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Investing in high growth stocks in the U.S. and Asia during tense times

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Investors are looking to navigate the deteriorating relations between the world’s two largest superpowers — the U.S. and China. Katie Stockton, founder and managing partner of Fairlead Strategies, joins Yahoo Finance’s Jared Blikre to break down the price action and trends behind some of the new opportunities in stocks, bonds and cryptocurrencies, as global economies recover from the COVID-19 pandemic and the U.S. celebrates Asian American and Pacific Islander Heritage Month. Katie explains her top down approach as Jared demonstrates how to leverage the power of Yahoo Finance Plus for technicals, fundamentals and portfolio management.

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Video Transcript


JARED BLIKRE: Thank you all for joining our 11th Yahoo Finance Plus webinar. Nearly been one year. Investing in high-growth stocks in the US and Asia during tense times. I'm Jared Blikre and we're going to be joined shortly by Katie Stockton. She is a Fairlead Strategies founder and managing partner.

And guess what? This is a pretty appropriate. NASDAQ is down 8% from its highs. Not the best day on the tape. And we're going to be talking about it. Definitely a tough time to be a growth investor. We're also going to show you how to get more out of Yahoo Finance Plus, how you can use it to filter for investment opportunities and use it to analyze your portfolio.

And now if you've been to one of these webinars before, you know the drill. If you haven't, I'm going to show you how. On the right hand side, you're going to be able to interact with us in real time. We're going to be doing polls. We're going to do one in a minute here.

You can also access questions-- ask us questions. And you can do that anonymously or you can use your real name. And then-- this is important. At the bottom left, that's down there, you're going to see some sliders. You can make me bigger. You can make Katie bigger or smaller. But you probably want to maximize the presentation window, because we're going to be sharing a lot of charts with you.

All right, let's start off with a poll. The first one is growth stocks tend to perform best when-- A, the economy itself is growing. B, interest rates are low. D, value stocks outperform. D, there is an alternative.

So we're going to leave that open for a couple of minutes. But I want to bring in Katie now and just get your thoughts on the market and what's going on right now. What is your assessment of this downdraft that we've seen in growth stocks and tech stocks?

KATIE STOCKTON: I mean, I think it was necessary, right? We've seen pretty much a straight-up market for the major indices. And indeed, during that time, we'd seen outperformance from high growth technology stocks. And those, of course, have led on the downside most recently during the pullback.

So to me, it was sort of overdue. And there are indications this time around that this is a more significant pullback than the ones that we have seen year to date. And that's, in part, because it's a loss of short-term momentum behind the growth stocks, but also a loss of intermediate term momentum.

So we have gauges that we track from a technical perspective on both the daily bar charts and the weekly bar charts. And when they both are pointing lower, it tends to be a weaker tape. And indeed, that's what we have right now.

The ratios when you look at things like the NASDAQ 100 index, which leans to technology, it leans to growth, versus the S&P 500, which is more broad based, you can see a breakdown in the NASDAQ 100 index relative to the S&P 500 index. That's carrying over to growth versus value ratios. And that goes for the small cap front and the big cap front.

So it is significant. It's really a follow on on the back of what we saw late last year, where value really picked up its head relative to growth. And I think we're seeing more of the same now, and probably for good reason when it comes to valuations.

So we currently-- in our research, we recommend energy, financials, more the cyclical sectors-- industrials, materials, and we're even overweight REITs here. So it's not our traditional overweight ratings, which are often centered in technology and consumer discretionary and communications services. We've definitely shifted on the sector front.

JARED BLIKRE: Yeah. I would echo that a million times. I do want to stay true to the title of our webinar here. And we have a bunch of tickers prepared. And let's just start charting some of these names. I want to start, actually, with ARK Invest. You can see it there on your screen.

I've put some of your work up there. Hopefully I reproduced it somewhat faithfully. But this has become a really important sentiment indicator of the market because a lot of people got caught up-- who got caught up in the Reddit trade, in the GameStop, and a lot of new traders over the last year, at the beginning of the year, this was something-- this was a stock going into the middle of February that was just absolutely on fire. Now it's down over 40%.

And that's leaving a lot of people, especially new traders, with a bad taste. And a lot of them are saying, how do I manage this risk right now? How do I right the ship? And first, I guess, Katie, what do you see in this chart? And maybe leave the heady questions for a little bit later when we talk about trader psychology.

KATIE STOCKTON: Of course. I mean, I first think we need to acknowledge that with any kind of very steep or even parabolic uptrend, there is inherent risk of a very sharp corrective phase. And indeed, that's what we've seen from ARK Innovation Fund, or ETF, and related ETFs that are very heavily exposed to high growth stocks.

Corrections often unfold in sort of an ABC-wave type format. That A wave is that first downdraft that you see off the peak in ARKK. The B wave is the relief rally that then fails, often times, as it has done, and gives way to a final C wave. And I think we're in that C wave of the corrective phase, which means that it should be maturing soon.

We're starting to see some signs of short-term downside exhaustion. And by that I mean looking at the overbought, oversold metrics that we track, some of which are readily available, like the stochastic oscillator. These measures are oversold. And they're oversold as we come into some important retracement levels.

So there are a lot of support levels to focus on. We can only use them as a gauge of downside risk, not as an actual entry point, necessarily. We really adhere to the indicators to help us trigger those re-entries. And I think we're close, but just not quite there yet.

JARED BLIKRE: Yeah. And let me get to another one. And feel free to explain any of the indicators that we're using here, because I thought it was a really interesting mix. I even saw some Ichimoku in there. We'll get to that in a little bit.

But here we have Nvidia. And you've got the stochastic indicator down there. Two stocks have been either trending down or sideways. You can see Nvidia really hasn't done much since last July. We've got this new nominal high here, but kind of an expanding megaphone, if you really look at it. What do you see in this?

KATIE STOCKTON: Yeah, that's a good way to put it, the megaphone pattern or broadening formation. It's not something we're out looking for. But it does tend to be more bearish than bullish. So I've been pretty bullish over the long term on semiconductor stocks. But Nvidia does show some signs of upside exhaustion. You see that in part in the fact that that breakout to a new high did fail.

And then also in the stochastic oscillator that you have pictured, there's an overbought downturn, which is when the stochastics rollover from overbought territory, which is above 80%. That's when we have a so-called overbought sell signal. In a weaker tape, it's definitely not something I would want to fight against.

So I think we can assume that the risk is to the downside here. Implications on the weekly bar chart or weekly candlestick chart that you have here are for weeks, not months. So perhaps it's just a short term event. But there definitely has been a loss of relative strength behind semiconductor sectors, which differentiates, again, this pullback from the recent ones.

JARED BLIKRE: All right. Well, I want to get to the results from our first poll, and then we're going to take another one. We're also going to get to some questions here. But first, the question was, growth stocks tend to perform best when-- is it the economy itself is growing? 40% said yes. Interest rates are low? 51% said yes. That's the correct answer.

Value stocks outperform. And then there is an alternative. Only 1% said that. And I'll go through-- this is kind of a trick question. When the economy itself is growing, we typically don't see high growth stocks accelerate. And that's because they do better when the economy has been under contraction where it's just a low growth.

And that's kind of what we saw since 2008, 2009 that recovery off of those extreme lows during the global financial crisis. That was an extreme event. And the Federal Reserve responded with extraordinary measures, as did many of their counterparts across the world. And so QE and low rates became the norm and growth stocks outperformed most of that period.

We did see value and cyclical enter the mix a few times. But for the most part, it was all growth. And so that's why when interest rates are low, that's when you tend to see growth stocks outperform. And then another answer, value stocks outperform-- those 10-- value and cyclical stocks get hit the hardest when interest rates are low and/or when the economy goes into recession. So they're going to underperform in that situation.

And then we've all heard the phrase, "there is no alternative." Well, that applies when interest rates are low and everybody is looking for yield and they're just not finding it in value, energy, industrials, et cetera. So I'm saying if there is an alternative, then we're probably in that economic growth upswing.

So let's get to the next poll here. And this is, what's your biggest concern about the markets right now? Is it monetary or fiscal policy misstep? And that could be involving inflation or lack thereof. Is it volatility? Is a predatory traders? Is it regulatory financial stability? Or is it another COVID-led slowdown or lockdown?

All right, so I'm going to get to some questions here. And I think I'll tackle the inflation one-- let's see if we have any on inflation. I'm seeing-- yeah. Does inflation really have a negative effect on high growth tech stocks? I think I just kind of touched on that.

When we're in an inflationary environment, things can get frothy. And that's a word that Chair Powell used the other day. So I'm going to ask my producers if they can get that clip ready. We're going to listen to that in a second.

But just another quick few words-- high growth tech stocks, you will find some that will outperform. But it's really more of a stock picker's market. It's not like the entire industry is doing well. Let's listen to that [INAUDIBLE]-- excuse me, clip-- by Chair Powell. And we also have Loretta Mester in there.

- Some of the asset prices are high. You are seeing things in the capital markets that are a bit frothy. That's a fact. I won't say it has nothing to do with monetary policy. But it also-- it has tremendous amount to do with vaccination and reopening of the economy. That's really what has been moving markets a lot in the last few months is this turn away from what was a pretty dark winter to now a much faster vaccination process and a faster reopening.

- So my read is that there's certainly-- in terms of equity prices, there's upward-- they're high. There's upward valuation pressure there. I think the financial stability risk overall I would view as moderate. However, I think we have to recognize that there are parts of the financial system that we have less insight into.

And my expectation is we'll see some volatility in markets. That in and of itself isn't a problem. It's when that volatility is coupled with high degrees of leverage where you might have a financial stability risk.

JARED BLIKRE: Here you have it. And by the way, Yahoo Finance's Brian Cheung asked both of those questions. The responses that were generated by that sent the stock market down by quite a bit on a relative basis during the day. So the Fed and the market participants have their eye on this.

Well, I'm going to get to a question that I'm going to throw to you, Katie. And we can throw in some tickers, as well. What are some of the key parameters to look at when evaluating a high growth stock?

KATIE STOCKTON: Well, for me, as a technical analyst, I would say momentum is really the key here. And there is a lot of ways to measure price momentum. Perhaps the easiest way is by watching the moving averages. They're a great way to understand what the prevailing trend is, what momentum is doing. And they do it with sort of a smoothing mechanism. They eliminate some of the noise that tends to be inherent to these higher growth stocks.

I personally like watching something very simple, which is the 20-day simple moving average. And when that's pointing higher, you generally have a stock that you want to be exposed to. And when it starts to flatten out, that's usually a good reason to be on the sidelines. And when it points lower, then, well, that perhaps is the time to be selling or selling short that stock or ETF.

So it's a very simple tool. But it's a great gauge of the short-term trend and short-term momentum that's easy to track.

JARED BLIKRE: So I have Peloton up on the screen there. And this is a really interesting chart to me because you outlined a head and shoulders top here. I look at the neckline. Measured move points to $30. But you tell me-- how are you interpreting this chart with the indicators that we have here?

KATIE STOCKTON: So when the high growth names started to pull back just, really, within the last few days-- it feels like longer at this point, because it's been so damaging--


KATIE STOCKTON: --in price terms. But when we looked at that, we were kind of hoping that the test of support-- and in some cases, it was the 200 day moving averages. In the other cases, it was the March lows-- we were hoping that these support levels would hold. And indeed, Peloton was one of the first names to break that support.

And as you can see on the chart there, it wasn't just a short term level. For Peloton, it was really an intermediate or even maybe long term level when you take a step back. And of course, the lower high that was left in the wake of this pullback gives the chart the shape of a head and shoulders top. We've all heard of that. You can see what it looks like visually.

And really, it's just a reflection of a breakdown following a lower high and sort of a distributive topping formation. It doesn't mean Peloton can't see a nice, significant oversold bounce or relief rally. In fact, there's some indications that high growth names are pretty oversold here and due for a few days of upside off of today's action.

However, it's something that perhaps with this price pattern having been completed that you'd want to use to reduce exposure into.

JARED BLIKRE: Yeah and I just-- you have volume at price here. These bar-- that's these bars here, basically how much volume was executed at a certain price. And I would make the point that a lot of what we're looking at in terms of technical analysis, you're either looking at mean reversion, which is you're searching for equilibrium or you're searching for extremes.

So equilibrium might give you certain opportunities. Extremes you might want to be going the opposite direction. But I think in general, when you're using moving averages-- and I like VWAP and anchored VWAP-- you're just getting a sense of, is the average person, the average grade, above water or below water over a given period of time, so 200 days, 50 days, whether you're using it anchored from a low or a high, just searching for that equilibrium.

But I want to take a look at crypto. There's a huge amount of interest in this, Katie. We're taking a look at Bitcoin right now. This is a weekly chart. It goes all the way back to, looks like, 2019. And we've seen this before. But what are you making of it?

KATIE STOCKTON: Well, Bitcoin, for one, and of course, there's many others, was in a parabolic uptrend, so a very, very steep uptrend. And again, with that, we acknowledge that when we do see a pullback or corrective phase, it tends to be pretty sharp. You just have to look at something like Ether right now and the spread to its 50 day moving average, which at last I looked it was about 50% downside to it.

So that creates some inherent risk for when we get that downtick in momentum. And you can look at that 20 day moving average to arrive at that. This weekly candlestick chart of Bitcoin, it was somewhat of a topping pattern-- not something that's long term in nature, but intermediate term in nature. It reflects a loss of upside momentum that's evident in things like the weekly MACD indicator. The MACD is a very common momentum tool. It's based on two moving averages of price and the spread between them.

And that tells us that there's a little downside risk for Bitcoin within this corrective phase. Right now it's more range bound. The support level that I'm watching as a gauge of downside risk is around 42,000. Support levels are always cushions, not precise points. So I wouldn't nitpick the actual number except to say that it was a previous peak on the chart, and it also is a Fibonacci retracement level.

So when we have these well-established trends-- and oftentimes they don't leave a lot of potential support in their wake when they're so steep-- we use these Fibonacci retracement levels to try to understand what would be a natural place or support to be discovered when we don't have our traditional means of identifying it.

So there is a Fibonacci retracement level around there. And that would be a natural place for it to become more oversold. And we would see that as an opportunity then to add exposure to take advantage of the big, long term breakouts that we have seen behind Bitcoin.

JARED BLIKRE: All right. Well, I want to get to the results of our last poll, and then we'll get to some audience questions. What's your biggest concern about the market right now? There is no wrong answer. Monetary or fiscal policy misstep. That took the cake. 60% concerned about that-- for good reason, I would say.

Volatility or lack thereof, 23%. Sometimes lack of volatility is bad for trading, too. Let's keep that in mind. 2017 was a pretty boring year. Predatory traders, only 2%. Not too much concern about that. Regulatory financial stability, 7%. Another COVID-led slowdown or lockdown, 8%.

All right, so here's a question. Do you think there's a correlation between the rise in Bitcoin and the decline in growth stocks? Is this a table for one scenario? I have personally noticed-- and I've read reports-- that crypto trading has attracted a new class of traders who were previously not interested in it. Coincides with the lockdown and the stimulus money, all of that.

Crypto could be in a different ball game. Now, you're asking about correlations. I don't know particularly. I've seen correlations in Bitcoin sometimes. It's correlated with the stock market or the bond market for a month or two months. And it's been all over the place.

So even on that hot CPI print that we got this morning when it sent stocks down and bond yields up, I didn't see any reaction really in Bitcoin. So I think it's its own animal. And that's kind of nice, because as an asset class, you want that independence.

Having said that, when we have severe sell-offs, like we did last March, everything goes down, or everything goes up in terms-- I guess if you are long the VIX. All right. Here is another question. And I can throw this to you, Katie, maybe. Amazon versus SHOP, which is a better 10 year investment?

I'll say in general, any tickers you want to go by-- Mercado Libre is in there, Jumia. We have some in Asia, too, that we can cover. So what are your thoughts?

KATIE STOCKTON: You know, I tend to hold more of a short to intermediate term time horizon in my work. I think that's where the charts and technical indicators really add the most value. It's where you have to fill in the blanks between the quarterly earnings reports and all the fundamental data available. And it's those fundamentals that really drive the long-term trends.

That said, the long-term trend behind Amazon is certainly very promising. When you look at the monthly charts and you look at the long term momentum there, it's been relatively healthy. You could see that this trading range is perhaps a consolidation phase within a steep long-term uptrend. And that would be another healthy takeaway for Amazon.

It certainly seems like a safer play for the long term than-- I think it was Shopify that they brought up, just in terms of the high growth versus sort of more steady growth exposure. And of course, for the fact that the [INAUDIBLE] M stocks are mature companies that are very widely followed and widely believed in. And you can see that in their long term charts.

JARED BLIKRE: All right. Well, I want to get to some trader psychology here. Kind of mentioned before. And I like the fact that you emphasized time frame, because most people will say, well, do you like this stock or this stock? Well, it depends on what your investment time frame is.

And I totally agree that technical analysis is very helpful in the shorter term when you don't have that fundamental analysis. That fundamental analysis can be great, but that's a very long term.

So I'm just wondering how you go about your stock screening process. This was one of the questions that we got from some of the people that registered early. How do you approach your day and your portfolio?

KATIE STOCKTON: Right. And I'm a research analyst, so I don't manage a portfolio-- at least, not yet. So part of my process is really preparing research reports. And for that, of course, it requires looking at a lot of charts. I focus primarily on US equities, but also any kind of macro technicals-- things like Treasury yields and crude oil prices. I do a lot of sector relative strength work, and also what I call bottom up work.

So my version of bottom up is quite different than a fundamental analyst. And it means to me, essentially, looking at all 500 of the stocks in the S&P 500-- it's actually more than 500-- and looking at them from a technical perspective using some of the indicators that we've already addressed, things like the MACD indicator, the stochastics, even the cloud model.

So I'm looking at these over multiple time frames and just looking for high probability setups and technical catalysts. Those can be in the form of MACD crossovers and breakouts and breakdowns and trend reversals and price patterns. So there's not one specific thing that I'm typically looking for.

But what I'm looking for are opportunistic positions that I can recommend long or short to my clients or my subscribers. And those setups kind of evolve with the market, meaning in this tape, for example, we're more heavily exposed to cyclicals and to value stocks in our long ideas, and of course, more exposed to growth stocks, tech and biotech, in our short ideas.

And that's just the nature of sort of the top-down influences of the tape right now. That probably won't look the same in a couple of months. So we really adapt our analysis to the current environment, letting the top down views trickle down into our individual stock recommendations.

And of course, the sector influences, as well, with our overweight positions that I mentioned before were more inclined to be long, as an example, an energy stock than perhaps a high flying tech growth stock.

So I think that that's an important differentiating factor when we're doing our bottom up work. But that is part of our process. We also think it's really important to have a holistic view, just looking at all these macro technicals and also global indices.

Of course, China would be a great example of that, because sometimes they can really inform the US, or vice versa.

JARED BLIKRE: Yeah. And I was just putting some of those sectors up there. People have to adapt to the current market environment. And I want to pull up an example-- might take a second for this chart to get up. But something really interesting happened earlier today.

Bill Ackman disclosed that he now owns Domino's pizza. He sold his Starbucks for it. And here we have Domino's pizza. I was looking at the technicals. He said he's wanted to buy it for years but it was too expensive. And it finally dipped down to 330 and he saw that as a buying opportunity. So you could qualify this as a growth stock, maybe even a high growth stock at times.

And he was able to use whatever method he used to get in at this relative bottom. So it just goes to show you that you keep your mind open to opportunities and you don't rush into things. You don't have to be in something, whether it's an IPO or a stack. And for anybody who has questions on those, please do submit them, because we are interested in hearing from you in this presentation.

And I think we'll take another question here. And this one is, what-- OK, two stocks that interest me and I'm following is EXPI and LMND. What do you think about these two stocks? Well, I'm going to pull them up here blind, because I don't know them. And you don't have to answer on this, Katie, if you don't have that in front of you.

But I'm looking at this chart here-- and I hope you can see it on your screen, too. That is somewhat of a disaster because this is a stock that probably got caught up in GameStop, just looking at the time and everything. I'm not familiar with it. But there are a lot of people sitting on these positions. And I think it's important not only to know your time frame, but also-- because you don't want to go from, I'm punting this, or this is a short-term trade. I want to double my money in two weeks, and end up being a long-term holder.

I'll quickly pull up the other one. And then Katie, just in general, if you have some thoughts about what's going on here, I would appreciate that. And here is-- oh, Lemonade, of course. This is an IPO. And it's given back practically all the gains. Testing these lows right here.

But Katie, how do you approach a situation with this-- like this? I'm assuming that maybe you would have been out much, much earlier. But what do you say to somebody who's still in it?

KATIE STOCKTON: I hope so. I hope so. I mean, these are some of the toughest setups in that they're sort of inverse V tops. And this is a very common thing in the year 2000 after the tech bubble. And unfortunately, the moving averages will have an inherent lag to them. So they're going to be a little late in telling you when it's time to get out.

But they're also going to help at least allow you to miss the bulk of the downdraft, if not the very early stages of that. So you can use that same mechanism of watching a short term moving average. And when it flattens, that's time to get out. Another thing that I noticed with those-- and it was hard to see, but you know, there's some information at times in what we call an outside down week. And it's when you're looking at weekly bars-- and a weekly bar encompasses the previous weeks, meaning the high-low spread is wider, and you see a down close.

That actually tends to be a bearish short-term setup. So if you're real sensitive to these parabolic moves, that might be a reason to reduce exposure. Now, of course, the question is probably, is it time to get back in? And I would say maybe. There certainly seems to be some support down at current levels for both of those stocks.

But what I would wait for that confidence is some kind of stabilization-- I call it support discovery. So more than just a week or two down there, but let's look for some stabilization. And let's allow that stabilization to carry over into the momentum gauges, things like even as simple as a weekly maxi buy signal or cross over in a momentum gauge like that. That would be enough to add some confidence that at least a good relief rally is in store.

One thing I'll add is that a lot of these names on their monthly charts-- and of course, some have limited price history, so you can't see it there. But a lot of the high growth names look like they'll have a really hard time getting back to new highs this year. And I say that because we have downturns in the monthly charts that suggest that, indeed, in the coming months, that resistance at their highs is probably still going to be intact.

JARED BLIKRE: Well, I'm getting a lot of questions about Apple here. So we're going to take one from Michael. Both Microsoft and Apple have had significant declines. These companies have near bulletproof balance sheets. Would you buy, hold, or sell?

I'll take this first. And here's Apple on your screen. I love this company long term. I don't particularly own many other products. But I think it's a great company. So is Microsoft. And I'll pull that up here. If you're a long-term holder and you want to be a long term holder of these companies, you can actually use these downdrafts to add to your position and lower-- it's called dollar cost averaging-- lowering your average cost for the trade.

If you're a shorter term trader, you can also use this as-- you can also use the indicators that Katie's been talking about, that I've been talking about, to gauge whether or not you want to add. So I'm just looking at this right now. This is a weekly chart of Microsoft. It's come down to the 20 day moving average right now. Have some potential support in here.

We could come down to the 50. I would think that we'd see more interest down there. But I'll throw it to you, Katie. What do you see in the technicals of either or both of these two stocks?

KATIE STOCKTON: Well, we're definitely right to be focusing on them because of their heavy weight sort of position in the major indices. We actually highlighted Apple in our weekly note to our subscribers today because it's at a critical level, a critical support level, between a gradual uptrend line connecting its recent lows and also a 200 day moving average.

It's around 120. Now, if we saw 120 taken out decisively-- and by decisively, I mean a couple of good, solid closes below that are consecutive. That would be a break down. And the initial support beyond that is around 110, so not super dramatic. But you notice here that the shape of the chart is eerily like a head and shoulders, as well. So it's just not quite convincing yet that it's done going down.

I would make sure that it holds first and then look for those upturns in at least the short term momentum gauges. And do the kind of market timing that it appears Ackmann had done with Dominoes. And really look for that oversold opportunity. I think letting some of these stocks that have done so well come to you is probably a good thing.

JARED BLIKRE: Yeah. I totally missed that potential head and shoulders top week that you're looking at here. And it looks like we're right at the neck line, right at the 50 day. Or I guess it's a 50 week in this. So a little bit of caution, but we're right at the potential support level. So it could turn around here and lead to an opportunity.

All right. I want to get to our next poll. And we are going to do-- yes-- at five times leverage, how big of a drawdown will result in total loss? Is it 5%, 20%, 50%, or 100%? We're going to leave that poll up for a little bit. And I'm going to give a demo of our Yahoo Finance Plus subscription here.

And by the way, let's do this, too. After we're done-- there you go. If you put that QR code and you punch that into your phone, take a picture of it, you will be able to get a 14 day free trial. And we're encouraging everybody who's not in to do just that.

All right, so I'm going to share my screen now. And I'm going to walk through how I use Yahoo Finance Plus. And it's just a brief overview because we're talking a lot about technicals. Well, pretty good on technicals. And I'll give you some examples.

This is the dashboard. So when you come in here, you can see your portfolio. Very easy to import it from your broker. Just directly link to the accounts. And then you'll see some insights right here. We've got some on valuation. We got some on diversification, risk level.

So let's click on some of these. Here's valuation. This uses the Peter Lynch model. And you can see the risk profile says "moderately aggressive." And by the way, this is just an arbitrary profile that I constructed years ago. On a valuation basis, eight are overvalued. Two are near fair value. Excuse me.

And then in terms of diversity, I find this pretty important and impressive. It'll show you exactly what the concentration of your portfolio is. So communications services-- that's kind of broad. It includes both Alphabet and our parent company, Verizon, and Netflix. But it's a lot of those names. Some of those names are high growth and some of our telecom companies are very slow growth.

Energy, 0.4%. Well, guess what? That's been one of the best sectors of the year. I might be underweight that. Technology, only 2.2%. Not too much exposure there. And then consumer cyclical-- given the environment that we've been talking about, where value in cyclical names are outperforming, that could be an important information here.

Now, what I really like are the investment ideas. And every day you're going to get some of these in your email box or in the app. And these are based on both technical and fundamental calls. So you can sort by-- let's do fundamental first. A lot of these come clustered after earnings reports. We have quite a few right now. Chevron just reported a couple weeks ago.

And it'll give you the price target, the reasoning for this. And you can also view it in a chart. And we can just take a quick look at that right now. And while that's pulling up, here we go. So here's Chevron. And you can actually see some of the longer term and shorter term technical indicators.

So if I press this right here, this is only available to premium subscribers. It'll show you, for instance, there's some moving averages in here. But what I find really interesting are the ability of it to identify technical patterns automatically. So if we just sort in here by technical-- there we go. Well, I got both of them.

Let's just get the technical ones. There we go. So these will show you the different patterns that have formed. And it's not going to be perfect. But this is a pretty powerful stock screening algorithm. And it gives you the idea-- the ability to participate in some of these patterns.

I would always double check it first to see if it matches what you expect it to be. But for instance, let's just take this right here. VSAT formed a pattern called continuation wedge. And then we can view it in the chart and it'll show the actual pattern here. Draw it out for you.

And you can get an explanation on the side here of what it all means. And you can, indeed, see that there was a bullish breakout from this pennant formation. And we've come back down to test these support levels. That means that you have a pretty good risk-reward ratio if you want to-- maybe 1 to 3, 1 to 4, if you're punting for a trade up here.

And just to round out the discussion on the Yahoo Finance Plus, we have now launched Community Insights. This is brand new. I'm still learning about it myself, but if, for instance, you're interested in technology stocks, this will give you some ideas here as to what is moving, why it's moving. Here's consumer cyclical. You see GameStop there. Penn National Gaming.

So you can get a lot of ideas on what the general market is doing and maybe potential trade ideas with this new community. So we're happy to introduce that. But let's take a look at the results from the last poll and skip to the results here.

All right, at 5 times leverage, how big of a draw down will result in a total loss? 5%-- well, 6% people answered that. 20% is the right answer. 81% of the people got that. 50%, 7%. 100%, 6%. I just put that in there to illustrate that when you're using leverage, even if it's only 2 times, you lose 50% on the position. You buy a stock at 100, goes down to $50, you're wiped out.

I'm just wondering what your thoughts are on the rise of new traders, Katie, because a lot of these-- you know, a lot of people who have entered trading have never been in another trading regime. And in fact, anybody who's been trading for the last 12 years has kind of been in this low interest rate mode. I'm just wondering if you have any advice for people who have come in how to approach the new market?

KATIE STOCKTON: I think let the trend be your friend and just respect the gauges. Try to take some of the emotion out of it. It's really advice for not just new people but people that have been in it a long time who might even be more prone to those emotional commitments to different positions to sort of listen to the market. You know, if it starts going down and every day you come in and your portfolio is suffering, will then, change it.

So it's OK to be reactive just to not get married to positions that are going against you. I think that's really key. And that would be probably my best advice. But you know, at the end of the day, I think sometimes we just have to learn it the hard way and suffer some losses to really understand how to navigate this kind of volatility. And when it picks up, we've only seen in the past year just sort of very short-term pick ups in volatility.

But when it really gets these kind of volatility spikes, unlike really-- we haven't seen the likes of which since the COVID low-- you know, it can be very damaging and really very painful to invest through. So be respectful of any downturns and navigate them using those sort of tools like the MACDs or the moving averages that help take the emotion out of things.

JARED BLIKRE: That's right. And there are lots of indicators out there for people to use. We have a ton of them that are actually free on our website, just maybe 20, 30, 40. I couldn't even count them. It's important not to get too wrapped up in them. But I love the basic ones. And just being able to read candlestick charts and being able to read momentum through whether it's stochastic, RSI, MACD, whatever-- everybody can find something that suits them, but you got to find it.

And as you said, Katie, you've got to learn some hard lessons along the way. I don't know any great trader who hasn't learned so many lessons the absolute worst way possible. I want to get to a question about China stocks. How high is the risk factor investing in China stocks?

I think it just boils down to, I try not to get too wrapped up in the macro situation where things are tense with China right now. We're trying to relocate supply chains. We're going after some of their listings, saying that they have to be more compliant with US regulations. And you got the PBOC rating and liquidity. You got the Chinese regulators worried about antitrust.

But guess what? We got charts. And Katie, before we go-- it looks like we got about five minutes left-- I want to get to some of these. And I'm going to share my screen now. And you just tell me, of the tickers you sent me in some of the charts, maybe we can get a couple China stocks up there. What are you looking at?

KATIE STOCKTON: Well, when I look from a top-down perspective for China, I usually start with the Shanghai Composite Index. And indeed, it looks a bit better than the average growth stock in the US, because it had a corrective phase already and has really found its footing. So I think that that should lead people to be somewhat warm to adding exposure in China, perhaps even before dipping their toe back into the growth stocks in the US.

That said, I'm not quite there yet on names like a Baidu would be one case in point. Again, just like the others, there are some signs of short-term downside exhaustion. But we have yet to see that convincing uptick in momentum that suggests that the support has ultimately been discovered. But there is support, essentially, in line, based, in part, on the 200 day moving average. And with that, we're seeing some demark indicators kick in with countertrend signals, if you're familiar with those demark indicators.

So to me it's getting interesting, but again, not totally convinced that momentum is ready to turn. With an eye towards the Shanghai Composite, it would suggest that we're getting pretty close to that, though.

JARED BLIKRE: Yeah. And you know, it's funny. We decided on the topic for this webinar a couple of weeks ago. And a couple of weeks ago, these stocks were looking a lot better. We've seen significant breakdowns. And I like the way you're describing the price action here. I'm looking at RSI on a five-day basis. You can use other methods.

But this could be a big break down here. But I don't like the fact that we got more momentum on this downdraft than we did on here. Usually, you get a price low. You get a momentum low. And then you get a price low on the retest. And it's the opposite here. So I'm a little bit skeptical of Baidu.

Do want to get Tesla, as well. We didn't get to that. Everybody loves this stock. And guess what? You got some Ichimoku clouds on here. Can you explain how these helped you determine the trend of a stock?

KATIE STOCKTON: Well, just visually you can see for Tesla the trend is higher based on that cloud or shaded area on the chart. It's not really a black box, but it's created in a way that's derived from midpoints of price, so it's a little bit convoluted in its construction.

But try to picture it as almost like a MACD indicator that's been lifted from its own window and plopped on the chart there. And it tends to track price. But then we can use it as a way to understand support and resistance. Of course, Tesla's quite far away from it right now. So we don't look at it as really a magnet except to say that going forward it does rise over time, though it does suggest that Tesla will maintain its long term uptrend.

Of course, there are short term issues right now with Tesla. We have a retest underway of its 200 day moving average. There's support, essentially, in line. There's also a Fibonacci retracement level around 583 that we really want to see hold on a consecutive closing basis.

So hereto, we're in that wait-and-see mode. Let's let it discover support. But ultimately, we expect to be able to defer to that cloud-based sort of support and guidance in terms of the long-term trend for Tesla.

JARED BLIKRE: All right. And I'd be remiss if we didn't take a look at Dogecoin here. And this is-- let's see. This is actually Bitcoin. I'm going to pull this up. I'm just going to freestyle this. And it's kind of funny to me with all the interest in it. And I think it is good that people are interested in crypto.

I'm a little bit skeptical of the Dogecoin fundamentals. But I just want to illustrate that you can really apply this to anything, any price time series, any price where you have a history, you can perform technical analysis. So guess what? It's still in an uptrend. And that's because we have higher highs and higher lows. We're zigzagging up here.

We've come back down to what was prior resistance. So we have potential support right here. You want to take a stab at this, Katie?

KATIE STOCKTON: You know, it's funny. I'm glad that Yahoo Finance has the data for Dogecoin, because it's not available on the system that I'm using. So that definitely differentiates you guys positively. What I will say is you're correct in that price dictates our biases. I mean, we really just need liquidity and price, and in some cases, volume to try to understand a security.

For this one, it's a corrective phase within a steep uptrend. And that's a pretty common set up in the cryptocurrency world. I think the relative strength loss that we've seen recently is probably notable. It hasn't occurred to the benefit of Bitcoin, but it has occurred to the benefit of other cryptocurrencies. So perhaps that's where we'd want to look.

JARED BLIKRE: Yeah. Well, on that note-- and I'm so glad we closed on Dogecoin, Katie, and you had some valuable insights there. I want to thank you for stopping by. I want to thank everybody in the audience. We're going to be doing this again in three weeks, first Wednesday of June-- June 2, so watch out for your email box. We're all going to hopefully join in the next one.

And also there's going to be a replay of this entire webinar on YahooFinance.com, our website. We're going to send it to you all by email. And on that note, good trading, everyone.