Investor's Edge with Gary Kaltbaum - Week In Review

Episode Date: September 8, 2023

garyK.com or https://garykaltbaum.com/Considered one of the finest radio shows on the markets, the business world and everything that affects them, Investor’s Edge with Gary Kaltbaum, a Fox News Channel Business Contributor, brings his in-depth take every day. If you want fluff, this is not the place. Gary is a hard hitting and pull-no-punches host especially when it comes to people in power affecting you and your money. His daily in-depth analysis on the markets is second to none.

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Terms apply. Lounge access is subject to change. See Capital One.com for detail. Investor's Edge with Gary Cultbaum. 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 Kay.

Who's out today? I have a lot to discuss. As you know, this is a show about you and your money and all the fun points in between. If you don't get this show in your city, you can go to GaryK.com, listen live or archive, rewind, fast forward, on any device. 24-7 at your convenience, all for free.

That's a magic of technology. You can also email Gary, you can ask him about his money management services, or if you want his premium services, you can go to Convictionleaders.com. That's Convictionleaders with an S.com. And Gary updates members several times a day there. He provides webcasts daily where he breaks down the market action. He gives pivot points, entry points, exit points,

and it's a really, really fantastic service. all available at convictionleaders.com. You can take a free trial and see if it's for you. All right. Let's talk about the market. It was a sloppy day today, quiet, mostly quiet. You don't have a lot of fireworks going off.

And what happened was you saw the market up earlier, closed in the lower half of the range, and then rally a little bit again. After all was said and done, it was just a quiet day, up a fraction of a percentage point on each of the major indices, almost too small to even.

matter. Now, what does matter is the weekly chart. Today's Friday. At the end of the week, you get the weekly chart. That's why Fridays, to me, are very, very important because think of a game of tug-of-war between the Bulls and the Bears all week long. By the end of the week, you get to see who wins. At the end of the day, you get to see who wins. If you end up, all things being equal, the Bulls won. If you end down, the Bears win. Same as weekly. Same for any time frame that is monthly, quarterly, annually, whatever the case may be. Now, every week and every day, it's different. So just because if you won three or four in a row, it doesn't mean they're going to keep winning the next three or four in a row, right, or even the next one in a row.

So that's really important to keep in mind as well. As we go through the major indices, one of the most important things, folks, is to really try and find leadership. Leading stocks and leading sectors, it's one of the best ways to get an edge in the market. edge. So we're looking for that edge constantly. And one of the best ways that I've found over the decades, I've been doing this since the 90s, has been just filter out all the noise, focus on price, focus on leadership, just to rank the stocks and the sectors on a year-to-date basis based on percent change. Where are the leaders? The market's always speaking, I like to say, and our job is to listen. I've got all this, by the way, and a lot more in my book.

It was number one in Amazon for two straight months. You can go to Amazon.com or Barnes & Noble. Just type in psychological analysis or just write my name, Adam Sarhan, S-S-N-S-N-SAM, A-R-H-A-N. I'm not selling you the book. I make five bucks on a book. It's not about that. It's my life's work. I've got lifelong lessons there that I've learned that, you know, it doesn't get to number

one and stay in a while every day for two straight, you know, every day for two months by accident. There's good there. You can benefit from it. That's why I'm sharing it. And a lot of what I share here applies in all markets. That game of tug of war, so to speak, where you look at multiple timeframes, time frame analysis.

There's a fancy word on Wall Street called arbitrage, and it just basically means a difference in prices between two things that should be correlated. So, for example, oil prices and then oil stocks, or gold prices and then gold stocks, or whatever the case may be, right? So that's arbitrage, where one might be up, one might be down, eventually they catch up, either the one that's undervalued goes up or the older overvalued one comes down. That's a traditional use of the word

arbitrage on Wall Street. Now, it's a fancy word and I take it and I have a spin on it. Well, two spins, really. And they're both outlined in the book. One is time arbitrage. The other one is intellectual arbitrage. I'll do the intellectual one first because it's easier to understand. Who's smarter? You today

or you from 10 years ago? Or you from 20 years ago? Now extrapolate going forward. Who's going to be smarter? You today? you in 20 years or 30 years. The idea is to get a slight edge. The biggest competitor you have is the person you look at in the mirror every day. Yes, you're competing with everyone else in the market. I get that. But let's focus on what we can control. You know, we spoke about in the past. I've used this as a story all the time.

You know, in the old days, you buy a printer. It's not working. You call customer service. And the guy, first question is it plugged in? And I'm like, oh, no, it wasn't plugged in. I plug it in, all of a sudden it works. Well, if there's nothing wrong with the printer, it's user error. And the same thing here in the market. There's nothing wrong with the market. It's user error, right? So that's the story of my life, user error, right?

So my job is to get better. Level up. Learn a little bit more. Push myself intellectually. That's intellectual arbitrage. Become smarter than my former self, and hopefully set myself up for continual improvement. And it's all aspects of my life.

Not just in the market. Push myself. Push myself. Why? because I want to get better. I want to improve. Think of the greats of the world. They don't just get great by accident, right? Michael Jordan, Tiger Woods, Babe Ruth, Ted Williams, any of these people, they push themselves physically, intellectually. They do the quote-unquote hard work that most people don't want to do. Tiger Woods was playing one time and somebody yelled at,

you're so lucky, you're so good, or whatever it was, right? He gets up in the guy's face. He's like, no, show me your hands. And the guy turns over his head. hands and what happens? Soft. And he shows him his hands full of calluses. He's like, I wake up every day at four in the morning. I hit the golf ball every day. I hit the club every day, until my hands bleed. What do you do, sir? The guy's holding a beer, whatever it was. And that was it. Michael Jordan, first guy in, four or five a.m. on the courts, practicing, warming up, and the last guy to leave. Day in, day out, day and day out, year after year after year. Bam, that's the intellectual arbitrage. The time arbitrage, Warren Buffett, I mean, forget me.

Warren Buffett in his annual letter this year, and he's mentioned in the past, multiple times, gives the credit. His success, as the most successful investor in the history of alive today, let's put it that way, to the great American, he calls it the American tailwind. I call it the great American tailwind. He goes in the last 50, 60, 70 years, his success is due to a rising, tied in America, American exceptionalism. All right. That's what he calls the American Tailwind. In my book, I call it the great American tailwind. Why? It's time arbitrage. Over time, long term, we are fortunate enough to live in a time period which is just full of

opportunity. And the stock market reflects that. The economy is the biggest ever been in history. the stock market, even with all of the selling and last year's bare market and this, that, and the other thing, the S&P 500 and the NASDAQ are, I believe, 4 to 6% below their 52-week highs. That's it. I mean, you're talking about a blip on the radar. And on a monthly basis, you've got these really bullish cup and handle patterns forming. on both the S&P 500 and the NASDAQ and the NASDAQ 100. Look at the QQ or look at the SPY. And what does all that mean?

It means that even with all this negative headwinds, which we spoke about this week on the show, and I can touch on them again real quickly, a stronger dollar up eight weeks in a row, yields on the 10-year approaching the October highs, and you've got a slowdown in China. China said officials in China can't use Apple stuff anymore. And you've got interest rates,

and the Fed raising rates and headwin after headwin after headwind. The S&P 500, the SPY, and the NASDAQ100, the QQQ, are 4 or 5% below, 52-week highs. I mean, that's really good action. And all this said and done, you know, yesterday I gave you on the show, levels to watch in the S&P and the NASDAQ for areas of resistance and support, the SPY, just to recap, but be 459, 44. and then that's resistance or the ceiling,

and 433 would be support. And the NASDAQ 100, the QQ, 388 and 354. Right now we're right in the middle of that big trading range for both these, the S&P and the NASDAQ. Even with all these headwinds, yes, we had a week close today. We closed right near the 50-day moving average in the NASDAQ 100, the lower half of the range. It wasn't ideal.

We're seeing areas break down. the S&P closed below its 50-day moving average, and again in the lower half of its range. Volume is anemic. I get that. It's super thin action. But even with all this quote-unquote negativity, I want to make sure end of week, end of month, end of year, end of day, I always step back and look at that time arbitrage. Look at the big picture. Zoom out.

The all-time high in the S&P was 47998. So let's just say 480. You're at 445 right now in the SPY. And again, I'm using the SPY numbers here because we can trade that, right? That's 480 and you're at 445. You can do the math on that on a percent basis. It's not that far. So keep that in mind, folks, as you step back and you look at the bigger picture,

the market remains exceptionally strong on an intermediate and longer term basis. Short term, it's just choppy. It's pausing to digest a big move. and one of my trading rooms is, my trading rules, is the next move wins. Up next, we're going to talk about stocks, some sectors, and a whole lot more. I'm Adam Sarhan, and this is the one and only Investors Edge. Hi, I'm Gary Kalbaum, hosted a nationally syndicated radio show Investors Edge. We're not just handsome radio people.

We manage investors' money for a living, specializing in fee-based discretionary money management. No big commissions, just a fee on the assets that's managed. We also provide a full range of personalized services, including retirement planning, fixed income, and educational needs, all to assist you in achieving your financial goals. Understanding not all individuals have the same needs, we'll carefully evaluate your personal goals to determine a proper investment strategy. If your current approach to investing is not getting you to where you would like to be, call us to make an appointment for a complementary portfolio review. The number to call is 888-4-22-5559. That's 888-4-22-55-9.

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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 to Investor's Edge. In case you're just joining us or missed any part of the show, you can go to garyk.com, listen live or archives.

You can pause or wind fast forward at your convenience, all available for free on garyk.com. All right, a few thoughts here. We spoke about time arbitrage. We spoke about intellectual arbitrage. We're just zooming out, understanding that user error, you know, there's nothing wrong with the market. It's me. Adam, I need to improve. I need to level up.

I need to learn from my mistakes. I need to get better. So on and so forth. That's the intellectual arbitrage stuff. And what am I doing? What am I reading? What are my practices? How do I improve?

Look, I've got a... Here's a story for you. High school reunion this weekend. Beautiful. Love these kids. The death. I haven't seen them in decades. Okay, great.

Well, I saw them last was my tenure. Anyway, I went to school with them decades ago. Okay, let's put it that way. And what ends up happening? I saw them, well, tonight and then tomorrow. But last night we had dinner at one of my friend's houses. their parents' house and I used to go over there all the time and it was great seeing the parents and so on and so forth. Okay, great. Now, they're up there in age, but it was great seeing them

and a few other friends came over, so like, you know, three people or four people. So it's a nice intimate setting. I eat dinner early, four or five o'clock because my schedule, I'm up at 5 a.m. every day, you know, okay, great. These people want to meet for dinner at seven. So by the time dinner, you know, is over, or dessert comes, it's around 9 o'clock. I'm usually in bed, 9, 30, 10 o'clock. guys are about to eat cheesecake and dessert and this and anything. So I politely, excuse myself, I'm not going to eat anything. Thank you very much for dessert. It's just way too late. It's my, you know, my, no way. So they're like, come on, try, you know, blah, blah. I'm like, yeah, pass. I'm not doing it. No. Okay. And what happens? They all eat it. They're fine. Then they get the coffee.

Coffee. I'm thinking to myself, my goodness, I'm ready to go to sleep. Anyway, so I leave at 9. 30, 10 o'clock, go, I'm in bed at 10.30, and that's that. Meanwhile, all of them, I love them all dearly. Overweight. One guy's got diabetes issues and they're eating the cheesecake. I'm like, what is going on here? And then this, that, and the other thing, problem after problem after problem. Well, all right, you've got to stay disciplined, right?

I want to be disciplined. I want to wake up early. I've got young kids. I want to take them to school in the morning. Every day to school in the morning is my thing. Okay, great. I want to be alert. I want to pay attention.

I would be focused. If I go to bed at midnight or two in the morning or whatever nonsense, no way. absolutely not for me now there's nothing wrong with doing that's not a judgment thing it's just not for me right so the intellectual arbiter it's constantly improving in all areas of my life now do i have weaknesses yes can i do more setups and should i sweat more and do i have my goals that i have absolutely i'm human like everybody else i put my pants on one like at a time but it applies to every area of our life right it's that's it's that you're on you're off you're focused you're not. In the book, I also have cartoons. It sounds silly. The only investment book that I know

with cartoons in it, it illustrates the good and bad inside all of us, right? So we have a good side, the superhero. And then the bad side is a highly emotional side, or the dumb money beast. One's a smart money superhero and the other one's a dumb money beast. The dumb money beast, think of like a Tasmanian devil, runs around that character from Looney Tunes and just causes emotional decisions, wrecks havoc everywhere, no logic, no rhyme, no rhyme, no reason and just does whatever they want to do, whenever they want to do with no understanding of consequences whatsoever. Checked out. Who's going to win? The one who's calm, cool, and collected, or the emotional creature who runs around yelling and screaming and blah, blah,

blah, blah, blah, blah, blah. Smart money superhero, the dumb money beast. And again, it's a story of our lives. It's things, again, that I've noticed over and over and over again. They're patterns or habits. Humans. People are people or people. Doesn't matter where you are in the It doesn't matter how old you are. It doesn't matter. Your language, your religion, your race, your socioeconomic level, you walk into a crowded theater and yell fire. What's going to happen? You get the same response. Same thing on Wall Street. Your money. The idea of the book in one sentence is to teach you how to make rational, not emotional decisions with your money. But when you think about it, are you making emotional decisions or rational ones? I can tell you, without knowing you, most people make. emotional decisions and they justify it with logic, but they buy something because they like it. I've yet to meet anyone who bought a stock that they quote unquote hate. It just doesn't happen. So, you know, buy a house that they hate. Why would you do that? You might not love the house, but at least you like it. So same thing with the stock. You might not love the stock, but you like it.

Notice the words, like love. Hate. These are emotions. People buy things based on emotions. they justify it with what I call emotional logic. They find logic. It's a confirmation bias in psychology. They find logic that justifies their preconceived notions or their opinions. Nine out of ten times. Not everybody, but most people. All right.

I'm a human. I'm a person. Last time I checked, I have emotions. After years and years and years of unconsciously, I wasn't even aware that I was making these mistakes, if you will. I would do it over and over and over and over again. I said, okay, I got to learn. And that's what I'm sharing with everybody.

So just take your time and ask yourself, this is a rational decision? Is it emotional? Where are we in the cycle? What is the price telling me? I always like to say the market's speaking and then ask, are you listening? Our job to listen to the market.

And yes, there's some areas that are weak, which I'll get into next. There are areas that are strong, fewer and fewer. There's some cracks showing up under the surface, as I've mentioned outlined earlier for you. but just stepping back, we're not that far from new 52-week highs. We could be down much worse.

No question, but we're not. So it won't take a lot for the market to go higher. It's all I want to say. But if we roll over, stops are in place, and we'll play defense, as always. Because there are cracks showing up beneath the surface. So take your time. Don't rush into anything. Let the market show you.

guide you, right? If it's not working, small losses tend to be the best losses. And if it is working, let it work. Be patient with your winners and impatient with your losers. I found that my experience to be the best formula for me. Everybody's, you know, find their own way. So just take your time, let the market guide you in and out. There's no quote unquote rush. If the market rolls over, will be out, our stops are in. If the market takes off and goes higher, guess what? We'll be loving life and long and everyone's happy. I just want to make sure that you're aware that we're not that far from 52-week highs. It wouldn't take a lot of buying to see the stock market shoot up higher. Now, on the other hand, it wouldn't take a lot of selling to see it go way down. When you step back,

it gives you clarity. When you step back, it gives you the ability to make those rationales, decisions. When you step back, it gives you the ability to see things from a bigger picture, and then adjust accordingly. So, there are some areas that are working, and there's lots of areas that are not. I'll go through some of those areas that are not up next. All right, 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 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 thing. Even better, Sprinker helps

you monetize your show with ads, meaning your podcast might someday pay for it. 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. This message is brought to you by the Capital One VentureX 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. I'm Adam Sarhan, in for Gary Kay, who's out today. In case you missed any part of the show, you can go to GaryK.com, listen live or archive. We're live Monday through Friday, 6 to 7 p.m. Eastern. You can pause or wind, listen to the show over and over again at your convenience. Absolutely for free on GaryK.com on any device 24-7. So, spent some time, the first half of the show, talking about the market, talking about some really important concepts that I use every day, arbitrage, intellectual arbitrage, ways that I can quote-unquote get out of my own way. Learn to make rational, not emotional decisions with my money. Because believe it or not, most people are emotionally attached to their money.

People love money. They like money. They don't like money. These are all emotional, the emotions, right? Love, like hate. And most people aren't aware that they're emotionally attached to it. So who's going to make a smarter decision? Someone who's emotionally attached to someone or something who's not emotionally attached to?

Think of the hanger in your closet. Are you emotionally attached to the hanger in your closet? No, seriously? No. If you had to make a life or death decision, you know, do you want to be emotionally attached to that decision or unemotionally attached to it? Think about doctors. They're not allowed to operate on their immediate family. Why?

One word. Emotion. That's it. It'll cloud their judgment. They have another doctor who's unrelated, I'm not emotionally attached to that person, make better decisions, especially when you're under pressure. Same thing with the market. So step one is to become aware of it that we're emotionally attached to the money. And then step two is figure out ways to remove the emotions from decision-making process.

And what I do, I've learned this, you know, I first learned it from Nicholas Darvist in his book, how I made $10 million in the stock market. It was about a ballroom dancer. It's a true story about a guy who made $2 million bucks in the market decades ago back in the 60s and 70s or even before. and he was a ballroom dancer and he would travel around the world before there was internet, before there were cell phones, before there were even faxes.

I think he used to use telicses or telegrams or whatever he was using. But he was in Asia and he wouldn't know where the market was doing on any given day and his brokers would send him Barrens and send him a telex or a telegram. I don't even know what he was doing.

Some kind of like snail mail, some kind of way of getting him the closing prices. And he would make decisions and then fax, or not fax, and then telegram back the orders to the broker. And he literally had to give the order buy stops and sell stops. He made $2 million, made a bunch of money, super successful.

And he's out dancing and doing this thing in Asia and having a great time. He came back, he goes to New York, into the broker's office, into the madness. They're yelling and they're screaming and they're jumping up and down and the excitement and this and anything. He gets walloped. And I mean walloped. All this is in the book. You can go on Amazon and get the book. How I made $10 million in the stock.

Market by Nicholas Darvis. It's a great book. Great story. And then what happens? He loses all his money. Well, not all his money. He loses a bulk of his money. He's staying in the Plaza Hotel, New York. Okay, great. Then what? He's like, I got to get out of here. He leaves, clears his head, goes to Paris. Again, gets away from the markets day-to-day, intraday action. And then all of a sudden, starts crushing it again. It does very well. He realized right then and there, hey, I need to be removed. That worked for him. Now, some people can look at the market all day long and God bless him. There's no judgment on what I'm sharing. I'm just sharing things that have worked my experiences.

I know me. I know myself. I do much better on the weekly time frame. The way that I make those rational decisions is by removing my emotions from the process is by doing the bulk of my work when the markets are closed, nights and weekends. And then I do the same thing Darvist did. Set those orders up. Thank God I don't have to telex them or telegram them or whatever.

I just place the buystop into the, uh, into the computer and say, okay, I'm buying this or I'm selling this or whatever the case may be. And if I enter, here's where I'm going to exit. And most importantly, I do the calculations of how much I'm going to risk if I'm wrong. Those are the only three things that matter. Entry, where I'm going to enter, what price? If I enter, where am I going to exit? And then if I'm wrong, how much I have to risk when I'm wrong.

My daughter's 11. She started in a new school, middle school, grade 6. Her heart was set on the student government. She wanted to really, really be a student government, you know, win the election or get in there and become a, you know, a member of the SGA. Okay, the Student Government Association. She made a video, put postcards out, posters, you know, whatever she had to do. Okay, great. She lost.

It's just happened last week. 11-year-old girl. Her heart set. Her friends are new friends. She's new school. She met some new people. And her circle of friends, they all wanted to do the SGA. Half of the girls won and half of them lost, and she was one of the first.

and she was one of the girls that lost. She came home crying, devastated, oh my God, end the world. And I celebrated it. I said, great job, honey. And she's like, what are you talking about that? I lost. She thought I'd be upset. Uh-uh.

The exact opposite. Why? Because how do you become successful? You're going to fail. You either win or you learn. And if you don't win one time, get up again. You can't control what happens to your life, but you control what? How you react to it.

So I celebrated, pattern interrupted, the exact opposite. I told her, I said, you can't control what happens. You might be control how you react to it. The lady who started Spanx. Her father used to sit down with her and a brother every day, or every week, rather, and say, okay, tell me where you failed this week. Tell me where you failed this week. She knocked on every door that she could find and they got rejected a gazillion times. Was told no, no, no, no, no, until eventually one day she got a yes.

But failure's part of success. trading. Baseball. The best baseball players strike out. Seven out of ten pitches. Traders. You're going to lose six, seven times out of ten. Eight times out of ten, that's okay, as long as the losses are small.

And the winners are big. That's the magic. Remember I told you last time you have ten trades. You lose one, nine times. You're minus nine. The tenth trade, you win ten. You lost 90% of those trades. It doesn't matter.

Net, net, you're still up one. Meanwhile, you have another trader who won nine trades in a row, but only won one, nine times. Okay, so they're up nine. The 10th trade, they lose 10. But they had a 90% win rate. It doesn't matter. Net net, they're down one. What matters is the size of the win compared to the size of the loss.

Keep that in mind, folks. Super, super important. The mindset with all this is critical because most people get crushed, defeated, lost like my daughter Sophia lost at the age of 11 and then just give up. Why? Because pain. Remember, people are associated. It's just, it's 101. It's human nature. We seek pleasure. We avoid pain. Successful people switch it. I'll talk about that in a second too. And it comes back to trading. And I'm trying to give you lifelong lessons here, timeless lessons that you can take so you can create your own system for trading and investing.

the foundation so you can make your own decisions and your own framework and have your own guardrails up and so on and so forth like ray dalio talks about who's the biggest hedge fund manager of our generation and he wrote a great book it's called principles and in the principal book he talks about guardrails and another one of those many many things his principles for being successful but if you didn't fail and you fail the first time and you give up you're not going to find the win got to keep swinging the bat so If you do get tagged, ask yourself, am I over trading? Be objective, be honest, intellectually honest. Journal if you have to.

Something powerful and magical happens when you write it down and you share it with someone else. Ideas, especially trades. That's why I do fine leading stocks every week. It's just therapy for me. It's fineleadingstocks.com every single week. I share my thoughts with anybody that wants to listen. And I've been doing it. Geez, I started writing the reports in 2004 every single week since.

Even on my honeymoon. It's a labor of love for me. It's like cavemen that are hunting and gathering. To me, this is my version of hunting and gathering. I'm the least handy man in the world. Screwdriver, hammer, nail, drill. I can't do any of that stuff. No interest.

My wife, she can do it. Father-in-law, no problem you can do it. Me, I'm lucky if I can tie my shoes. Can't do it. All right. but when it comes down to this stuff, I'll do it all day long with bells on. I think I scanned 1,000 charts in the last two days, probably more. For sure, over 1,000 charts in the last two days.

And I look for different criteria. I look for leaders on percent basis. I look for earnings growth. I look for sales growth. Look for lots of other metrics as well. So again, I hope all this is helpful. it lays the foundation for you so you can use it to learn how to make rational and not emotional decisions.

Up next, we're going to talk about some of the weak areas in the market. Talk about some stocks. 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.

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Investors Edge. With Gary Culpa. And welcome once again to Investor's Edge. In case you're just joining us, we missed any part of the show. You can go to GaryK.com or want fast forward, listen live or archive, 24-7 on any device you want to any Gary's radio shows. All right, so we spoke about the show major indices or the S&P, the NASDAQ are leading. The bullish cup and handle patterns forming on a monthly basis.

They're very close to new 52-week highs, I think 4, 5, 6% below a 52-week high, and they're leading. It's not going to take a lot to break out and go higher. Now, on the downside, There are lots of areas that are underperforming, lots of areas that are in trouble. Earlier this week, I said trouble ahead and listed a lot of these areas that are in trouble. And I'll go through some of them for you again now. If you want, go back on GaryK.com and find the episode, the radio show that said, Trouble Ahead and listen to that one.

You can see them all in full detail. The market ended down this week. The small caps are lagging. The midcaps are lagging. The regional banks are lagging. Transportation stocks. are lagging. In fact, many areas of the market are lagging. The retail stocks are lagging. The financials are somewhat lagging. What's working, you've got semiconductors, the SMH. You've got the big tech

stocks that reside in the QQQ, the NASDAQ 100. You've got some housing and construction. They were acting good, but they're starting to get a little topy here, but they're sitting near their 50 own a lot of these housing stocks. If they bounce them here, that'd be good. And you've got oil, energy stocks. Those are the four, five big areas that are really working in this environment. Some other areas are working too, small pockets here and there. But by tech, I mean software, I mean cloud. I mean, you know, tech. It's a broad umbrella. So you can break it down to lots of different areas. For the most part, that's what's working. But there are a lot more areas in the market that are not working. Again, look at the IYT, the transportation index, broke down below August's low.

That's not a good sign. When you have a chance, take a look at the KRE Regional Bank Index. 4281 was August's low. Today's low was 4247 and it closed at 4336. So some buyers showed up there and defended support. But that's not a good sign, right? Take a look at the XLF when you have a chance. It's just sitting there, the bottom of this big base it's forming. 3571's resistance, 3358 of support, and you're at 3430. You're a dollar and change off of support. So the idea with leading stocks and focusing on leadership and everything that we do is the idea is to listen to the market, let the market guide you. You're not going to always have a market where tech leads or housing leads or gold leads or oil leads or energy, any one sector leads.

It rotates. It's normal. It's healthy. In fact, I've got this concept. It's called the Great Mini Rotation, where I've noticed this over the decades. You see the market kind of just go sideways or go higher. And then under the surface, you've got one sector that's leading. It pauses.

It pulls back a little bit, kind of like housing now, the XHB, was leading most of this year. Then it hit a wall, you know, just near term high. And it's been pulling back the last several weeks. And then while that sector pauses, oil woke up. And oil was in a slumber all year, wasn't really doing much. in the first half of the year, and then bam, that took off. Look at the OIH or the XOP or the XLE, just bam. Those are just big ETFs that track of the basket of oil stocks.

OIH, XOP, XLE, while the housing stocks were resting. Earlier this year, the banks weren't performing, and then the banks started to perform a little bit. Then the transportation stocks weren't performing, and then you had this rotation going on. Semiconductors were working, they paused, and then they started working again. Now they're pausing again.

So again, it's a great mini rotation because in the old days, there was something called the great rotation from stocks to bonds, or money would flow one way and then from vice versa. It would go back the other way. I made up this turn the great mini rotation because I've noticed it. Okay, it gives the market a chance to pause. The other reason why I like these pullbacks, I've learned to like them, is because they're healthy for the market.

If you look at the QQQQ, the NASDAQ 100, you had a big rally from January all the way to the beginning of February, and then you sat tight for about three, four months until May. You really went sideways from February until May. It gave the market a chance to pause and digest the big rally. You really rallied from October until February. But you went kind of up during the month of January. You had a big run.

It had to digest. And you digest it for months from February until May. And then you had another leg up from May until July, just virtually going straight up. Not every day, but for the most... Not every week either, but you had a very nice rally. All right. Then what?

You paused. You hit a near term high in July. And since July, you've been going down the sideways in the S&P, the NASDAQ and the other indices. Some are stronger, some are weaker. That's it. If we break out and go up, it's bullish. We break down and go down. Barish.

Get more defensive. And you could break down and then reverse. Like what happens. Just like a breakout could fail. A breakdown could fail below support. And the 50-day moving average right now is in the middle of this big trading range, as I mentioned the other day on the show. So I'm watching support and resistance those big levels, the high from July, the low from August, because that's what matters a lot more to me than just the 50-day moving average. In the short term right now, just the 50 is in the middle of support and resistance.

Typically, just the 50, because that support and resistance isn't there, or the support and resistance is above the 50, or or, or. But again, things evolve. things change in the market. The market's almost like a living entity. It's just constantly changing, right? Sometimes these areas are leading, sometimes they're lagging. Sometimes these areas are leading. Sometimes the 50s here, sometimes the 50s there.

It's constantly evolving. Just put the pieces together. Stay flexible in your approach. Remember, the market can change quickly. September historically has been a bad month for stocks. This could easily be a bad month for stocks. a bad month for stocks. But it also could be a very good one. Just because September's in the past that's been good doesn't mean this has to be bad. But just play defense. There's no reason to go out there

and be a hero. There's no reason to go out there and push it. There's no reason to go out there and force a trade when the market's not giving you something. There's a time to be bullish, time to be bears, time to be on the sidelines, time to be playing the game. Patience is a virtue, especially in this business. But understand, we're not far away from new highs. It won't take a lot for the market to shoot up and go higher. And that's why I want to lean in, be prepared, get the watch list out, look at the leading stocks, make sure we stay focused. So in closing, I want you to have a great weekend, everybody, put the market where it belongs, hug your kids, hug your wife, your husband, your significant other, enjoy life, and understand our biggest wins are in front

of us is from a great book called Pitbull by Morty Schwartz. All right, have a great weekend, everybody, and I'll speak to you again soon. This has been Investors' 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 GaryK.com.