Investor's Edge with Gary Kaltbaum - Week In Review [04.25.2025 w. Adam Sarhan]

Episode Date: April 25, 2025

https://garykaltbaum.com/Adam is guest cohost again today while Gary is out. We reviewed the action on Wall Street this week 04.21.2025 - 04.25.2025 and we look at what's happening as we approach the end of the month and enter the heart of earning season. We also cover the importance of finding leading stocks and how they drive the market higher. 

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That's Tommyjohn.com, Code Comfort. Tommy John. Comfort perfected. Investor's 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 Kay, who's out today. Today is Friday, April 25th, 2025, and we have a great show for you today.

As always, I want to thank you very much for being here. Before we dive in or go through the specifics of the show, Just as a quick reminder, this is a show about you and your money and all the fun points in between. You can go to GaryK.com. Rewind, pause, fast forward, listen to the show at your convenience as many times as you want, all for free on any device, all on GaryK.com. You can also subscribe with Gary's morning notes sent directly to your inbox. You can follow Gary on X, formerly known as Twitter. His handle there is at Gary Culpom.

And then you just click on the button or the banner. It'll show up. It'll take you right to his X or his Twitter handle. And then you can also sign up to his premium service, which is convictionleaders.com. All right. We have a lot to cover. It's the end of the week. So this is my favorite time to come on the show because it's a week in review. It's also getting close to the end of the month.

So I'm going to do an end of month review as well. Now, this has been a difficult month. I'm going to put difficult in air quotes there. You can't see it. So let's just, you know, I'll verbalize it and tell you this. It's a difficult month. When we started off in really in free fall level, there's a lot of fear baked into the market. You had a lot of concern or fear about tariffs.

Trump was talking about raising the tariffs, Liberation Day, all that stuff. And then the market was really just selling off hard. All of that came into the low on April 8th. So 4-8, 25. No, I'm sorry, 4-7, April 7th, so the wrong day there. So 4-7th. Yeah, 4-7-25 was the low. And the market, a few things happened here that I want to share.

The market reversed on the NASDAQ 100, that is, it closed just barely up on the day for the 7th. That's day one of a new rally attempt. The next day, the market was down big. And then on the 9th was the day that Trump had that 180 where he blinked or he pushed push back and said, okay, I'm not going to be doing tariffs as expected. Instead of 35%, it was like 10%, and we'll give a 90-day extension, and the market just took off.

I mean, the biggest update in the NASDAX history was on April 9th, 2025. All right, then what happened? You futz around for the next few weeks. You go down a little bit. Come into this week. At the beginning of this week, it was a long weekend last weekend, right, Eastern, and Passover. Okay, great.

So you come back in on Monday, the 21st. And what happens? The market opens lower and fears just, you know, has taken over. Again, the headlines, Powell is basically going to get fired. Trump doesn't like him and the market's concerned. You know, the president of the United States says, oh, by the way, the chairman of the Federal Reserve is incompetent, more or less, these aren't his exact words. And we've got to get fired.

And we're going to fire him or he's got to go or something along those lines, right? Again, the gist of it. It's not the exact words, but it's the gist of it. And then market sell off hard. Then next thing we know, as far as the public, Trump is going to meet with the CEOs of Walmart and Target and other big retailers. All right. He has that meeting. The very next day on Tuesday, what happens?

The market rallies after Trump comes out and says, oh, by the way, I'm not going to fire Powell. And I'm going to, quote, unquote, be nice with China, whatever that means. meaning I'm not going to have really tough tariffs. Okay, stocks take off. Then you close on Tuesday. It was an up day, but it was a big update. And it was enough to be what's called a follow-through day in William O'Neill world or Investors' Business Daily. Well, it's a big update.

It's enough to be an update on big volume, so it confirms a new rally attempt. So the first follow-through day we had was on April 9th. And then you move down, down, down, down. Never really undercut the low of the 9th, which is a good sign. And then we had another follow-through day on Tuesday this week, which was a big update on volume, a higher volume than prior session. All right, great. Wednesday, the market gaps up on that news and then some, some more news. But rallies all day and then all of a sudden hits a wall near the 21-day moving average and then closes in the lower half of the range. And the market mean the S&P, the NASDAQ, I'm just using the market.

But for those of you following at home, it's the QQQQ that I'll be primarily focused on. All right. So by the way, all this were still below the April 9th high. Then what happens? Thursday comes around and the market rallies and rallies nicely. Oh, okay, that was yesterday. And you close right near April 9's high. Now, if you go back and look at March, the low there was 466 in the QQQ. The April 9 high in the QQQ, and again, this is how this is how this was. works, folks, I don't make this up. Literally was 4-6-7. So the low in March was 466-46-43. The high on April 9th was 4-667-83. So 4-6643, excuse me, was low in March, 4664-6-4-3. And then the high on April 9th was 4-6783. All right, we closed yesterday at 4-6766. Whoa, not a mistake.

And then what happens? You also broke, well, two other important things happen here. One, you broke above a multi-month downtrend or a downtrend line. You know, if you connect the highs over the last few months since February and then into March, into April, there's just a straight line you can draw. And that's a downtrend. You broke above it in the NASDAQ 100 yesterday on Thursday. Wow.

Then you had bullish follow through on Friday. nothing crazy but yet you know you're up for most of the day okay great and then you close above the downward trend line and above the 21 day moving average and now going forward those areas that were resistance now become support so as long as we're above the 21 day moving average in the cues the simple 21 day moving average you know I'm of the mindset we're probably headed higher here now if we go into the weekend and we so news driven this market I mean this is tweet driven not even news driven right we get a bad headline from whoever enter any character you want in our movie we could things could

change you can see a big sell-off right but it feels like that the and the feel is a quote-unquote we'll use the air quotes again that the tide has turned a little bit here the bears have gotten weaker the bulls have gotten stronger, meaning it feels like that the market's ready to have a little bit of a, I guess a little, we'll take a little out, but a nice little rally. Let's put it that way. I don't know if it's a little rally, a big rally, short term, we're very overbought. So we had a big rally this week. But it's back on in rally mode. Now, it doesn't mean we're going to rip to new highs.

We're still below the 50-day moving average, still below the 200-day moving average. Still a lot of work needs to be done, right? A lot of repairing work. We're still down for the year in all of the indices, right? So we're going to take our time, but just noticing things changed a little bit, right? Like Gary says, the complexion has changed. Also, we're seeing stocks leadership breakout, like breakouts. You know, we're actually having breakouts again, which haven't happened in months, right?

Leadership has expanded a little bit, right? Netflix, good leader. Gary's talked about that, right? There's other ones as well, but we're seeing leadership expand a little bit. That's a good sign. Yesterday, China said, oh, the tariff talk is fake news and the market was up yesterday. If that happened two weeks ago, we'd probably be down 500 points or 1,000 points in a blink of an eye. So remember, what matters now, it's not so much the news.

It's the reaction to the news. and we might be entering a phase where the market's shifting its reaction from overtly bearish, just no matter what, sell, sell, sell, to bullish. And that can be a big shift. That's one. So that's a week and review, big up week this week. Bulls put their feet in the ground. We said, you know what?

We're done selling for now. That could change on Monday. But for now, we're back into bounce mode. Let's watch the 50-day moving average because we're still below it. Let's watch the longer-term 200-day moving average because we're still below that. But if we can get back above those two levels, the 50 and the 200-day, wow, things can change and can change for the better. Now, next, like Gary says, what's next?

On a monthly basis, the NASDAQ 100 is now up, which is very, very encouraging. you had every chance in the world to fall this month and the NASDAQ 100 and all the indices, by the way, are in the upper half of the ranges for the month. And the QQQQ just turned positive. And it's a big volume month. And in more bullish kind of news, you found support right near the old chart highs from 2021 and 20, really it was November 21. 40871 was the old chart high in the NASDAQ 100 from 2021. The low this month was 402. And that only happened on one day, which was at 47 day, yep, on April 7th.

And you close that day at 423. So we didn't even close below that 408 level, which is really, really bullish. So again, that's how it works. It was resistance for a long time and now it's become support. So big defensive months across the board. All right, up next, we've got a lot more to cover. We're just scratching the surface. I'm Adam Sarhan.

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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. 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 to Investor's Edge. In case you're just joining us or missed any part of the show, you can go to Gary

K.com. Rewind, fast forward, listen at your convenience anytime you want on any device, all for free. All right. So we spoke about the market. The week in review and the month in review. The month's not over yet. But it's a big defensive month. I think I saw a headline this month. Where was it? I think it was the Wall Street Journal. So the Dow's on pace for the worst month since I don't remember what the rest of that sentence was, but for a long time. And in my morning note on find leading stocks.com, it's a newsletter I shared breakouts and setups and leaders and all that fun stuff. I share my thoughts about the market with people. I wrote that day. I was like, there's something inside of me that just wants to go out and buy.

Just because that headline. I should have. I didn't, but I should have. And what happened? Boom, he took off since then. It didn't low ticket to the day, but it was very close. So it's one of those situations where, oh, okay, let's just zoom out, right? It's really important, especially because I'm not on every day.

Whenever I'm on, I want to zoom out and look at the forest, not just the trees. Most people are looking at intraday charts, which to me are the leaves and the trees and you miss the forest, you miss the trees. So daily charts can be looking at the trees, you know, weekly charts looking at the forest and monthly charts at the forest as well. So the intraday charts are looking at the leaves, in my opinion, right? So let's zoom out a little bit. Let's look at the monthly chart. The monthly charts, all of the indices now, you can look at the leaves. at the Russell 2000, the IWM, you can look at the mid-cap S&P 400, the MDY, you can look at the S&P 500, SPY,

you can look at the Dow, D-I-A, Dow Jones Industrial Average, or you can look at the NASDAQ 100, which is the QQQ, they're all in the upper half for their ranges. In fact, the Qs are up on the month. In addition to that, the semiconductor index, SMH, is in the upper half for the range. the range also and it's on track. It's not going to take a lot for all of these indices to be up on the month. And a lot of them found support near their 2021 or early 2020 highs. So if you look at the S&P or you look at the SMH or you look at the Q's, you know, most of them, they pulled back in April and they retested the high from back in late 21 or early 22. Like the S&P 500 topped out in January of 22 at 479.98. Let's just call it 480. The low this month was 481.80. One point away from the high in 2022. That's big. Why? Because that shows you that at that time, when fear was at its most, the big institutions were in there doing what? Buying. Defending.

When resistance becomes support, that's a bull, all things being equal. That's bullish. going forward now, looking at the forest, April's low, across the board, and all of these indices, near-term support, big-time support, not even near-term, intermediate, long-term, like this is just major, major support would be April's low. Short-term support, you can look at the 21-day moving average, you can look at this week's low from Monday, and then you can go back and look at April's low. So you've got three clear lines in the sand. The 21-day moving average, this week's low, and then April's low, going back.

It doesn't matter what the index is. It's all the same, right? The S&P, the NASDAQ, it's all the same. They're all above the 21-day moving average right now. Let me double check here. The Russell is, the mid-cap is, the S&P is, the NASDAQ is, and the Dow is just about to be above it. So everything except for the Dow.

the 21 day, the doubt still below the 21 day. The other ones are above it. All right. So as long as they stay above the 21 day, great. I'll lean a little bullish. They undercut the 21 day? No, boy, no. Right?

And a lot of these, the S&P and the NASDAQ are both above their highs or right near their highs from that 9th of April, that big huge update we had. So, I mean, depending on the index you're looking at, but close. to that and above downward trend lines the S&P and the NASDAQ. Not all the indices, but the S&P and NASDAQ. So for now, we're getting slowly getting better, but that's big. Because most people look away when the market down. We don't.

We double down. We do more work. Why? Because this is when the big money's made, folks. You find the leaders coming out now and this rally, let's say this bare market or this correction or whatever the case is, however you want to lay. is quote unquote over? What's going to happen? A, we're going to hit new highs, very in a blink of an eye type of a thing, assuming that the bear market's over, the correction's over. And then

B, you can see a whole new batch of leaders show up. And those stocks are going to have remarkable runs. Whenever this bear market ends, I'm not calling the end of the bear market right now. All I'm just saying is that odds are favor, you know, this is healthy action, considering how bad it was just on Monday of this week, if not two weeks ago, right? Okay, great. This is good. We're bouncing into the 50. We're bouncing in the 200 day. That's good.

Step in the right direction. Breaking above a downward trend line in the S&P in the NASDAQ. Good. Doesn't mean it's over the bare market. No, we can easily rally into this 50 day or the 200 day. Roll right back over and have another leg down. So very easy that can happen. But the S&P now is only down about 10% from its all-time high.

That's correction territory. A few more updates, you'll be down single digits. Notice, folks, that's how things work. When things change, they change very quickly in the market. The NASDAQ 100 down about 12% between 12 and 13% from its 52 week high and all-time high. Wow, right? Because just last about two weeks ago, it was down near 20%. So it flirted with the bare market territory.

it didn't actually live down there for long and got right back up into correction mode. So we're still in a correction. Ugly correction. Some areas are still down over 20%. Like the Russell 2000, the IWM, is down about 21%. The mid-cap S&P 400 is down about 17%. But the action has improved considerably. In fact, the mid-cap, M-D-Y and the Russell are up every week for the last three weeks.

They're fighting. That's how this market works. That's how things change. They're fighting to get back. You know, the bulls are fighting. Think of a game of tug of war, right? The bulls are fighting to regain control. Now, one, two down days.

We can go right back into the ugly. Very, very quickly. We're not out of the woods. But things are improving step by step. It's just how this stuff works. All right. So leadership. If this is good, Adam, what's working, right?

Let's focus on some leaders. So here we go. I want to find, like, what are leading stocks? So yesterday I had a friend over. He's like, I got to leave. I said, what are you doing? He's like, I got to go. The NFL draft is starting.

Okay, great, have fun. Baseball season started. Oh, you know, I was talking someone today about Steve Cohn who owns the New York Mets. Okay, great. Mets are doing well. Great. If you like sports, you probably know where your team is in the division or in that league or in the standings, right?

Whatever the case is, it doesn't matter, basketball finals, the NFL, the NBA, the NBA, whatever it is, right? NHL, it's all the same. Where are your stocks? We want leadership. All right, up next, we've got a lot more to cover. I'm Adam Sarhan. This is the

one and only Investor's Edge. Guys, it's no use putting it off. The best time for an underwear refresh is now. Tommy John underwear is designed for a perfect fit that stays put all day. There's zero-chafe thanks to four times more stretch than competing brands, and their innovative horizontal quick-draw fly is a game-changer.

With over 30 million pairs sold, there are thousands of men out there more comfortable than you. Don't settle for less. Go to Tommyjohn.com today for 25% off your first order with Code Comfort. That's Tommyjohn.com code comfort. Tommy John. Comfort perfected. 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.

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. You'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 from

any part of the show, I'm Adam Sarhan filling in for Gary Kaye, who's out today. Today is Friday, April 25th, 2025, and we're doing a week in review and a month in review, spoke about the strong action that's happening, changing complexion,

not 100% bullish, just putting the bullish pieces together for you. And the bulls are fighting day by day. And it's the reaction to the news, that matters, not the news itself. And we're getting healthier, meaning more bullish reactions. The stock market was very close to bare market territory, briefly dipped into bear market territory, the S&P, the NASDAQ, and the other indices also. And they came right out of it.

Didn't last long. On a monthly basis, we're in the upper half of the range for most of the indices, and they pulled back, most of the indices, found support near their 2021 and 2022 highs. So this was a classic case. Look on a monthly chart where old resistance became support. Next, next, we spoke about leading stocks, and that's where I left off. So if you know your sports, anyone who like sports, okay, most likely you know where your team is in the division or in the league, right? NHL, the Stanley Cups coming up or the NBA playoffs or the basketball NFL drafter. All the sports, same thing.

My team is here, that good or that bad. Think of it that simple. Most people know where their team stands. Well, what happens? With stocks, most people don't know where their stocks stand. Yeah, think about it. Speak for a living. Talk to professional money managers, individual investors.

I've been doing this for over 25 years now. And I've been trading since the 90s. and I started, this is all my own personal experience, I didn't know what the strongest stocks are in the market. So, said, all right, let me find them. Whenever I speak to investors, I always ask them, raise your hand if you know the strongest stocks in the market right now. And I don't mean Apple or Amazon or whatever the latest hot stock,

Navidia, the latest hot stock is du jour. No, I'm talking about literally the strongest stocks in the market. On a year-to-date percent change standpoint, Just what's the strongest stock in the market right now up the most this year that has liquidity and trades. I don't want some penny stock that no one's heard of. No, that's not my world. I want to find the strongest stocks in the market right now. One of the strongest ones right now on a year-day percent standpoint is a change, excuse me, year-to-day percent change, is NUTX.

All right. Up huge for this year. And it's a really good looking stock. I actually interviewed the CEO of this company on my Smart Money Circle podcast a few months ago. I wish I would have bought the stock. I didn't. But I interview CEOs and big money managers for timeless advice. And just passed a trillion dollars in AUM interviewed on the show and over 230 episodes.

It's all free if you want to listen to it. By all means, feel free. Please like and subscribe on YouTube. They want me to tell you that. Smart Money Circle is the name of it. You can search it up on YouTube or go to the website, smartmoney circle.com. and this is the strongest stock in the market right now that trades over $5. Simple.

All right. It's a thin trader. It doesn't mean you buy it. It's not a buy. It's just I want to know the strongest stocks in the market. What's the second strongest stock in the market? What's the third? What's the fourth?

Oh, don't know. How do you plan to beat the market if you don't know the strongest stocks in the market? So step one that I do is I want to find the strongest stocks in the market. I'm not going to buy them. I just want to know what they are. Hertz, HTZ, is up huge this year. A lot of in the last three or four, maybe week or so, like three or four or five days went from four to eight. It doubled. But still, I want to know.

And then I go through leadership and I say, no, no, not for me, not for me, not for me. Oh, that one might be interesting. Okay, great. Let me watch it. What's setting up? I love it because that helps me find. that helps me find leaders. And when you're able to go through and find leaders, once you have a bullish environment, which most of the time the market's trending higher, thankfully, guess what?

Well, at least that's been the case in the past. And again, past performance is not indicative of future results and so on and so forth. You have a situation where those leading stocks tend to continue to lead. And they become the first ones out after the bare market or the correction ends and you enter a new bull market, right? Another strong stock, Groupon, GRPN, I'm not buying it. It's extended up here. But hey, it went from 13 to 19. Over the last few weeks, while the market's going down, they report in 12 days.

Again, just want to find leadership. Other ways of finding it, look for breakouts. Deutsche Bank, DB, stock broke out today. And it's has to have. a good run in the last maybe two, three weeks, from 18 to 25. Little extended, but still, good way of finding leadership is finding breakouts. Netflix, Gary's talked about this. Big leading stock broke out this week and did it on volume. Very good action. Big double bottom base and broke out. Really good action, right? MRX. I don't even know what this is. Let's see,

financial services specialty stock, 99 EPS rating, earnings per share rating, 98 composite rating, 97 relative strength rating, outperforming most of the other stocks in the group, broke out, hit a new all-time high today. MRX. It's up every single week for the last six weeks

and just breaking out today. It broke out yesterday and then above, it limped out yesterday, but really today was a breakout on volume. MRX. That's what I'm looking for. Leadership. Now, I'm not going to catch them all.

I've learned that's okay. It's like the high school boy who goes to the dance and wants to kiss all the pretty girls. It's not going to happen. You just need to find one and you'll be very, very happy. One stock, one good trend, a year, two good trends could really make your year. When I was first coming up in the business and getting started, I used to get upset, angry when I would miss stocks. Oh, I saw X, Y, Z.

I can't believe I didn't buy it. Now, after doing this for decades, yeah, it's okay. You're not going to catch them all. Nobody catches every single leading stock at the exact right time, buys at the exact low, sells the exact high. Every single time over and over again for every cycle. Now, I don't even try doing that anymore. All I want to do is capture the bulk of the move. I want to identify leadership, and there's no guarantee.

It's all about probabilities. If these stocks are breaking out and leading now, they have a higher probability of continuing to rally in the next up cycle. And that's big. Or to use Trump's word, that's bigly, right? Leadership matters. Leading stocks by definition are the stocks that are moving the market higher. Now it's a basket of stocks. I get it.

These indices are market weighted and the big stocks like Apple. You know, in Microsoft, they take up a big chunk of the index. But we want to find, I want to find leadership. I want to find the strongest of the strong. I'm not going to own all of them, but at the very least, I can have a pool when I go fishing in leading stocks that have a high probability. And object in motion does what? An object in motion stays in motion. They have a high probability of leading the market, because by definition, they're already leading the market.

They have strong relative strength. They're acting well. so on and so forth. And again, that's the goal. Will I catch every leading stock? No. I want to find them. Look for the fresh breakouts.

Look for stocks hitting new 52 week highs. Look for stocks that have strong relative strength. And if we're going to come out of this correction, mini bear market correction, it's one or two things. Well, one of three scenarios. Either we come out of it, we haven't hit new highs. That's scenario one. Two, we go sideways. Three, we go down.

We have another leg down. That's it. Those are the only three scenarios that can happen. If we go sideways, okay, still want to find leadership. If we go down, I want to find leadership. I'll be out, but I still want to keep my eye on leaders because eventually that downtrend will end. And if we go up, hey, guess what? I want to own leading stocks.

The whole idea of just high probability trades. Now, could I find a stock hitting at 52 week low that has a huge move up? Yeah, sure. I'm not fishing in that pond. It's not my universe. Doesn't mean someone else can't find it and do very well. Great. God bless them.

In my book, psychological analysis, which was number one on Amazon every day for three months after I published it and thank everybody for the kind reviews and writing reviews online on Amazon and buying the book and supporting it and the feedback. It's been absolutely fantastic. But in the book, I say there's an infinite number of ways to make money in the market. Your job is to find one that works for you. It's really that simple.

So I'm not going to argue with somebody who does something different. God bless you. It's an infinite number of ways to skin a cat. Find one that works for you. For me, I like leaders. I like leadership. All right. Up next, we've got a lot more to cover.

I want to thank you very much for being here. I'm Adam Sarhan. This is the one and only Investor's Edge. Guys, it's no use putting it off. The best time for an underwear refresh is now. Tommy John underwear is designed for a perfect fit that stays put all day. Their zero-chafe thanks to four times more stretch than competing brands, and their innovative horizontal quick-draw fly is a game-changer.

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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. You're listening to. What are we waiting for? Well, what are you waiting for? One, two, ready, go. Investers Edge with Gary Culper.

And welcome once again to Investors Edge. I'm Adam Sarman, in for Gary. 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 for free on any device you want, anytime you want, all on GaryKK.com. All right, so we covered a lot. Did a week and review, month in review. We did the fact that there's three scenarios that can unfold here.

We hit new highs, uptrend, the spare marketer, this correction's over or close to over. Or we go sideways, or we have another leg down. That's really it. And if we go higher, we want to find leadership, spoke about the importance of finding leading stocks and how they tend to lead by definition the market higher, hence the focus on leading stocks, right? So that's that. Now I want to talk to you about earnings season. We're entering the heart of earning season over the next several weeks, the thick of it. Now, every day, you're going to have hundreds of companies report earnings.

I'm not going to list all of the earnings for you right now because I sit here and just ticker after ticker after ticker. But we have next week one of the most important weeks, if not the most important week on earning season coming up. Apple reports in six days. Microsoft reports in five days. Meta or Facebook reports in five days. Amazon reports in six days. I've got a lot more. Hundreds of companies are coming out and reporting.

But when you have a situation where so many of these stocks, report earnings. How do you handle it all? Well, let me tell you how I do it. First off, there's a few things I look for during earnings season. Number one, and the most important thing, it's the reaction to the numbers. I don't care about the numbers as much as I care about the reaction to the numbers. Why? Because the reaction shows me what the big institutional investors are doing with their money, not what they think, or not what this or not what that, or what it's what they're doing. I'm not privy to their trades, what they buy and what they sell, but I can tell you with absolute certainty that, oh, it shows up in price and volume they can't hide. Meaning,

if a big huge institution or several institutions are buying a stock, and let's see the average volume is, I don't know, 100 million shares a day, okay, great, and they have to buy $5 billion or $10 billion, dollars, it's going to show up. Right? So that's how we do, a price and volume. So the reaction, a bullish gap up is a really good reaction to earnings. A bearish gap down is a bad reaction, all things being equal, of course, right? So, you know, a stock like Google or Alphabet reported earnings after the close.

Today's the first day is traded. It gapped up, closed and lower half of the range, but it gapped up, right? Tesla reported earnings this week and it rallied and rallied nicely. Okay, good. We're up about 9% today and it reported earnings two days ago, I believe, earlier this week. But good reaction after the fact, right? EHC encompassed health reported earnings big breakaway gap. When you have a chance, take a look at EHC, that's one of the best reactions to earnings

so far that I've found. Now, on the flip side, you find something like United Health, UNH, gaps down, gets crushed, and continues to fall after reporting earnings. And by the way, earnings were up 4%. Market didn't care. So as you separate the winners and losers from earnings season, step one is I'm looking for the reaction. Step two, so I want to see the numbers. What were the numbers this quarter, that's the reporting Q1, you know, we just finished the first quarter of the year compared to Q1 of last year. This way, you're comparing apples to apples. I don't want to compare Q1 to Q4 because that's not fair. I mean, it's not even, there's no reason to it. It's not apples to apples, right? Retailers have a huge Q4 and Q1's weak. So why would I compare

Q1 to Q1? No, Q1 to Q4 to Q4, but year over year. Same quarter, how to do last year in that quarter. So it's apples to apples. And is there growth? I love growth. I'm a growth investor. I love growth. I like growth stocks. I like growth. Sales, earnings, two big metrics I look at. And the next thing I look at, what was the consensus? What did Wall Street expect was going to happen? And did they beat? Did they raise guidance? Another thing I look at. Guidance. Who doesn't love when a stock beats earnings and raises guidance and gaps up? Ooh, that is phenomenal. I'll take that all day long. Week in, week out, week in, week out.

Take it all day long. Why? Because that gives you the ability to say, oh, okay, hold on a second here. Management is bullish on their future. The institutional investors are bullish on the future. And the numbers are bullish because the numbers come out and are supporting more growth. Right? That's big.

Sometimes companies report down quarters like Tesla in the last quarter earnings fell 40% compared to the same quarter last year. In Q1 to 25, Tesla made 27 cents. In Q1 and 24, they made 45 cents. To decline of about 40% sales fell about 9%. Doesn't matter. Stocks up. That's what matters. Why? Because the market's a forward-looking mechanism.

earnings by definition economic data too by definition rear view mirror phenomenon that's big big I didn't understand that for years and years oh one day it clicked oh that makes sense okay so the market's looking forward so as we make our way through earnings season just on a piece of paper, if you want on your computer, it doesn't matter. Two columns, all the tickers that gap up. On the left, winners, and on the right, losers, all the ones that gap down. Doesn't mean because it gaps down, it can't rally afterwards. No, it still can. Doesn't mean because it has a big breakaway gap. It has to go up from there. No, of course it can go back down. It's just about probabilities. Again, we're playing the odds. We're stacking the odds

of success in our favor. And at the same time, we're eliminating low probability outcomes. I don't want to buy United Health when it gaps down 20% after reporting earnings and say, oh, it got cheaper. It's not how I play the game. Someone else could buy it. Great. God bless them. For me, I'm not doing it. And then it falls another five or 10% afterwards. Like what just happened? I much rather put the odds of success. Oh, find a stock gaps up, sits tight for a little bit, and then breaks out again, love that, especially to an all-time high. That means no one owns the stock at a higher price. There's a concept of overhead resistance, overhead supply meeting.

Every time the stock rallies, if people own it at higher prices, they sell just to get out of break-even. If it's at an all-time high, there's no one else that owns that that higher price. There's no overhead resistance. So putting things together, it's a good week. We're on track for a good month. It's very headline dependent. Take your time. So that's all the time we have for today.

I want to thank you all for being here. Definitely hug the children, strengthen those connections, and I'll speak to you again soon. Have a great weekend, everybody. This has been Investors' Edge with Gary Coltbaum on BizTalk. To listen to past episodes or to get in contact with Gary, go to GaryK.com. That's GaryK.com.

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That's Tommyjohn.com, code comfort. Tommy John. Comfort perfected. 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.