DON'T GET INCINERATED – CEASEFIRE OPTIMISM DRIVES TECH RALLY | Your Money Podcast Ep. 593

Added: 2026-05-30

[00:00:04]Welcome to Rever Asset Management's Your Money with Danny Stewart. The market will always overshoot to the downside and to the upside. And Don Vandenour.

[00:00:14]>> Cuz it's not how much you make in the markets, it's how much of that you can keep.

[00:00:23]>> Are you prepared for when, not if, but when the bubble burst? Is the stock market too extended? Do you have an exit strategy so you don't give up all your gains?

[00:00:36]Or are we in a power trend right now with ways to go? And is this stock market uh poised to continue higher?

[00:00:45]So my basic question is how do you participate with managed risk without getting clobbered?

[00:00:53]We're going to go to the team to find out the insights and statistics and what Price is actually telling us. Remember, Price is truth. No exceptions, period.

[00:01:03]So, I'm going to go to Obi-Wan Kenobi and then after he gives his overview, we're going to go back to one mailbag question comment because it really adds insight to how we how we do things. And we're going to pull back, you know, we're going to let you look under the tent. So, Don, go ahead.

[00:01:22]Well, first, uh, Dan, before we review, uh, the market, I want to talk about, uh, two books that I'm in the process of, of reading andor finishing >> at the same time.

[00:01:36]>> And >> at the same time, one of them, well, >> one left hand, one in the right.

[00:01:41]>> No, one's an audio book.

[00:01:44]>> Oh.

[00:01:44]>> So, uh, when I'm out walking, I like to, uh, listen to to books.

[00:01:51]So the first one is uh 1929 Andrew Ross Sorcin. Now this is come this came out uh a few months back but he was on 60 minutes the last weekend and got a lot of press because uh well of course he threw in uh some comments negative comments about the administration but that's how he leans politically. He couldn't help but uh say that. And then he um was asked about uh what he thinks will happen and he said there will be another crash. I don't know when and I don't know how bad it will be. And he got a lot of flack on social media for like how does this help anybody? But if if they're a if we're being asked that same question, we would give the same answer because we know historically market crashes occur for various reasons. Uh, and we also know that we don't know when it's going to happen, but we're trend followers. So, if the trend's up, grow. If the market's the trend is up, we're going to grow assets and protect them. If the market is unhealthy, particularly under the 200 day moving average, which as we know, you listen to us, that's where all bare markets uh occur. If you're under the 200 day moving average, you're at risk of one.

[00:03:14]We are at risk of one. uh recently, just a couple months ago, uh but we bottomed and we've rallied strongly off of there.

[00:03:23]So, what do we do as trend followers?

[00:03:24]Well, we get back on the horse and ride the trend. So, this book, I'm enjoying it. It was a nice historical perspective. Uh I didn't know a lot of the players that were involved on the Fed and the inside of the Hoover administration and uh the transition to the Hoover administration.

[00:03:42]And then really 1929, the year ended only down 17% despite a 50% uh haircut in October and early November. Uh really toward the end of it, he gets to the story of how bad things got in 1930, 1931, 1932 before they finally bought them. So uh recommend the book definitely uh if you'd like market history, great. But I the markets are so different from now than they were then. The things that are never different are human emotion and that really played a big role in the 29 crash for one reason. The uh stocks were really um centralized in the hands of many fewer people than they are today. It was basically only the rich that held stocks. Uh toward the summer of 29, uh they they started sucking in a lot of retail investors who were hearing about the riches and of course they uh got their butts handed to them. Uh, so 1929.

[00:04:42]>> Yeah. Stock market tips from shoe shine boys. Yeah.

[00:04:45]>> Exactly. And that's what Jack Kennedy, that's how he um dodged it because he said he sold out of the market when he got a tip from a shoe shine boy. So he was one of the ones that dodged it. That was one of the comments that was made in there. The second one is uh Risk and Reward by Ben Carlson.

[00:05:03]And why did I get this book? because of this subtitle, how to handle market volatility and build long-term wealth.

[00:05:10]So, the build long-term wealth uh lot of stats in the book, some really good stats. I made uh copious notes and highlights and uh there were some good takeaways from it. But what we never got to was the how to handle market volatility in any reasonable standpoint that would benefit Rever clients. And the reason is their response to how you handle market volatility is to put your money in a pie chart and hope for the best. But one of the um quotes out of the book that just made me sick to my stomach. At the end of it, uh Ben lists 20 things he believes about investing. And uh there were two of them that really bothered me. First one is I believe being bullish or bearish matters less than progress towards your goals.

[00:06:04]Uh >> okay who had in >> who in um 2000 had part of their goals uh to lo to to see a 50% draw down twice in the next 10 years. Your goals you you can be on track for your goals until you're not. And that's the problem with that, especially when you get close to retirement. Uh, but the one that really aggravated me was I believe every investor in risk asset should be comfortable seeing their money incinerated on occasion.

[00:06:41]>> Wow. Incinerated.

[00:06:42]>> Wow. That now I'm sorry. That's the dumbest thing I've ever heard for risk adjusted returns and manage risk. That's like saying you want to be in a bad car wreck and go to the hospital every 5 years so you stay diligent and more careful the rest of the time. Uh, no.

[00:07:01]You want to always defensively drive always and avoid going to the hospital.

[00:07:06]So I ask you the listener, do you have steering and brakes? steering is just not enough because you you run into stop lightss or obstacles. So, you need brakes and steering for your money, the name of our podcast and your portfolio.

[00:07:28]And the Don is going to actually talk about that. But let me let me read because this this goes to this whole question about how you know Don always says you don't go to the grocery store and buy rotten fruit for a balanced diet by charts or us. You avoid the the the bad stocks or sectors that are weak.

[00:07:49]There may be one or two stocks in that sector that's outperforming but and then you want to uh be in the strongest sectors. Now, you don't want to overweight too much in just like AI buildout or uh electricity for AI or because you got to have enough because when they do fall, these growth stocks, they fall on an average when they drop, they fall on average 73%. Those growth stocks are more volatile than others.

[00:08:14]So, you got to have rules around them.

[00:08:16]Now, this was a 527 uh what is it? Two days ago from CB, my favorite resort. Don, first of all, I want to compliment you and the Rever team for your daily podcast. We put a podcast out every night the markets open and we actually tell you what we're actually doing in the portfolios, our own portfolios. And Don and I are in those, too. or the most transparent adviser in the United States and probably the world. I don't know of any other adviser that's putting out what they're actually doing every single day.

[00:08:50]But anywh who, um I wanted to compliment you and River on your team for your daily podcast. I'm an IBD follower and watch their podcast on YouTube soon after the market closes. Talking about our uh both of them, I don't know what time your podcast post, so I catch it the next day. I like the agenda of your podcast which goes more indepth than IBD. Woo! I like that. But I do have some questions. After watching each member of your team conduct programs, I've tried to write down the stocks in each category presented. The 21 over 21, that means the 21 stocks over the 21 exponential moving average list has confused me several times. It almost seems like each member of the team keeps keeps their own list of stocks in the 2021 21 over 21 list. I have not been able to get the list of RG8 that's our uh growth sector different eight different growth sectors. So we can see the sector rotation other than grow listing on the tail of the tape.

[00:09:59]Even then, it seems the grow and the turbo change depending on who is presenting. Great question. So, the question is, who determines your list in each category? Keep up the good work and thank you. Regards, CB. Well, I can't read his last name. CB.

[00:10:17]And this is Obon's uh uh response. Hi, CB. Thank you for the kind words and expressing your concern. We try to communicate clearly in our videos. So, I'll explain the process. The 21 over 21 and the Turbo 12 list are updated at the end of the first trading day of the week and reported in the first video of the week as I did last night. Then list the the list then stays static for the rest of the week. We have color a color-coded system that we have all shared access to. So that things should stay consistent. I know one recent issue I had was working with ticker Q which had two listings in market surge. The RG8 never changes. It's IWO, SLY, MDY, PDP. That was all my old tennis racket.

[00:11:17]um QQQJ, SPHB, and FFT Y and ARC A R KKK. Below are the official 21 over 21 and T12 list for this week. Blue means holding in in in the portfolio, green means adding as a new list member. Folks, listen. We we actually do a market. I'll let Don explain all that in a second. We do a a team call with everybody. Everybody.

[00:11:50]Ted, Connor, Don, me, uh, a couple.

[00:11:54]Nick, Jackson, Todd, um, every Alex, he's our options consultant. We do we do a market I don't think I left anybody out. If I did, I'm sorry, guys.

[00:12:04]>> No, you didn't. You got >> Okay. Um um we go through and and about an hour before the market opens, Don and I have a a call ourselves by ourselves, a little bit before that, but after that, we have the team market call and everybody goes around and gives their top ideas like they're because they do a screening every every morning. They get up early and they do a SC and the night before and they do a screening of the stocks that they like the most that look like they're setting up, etc. And then they also go over their own stocks in their portfolio or their portion that they're managing and where their stops are, what their plan is, where they're how they're going to handle that stock.

[00:12:47]Obi-Wan Kenobi keeps up with that and makes sure and if somebody misses a stop, he'll be tapping him on the shoulder in a few minutes going, "Hey, here's where your stop was. What are you doing?" That's rarely rarely rarely ever happened. But anyway, but when we go around the room and Don goes last, when you have stocks that overlap and three guys are looking at the same stock or even four, that actually gives me a lot more confidence that that that's probably, you know, if only one guy sees that stock, maybe, maybe not. It still be maybe a great stock. But all I'm saying is before the market opens, they've been working for two or three hours and they already have a whole plan for the day.

[00:13:30]Is your adviser doing that or is he asking you for lunch or she is asking you for lunch?

[00:13:36]I don't know where these guys don't go to lunch with clients during when the market's open. Very, very, very rare.

[00:13:42]All right, with that, Don, you can answer that if you want to clean up the 21 over 21. I mean, your email was pretty >> um I I I'm the important thing there was, you know, why would there be different lists? The the only explanation is we change it on the first business day uh the first market day of the week. That's when we we first pass through the list is over the weekend. That gives us a highlight of what's definitely staying on our list and what is at risk of leaving. And then depending on the follow-up market action on Monday, by the close, we finalize those list. And then those lists stay the same throughout the week until the following, uh, Monday. So, uh, the first video of the week, we're going to go through them all. Connor tends to go through them all the time when he does his videos. Uh, on Tuesday, because he the first one has a pass has already been done, uh, I normally just hit the portfolio holdings and any other noteworthy names. So, uh, that's it. that the lists are static once they're finalized in the first after the first trading day uh of the week. And um I hopefully you know I I that's I mean we we spent a lot of time on this. It didn't make sense. It's the first time somebody said I don't understand why your lists are inconsistent. But um we'll we'll make sure that uh everything is in line.

[00:15:02]>> Well, we can we can't do every single thing for the listener. That's for I mean that's why clients come to us and we manage their money >> because >> Well, sure. But if I'm doing a 2121 on if the person on Monday presents a different 2121 than I do on Tuesday, then we've got a problem. But that's >> right.

[00:15:18]>> I don't understand that. That shouldn't be the case.

[00:15:21]>> Right.

[00:15:21]>> Anyway, uh I want to go back to some other things in this risk and reward book that uh I'm just going to say we completely disagree with because we're risk managers at Rev. You know our story.

[00:15:33]We've seen uh family members get devastated by pie chart uh firms that just don't ever sell. And there was a there was a chapter in here, chapter five, timing the market. The sub heading for the chapter was timing the market is a fool's game, whereas time in the market is to your greatest natural advantage, blah blah blah blah. And then it talks about the typical story of people with no technical skills. You have to be right twice. When you buy and then when you sell. And then the summary for this chapter was market timing is an impossible long-term strategy. Warren Buffett can't do it. You can't do it. I can't do it. First of all, Warren Buffett market times constantly. He's in and out depending on what's going on with uh the individual holdings. He he's not he is a market timer. I mean, he's helping >> he's a longer He's a longer term market.

[00:16:27]And by the way, he's got some ins well he's he's got some very good information from the politicians and he knows what's going to happen before it happens a lot of times. That really helps.

[00:16:37]>> Warren Warren Buffett's best returns were before regg since reggd's in line with the S&P 500, right?

[00:16:44]>> Uh to back what Dan just said, the only people that can do it on a consistent basis are either lucky or lying. So River Asset Management apparently is either lucky or lying. Um, I'm not sure which one it is. Maybe it's neither.

[00:17:02]Uh, you're better off buying stocks on a >> You're better off buying stocks on a regular basis, creating an asset allocation you can stick with, and keeping your emotions in check. Okay, sure. Ben. Ben is the director of institutional asset management at Rit Holtz Wealth Management. The best known Rit Holtz wealth management guy is Josh Brown who goes on CNBC as a stock specialist over lunchtime. Even though Josh is on uh record as saying we don't buy individual stocks for Rit Holtz wealth management clients because we have no uh we have no edge in buying individual stocks. So, uh, if you're at Rit Holtz Wealth Management and they're very successful and very big, and kudos to them for growing, uh, the next market crash, you will see half of your money disappear.

[00:17:54]That's the only other way to put it. If they stick with what is being written in this book, which is get your pie chart, think long term, and be okay with having your money incinerated.

[00:18:06]Take your pick. You can you can have I mean you can do that if you want to.

[00:18:10]Kudos to you. I hope I don't see you bagging groceries as a senior citizen when I'm checking out at the supermarket.

[00:18:16]>> The soup lines. Yeah.

[00:18:19]>> Um I I it just it didn't sit well with me.

[00:18:23]Like I said, there's a lot of good stuff in here. Some things I didn't know, some things I made notes of. Uh, but if you're telling somebody to get their money incinerated and you're a professional uh in um the market, I have no respect for you.

[00:18:39]>> I got one word for you for the client.

[00:18:42]Run. Run away. Run away.

[00:18:46]>> I'd be glad to discuss this at any time with anybody from Rhett Holtz Wealth Management if they want to. We're very small compared to them, but uh our clients can sleep well at night. So, back to the markets. Here's the S&P 500 and grow. We're in grow mode. We were in protect mode down here below the 200 day moving average. Why? Because that's where you're at risk for every bare market. Uh we had uh slightly less than a 10% pullback in the S&P. Uh slightly more than a 9% pullback uh in growth. Uh we made a low. We followed our rules for getting back in RAIR regier aggressive index re-entry rules. Uh when we first get back above the 8day exponential moving average and then we look for a follow-through day. The follow-through day occurred right here on this gap. Got above the 50-day moving average and we've been off to the races ever since. and we lagged uh from this period coming off the lows which is just part of the process because we're going from not invested basically zero invested to starting to re-engage in the market. Uh >> yeah, let me make a comment real quick.

[00:20:03]Let me make a comment real quick. So folks, >> one to three to one out of four of those times the market will break and continue lower. You see what I'm saying? That's you. With hindsight, you don't know that it's going to come back up like that and bounce like that. So, our strategy will always underperform the first four three to four days off of a bottom. That's that's that's you know 9 10% or more. We've But if the but we've we've cut we've we've stopped bleeding. And so if the market goes down 35, you're down 11 or 12, right? Because we're out. So when it does bounce right around that classical correction level, by definition, that's negative 10%. And the market, the stock market, the market makers already try to defend that level because they don't want to call it a correction. But even on a bare market like during COVID, right, off the very bottom, we underperformed the first, you know, week, but we got back in and we got better stocks than just the average stocks and we ended up beating the S&P handily.

[00:21:14]So on a risk adjusted risk adjusted basis, this it's it's a great way to do it and the equity curve is a lot smoother. Sorry, Don, go ahead.

[00:21:25]This is uh a chart of the S&P one year ago uh where in April of 2025 the situation that we protect against uh kicked in. So here's your uh 2 ATR within the 200 day moving average. We give it >> average true range.

[00:21:42]>> Yeah, average true range. We give it a little bit of room to see if the market is going to get back above this level.

[00:21:49]Uh but we were out and missed uh this big drop down rebound, test of the lows, then we had a follow-through day and we re-engaged uh and then we were off to the races for the rest of 2025.

[00:22:04]So, um >> we didn't have to change our underwear.

[00:22:07]>> Fast fast forward to 2026, here's that same area. We were stopped out here, uh started re-engaging. we didn't get the the other uh 10% down that it would have taken us to a bare market. Um so that's the risk that we're willing to take. Uh you know uh underperforming short term because we know if the trend is going to remain strong, there are going to be plenty of leading stocks to make up.

[00:22:35]We're going to overweight in the market when the market's healthy. The market is healthy when you're above the 8, the 21, the 50, and the 200 day moving average.

[00:22:44]just like the trend gauge we put out.

[00:22:46]So, and then this is one of the problems that that we see with the pie chart approach is that you're overinvested in bare markets and you're underinvested in strong bull markets >> in the best area.

[00:22:57]>> You're basically you're basically never chasing your beta and then when you get out of balance, you're actually selling your winners and adding to your losers to rebalance. But that's a whole different topic and we've been through this and and people know why uh we don't do it. Nice to see we're getting some upside alerts in our holdings here while we're doing this uh >> giddy up >> this show. So, um so here's the S&P and you know it's just one close below the 8 EMA. We trimmed a little bit on this 3-day pullback and then we added back on a regain and um some good uh some good to great action from leaders. one red flag that we're seeing in the markets, one of the subsectors of AI and we created uh the this week we started tracking the river AI 100. It's 100 AI related stocks in about uh 12 different subsectors. One of the subsectors is uh dramatically underperforming over the last couple of weeks and it is the fiber optic sector. You can see here AOI, which we got stopped out on today, breaking the 21-day moving average.

[00:24:04]Light LI, uh, breaking the 50-day moving average.

[00:24:10]GLW, Corning, uh, breaking the 21-day moving average. Uh, never really got re-engaged. Uh, well, it did for a little while after its earnings gap. And then there was um a uh good news about a contract in here and it ran up but it's given back all of those gains. Uh coherent is another one. COR >> and that is breaking the 21-day moving average and Sienna >> breaking the 21day moving average. Yeah.

[00:24:45]Yeah. Yeah.

[00:24:46]>> And finally VIA. These are really the big six that we track. Breaking the 21day moving average. What we want to see out of this group is for them to hold at the 50-day moving average and start to fill out the right side of the base. The weakest one, as I said, was light. That's breaking the 50-day moving average. A AOI probably the second weakest. They also have very wide ATRs, but um this is normally >> your position size. Yeah.

[00:25:08]>> Yeah. This is normally a spot where you would see support. Let's go to the weekly on light. You can see that it bounced at the red line here, the 10-week moving average, uh, two prior times, three prior times, uh, but now breaking it here below, but right right back in here, uh, in early 2026, it broke below it and then went on a big run. So, this is kind of a what we want to see is it to start bottoming and then a base form and come up the right side.

[00:25:35]So the question that we're watching is are there going to be additional AI sectors that uh money is going to rotate out of? Will it go into other AI sectors or will it flow into um value type names which have been strongly underperforming growth names. Let's bring up the spyv here and the relative strength line on spyv chart looks great. relative strength line looks awful. Let's go to a weekly chart. You can see the relative strength line, how it's been lagging here for uh about two months. And that's just simply money flying uh flowing into the growth half of the S SNP 500. You know, everybody was saying it was just the MAG 7, but you can add uh memory and semiconductors very strongly on there uh as as be as being supportive. And you can see the relative strength line off of the lows in late March. Uh money very clearly going into the growth half of the S&P 500. All right, we've got three great presentations today.

[00:26:44]Uh and >> Conor Pretty good, too. Don, don't sell yourself short.

[00:26:49]>> Well, I expect excellence out of myself, Dan. So, >> I know you do.

[00:26:54]>> Hopefully, that's >> And your team. And your team. And your team.

[00:26:58]>> And the team.

[00:26:59]>> Don can be a whipping boy sometimes. I mean get, you know, he could get the get the riding crop out and, >> you know, >> I am firm but fair.

[00:27:08]>> That is true.

[00:27:09]>> All right. So, uh, I lost my train of thought here.

[00:27:14]>> I'm sorry.

[00:27:17]Yeah.

[00:27:18]>> Yes. Here we go. So, let's go back to the S&P 500. See where we are. And, um, up a third of a percent. very nice little pullback early, but again, weakness in those uh those fiber optic names is something that basically will be all out of them by the end of the day and uh rotating money into what's strong.

[00:27:38]So, S&P 500, we're going to start off with uh especially uh okay, I'm going to give a little overview of the presentations. Connor's going to start with earnings.

[00:27:48]uh you don't really know what you're going to get with earnings. And we if something is extremely extended and we own it, we're going to trim it into earnings because if you're already extended, what you see is even if you have an upside gap, you will end up giving some of that back. Uh and earnings are are a gamble. We don't gamble with our clients money. We get it to where we're comfortable with the risk. Todd's going to talk about some monthly charts which are a very uh clear way on a longer term basis to see where things are just finally busting out of a bunch of resistance. And finally, Ted's going to do a very interesting uh presentation. Every night in the tale of the tape, we talk about or we show we only talk about it on Thursdays when it's updated, but the AI, this is retail money and how bulls have been below the number of bears. And our thought is that it's very politically motivated. When you've got most of the mainstream media telling you how bad things are because fear sells and they despise the administration, they're never going to uh tip their cap to anything good that's happening. Well, that trickles through to people's psyches and and what they're watching and they'll pay attention to the news and not pay attention to price.

[00:29:06]Uh, and then there's an NAIM, which is active investment managers, and we watch that more closely. It's more in sync with what we do. But TED has some very interesting insights to uh the updated a NAIM uh stats that came out this last Thursday. So get ready for uh three fantastic presentations and Connor you can take it away.

[00:29:29]>> So Connor is going to talk about offensive selling versus defensive selling.

[00:29:34]>> Right.

[00:29:35]>> Yeah.

[00:29:36]>> Right. So yeah basically I'm going to be talking about holding winner selling into strength and kind of the basis of this topic is hindsight is always 2020.

[00:29:47]Um so we'll start off with the chart of Dell and for the Turboction portfolio.

[00:29:53]This was initially purchased on $413.

[00:29:56]Cost basis was $182.

[00:29:59]And yesterday before earnings, we sold another half of it into strength before earnings. And you can see the stock is up 30% on earnings. But why would we trim more into earnings? Well, of course, hindsight's 2020 now. I mean, of course, we would have rather held the full position for the 30% gap up, but you know, it was it was a well over a 3R gain. Um, it was 10 ATR above the 50-day moving average going into earnings. It was 25% above the 21 EMA into earnings.

[00:30:34]And it was over 100% above the 200 day moving average going into earnings. So, what does that say? The expected the expected value is not a gap up there.

[00:30:45]that's it's you know a lot of times stocks will run very hard into earnings um and it's the market pricing in a good earnings report before beforehand and that was kind of the thought on Dell um but they just knocked it out of the park and they gapped up you know 27% and we still had a piece um not as big you know even after the trim on Thursday so you know you just never know and like and like Don said earnings are a gamble But that's exactly why we have rules for holding stocks into earnings. Um, and that includes, you know, we're only going to hold a size into earnings if we can weather a two two uh ATR implied move on earnings. So, basically what that means is, you know, we understand what the hit would be on the portfolio if the stock blew up on earnings. You know, we only hold stocks with cushion into earnings. And then we also always analyze where is the stock at in the life cycle of the move. Um what's the sentiment regarding the sector? Um you know what's our read on the company reporting earnings and all those factors go into it. And when you have a stock like Dell super extended into earnings it's just the math tells you that it makes sense to take some more off into it. Um and you know you're never going to sell the high. Um and so and then that brings me to the next one, Intel.

[00:32:12]And this is kind of the opposite um example, and we're going to go back to January 22nd um of this year. So this was a case where we had a position in Intel. We had plenty of cushion.

[00:32:26]Um you know, we calculated the implied move going into earnings. It was fine.

[00:32:32]And the thought was this stock is showing immense relative strength versus the market. It just broke out of a big base. Um it just made sense to hold into earnings. And guess what happened? The stock gap down and we you know sold it for a break even trade. But you just never know, you know, you just never know with earnings. And I'm trying to show you guys that these are kind of the things that we examine when deciding if we want to trim into earnings or hold.

[00:33:03]And you know, they don't always work, but you know, the way that we look at it, we think it, you know, it does have positive EV. And these are just two examples of um, you know, sometimes it just doesn't go your way. And then that brings me into my next kind of part, and this is holding winners. And Don, if you pull up a chart of SanDisk and so everyone wants to hold the true market leader for the whole run, you know, it's it's so easy to look at the weekly chart after the move and be like, "Oh, I just would have held it. Never broke the 10-week moving average. Look how easy it would have been to hold for the whole move." And I'm sure a lot of people can look at SanDisk and think that. But let's take a look at some of the pullbacks that it's had during its run. So go to November 2025, Don. And for this exercise, we're going to assume that you are holding a 10% position in Sandis, just to keep the math easy. Um, and so if we go to November 2025, yeah, just anytimes.

[00:34:13]And so Sandis had a really nice runup, but and it hit highs of 284. So, you have a 10% position. The stock goes from 284 to 183, but that's a 35% decline.

[00:34:26]Granted, it never broke the 50-day moving average, but if you have a 10% position, that's going to hit your total portfolio, you know, around 3 and a.5%.

[00:34:35]And another thing that in real time, if Sandis is pulling back 35%, you have to imagine all the other leaders are pulling back just as bad. So on this, you know, not only do you have Sandis that would be hitting your portfolio three and a half%, you have to imagine that say you had, you know, you know, nine other 10% positions and they're all pulling back. That's going to give you a huge draw down. And although it never broke the 50-day moving average, it's very hard to hold um if you're not selling into strength. And then if we fast forward to February of this year, um you can just go back to the daily to present day. Um you had you had another similar pullback on this one. This pulled back, you know, hit a high of 725 um and then pulled back 28% 517. So again, if you're not selling into strength, your equity curve is going to see huge volatility. Um and and it it's, you know, it's just not ideal. Um so Sandis is a good example.

[00:35:44]Every anyone can look at the weekly chart and just say how easy it would have been to hold with the 10-week moving average, but they're not factoring in portfolio volatility and what it really feels like to hold a high ATR name through a pullback. And it really brings a lot of volatility to your equity curve. And that's why for clients, we're always looking to sell into strength as that's the optimal way to smooth out the equity curve and keep it near the highs. And then we'll just take a quick look at Bloom Energy as well.

[00:36:13]Just give a quick example explaining kind of same thing that I'm trying to show here with SanDisk and you can just go to the daily. Um, and so November 2025, this hit a high of 147.

[00:36:29]Okay? and then it pulled back all the way to um 76. That's a 46% pullback. If you had a 10% size, that's nearly drawing the whole portfolio down 5% on just one position. And like I mentioned with Sandis, you have to you have to think that if this is happening to Bloom Energy, which is an absolute leader, you know, a lot of other stocks are getting hit as well. So really the point I'm trying to make is that for our clients, we're trying to keep the equity curve steady, stairstepping higher, and we're trying to reduce volatility. And so that and because of that, we're going to be selling into strength. Um, you know, as the stock moves out, we're going to be trimming stocks into earnings. And that's really our, you know, whole goal.

[00:37:15]Um, and so these are just a couple good examples to display why we do what we do.

[00:37:23]Great stuff, Connor. It's all very easy when you go up in a straight line, but we know that that doesn't happen. Bases will have to be formed. We typically do not hold through bases unless we have a massive uh gain. Uh, great stuff. And that's also why we diversify half of the portfolio into indexes to cushion the equity curve when growth stocks get out of favor.

[00:37:50]Todd, you got some monthly charts you want to take a look at?

[00:37:53]>> Yeah, sure. I just want to say that it's been one heck of a month. You know, this is the last day of this particular month, and this is two months in a row where we close a Friday at month end, and we have the opportunity to look at a clean month of data and see really how the performance was. and going through my I call it the monthly liquid allstar screen. There's 254 names on it this month. Um these are all liquid stocks that were up at least 20% on the month.

[00:38:27]I don't think I've ever seen it that high since I've done this screen, which has only been for a couple years. Um and many of these names are up under over 100% this month, including Dell, which is up 96%.

[00:38:42]But one of the key reasons before we start, let's just look at light on a monthly. Don, I want to throw a little audible in the presentation and and just show this and why why I like these monthly charts because look at this thing was up 12 months in a row. 12 months in a row before this month, which is its first down month. This this is why these stocks can still be up 20 30% in a month and just keep going. So when they break out, pay attention to it. So let's go to the first name on the list, which is Guardian Health, GH.

[00:39:23]This is a grotction holding, and it's having a great month. It's up uh what percent is that up on the month, Don? Let's see.

[00:39:35]50 >> 50% on the month. Now, let's go to the weekly on this. And you can see this is having a nice month. Still below its all-time highs. Just a beautiful base on base pattern. Broke out this week. Uh Don bought this just one day prior to the breakout and grow. And this has just had a perfect follow-through day through this base on base. Let's just go to the daily on this Don because it's got some really interesting characteristics to it.

[00:40:10]You know, it had this big gap up back uh at the end of last year in October.

[00:40:16]And you can see that earnings gap. It was big 27% increase. And really all this big base did was, you know, base that big gap. And finally, it's breaking out again. So, this is a name that just has very powerful looking action. Relative strength making new highs. Uh, even though we don't see the blue dot here, but relative strength is making new highs, and this is exactly what you want to see on this nice uh breakout. So, that's one name looking very nice right now. The second name I want to talk about on the monthly is Snowflake.

[00:40:58]This is this has been a challenging stock. Uh it's had many gaps that have just gone nowhere. This is interesting.

[00:41:06]This month, this stock's up uh what over 70% this month on this earnings report and it's also trading the biggest volume month it's ever traded. So, this is notable perhaps something to uh keep an eye on. We are seeing software stocks now rotating, getting rotation. Several names look good here. And this snowflake is a very nice move off of earnings that we're paying close attention to.

[00:41:38]Uh the third name I'd like to talk about is let's go to data dog. This is another growing.

[00:41:50]This is up 82% this month. And I just want to show how this is just breaking out of those highs going back to 2021. So they can look very extended on the daily charts, but this is a very clean monthly breakout.

[00:42:08]And it's, you know, looking at that light chart of 12 months up straight. You don't want to give these things away early. And this is a first major all-time high breakout. And finally, let's look at Nphase on the monthly. We did this last week.

[00:42:28]This had a very nice move this month.

[00:42:31]You look at the daily and you think it's just screaming and extended. It's up 109%.

[00:42:37]But look at that nice monthly trend line breakout. Uh, you know, you just draw a declining tops line. This is really the first month that this thing has broken out. and uh going to trade big volume.

[00:42:51]Not the biggest volume it's ever traded, but definitely a big volume kickout on this uh this breakout here. And it's one that uh you know that solar group is getting hot. We talked about the solid state transformers which are still going to be a couple years down the road, but you know this is a name to keep an eye on and you can see these monthlies can help you maybe stay in an initial position in these stocks or enter them despite the extension.

[00:43:20]And uh that's it. So one heck of a month, one heck of a rerating. All these reratings are being done on earnings, you know, just massive breakouts.

[00:43:31]earnings from Dell were just unbelievable and you know maybe we're at a point where we're going to consolidate some of these moves but uh these are some new names to kind of keep your eye on >> but the monthly also help you keep out like Nphase got crushed and it lost almost I mean if you go back and look at that chart is the this first month it's broken out and been positive before that it's been a dog for month over month for >> almost a year. So it does give you some it does give you some guidance but but you know you you really got to pay attention.

[00:44:04]>> You got to use both daily and monthly combined.

[00:44:07]>> It helps you identify the stage analysis.

[00:44:10]>> Right. Right. Exactly. Exactly.

[00:44:14]>> We'll have to go back over stage analysis on on another show again.

[00:44:20]>> A good point about uh this with us being at all-time highs. This is being fueled by earnings growth. The PE forward PE of the S&P has actually declined from 23.6 to uh I think 21.4 uh after this most recent earning season. So yeah, uh the sales and earnings are there. Yes, they are tied to uh a specific theme mostly uh AI but um it it's it's being supported by the earnings growth and until that stops >> the earnings growth set another way what Don's saying is the earnings growth is actually accelerated more than price and that's why it's earnings you know earnings per share earnings over price well if you're earning grow if let me give you an example if you got a 100 PE which used to say or even five. Remember how the companies uh uh during right before the tech wreck they were hundreds or thousands. But if you got a 100 PE and you're making growing 100% a year, next year your PE is going to be 50. The next year, all things being equal, next year it's going to be the next year it's going to be 25 and 12 and a half. That's why that growth portion is real important, too. The earnings acceleration or growth or deceleration.

[00:45:36]>> It's just the opposite.

[00:45:38]>> All right, Don.

[00:45:41]All right. Uh, I'm hearing some feedback in my ear here, Zach. Uh, but we're going to turn it over to Ted now. He's going to take controls and, uh, he's going to talk about, uh, NAIM and what insights some AI tools can offer to us.

[00:46:00]>> Thank you, Don and Todd. Great presentation. I actually made my own monthly all-star screen while you're doing that. I'll probably go over it this weekend.

[00:46:08]So right here, this is a gauge like Don said that we have on the tail of the tape every day and it's updated weekly.

[00:46:16]And pretty much like Don said, what it is is there's a group of active money managers and they respond to the survey every week just indicating how much exposure they have. Minus 200 is full net short, zero is flat, 100 is fully invested, 200 is fully margin long. And that is plotted every single week. And this line as it says right here is the twoe moving average of the manager's responses. And so this week we jumped from 82 week and typically from our qualitative observations just from being the markets for many years. We've noticed when you get to the 90s, especially over 95 and definitely over 100, it's a time to potentially put up a red flag and buy less name, size down, and perhaps reduce some exposure. We started seeing a lot of people tweet about it as well. But can we and so my question was, can you only just use this gauge? Usually, it's always always no. In the markets, you have to stack a bunch of pieces together. But in this case, my question to myself was, is there signal in reducing exposure significantly or even is there a cell signal when the NAM gets above 95? And on the website, you could download the entire Excel sheet since except since inception and so this is about I think it's,37 weeks of data all the way back to 2006. So when you download that um with AI chatbots now LLMs, one of the strengths of these LLMs is that they can process enormous amounts of data and they're really good at math in a quick way. So the one I used was Cloud. I also use Chad GBT as well, but Cloud was able to better outline all the results in an Excel sheet, a PowerPoint, and a Word document. And what I found was they had similar findings. side. I'm not going to show the process with chatbt, but this is the cloud MacOSS app. There's a function called cloud co-work, which allows you to access various files on your computer. So, I took the I took the NAM numbers, put it into a folder on my Mac, and then I connected that folder to this app or to Claude, and this is a prompt I came up with. You can take it if you want for the future. And from there it pretty much went back analyzed all 1037 row or 1038 rows since the top one is the header. Ran a bunch of statistical analysis and because these LLMs are trained on all the math theory in the world. They're they're technically PhDs in statistics. So really really smart tools that go through all the data. Um, it builds various charts and we'll see that soon in the PowerPoint slides I have. It does all of it, runs it and I asked for the output in Word, Excel and PowerPoint just have three formats. I'll just share some slides. We won't have to go through the whole Word document but we could potentially if you are interested I can send you the word document or we can have it attached somewhere maybe under the podcast if that's possible. But from here, let me bring up the word doc or the PowerPoint slide. So the average exposure or the dynam exposure over these 137 weeks was 67.

[00:49:44]When it says episodes, what Claude did was when there's multiple consecutive weeks, let's say above a signal, whether it's 95, it'll it'll compress all those weeks into one quotequote episode. So let's say this week we hit above 95 and the next two, three, four weeks are also all above 95. That would compress into one episode. And so that's kind of how CLA did that study and we have 20 years of history. And in this 20 years, we had the great financial crisis, the Euro zone, sovereign debt crisis in 2011. We had the Brexit, COVID 2022. So plenty of macro crisises as well as manas. So this encompasses a decent amount of data. Um so the next chart or the next slide is this one pretty much is just like little bottom line and it really answer the question with empirical data that a high NAM is not a sell signal. So just because you see greater than 90 greater than 95 doesn't mean you just start dumping all your stocks. You really have to layer it in with other pieces of your analysis which obviously we do have with the growction gauge. Look at the market leaders in the three time frames of all indexes. And so with what it found was pretty much when there's a high NAM signal the forward returns which which cloud calculated on a four-week 13week was pretty much a quarter 26 week which is about 6 months and then 52 weeks is a year alltime horizons saw positive returns and the big finding was that actually with the higher NAM that is when volatility is actually lower. Um, so maybe it's a cautionary sign, but you can't just use it as a pure sell signal.

[00:51:25]Even sub 60, even though that can seem a little low, that's actually around the average, so it's not extreme. So there's no true signal there. And what Cloud and Chat GPT found through analyzing the data is that the real edge comes when you start seeing NAM below 40 and especially 30. And when you look at the episodes, and we'll see some other graphs going forward here. Maybe I can bring up a better one. Actually, I'll just keep keep the slide up. Um, the sub 30 occurrences don't happen often.

[00:51:55]They're typically during macro crisises.

[00:51:57]So, during the great financial crisises, during that Brexit, during the Eurozone debt crisis, COVID in 2022 and as as we know now with hindsight, that has led to great forward returns if you are starting to buy in those areas.

[00:52:12]>> Yeah. Once has been crushed. Yeah.

[00:52:16]Exactly. So pretty much one bottom line is like honestly our whole observation through our experience was that NAM was a much better bottoming signal. That's where you want to start being contrarant than a topping signal and that's exactly what the statistical analysis of both the smartest reasoning models at least currently in the world supported that observation. So that that does give us more confidence um in our observations as well. So I skipped a couple slides because they they weren't that important. This one pretty much is the evidence that just being overseated. O sorry overheated equals cell is refuted.

[00:52:56]You can see so the baseline is just the four returns looking at all weeks. And now you have the four-week forward returns 13week, 26 week and 52 weeks of the various scenarios which is in this legend up here. And you can see when NAM is greater than 95 when when you look at a 13week, 26- week, and 52- week forward returns basis, they're well above they're they increase well above baseline and are positive across all time frames. So just selling all your stock, your S&P 500, you're you're going to look back, you're going to see likely see the S&P higher than where that first or where the episodes of 95 show up. And so this number is just on a six-month average. S&P is up 6.9% and has a 83% hit rate over time. The next slide. Oh, and pretty much and if you were to act on 95 greater than 95 and you sold all your stocks, you would have fought the 2013 bull run, the 2016 2017 bull run, the 2020 2021 bull run.

[00:54:02]And if you can remember that, that was a big one. And then the recent 2023 2024 advances which has been the AI bull market. You would have missed a lot of gains if you were just to sell all your stock when the 95 readings um are signaled.

[00:54:20]Um next one. So another actually really interesting finding. Oh sorry I skipped one. This is the second finding is that sub sub60 is a non-signal like I shared in the second slide. However, you do get to the sub 40 and sub 30, there's typically um an edge there. And like I shared, these typically happen during the huge crisises, especially when it's paired with Fed policy and a macro crisis.

[00:54:48]The next finding, which was really interesting, is that uh it does make sense too because when NAM is extremely low, that's typically when VIX is really high because you are in a crisis, probably in a bare market as well. And so NM what Chajbt and Cloud found is that NAM is actually a better indicator of volatility or sorry when NAM is high there's typically lower volatility and when NAM is low there's typically higher volatility and when it is high um it is still decent warning sign but again it can't be used as a full just sell signal continue on cloud also graphed every single episode from in the last 20 years, which is pretty cool as well. And you can see where all the green episodes lie. Great financial crisis, though. If you were quick to just plunge into the markets, even at the sub30 levels, you do still end up in the last part of the crash. So it's not again any one layer of analysis and especially this is a secondary indicator for us can't just be used by itself but it can put it into a larger term context of where the markets are potentially at combined with all the other layers analysis that we always talk about on the show and in our videos. So you can see all the red ones are 95 and typically you're just seeing almost the markets higher. The only one time that was the exception though was before the 2022 where you did have negative returns after those 95 signals.

[00:56:25]>> Yeah. The inflation bear. Yeah.

[00:56:27]>> Yeah. But you can see like you have the 95 here in in around 2013 and the markets are far higher. Even in all these periods here when Trump had that tariff war and then even during this uh well especially during this COVID bull it flashed enti pretty much the entire way up until the last portion. So that that's another piece of evidence that just because you hit 95 doesn't mean you should just sell all your stocks.

[00:56:56]And then just one last slide, just a few implications. You don't want to just sell everything on the higher readings.

[00:57:02]You want to layer in your other pieces of analysis, other breath measures that you might look at, especially the trend of the major indexes and the market leaders and what your portfolio is doing. Um, however, with the NAM sub 40, sub 30, definitely want to start turning your head the opposite direction. You can fe you can sense a lot of fear in yourself. You can see the media in full-blown pessimism. There's probably a crazy crisis going on. Just think about the great financial crisis, COVID, or the inflation bear in 2022.

[00:57:36]It's not going to feel good. But if you do get the sub 40, sub 30, that's definitely a time to look the opposite way um on the bull side. And then three, this is less useful because we already use the VIX, but they ch concluded that it's actually a decent volatility gauge.

[00:57:53]And we are seeing that right now. NAM's at 95, S&P ATR is well below 1% now. And the VIX is at a 15 handle and might even see a 14 handle today or next week, >> which which means very low, folks. Which means low.

[00:58:07]>> Yeah. Which means very low, which then again we can say that can be used as a contrary indicator. Maybe there's volatility that comes back, but the lower volatility, smooth uptrends can last far longer than anyone thinks. And so the question here was, is there a statistical edge in selling your stocks when there's a high NAM? And just using that, the question, the answer is no.

[00:58:29]But when you combine it with other pieces of analysis like what we talk about the Nazi for example right now I'll just quickly cover these few pages and then we'll finish up. The Nazi actually just hooked up from a neutral territory and isn't an overbought. So okay you can say the NM is overbought but now the NASI isn't overbought. If the NASDAY wasn't overbought and hooking down along with the high NAM, that's another layer that perhaps you should trim more aggressively. Then you go to the NASDAQ net highs and lows. We're firmly in net highs. So that is supportive as well. We started seeing this crack into net 52- week lows paired with a high NAM and the NASI hooking down and that's an a third layer of analysis potentially telling you, okay, maybe the markets are super overheated. It's time to reduce exposure even more aggressively. And what's interesting is the CNN fear and greed index hasn't even dipped into extreme gre greed this entire way up. It's just flirted in this greed area and it's almost even in neutral territory as the markets are making highs day after day.

[00:59:38]So that's a fourth layer we look at. And then Don mentioned the AI as well. This could be a little biased as he said because of the political the current political climate. But you can see bears are well above historical averages. Came in at 41.9% versus 31% and then bulls are below historical averages. So that's a fifth piece of analysis. And then when we look at a more shorter term, percentage of stocks in the NASDAQ above the five days at 55. So very neutral. And the percentage of stocks above 5day moving average in the S&P is at 47. So you can even say that's getting closer to the um fear territory than agree territory. So this is more of a shorter term. And then of course we have the grotaction gauge looking at the three time frames and our market leaders list the 21 over 21 and turbo 12. So right now it just seems like NAM is flashing that potentially overbought area or sentime is getting a little heated but the rest so far is quite tame. So the conclusion really is that NAM is much better for a bottoming indicator than a topping indicator.

[01:01:00]Print argues for reduction in your return expectations, not uh not a sell signal. Great stuff, Ted.

[01:01:09]>> Right, >> Dan. That's it from uh from >> that's it. That was like that was a lot, man. That was that was a lot. That that that was drinking from a fire hose. Hey, listen folks. I just want to say >> I don't try to interrupt the First of all, I try to add a little bit of humor and make it fun and yuck it up a little bit.

[01:01:29]>> But this podcast is actually geared a little bit more toward the retail investor, not the hardcore stock nerd.

[01:01:36]They put a video out every night the markets open both through if you go to our website reverasset.com and and sign up for the there's a subscribe button.

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[01:02:18]A lot of our clients in retail, a lot of them are stock nerds because even though you think you're a stock nerd, doing this is very, very, very difficult.

[01:02:26]Right? You could take Don's brain and drop it into a hundred people and only about five of them are going to be any good because it's not just having the rules, it's following the rules and people get emotional. I know lots of traders that are no good at all, but they still like the game. It's almost like going to Vegas and gambling. They they lose money. Folks, we don't we don't gamble. But anyway, my point is I'm not trying to go out there and interrupt all the time and and do that on the podcast, but they throw out a lot of technical terms like at average true range or 21 EMA, 21 exponential moving average, and a whole bunch of RS, relative strength. And to them, it's just in their vernacular, and they throw it out there. And so, I'll kind of try to clean it up, and I'll try to use analogies or explain what the definition is. You won't get that on our nightly uh uh uh uh uh uh newsletters because I'm not out there playing referee and kind of trying to explain everything. So, take it with a grain of salt. But there's multiple ways to get our podcast. And if you go to YouTube and subscribe, they actually do stuff on the weekend that doesn't go out on our newsletter. So, it's not just every day the market's open. They're actually creating the list and and things they're going to do for next week and putting them that on on on um YouTube just as a compliment to you guys and just to help just to help I mean we give out more free information than any advisor I've I know and I've been at this game a long time. All right. What was the second thing? Um All right. I told him that.

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