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PREMIUM: Trading the new 'fast market' paradigm

Former NYSE floor governor, Jay Woods, CMT joins Yahoo Finance's Jared Blikre to break down the secular trends in lower liquidity and heightened volatility that shape today's markets. Jay explains his top down approach, focusing on managing risk and "knowing your timeframe." Jared charts the price action in the new market leaders and explores how to leverage the power of Yahoo Finance Premium for technicals, fundamentals and portfolio management.

Not a subscriber? Start your free trial to join future webinars live!

Video Transcript

JARED BLIKRE: I want to thank all of you for joining our sixth Yahoo Finance Premium webinar-- Creating the New Fast Market Paradigm. What does that mean-- new fast market paradigm? We're going to talk about it. We're going to dive into it.

I'm Jared Blikre, and I'm really excited to have Jay Woods here in a minute. He's a chartered market technician who was very recently a New York Stock Exchange executive floor governor. And we're going to be picking his brain today, talking about some of the biggest moving tickers, starting with Tesla and Zoom, which is, by the way-- we just announced it's our Yahoo Finance company of the year-- and many more.

He's going to share his insider's view from the floor about how markets have evolved and how to approach them now. We're also going to show you how to get the most out of premium-- Yahoo Finance Premium, that is-- how you can use it to find stocks that show signs of promising returns and also use it to analyze your portfolio and fine tune it.

If you've been to one of our webinars before, you know the basics, but I'm going to explain our Verizon-owned BlueJeans software right now. So you're going to be able to interact with us in real time. We're going to be running some polls. In fact, we're going to do one in the next minute. So we're going to do this throughout the show.

And you can find those on the right hand tab of your screen or browser. A little notification will pop up when it becomes available, and you can also post questions at any time using your name or anonymously. And at the bottom left-- this is important, because this is how you arrange your screen here. You can make me or Jay bigger or smaller.

Also the presentation, we're going to be showing you charts and slides. You can make those bigger. You're probably going to want to make those as big as you can. So that's all on the lower left of your browser tab. Well, time to get started, and we're going to get started with a poll.

And without further ado, what's your year end 2021 Dow target? Is it less than 20,000, 20k to 25k, 25k to 30k, 30k to 35k, or more than 40,000? Just kind of want to get a sense of the bullishness or bearishness or neutralness of everybody in the room. Again, that's on the right hand side of your screen. We're going to give the results of that pull in a minute.

But without further ado, I'm going to bring in Jay Woods. It is great to see you and have you here. I thought this day would never come, because you were a floor governor at the New York Stock Exchange, but you couldn't talk-- for the most part, there are some exceptions. But for the most part, you couldn't be in media.

And you have an incredible story. You laid it out on Ramp Capital's blog. And I just want to bring everybody current. Give everybody a little bit of background. It's about Tesla, your son's first trade, and kind of bring it forward here, Jay.

JAY WOODS: Yeah, well, first of all, it is good to talk to you out in the open here. I was usually the behind the scenes guy at the Exchange for years. And I like that. I had no problem with that at all. People like yourself, guys on the floor telling me, you know, a lot of times, whether it was you or Bob Pisani, who's a good friend, you know, that would be one of the people they would talk to, amongst others.

So it's good to do this. And yes, you mentioned my friend Ramp Capital was nice enough to let me blog on his Post330Ramp.com is the website. So you can see the story there. But I didn't know how much traction this would get.

And considering the timing on everything, this was the end of January. My son comes home from school, and he gets all excited. Hey, dad, I want to get involved in the stock market. And as someone who's been doing this my entire life, I'm like, wow, my kid is finally interested in what I'm doing-- this sense of pride. And then I thought about it, I'm like, wait a second. What are you on to? Because there's always a scam. And you don't--

JARED BLIKRE: We're showing this tweet right here on the screen here. I just want to bring that up, but you can get back to your story.

JAY WOODS: Yeah, there-- and that was the tweet that started it all. Who knew where it would go? And can I buy stock? And oh, I thought about it, and then I realized it's Tesla, isn't it? And of course, it was. And he goes, how did you know?

And you know, all the kids were talking about it at lunch. And here we are early February, and we're at a new high. And everyone is very bullish at the time-- and this is as we're hearing stories in China about the virus and rumblings, but it's not affecting the market. So you know, you have this euphoria in our markets with the clouds overhead and my son wanting to jump in on top of everything.

And I'm thinking to myself, this is the top. This is the top. And after a week, he kept bringing it up. So I said, you know what? Let's do it. Let's buy one share. So I go in that morning, go to the floor, and there's news in Tesla-- the same news we have today. They were doing a capital raise and a secondary offering, so the stock was trading a little over 800. It got down 60, so he's getting on sale-- this is kind of cool.

And he bought one share at like 740-- the story has the exact time. So it was, you know, the gap down in February. So he bought one share at 740. And then, like, today after a secondary offering, the stock gapped lower, held the low, and then spiked up and closed up on the day that day. It may close up on the day today. The thing is just unstoppable.

And all of a sudden, you know, he's up $60 in one day, and he thinks he's amazing. And he let me know about it in a series of texts that we chronicled. And you know, here he was-- OK, so now, like any investor, you know, it's one thing to talk about the market-- but once you have skin in the game, once you actually know that you're going to get to keep the profit-- and I'll eat the loss, but I didn't tell him that at the time-- you know, it takes its emotional toll on you.

So now he's anchored at that price where he bought it, and he's checking it every day. And then we went through all these different texts as to what was going on. He's texting me-- he's watching it while he's in school. And you know, the whole part of this lesson was to teach him the risks involved, not to go from buying it to straight stock market wizardry to total euphoria, which he did in 10 days.

And then we got hit with corona, and the stock broke down. In fact, it actually held up well for a little while. And then when it broke down, the tweets and the texts started getting few and far between. And then he was getting upset. And the emotions came out on the other side. So the whole roller-coaster of emotions was so much fun for me-- not fun living through that at the time, but living through him dealing with this.

And then the worst part of all, we sold it. He lost $12. So for $12, this experiment got to teach him about investing. He did some research on the company. He got to learn who Warren Buffett was, when we talked about other famous investors. And you know, it turned into something bigger.

And then the worst part-- and this is the part that I never lived down to this day-- in fact, he still gives me stock ideas, and we'll talk about those later-- he sent me a text the day of the low. It broke 400, it was trading around 380. Dad, if we buy five shares now, it will cost us a little more, but the cost average philosophy-- he was all in. You know, if this goes up 100 points, we're golden. And I'm like--

JARED BLIKRE: And 5 shares.

JAY WOODS: I can't thank you--

JARED BLIKRE: They did that 5 to 1 split, so that would have been perfect.

JAY WOODS: Yeah, trust me, he reminds me--

[INTERPOSING VOICES]

It's up five times since he could have bought it. And he texted me on the day of the low. It's chronicled. And no offense, but I was a little busy that day on the floor of the Stock Exchange. I couldn't pay attention to his text, let alone, OK, let me leave this situation and go execute five shares of Tesla. And then I forgot about it. And sadly, he called it the low.

And every day since, he just watches as it goes up and just wants to kill me. So there is a happy story. I did buy him one share of Amazon at 2,200, and he made $1,000 profit on it. And he hasn't done anything with that money yet. So he did all right, but it taught him a valuable lesson. And it was entertaining on top of it.

JARED BLIKRE: Yeah, we're going to get back into your new journey in trading-- you know, off the floor kind of doing some day trading-- here in a minute. I want to read the results of our last poll-- our first poll. What is your year end 2021 Dow target? So less than 20,000, only 4% of people-- so it looks like we don't have a lot of perma-bears. 20 to 25, 10%, 25 to 30, 25%-- most common answer, though, 30,000 to 35,000. That got 51% of the votes.

And then more than 40,000, the uber bulls, because that would require a 25% rise, I think-- no, actually bigger, 33% from current levels-- 10%. And we have seen 33% in one year. We've seen more than 33% off the lows. So just incredible there. I want to get to our second poll, and then we're going to take some questions from the audience. And you can join in here, Jay, but let's do our second poll here, which is, what percentage of new issues eventually undercut their first trading day price lows?

So we're talking about IPOs or SPACs here or direct listings, as the case may be for a SPAC-- whenever the announcement is made official. What percentage of new issues eventually undercut their first trading day price low? Answer in a few minutes. And this was a poll that we did with Kathy Donnelly, who literally wrote the book on IPOs and how to trade them-- so got some surprising insights there.

And we'll get back to the results in just a little bit, but I want to take some questions from the audience here. So do you expect-- and this comes from Sunroo-- do you expect in stock and/or bond market volatility, which includes pricing and trading volumes, due to this current second wave of COVID-19 in Canada plus US?

So are we expecting increased stock or bond market volatility? And my short answer-- I'll toss this to you, Jay, in a second is I think a lot of the volatility is already priced in. We have the VIX futures curve, actually, as a graphic, which my producers can bring up here. But it shows that we're pricing in elevated volatility in January. And that, not coincidentally, is when we have the Georgia runoffs. And the potential-- it's a small potential for a blue wave, which I think would really alter the investment styles. So there would be some rotation into that.

I think that's what the VIX is pricing in. I also think that we are in a new norm of volatility. And it's kind of what we're talking about in this webinar. So, Jay, I'll hand it to you-- get into as much history as you want, but what are you seeing?

JAY WOODS: Yeah, well, I mean, it's a logical assumption that there will be more volatility if there was another wave coming. But logic doesn't always play out in the markets. We've been relatively flat to trending up, and the volatility has been from pockets of different sectors that could be affected by the next wave of the virus or a heavy rotation. I think, Jared, your point to the Georgia election, that's what most people are kind of focused on right now.

Because if it was the shift Democratic, that could spook some people. Because most people that I know like the split amongst the House and the Senate. You have to work together. You have to compromise. Where if there's one dominant side, it could lead to a certain agenda that could skew certain sectors.

So the Georgia election, I think, will have-- if there's anything surprising there, that could see some volatility. If there's something wrong with the vaccine, god I hope not, then you're going to see some days where you get some wild swings. But to see anything like we saw back in February, March, I don't know what it would take to see something of that magnitude.

I hope we don't see anything that could cause the market to be spooked like that. But you know, you're going to see pockets from day to day. The headlines will be-- is more volatile than the actual stocks that trade under them.

JARED BLIKRE: Yeah, I got to agree with you there. I think the markets have kind of priced almost to perfection the vaccine rollout. We're going to see some hiccups. When we got the news the other day that I think it was Pfizer might not be able to fill their 2020 quota, and it was kind of old news, but it shook the tape a little bit-- Dow almost immediately went down 200 points.

So we get any major hiccups with the distribution of vaccine, I think it's going to be priced in pretty quickly. And that kind of is what we've come-- at least what I've come to expect this year is that new information is priced in very, very quickly. And I think that gets to the liquidity or the illiquidity and that secular trend toward lower liquidity in the market.

So I'm just going to kind of segue into our next topic of discussion here, and maybe my producers can throw up that full screen that we have of the low liquidity factors in the market. But I'd like you, Jay, to go through some of these things, give your personal experience over the years, and where does that leave us now.

JAY WOODS: Yeah. Well, when you talk about liquidity, let's remember-- volumes are at record highs. So there is liquidity to this market, but-- I don't know if you have the chart there-- it's changed dramatically how you see it over time. You're talking about the difference between the spread or the size of the bids-- the amount of buyers willing to show or sellers willing to show. That's where things have changed.

I mean, let's go back-- when I started on the floor of the Stock Exchange, we were trading in eighths. So there was more size up and down every $0.12. Then we went to teens. We cut that in half, and the old guard was freaking out. And that wasn't as liquid and would cause a little more volatility, because you're going up $0.06, down $0.06, up $0.06, down $0.06. And then we went to pennies.

And the decimalization of the market really changed and evolved to where we are today. And as a result, instead of having 12 price points between every dollar, you have 100. And people aren't going to just advertise, I want to buy 50,000 shares at, say, a quarter. Because if they advertise it, guess what? Someone's going to pay $0.26. Someone's going to pay $0.27.

So you're not seeing the size being advertised like you used to, because you have now algorithms instead of a human going in to represent that order. They come in, they come out. They see someone bid for 5,000, they'll bid a penny above that for 100, for 200 to try to scout that a little bit. So there's a new way of trading.

And you know, the speed at which things happen, we don't announce every single trade anymore like we used to on the New York Stock Exchange floor. I would be yelling and screaming and talking all day. Those times are long gone. But when we see stats and people talk about how illiquid the markets are-- yes, they are, but you kind of have to see where we were before you start to compare it to the way it was.

Now, this is the big change is the speed. So if some news breaks immediately, you can hit a button and cancel all your buy orders. And you may see intraday pockets where stocks jump up, down dollars at a time. Well, you know, as someone that worked at the Exchange, we have safeguards in place to stop those big pockets of illiquidity-- volatility trading pauses.

So if a stock is to move too far too fast, say, 5% in-- 5%, 10% in a certain amount of time, we're going to pause. And that's where the human judgment comes into play. If something goes too far too fast, you want to kind of call a timeout. Could there be news in the stock? Let's get everyone on the same page. OK, that's important.

Could there have been an error? There are errors called fat fingers, where someone, you know, say you have an intern that's working for you on the trading desk and you give him 10,000 shares to buy, and they get a little nervous, little excited-- 100000, done. And that 10,000 with that extra 0 is 100,000. You buy it in the market in a stock that only trades 50,000 shares a day, 100,000 shares of day, you're going to move that stock.

And we will stop, send that order back to the person, and you know, look into it. So there are pockets throughout the day where you see wild swings. The speed-- and let's just look at it on a macro level. Look at the drop-off we had in February to the lows in March. We went from a Dow 29,000 to a Dow 18,000 in 32 days. It was 32% in 32 days in the S&P 500.

And then the next 30 days, we rallied back over 30%. The speed at which the movements occur are just unbelievable. And the access that people have to the markets is truly astounding. You can pick up your phone, and you're trading. That gives more people access, which I think is a great thing. But you're going to see a lot of intraday movement because, you know, people like to spread some rumors. You know, FinTwit's a fun place.

I'm learning this now being home for the last month, seeing the swings that some influential Twitter handles can have or rumors that are spread through financial-- you know, whether someone comes on Yahoo Finance and says something positive about a stock or is on TV or it's on FinTwit-- these little things will cause hiccups throughout the day.

So it's very interesting to watch.

JARED BLIKRE: Yeah. And for me, the speed of the market really just reemphasizes that you've got to get back to basics. You've got to know your risk, you got to know your time frame, as I know you love to say. And you've got to manage your stops properly. Risk management is key, because you can get taken out in a-- you can get trapped in a trade in a second, and that is not fun.

Well, I'm going to read the results of our second poll here. What percentage of new issues eventually undercut their first trading day price low? Most popular answer is 25%. 38% of you said that. Least popular answer, 90%, only 12% of you said that. But it is the right answer. Over 90%--

JAY WOODS: [INAUDIBLE]

JARED BLIKRE: Actually, 91% undercut their first trading day low-- good lesson to keep in mind, because if you don't get in that first day, probably fine. You're going to have an opportunity. And with that, I want to go to our next poll. And this is poll number number four from my producers. Who says, only price pays? Is it Paul Tudor Jones, is a Brian Shannon, is it Joe Fahmy, or Ramp Capital? Answer's in a few seconds here.

But we're going to take a question. This is about the IPO market. And Roberto is asking, what is your opinion for the IPO of Airbnb in this period of the year when the tourism is down?

Well, first, I don't make-- I don't even trade stocks for that matter. I trade financial futures. It's what I've always done. I own some ETFs, full disclosure, a 401(k)-- good stuff. I don't actively manage it. But if I were buying an IPO, I wouldn't care about the fundamentals as much as the technicals. I'd probably give it two to three months just to watch what it does.

That's what fits into my personal risk tolerance. But you want to talk about the fundamental story of Airbnb, I think they've done a tremendous job at pivoting this year. There's a lot of anticipation for this big unicorn IPO. But we've seen how these things do before. Uber and Lyft were the banner IPOs of last year, and they pretty much disappointed for a long time. They are still disappointing some people, but they seem to be off to a better foot.

Profitability is a big thing in the current market-- maybe not so much with rates near zero. But if we get into a cyclical, value-based rally, which is the reflation trade, some of these big tech unicorns could get left behind, because they tend to do better under a low growth, low interest rate environment. So I'm just going to throw that out there. Any thoughts, maybe insights, into what happens on the floor, Jay, on these IPO days?

JAY WOODS: Yeah, well, this one isn't on the floor, unfortunately, it's over at the NASDAQ. But I do--

JARED BLIKRE: Oh, right.

JAY WOODS: On these things. And you know, I don't tend to talk about stocks individually-- at least, I didn't, so I'm not going to go deep in the weeds on this but to say, one, I'm rooting for them, because my college roommate works there and he's been there for about 10 years. And this is a big day for him. I've been talking to him a lot, so I'm excited for him.

As far as the IPO goes, it depends, once again, on your time frame. Now, I don't know what your time frame is when you're asking that question. Are you looking to day trade it? You won't want to get in because you didn't get in on the pricing which most of us don't have that ability to do? You're going to probably see the stock get oversubscribed, gap open higher than where they price it the night before, and then be extremely valuable for that first day or so.

There is a big buzz about it. So if your time frame is short term, you want to get in that first price, go for it. But make sure you have a game plan to set stops to limit your loss. Because there could be a pocket where it just drops, and then it comes back. Most of the time, these stocks tend to perform very well on their first couple of days. But we'll see. Each stock is different.

As for the product itself, I'm a big believer in the business. I haven't used Airbnb-- and my roommate in college gets on me about that. But I'm not traveling anywhere anytime-- anytime soon. Hopefully, that will change. And I think people anticipate, with the vaccine, with changes-- let's get out of our house.

I mean, I know once we get the all clear, I'm going on a road trip. I'm going somewhere. And you know, first to concerts, then to movies-- just get me around people-- the bars. So I would expect this to be very well received. But if you're looking for a quick trade, just know your risk, be careful. Long term, you know, it reminds me of a Snowflake.

It's a great name that may get overhyped and may do extremely well on the first day, and you get a little hesitant. My son wanted to get into Snowflake. I said, no, no, no. And now he's still yelling at me because I didn't get into that one. Because I looked at the fundamentals and I saw, you know, if you believe in it, buy it, put it away. That would be my best advice as far as Airbnb. I think the story's phenomenal.

JARED BLIKRE: Yeah, we're looking at a chart of Snowflake here. And you can see it took-- it based for several months before it really broke out. So this could have been a breakout, wasn't able to get over price-- at least the opening day pop. This made it, and we got a pullback. So there's plenty of room to get in if you're a little bit patient if you want to catch it.

But we actually interviewed the Snowflake CEO the other day, and this speaks as to the fundamentals of his business. And let's take a listen about that.

FRANK SLOOTMAN: The workloads of the future are going to be data sciences. And data sciences are going to have very different needs. And they need unfettered access of data wherever it is, wherever it lives. The real problem with data historically has been that even though we have infrastructure clouds, like AWS and Microsoft Azure and Google Cloud and so on, and we have tons of application clouds in terms of all the SaaS companies that are out there-- data has been fragmented into a million places.

It lives in all these clouds. It lives on premise. It's been extremely difficult since the beginning of computing to drive analytical perspective and signals out and across all these different sources. So we said, you know, we can't keep doing this, because we'll never realize the potential of data sciences if that data can't come together. And the data cloud is all about the combination of execution with unfettered global data access-- doesn't matter what geography you're in, doesn't matter where the data originally came from, it doesn't matter what cloud you're on.

And that's-- we emphasize that really aggressively, because otherwise, you know, 10 years from now, everybody will be in the same place they were 10 years ago. And we have maybe modernized, but we have not transformed.

JARED BLIKRE: Yeah, it's pretty compelling when I hear the story, because I hadn't thought about how fractured data really is. We have-- you know, we have these big, targeted solutions like AWS for the application layer. But Snowflake really attacking the data-- you know, just looking from a technical basis here, we just kind of laid out the technicals of how you might leg into a company here.

I want to go to another stock here-- this is going to be Palantir. And I'm going to share my screen so everybody can see it-- recent direct listing. And I just want to show Palantir, because it's got a lot of action-- volume really picking up. You can see institutions starting to get into it. And these lines that I have here, anchored VWAPs-- that's anchored volume weighted average price.

If you've seen these webinars before or you follow me, Brian Chen, and some other people online, we use it extensively. And it acts as a way to gauge, are the majority of people who are in a trade as of a given day, are they in the money or are they out of the money? Are they making money or are they losing money?

And so you attach it to important lows, highs, breakout points-- and it's kind of subjective. You've got to do a bit of formfitting. By the way, this is a free indicator that we have on our site. Anybody can use it-- it's under anchored VWAP. Click that, you're going to get this little dialog box here. It doesn't want to-- I'm in draw mode, that's why.

Here we go. And you can change the anchor date. If you're inter-day, you can use the time, change color, et cetera. But this shows you it's capturing this low here. So this means this is an important reference point. And we're going to want to see any further pullbacks get captured by this potential support line. Also, I put in something from the top here.

Now this, you could see price breaking above it here, and then acting as resistance. Then we got price finally back above it. So this tells me bulls are in control over the long term and also the short term here. Does that mean it's going to the moon? Not necessarily. But on a technical basis, it's behaving decently.

And what people get scared of at this time in a new stock, a relatively new stock, I think, is when you see this institutional participation, people think, oh, bubble, because they start going parabolic along with the volume. And it's something to take into consideration. Jay, you got any thoughts here on Palantir or just any other IPO thoughts in general?

JAY WOODS: Well, I think when you're dealing with an IPO where there's not a lot of history-- as a technician, you know, some technicians will look at this and say, I can't give you a read on this. There's not enough history. There's not enough data behind it. I think what Brian Shannon and you have used the anchored VWAP is very important, because you have to know your time frame.

And where does that blue line start? You anchored it to a place where the stock broke out of a relatively neutral pattern. Something changed on that day. So let's focus in on that day. And basically, there was a spike in volume, a spike in price, meaning new people came into the stock and they are anchored to that price.

As a result, that's a key level of interest that you want to watch. And as the stock rises, every time it came back to the average volume weighted price since that point in time, it continued to rally. So it showed general strength in the stock. Others will look at the candles and see one-day charts where you see an evening star right in the middle of that screen-- that red little candle, that doji-- where, oh no, I got to get out of the stock. And for a day, you would have been right.

So once again, depends on your time frame. With a stock in the IPO process, I believe the fundamentals-- and the C&T people may yell at me for this-- if you believe in the company, believe in the management, you buy, you put it away, you don't look at it. The stocks that I buy for my own personal account on the long term horizon, which is generally how I invest are the stocks I use every day, the stocks I know.

I've had Disney since my daughter was born for the Disney princesses. It's served her well. Coca-Cola for my oldest. My youngest got Google. He's also the Tesla. This kid gets lucky with everything he touches. But you buy what you know, you buy what you use. I bought Dunkin Donuts after its IPO because I'm addicted to its coffee.

It probably evened out when all things were said and done. But you know, that's how I look at IPOs, more on the longer term. But they are tradable. They're tradable events, but you have to be very careful due to the volatile nature of them. And that's where I think the anchored VWAP is vital. If you're going to use one indicator from the technician side of you to trade that, that would come into play.

JARED BLIKRE: Yeah, definitely words of wisdom there. Love it. And we're going to get to the results of our last poll now-- of our prior poll, and then we're going to do one more. So poll 4, who says, only price pays? Well, we've been talking about him. That's Brian Shannon. So that's the number one result-- 44%. Second biggest result, Paul Tudor Jones, 31%, then Joe Fahmy, and then only 8% of people said Ramp Capital. We're not going to try and doxx him-- we're not going to dox him today.

JAY WOODS: [INAUDIBLE] the same person. It's not true. But I'm disappointed with Ramp Capital votes. That's sad.

JARED BLIKRE: I think we could have an entire 10-minute discussion on Twitter personalities and probably go over on that. I want to get to our next poll-- poll 5 here. My producer's top source for my trading decisions is-- and we do this poll every webinar. And it gives us a handle on really what the people are looking at.

So the first response is free advisory service, second, paid advisory or subscription service. Third is Twitter message boards, then financial media. That would be Yahoo Finance, "Bloomberg," CNBC, et cetera-- and then my own research. And I want to take another audience question here before I get to a demonstration of some premium features.

Mark is asking, does the opportunity presented in Chinese growth stocks like Alibaba, Tencent, JD, Pinduoduo, Nio, Candy, Xpeng outweigh their policy risks? And I'll tackle this-- the policy risk being the US is kind of going after Chinese firms in a number of ways. President Trump has had his own agenda, but both sides of Congress-- and there's bipartisan support-- looks like we're going to have some regulations soon that Chinese companies have to have US auditors apprised of their situation. There has to be more transparency there.

And that's because there have been some spectacular blowups, like Luckin Coffee, a number of other firms. So I think that's a good thing, actually. It's going to decrease the number of frauds. But then at the same time, you look at what happened to some of these stocks-- for instance, Alibaba has come back recently, but just a little bit. So it's had a tough time, and you look at certain ETFs like EMM, which is emerging markets, baba is the number one pick in there.

And then you've got Tencent and Samsung. And we can look at Tencent too. A lot of these Chinese tech companies, they are the EM market. So I got the wrong stock up there. There we go. So I think you should judge each stock relative on its own merits. Or if you like the space, look at an ETF, look at the technicals.

I think the policy risk for at least sharing auditors, that's kind of overblown. I think President Trump was more of a policy risk to Chinese stocks, because there was another agenda there. And you can agree with it or disagree with it, but it looks like that's out the window now. So I would expect more cooperation-- just a slightly friendlier tone going forward.

But also keep in mind that there is that pressure by the US on China to have these Chinese companies at least on a fair footing. And then the risk is bilateral because the Chinese have also been reeling some of their companies in. The new listings, the secondary listings, those have been going to Hong Kong instead of US-- and there's a whole dynamic there. And, Jay, you saw a lot of this on the inside at the New York Stock Exchange-- maybe just give me your thoughts there.

JAY WOODS: Well, fundamentally, it's tough to kind of trust the numbers. And you get a little skeptical when you see a Luckin Coffee. You know, if I was to trade the foreign listings, I would do it more in a basket point of view where I buy an emerging market fund. Unless I knew something like an Alibaba, you can do some research on and know the company-- know Jack Ma and know the kind of person behind the company.

2019 China trade talk is what caused all the volatility in this market. And one day, we're in phase one, it's looking good, and then we're up, then we're down-- now that's kind of gone by the wayside. But I would rely solely, if I was trading these individual Chinese names, I would look at the technicals. And if it's in an uptrend, I'd be buying it. And otherwise, I'm not basing anything fundamentally on any of those decisions.

JARED BLIKRE: Yeah, I got to agree with you there. I mean, for me to make a decision, the chart always has to confirm it. It's always the final arbiter for me. All right, I'm going to do-- I'm going to get into Yahoo Finance Premium here-- should be able to see my screen. And this is the dashboard.

And this will show you what's in your portfolio. You can link it to your brokerage account or accounts. You can also manually put in tickers. This just happens to be a kind of random group that I put in over a year ago now. And so this is my watch list versus the S&P 500. It'll give you valuation cues based on the Peter Lynch model.

Diversification, I happen to like this-- for instance, 65% of my stocks are exposed to this one particular sector, which is communication services. Maybe I want to diversify. That in and of itself can be valuable information. And then it shows you your risk profile overall.

So I'm only moderately aggressive right now. I click on it for some more details. It'll give me the beta, my market exposure just based on what multiple to market my portfolio is. It'll give me volatility over time. That can be very useful. You can see what happened this year. And although volatility-- the volatility is still elevated for this particular portfolio, as you can see, but did rise pretty quickly in February, March, and April.

I think my favorite part of this is the investment ideas, because this gives you fundamental and technical actionable ideas. And here are just a couple of the ones that we've seen today. Here is AbbVie. This popped up-- anything that-- this is going to be a fundamental report by Argus Research. You can get all of their reports here. You can search by ticker.

But this will just give you a little synopsis in this window. They're looking for 23% upside. Usually, these are 12-month targets. And in the case of AbbVie, they're raising it. And this is based on their recent earnings results. So if you want to see what it looks like in a chart, this loads pretty easily. And there you go.

I'm going to also check out a technical. I do really appreciate the way our team has implemented some of these features here. We got to ADM before. There we go. So this will automatically identify technical patterns, and then you can actually see them.

This happens to be an ascending continuation triangle. This gives you the midterm price target. This is also automatically generated. From there, you have 13% upside until there. They're saying this is a midterm opportunity over the medium term-- six weeks to nine months. So that helps you with your time frame. And if we take a look at the chart itself, it's going to show you the pattern on the chart.

And this, I find very useful. I'm going to click out of all these other extraneous things here-- don't need anchored VWAP. But you can see we have this linear regression channel. It's nice to identify the trend. We have this nearly perfect symmetrical sideways pennant, and we're just waiting to break out.

So usually, these things favor in the direction of the original-- excuse me, they end up in the original direction here. So I would expect this to have an upside bias, but we really haven't definitively broken out yet. You might want to look for a little bit higher price on some higher volume-- kind of important for single stocks. Or you could simply buy here.

But you have some well defined risk. If I were looking for a stop, I might put it below this low. It's going to be outside of that triangle pattern. So any number of different things you can do with these recommendations-- in the end, you're responsible for your own trade. So you've got to know your own risk management, how much you can tolerate. But any kind of reward to risk ratio of 3:1 presents decent opportunities. And that's what we're looking for, Jay. I think if you can just talk about maybe now your personal journey that you kind of gone through as you return not from floor trading, but from floor trading to day trading again.

JAY WOODS: Yeah. Well, I mean, this is not something I wanted to be doing. But I do find myself with a little extra time on my hands trading a few stocks. And I look for set-ups, something where the risk the much less than the reward-- I almost reversed that. That would be ridiculous. But any set up that looks good, I look for momentum swings.

I'm trading stocks that I don't know what they do. I just know what the symbol is, which is exactly against everything I've done in my professional career, where I know the companies inside out. I know when their earnings are. I know what the analysts are saying. I know what analysts have more impact than the other analysts. But right now, for someone that's day trading, swing training, I'm looking for set-ups. I'm looking for momentum swings.

I'm getting in, I'm getting out. My biggest problem is the greatest problem to have-- I get out too soon, and I don't let my winners run. Have that problem, please. It's a great thing. But you know, professionally, I had strict rules. And those rules were actually good at times, where you had to buy something, you had to buy a certain group of stocks, you couldn't buy any stocks made markets in, and you had to hold for a 30-day period, which was good.

Because my professional job is I was a market maker trading stocks for minutes at a time, seconds at a time. Now, translate what I do for fun is I'm writing notes, lots of notes, entry points, exit points, stops. Stops are the most important thing. Because-- and people that know me know I say this all the time, so I apologize to my friends-- but four things can happen when you get into a trade, guys.

Small loss, big loss, small gain, big gain-- just have to avoid one. Avoid the big loss. Minimize your losses, move on. Try to have a short memory. And trust me, my biggest regret-- Penn Gaming. I bought that the day the low. I was a hero. I bought it at $5.25. It wasn't the low, but the day of. And I made a triple, and I was a hero on 2/3 of it. I let the other third run.

You know, I made five times. I sold it at its 200-day moving average. I thought it would pause. Stock hasn't looked back, it's a champ. And god bless them. But if you see on this chart, I did buy on the very low. Let's not--

JARED BLIKRE: It's broken out-- it's broken out as of today.

JAY WOODS: Yeah, all-time highs. It's amazing. But that was one where I threw the technicals out the window. I thought it was over done. I believe in the people there. I bought it. I thought it was ridiculous. I tripled my money. That was more than I anticipated. And now I look back and I want to throw up when I see it trading at $70.

But I knew what my goal was at the time and in the time horizon I had. Shame on me for not holding it forever. But these are things that happen all the time to the best of us. And these are great problems to have.

JARED BLIKRE: Yeah, we're lucky to be here. And to second your notion, this is not an easy business. I want to take another question from the audience here. This is from Sicily-- what are your thoughts on the correlation between precious metals and cryptocurrencies? This is a question for the ages here, because everybody's been talking about rotation from gold into Bitcoin.

I got to tell you something-- gold has perked up over the last few sessions. And you know, let me do this-- I'm going to share a different part of my screen here. Because I do have a nice gold chart here for everybody. Just give me a second. But you know, the gold market itself has historically been, I think, misunderstood.

It's useful as a hedge for certain things like inflation risk, but also armageddon risk. But gold tends to outperform when interest rates are low. And I think that's one of the biggest factors. And we start seeing interest rates creep up again on the long end with the reflation trade, I think that really scared people out of gold.

Is it done? I don't think the move for gold is done just yet. And here's my gold chart. This goes back-- this is daily candlestick chart, goes back to about May of this year. But I want to show this downtrend. And this is just one way to look at a market. When you see these lines, it looks obvious what's happening here-- how we just bounced off the bottom quarter here. But they're not that hard to put into place.

I can just delete these. Once you have a top 2 point-- so we're in a downtrend-- create a parallel line here. Put it towards the bottom now. This was a little bit too low, but you're capturing multiple points here. We've just perfectly bounced off this low. Guess what this reference here is 1,768-- well, these were prior highs that served as resistance. So gold is a very technical market.

And then you want to take a look at Bitcoin. There is Bitcoin. Now, this is anchored by VWAP from this particular line here. I'm going to watch that going forward. This line here is Paul Levine's top finder, bottom finder. In fact, what we call anchored VWAP was invented originally in the mid-90s.

This was before Brian Shannon independently invented it. And part of his Midas method-- the Midas anchored VWAP line-- is this top finder bottom finder. And this is showing that there's a lot of gas in the Bitcoin tank to go. It's only 58% done, termination price of 27,000-- that's way, way, way up here. Doesn't have to get there, and in fact, if price crashes below 17,500, I would say that this move is done, and it's going to have to consolidate for a while.

But in the meantime, if I'm looking at this, is there a bubble in Bitcoin? Not seeing it right now. It could very well continue to the upside. Jay, we've talked about cryptocurrency a few times. I know you can read the charts and anything else-- maybe you don't want to wrap your head around the fundamentals. What are your thoughts on crypto right now?

JAY WOODS: I'm strictly an equities guy, but I look at these things all the time, I'm not going to lie. You know, what I do with my own portfolio is I have a small exposure to gold and a small exposure to Bitcoin-- very small-- just to be there, just to follow it, just to have an idea what goes on. But I look at the charts.

You know, gold can be extremely boring, but it's a good hedge if things get crazy. But it's not where the excitement is for me. Bitcoin, that's exciting. And you need to buckle up, you need to really pay attention. And for traders that are obsessed with markets, you get to trade on the weekend, you get to trade all hours of the night. That's crazy too.

JARED BLIKRE: We get to sleep at all hours of the night.

JAY WOODS: Yeah, and [INAUDIBLE]? You know, I remember they were going to add an hour to our trading day the floor, and we thought that was insane. Now you guys are trading all night, all weekend long in the crypto.

JARED BLIKRE: Like those guys at the London Stock Exchange.

JAY WOODS: Yeah, but you know, it's something that I have a very small percentage-- like, 1% of my portfolio allocated to just to be in it, because you never know. But I would never be one to go pound the table one way or another to say anything about Bitcoin-- or gold, for that matter.

JARED BLIKRE: I do want to play this one clip before we go. It's Mike Novogratz, famous trader billionaire, and this is about Bitcoin and his position on it as well.

MIKE NOVOGRATZ: We're nowhere near what 2017 looked like, right? It was driven by small retail investors. It was kind of the first people's revolution in lots of ways. It was the first global [? specula ?] we ever had. This rally is being driven by institutions slowly getting into the space-- high net worth individuals, hedge funds, real institutions.

Bitcoin's become a macro asset-- a macro asset to hedge against the debasement of fiat currency, both here in the US and abroad. And so that story has really taken hold. Bitcoin's always been valued as a social construct, very similar to gold. It's valuable because we say it's valuable. And as more and more credible participants get in-- when Stan Druckenmiller says, I'm buying Bitcoin-- Stan Druckenmiller's kind of god in the macro space-- if there was a god, it'd be Stan.

And so the credibility of the space just keeps growing. And we've hit this kind of inflection point where the network effects take over. You know, because if you're probably a Yahoo Finance watcher, younger generation, Bitcoin is social money.

JARED BLIKRE: Social money. And I love it when guests say Ya-HOO Finance, it just sounds a little bit more sophisticated. But on that note, I guess I'm going to circle back to Sicily's question here. I think gold has more potential. I don't think the run in gold is done. Typically, that happens when you get ads for coins and gold dealers on your Facebook and Instagram pages. But Bitcoin is probably the near future, and I think it has a long way to go.

So I'm going to wrap there. Really, really appreciate Jay Woods-- you for stopping by here. I wish you the best in all your endeavors. And I'm sure we're going to be talking again soon. And who knows, maybe there will be a time when you can talk again soon. But I'm always going to remember the days when we were standing by Cam 9 and just kind of shooting the breeze talking markets. It was a great time.

And I want to thank all the audience members here. Thank you for participating. Real quick on that last poll, I'm going to give the results. OK, so the number one answer of the top source of my trading decisions is, my own research-- 61 votes. That is the right answer. Thank you, everybody. And we'll see you next time.

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