The Compound and Friends - VWAP-er's Delight

Episode Date: April 28, 2023

On episode 90 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Brian Shannon to discuss Volume-Weighted Average Price (VWAP), trading strategies, technical analysis, tech earnings, and much more! Thanks to Public for sponsoring this episode. Go to https://public.com/compound to learn more about their new Treasury accounts. Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

So we're gonna do about three, four hours, okay? Perfect. There'll be a bathroom break. How long has it been? We got that. We're gonna do some charting. Put my mic on! Put my mic on!

Alright, my sounds are good. Are we all lit up? Yes. So, uh, Jerry Springer died today. Did he? 79. Oh. I guess you just lose track of how old people are.

I know. Because if you would have said to me today before I heard the news Jerry Springer died, I would have said that guy's 65 years old. Yeah. Every old person to me is 65. So he was almost 80. Everyone old to me has got a seven handle at this point. Oh, dude.

It keeps extending. The goalposts move the older you get. So I was looking at some of the clips from old school Jerry Springer and the paternity tests. Right. Lunacy. I don't think I've ever laughed so hard. Last time I saw you, it probably was in North Carolina.

Yeah. Right? Yeah, yeah, yeah. Was that five years ago? Was it that long? Unfortunately. Four for eight? Yeah.

John, yeah. Al Pacino turned 83 this week. Holy moly. How's that? I would have believed if you said he died over Jerry Springer. Yeah, yeah, yeah. Jerry Springer died? Jerry Springer died.

Shut the fuck up. Yeah, where have you been today? When? I've been busy. Aw. What died? Jerry Springer died. Shut the f*** up. Yeah, where have you been today? When? I've been busy. What time? Take care of yourself. 79. And each other.

79 years old. What happened? I don't know. Like, it wasn't like something happened. He just died. I'm a little shocked. That guy was like a staple. Really?

My childhood. When I was home sick, like not sick, at 10.30 in the morning, I was watching Jerry Springer. That's the whole thing on social media today. It's like, thank you for entertaining me

during the days I missed school. Remember Steve Wilkes, the bodyguard? He did something. That's very sad. Oh, Steve. That's right. He did.

Yeah. Yeah. The enforcer guy. Was Jerry Springer really the mayor or was that a rumor? I think that was real. He was. Yeah. Yeah. The enforcer guy. Was Jerry Springer like really the mayor or was that like a rumor? I think that was real. He was the mayor of Cincinnati. Do you know about this? Was he the mayor somewhere?

He was the mayor of Cincinnati. He was. He was also a judge. He was like not a, he was not like destined to be a reality. All right. Let's talk about this for a sec. I, maybe I'm a naive. I kind of thought it was like, I thought it was real.

What do you mean? The show. Was it totally scripted? No, I think they found some really interesting people, and it was real. It was real? Yeah. Your thoughts? I think that they started off finding some really interesting people,

and then you run out of insane people, and you start manufacturing them. That sounds right. Man, I'm sad. I love that guy. Like, if you ask me. people and you start manufacturing them. That sounds right. Man. I'm sad. I love that guy. If you ask me... Jerry! Jerry! Jerry! If you ask me was everything on the show real, I would say probably not. I'm not saying

everything, but I think... It's wrestling. Yeah. In the end, right? It turned into wrestling. Yeah. Man. They're good athletes, but there's a script.

Yeah. So one of the funny clips I saw was they had him on Austin Powers. And in character, Mike Myers comes out as Dr. Evil. And Jerry Springer is, like, doing the reunion of Scott Evil and his dad like trying to reconcile that but the brakes on the drama with his relationship what's going on Jerry I cheated on my BM oh I was what B and cheated on your baby's mother. Baby's mother. And why would you do that? Before I tell you the story, Jerry, I really want to say I love my family.

We probably can't use this. We have a son together. I'll probably do whatever I want. I'll sell my son for anything in the world. Yeah. But one day... Well, he's dead. Whatever. It's a tribute. Oh, the rights die when he dies?

No, we're doing a tribute. We're not appropriating his content. We're trying to pay homage. Way to screw that up. Mark! Way to screw it up. Alright, rest in peace Jerry Springer. Thank you for all of the countless hours. What the f*** are you doing? What is in your mouth?

You know we're broadcasting, right? We're not really broadcasting. This is the pre-taping. Okay. Alright, so Shan, we want to hear your economic outlook before we – What did you think of the most recent Beige book? We would like your take on revised GDP forecasts, if you don't mind. Are you excited for this? Are you amped up?

I am. I know you did a bunch of stuff this week to promote the book. Right. And you guys had the 50th anniversary of the MTA. They call it CMT now. The CMT. Yeah. This is different.

I'm here with friends. Okay. So who, but who was there? They said they had the biggest crowd they've ever, I know it's Jay Woods' show. Right. Shout out to Jay Woods. Yeah. So like who is there that we know?

Big names. John Bollinger, Tom DeMarc, Larry Williams. Was John Bollinger there with his band? But I'm – Thank you. Thank you. Do they all present or they're just hanging out? Those guys are presenters, yeah.

But I mean JC is there, Jay Woods as you said. A lot of people in the business who – names you know in technical analysis. Katie Stockton, she's on CNBC a lot I think, JC's there, Jay Woods, as you said. A lot of people in the business who, you know, names you know in technical analysis. Katie Stockton, she's on CNBC a lot, I think, right? She was there presenting. Louise Yamada. We had Dan Russo on the show recently. He must have been there. Dan was there, yeah.

That's his scene. Yeah, exactly. Oh, that's great. Dan's great. So it's good seeing everybody? It is, yeah. This is the first one that you're back to since the pandemic? This is the first time I've been back to New York since the pandemic. Was it at the seeing everybody? It is. This is the first one that you're back to since the pandemic? This is the first time I've been back to New

York since pandemic. Was it at the Stock Exchange? Where was it? We're having a private dinner down there tonight. It's over somewhere off Madison. Should I come? Am I invited? I don't think I got an invite. If you're invited, you should. I bet you could. If you were invited, you should. You should probably

hit Jay Woods. It's not my invite. I'm kind of dressed down. I don't know if I'm dressed down. Just go with Jay-Z's entourage. Yeah. Just like blend in with them. That's true. Should I say who we are?

I'm a technical analyst. That's all you need to know. Is Jay-Z like the rock star of the thing when he walks in? Does he think he is? Is that what you're asking me? I know he thinks he is. Actually, I was going thinks he is. I know he thinks he is. Actually, I was going to try to FaceTime him, but he didn't respond to my text.

Let's see if we can get him. Can I do a FaceTime from this? Is it going to screw anything up? Duncan says that's not compliant. In theory. JC has his crew, and JC is well-respected. He's been great for the CMT Association. That's what I always said.

Yeah, he's brought in a lot of guys who have become CNTs and helped raise their exposure. Globally? Yeah. He has tech missions in every country. He's big in India. Yeah. Japan. Japan, really?

I think so. Does Akinpura show up to these things? Yeah. Ralph did the opening talk today. So he's like the most senior figure. He started it 50 years ago. 1973, he started the—it was the MTA then. Now it's the CMT Association.

JC was telling me he has a barn in Minnesota. Where is it? Minnesota. And he painted the entire side of the barn, the Dow Jones chart. Yeah. That's true. Yeah, and it's like 120-foot wall or something crazy by 25 feet high. It's not a painting. It's the whole side of the barn.

Yeah. Okay. Yeah, he paints a new can, gets up on his ladder at 70 years old, and gets up there and paints on it. Is it candlesticks? Is it like legit? No, it's a line. It's a line.

It's kind of like a hybrid. Okay. Yeah. All right. Shout to Ralph. Wait. What's not the candlestick, but it's the straight line with the sticks going out? A bar chart?

Is that a bar chart? Yeah. A bar chart. A bar chart. Right. You're a candle guy. You know, I'm actually a public candle guy. Okay.

But I'm a private bar guy. You're a candle in the streets, bar in the sheets? Yeah. Okay. I feel like, yeah, bar is sophisticated. Well, it's just simple. The colors, I think, can jade people's opinion. They think that, you know, they put them all green and red,

and they think everything green means it's positive when it might be down for the day. Guilty. You caught me. I'm a candle guy. Yeah. Sorry. Wait, so you don't want to know? It means it's positive when it might be down for the day. Guilty. You caught me. I'm a candle guy. Yeah. I mean, I, I, I, when I do public display. You don't want to know if the days that you're looking at were green or red or the timeframe.

No, what you don't want to know is if they, if they were open, if they closed red, but were, but closed higher than the open, and then it could be a green bar, even though it closed red. You know what I mean? Here's a sneak peek at what I, what I look at. It's, it's, it's all bars. I've got one up there that can't that's candle thing michael's gonna start placing trades wait so so why don't you want to know um i to me it gives a bias that it might not be true so it'll make you feel a certain way. Yeah. I try as best I can to remove the emotion from everything I do. And I think the colors kind of jade your opinion.

I've never found value in candlestick patterns, you know, the three dead soldiers. But what about the Ichimoku? What about the clouds? The clouds. You don't like dojis? No. You know, point and figures are cool. Point and figure charts, I like those because they're just price.

Yeah. Right? To me, it's all about keeping it as pure and simple as possible. That's what we do here on the show. So you're going to be a perfect guest. How are we feeling? Feeling good? Oh, shit.

Here we go. All right. Here we go. It's an important thing. Here we go. Dinner at the New York Stock Exchange. Welcome to Stock Exchange. Welcome to the Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions

and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's excellent episode of the Compound and Friends, we had Brian Shannon on. What a show you're in for is brought to you by Public. One of the themes which I did not see coming of 2023 is cash as an attractive investment. It's the hottest trade on Wall Street. Like, no doubt. This is what everyone's doing.

It's what everyone's talking about. So what's so special about Public and accessing the sweet, juicy yields that the federal government has to offer us. Well, listen, you can buy a high yield money market anywhere, but if you want to buy the actual T-bills themselves, it's not quite as simple to do. You can do it in different types of accounts, but Public makes it really easy. And I did my first T-bill purchase using Public a few weeks back, and I'm probably going to do it again. It's just seamless. It's in the app, and you can move money in quickly, and you can just

take care of business. How do people get to Public? You're going to use the Public app. Listen, I'm not an app trader. You know me. I'm old school. I like to call it in. No, I'm just kidding. But I use the Public app. Hello, is this Public? Yeah. Customer service, please.

No, I used the app. It's really easy. So shout out to public and shout out to Leif and all the good people working there. Good folks, good app. Happy to have them

sponsor the show. Go to public.com slash compound and that way they'll know you came from us. We did 90 of these things? 90?

All right. Compounded Friends, episode 90. Starring Michael Batnick and me, downtown Josh Brown, and our very special guest today, Brian Shannon. Right? Right? The whole studio audience. Brian Shannon is the founder of AlphaTrends.net, a trading analysis and market-focused education platform.

And he has just released his latest book on technical analysis called Maximum Trading Gains with Anchored VWAP. Welcome to the show, Brian Shannon. Hey, good to be here with friends. We're going to go back to technicals in a minute. We're going to put a pin in it, but let's just tell people what VWAP is, and it'll be important later. Oh, sure. Volume-weighted average price. Right.

It was created as an institutional benchmark in 1988 to say, here's how well you did with your order for today. It gave the ability to say, we got a good price for our trade or they did a bad job. So let me back up. So people that are not professional traders, they understand there's an opening price, there's a closing price. And then some of them even understand there's a high price on the day and a low price on the day. Volume weighted average price is where were most of the trades done. At which price, which were the most important, what was the most important price of that day?

Right, the arithmetic mean. So it's the adjusted for volume, what price did this trade at? What's the, and they call it the price a naive trader could expect to get. You're not really doing anything special to get the VWAP. If you do better than that, then, you know, you did a good job for your client. If you did worse, they anything special to get the VWAP. If you do better than that, then you did a good job for your client. If you did worse, they're going to say what's going on. Okay. So you're a sales trader and you get an order from Franklin Templeton, buy me 150,000 Intel. Right. If you then report the, I mean, I know it's instantaneous now,

but if you're reporting back a price to your institutional client that is significantly above the VWAP on a block like that, you look like you screwed up or is it not that simple? No, it is. And they might actually report a better price than what they did. So they don't lose that business because they know they might be able to make it up down the road or they're going to get extra allocation of the next hot IPO. So they have to balance it all out. They're not just going to give you – and if they do the best job and they buy at 50 cents less than the VWAP, they're not going to keep that all for themselves, the brokerage firm, unless they're really greedy and need to make their quarter or something.

So now you, the trader – all right. So trades of that size, institutions of that size, they're like barges or luxury liners, just these giant – so, you, the trader, are trying to do what with regard to the anchored value-weighted average price? You're trying to see the footprints that they leave. So, when they do that – let's say one and a half million shares, right? Because it's- Or in my analogy, the wake. Yeah. So you're looking at that and they don't want to go to the market first thing in the morning and say, hey, we're going to buy a million and a half shares. That tips the market's hand, they drive the price up, that's market impact costs. They don't want to do that. And they don't

want to put a big bid in and people will see that and everyone will start front running. So they slice it up into small orders. So if 10% of the volume typically occurs in the first half hour, they're going to do 10% of the volume with their algorithm that trains it to do that. And they try to get the VWAP just for that first half hour. And throughout the day, as it builds, they're trying to make sure they're as close to that average price as possible so that they have a fair price. So in real time, then, that price is moving. It's moving, just like a moving average. Right.

Okay. So you want to use that information to inform what you're trying to do. Right. So what happens a lot of time is let's say the stock gets away from them in the morning, runs up real strong. They'll say, well, we can't buy it up here. It's too far from VWAP. As the stock maybe comes back in because some big institution,

it's in a hedge fund says, hey, you know, it's two standard deviations away from VWAP. Let's short it down to the VWAP intraday. And they'll do that. So it comes down to the VWAP. And then that institution who has the buy order is waiting with their algorithm to say,

let's soak in as much as we can here because we're behind on this order. We need to get this liquidity at this good price before it gets away from us again. And what that shows on the chart is that you can see the stock being absorbed at that level. It won't go below it. So I like to watch it there. And as when it starts bouncing away from that again, then get in, execute an order, try to ride that wave the way because you just said. Because you have an edge in just in terms of knowing what that buyer or seller is attempting to accomplish. Yeah, you have an idea of what they're doing. Nobody ever knows and they're always playing games, trying to sell a little bit on the open, trying to sell 50,000 shares on the open short to drive it down a point.

And then start buying. Then they can pick up 300,000 shares at a discount and get ahead of that order. Then they know their order throughout the day is going to have less impact on it. Brian, I've got a million questions on VWAP and moving averages and how they intersect. But before we do all that, I don't think I ever heard your story of how you got to where you are today. So why don't you take us back to when you were like 11 years old. It all started on Jerry's front. Let's start at 11 years old.

No, but seriously, what was your first job on Wall Street? I was a retail broker in Boston for a little company called Thomas James. Maybe you know them, Josh. They're one of those little- Thomas James. It was a bucket shop? It was a bucket shop, yeah.

I didn't know what it was. Truthfully, I liked the market when I was a kid. I'd watch Wall Street Week with my dad when I was 12, 13 years old and did a trade at 14 years old that really worked out well. It doubled. And I was like, boom, this is easy. This is what I want to do. So I became a stockbroker and I realized quickly that Thomas James wasn't the place I wanted to be. And so I went over to Lehman Brothers and they taught me how to sell. The problem was I didn't want to be a salesman. I wanted to be a trader. So I was decent at it and I really learned some great skills. I worked for a guy there who really taught me some good stuff about technical analysis. And that got me in the door. So then I moved out to Denver,

continued as a broker for about two years. And then in the back of the investor's business daily, they used to have this ad, come trade with our money, put up 25 grand. So I was, you know, 24 years old. My first son was just born. I didn't have a pot to piss in really. I took out some money on a credit card. I put up to $25,000. Okay. And I started trading full-time. Smartest thing I ever did. Okay.

Everyone would tell you that's the dumbest thing you could do. And most of the time, it is. Fortunately for me, you know, I have a very strong aversion to risk and losing money. I hate losing money. That's why I can't invest. It's also why you're still here. It's why I can't. Yeah, I was still here.

Right. So that worked for me, but I wasn't trading with scared money because I also knew I had to make my mortgage. So I would plow away at it. And then I helped that firm, they're called Generic Trading, original name. That's literally what they call themselves? That's like the Clever Beatles. That's the firm that doesn't want any attention. Yeah. It's like Acme Products. Yeah, yeah, yeah. Okay. So generic, I helped them open an office in Denver. Then I went on, this is during the time. I went and opened my own day trading office. And then, you know, just kind of bounced with a, went to another one market-wise at the time, headed up their prop trading desk, traded their money.

And about 15 years ago, I broke off and did my own thing. And Howard brought me in with StockTwits and started. Shout out to Howard. Yeah. So many of us have that story. Yeah. All right. Because my earliest memories of, and I wrote a little bit about this in the forward to your book, but my earliest memories of you was just like like people would speak about you in almost like whispered tones. Like people, oh, Brian Shannon. Yeah. Like like you were the guy, but you were like a trader's trader and you were doing videos before. I mean, YouTube was around, but nobody really knew how to like make videos and upload them.

You were very early to that. I'm not just going to tell you I'm early to that. I'm, I'm not just going to tell you I'm a good trader. I'm going to show you how I trade. Right. And you built a big audience. And from what I understand, like most of your audiences is still there and it's built and you know, you're, you've now been a teacher and a trader for, I don't know, 15 years ish. Um, well, so, you know, full-time doing with YouTube and that sort of thing. Yeah, definitely. But market-wise, I was doing a daily letter, teaching classes there as well.

So I've kind of always had an educational bent to it. Even when I had my first day trading office, I realized all these people coming in, they didn't really know what they were kind of doing, really. And I wanted to keep them around as customers because we'd get a piece of each commission. So I didn't want to just churn and burn and always find guys. So I'd help them and I taught a technical analysis class. I still have it on the web. It's kind of funny. I just took all these investors' business daily charts, cut them out, blew them up on a photocopier, typed some stuff and taped it together and photocopied it. So yeah, that's kind of always come naturally to me to try to teach and help people.

I think the other thing with you that's really interesting is that you just prefer to manage your own money, even though if you wanted to, you could run a fund or you could do separate accounts and you've done it over the years. You told me an amazing story. I have to. Yeah, yeah. Can we tell the Canon story? Of course. All right. And then we'll get into the news of the week. But just tell us the Canon story,

because I love it so much. I was at a Traders Expo or something in Las Vegas. And I did one of these talks and this gentleman came up to me and said, hey, Brian, I want to give you a million dollars to trade with. I'm like, yeah, sure. Everyone does. But go find a million dollars first, then we can talk. He's like, no, no, let's have dinner. You, me, my wife tonight. Next thing you know, I'm signing papers. He gives me limited power of attorney on his thing. I was like, okay, Monday morning, I'll start trading.

Was this like an interactive broker's account or something? It was a Fidelity account. And I just had the power to, so the deal was I was going to get no asset fee, just 20% of the profits. So I don't need the 2%. I'll do the 20. So I traded for about three weeks. And, you know, during that time, the market was down 2%, 3%. And I was trading really aggressive.

Yeah. But I was up 3.5% or so. And, you know, I'd be like. What's aggressive? Position size or just a lot of trades? aggressive. Yeah. But I was up 3.5% or so. Yeah. And, you know, I'd be like- What's aggressive? Position size or just a lot of trades? Both. Yeah. Okay.

Both. So I'd, you know, leg into the spy. And I might build it up to 25,000 shares during the day. And then I was just getting my feet wet with this account. Yeah. So I'd go in 5,000 share clips. Buy 5,000, buy 5,000, buy 5,000. And I'd do it sometimes that quick.

And the funny story is, so I did, you know, I, buy 5,000, buy 5,000. And I do it sometimes that quick. And the funny story is, so I did, you know, I was up three and a half percent. The market was down 2%. This is three weeks in. I'm starting to add up the numbers, how much money I'm going to make with this account this year. And I get a phone call. He says, Brian, I have to close the account. What are you talking about? Look at the market. Three weeks in. Yeah. Great client. Yeah. How does that make any sense? Yeah. He said, well, I'm retired and I have a heart condition. And I, you know, he lives in this mansion in LA looking over the, overlooking the ocean and all that. He said, I have the account set up to my surround sound speakers in the house. And every time you do a trade, it fires a cannon shot. So if you had a sound effect, that'd be great.

We don't. We don't. We don't. So yeah. I got this. It was just boom, boom, boom, boom. Okay. And it wasn't good for his heart.

So you do 10 trades and this guy's got a cannon going off in his house. Yeah. It's just rapid fire too. It's like, poor guy. He was shell-shocked. Brian. So you probably said to yourself at that point, maybe this is not the way I want to move forward with people.

Here's the way I view it is, you know, managing money is really tough. Yeah. But managing people is definitely not my challenge. Yeah, no shit. That's why I do all that. That's really. It's hard. So before we get into all of the earnings and all that good stuff

and trading techniques and all that stuff, trading. It is not rocket science. Obviously, there are things that you need to know. If prices are going up, you want to buy. If prices are choppy, you want to avoid. If they're going down, you want to short or whatever, something like that. knowing that and actually being able to execute and actually being able to control your emotions when things are going sideways or even in your favor because you get excited right is supremely difficult it is do you know if somebody has that in them or not like because how long does it take

to master that in 15 years you know what i to like take time to mentor somebody, do you know if they even can do it regardless of what you teach them? I still make mistakes all the time. And I know I'm making the mistake when I'm doing it, but I'm telling myself, no, I got this one. And, you know, the good news is I hate losing money. So I'll look at it and go, that was really stupid. I sell, take my loss, beat myself up. But I always know it's my fault.

I got exactly what I deserved. I shouldn't have been doing that. So, you know, to teach someone how to do that, there's got to be something in you because my risk aversion is what really has kept me in this business. That's what I'm saying. It's an emotion.

It's not intelligence. It's an emotional intelligence, right? I mean, it's both. But that's the whole theory. Like, remember when Schoenfeld sent out that letter maybe 12 years ago or something? They, like, fired half their human traders. I kind of do.

Yeah. It was, like, a big moment, I feel like, in the history of trading. Schoenfeld had this, like, reputation as the best place to learn how to trade. Right. And they just, like, made money in every market. They got bigger and bigger.

And I think they had this realization that everything was going to go algo and only a very few human traders would be able to keep up. Right. And they fired half the people and they put out a letter. And I think the media picked it up. And it was basically to that effect. It's almost like it, it almost doesn't matter what we teach you. If you don't have the thing that you need to have to, to like really employ it. I mean, you have to, I am very skeptical that people can master their emotions. Obviously there are people out there yourself, but it just – Don't count me in that.

You know, I can control them from time. But you're not going to go off the deep end. That's what I mean. No, I haven't done that in a while. But, you know, as late as – or as early as, you know, five years ago, I remember there was maybe eBay or something like that was gapping down in the after hours. And I was – I knew I was breaking every one of my rules and I bought it and it kept going down and I got stubborn. I bought more and more and more. And then after about an hour in the aftermarket, you know, I was down, you know, good amount of money. I just, I just cut it. I said, that was just the stupidest thing.

Now I got to spend the next month, who knows, making this stupid trade up. But I got sucked in. And fortunately – You know when you know you're fucked? When you start like researching the company fundamentals. I've done that. Yeah, yeah. That's when you know the trade didn't go well. What are these earnings?

When you get into a trade for technical reasons, you have to get out for technical reasons. Period. If you start listening to the conference call, you're dead. You are done. Yeah, yeah, yeah. I haven't listened to one in ages. Well. Period. If you start listening to the conference call, you're dead. You are done. Yeah, yeah, yeah. I haven't listened to one in ages. God. Well, but, okay, so let's transition.

So we have, and we're going to do some earn. By the way, hold on. We're taping this on Thursday, 3 o'clock. The market, 3.30. The market is ripping. Yeah. Going nuts all week, but really today is a huge. What's the S&P up?

Dude, up 2% Brian yesterday. I'm talking to Josh. I was like, I don't know, man. Like market's looking like the stock market is acting recessionary. Like industrials are getting the shit beat out of them. Everything that you would say is cyclical to the upside was getting smashed. And I don't know why I was not on my computer today. But the market seems to be ripping. Before we get into all of the earnings of the week, I'm just curious, as somebody who's trading full-time, when we are in earnings seasons, do you completely—how could you completely ignore it? How do you incorporate earnings into when you're trading? It's really a great time to pay attention to what moves on earnings. So I had this stock, Mondelez.

I knew they were reporting last night. It was a winner. I sold it. I didn't want the exposure. It was up, you know, 3% in three days. Good enough. Take the money and run. It's up today.

Doesn't bother me. I know I don't want to take that risk because it might've been down 10, 15%. But so you know if your companies are reporting earnings. Oh, you have to know that. It's like, you have to know when the Fed is coming out. You can't be, you know, you can't be there trading the S&P at two, you know, eight, 158 Eastern.

And then what happened on the market? Yeah. So you're not quite as extreme as JC. Who's like, who's the Fed? Earnings, what are those? Wait, so, but you, I heard you say, and I've kind of adopted this idea, and it's, of course, it's not like always works

or, you know, there's exceptions. By the way, the thing with technical analysis in general, people are like, oh, it didn't work that one time. Forget it, It's bullshit. But I heard you say that surprises like earnings tend to occur in the direction the stock was already traveling in. Facebook. Yeah. Perfect one today. Huge upside. So it's, of course, not always true. And that's why you say tends to. Right. Can you explain that a little bit for people? It's like the market is smart is kind of what you're saying.

Yeah, so Meta is a perfect example because it was down a couple days prior to the earnings. Yeah. So that kind of put it in a position where if it had been up five days in a row and then the earnings came out and they were good, it probably would have been sold into because the market was already anticipating that. But the market's a discounting mechanism. It trades on where, you know, the smart money, supposedly, the people who do the research think the earnings are going to be six to nine months down the road. It's not what about- So, Facebook's been rallying all year. Yeah. And, you know, where did they bottom out? They bottomed out with the worst news, right? That's when, hey, this metaverse isn't working.

We're laying off that whole department, whatever, you know, whatever the news was. Just headlines is all I read. But so the market is anticipating this. But when it's a true surprise, you really get that extra magnitude. So, you know, today, what was it? Crocs and Mobileye. Mobileye was looking ready to break out and they reported earnings and it got crushed today. So I don't want to take those risks. When it's a true surprise, when it really catches the analyst off guard and the smart money, then it can be, you know, a face ripping disaster in the other direction.

Are you more likely to close a position out as it goes into earnings as opposed to putting one on into earnings? I like to buy stocks several days before the earnings because you often get that drift in front of it. But as soon as like Mondelez reported today, had to be out yesterday. There was just no question in my mind. I don't want to take that risk.

But after the fact, once they gap up, I'll look at Meta and say, I don't want to chase that thing up here. Coming into this, I was up 150% the last six months. So I look at it and say, something's going on there. I don't know what they said or what they're doing or what their sales are. It's Oreos. But people, is it Oreos? Mondelez, yeah. I thought it was the Twinkies.

Oh, might be Twinkies. No, no, Twinkies is Twinkies. No, it's TWNK. Yeah, oh, that's, it's all stopped now. Right, right, right. Mondelez is like Ritz crackers. No, you're absolutely right. But Brian, you only trade stocks, right?

Or do you trade other stuff? I trade ETFs. No, I'm saying you don't do bonds or Forex or- No, no Forex, no. I dabble in futures once in a while and I always regret it. So there's this thing that I say on TV, so you know it's true. But I really believe this, just from my experience. Like there's this concept, I don't blame TV for this,

but there's this concept like, oh, you got to buy this for the earnings. Like I think a lot of, so I say, uh, I say amateurs trade earnings, pros trade the reaction to earnings. Yeah. I think that's fair. That's what you're, that's kind of what you were saying. Yeah. I mean, so I have a strategy for the day of earnings with a one minute chart and the, and the volume weighted average price for the day. That's not my preferred timeframe though. I like to look at it maybe five, six, seven days later after it's kind of settled down. We see it runs up for two days,

pulls back three, four, five days, goes below that VWAP and then settles down. And then we get to see the real money emerge and say, okay, we're in, we're going to turn on our programs. We're buying this into the next quarter. We're going to buy that 50 million shares. That's usually a week or so after the report. Yeah, a week to 10 days.

Yeah. So you get a lot of choppiness around it. Sometimes they just take off, but that's unusual. And I end up missing those. Brian, you are obviously, this is your life, right? Like you are super committed to what you do. It's obviously your passion and you love it. What do you say to somebody or when people are like, yeah, I trade. Like I, you know, and it's just, they're just sort of winging it.

Like it's almost comical that there's people that do that. Oh, and they're like, what do you do? You're like, I'm a trader. And they're like, yeah, me too. I say a little prayer. I like it. All right. Let's talk about this week. So this has been a great week for the market. I like it. All right, let's talk about this week. So this has been a great week for the market, and it's obviously being driven by earnings, and most of the real explosions to the upside have been technology company earnings.

Which one do you want to do first? I know we're waiting for Amazon. We'll get that later. So before we start with the company that reported, just at a high level, both of these data points from Bespoke. So Q1 earnings season, it's financials versus non-financials. That's like the big story. So non-financials, we've got an 83% EPS beat rate, 72% sales beat rate. Financials, only 57% EPS beat rate and only 46% sales beat rate. So it's financials and then there's

everything else. Bespoke says, it may not be an earnings apocalypse, but investors have generally been selling the news so far this season. That's before today. So they said, here's a good chart. Both EPS misses and beats have averaged one day declines on their earnings reaction day this month. That's sort of interesting. So again, whether you're beating or missing, they're getting sold a little bit. Which I think speaks to your concept of the earnings coming out, whatever. But we had a few strong weeks in the market.

So it's not terribly surprising that they're selling the news a little bit. Yeah. I thought we were going to, before today, I thought we were going to sell off maybe another week or so and news a little bit. Yeah. I thought we were going to, you know, before today, I thought we were going to sell off maybe another week or so and reset a little bit. I told Josh, Bears fumbled today. I mean, they were looking like they were about to ready to score a touchdown and Bulls are shoving it right up their ass.

We had Dow down like 300-something yesterday and being led lower by all the cyclical stocks. And so, like, that's your moment to press. And they don't have it. It's pretty amazing with all the banks blowing up in that. And biotechs look like garbage. The Russell 2000 looks terrible. The broader market can still manage to rally.

And people are talking about it's narrow. It's a bunch of names. But you know what? Then get in those names. It doesn't have to be, you know, I'm all about bottoms up, stock first. And if the market supports it, then I go in bigger size. But if the market doesn't support it, then I'm a little, you know, timid in terms of size. And that's why I've been trading all year.

There's very little conviction. I think there's a lot of people that want the reinforcement of good internals and they want to feel like they're buying into a market where a lot of stocks are working and I'm one of those people, but you just don't always get that. And there's not always some kind of signal there. It's just, sometimes that's just what the market is doing. I think, yeah, you, I always say like, you always say like, oh, this stock's priced to perfection or they beat the shit out of the stock. It can't keep going down. You find out what the expectations are the next day or when the stock opens because you don't know what's implied in the price. You just don't know until you know. Right. And so I think one of the reasons maybe why we've had a rally over the last couple of

weeks is because, or why companies are doing well relative to earnings is because you had, John, chat on please. You had so many companies guide down over the last couple of quarters. So Brian, that blue line, this is from Ned Davis. You see positive revisions shifted fell by 12. All right. Don't worry about the shift, but you see the blue line coming all the way down into 2023. That was companies revising their earnings downward. We had tons last year. It was nothing but negative guidance, negative guidance. A lot of companies pulled forward guidance. They said, we're not doing it anymore.

And now you've got a surge in companies reaffirming positive guidance. Everything in the market is about expectations. So they build the expectations too low, really, right? Yes, exactly. Because when you were saying the financials are at 57%, I was surprised it's not 22%. Right. But they've already been cut down so much, I guess, that they overcut.

Yeah, so Meta, Google, Microsoft. Google to a lesser extent. Meta and Microsoft, two gigantic stocks, both crushed their earnings expectations. And then you'll hear the bears say, well, those are already lowered expectations. And it's like, who gives a shit? The stock is doing what it's doing.

What pays, Brian? What pays? Price. Only price. Only price. All right. Let's talk about meta very quickly. So 220 in earnings versus 202 expected.

That's a big beat. For me, the bigger one was the revenue beat because that's where they're really struggling. Everyone understood if they fired all these people that they could start beating on earnings, but beating on revenue, you can't fire your way to beating on revenue. So you're either growing or you're not. So they're not quite growing, but they're not shrinking anymore. 28.65 billion in revenue, 27.7 was expected. I think that's a really big part of why the stock had how much did Face meta go up today? It's up I think 14

30 bucks I bought 14% on the day I think so Brian it's a really big move I bought Facebook's the only stock

that I bought at the bottom it's the first time ever like I caught the bottom in October how long did you hold it? I sold it at 219

a week ago oh wow that's a great trade dude it was like one of the best trades I've ever made I was up 140 240 the best trades I've ever made. It was up $140.

The reason why I sold it was because I just thought that the layoff trade was over. Basically, I thought they got the benefit of all of that. I didn't really see this upside. By the way, it's all good. It was a great trade, so I'm not upset. But where am I going with this? Do we want to put those charts up?

Which charts? Expenses as a percentage of revenue. So I think that the key thing here is that the playbook of firing people was enough for Wall Street. And now maybe it won't be enough going forward. Now Wall Street wants to see growth again. And that's probably why Facebook had the outsized move. Well, so they spoke about it. They said, we entered the first quarter with over 77,000. By the way, just a quick plug.

I was listening to this on the quarter app this morning on the way in. Quarter is now on desktop. It is f***ing incredible. And we're investors, full disclosure. So if you listen to Ernest's calls, you got to check that out. All right. They said, we entered the first quarter with over 77,000 employees, down 11% from the fourth quarter.

But employees that were impacted by March layoffs in March are still included in the first quarter headcount. So that's going to come down. They bought back over $9 billion of stock. They've got 2 billion active daily users, which is kind of hilarious. Where are they finding 2 billion people at this point? Like how many people are on Earth? Seven? But here's the thing.

It was up 4% or 4% on that number. That's 77 million compared to last year. So there's 77 million people that they found. That's nuts. The other thing they did that I think was really bullish was they said, since they changed the algorithm for Reels, which is like their TikTok. I think Reels is doing very well. They said engagement is up 24%.

So there was a big thing with Facebook where they were like terrified of TikTok. So they were going to start including people that you don't follow on your Instagram. So half of Wall Street said, what are you crazy? Like people are on Instagram to follow their family and friends and Kim Kardashian. They don't want you to start

throwing shit in there. Like people they don't follow. Guess what? I love it. They did it and people loved it. I hate that I love it. I love it. Yeah.

So I don't have TikTok, but I am on Instagram scroll. I'm like, that's hilarious. That's hilarious. I love it. So it worked. But they spoke about ad revenue, but I am on Instagram. Scroll. I'm like, that's hilarious. That's hilarious. I love it. So it worked. But they spoke about ad revenue, which is much stronger than I expected. I thought we were in an ad recession.

They said with ad revenue, the online e-commerce vertical was the largest contributor to year-over-year growth, followed by healthcare and entertainment. However, other verticals remain challenged, which financial services, hardly a surprise, and technology being the largest negative contributors. This is hardly a surprise, and technology being the largest negative contributors. But in the rest of the world, it was 9% growth, which is pretty strong in North America, and North America was 6%. The way an ad recession really works, though, is that Facebook's the last one that you abandon because it actually works. I think that's what they say, yeah. I got a mosquito. Sorry. They spoke about-

You're just letting insects come into the studio, Duncan? Duncan, what's happening? I got mosquitoes. I'm DDT. So did you listen to the Ernest Coyle? No. No. So, all right.

So Mark said- I knew you would. Mark said, beyond AI, the other major technology wave that we're focused on is the metaverse. Nah. So before I- No, but listen. But listen. They're not f***ing around.

They're not leaving it. So where's that number of mentions? Where is who has this transcript has this okay so metaverse in the last three quarters they mentioned it eight times six times then nine times nice ai went from 17 to 23 to 44 so they imagine why no listen, but here's what he said. He said, where is this? Pardon me. He said, a narrative has developed that we're somehow moving away from focusing on the metaverse vision. So I just want to say up front, that is not accurate. We've been focusing on both AI and the metaverse for years now, and we will continue to focus on both. Skip to the end.

He said, and then the term, all right, whatever. They're not stopping. Yeah, but nobody's paying attention to it anymore, which is good because that's what crushed the stock. I think the day they changed the name might have been the high price. I think I saw something like that. Do they change the name of the company to AI?

Why not? It already exists, right? Whatever the next buzzword is, they should just keep changing the name of the company. There's companies that do that. That one AI is being accused of that. I don't know if you saw that last week. The ticker?

Is it? I'm sorry. C3. C3 AI. Yeah, C3. They've been accused that they've been on the bandwagon. We're a crypto company. Oh, hey, now we're AI.

We used to see that all the time. The short sellers were saying that. Well, with that being said, allow me to introduce Ritholtz AI. You like that one? All right, let's do these charts and then we'll get out of this topic. John, put up the first price chart,

meta, alphabet, Microsoft. These aren't your type of charts though, Brian. No, no. These are percentage return, I think. Yeah. But these are big moves, right? And they're holding it. And they're gap-ish.

And they're holding it. Gaps are tough for traders. I mean, they're fun if you're on the right side of them. But they change patterns often or they change trends. They can, yeah. So what's your attitude toward getting into a stock

after a gap? Is that something that you see the opportunity in or do you just leave those alone and focus on something else? Brian, I just want to answer before you answer because here's what I've said.

I think professionals buy gaps, meaning the average investor would never buy gaps up. The average investor, if Facebook goes up 14% today and finishes at the highs of the day on super volume, the average trader would never buy- Gaps up. Gaps up. The average investor, if Facebook goes up 14% today and finishes at the highs of the day on super volume, the average trader would be like, I missed it.

That's where professionals are actually buying because they're not afraid. Do you agree with that? I do. There's a lot of funds that do that. And you can see it in the VWAP. I mean, we're kind of flat from the volume weighted average price today.

So we are basically just below the average price for the day. So it's maybe getting a little bit more profit taking because we've had such an enormous run in the stock. It's up nearly 200% now since the lows in November. That's crazy. I like it again several days later because then we can see who really has control. And it's one of the best places to place an anchor

to measure the volume weighted average price from because it tells us 100% are the buyers or sellers in control. It's not a nebulous concept. It's not a weird candlestick formations or projections with Fibonacci and that. It's actual supply and demand. So that ends up being one of the best places to find trades several days later. So to continue to answer your question earlier, I like earnings

season for that because it reveals what are the best stocks to trade the next three months. And where the conviction is. Right. Are you a believer of the maxim, all gaps must get filled? No. Okay. But people say that. Why do people think that?

Somebody said it. I don't know. I say it tongue-in-cheek, but I think most gaps get filled. I really do. Eventually. I mean, a lot of the gaps that were from 2020, from the COVID lows, they only got filled three months ago. Yeah. Right? from the COVID lows,

they only got filled three months ago. Yeah. Right? So if you were waiting to buy that stock, now you're buying it at the same price, but it's, you know, went up 300% and down 90%. Now you're buying that gap. Oh, you can't make money with that ethos,

but I do feel like eventually all gaps get filled for the most part. The fundamental theory behind that is that the company, whatever, they're usually talking about gaps down, not always, but the idea is that the company whatever call they're they're usually talking about gaps down not always but um the idea is that the company's going to get its shit together and regain its prior price at some point i see the gaps up too i'm not i'm not biased which way but brian getting

back to the statement that i made would you agree with the following professional traders investors are not afraid to buy a stock that's up 30% over the last six months. Or all-time highs. But where is the average investor like, shit, I missed it. I can't buy it here. Yeah. I would agree with that. You got to buy it when it's on sale. Loser. Duncan, you and me both. You and me both. We're of the same mind. Well, wait a minute, because the average retail punter in the stock market falls prey to the gambler's fallacy, which is stand in front of the roulette table. It's black.

It's black. It's black. They're like, okay, five times black, six has to be red. No, but also they're told buy low, sell high. Both of those two things. Without understanding that buying low, there's a very good reason why stocks are going down. When you see a stock making a new high, making a new all-time high, regardless of where it came from, which is another thing that retail people fixate on that pros don't necessarily or shouldn't. When you see that somebody is buying that stock at an all-time high for a reason, it's not randomly at an all-time high. It's at an all-time high because there's a lot more buyers than sellers.

And it's pros. I don't think retail buys record highs in general. They don't, no way. They think because they're afraid of getting rugged. They think something bad happens at the top. No, no, no, no, no. Something bad happens when stocks are going down. Right.

All the bad news comes out at the bottom. All the good news comes out at the top. Those are things. There's different kinds of gaps. There's a common gap. It's just gap, normal order imbalance each day. Those get filled. Then there's three- Event gaps. Technical analysis gaps called the breakaway gap, the running gap, and the exhaustion gap. The breakaway gap seldom gets filled. You see a stock go sideways for a year, year and a half. A big surprise on earnings comes. The stock is up 10%, 15% on massive volume. That'll get filled in three years after the product cycle and the whole cycle

is filled. The measuring gap is somewhere in between halfway through. And then the exhaustion gap is just like this, all that good news that good news. Yeah. Yeah. So exhaustion gap is a stock that's been going up for three years and anyone that wants to buy it at this point has bought it. Yeah. And then there's just like that last mania to get in. And a lot of that is shorts getting squeezed too. Actually, there's a lot of short cover. I think you'll be proud of me. I've banged my head against the wall trading so many times. So I wanted to buy – I can't remember if I sold Netflix before the earnings, if I wanted to buy it, but I didn't. And I was like, I just hope it doesn't go up 15%. I think you bought and sold it so that you would be right.

So listen. So this was Netflix in October. And sure enough, it gapped up 15 – Brian, look at me. It gapped up 15%. It gapped up 15. Brian, look at me. It gapped up 15%. It gapped up 15% here. No, but listen. And it closed the gap, and I bought it when it closed the gap.

And then I was off the list. I'm so hungry for your validation of this Netflix trade. Brian, please hug me. Please hug me. What you did there was just beautiful. Can you just high-five him so we can move on? Hold on. Let him finish.

It's beautiful. It's beautiful. It's amazing. Thank you. I wouldn't have done that, and I've been doing this a long time. We'll talk. I have a few things to teach you. You feel better now?

So much better. Brian says you're a good trader. All right. Are we done on earnings? Can we, what else are we doing on this? No, I think we're good. I think we're good.

We're good? We've got Amazon after the bell, so Brian, it's about to go down. Michael's going to react big on Amazon. Let me see. But wait, we've got – Amazon's ripping today. It's up 5%.

It looks like it's breaking out. All right. Wish me luck. Google had a big – you're long Amazon? I'm long Instagram. Dude, I'm with you. I mean, I'm not with you, but I'm in spirit. I'm not long this time, but I hope it goes up.

Brian, are you blessing that trade? I'm going to bless that trade. Okay. But wait, hold on. Last thing – We'll know in a minute. All right. This is important. So yesterday, Microsoft gapped up. It closed basically where it opened. I don't know if it was, what was it? 8% yesterday? 5%? Wherever it was. Is that an abandoned baby doji? No, but listen, when you see a stock like Microsoft, one of the biggest stocks in the world, go up 5%, hold the gap. It's up another 3% today.

That's not bearish. It's got a beautiful chart. I mean it's in an uptrend. It's doing what it's supposed to do in an uptrend. It's above the rising 10, 20, 30, 40-week moving average. It's got a pattern of higher highs and higher lows. They're executing beautifully and the market is rewarding. These are also the biggest stocks in the world.

It's crazy. With these big moves. Yeah. Which is why the whole market's doing what it's doing today. It is. And a lot of the little ones have just been, you know, they break out and then they fail three days later. Yeah.

It's crazy. Which is frustrating. Spotify did that. I own Spotify. I mean, look at the Russell 2000. That explains it, right? It's terrible. So you wanted to do this as a theme, actually, Michael.

No, it's Brian. It's Brian's stuff. Okay. So- Wait, hold on. Last thing. I'm sorry I keep interrupting. But as we get into-

Before we get to Brian's theme, how do you think about markets that are working versus markets that aren't versus when you're trading? Like, I know you don't get bullish or bearish based on economics, but I'm sure for you, especially more than anyone, it's easy to identify whether we're in an environment that's conducive where the wind is at your back

versus markets where it's shit, everything gets faded. How would you describe the state of the market right now? This is a terrible answer. You're going to hate me for this answer, but we're still kind of stuck. We had, you know, the stage two uptrend, stage three distribution. That was our topping process. We went through the decline last year.

We're feeling the aftereffects of that now. And I wish it would just turn around and break out like Microsoft. Every stock would do that. But we're seeing so many stocks still. We are stuck. It's sideways. That's my point. Someone yesterday at the CMT conference, I wish I could give credit where it's due, said

we're in a technical torture box. Was that Buffett? It was Munger, maybe. Wait, wait. What's a technical torture box? Doing nothing. Just going sideways. Chopping back and forth.

Yeah, because nobody's satisfied. Yeah, nobody's satisfied. And nobody ends. That is the answer. That's the right answer. Right. So we're building for the next move. Fortunately for me on my timeframe, I don't really have to consider that so much because we get a nice 10% rally.

We have a 4% decline. There's opportunities in both of those. So there's a reason for the torture box that is an economic reason. So there's a reason for the torture box that is an economic reason, not like prediction of the economy, but just the money supply drying up. That will put a lid on stocks. So even you have companies reporting pretty good earnings, the beat rate is high this quarter on revenue and on earnings. But if there's less money to go around, it's hard for stocks in general. You could have some stocks make a lot of progress, but for the asset class, this is Barron's.

Money supply measured by M2. This sums up currency, coins, and savings deposits held by banks and balances in retail money market funds and everything that you consider to be part of the money supply. What's it down year over year? Data from March released Tuesday afternoon,

so two days ago, showed a negative growth rate of 4%. And it's never down. Versus a year ago and the biggest year over year decline on record. Yeah, it never falls. That's double the 2.3% drop experienced in February and it's more than twice January's 1.62% fall.

So M2 has now contracted on an annual basis for four straight months. Dude, we keep talking about it. Hold on. That's never happened since they started tracking this in 1959. So that'll give you a torture box. Yeah. Because where is the incremental dollar to get invested? It's vanishing, like physically.

But wait, hold on. What will the narrative be if we break out of this torture box? Then I'll just – I'll edit this out and – I don't know what to tell you. I'm just describing a condition that you don't have to believe in it. It's real. But I – It makes sense.

I mean, it makes sense. So I look at the headlines and I say, that makes sense. But then I look at what price action is doing and I say, I can't hang my hat on what makes sense. Two years ago, the mantra was, we have all this money supply sloshing around, right? And it was true. We were seeing still expansion of monetary, of money, and now it's contracting. Where does it go? Where are people pulling it out of stocks? I mean, it's got to find a place and money goes where it's treated best.

It's not being treated best in the stock market right now. It's not being treated best in, I guess real estate is good, but there's nowhere really, what's the alternative? I mean, I don't want to anticipate this breakout of the S&P, but that's looking bullish, man. I agree. Like, and- It is. No, for real, it is.

I'm beating a dead horse. Every f***ing week, I say the same thing. Why is the stock market not going down? In fact, not only is it not going down, you could argue it's going up. And I know the Russell's weak, but- There are some environments where it's just better off to have no opinion at all about, all about the environment and just trade price.

I know you would argue that's most of the time, but right now, especially. Especially now. Yeah. Because that's what the charts are dictating. When we're in an uptrend, it's so much fun. I love being a trader in an uptrend. Apple. It makes it so easy.

Apple doing the thing. Apple. So if we get Amazon strong tonight—is Apple tonight? No, no, no. Apple's next thing. Apple. So if we get Amazon strong tonight, is Apple tonight? No, no, no. Apple's next week. If we get a strong Amazon tonight, we already got strong Meta, strong Google, strong Microsoft. If we get strong Amazon, strong Apple, market's going. Or?

Well, the NASDAQ certainly is, and the semi-conductors are supporting it. They look like they're on the verge of breaking down. They hit a key level the other day. Wait, the semis do? SMH, yeah. It does not look good. But Qs are breaking out. They're going. Qs look good.

As long as Amazon and Apple doesn't shit the bed, we're going. You can't argue with price. Hang on, hang on. Why can't you argue with price? Okay. From a trader's perspective, you can't argue with price. We're always arguing with price when we buy a stock. We're saying, no, that's wrong. I'm smarter. It's going to go higher.

You can't get stubborn in your argument with price is probably the better way to say it. You got to cry uncle if you're right. Brian, but that's not the same thing as saying the price is always right because the price is always wrong. The price is just reality. This is where buyers and sellers are transacting. The price is wrong, bitch The price is just reality. This is where buyers and sellers are transacting. The price is wrong, bitch. No, no, no. Amazon's up three or so right now.

Four, five. Oh, right now? Yeah. Let's go. All right. I'm retired. Five and a half, six. Let's do your chart.

So this is- I thought it was four o'clock. That happened fast. This is if they didn't scare you out in 2022, they will likely wear you out in 2023. So what are we looking at here? That's the S&P 500. That's a SPY weekly chart.

And just regular- That's last year in the box. That's 2022, correct. And that was, I wrote, I did that in January. And I said, you know, here's a likely scenario that we need time to correct. We've had a price correction. Now we need time to kind of, you know, see new ownership in the market, let it flatten out and get a solid base of support. What a beat. Sorry. 118. Yeah. Huge beat.

Huge beat. Sorry, Brian. The number's good besides the stock? Yeah, I'm very excited. I'm very excited. Keep going. So it just, it needs time. Typically, it needs time. The V bottom reversal that everyone's looking for aren't really happening. It's over. So you look at last year's leaders. You look at Zoom. You look at Coinbase.

You look at PayPal. They're still garbage. Yeah, they still look terrible. They're still in this sideways. If they don't scare you out, they'll wear you out is the way I learned it. And I think that's still in this sideways. If they don't scare you out, they'll wear you out, is the way I learned it. And I think that's likely for this market. I think we're going to, you know, if the market breaks out, if this S&P breaks out, I think it's going to probably pop

back down and you've got to be ready for a fail. Another double beat by Amazon, operating income estimates at 3 billion. They crushed it, 4.7. Which is up. Up 9%. and it had an up 5% day going into this sorry bears holy shit so there are whole years and even whole decades where it's just chop it doesn't feel like it at the time

because you have bull markets you have bear markets but like there is a scenario where the fastest rate hike cycle ever leads to just a choppy, shitty market for an extended period of time that wears people down. Not even financially. It wears people down like emotionally. Yeah, absolutely. They either get really aggressive because they're frustrated or they just – they lose interest.

You know, it's been happening to me too recently. I've been, you know, getting involved in trades and telling AlphaTrend subscribers, sorry, I'd love to bring you like a high conviction trade, but I just don't feel it in this market. So I'm suggesting you take a third of your normal risk unit. It sucks, but it's better than, you know, losing big. So I've been feeling that same frustration myself. And I'm starting to wonder, well, maybe this is a contrary indicator, right? So you start thinking, well, if I'm getting worn out and I knew this was going to happen, maybe we're near the end of that wear out cycle. But I don't think we are. Part of what these people are counting on you for is to give them that truth. Because you want to

keep them alive. You don't want them to blow themselves up. So you giving them that truth. Because you want to keep them alive. You don't want them to blow themselves up. So you giving them that, like, hey, I want to make money too. This is just not the right tape to be doing what you want to be doing. It's not about having fun. Tommy talks about that all the time. Like, if it's, know the

tape. Yeah. The market's healthy two or three times a year. So my- Joe just go to Vegas for a month. I'm not trading right healthy two or three times a year. He's yeah. Um, so my, my Joe, just go to Vegas for a month. I'm not trading right now. Hang out with slash. I'm going to go hang out with guns and roses. My three goals are to help people make money, help them avoid losing money and to educate them and give them a process. And so they can make it there. Let's look at this understanding market structure. Is it, this is from the new book or no, that's, that's a, uh, yeah, that's a watered down version of an

infographic I did. I like this though. And yeah, it just kind of tells you that, you know, where are we in the overall market? So can you walk us through these four, would you call them phases? Yeah. So these are the four market stages of the market. This is Stan Weinstein's work and stage one is maybe where we are right now. Who's Stan Weinstein? Stan Weinstein's work. And stage one is maybe where we are right now. Who's Stan Weinstein? Stan Weinstein's a tech – what? My dentist? Yeah. Now, who is it?

I thought he was your rabbi. No, he is my rabbi. Right. Stan Weinstein is an old-time money manager, technical analyst. He was on like with Rukeyser and all that stuff. So we might be coming out – see how it's going from red to yellow? Yeah. Well, at the end of stage four of prior decline,

we need time to rinse and get new ownership. The new leaders will emerge and show who they are. It could be last year's leaders, which it looks like it is, you know, Amazon and Google again. And then in the stage two uptrend, that's when stocks are innocent till proven guilty. I don't want to- Wait, so the first phase accumulation, the market doesn't make a lot of progress, but that's the time that the market needs to heal.

Yeah. That's when value investors should be buying and start building that base. The worn out growth fund managers who, as they get fired and a new manager comes and takes over, he's getting rid of all this garbage, selling it to the, you know, value guy. And then, you know, new value, new growth guys start saying, hey, you know, six to months, nine months down the road, this could get going. So, in stage one, two, one, three, they're going to start building that 50 million share position that they need. And then that's how you get lift off. And you get lift off because they've absorbed all that supply.

The company comes out with a positive earnings surprise. All the momentum people chase it. The shorts who were stubbornly stuck in there start to reevaluate. And then we start to see that's the emergence of a trend. Would you say this year has felt most like this first stage accumulation? Because no IPOs. Yes. Right?

And that's a good sign because we don't have the money supply. Right? Right. All right. So the second stage is called markup. Markup. And what goes on? So what goes on now?

That's a bull market. We're above all the moving averages. They're all rising. You know, people create bad habits and start buying dips and thinking that they're smart. That's 2021. That's 2021. And- Josh thought he was super smart in 21.

I will again. All right. So we know what that looks and feels like. It's easy, but it's too easy. And it introduces all kinds of risk because people get bigger in position size. Oh, question.

Margin balances grow. Where does news fit in here? Because this week, we just saw Amazon. So we had Amazon, again, Amazon, Facebook,

Google, Microsoft. I don't know if fantastic is too strong of a word, but clearly fantastic relative to expectations. Where does economic news, earnings news fit into this cycle? Well, I mean, you can look at Apple. I mean, Amazon. Amazon just had a beat apparently. And it's up because I blessed it, if you remember.

That's right. That's true. You did. You did. So we're possibly at the new stage of this markup. It's above the 200-day moving average. The 50-day moving average is rising. The 20-day moving average is rising.

Microsoft, Meta, we've got the same story in those stocks. In fact, I would prefer, of all these stocks, if I had to buy a new one right now, I think Amazon or Microsoft is probably best because Meta's had the big run. But we're still in that bullish cycle and news and surprises follow the trend. So we're starting to see confirmation of the people who were looking at this six months ago, nine months ago and buying it. And as it pulls back, so today they might be selling a little bit. They have 50 million shares. So let's sell a million shares. And as it pulls back in the next five days, let's support the stock. We'll put in a bid and they help create the trends. And it runs to standard deviations. They'll sell 2 million shares down and they'll replace it with 500,000 shares. So that by the time it's up to that distribution, you know,

the old ad, sell when you can, not when you have to. Then you start to see, you know, we're getting a little bit more aggressive. People start selling into the good news. And people are like, why isn't it going up? It's so good. The earnings are so good. That's when you're getting into the distribution phase. That's the distribution. When they're selling good news.

Yes. But so we just started maybe the accumulation phase. Pull up a chart of Microsoft. Everyone look at Microsoft right now. Microsoft is the first or second biggest company in the entire world. Just technically, I'm not talking about anything other than price action, buyers and sellers.

Holy shit, this looks bullish. It sure does. There's nothing negative about this. And don't be mad at me if this fails. Right. Or it gets back to November 21 peak and it fails. Totally can. Yeah.

Totally can. There's nothing wrong with that. Of course can. That's a great rally from here. Yeah. Here's what happened too. If you can look at that. Show me your screen.

Why am I turning mine around? This is the Microsoft daily chart. That's the high in 2020. That's the anchored volume weighted average price off of that high. So that purple line, see how- Resistance, resistance. Found support. It found support. It's the anchored volume weighted average price off of that high. So that purple line, see how- Resistance, resistance, found support. It found support. It's flipped. We know with 100% certainty that the average short seller is losing money from this decline. The average price, that's the average price since that high.

So the average short seller is losing money. The average long now feels good about it. 100% certainty buyers are in control now from that point. Purely on VWAP, like you know where the trades are taking place. But there's no opinion here. No. I'm not saying that I'm bullish on Microsoft. It's the market is. It's not me.

So is VWAP something that is available on more or less every trading service at this point for people that don't use it? Yeah, this is TC2000. They have it on – this is TC2000. They have it on – What's TC2000? That sounds super sophisticated. Yeah, it sounded super sophisticated in 1985. You're still using the same quote service and stuff that you always used?

I switched to them in 2015 because they built the Anchored View app for me. Oh, wow. Yeah, it was really cool. So these guys saw it. I still remember my first, my Quotron. Yeah. I still remember the Quotron. There's nothing Tron about it.

I had one of those little handheld ones for a while. Those were futuristic. Let's do this retail chart. Quarterly equity and ETF purchases, individual investors. This is X 401ks, X retirements. These are just people that are buying ETFs and equities. I spoke about this with Ben. Let's give the listeners what's in here.

Shush, I'm going. I can't understand what's happening here. The chart that we're looking at is going back to around 2014. You've got the quarterly equity ETF purchases. And then of course, we remember what happened in the pandemic. Everyone became an investor. You have this giant spike and you would just think that given the nasty bear market and all of the shit that they were buying, that they would have gone away. They didn't go away. They haven't even, I mean, it's completely holding its volume or whatever it is.

So I don't really know what to make of this. I guess, Brian, I would ask you – Wait. So let's tell people what we're looking at. I just did. No, you're not giving people – You always do this. I just told them.

Give them the numbers. What's the difference? It's a big number. Because this is an audio program for like half of the – I just told them that it was a line that was going sideways that exploded. Take a beat. Retail bought a net 77.7 billion in equities and ETFs. for like half of the- I just told them that it was a line that was going sideways that exploded. Take a beat. Retail bought a net 77.7 billion

in equities and ETFs on US exchanges in Q1. That sum trails only the first quarters of 21 and 22 when they bought about 80 billion.

So they're buying almost 80 billion dollars worth of ETFs and stocks every quarter is the chart. And what was the number prior? Well, that's the point.

It was like 20. No, lower. Look. It's like 10. But they haven't left. It's crazy. So where are they getting the firepower to keep buying if we're saying money supply is shrinking? Where are these funds coming from?

But they keep at it. This is just one of a million contradictions that we're seeing in the data. But Brian, my question to you is, have you seen a change in how you think the market is behaving based on the influx of zero-day expiration options, based on retail investors? If you didn't know any of this and you're just looking at the screens, which is I know what you're doing, do you think the market is trading differently today than it was, say, five years ago? Five years ago, no. You know, during the HFT process, and that was back in Coronado when you first – one of your best quotes back then was the way to beat high-frequency traders is to be a low-frequency trader.

Great quote. Right, yeah. And back then, I was fighting it it every day and it was so choppy and frustrating. But now that the algorithms are in there and the bottom line is that the institutions use the anchored VWAP for their orders. They are in there every day with these orders. So they make it a little bit more predictive, not predictable, but easier to see what those patterns are and to place higher probability trades.

Are there enough algorithms now where they're canceling each other out and not as important as they seemed during, I know from a volume perspective, they're as important, but that 2010 through 2012 era where everyone on Twitter was a conspiracy theorist. And there was, there were some real abuses going on with servers that were, you know, uh, uh, jumping in front of retail. Right. And I'm sure there still are today. Yeah. But there are so many operators now, um, high frequency trading algorithms. It's almost like

background noise and people don't seem as upset about it as they used to be. No, I think that back then it was the race to zero to get the fastest order. But now everyone's kind of on a level playing field again. So that got arbed out of the market. Whenever there's a real edge like that. That race is not profitable anymore. Right. Almost the minute Michael Lewis put his book out, like it almost didn't matter anymore. Okay. I agree with that. So, so it's not quite though this thing where machines are stealing from retail and people don't seem to be as upset as they used to. Yeah. Maybe they're just hiding it a little bit better because they're, you know,

why is Citadel the most profitable firm who does 35% of all listed trading? Yeah. You know, they're, they're not doing like a quarter of Miami. Someone just told me, you know, we always get the worst fills with Citadel. So we dropped them. Okay. And don't sue me, Ken.

That's their bit, right. You're f***ed. So Amazon, here's the numbers. Revenue up 9%. Online stores flat. Physical stores up 7%. Third-party sellers up 18%.

Subscription up 15%. Advertising up 21%. Remember we spoke about that the other day? Yeah. And that's not a small number either. AWS up 16, EBIT up 30. So there we go.

They're rocking. All right. I like it. Maybe Jeff Bezos doesn't come back after all. I guess not. I was saying some wild shit on TV about that. What were you saying? I don't remember, but it was –

You said he was watching Tame Impala and wearing a hummingbird shirt? Yeah. Listen, I'm a huge fan of Jeff's. I was basically saying like the stock has sucked since he left. It's not the new guy's fault. Right. He like left right in the middle of the pandemic, and they were never going to repeat those numbers again.

Right. But if the new guy doesn't get the stock to start moving, it's not like Jeff is just going to be out there hanging out on cruise ships. He's going to come back. The stock got cut in half, no? Yeah. Horrible. What's this chart? What's the Alpha Trends

chart? Let's set this up. This is... Here's a couple VWAPs. Okay. Alright, so this is the NASDAQ year to date. That green line is right at the beginning of the year. And that's the volume weighted average price anchored to the beginning of the year. So you see, we had that huge run in January. It pulled back to that volume weighted average price and there were buyers there waiting for it. It didn't happen all at once,

but that was where we saw- This is the triple Qs. It didn't happen all at once, but that was where we saw- This is the triple Qs. The buyers, yeah. Okay. And then the new momentum campaign began there where that purple line is. So you add that purple line, not on that day because it might have continued to fall. But three to four days later, when it became apparent that the buyers had regained control, you put that anchor on there.

Wait, what is the purple line? The purple is the volume weighted average price anchored from, looks like, March 15th It's a new anchor. Keep up. You got to anchor the anchor. No, no, no, no, no. It's a new momentum campaign, basically. So the green line you're anchoring to a date, the start of the year.

To the low, yeah. Yep. Okay. Oh, it happens to have been the low also. So Brian's saying where buyers show up, you set a new anchor. Right. Right? Once you get a new momentum campaign like we have now.

So you started over there. So let me – so a lot of people – not a lot of people say. Critics of technical analysis will say it's all voodoo. It's all bullshit, hocus-pocus, magic, whatever, make-believe. But you're saying there are fundamental reasons that VWAP works, not in the sense of fundamental analysis, but literal people that are allocating big pools of capital, like traders at mutual funds, are actually looking at VWAP. Yes, 100%. Like that, no bullshit. No bullshit.

Can you go ahead two slides to that, Ken Griffin? Because that really sums it up. So Ken Griffin, last year the sums it up. So Ken Griffin, last year, the guy made $4.1 billion. He just bought half of Miami. Personally. Yeah, but that's before taxes.

Before taxes, before taxes. Yeah. He doesn't pay taxes. What is he, a schmuck? Okay. We pay taxes. Right. $4.1 billion,

and you're saying that's the most of any hedge fund manager in history in one year. And he's always number one, right? Or number two? I think so. So anyways, when GameStop was occurring, they brought him out, if you remember, and Gabe Plotkin and those guys. So he was on the other side of every trade.

Right. In fact, he said, our firm does 35% of listed volume. Today, virtually all the trades executed by institutional investors are in the form of program trade, such as VWAP. The guy said this in front of Congress. When the guy who makes the most money ever tells you what his strategy is and how they're executing orders, you got to listen. So he said- He was talking about VWAP in front of Congress? He was talking about VWAP. I was like-

This is the first time I'm- It should have been you. It should have been you. That's why I took it in there. But I'm not doing 35% of the volume. He covered your song. He stole your whole shtick. No, he's my-

No, he's an Alpha Trends tribute band. Yeah. He's a subscriber. I've convinced him. All right, all right. I like it so he's telling you that VWAP is

one form of the types of program trading that are now dominating the whole market correct so how could you

not pay attention right and yet that's the only strategy he mentioned was VWAP algorithms such as VWAP

okay and he went on to say VWAP orders are a part of a day, they could be a week, they could be a month. And I also know that they're also on a yearly basis. That's why when we pull back to that year-to-date anchored volume weighted average price, there's buyers waiting who felt like, hey, we can't chase when it's extended, but now we're at that average price again, let's start buying. That's really interesting. So this is not specifically about day trading. No.

These prices are important to the market makers. Yes. So they should be important to you. Right. Okay. So in the chart we just had, those Qs, that was as of yesterday's close. And now today, I mean, we came right down to that VWAP from the other one. Yeah.

And now we're up with 3% today in the NASDAQ and going tomorrow with these earnings as well. So yesterday's puke was bought. It bought exactly at that place. That's really interesting. I don't think most people understand this at all. No, they don't. Okay. That's really fascinating.

That's why I wrote a book about it. Yeah. Okay. We're going to get to the book. Let's do the semi-chart, SMH, John. Thank you. Okay. This looks like a mess. I understand that. This is hocus pocus. This looks like hocus pocus, but if we break it down, I promise. So we've got the semiconductors from October of last year. So we've got the semiconductors from October of last year. And the mantra always is buy the dip, right? And you would have made money buying the dip.

That's those red highlighted areas. But the problem is, if you're buying it, that second one, it drops from 236 down to 208. Well, you don't know where the dip ends. Yeah, how smart do you feel? You're down 10% in a week and a half. So you're going to end up puking it down there. Instead, wait for the volume weighted average price from the prior low and the prior high, the red and green to come together and say,

okay, this is an area where maybe it's going to find support. Let's watch here. Watch how it acts. Watch how it acts. And we want to buy strength after the dip. So we buy that. Watch how it acts. Watch how it acts. And we want to buy strength after the dip. So we buy that little green dot right there. And we don't want to buy the breakout. So it's not the low. It's not the low, no. You're buying after it's already bounced off of that VWAP. You're almost like, that's your confidence moment. Here's what it is. It's a frame of reference,

Donnie. It's a frame of reference. Yeah. No, I call it a level of interest. Oftentimes it does become support. Right. But when it got back above that red one where the green light is, the green dot, it basically is a green light to buy. It's saying the average price from that second red dot, the average short seller is now losing money. The average long is making money. So the buyers, we know 100% certainty are in control here. It doesn't mean they're going to maintain control. So we set a stop. But then you get involved at that 210 level, 209,

and you get that beautiful 10 to move. Well, the red dots, sorry, Michael, those are the people buying the breakout. So don't buy the breakout either. Buy strength after the dip. It's so funny because I know how this is going to resolve. I don't know which direction, but look at this most recent setup. So the semis look terrible this week. Right. They're going down while tech is going up. They're going down while these tech giants

are going higher. And then NVIDIA comes out with earnings, and that's the biggest market cap in the SMH. Is that next week? I think it's the second week in May. Okay. It's like the 10th or the 11th. I could be wrong. But the point is, like, if any stock in the SMH is going to move the SMH, it's going to be NVIDIA. And it could be – it's binary.

Like that stock, it's either up 9% or down 14%. That's the way it acts. Did I miss Intel earnings? Nobody cares anymore though. It's tiny. It's $120 billion. We live in a land of trillion dollar market caps now. Can I ask you about sell discipline?

Because buying is easy. I found selling to be really difficult. Are you more likely to sell on the way up or like, what's your sell discipline? I always sell a third as soon as I get a quick move. So let's say I buy a stock at 25 and that day it runs to 26. I probably sold some at 25, 80. That reduces my risk on the two thirds position. So my expertise is really trying, you know, buying at the precise time. That's, that's my talent really, because I look at these on multiple timeframes all the way down to the shortest timeframes.

So when I get an entry, it's usually right, but I don't trust this market. So I want to sell some immediately, you know, not immediately, but that day, ideally. And then because I'm latching onto a new emerging trend, I use the definition of trend, higher highs and higher lows. As long as it's making higher lows, as soon as it pulls back and starts to rally again, I raise my stop up under that prior low and I repeat that process until it falls below the prior low. But so if the wind is at your back, if we're in a bull market where your longs are working, you will give it more room to the upside? I'll go on a different time – a longer time frame. Yeah. Got it.

So right now, there's shorter-term time frames. So I'll be doing this on like a 10-minute – Because of the environment. Yes. Okay. Because you don't trust the environment, which makes sense. That's the market – that's the message the market has been telling me because I've tried to hold things. And it breaks out.

Then it just gets punched right back down. You're not predicting what type of market, where the market's going to go. You're just reacting. Yeah. The market's strong. It's not strong. It's choppy. It's not choppy. Yeah. And I want to get in right at the onset of the new momentum and ride it as best I can, but I'm not going to be greedy about it because it's not a good greedy environment to be in right now. I want to do a few more with you. And you've shared like so much helpful information for people. And just the whole VWAP concept is like so – I don't even want to say misunderstood. People have never even heard of this as an indicator.

So you said this and then I have some follow-up questions. You said, as a trader, I'm focused on price action. I look at most technical tools the same way, similar to how I view fundamentals. I am not interested in the literal interpretation of head and shoulder patterns, moving averages, et cetera. Similarly, I view fundamentals the same. I know the market doesn't care about my interpretation of economic data, earnings, cashflow, et cetera.

It is all about getting inside the head of the market participants, understanding what they value and what might motivate them to act. So my question to you is, has there ever been a situation where you'll look back at a trade and say, that would have gone better

if I'd known more about the underlying company before buying or selling the stock. It's typically hurt me to know more about the company. And so that's like, like, like hypothetically first Republic is in a beautiful uptrend and you're around with it because you like the price action. And then out of nowhere, like it's blindsided because of something that goes wrong at silicon valley bank right and then i know like you're not going to enter it again you know once it starts breaking down i understand it's out of your wheelhouse but in that moment like a situation like that would you ever be like shit i don't know i was trading a bank that was making loans to

you know giving mortgages out at 1% to tech people. You know what I mean? Like, have you ever seen that before and said, shit, I wish I had known? No. Okay. Because, you know, who did know, right? That's why it had such an outsized response by the market. It took everyone by surprise.

I'm sure there were some short sellers in there, but by and large, most people were not focused on that. Great example, that C3 AI recently. I'm part of this little chat group with some sophisticated people. And they put out – I was talking about AI, the stock, and I think it was 22 or something like that. And they said, well, this hedge fund has a report out, and they linked it to Yahoo Finance. And it was the same report that came out, but it was four days prior. And they said basically these companies are fraud and all this stuff.

But the stock was breaking out. It went from 22 to 50 or whatever in four or five days. And then, so, you know, I was like, well, the market doesn't care about that news. But then it broke like on CNBC. It was just a little article on Yahoo. So I knew that story and it actually ended up hurting me because when it came out on CNBC and the big networks picked it up, the stock came crashing down and I drew a VWAP and I said, well, that's probably going to be where it's support. And I broke all my rules and I said, well, I'm going to buy some there because the marketer knows this news. It's not news.

Rather than let it bounce off that level. Yeah, exactly. I broke my rules. I'm going to front run the buyers. Four days ago. Yeah. Yeah, but they're your rules. They're my rules.

So I get to break them. They're guidelines. Yeah. There are no rules. There are only guidelines. I can't break your rules, but you can. Okay. So I lost money, but I got out real quick.

So that knowledge actually hurt me because it put a bias in my head. Do you have an investment portfolio or a retirement account that you don't trade, that you just allocate to ETFs and leave it alone? I have some money that I have to do that with. Is she in charge of that? She is. You're in charge of that? No, no.

She's in charge of that. She does. Okay. She's done really well with her long-term stuff too. Okay. I look at that. But at the same time, I see that stuff go down 20, 30%. But you have to treat your, of course,

but you have to treat your trading as a business, which it is. And then you have to almost like separate what the purpose is of the retirement account. But it's probably not always easy to do because you have a view. Not at all. I always think I'm smart. In fact, most of my really active trading is in my IRA. For tax reasons.

For tax reasons. Yeah. Yeah. I mean, why create that big paper mess and pay taxes? So, yeah. You're old enough to have been trading, me too, when most of what was on the tape was the activity of other humans. Do you miss that? Like, like old school tape reading.

Like, like the kind that the SMB guys used to talk about. I was never good at that. I don't, I don't have the patience to look at the level two. Can you describe that? Tape reading is looking at, looking at what's going on in prices and sussing out what other people are doing but not in a mechanical way, really just like more in a feel kind of way. Yeah, and you would see a certain market maker keep refreshing on the bid.

But now it's all hidden. Usually Sherwood. Yeah, Sherwood. Exactly. So I caught the tail end of that. And there were guys, they were retail brokers, but they were pitching this to their clients that like i'm here all day i'm reading the tape like in other words if some shit is about to go down i'm going to see it before anybody else and i guess that was a thing that you could say and people would believe you right 25 years ago but that uh tape reading is effectively dead right

for me it was really never a big thing i I know those SMB guys still promote it and do it. So I think for some people, it's really highly specialized. It's never been my interest. I don't have that attention to detail. I can't sit there and watch it at that level. It's almost like card counting, but harder. Yeah. Because it's not a dealer and

it's not a dealer and three other people and 52 cards. It's millions of people. Brian, do you use stops? Or are you in front of your computer all the time? I'm generally in front of the computer. It's not a dealer and three other people and 52 cards. It's millions of people. Brian, do you use stops? Or are you in front of your computer all the time? I'm generally in front of the computer. If I have a stop, it's because I'm nervous about the position. So I might sell a little bit if I'm that nervous. But if I go on vacation, I'll trade options instead.

That way I know what I have. So we define the amount you could lose. Yeah, exactly. Okay. Brian, did you have fun on the show today? I loved it. You guys are the best. All right, dude, you're the man. Thank you. So we're going to do favorites and let you guys get out of here. I know you have a dinner tonight. Um, but let's just talk about the book quickly. So in addition to a lot of the concepts that we talked about today, just give us like the elevator pitch on why, um, our listeners should check out the new book.

It'll help you understand market structure and what goes on behind the scenes. It's not always just about fundamentals. That's a real important piece. But there's a lot of money. Most of the volume is done by computers. So wouldn't you want to know what those computers are doing and how they've been programmed? That's the elevator pitch. Okay.

Is this for everyone? Is it too much for beginners or what? Well, it's kind of advanced. So, you know, buy my first book first. But if you don't do that. What's the name of the – your first book is also legendary. Every trader has a copy of it. One of the best-selling technical analysis books of all time?

I'll say that. Okay. Has to be. What's it called? How many copies have you sold? It's a lot. Yeah, it all time? I'll say that. Okay. Has to be. What's it called? How many copies have you sold? It's a lot. Yeah, it's about 20,000 or so. Okay.

And this is like a technical analysis book that you sold yourself? Yes. Okay. And you still sell it yourself? Correct. Okay. So you buy that at alphatrends.net? Amazon.com.

Oh, or on Amazon. Okay. All right. Very cool. So what's that one called, the first one, the original one? Technical analysis using multiple timeframes. Okay. All right. Very cool. So what's that one called, the first one, the original one? Technical Analysis Using Multiple Timeframes. Okay. And the second one is, let's do the title again.

Maximum Trading Gains with Anchored VWeb. Okay. So it sounds intimidating. If you're newer, start with the appendix. I was going to say, why couldn't you just name it like How to Get Rich? Yeah, I know. Don't you want to sell it? Yeah, I really should have.

But they're almost, I don't want to give people the impression it's a textbook. It's written in your voice. It is. And you as a teacher and as a current practitioner, that's why I was able to read it

and like enjoy reading it. You were able to do that because of Leah and my wife. Okay. Her edits, seriously. Okay, that's good to know. Because I don't read technical analysis books

like i just don't i get it but i liked yours and on every page there was like familiarity like like a light bulb would go oh yeah oh yeah so that's what i looked about it yeah it's just plain english right it's not trying to when i worked at lehman brothers the phrase was treat your customers like mushrooms feed them shit and keep them in the dark. Yep. I hated that. I was like, why can't we just explain what's going on? Let's talk in real English.

Because that's where the vig is. That's a line from a movie, too. I can't remember which one. Was it? Yeah. Maybe Boiler Room or something? It sounds about right. All right.

Let's do favorites. Brian, what have you brought? No, it's from The Departed. It's a Boston accent. It's from The Departed. Okay. Okay. We solved that mystery.

There we go. What have you brought us today? What do you think people should be paying attention to? Or what are you excited about right now? Watch. Well, we just got done with something. I forgot what it was. It sounds good.

Must have been awesome. Yeah, wow. I like that. Succession though. Big fan of Succession. Let's talk about Succession for a second. Yeah. It's my favorite.

I'm two shows behind. Okay. I'm not spoiling anything. I thought the last episode was phenomenal. The one in Norway? Yeah. I don't know that I buy Skarsgård, Mattson. I don't know that I buy him.

He's not that good. Just his character just seems totally implausible, and I don't know that he's very good at it. I think the show is flawless. He's kind of flat. I don't buy it. He's too much of a D-bag. They have the best characters.

He's too hateable, though. So Kendall is... They have the best characters. He's supposed to be Elon, right? That's what they're kind of playing off of? Like brash and does whatever he wants?

I don't know. I think he's supposed to be like really cold and calculating and he's doing that. I just don't buy it. I think Kendall is one of the best characters of all time.

That guy, the guy just, could you imagine anyone doing a better job than Jeremy Strong in that role? It's incredible. The amount of things he has to do in every scene. It's incredible. Yeah. Uh,

every, everyone on that show is just crushing it this year. And this is the end. It's like, how many left? Three left? That was episode five, I believe.

So is it eight episodes? I think 10. Okay. Uh, you're two behind. No, It's like, how many left? Three left? That was episode five, I believe. So is it eight episodes? Are you 10? I think 10. Okay. You're two behind? No, I'm one behind. One behind. This week was all right.

Kendall was just making a power move and really showing that he's got some tricks. Did she do drugs? No. She pretended to. Yeah, because she's probably... So that was very calculated. She's...

That's not a spoiler. She's pretending to do drugs and drink to get him to spill the beans. It works. So they never actually show her snort a line of Coke or whatever. I don't – She like picks up the jar and puts it down. Yeah, because she's got a drink that she's like – I had a friend who would pick it up and put it down, but he – all right.

It doesn't matter. This is a very long time ago, everyone. And then pretend he's drunk, right? And then you mentioned AI. So is AI already having an impact on what you do or you just see it coming? It kind of is. I mean, I've been playing around with it.

And the problem is there's too many sites right now. I just saw a new one last night, Hugging Face. Hugging Face, right. Yeah. So there's ChatGBT, Baird, and Hugging Face. What's Hugging Face? Those are the three big ones. It's the same thing.

Same thing? Yeah. But then there's all these little offshoots that will take a YouTube video. Dude, this one kid just took ChatGPT and built a Chrome modification. Right. So you could just run that in your browser.

It's ridiculous. And it significantly shrinks down the amount of whatever data. Everyone who knows anything about tech, like all the tech people are saying this is real. Wait till whatever Apple does in this space is going to be the one that every consumer makes use of immediately. So how are you using it? But do you think so, Josh? Isn't the first mover always, you know?

No, Apple's never first. They didn't have the first MP3 player. That's true. iTunes came way after Napster and LimeWire. The phone was way after Palm Pilot. Google was like the 20th web browser. Yeah, Google was way after the first wave. So Apple doesn't come first.

They come correct. They make the best shit. And part of that is they look at what other people have done and they turn their nose up and they say, that's garbage. Here's the thing. It doesn't always work, but I can't remember a time where it didn't.

How about them Knicks? How about that? We have Knicks fever, dude. We're losing our minds. It's been over 20 years since I've been excited about a Knicks team. Actually. We're like, we're losing our minds. It's been like, it's been over 20 years since I've been excited about a Knicks team. It's-

Actually, I think I love this team as much as I loved like the 96, 97, 98 team. Yeah. Like I love these guys. I was 14 years old at the time. So this is, this feels a little different.

Music fan? What are you listening to? Yeah, yeah. You are, right? You go to Red Rocks. We talk about this. Yeah, we go to a lot of shows. So there's a Rolling Stones tribute album that just came out. It's today. music fan? What do you listen to? Yeah, yeah, yeah. You are, right? You go to Red Rocks. We talk about this. Yeah, we go to a lot of shows. So,

there's a Rolling Stones tribute album that just came out. It's today, all of the biggest artists in country music. Yeah. Each one of them covered a Rolling Stones hit.

It's like 30 songs on. Do you like country generally? I'm not a huge, I like alt country. I'm not like a huge like country music listener. Actually, in your car on the way home, you were, you had country on the other day. I think that's what this was. Oh, okay.

So, but I'm a Stones guy. Yeah. So there's like every Rolling Stones song that you love. Overrated. Covered by. Just kidding. Overrated. Covered by a different country artist.

Pretty cool. It's like, you know, Spotify, iTunes, whatever. I'll check that out. You probably like that. You see any shows lately? Are you going to anything this summer? Yeah. We're going to go to Beck.

I love him at Red Rocks. We just saw Pink Floyd in the Colorado Symphony Orchestra cover band. That was pretty cool. John Mellencamp was a lot of fun. That was a good show. It's just like everyone there my age, everyone knew every note to every song. I don't know.

We go to a lot of shows. How far away do you live from Red Rocks? Is that like your local? 20, 25 minutes. It's incredible, right? Yeah, it is. You got to come out. I keep telling you that.

I almost went. Somebody had me going to a Dave Matthews show there or something. Josh hates Dave Matthews. And I hate Dave Matthews. And at the last minute, I was like, not gonna do it. We'll have a reason to come to Denver soon. Yeah.

I think, I hope. Who? Us. Oh, yeah. In that one. We haven't landed on Denver yet. We don't have an advisor who lives there.

But we've got a guy. Sean's out there. But we've got a guy who lives there, works with us. Shout out to Sean. And someday, we'll come at him.

We'll do the whole thing. So, all right. We're gonna let Brian and his editor get out of here for the night. We really appreciate you coming through. And I meant everything I said. You do have this legendary status amongst at least the traders I know. Confirmed.

They've always respected you. They've always spoken reverentially about you. And I hope the audience listens to this and gets that same sense. You're like a real guy. You really do it. And you're also a great guy. So thank you.

That's why I love being with you guys because I look at you the same way. Thanks, Brian. Thank you so much, Brian. We appreciate it. And listeners, if you haven't yet left a comment about the show, a rating on Apple Podcasts,

today might be the day that you do it. And I got to tell you, it's very important for the algorithms that we have ratings. So if you love the show and you want to encourage us to keep going and you want to help out, this is your chance.

Leave us a rating and review and tell the rest of the world that you're into what we're doing here. All right, that's all we have for this week. Shout out John, Duncan, Nicole's away. We miss her. Great job in the doc, Sean. Thank you so much, Brian Shannon.

Let's get out of here. Thank you. I kind of like that. I like it. You're the man. Thank you. That was great. All right, so that was the dry run.

And we just want to're the man. Thank you. That was great. All right, so that was the dry run. And we just want to get the bunch of butterflies out.