Investor's Edge with Gary Kaltbaum - Repercussions of the Election [11.14.2024]

Episode Date: November 14, 2024

https://garykaltbaum.com/

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Straight talk about you and your money. Now from the BizTalk Studios, here is Gary Cultbaum. And welcome once again to Investors Edge. I'm Adam Sarhan, in for Gary Kay, who's out today? Today is Thursday, November 14th, 2024. We've got a great show for you tonight. As always, I want to thank you very much for being here. Little housekeeping before we dive into the show.

Just as you know, this is a show about you and your money and all of the fun points in between. Just as a quick reminder, if you don't get this show in your city, you can go to GaryK.com, you can pause it, listen live or archive. We're live Monday through Friday, 6 to 7 p.m. Eastern. Also at GaryK.com, you can follow Gary on X, formerly known as Twitter, by just pressing the button. You can subscribe with Gary's morning notes sent directly to your inbox for free.

Every day, you may email Gary, ask about his money management services, or if you want more, you can subscribe to Convictionleaders.com, and take a free trial to Gary's premium newsletter where he updates members several times a day, does nightly webcasts, and a whole lot more. All of that is available and Conviction Leaders.com. All right. A few headlines or a few highlights from today, directly from Gary. I'm going to dive right in and give you the update.

First off, the markets, we have repercussions from the election. That's the big headline of the day. Defense stocks are down. Defense contractors are down. They're getting blasted because of the thought process of the new defense secretary coming in. Some electrical vehicle stocks are getting hit today because that proposal to get rid of that $7,500 subsidy to buy electric vehicles. And of course, on the other side, there's crypto.

Those are the big messages from Gary, want to drive that home. Now, as far as the market's concerned, after a big move up, which is what we saw since the election, it's perfectly normal for the market to pause and consolidate slash digest. that move. And there's two ways the market can do that, folks. Number one, and the same is true for any stock. It can go sideways or it can pull back. So let's say you have a big run for a few days, a few weeks, few months, whatever the case may be. Okay, the markets earn the right to pause and consolidate, digest that move. All right, what does that look like? One, it goes sideways, where trades in a tight trading range for a few days, or two, it pulls back.

And typically, the definition of an uptrend would be a series of higher highs and higher lows over a period of time. You know, every time the mark goes up, makes a new high, pulls back a little bit, makes a higher or low, and then rallies again, pulls back a little bit, higher low, higher high, higher low, so on and so forth. Every pullback should be in a healthy environment, orderly. You want to see a quiet pullback in both size and scope. And what I mean by that, size is the percent decline, typically anything under a 10 percent pullback, you know, 9 percent or less, single digits is considered a pullback. A correction, and healthy. Correction would be 10 to 19.9 percent.

You know, that's considered a correction. Let's say the stock of the market goes down 15 percent. Okay, that's a correction. In Wall Street parlance, of course, everyone's free to define it however they want, but that's just generally speaking. And then, of course, over 20% is considered a bare market for just a flat, you know, all things being equal type of a thing. That doesn't mean the move is over. It's just how Main Street, Wall Street defines pullbacks and corrections in bare markets.

All right. That being said, pullbacks are normal and healthy. They happen after a big move. They happen several times a year. Now pullbacks, remember, they come in all different shapes and sizes. Size and scope is what I look at. is a percent decline and then scope is duration, the length, how many days, weeks, months is that pullback or that correction? If it typically all things being equal, healthy pullbacks are shallow

in both size and scope. So they're down 3%, 5%, you know, let's say the S&P or the NASDAQ 100, whatever the index is that you're looking at goes down 4 or 5 percent, pulls into a moving average, could be the 21-day moving average, could be the 50-day moving average, could be a prior chart, high, what have you, and I'll give you all those numbers in a few minutes. And then it bounces. And then the bulls show up, the pull-backs over, you have the bounce after the dip, and boom, you're off to the races. You know, years ago, I was on Fox business with Liz Clayman, and she says,

Adam, you have a great way of buying the dip. You don't buy the dip. I said, no, I don't. I buy the bounce after the dip. So the reason why is you have no idea. I have no idea how deep that dip is going to be, the size of it, or how long it lasts. I have no idea. I don't have to.

All I have to do is just wait and be patient and say, okay, most likely, remember, we talked about probabilities. Most likely, after a big move up, you're going to get a pullback or a consolidation of some kind. And that's what's happening now. All right, let's see that pullback. Is it short? Is it shallow?

Short and size and scope? Is it shallow from a small percent pullback, one, two, three, four, five percent? Or is it deep? And does it last a long time? Right now, it's just day by day, the last few days. We had a huge move after the election, and now we're just consolidating that move and moving drifting lower. If you notice, folks, volume, which is a good tell of institutional sponsorship or, you know,

what's going on beneath the surface, has been light as the market's pulled back in the last few days. If you look at the QQQ, you look at the SPY, the NASDAQ100 is the QQQ, the SPY is the S&P 500. You know, the last few days, fines have been pretty light. And it was pretty, it was above average on the way up after the election. So that so far is a good sign. Remember, we're not privy. We don't know what the big institutions are doing of buying or selling on any given day. The good news is we don't have to. That's the good news because they can't hide. You know, the fidelitys of the world, the big multi-billion dollar money managers and multi-strategy firms and the hedge funds and the mutual funds, the ETFs that manage billions and billions of dollars, they have

to buy. And that shows up in price first and volume second. And that's why price and volume, it's a great way to be objective. And for me, price is primary. Everything else is secondary because what shows up in our statement? Price. Everything else is secondary. So that being said, From right now, we had a big move up after the election. As Gary said, the repercussions are now being priced in. Okay, hold on a second here. What actually does this mean? What's this?

What's that? And the market's pulling back. Now, if we start seeing some heavy selling and on heavy volume, then all of a sudden things change. But until then, we just want to be aware of the fact that, okay, we had a big move up and now it's pullback time. And just be patient. And when the market pulls back, folks, one of the best things to do is to look for stocks that either A, don't pull back as much or B, actually go up.

That's a great way of finding leaders. You know, the market down, let's say, 5%, the stock's flat. That's good relative strength. Does that make sense? Think of it like this. If you have, what's a good way of explaining this? It's all relative, right? So expectations.

We spoke about this with earnings a while a few times ago when I was on the show where the idea of happiness, if somebody's happy or not happier, it's all based on expectations, right? Rain is a neutral event. If there's a drought and you want rain to water the crops and feed people, then, hey, rain is really, quote unquote, good. If you're going on a big expensive, you know, beach vacation and some tropical destination and it rains the whole time you're there, the quote unquote rain is bad. But the rain didn't change.

It's your expectations. It's the context. Same thing with moves, right? Oh, the market's down. The market's up. It's a neutral event. What matters is, is the expectations, the reaction to it, so on and so forth, right? Stocks are going to go up, stocks are going to go down.

It's guaranteed. That's what happens. So nothing goes straight up, nothing goes straight down, these up days and down days. So the idea is, okay, fine, let's be in harmony. It's my way of saying harmony. in harmony with the market. In the old days, I used to try to fight it. And that's a losing proposition.

The market's bigger and stronger than I am. It's bigger than stronger than any single individual participant that I know of, at least. So even the big, big, big institutions, they always say, oh, okay, let's respect the price and let's respect the market, and the market's bigger than any single one participant. So, and that's a beauty of it, right?

Everyone can enter, everyone can win. It's all based on our, you know, the users. so to speak. I had a problem with my printer the other day. I called up and she's the first question she asked is it plugged in. My case it was. She said most of the, I asked her so most people it's not even plug in there's nothing wrong with the printer. It's user error, right? So in that case, it was also user error. I had a problem with the settings and she fixed it and it was it. So the printer's fine. It was just the user. So let's talk about the market. I just want to put that in your mind's eye so you can begin to anticipate these pullbacks and not be

reactive in a negative fashion. Be like, oh, no, the world's coming down, the stock's pulling back, this, that, and the other thing, it's okay. Stocks pull back. That's what they do, right? They also go up. So, boil it down to risk and reward. If we have a big sell-off here, look at the NASDAQ 100, the QQ, 5.0352 was the high back in

July. Then you had to pull back down to 423. Then you rallied up and moved sideways from July all the way up until November. and you finally broke out after the election on the 6th of November last week above that 503. Okay. Now, ideally, you want to see 503. It was resistance. You want to see it become support.

It doesn't have to. It's up 508-ish now. But you want to see its day above 503. The 21-day moving average is 498 and the 50-day is 488. So as long as it's above those levels, the bulls are in control. Up next, we've got a lot more to discuss. I'm Adam Saran. And this is the one and only investors edge.

Hi, I'm Dr. Jake Goodman, host of Beyond the Script, the podcast where I sit down with pharmacists to answer the health questions you didn't even know you could ask at the pharmacy counter. In this episode, we are diving into gut health with CVS pharmacist, Victoria Motola, who explains why so many of us live with stomach issues we should not accept as normal. A lot of what I see is just like chronic bloating, chronic stomach. aches. Like, I get a stomach ache every time that I eat. And it just

becomes like a lifestyle where, oh, yeah, you know, I just, I have a stomachache every day. Or I'm constantly feeling like gassy. And all of those things are not something that generally, if you have a healthy gut, you should be living with. So that's when we deep dive. We deep dive into your medication.

We deep dive into your OTC medication. And then at that point, we can probably identify something that we can change. Hear the full conversation, plus some fascinating facts about how gut health affects so much more than just your stomach on Beyond the Script, a podcast from CVS Pharmacy and IHeart Radio. Listen now wherever you get your podcasts. All right, quick quiz for the hiring managers out there. What's worse? Being understaffed or being

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get better than this. And welcome once again to Investors Edge. In case you missed any part of the show, you can go to garyk.com, rewind, fast forward, pause, listen at your convenience 24-7 on any app you want or any device you want, all for free. So that being said, let's keep going. So we're talking about the NASDAQ 100. We spoke about the fact that it broke out after the election on volume. It's pulling back now on light volume.

503 was resistance. Think of resistance and support if you're not familiar. Let's see you're in a room, right? Resistance would be the ceiling, support would be the floor. Think if you have a ball bouncing between resistance, you slam it down the floor, it goes all the up to the ceiling, bounces back down again, falls to the floor, it goes back to the ceiling, so on and so forth. If the stock trades between 503 and 423 for four or five months, 503 would be resistance, 423 would be support. That's a concept. Okay, if this thing's going to double or triple or go up 10x, it has to break above resistance. So the idea of a breakout is when it breaks above resistance at 503.

So the NASDAQ 100 broke out. Now, breakouts, a lot of them fail. A lot of them tease where they fake out. They break out. They fake you out. They pull back again. Let's say in this case, 503, it's above it now. Let's say it rolls over, gets below it, and then it bounces again and takes off and goes.

So it negates the breakout and then goes. So that's just the way markets work. It's not 100% perfect. Sometimes it is where it's a perfect breakout and it just goes and never looks back. But that's rare. Most breakouts are somewhat messy where you'll see the stock or you see the market pull back. It'll retest the pivot point that happens often or it retests resistance. That happens often.

It can either undercut a little bit and then get back above it again. You know, one of those type of the things where it's more of an art than an exact science. So near-term support for the NASDAQ 100 be 503, which was July's high. then you have the 21 day which is 498. I'm going to round up to 499. And then you have the 50 day at 488. I'll round down to 488 there. So as long as we stay above 503, it's a pullback.

It's a light volume pullback in the NASDAQ 100. No problem. If we start and we break down below 503 and then break the 21 day and break the 50 day and starts saying heavy volume and all that stuff, change in complexion to use Gary's language. Things have changed. And our job is to change as well and be in harmony with the market. Remember, that's the goal. Not to fight it, but to be in harmony with the market.

The S&P 500, 58612 was the high from October. You had a breakout after the election. Now you're above that 58612. Think of it like binary. You're either above it or below it, pass, fail type of a thing. Okay, you're now above it. The 21-day moving average there for the S&P 500. Look at the SPY.

That's what I'm using because you could trade that. is 584 and then the 50 day is 575. I'll round up and I'll round down. So it's flat numbers. So 586 was the old chart highs. You're now above it. You want to see it stay above that level. And the 21 day is 584 and then 575 for the 50 day.

As long as you stay above those levels, you're fine. You're just pulling back. And you're going to see pullbacks along the way. They're normal. They're healthy. They happen. really it's just that simple nothing goes straight up if it did hey that'd be great oh my nothing i mean the vast majority of time it doesn't go straight up markets don't go straight up the indices you know

they pause they pull back they futs around a little bit they go sideways that type of a thing next russell 2000 here it's a little bit of a different picture folks the nasdaq s and p 500 strong they're both above their 21 day moving averages they haven't negated their brinket their break breakouts yet. So far, so good. By the way, ditto for the Dow. I didn't mention that one. Let's look at the DIA. 433. Before I go to the Russell, let's go to the Dow. 433 was the old chart high from October. And you gapped up on the sixth. The low that day was 433.71. So let's use 433 as the next line in the sand for the DIA. And right now you're above that level. 21 day moving average there is 429. I'm rounding down. And then the 15 day moving average is 424.

As long as we stay above 433, we're fine. Stay above 429. You get below there, 424, then you got some problems because you blow the 50. Now, let's go to the Russell 2000. These are the small cap stocks. There's a big difference, folks, between the large caps, which is what I just showed you, and the small and midcaps. From a risk standpoint, investors, the money flows differently into areas in the market.

And small caps and midcaps, for the most part, were under a lot of pressure during 2021 and 2022 when the Fed was raising rates. Now the Fed's cutting rates. The environment has changed. And you've got Trump in office and his pro-growth policies. There's a perception there that's good for markets, good for stocks, good for riskier assets like crypto or small caps or mid-caps. So the day after the election, last week on the 6th, the IWM, which is an ETF that tracks at Russell 2000, the small cap,

2,000 small cap stocks, gaps up. And this guy, same thing as the NASDAQ, was moving sideways since July or August. You know, 228 was the high at the end of July. And he moved sideways for several months

until November 6th, after the election gaps up. The low that day was 232. The high was 237. He closed at 237 and change. Okay, great. You're now at 232. you're below the place where the market closed, the IWM, the Russell 2000 closed the day after the election gap up.

So you've given that move back. And now the low of that day was 232.75. You undercut that low today. No bueno, like they say. That's not good. Now, you're still above 228, which was a high from July. But typically, when you have a big gap up, it's not ideal to see that low undercut, the low of that gap. Doesn't mean the moves over.

It doesn't mean, hey, sell everything, go to cash. None of that stuff. It just means a little bit of weakness showing up here. And you're only 4.3% below an all-time high. Sorry, not an all-time high. 52-week-high in the Russell. The other indices that are all-time high is this guy still at a 52-week-high. The 21-day moving average there in the Russell is 227.

I'm going to round up. And the 50-day is 22. I'll round up also. So 228 is the old tie. July in the IWM, I don't want to see that undercut. It can, but I don't want to see it. 226 is a 21-day moving average, or 227, I'll round up, and then 222 is a 50-day. As long as we stay above that 228, okay, we're fine for now.

But the fact that we undercut the low from that election, yeah, in the riskier assets, like the small caps, not the best sign. Again, Gary's calling this the repercussions of the election. And close situation for the midcaps, the M-D-Y. Those of you that following at home, you could type an M-D-Y and see it. The low that day on the 6th, you had the big gap up, was 591. You're testing that low today. Now, you did test it.

The old chart high was 585 from October. The 21-day moving average is 5-82, and the 50-day is 571. So 585, 582, and then 571 in the MDY. Ideally, this pullback bounces off of one of those levels. If not, not the end of the world. Just a little pressure may begin to unfold. But for now, it's just pulling back. Up next, we've got a lot more to cover.

I'm Adam Sarhan. This is the one and only Investor's Edge. Hi, I'm Dr. Jake Goodman, host of Beyond the Script, the podcast where I sit down with pharmacists to answer the health questions you didn't even know you could ask at the pharmacy counter. In this episode, we are diving into gut health with CVS pharmacist Victoria Motola, who explains why so many of us live with stomach issues we should not accept as normal. A lot of what I see is just like chronic bloating, chronic stomach aches. Like I get a stomach ache every time that I eat.

And it just becomes like a lifestyle where, oh, yeah, you know, I just, I have a stomach kick every day. Or I'm constantly feeling like gassy. And all of those things are not something that generally, if you have a healthy gut, you should be living with. So that's when we deep dive. We deep dive into your medication. We deep dive into your OTC medication. And then at that point, we can probably identify something that we can change.

Hear the full conversation, plus some fascinating facts about how gut health affects so much more than just your stomach on Beyond the Script, a podcast from CVS Pharmacy and IHeartRadio. Listen now wherever you get your podcasts. All right, quick quiz for the hiring managers out there. What's worse? Being understaffed or being poorly staffed? Well, that's a trick question, because both are recipes for chaos.

Either way, just say to yourself, this is a job for indeed sponsored jobs. You'll get matched with candidates that meet the skills, certifications, and everything else you're looking for. Or go a different way and get no. No traction.

Seriously, sponsored jobs posted directly on Indeed are 95% more likely to report a higher than non-sponsored jobs. It really is a no-brainer. Spend less time searching and more time actually interviewing candidates who check all your boxes. Less stress, less time. More results. When you need the right person to cut through the chaos, this is a job for Indeed's sponsored jobs. And listeners of this show will get a $75-sponsored job credit to help your job get the premium status it deserves at Indeed.com slash podcast. Just go to Indeed.com slash podcast right now.

Indeed.com slash podcast. Terms and conditions apply. Need to hire? This is a job for Indeed's sponsored jobs. Success starts with your drive, and American Public University is here to fuel it. With affordable tuition and over 200 flexible online programs, APU helps you gain the skills and confidence to move forward.

Whether you're changing careers, starting fresh, or pursuing a lifelong passion, Our programs are designed for people who never stop. You bring the fire. APU will fuel the journey. Learn more at APU. APUS.edu. 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 Coltbaum. 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. I know I mentioned some specifics and numbers in those areas, but I know that we get questions about them and what levels are we looking at and support and what's coming up next, so on and so forth. So I wanted to make sure I addressed it. But the good news is you can go to garyk.com. You can rewind, listen to this numbers, rewind any part of the show over and over again at your leisure as many times as you want. All right.

All for free. on Gary K.com or on any podcast platform. So a few things that keep in mind here. The repercussions of the elections. Trump's coming in. There's going to be a major change in policy. Some good. A lot of good.

And some things that are still may leave, create some uncertainty. And the markets typically like certainty. The thing is, And there's the rub. We live in an uncertain world. And that's really, really, really powerful. What does that mean? By definition, the future is unknown.

Does that certainty or uncertainty? It's uncertain. Well, how do you navigate an environment where it's unknown? And that's why there are times where markets are just, you see emotions take over. And they're not, moves can become exaggerated. I'm trying to pick my words carefully here

so I can get the point across. Moves become exaggerated up or down. And then after the big move, cooler heads prevail and like, oh, okay, hold on a second. It's not as bad as we thought or as good as we thought or whatever the case may be. So typically when you look at markets, you know, you want to look at certain areas

and you say there's a lot of uncertainty coming around the corner. A lot of goods coming and a lot of uncertainty is coming. So when you see a group like defense stocks get hit today, look at LMT, Lockheed Martin, look at North of Grumman, NOC, right? I can go on and on and on. There's RTX, which is old Raytheon company. They change your name to RTX, ticker symbol, RTX. You know, down 3.88% there. You've got NOC, North of Grumman, down 3.5, almost 4% there. you got Lockheed down over 3% there and undercutting recent lows.

That you have a new secretary, you know, defense secretary coming in. There's just uncertainty. People don't know. So what they often do is they panic and they sell. Now, these stocks, the group itself, they're not at new highs. So they're not leading. And part of my work, you know, my focus, is on leading stocks.

I love leadership. I speak for a living about investing, and I wrote a book, it's called Psychological Analysis, and it was number one in Amazon. The whole idea there is to help people make rational, not emotional decisions. And when I go speak to investors anywhere, big or small, institutional investors, individual investors,

it's all the same. I always ask the question, what's the strongest stock in the market right now? Over $10. I don't want any penny stocks or any single-digit stocks. I'm not looking for those kind of movers. I'm talking about liquid stocks that are over 10 bucks, right? And nobody, they could tell me Amazon, they could tell me Navidia, they could tell me Apple,

they might tell me this, that and the other thing, nobody knows. And I always ask myself, I'm like, how do you plan to beat the market if you don't know the strongest stocks in the market? It doesn't have to be the exact strongest stock, but, you know, top five, top 10, app, APP, one of the strongest stocks in the market. A nuclear stock, ticker symbol, SMR, one of the strongest stocks in the market. It's up over 600% this year. You know, I love to find these type of stocks.

Micro Strategy, MSTR, Bitcoin-related stock, right? Up big this year, up over 400%. I love finding leadership because I want to find the stocks that are going up the most. and then find a way to sink my teeth and get into them at a low-risk, high-reward time. You know, a stock that goes from, I don't know, $7 in January to 80 this year. Oh, that's pretty good. So you look at sports, people always know, oh, this might, you know, the Yankees just lost the World Series and Freddie Freeman was, you know, the All-Star.

He hit the Grand Slam in game one and then home run in game two and home run and again. And again, okay, people know the top five sports team or the NFL football is on now. Oh, my team's doing this. My team's doing this. But when it comes to stocks, when it comes to the money, people don't know. I want to know. It's just that simple. And then find the strongest stocks in the market.

Don't just blindly buy them, but wait for them to build new bases. Wait for them to pull back and bounce off support. And bam, good entry points, low risk, high reward. So when you do it over and over and over again and you look for groups, you know, the defense stocks have not been leading. LMT and Lockheed Martin, whatever these cases, all these stocks I mentioned, the group itself has been okay this year, but these stocks aren't at new highs. Then all of a sudden they get hit. But Lockheed's below its 50-day moving average. Even after the election, it's still below the 50.

No, thank you. North, NOC. Northam breaks the 50 yesterday on volume, does it again today, heavier volume. and undercuts the recent lows. You know, Raytheon or RTCS, breaks of 50 on volume. That's the market speaking, folks. I always like to say the market is speaking, and I always have to ask, are you listening? It's our job to listen.

The market's not going to, I told my kids to school on the way to school this morning. I said, most communication is nonverbal. My kids are still young, elementary school and middle school. I said, I asked the younger one, I said, you know what nonverbal means? He goes, not talking. I said, yeah, you're right. So that's it. It's nonverbal communication.

Like, well, what do you mean? I said, what if somebody has a, you know, happy face? Show me happy face. Are they in a good mood or a bad mood? They said happy. I said, okay, they didn't say a word. But you can see it. Same thing with the market.

It's nonverbal communication. And most communication between humans is nonverbal. So being aligned with the market, being in harmony with the market, helps us avoid blowups. Because we don't want to be positioned in stocks that are just going straight. down. You know, there was a stock the other day. One of my friends actually was telling me about it. A stock had gaped down on earnings and it was at $58 before it reported earnings. It reports earnings. Average volume for the stock is 10 million shares. I'm not going to mention the name because he might be listening and I want to be respectful. Stock goes down. 37 million shares traded

that day. Average volume is 10 million. And the stock fell, I think what was it? 15, sorry, yeah, 15% that day it reports earnings. It's a true story. Slices below the 50-day moving average. It was a leading stock, but it broke after earnings, right? Monstrous volume gets crushed. He sends me a text. He says, hey, Adam, I'm buying this. I said, why would you do that? He's like, oh, because the bank and cash flow and this and he gives me all these reasons. P.E ratios low, this, any other thing. Folks, the stock closed that day at $49.

And that was three weeks ago. Today, the stock is at 40. Yeah. Today, the stock's at 40. That is, and it's heading straight down. And every single day above average selling. It's only been up three up days since then. and all at or below average volume on the way up.

And it's below the 200 day moving average now. He's probably averaging down and buying more. It's just not the way, nothing wrong with it. It's not how I do it. Look, everyone's free to do whatever they want in the market. For me, it's all about risk and reward. When the market smacks a stock, it's down 15% on 37 million shares. Average volume is 10 million.

That's not, like Gary says, it's not Mary and Uncle Joe doing the buying and the selling that day. it's a big institution selling. That's the market speaking. For me, I don't want to step into there and try to catch that falling knife, buy it at 49 because it's quote unquote cheap because a few days ago is at 58. And now two weeks later, it's at 40. What do you do? And why would you do that when there's so many other stocks are doing the exact opposite

that are breaking out and gaping up? Look, Gary's been on Spotify, SPOT, on Convictionleaders.com, for a long time. When you have a chance, take a look. SPOT, look at a daily chart, go back one year. Clean, orderly base goes from the lower left to the upper right. A year ago, it was at 145. It's now at 477, almost 500. Gaps up yesterday on volume.

Average volume here is 1.8 million shares or thereabouts. Yesterday reports earnings on the 13th. Gaps up over 11%. volume at 12 million average volume is 1.7. Again, not Aunt Mary and Uncle Bob doing the buying there. That's what I'm looking for. Orderly bases, breaks out, volume is heavy, gaps up, hits new highs. That's a tailwind.

The other one? Not good. Anyway, up next, you've got a lot more to cover. Hope all this is helpful. I'm Adam Sarhan. This is the one and only Investor's Edge. Hi, I'm Dr. J. Goodman, host of Beyond the Script, the podcast where I sit down with pharmacists to answer the health questions you didn't even know you could ask at the pharmacy counter.

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Well, what are you waiting for? One, two, ready, go. Action! Investors Edge. With Gary Culpa. And welcome once again to Investor's 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 to any part over and over

again as many times as you want. All right, so we left off speaking about the importance of watching the market, listening to the market, learning, this is a super important skill, the power of listening to the market and translating it into quote-unquote English. So making sense of what's happening. It's nonverbal communication. Most communication is non-verbal, but learning how to translate the market or understand the market. It's all patterns. It's all risk and reward is a superpower. And I strongly recommend people learn how to do it. It is really, really, really powerful. Because it's a, use the word power here. It shifts the power back to you. Instead of, when I first started investing in training, I felt helpless. I didn't know what was

happening. I felt this. I was at the mercy of the market. These big, scary, you know, gremlins or goblins or investors are, you know, coming out in sharks and they're eating my lunch and they're taking my money and they've got PhDs and algorithms and schmalgorithms and this, any other thing, uh-uh, I just didn't know what I was doing. It was user error, right? Nothing's wrong with the market. It's a level playing field. Anybody can go into the market. They're free to do what they want, legal and ethical, and win or lose. It's a beauty of capitalism. The beauty of it. And that's why I love it. One of the many reasons why I love it. It's a puzzle.

Think of it as a, some people play Sudoku or whatever, you know, all these kind of games or crossword. I don't do any of that stuff. Some people gamble. They do this. I don't do any of that stuff. There's no interest. Zero. Very simple.

There's something new. It's challenging. It's intellectually stimulating. There's risk. There's a reward. It's thrilling and exhilarating. You know, that's da-da-da-da-da-da-da-da-da. And then some.

And mentally keeps me sharp. So learning how to listen and paying attention. to markets and stocks and understanding the behavior is really powerful. Like a Spotify, SPOT. And again, it's not viable up here. It's extended. It had a big move. So on and so forth.

But it traded in tight consolidation, a tight trading range. Volume, for the most part, dried up while it was moving sideways. Had a nice rally from, let's say, 288 gaped up back in July, went sideways for a few months, broke out above it back in September, rallied to 389, pulled back to the 21 day moving average 362, move sideways for a few months, volume dried up, and then all of a sudden, volume explodes before earnings on this election day, 6th of November, and then every day it's been up since, and volume's been above average every single day. New highs. That folks is an example of a leading stock, and new all-time highs too. It's not just new 52-week highs. All-time highs. Very strong

action. That's an example of what I'm looking for or what Gary looks for. It's leadership. And you're looking for these stocks that are able to stand out from the PAC and go up and stay up and have earnings. By the way, Spotify's earnings are growing nicely. The last quarter, earnings were up 363% year over year. They earned $1.61 in the quarter ending September 30th, 24. same period in 23, they earn 35 cents. Again, $1.61, 35 cents. That's a growth of 363%. The quarter before that, earnings up 184%.

Quarter before that, 183%. Before that, 73% earnings growth. And sales have been up over double digits, up over 15, 20% in each of the last four quarters. We're about up 18%, 19%, 20%, 20%, 25%, in the last several quarters. The companies lost money up until last year. They lost $3 last year.

This year, they're expected to make $6.33. Next year, $9.79. My goodness, that is explosive growth. The market knows that, and bam. Buying it up here wouldn't be prudent because after every green light, you get what, a red light? Green light in the market's a nice move up. A red light is a pullback.

So knowing when to buy is all. also extremely important. But my three most important questions, before I buy a stock is, where am I going to enter? You can write this down. Where do I enter? Where do I exit? And how much do I risk when I'm wrong? That's it. Typically, all things being equal, I want to buy stocks that are in uptrends, but are pulling back and they're bouncing off of support, or they're breaking out, or they're coming up the right side of a base. I'd like to see volume, a company, price. Price first, volume second. That's really it. I don't use stochastics. I don't use RSI and L MNOP and QRX and TUV. Old school kind of guy. It's price first and then volume can be second.

I like orderly consolidations. Tight action. I like leadership. The market is a competitive arena. Think of a gladiators way back when the new movie Gladiator 2 is coming out next year. I saw a trailer for it so it's top of my mind. That's kind of an arena. Mine is a death part. It's just an arena, right? So you go in there, it's competitive. Great, let's compete.

Let's win. And I don't get, if you protect your risk, you don't have to worry about big losses. Well, all right, great. Let those stocks compete with each other. They're the ones going up. They're the ones going down. My job is to pick the ones that give me the small risk when I'm wrong

and highest reward when I'm right. And that's it. Do it again and again and again and again. And most of the time, I'll be wrong. That's okay. When I'm wrong, I'm wrong small. I got stopped out of something earlier today. I lost 3.62%.

That's okay. I'm okay with that. I'll take that all day long. Because when I'm right, I want to be up 10, 20, 50, 100, 200%, so on and so forth. When you're wrong, wrong small, when you're right, be right big. And over time, that compounds. and I'm not swinging for the fences on every single trade, put all my money into that stock, it's got to go up, oh my God, I used to do that.

No, no. Now, it's a calm, cool, collected. I understand profits are a function of time. If I manage my risk properly and I'm prudent, the reward side of the equation kind of takes care of itself, within reason, of course. So again, learning how to say no becomes a superpower. No, I'm not going to do this. Life is full of distractions.

It's not just in the market all day. No, I have no interest. interest. No, I have no interest. Stay focused on the highest ROI activities on any given day that are good for me and my family and clients and people I work with and everywhere in my universe. Great, my orbit. Great. If I can do that and eliminate all the distractions, I'm way ahead of the game. Same with the market. There's thousands of ideas out there. Stocks, ETFs, mutual funds, crypto, you know, blah, blah, blah, blah, blah, blah. No, no, no, no, find the best of the best. So in closing, I hope that's helpful. I believe Gary will be back

tomorrow. Not 100% sure, but as always want to thank you very much for being here. Hug the children. Like Gary says, enjoy it. Everybody, time is your most valuable asset. Enjoy every moment. Have a great evening, everybody. Speak to again soon. This has been Investor's Edge with Gary Cult Bomb on BizTalk. To listen to past episodes or to get in contact with Gary, go to GaryK.com. That's GaryKK.com. Struggling to see up close, make it visible with Viz. Viz is a once daily prescription eye drop to treat blurry near vision for up to 10 hours. The most common side effects that may be experienced while using Viz include eye irritation, temporary dimmer dark vision, headaches and

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