Odd Lots - Helene Meisler On What's Going On With the Stock Market Now

Episode Date: August 25, 2022

The Federal Reserve is in tightening mode. And there's that old adage "don't fight the Fed" which means in theory it's a bad time for stocks. And yet we saw a surprisingly powerful rally off the bottom in June. But now what? Can the market resume its ascent? Or will we return to the lows, or possibly make new lows? On this episode we speak to Helene Meisler, who has been trading stocks for roughly four decades, and who has a unique approach to analyzing the market. She draws stock charts by hand. In our chat, Meisler explains her methodology, and gives her assessment of the market right now. See omnystudio.com/listener for privacy information.

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthall. And I'm Tracy Allaway. Tracy, you've been on vacation for a couple weeks. Welcome back. It's nice to be back in

the studio with you. Actually, I think it's like our first time recording in the studio, I'm like almost a month. Yeah, that's right, because I very nicely got to record some episodes remotely. I hesitate to say this, but what did I miss? Well, I mean, in a way, I think you actually, it was not a bad couple weeks to sort of to take off and tune up. But there have been some interesting developments in the market. You know, I would say the first half of your vacation, we had this like continuation of this very powerful rebound off the bottom of the stock market that caught a lot of people by surprise.

And then the second half of your vacation, like over the last week or so, we've given some of it back. Yeah. When I left, stocks were still going up. Yeah. And now I've come back and it seems like we've done a round trip to where they were when I left. in early August. I think it was August 8th. And it's kind of been a weird summer for stocks, hasn't it? Because I think we had the best start to a third quarter since like the early 1930s. And we even saw a bunch of the meme stocks doing really, really well. And then I've,

you know, I've come back and it seems like it's just a bloodbath across the board. I know. While you were gone, like AMC became a story again at Bedbeth and Beyond became a story again. and Adam Newman got $350 million from Andreessen Horowitz. And I was like, oh my God, Q3 of 2022. This is just like Q1, 2021 again or 2019 or something again. It's tricky to because, you know, the macro situation, which we know is very elevated inflation and a Fed determined to stamp it out. And so, you know, one of the oldest cliches in investing is like, don't fight the Fed, right?

Like you hear that a million times. You hear it all the time, really. That is a cliche. Remember you made fun of me the other day for some cliche that wasn't actually cliche about the grid. Anyway, that actually is a cliche. So you have the Fed doing a lot of work to like stamp out inflation. And if you're believing the don't fight the Fed thing, it's like it's very bold to sort of be bullish at a time when the Fed isn't tightening mode. Yeah. Well, I mean, it feels like everything is sort of being driven by macro at the moment, but no one really knows what the macro picture is going to shake out is, because either you have inflation continue or you get a big recession because the Fed is raising rates

and trying to cut demand and bring prices down that way or, you know, I think the nightmare scenario for a lot of people is that you get both those things. But it all seems quite like tail risky, if that makes sense. Well, you mentioned the nightmare scenario and I think that really is a good lead in to our episode today because sentiment has been extremely negative. And so if you look at various surveys of professional fund managers, individual investors, you know, Q2 this summer may and June extremely pessimistic overall. Which might, some of the positioning, the Bank of America has a fund manager survey. I think at the last survey sentiment was like just a little bit better than apocalyptic was how they characterized it. Well, it was worse than the 2008 financial crisis.

I know that for sure. And that was even as stocks were recovering. And that's why people were calling this, you know, the most hated rally of all time and things like this. And so that sort of like gets into our conversation today, which is like, what's going on with the stock market? And how do you like think about how investors are positioned? What are the chart saying? What are the surveys saying? And yeah, like, what is the overall positioning? So it should be a good episode for sort of thinking about like what we've seen in the stock market really over the last several weeks and months. Yeah, I'm looking forward to it. Okay. I am so excited about our guest. Like, this is like a guest that I've been wanting, literally wanting to speak to for

literally years. We've never been able to like quite make it happen with scheduling just because, you know, it's hard. Finally, we're going to have her on. I'm so excited. We're going to be speaking to Helene Meisler. She is a columnist for real money, but also a longtime veteran of markets, having traded at Cowen, having traded at Goldman Sachs on the equity trading desk, doing technical analysis, managing money for Cargill, one of my absolute favorite people to follow on Twitter for all things relating to the stock market, but also just generally, just one of my favorite people and someone I've wanted to hear from for a long time. And we'll get right into it. And someone who has a very distinct way of analyzing the market. So Helene Meisler, thank you so much for

coming on Oddlots. My gosh, what an introduction, Joe. Thank you. I just want to say, I'm going to tell you guys that I have been listening to your podcast forever. And so when you asked me to be on the podcast, I felt like when you have a favorite TV show and the two stars have invited you on as a guest. So thank you. Thank you, Helene. That's very nice. So that is extremely kind. There are many reasons I enjoy following your work and following your analysis and following your sort of assessment of the stock market and individual stocks at any given time. But I think like there's something you do. that nobody else I know, or at least that I follow does in looking at the market, you chart by hand.

Like we all, like, we pull up a Bloomberg terminal chart and we like drag a line with a mouse, click, et cetera. You, you like keep it organic. You keep it real. Like you chart by, you actually draw out charts on paper. Can you talk to us a little bit about what that is? Like, what do you do? What that is.

Well, let's start. I just put a pencil to the paper every day. It's not, you know, and it's a high, low, closed chart, and I do volume. When I got into the business, which was actually 40 years ago this year, we didn't have computers on every desk. We didn't have PCs. You had a quotron, which gave you quotes. It didn't even give you news. News just scrolled across, like, headlines.

If you wanted to look at the charts on the market, you had to post them by hand. I mean, pretty much what everyone did. And then you had some services that you could buy where you got paper charts like O'Neill of IBD fame did these daily charts and you'd get them in a book once a week. And then there were some weekly charts you could get. But that was the only way to do it back then. And then slowly they started to computerize charts on a screen. And then we had computers and then everybody could have a PC on their desk. So I will tell you the story that when I started working with my mentor in technical analysis,

Justin Mamis, he had this huge pile of charts, handed it to me, and the chart scales are semi-logarithmic. So it takes a little while to get used to them. And he gave me one little piece of paper that showed me what the scales were and told me to chart them, and he left the office. And I was still at the office at 8 o'clock at night because, you know, you can't start charting. until the market settles, and that was like at 420. Anyway, so I'm charting, and I'm thinking, this is ridiculous. You know, I'm 20-something years old, 22, 23, and I'm thinking, oh, my God, he's so old, and he was probably 55. And I'm thinking he is so old, there has to be a way to computerize this. So the next morning, I tell him, there has to be a way to computerize this.

And he says to me, there is a certain feeling you get from putting a... the pencil to the paper, also from sharpening the pencils. Oh, imagine 23-year-old me. I rolled. I did the whole deal. And I said, oh, my God, I can't believe this. Can we make this a three-hour episode, by the way? I always, I just want to hear like this. Anyway, sorry, keep going.

I didn't mean you interrupt. Cycle, cycle about 10 or 12 years later, 13 maybe. And it's 1996. I'm still charting by hand. And my husband gets transferred overseas to Singapore. And so I pack up myself and I go. I quit my job. And I said, you know what?

I mean, we only had dial-up internet. But I know that there are charts sites and I can get charts on. I'm going to give this up. And all I was going to do was I was going to sit at home and trade. I mean, you know, I had no job. And one month, it took me one month before I felt like I didn't know what the market was doing every day. And so I went back and I actually posted on every single chart the month I missed. And I've not given it up since. And of course, the whole time I'm doing it, I'm thinking,

oh, God damn it, Justin was right. This is what Tracy should do after her two weeks off. Just like instead of hand chart what the market has done in my absence. Go back, pull up the clothes and just do it by hand to really internalize what you missed. I was going to say, you know why it's good to do that is to sort of take a set of data for a month or two and just literally chart one stock is because after you do, let's say, a week, you take a look and you stay to yourself, what do I think this stock is going to do now? And then you can see immediately if you're right. On that note, what is technical analysis? And what's the value of it? Because I know it has, it has its critics, people who say, you know, you're just drawing lines on a chart, sometimes by

hand, as you just described. And then it has a lot of fans as well. And, you know, there's a broader argument that if the market is really about momentum and sentiment, then something like technical analysis can be very, very useful. So how would you describe it? And I guess what was the value proposition, you know, when you were doing TA technical analysis in the 70s and 80s, like, what was the elevator pitch at some of these banks? Okay, first of all, I'm not that old. I know I'm old. I wasn't around in the 70s, I started in 82. But let me just say that I think what's evolved over the years, back when I first started, you didn't have what I call today chart readers. Because so many people, you know, think of, I've just told you, how hard it was to get a chart. And so you didn't have

access to charts everywhere. They just weren't available. You literally had to buy them. And so you really had to be into charts to do this. So you didn't. didn't have a bunch of people who even understood what a head and shoulders pattern was or how to draw a line or anything like that. And so that has changed drastically now with the fact that anybody can pull up a chart on a computer. And so the analysis that we did when I first got into the business was what I call analysis, not chart reading. How? Now, what's the difference? The difference is, for me, I start with the statistics and indicators on the market. I don't start with what the charts are doing because good charts turn bad and bad charts turn good.

I mean, you just said, Tracy, you just said you left for vacation and the market was up near the highs. You come back and everything's sort of plopped. Right. I mean, so good charts can turn bad and bad charts can turn good. So I start with indicators and that's what I analyze. how's the breadth of the market doing? Or what are the sentiment indicators? What's the momentum?

So if you start with breath, just recently, breath was hanging in there really well up until about 10 days ago. Brett is basically not just whether the line is going up, but like how many stocks within the index are performing well at any given time. Right. You're looking for you don't want a narrow group of stocks taking the market up. You want a lot of participation. So what's the breadth of the market?

And I use the advanced decline line as a guide. But I also use the McClellan Summation Index. I don't want to get too wonky on you. But that's sort of like a third derivative of the advanced decline line. So it moves much slower. It takes a lot more to turn it. So when you get a turn, it tends not to be false. And I also use the number of stocks making new highs and the number of stocks making new lows.

So if you go back to Tracy's comment, back in late July, NASDAQ had a smidge over 100 stocks making new highs. But by, I don't know, about a week and a half ago, when NASDAQ kept going up, what, another 5% or something like that, you could hardly even get to 80 new highs. So you were already starting to see the waning. So you didn't even have to look at charts to see that fewer and fewer stocks were participating. So that to me is the analysis on the indicators. And that should eventually show itself up in the charts. And so now if you go back and you take a look at a lot of the charts from the last few weeks, you'll see so many of them peaked out by early August.

And so the last couple of weeks were just sort of a lot of churning and going back and forth and not really doing anything. I'm June Grasso, inviting you to join me for the Bloomberg Law Podcast. Every weekday, we help you make sense of the legal story. that shape the nation and the world. Listen for complete analysis of the biggest court cases, the latest actions from Congress and regulators, and the legal moves driving the markets.

From corporate law to constitutional law and from state courts to the Supreme Court. At Bloomberg Law, we go beyond the day's headlines. We speak with top attorneys, judges, scholars, and policy experts to break down what the rulings really mean. We do this every weekday, then bring you the best conversations in our daily podcast. Search for Bloomberg Law on YouTube, Apple, Spotify, or anywhere else you listen.

On the East Coast, listen as you start your day. And on the West Coast, catch up in the evening. That's the Bloomberg Law podcast with me, June Grosso. Subscribe today wherever you get your podcast. So it sounds like to me that like just naively pulling up a chart, like if you pull up a NASDAQ 100 chart or a NASDAQ, chart or a NASDAQ chart or an S&P 500 chart, you're not going to, at least it sounds like, in your view, get too far by just starting with the chart, drawing some lines and say,

oh, it looks like it's going up or it's running into resistance here, et cetera. What it sounds like is that the chart is sort of the capstone or the final step on looking at these sort of like deeper trends happening in the market related to sentiment. and breadth, et cetera. And so you really have to, you know, like the chart is like the sort of like the finishing touch of like deeper analysis that you really have to do to understand the market. For me, yeah. I mean, I'll give you the fundamental equivalent. When Apple reports earnings and everybody is looking for $5 and they come in at 503. Yeah. They beat, right? But then if you start breaking it down, oh, revenues were a little light. They did it on share buyback. They did it on

expenses. You start breaking that down and maybe that 503 wasn't so great. And all I'm looking at is the S&P is up $30 today and I'm looking at the market internals and going, ah, that'll look so great. So it's the same equivalent. So to Tracy, to go back to your elevator pitch, it's not much different than fundamental analysts who are looking at earnings and breaking it down. They're looking at growth rates. They're looking at, you know, they're looking at all the expense ratio. And They're looking at all the same things I'm looking at, only I'm looking at it from what the market actually is doing and therefore what individual stocks are doing to make up the index. That's a good way of describing it. Further to this point, the indicators that you look at, do you have different favorite indicators at any one point in time depending on like the overall health of the market or maybe where the economy is? Like, for instance, does breadth become more important to you depending on certain market backdrops or economic fundamentals and things like that?

Good question. That is a good question. No. So let me take you back a little bit to, Joe, you mentioned that the meme stocks were coming back in vogue just recently, just like the first quarter of 21. Everybody dates the bare market to the peak in November for NASDAQ and the peak in January. for the S&P. I think the bear market actually started in the first quarter of 2021. Right. Because if you go back, okay, there you go. If you go back, that was when you had peak everything, peak speculation. You had the most bulls and bear, sorry, the most bulls and fewer

bears in the market. You had over 700 stocks making new highs on NASDAQ. That's unheard of. you had the biotechs were running, the meme stocks were running, you had, oh, peak spacks, let's not forget about peak spacks. And all of that, and then you had what should be, what was, a normal correction into the spring off of a big emotional high. But after that, you started to get fewer and fewer stocks making new highs on every subsequent rally. You started to get much narrowing breath. You know, you started to get to the point where, There were, what, 10 NASDAQ stocks that were influencing the entire market. Without them, we would have peaked well earlier than November in NASDAQ. And if you go back and you look at all these charts, most of them never made new high skin, or if they did, they sort of got up there and failed. So to me, we are 18 months into a bare market now. That's what, to me, the internals can tell you.

And so then if I come back and I say to you, everybody talks. about the June low this year. But I'd like to point out that you had the peak number of stocks making new lows on NASDAQ at just shy of 1800 in January. And when you came down in May, you had that exact same number, which was 1792. You had that exact same number. And then when you came down in June, you only had 1,000 or maybe 1,100. So each time we came down, it was the inverse of what you kept getting in 2021, which was fewer and fewer stocks were participating on the upside. What you were getting was fewer and fewer stocks were participating on the downside. You mentioned, you know, you go back to beginning of 2021 and you mentioned, you know,

peak everything. How do you use in your analysis the surveys? And there are various surveys. There's AIAI-I. I think it's like an individual investors survey. And they just say, like, are you bullish or bearish? I guess people respond. Then there's like the Bank of America, a monthly fund manager survey.

Tracy and I mentioned that. In the intro, they say, like, how are you feeling? Are you bullish? Are you bullish? What is your high conviction trade? What are your cash levels, et cetera? How do you think about the value of these surveys of just going out and asking people, do you like stocks here or not?

To me, the gold star in sentiment surveys is the investor's intelligence, which no one never talks about anymore. But it's been around since the 60s. And it is compiled of, it's either 100 or 120, I can't remember, newsletter writers. So you have to have, somebody is actually paying for your advice. That's number one. So it's not just willy-nilly. I feel like Mark is going up, market is going down. Somebody is actually doing analysis and sending out a newsletter that somebody is paying for. And so this outfit compiles each week. How many of them are bullish? How many of them are bearish? But they also take into account how many of them are looking for a correction. And those are primarily bullish, but they're just looking for a short-term pullback. And so you can really

quantify it. It is very slow-moving. It doesn't jump around like the AAI-I date traders do. And I don't know about the Bank America survey because obviously that's proprietary to them. But I, I, or investors intelligence, like I said, has been around. It's got a very long history. I find that to be the gold star of surveys. And if we want to take a look at that, back in June, there were 26% bulls and nearly 50% or 54% bears. That's bear market low kind of stuff. I mean, you just don't You just don't see those kinds of numbers often. And now what we got as of last week was you've got 45% bulls and 29% bears. So they're not out of control, but they certainly have flipped.

I don't know what this week's numbers will be. I assume that when they come out tomorrow, they'll have come back. The bulls have come down and the bears have come up because last week was really quite well. So when it comes to surveys. We should just mention that we're recording this on Tuesday, August 23rd. And so there's a lot happening this week with Jackson Hole and the potential for sentiment to maybe change a little bit. Right. So now, to go back to AIAI, because I have a pet peeve that if I could use this platform to scream from the hills for. Please.

Everybody who uses AAII, okay, they only seem to use it to give you their bullish case. They never once tell you when bulls are over 55% in the first quarter of 2021, you didn't hear anything about AAI. But when Bulls got down to 15% in May, oh, everybody was talking sentiment. You know, first of all, it's really mostly a crap survey because how many people do you know that are members of AAI? And if they are, they're older than me and I'm 61. I mean, you know, and you don't have the same people surveyed every single week. And, you know, so it's sort of a crapshoot. I'll give you one other survey that I think is quite good.

And that is the National Association of Active Investment Manitors, N-A-A-I-M-N-A-M-N-A-M-N-A-M name. And they survey their members every single week and ask them what their exposure to the market is. They survey them on Wednesday morning. The results come out on Thursday morning, so they're very fresh. And I have found that to be an incredibly useful survey. So tell us more about what you were seeing, I guess, over the summer. So, you know, you talked about sentiment getting like quite low in June. We've also seen explanations for some of the market moves. Lots of people saying that the rally was just driven by short covering and things like that. What did you see over that time period? Like how much of it was genuine sentiment versus technical shifts such as covering short positions? Well, Bob Prechtor, famous technician, once said all rallies start with shortcovering. And that's true. The question is, is whether or not after the short covering is finished, you get real buying. I suppose that what you could say is that the number of stocks making new highs, having peaked in late July, early August,

probably tells you that whatever buying you had petered out by then. and anything that was left over was just, you know, if you will, the dregs. So I think sentiment was incredibly bearish, but I think it was incredibly bearish in May. And I think we got very oversold in May. And if you go back to that whole May, June period, you were oversold, you had a little rally in late May and then you came down again. But again, as I said, you had almost 1,800 stocks on NASDAQ making. new lows in May, but by the time you came down in June, you had a little over 1,000. So that's already a contraction in new lows. And sentiment was only getting worse. And then you have,

I talked earlier about the McClellan Summation Index, which is a slow moving breath indicator. I'll just use it at that. That was actually making a higher low and starting to turn up. So you were already starting to get people. There were people buying stocks in May. I don't know who they were, but I know that people were, or at least they were no longer selling them. And, you know, you can see it now if you go back to the charts. Go take a look at all those arc names. They weren't making new lows. Biotex had stopped making new lows. A lot of the software stocks that stopped making new lows. And so was that shorts covering? I can't say. But somebody had decided it was enough. And I think that's how you sort of got that June low was over a period.

Now, I'll go back to one other thing is that everybody was talking about, but we haven't seen capitulation. People love that. Let's talk about the cues for a minute. In 2021, you can probably count on one hand the number of times the cues traded over 100 million shares. This is the, for the listeners, this is the QQQ NASDAQ 100 ETF. Yeah. And in 2022, you could probably count on one hand up until May the number of times the cues didn't trade over 100 million shares. So everybody is looking for that one day when the capitulation had taken place over months.

You know, it was just 100 million shares every single day you were trading these incredible high numbers of cues. I mean, go back. Or if you go back and you look at Apple. I mean, take a look at Apple and all of a sudden Apple was trading millions and millions and millions and millions more shares than it had ever traded. So there were people, there was plenty of selling. It just didn't happen. Oh, my God, in one day. Right.

People have this fantasy. There's going to be like one day, like a Black Monday or something. It all washes out. But really, if you look over a period of time, you see very intense, sustained, widespread pessimism. I want to ask you, though, you know, one of the advantages that you must have at this. point is just obviously your experience and having been watching markets, haven't been watching these indicators and volume indicators and surveys and charts for decades now. Can you talk about A, are there any like periods that you think like this feels familiar? This feels like another time.

Like you feel it and sort of like and be like do you keep your all year old charts such that you can sort of go back and look at a comparable period to see like how is similar some certain time frame was. That's a great question. So I'm going to start by telling you, I don't believe in analogs. But I do believe history repeats and chart patterns repeat because if you didn't believe chart patterns repeat, why are you looking at charts? But, you know, all those analogs, why do they always end up in a 1929 crash?

I know. I've seen a million. We're always one week away according to these overlay charts of like, this is exactly like the lead up to 1929. To me, it's just amazing. And yeah, I lived through the 87 crash. Okay. And I will tell you that the only people who tell you, oh, look how easy it was to buy are the people who are looking at charts and didn't live through it because I got news for you. It was probably, to me, it was one of the scariest periods in the market I've ever seen. You know, I mean, everyone gets crazy now, but the stock market was down 20%. in one day. And it had come on the heels of three incredibly bad days prior to that. And then when you opened down again on Tuesday morning,

just so listeners know what happened that Tuesday morning when we still had a specialist system in place, 28 of the 30 Dow stocks were halted for trading at, I don't know, around 11 o'clock in the morning. And the specialist said, I'm not reopening till I find buyers. And that's how come we made the low, that morning because they literally closed the market without really closing the market,

okay, which is what the circuit breakers today are sort of meant to do, right? Anyway, but to me, that was pretty scary. So, again, anybody who tells you that, oh, it was so easy, please, they didn't live through it. All right, which is why I look at those 1929 crash charts, and I'm like scared. Okay. So, history repeats, patterns repeat. And so, yes, I often will take a look at a chart and think, ah, I think I've seen this before. And most recently, I took a look at 2000 to 2001.

And it's quite interesting to see how we came down and we rallied and we came back. Anyway, I did a Twitter thread on it. And what I found was fascinating was obviously no one could have ever predicted 9-11. and let's hope we never have another one again. But that capitulatory low led to, I can't remember if it was about a 12 or 13% rally in the S&P over the next six or eight weeks. And you did not turn around and die. We went into from November until March or April.

We just went into like a 10% trading range up and down, up and down, up and down. Now, yes, what came out on the other end in April, was a complete plunge, but forget that. But you really, and it seems to me, nobody even entertains the fact that now we can just have a market that doesn't have to give it all back. It doesn't have to keep going. You could really just digest what we just had

within the context of ups and downs, ups and downs. And I sort of think that's probably likely. So in other words, I don't care what Jackson Hole happens. If, you know, like if the market plunges, So it's part of the up and down, up and down. Well, this was actually going to be my next question. But can you talk a little bit about how you view the relationship between stocks and yields? So bond yields at the moment?

Like, is that something that you look at? And can you apply the same sort of indicators and technical analysis to bond movements as you can to stocks? Or at least try to draw the relationship between them? Well, when it comes to bonds, I literally just look at the charts because that's all I have personally. I don't have anything else. I do have a sentiment indicator that I like to use, but it only gets extreme if you're lucky once or twice a year. So, which by the way, it got extreme in June, you know, which meant yields were probably at the high. There is a direct relationship between interest rates and the stock market. As a matter of fact, I will tell you that in January of 2017,

just as Trump was taking office, everybody was a little hysterical. What was going to happen to the stock market. And I went back and I looked at how presidential scandals, if you will, or situations affect the stock market. And the answer was, they don't. And I did an entire study on it. And I found out what affects the stock market. Interest rates are obviously the biggie. And the other is taxes. So financial, I mean, some people would say earnings, but I would say, interest rates help earnings and, you know, lower taxes help earnings, so it's all related. But its financial indicators are what matters to the stock market. So, of course, interest rates matter. And if you go back and you take a look at the low in June, I'm sorry, the low in bonds,

the high in yields in June, was absolutely when not just the stock market stopped, but when all the gross stocks stopped going down. And commodities had a little peak. I don't understand who you cannot look at the charts and not see it, but to me it's that obvious. And right now, I think that if you go back again to Tracy left and interest rates were near their lows, and now they've crept up and what's been gotten hit the hardest, oh look, growth stocks. Tracy, go back on vacation again. I'd be happy to. All right.

For the good of everyone's portfolio, I will take that on. And we actually talk a little bit more about, you know, we were talking about the meme stocks, having this sort of like kind of like this weird echo of January, February 2021 lately with like AMC back in the news, Bedbath and Beyond back of the news. It feels like, you know, my recollection after the dot com bubble burst and the start of, I guess, it was early 2000, like the very peak. it took a while for people to really give up the story. And you did see these sort of echo booms where the high flyers from 1999,

they would have these occasional rally. I think there were like four or five, like 50 percent rallies during those two years that you're talking about. Like it took people a long time to just sort of give it up and say, no, this is really, that story is over. Oh, 100%. Go back and take a look at a chart. The S&P came back almost to the old high in September of 2000. I mean, so nobody was talking bare market. I think there were plenty who were talking that the dot-com bust had happened.

Again, if you take a look at that, and then if my memory serves, I think it was in December, around sometime early December 2000, one of the high flyers, maybe in Cisco, maybe pre-announced a quarter or had some announcement. And it was sort of what I call a realization when everyone goes, my God, maybe things aren't so good. And the market started falling. And I would also tell you, I think that Twitter and social media has learned, has really exacerbated everything we do in the market tenfold. Talk about that. That's interesting. Well, I mean, when I was a child, when I got, when I got into the business, I told you, you had a quote run. You couldn't even

even pull up a news story on a Quotron. The story came across the tape, as we called it. The story came across. And if you wanted to read the story, you had to get up from your desk, walk over to the Dow Jones news machine, which was like a roll of paper that just, you know, spit it out. And you had to, you know, sort of pull it off, cut it, tape it, Xerox it. And then you had to go tape the story back at the machine in case somebody else wanted to read it. Think about how much time that took just to read a story. Whereas now you can just pull up any story you want. So that immediately just changes the whole timing in the market. Things are just accelerated now.

Now picture that if you can pull up a story in the market and everybody can pull up a story in the market at the exact same time and then it gets magnified on Twitter or Facebook or whatever, like that quickly, everything just happens so much faster and gets reacted to so much faster than it used to be. Hi, I'm PJ Vote. My podcast search engine has a new two-part series for you. Of all the new technologies coming out of AI, the most transformative one might be driverless cars.

They're already on the road in 10 American cities, and they're quickly coming to more. We tell the story of how we got here. The secret team at Google that spent 15 years building what might be the safest vehicle on the road, and we cover the fights brewing in blue cities, where unions and politicians are working to keep those cars off the streets. Listen to search engine wherever you get your podcasts. You know, if you pull up a chart of bed, bath, and beyond, for instance, which is now a very interesting looking chart with a big decline and then a big spike and then another big decline in an even shorter timeframe. So just over the past month. What do you see?

Like, what would you be looking at when you analyze that stock? Well, now you're going to have to give me two seconds to pull up the chart. Please do. I will tell you, I don't look at those charts because to me they're useless. While you're pulling this up, I'm looking at the QQQ chart from 2000 just while, you know, going back. So it looks like the QQQ, the NASDAQ, the NASDAQ, ETF peaked at about 120 in the spring of 2000 and dropped 40% by May. And then rallied another 42% by September. And so to your point, like there was this like really big rebound that I sort of had forgotten about in summer of 2000,

and where probably a lot of people thought, oh, yeah, we're back. Who said the dot-com, that was just a little hiccup. And then, of course, it went to plunge much more. And by early 2002, it was down to, like, 25. But, you know, there was this, like, pretty impressive echo boom in 2000. Anyway, sorry. Yeah, but, you know, Joe, even if you go back and you think about 2007, 2009, you know, we peaked in October of 2007.

How many people you think can tell you that? We say that last... We peaked in October of 2007. How many people you think can say to you, oh, most people think we peaked in 2008. Because you came down, then you had a rally, I think into maybe early January. And then we came down to the Bear Stearns Low. Remember that? And everybody thought, okay, we're done.

That was the problem. It got fixed. And we rallied into May. Even the banks had a rally into May. and then, you know, things weren't so good. Okay, Tracy, I'm looking at Bed Bath and Beyond. And all I see is a stock that has some serious resistance at 30. Walk us through how you make that assessment.

Well, last September, you had a high at 30. You had a high at 30 in early March. You had a high, it looks like maybe 29 in late March. And then this time you got to 30. I don't know. It seems like resistance to me. And let me just explain to you. Maybe some readers should, readers should understand.

Think of resistance. Let me think of how to explain this. Okay, I think of resistance as a big giant sandwich you're trying to eat. And it's the old joke, how do you eat an elephant one bite at a time? Okay. So just because you got to resistance isn't the end of the world. Because you have to think of resistance as, I own it here. Somebody owns it there.

And so somebody is saying, oh, God, just let me get back to even. And I promise I'll never trade that stock again. I mean, we've all had that experience. And so you're always going to have somebody who says, thank God I got it. You know, I was down 30% in the stock and now it's gotten back. I swear I'm never going to trade this stock again. And so that's why resistance works. Okay.

And so just because you back off of resistance doesn't mean it's bearish. You know, you do have to keep eating through it. like a big sandwich. Now, sometimes it's bearish, but not always. And so I often say bases are not built in a day. I know everybody wants the bottom to be built in a day, but it isn't, just like the top isn't built in a day. And if it took nine months to build the top, you can generally expect it's going to take six or nine months to build a bottom because you have to sort of go from weak hands to strong hands. Let me ask you about another chart that probably is maybe more sort of crucial for the future of the market than Bedbeth and Beyond, as entertaining as that story is.

And that, of course, is Apple. And what do you see when you pull up the Apple chart? You know, I can sort of eyeball it. It peaked actually January. Then it almost came back to it ties in April. Then it had a lower high in August. It's come back. Like, is this a, is this a, is This is having a hard time? Is it the same story? It's a really tough resistance to break through. Like, what's the story here? It's a stock that got to resistance.

That's what I see. So let me, right now, because my view on the market is not wildly bullish, okay? Right now, I pretty much think you're going to have a volatile period from now through September. That's just the, my indicators say that we're overbought, we're intermediate term overbought, short-term overbought, breath has started to roll over. So you sort of have to cycle through that whole overbought to oversold period. So, you know, if I was, if I thought that the market was overbought, oversold here, I would be more positive on Apple right now. But I look at the Apple chart and I say, okay, Apple ran from 130 to 175. You know, big deal if it comes down to 150 and it holds.

in the big scheme of things, it's no big deal, you know, if you're an apple holder. And I would look at, so now I look at the chart and really all I see is a lot of resistance at 180. That's all I see. So I think it should correct. Could it correct all the way down to 150? Sure. All right. I have one more stock I want to ask you about it.

And it's also a very interesting chart. And it's one that you and I have a shared affinity for this chart. because you and I think have been talking. Oh, I know exactly what it's going to be. It's already up on my screen. It's on my screen, too. All right. So what, tell me what you see when you see the Shopify chart.

It's a dot-com bust. Okay. That's the only thing I see there. I see a stock that had a huge massive peak. And in that respect, I'm going to go to a little bit of a longer-term chart. But we just discussed earlier, early 2021. And that stock, if you take a look, got up just over 140, had the big correction. Now take a look how it got to 160.

And then it just kind of died. I, you know, then it corrected. It came up to a little over 160 and then died again. I think if you think about a breakout, like you think about a kid running away from home. Okay. Did the kid go to the garage of the neighbor next door and look across? the street to see if mom was worried, or did the kid get on a bus and go to the next town? The kid who got on a bus and goes to the next town is a breakout.

The kid who went next door to the neighbor didn't really want to run away. Just wanted to see what was happening. And so a stock that keeps trying to break out and can't is the kid who went to the neighbor. I love it. And that to me is what I see in Shopify. It kept trying to do it, but it kept coming back. Sometimes those kids, sometimes even the kids who come to go to the next town, probably regret it, want to come home. This is true.

But, you know, you can also measure a target there and then 180. You don't want to know it doesn't look pretty. We could, man, we could do this forever. I want this to be. Just go through all the charts. Yeah, this should be mad money. This is what mad money should be, Helene Meisler. It's so good.

It's so good. Oh, stop. Anyway, you know, so let me just give you about the market right now. I don't know what happens in Jackson Hole. I mean, to me, it seems like a big wild card right here in the near term. But I think we have a market that should see a lot more volatility. We have a market that has sentiment that is not terribly giddy. It's certainly going to be bearish pretty quickly.

And if you just want to witness every weekend, I do a poll on Twitter for the next 100 points in the S&P. And this past weekend, I had only 30. 35% or 33% we're looking for the next 100 points to be on the upside. And I've been keeping that poll for over two years. And that's the least number looking for the upside we've had. So it, you know, it tells you something about how fast sentiment will turn bearish. To go back to Tracy's question about, did we have short covering or did we have real buying? You know, I think the short covering, for the most part, ended sometime in late July. and it's not clear to me that you had a ton of real buying in early August. Again, those new highs

coming down. So I don't think people are positioned terribly heavily in the market, which means can you come down and make new lows? You can, but probably not before you get oversold and already too much bearishness. So I go back to that 2001 scenario where you could easily have a 10 or 12 percent up and down, up and down, up and down. Helene Meisler, this is a, This was so fantastic. This totally lived up to the hype. Very fun. Really appreciate you coming on.

I think we should do this once a quarter, actually, in all seriousness, where we check in with you on the indices, on some individual names, and get an update on the weekly Helene Meisler Twitter poll, which I think should supersede all those other polls, especially if you keep it going several years. So fantastic. Thank you so much for coming on the Outlaws podcast. Thanks, and Mel, guys. Thanks, Helene.

That was great. was really fun. I'm so glad we finally had Helena on. Yeah, she definitely lived up to the hype, as you said. But it's great to, you know, I think technical analysis does get its share of criticism. And I really like the way she described it as basically looking at the fundamentals of the market versus the fundamentals of a specific company, looking at things like sentiment and breadth and how people are generally feeling about the market at any one time and how it's actually behaving. That makes sense to me. Yeah. If you think about it, I think, as an attempt to sort of quantify and visualize psychology. We know that psychology is really important in the market. And I mean,

that's not even controversial, but, you know, markets overshoot and undershoot the fundamentals all the time. You know, we're all animals, et cetera. Then I think it makes a lot of sense. And so combining the sort of visualization of the chart with things like the internals with various surveys, with volume to sort of indicate, okay, this is a lot of people are selling right now. It's not just that markets are down. A lot of people are selling. I think you can have some real signal from it. Yeah. And I guess on that basis, we might have an interesting few weeks coming up. Yeah. Totally. And to her point, which is like, okay, there aren't many bowls right now. Not a lot of people have entered the market. But on the other hand, like, there's still a lot of

bearishness. And so it's hard to go down when everyone is still out of the market. Like, these seem to me like useful, useful things for thinking about where the market's going to go next. Yeah, for sure. We'll have to have Helene on again at some point. Absolutely. All right. Shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway. And I'm Joe Wisenthal. You can follow me on Twitter at the stalwart. Definitely follow our guest, Helene Meisler on Twitter. She's at H. Meisler. Follow our producer, Carmen Rodriguez, at Carmen Armin. And check out all of our podcasts at Bloomberg under the handle at Podcasts. Thanks for listening.