief, you had a massive bull market from 82, where the S&P went from 101, all the way up to 87, more or less. You had a 15% correction in between, or pullback. But basically, it went from 101 in August of 82 to the 1987 crash. In three months, well, the crash happened on the Black Monday, but anyway. That bare market lasted about three months, from peak to trough, from top to bottom, and it was down 36%. 1987 crash. Was it 2.16?

And then it rallied all the way back up a few months later. By 1990, you were back at the above where you were at the high before the crash in 87, down 36%. So, in the 90s was pretty much, you had a few saving loans crisis in the early 90s. you have the 80, 1998 Asian financial crisis, but basically just a 10-year, just strong, strong, strong, strong market. So going back from the beginning of time for the S&P 500, you've got one, two, three, four, five, six, seven, eight, nine major bear markets. I've got the COVID crash down 35 percent. That was three months, so we can include that. So there's four and then six. That's 10 bare markets if you want to include the COVID crash. Sure. Why not? Down 35 percent for

COVID. Right now we're down 27% if you use the high in November of 21 to the low in October of 22. That's 11 months. The duration, 11 months is good. The average, I mean, the shortest bear market here was nine months. Well, you had three months. The crash, I'm taking out the two crashes, the 87 crash and the COVID crash. Just normal bear markets in the S&P was nine months long, going back to 66, February 66, October of 66. This bear market's 11 months long. If that October, October low is indeed the bottom. All right. Time-wise, that's enough time. Now, remember, the second component is price. 27.57, 54% was a decline from top to bottom. The smallest bear market I had going back to the beginning of the S&P 500, the smallest one, folks, was 20% and it lasted 21 months

from September 76 to March of 78. It's the smallest one I have. Now, I might have missed one or two. There was another 20% briefly, it was like 19.9 or whatever it was after the 08 crash, which I'm not including here because it was just, in my opinion, it barely touched 20%. It didn't even stay there and it just took off. So I let that one go. So this could be the bottom. I don't know. That's okay. I don't have to know. But again, what I'm looking for, if it is in fact the bottom, the October low is going to be defended. It could retest and hold. But you want to see the major indices get above their moving averages and then for their moving averages to turn higher and then for the major indices to start making higher highs i wish it was more complicated than that remember trading

it's simple not easy there's a big difference there but you can keep the simple and do extremely well extremely well i've seen i mean i've seen people have term life-changing gains in this business It's changed my life. I mean, I can go into my trading and all that stuff, but I'm not the kind of guy that sits there and talks about my successes, unless if you ask, and I'm happy to tell you. But that's beside the point. It's about you, not me.

So if you understand the basics and you, quote, unquote, do the mental sit-ups, you do the work, you get the results. If you don't do the work, you don't get the results. It's really that simple. Not easy, simple. Remember, risk management is job not. number one. Job number two and job number three. I had a guy tell me one time he's like, we're not buying and selling stocks out. We're buying and selling risk. I thought that was genius.

So spoke about the bare markets, spoke about the short squeeze. Now I'm going to shift gears. Talk to you about some stocks, some leadership, some isolate some leaders for you. Talk to you about some breakouts and some other things I'm seeing in the market right now. I'm Adam Sarhan. This is the one and only investor's edge. This message is brought to you by the Capital One, Venture X card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet? Terms apply.

Lounge access is subject to change. See Capital One.com for details. This episode is brought to you by Spreker. The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Sprinker distributes it everywhere people listen, Apple Podcasts, Spotify, and about a dozen apps your cousin's swears are the next big things.

thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones. Start your show today at spreeker.com. Spreaker, because if you're going to talk to yourself for an hour, you might as well publish it. This message is brought to you by the Capital One Venture X card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet?

Terms apply, lounge access is subject to change. See Capital One.com for details. You're listening to. What are we waiting for? Well, what are you waiting for? One, two, ready, go. Action! In The Gester's Edge. With Gary Culpe.

And welcome once again to Investors Edge. I'm Adam Sarhan in for Gary Kay, who's out today. Again, if you missed any part of the show, we covered a lot of grounds. I know we have a few minutes left here and then it kind of wraps up fast. Time flies. Thank you all, of course, for being here. If you want to go to GaryK.com, you can pause, rewind, fast forward, and listen to any part of the show over and over again because I know I covered a lot.

So that being said, let's talk about some stocks that actually are working and are breaking out or trying to break out. first one, Arista Networks, ticker symbol A-N-E-N-E-T, up nicely today. Closed in the middle of the range. The market sold off in the last hour. Had it not been for that, it was up in the upper half of the range. I guess middle to lower half-ish of the range. It tried to break out above the high from, what was that day? The 4th of November.

The high there was 133-70. Got as high as 134-61, closed at 131-20. So I want to see it above that 133, level. Excuse me. 133.70. Let's get it above 134 and let it stick above 134. But it looks good. Good volume patterns.

Good earnings growth. Good action. Another stock. Let's see. IMCR that broke out today. Closing upper half of the range. Good volume patterns there. Good group.

This is a biotech company. They do lose money. So be very careful with this. But I'm just pointing out technical strength. Also IMCR, they are thinly traded. they only trade about 370,000 shares a day. I don't like the cover stocks that trade less than a million a day, but I'm just showing you.

These are not by recommendations in any way shape or form. I'm just showing you strength. How do you find strength in a weak environment? That is down 200 points, these stocks are up, and they're breaking out of mid-level bases or hitting new highs. Like IMCR is at a new high for the 52-week high, right? So, again, just for illustration purposes only and educational purposes only. ACM. This has a big, I guess, cup with handle kind of pattern, just a sideways consolidation.

7815 was a prior high. Tried to break out above there. Sold off towards the close. Closed at 7821. So it's just barely above there. But we close. Ernie's not that impressive. But I'm just, again, pointing out strength. That's ACM. They're a construction management company. We'll see if it can get some legs and get some fall through to the upside. Let's see, what else did I want to show you? EnPH, N-Ph, N-phase. This has been a strong stock. It sold off hard on Friday.

It tried breaking out on Friday and then reversed and closed and lower half of the range on heavy volume. So it was a distribution day for the stock. You also, in the last 10 days or so, what is it? Going back to the beginning of November. You've got one, two, three, four distribution days, and the up days are on below average volume.

Not a good sign, but not the end of the world. If this thing can clear, 317, I'd be very happy to see this thing go higher. 319. I'll probably own it at that point in time. Not 100%, but I'll nibble on it. It's got phenomenal triple-digit earnings growth, double-digit sales growth, return on equity. If it's 20% or more, that's a good thing. Return on equity in the last quarter was 109%.

in the last quarter. The quarter before, that was 91%. So you've got, I mean, just monstrous numbers here. First Solar technically, or on a stock basis, have been acting better, even though they don't have Ernie's growth and they don't have the big return in equity. Return equity in First Solar is 1.6. So, but the technicals, the chart pattern and first solar is just much stronger than end phase. So again, just pointing out strength.

HLIT, another one, H-LIT, about 2 million shares average volume, 1.8 and a half, 1.9. Harmonic Inc. is a ticker. Or is the company's name. HLIT is a ticker. Great breakout back in September. You had a really just a rock, a powerful day on the 28th of September. Lower price stock, this was at 1174, exploded all the way up to 1580, and then it pulled back hard at the beginning of November. And guess what? It pulled back right into the 50-day moving average. The 50-day moving, and still above that breakout point from 1174. The 50-day moving average folks serves as a good secondary buy point. If you wanted to add to this or if you missed it, you want to buy it and then have an exit below the 50, in healthy environments and healthy markets, that's a strategy that a lot of people use.

Because it gives you a low-risk entry point. The idea, the logic is a 50-day moving average is going to be support. Think of a floor. That's what support is. The big institutions are going to defend it and the stocks can go higher and break out above 1580. so on and so forth. Now, and the environment here is completely different. Not saying to buy anything right now. I'm just showing you strength. Now on the flip side, some weakness. On end semiconductor. This is a strong semiconductor stock. It tried to break out today. Close down 3%. Failed. Same day.

And not even like it last, like, it just failed. A scholastic corp. They make books. I'm going to buy a bunch from my kid's school. They send us to the letter. The holidays right in a corner. They have their scholastic book sales, right? The HL is a ticker. Doesn't really trade that much, a thinner name, tried to break out above a little handle here, mid-level base, and closed down. So again, failed the same day. INSE, another one that failed.

This is a thinner name, 164,000 shares that are traded. This is inspired entertainment. It's a gaming company. But the point is, it rallied, broke above the 12-17 level, closed in lower half of the range. PSTG, which is pure storage. They're a computer data company. They tried their breakout, close in lower half of the range, breakout failed same day. So just take your time.

Right? The environment, closing here, and we have just a little bit of time left, it's still a bare market. So if this is a tradable rally, and this is going to yield, by definition, a tradable rally is going to give us new stocks, new breakouts, new leaders, New leaders. Not the same stuff that's just recycled. In other words, the form of the fangstocks, Apple, Amazon, Facebook, Microsoft, Google, or Netflix and Google. Not Microsoft, but the fang stocks, right? It's a meta.

They change your names. A lot of these changes symbols. But anyway, it's Facebook, Amazon, Apple, Netflix, and Google. I'm putting Microsoft in there also. Adobe. The leaders from the prior bull market, very rarely do they. they lead again in the next bull market. I want to see new merchandise.

I want to see new breakouts. I want to see new leadership emerge. And the key now is to gauge the health of this pullback. Is it going to be a violence, you know, just failure? The major indices all just and go straight down, take out Thursdays low and good night Irene. That's a possibility. Or is it going to be a healthy digestion? And we can break that down to two sections, right?

First is you get a light volume. pullback. Second, it goes sideways. I believe that's all the time we have for today. I want to thank you very much for being here. As always, Gary is traveling. I probably will see you again this week. If not, he'll be filling it. He'll be doing it. Thank you as always and take care, everybody. This has been Investor's Edge with Gary Cult Bomb on Biz Talk. To listen to past episodes or to get in contact with Gary, go to GaryK.com. That's GaryK.com. This message is brought to you by the Capital One Venture X card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect.

Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet? Terms apply. Lounge access is subject to change. See Capital One.com for details.