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Webinar: How to invest in meme stocks while managing trading risk

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The revolution in retail trading that has catapulted companies like GameStop and AMC to prominence is opening the door to a new class of investors. Michele "Mish" Schneider, Marketgauge.com partner and director of trading research & education, joins Yahoo Finance's Jared Blikre to break down some of the basics as well as advanced charting methods for new and veteran investors alike. They'll focus on identifying target markets and stocks, including cryptocurrencies and momentum names, as well as how to manage risk both before and after the trade. Jared will also demonstrate how to leverage the power of Yahoo Finance Plus for market technicals, fundamentals and portfolio management.

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Video Transcript

JARED BLIKRE: Thank you all for joining our 13th Yahoo Finance Plus webinar. Heading into our second year now, this one's called "How to Invest in Stocks while Managing Trading Risk." Welcome, one and all. I'm Jared Blikre. And we're going to be joined shortly by Michele Snyder. She's a marketgauge.com partner and Director of Trading Research and Education there. Now, we're going to break down, not only meme stocks, but also some crypto. And this is a great day because we've got some things moving here.

And we're also going to show you how to get the most out of Yahoo Finance Plus, how you can use it to filter for investment opportunities, especially meme stocks, by the way, and also use it to analyze your portfolio. If you've been to one of our webinars before, you know the spiel. We're using the Verizon-owned Blue Jeans software. And here's what's going to happen. Over the next 45 minutes, we're going to be running polls. We'd like to keep this interactive. And you can access those on the right-hand side of your screen. There's a little tab there. And you can also ask questions using your name or anonymously.

And this is important. On the lower-left side-- so that's going to be down there-- there are little sliders and buttons. In that, you can use those to adjust the presentation window. You can make me bigger or smaller, Mich, as well. And you probably want to maximize the presentation screen because we're going to be doing a lot of slides here and also charting a lot of tickers. So everyone who registered here is going to get a copy of the full webinar by email after the event. And I will be tweeting it tomorrow. It's going to be on our website as well. And if you're not a Yahoo Finance Plus subscriber, maybe we can put this on the screen here.

You can check it out free for 14 days. Just scan that QR code with your phone. We're going to post this a little bit later as well. And also, one final housekeeping note. Nothing we say during the course of this webinar should be construed as investment advice. Past performance not necessarily indicative of future results. And let's start off with a poll now. Poll number one, what is a meme stock? Is it low per-share price, a market cap under $10 billion short, short float over 15%, consumer facing or familiar name, or all of the above?

All right, well, I want to bring in Mich right now. And Mich, what do you what do you make of what's happened this year? I find it simply incredible and also encouraging at the same time. I know there are a lot of new traders in this room just looking for some information. Break it down for us. What are you seeing?

MICHELE SHNEIDER: Well, I definitely agree with your assessment. I think it's exciting. It certainly is unprecedented. It, a, bit reminds me of when I got started. Because when I got started back in the day when dinosaurs were on the Earth-- so it feels like at this point-- young traders were flocking into commodities at that point. They were buying gold and silver. And people who knew absolutely nothing about what they were doing, they were just going in, basically, at that point, that version of a social revolution.

Now, here we are all these years later. And of course, the social revolution happens much quicker because of social media. And so I think that the social media aspect of it, the fact that people are able to communicate so rapidly through the Reddit platform, being one, about stocks that are hot has been fantastic. That's what you want. Whether you're trading commodities or stocks, you want liquidity, you want volume. And that's what happened in the past year. The other thing, of course, was that people were home because of the pandemic. So we also saw people who had not much else to do turning to trading, which was great.

And the third thing is that zero commissions happened. That's where Robinhood really revolutionized the space. Of course, they have a lot of competition. And they have their own issues, which we may or may not get to at this point. They're going IPO soon. But the point is that they actually started the whole idea, not only of zero commission, but also fractional ownership. And all of this made the super-attractive, along with a lot of stimulus money with that free time. And so here we are. So now that we're basically a year later, a year-plus later since we had the moon, it's going to be interesting to see how many of these young, particularly young, retail investors the market continues to hold onto.

Because as we know, the market will humble you faster than anything. And I think that's what happened here with a lot of these meme stocks right now.

JARED BLIKRE: I couldn't agree more. And that's my biggest concern. And that's why I love doing these webinars because, especially incorporating the phrase risk management in the title because that's the most important one right there. And once you can get that down, then you can manage your risk, you can build your portfolio. But I think a lot of people got excited, initially, last December and January, just buying calls willy-nilly. Robin Hood just paid a $70 million fine because they shouldn't have been letting people open up those options accounts a lot of time. And a lot of people got burned.

A lot of people made some money. They considered it house money because the government gave it, and gave it all back. So I want this to be educational because trading is great and I hope we retain as many people as possible. But I want to get to our first the results of our first poll right now. And then we'll get to the second one. We'll take some questions. And we'll chart some tickers here. So what does is a meme stock? Low per share price-- only 4% said that was their answer, market cap under $10 billion--0%-- short float over 15%-- that's 34% of you, about one third said that, and then having a consumer facing or familiar name like GameStop or AMC-- 15% of you said that. All of the above, which is kind of the correct answer, even though there's no standard definition, that was about 50%.

So if the producers can put my full screen one up. And indeed, it's not it's not a steadfast stick-to-it definition here. But let me just let me ask you here, Mich, what do you see as a meme stock? And maybe break down some of these metrics and why they would be important here.

MICHELE SHNEIDER: Well the low pressure, low per share price actually really was part of the attraction because when people were buying GameStop and AMC, they were trading at, basically, almost at 0. I think GameStop, at one point, was at $2. And so that's definitely a factor. The short float was the attraction that got a lot of people involved because they knew they could squeeze those shorts very easily, which is why, last year, we had this situation where retail investors were actually doing better than hedge funds. It also has brought up this whole idea of having excessive shorts in the market.

As far as market cap, yes, because they're heavily shorted, their market cap generally is smaller. I don't know if it's under $10 billion, that I would have to research more. So I would say in that answer, it's kind of a combination of all of the above, along with what's familiar, which is really important because it kind of calls in a way that we like to trade anyway, which is buy what you know or a sort of this consumer instinct idea. And I think all of that together, combined, was what made the whole meme stock explode, that, of course, with social media.

JARED BLIKRE: Yeah, well let's get to a couple audience questions. A lot of people are just asking, not only what is a meme stock-- hopefully, we shed some light on that-- but also, how do you screen for them? How do you select them? How do you find them? Do you go on Reddit? Who do you believe? And that's kind of the tricky part here because there is a lot of false information out there. There's so much money riding on the line here that hedge funds are involved. And they are they have infiltrated a lot of the chat rooms. And there's a lot of kind of spy versus spy stuff going on here.

But the good news, Mich, is that we have technicals. And we can chart these things. And we can see the patterns as they evolve. And let's start with one of the kahunas here. I'm going to bring up a chart of AMC. And let's see if I can get this up, there we go, almost there. And this is going to be daily candlesticks. I hope everybody can see that here. And we've got some moving averages. And because this is an educational seminar, let's just start with the basics. What do you see when you look at this chart, in terms of the candlesticks and the moving averages here?

MICHELE SHNEIDER: Well, before I answer that, Jared, I just want to make one other point about these meme stocks. Is what's interesting is AMC was on the verge of bankruptcy. It was a classic example. But because the stock price went up and they were able to raise so much money, they actually, the company, itself, actually used that money to help them get out of the red, essentially. And so that's been a really good sort of consequence-- and I don't mean consequence in a negative way-- a positive consequence to this whole movement. So I just wanted to add that.

So now we go back to the chart. Essentially, Jared and I were talking a little bit before this began. And I like to keep it simple. You're going to look at charts throughout your career, whether you're an experienced person in trading or you're just coming into trading in the last year or so. And you're going to see tremendous amounts of indicators. And so that's what we call analysis paralysis. Just to give you one-second background on me, I actually started on the commodities exchange long before we had computer trading. And so really, essentially, I had to learn about pure price movement.

So when I look at a chart, I like to keep it very, very clean. I like to look at a few things, pure price, which, of course, is what we're seeing historically. These candlesticks, basically, it's a Japanese form of charting. And essentially, what you get is a wick-- which, the top of the wick, obviously, would be the high of the day, the bottom, the low of the day-- and then you get the body of the candle, which simply means the body represents where it opened for the day and where it closed for the day, but not necessarily the entire range.

So I like that. I like to see the opening and closing prices. Of course, I also want to see the high-low. But that's why you're going to see these Japanese candlesticks. And the other thing, of course, is green means it was an up-day. Red means it was a down-day. So that's candlestick charting, really, one-on-one in 30 seconds. The other thing I like to do is I like to look at chart patterns. And we can talk about chart patterns. But some of the ones that are probably good to get familiar with are like consolidation. So that's what a price has moved in a range for over a period of time, say, one week to three months.

That's something to look at because it's significant when that consolidation breaks down or breaks out. Also, trend line, which Jared is drawing in for you right now. Trend lines are really important. And in order for a trend line to be valid-- and I hope some of you are taking notes on this because I tend to speak quickly-- but a trend line has to be valid, it has to connect two or more points. So the one that Jared just drew for you connects the very high on that top tick of AMC, the next time it went to a high, and then the next time it went to a high after that. That makes it a valid trend line, OK?

Then he also drew on coming in from the bottom, same thing. You have to connect three points that have lows that will connect neatly there with a line. And then if you look at what he also did here, another big chart pattern right there is a wedge. So basically what you have is where the two moving averages cross, anything beyond that, forget about. So everything from before that, that's a wedge. And wedge patterns are also really important because when something breaks down from a wedge, as you can see happen here, you get the follow through to the down side.

There's also flags and things like that. You'll hear people talk cup and handles. I like these. Again, just stick to a few basic. I love trend lines. I love wedges. I love consolidation patterns. And I do like flags. Now, in terms of the rest of the technical analysis, I like to look at three-- on a daily chart-- three basic moving averages. I also look at weekly charts, monthly charts, half an hour charts, and one-minute charts. But we both agree, Jared and I, that for today's purposes, we're going to keep it as simple as possible. And you need not really to look at all this stuff because you get everything you need to know right here on the daily.

So a 50-day moving average-- which I believe you drew in purple, or no, blue. The blue line is the 50-day moving average. So a 50-day moving average is a lagging indicator, by the way. What happens with moving averages is that the next day, the day before drops off. And that is what creates your line there of 50 days. So it's an average over the last 50 days that lags from each day before. So that's sort of the technical explanation. But it also tracks, obviously, about a month and a half worth of price action. And institutions will look at a 50-day moving average.

I like to look at the 50 day moving average because, very often, when it clears, it tells you that there's going to be a trend change or what I like to call phases. And when it breaks, it also could tell you that perhaps that move is over. And I'm going to get back to the moving averages in a moment. Well below that is the 200-day moving average. And this is a very big one. The 50-day moving average, obviously, is faster than 200. And I always like to think of it in terms of a conductor pulling cars on a train. 50 cars, obviously, a conductor can get up to speed faster if he's going uphill and can break faster. Pulling 200 cars, not so fast to gain momentum or gain speed, and the same thing on terms of braking.

So if you think of that as a metaphor, you're going to see price action around a 50-day moving average a little bit more active than, say, a 200-day moving average, which is why the ultimate trend really happens at a 200-day moving average. And this is a huge indicator for institutional investors and, in fact, people like Paul Tudor Jones, a very famous guy from the floor who's is a billionaire investor, will look at that 200-day moving average way more than a 50. And then finally, the one on top, that's a 10-day moving average, the one that we did in green, I believe.

And that one is much faster. I don't use that necessarily for deciding trends. But in the near term, I like to look at it if an instrument is clearing the 10 or if I'm looking to take a profit or get stopped out of something on a trailing stop, I like to look at it if it's breaking down. So that's the basics. Finally, on the bottom, you've got volume. And volume is also important. Obviously, when something is going up, you want to see volume supporting that. And if something is starting to sell off like this is-- notice how the volume patterns have started to decrease on this way down. And actually, as we're talking today, you're getting a little bit more of a spike in volume compared to the last three days because we're getting some more massive liquidation happening here.

Volume is important for two reasons, one is when you're on the right side. But also, it can indicate blowouts. It can indicate a blow off rally when something has gone up, as this did, accelerated so fast and price. The volume is spiking and it's like last man in. That's why they call it a blow off rally. And in the opposite form, if something starts to sell off and accelerates in volume, then, basically, you know that almost every long is out of the market, or at least the weak longs are out of the market. And now maybe after you get that blow up volume to the bottom, you can start looking for some level of support to re-enter. So that's the general thing of what we see here with AMC.

Yeah, and I know that's a lot of information, but you did a beautiful job there. And it is pretty simple, just putting some basic tools together. I want to get to some audience questions here. This is one, how much do you think retail investors actually have to do with volume traded in meme stocks? Retail traders are a big part of the market now. And I'm going to share something, this is going to be the individual investor share of the retail market has simply exploded over the prior year. I just found this earlier today. So this is a "Wall Street Journal" article. But you have this graph.

This is all the way in 2011. And what, I think were at what, 10.7% back then? Then we got up to 15% by 2015. Last year is 20%. This year, it's 24%. And Mich, retail traders, the army is really changing the nature of the markets, especially when you consider options. And we're not going to get into all the weeds here. But people have been buying call options on the big mega cap stocks and. That is what's been fueling a lot of their surge. And I see on Twitter a lot, people saying, my portfolio down today and the market's at a record high, what's going on? I just threw a lot out there, Mich. So maybe you can get your thoughts on whatever you'd like to address there.

Well, yes, again, we sort of started with this, I say bravo to the retail investors coming into the market. I think that's great. Essentially, that's what I am, except with a lot of experience behind me. So I say, bravo. However, again, if I can go back to the days on the floor when gold and silver was going up and we used to say when the taxi driver finally tells you that gold is a buy, it's probably the top. What I'm hoping now this time is that we see these Reddit army, or these young retail investors, or even the older retail investors learn something before they blow out. So this is a great spike in terms of interest, number one.

But number two is it concerns me because it's going to tell me that, just based on percentages, there's going to be a huge percentage of people who may have gotten lucky and push it without getting any education, thinking, oh, this is easy. And then, of course, they wind up being carried off. In those days, we'd say carry off the floor. Now it would be like having to shut down their electronic trading.

So, yeah, that's really important. The other thing with the retail investors moving the market, though, is what I said before is a positive, is that they've added liquidity. And they've added some money to some of these fledgling stocks that were getting killed by the hedge funds, which were basically ruining businesses, destroying businesses. And there's some history behind that.

So yeah, get a clue. Get a little bit of chart knowledge. People used to say that technicals was like astrology. But even the most hardcore fundamental traders are starting to realize that if you have technical analysis behind you, then you actually have a leg up in terms of advantage of seeing support areas, of seeing things like moves above and beyond moving averages, like seeing volume spikes, that kind of thing.

JARED BLIKRE: Yeah, that's so important. Because even if you're a fundamental value investor-- and that's essentially how the meme stock traded, the movement got started here-- even if you're a value investor looking at fundamentals, technicals can help you time the market because fundamentals they matter six months out, maybe three months out, a year out. But on a day-to-day basis, it's all technicals. All right, we have a clip here. And let's see what we have. Well, let's just roll this clip that we have. I think my producers have set it up. And then we'll just have a brief chat about it afterwards.

- We were chatting with the CEO of one of your competitors, another free trading platform, Webull Anthony Dernier joined us to explain some of the volatility issues, and he did it pretty well. But it sounds like there is one key, specific difference between them when they were able to restore trading before you guys and what happened with Robinhood hood. So I just want to play what he told us and then get a question to you on the other side. Take a listen.

- In reality, what's going on is that the there is a two-day settlement between if you buy the stock today, those brokerage firms that you bought that stock on have to fund that trade with the Clearing Central House, called DTC, for two whole days. And because of the volatility of these stocks, DTC has made the cost, of the collateral, for the two-day holding period extremely expensive. And we just can't afford-- well, not we, we're not a clearing firm-- but our clearing firm simply cannot afford the cost.

- So they use an outside clearinghouse called Apex. And as I understand it, Robin Hood moved to cut ties with APEX a couple of years ago, instead opting to build you guys' own internal technology, your own clearing house, just like we've seen from TD Ameritrade and Charles Schwab in the past. TD Ameritrade and Charles Schwab didn't cut off customers from buying stocks like GameStop or AMC. And I get that we're in a period of added volatility. But wouldn't you have seen that volatility coming before all this? Since we were talking about GameStop on Monday, we had you on a Wednesday.

And then also, if you made that decision to internalize the clearinghouse operations to increase profits or add to revenue here, I assume your customers would have a right, then, to be angry if you did that and didn't stopgap enough protections against this volatility. So what happened there?

- Look, I think Anthony gave a great technical explanation of some of the details behind settlement and the DTCC. I think, putting this in perspective, Robin Hood, today, has already started allowing limited buys of these equities that yesterday, went to position-closed-only. They went to position-closed-only, which means customers that held them weren't restricted from selling them. And we have thousands of other securities that are available on the platform.

And brokerages and other financial institutions do this all the time. They've been doing this throughout the week. And it's just part of day-to-day normal operations. Now, sure, Robinhood gets a lot of attention for it. But this is just a standard part of practices in the brokerage industry and the broader financial industry.

JARED BLIKRE: Yeah, lots to unpack there. And we're not going to get into the weeds with a big technical discussion. But my big takeaway is Robinhood has counter parties. And when they ask for more money, Robinhood has to act. And maybe they have to shut off some of their trading. Hopefully, they don't shut off access to their entire platform or have an outage like that again. I want to get to another audience question. What is the biggest trading risk? I'm going to field this one first and then I'll hand it over to you, Mich.

The biggest trading risk is you, it's me. So I'm my biggest trading risk. Just, we're humans. And I found trading to be the least intuitive thing I've ever done because you're fearful when you should be greedy and you're greedy, probably, when you should be fearful. And it's just you got to rewire yourself. And you have to get some good habits. I say it's very important to have a written trading plan where you have outlined your risk tolerance, how you're going to enter trade, what you're thinking about the exit strategy should be. So what's your answer to this question here, Mich? What's the biggest trading risk?

MICHELE SHNEIDER: Well, I think you're right in terms of us as human beings. We have been actually more built from our DNA to fail than to succeed. And this goes way, way back to the beginning of man. We spent our entire time for thousands and thousands of years just trying to survive. And I don't think we've changed all that much. I mean, we've evolved, but by how much? So in essence, if we take that into the trading realm, what happens with people is that they're making money, for the most part. They almost can't believe their good fortune so they get out too soon.

And when they're losing money, they get very hopeful and in denial. And they don't mind the pain because they figure the pain is going to stop, eventually. And of course, they wind up losing way too much. So I would say, in terms of the psychology, you're right. It's so counter-intuitive to who we are as human beings. But the other thing, of course, is really if we just take it down to trading, itself, is not understanding your risk versus your reward, and also not understanding position sizing, which not that many people talk about. But it's extremely important to understand how many shares you should buy.

If you're buying something like Tesla, then, obviously, a stock that's trading between $600 and $700, based on how much you can afford to risk on that, you're going to probably buy a lot fewer shares than if you're trading something like AMC, which is, right now, down at $35 or $36. That, obviously, at a fraction of what Tesla is, means you can buy a lot more shares, maybe 20 times more shares. But you have to understand that. So what happens is people will buy too few shares of something like AMC. They don't even understand their risk. But let's say they get lucky, they make a little bit of money.

And then they buy too many shares of Tesla and it goes against them. And now, they've lost a lot. So those are the basic things, is understand your own psychology. We used to say on the floor that the market is your best psychologist. If you're having a rough day, you're feeling a little self-destructive for whatever it is, guilt about something, you broke up with a partner, your mom just passed away, or whatever it is, probably not a good psychological state to be in. And number two is, really, if you have just some modicum of a strategy, understanding risk, knowing you want to at least make double of that risk, and understanding how many shares to buy depending on the size of the stock, that will help go a long way to combat a lot of that psychological baggage that we all carry.

JARED BLIKRE: Yeah, there's a lot that can be done with that. And I agree, position sizing is a huge one. A lot of people allocate more than, let's say 2%, to a particular trade in your portfolio. There are different numbers there, but we know that some people have get into these huge, out-sized positions. I want to get to our next poll. When is the best time to think about risk management? You can get that on the right side of your screen. And the answers are before the trade is entered, when a trade is in the money, or when the trade is tanking or when the market is tanking. We're going to post the results to that in a little bit.

What I want to do now is talk-- I want to go over our Yahoo Finance Plus package. And for that, I'm going to share my screen here and show you some of our tools, and actually, a really great addition that I've been finding perfect for kind of breaking down meme stocks and finding where some of the action might be coming from. This is the dashboard page. And every time we do one of these webinars, I go over all the features in here. And I'm going to skip some of that this go around because I want to get right to community insights. And let's see if I can pull this down. There we go.

I got to click back, and there we go. This will show you trending tickers. Now, this is based on proprietary Yahoo Finance data. We do have a free version on our website that's updated about once every hour or so. But this really gives you a longer term perspective. So this is saying, for instance, Bank of America-- that's BAC ticker-- user visits are up 31% over the last seven days. Well, they've just released earnings this morning, so that's an earnings story. Moderna, user visits up 10% over the last seven days. They just passed a $100 billion in market cap. They got some news going on as well. BlackRock, American Airlines, I think these are mainly earnings stories because, well, we just entered earnings season.

But now we have other metrics. You can go by sector. You can see the communications services sector hot. That's where you get Facebook, and Alphabet, financial services. That's where you're going to find Bank of America, JP Morgan, et cetera, et cetera. So you have a lot of information here that you can use to see what other people on our site are viewing. And we are the largest business and trading platform site on the web. So most visited companies here, guess what, we got Coinbase. I'm starting to like Coinbase even though they're having not the best day. They're down 5% here.

This will give you average analyst rating. So there's a degree of fundamental information here. And you got a little squiggly line-- spark line, that's what it's called-- of the visit. So we can see it was spiking, probably not today, but it was spiking a little bit ago. And then you have New Egg Commerce, that has been a definite name stock. And a lot of times, a lot of days, our trending ticker page is just lit up with all meme names. And so I could go down the list. But I just want to show some of the other things we have in our arsenal. We have a community conversation. We've tracked changes in conversation so you can see what the buzz is about.

We have ticker pages for just about everything on Earth. And this kind of tracks the bullishness or bearishness of the conversation. Also, we allow people or give the ability of people to upload their portfolio, really easy to link your brokerage account. We don't store the information. And you can see what people are adding to their portfolio and deleting and moving around on a day-to-day basis. And so that can be very powerful information as well. So I'm going to get to the results of our last poll here. And let's see.

All right, what is the best time to think about risk management while people have been paying attention? I'm so happy. Before the trade is entered is the number one result, with 84% of the respondents. When a trade is in the money, 10% said that's their answer. When the market is tanking, 6%. So at least somebody is being honest here. But the best time to think about risk management, as we've been talking about, is before the trade is entered. And now I want to get to our next poll. I skipped the last one by accident. Poll four, when do value stocks tend to perform best? Is it when the yield curve is expanding, when the yield curve is flattening, and when the Fed starts tightening.

This one's tricky. And it's not necessarily intuitive. But I'm going to get into that in a little bit. What I want to do now is start some Bitcoin because we said, I said, that we're going to tackle cryptocurrency as well. And as soon as we're done with that poll, I'm going to share my screen and show a Bitcoin chart here. And Mich, you're going to tell me what you see. Let me do this, almost there, guys, and this should be. All right, so this is a candlestick chart. This goes back to August of last year. We all know the story of Bitcoin, we should. It's definitely made enough news.

This was the breakout to new highs that eventually failed. And you can see this is a 50-day moving average that really captured the price action on the way up and on the way down, so far. And if you look at this line here, it's at $35,000. That happens to be a level that I've been looking at as pretty important because that's where we saw price react to before. So $35,000, we had a surge above that. I'm starting to get a little bit more bullish. What about you, Mich?

MICHELE SHNEIDER: I'm so happy you pointed out the 50-day moving average because there's a classic example of how it kept you in the uptrend because it never broke on the way up, if we go back right to where Jared's showing the cursor, and how when it finally broke down there, after that apex, it really gave you an opportunity to get out. And really, it had no reason to get back in if you just want to follow the overall trend. Now, Bitcoin is so interesting because the other thing, people are-- it's a very emotional, obviously, trade, in that you have people who love it and think that Bitcoin is going to go to $200,000 by the end of the summer. And then you have people who think that this thing is going to crash and head back down to about $10,000 or $15,000.

Again, if we go back to basic chart patterns, people will tell you that might be a head and shoulders top. But a head and shoulders top simply means that the neckline line has to break. So if you go back to the information in the beginning of 2021, that's kind of the start of the left shoulder. And then you have that whole head that happened as we were reaching the highs. And then now you can see that we're forming sort of extended right shoulder. So really, essentially, what that tells you is what you're already hearing people say. If this breaks $30,000 next time, that could actually spell some problem for Bitcoin, in general.

And it doesn't matter what the fundamentals are, I would be extremely cautious. On the flip side, though, if it clears not only the 50-day, as Jared just mentioned, but also gets to that top blip, which is we're around $40,000, $41,000 of both the right and the left shoulder, now you're in a situation with that head and shoulders top is negated. That pattern is no good anymore. So essentially, what I would read from this chart is, yes, I probably would get a little bit long over $35,000, have my risk under $30,000, and then I probably pile in more if it gets through $40,000, $41,000. And that's why those numbers are so important right here. Right here, I'd be kind of flat.

JARED BLIKRE: I hear you. And I have some fundamental reasons to start liking Bitcoin again, which I'll share in a second. But I just want to point out that the reason I love candles, or one of the reasons I love candlestick charts so much, is because when you apply these rectangular boxes, or it could be a line, you can really see how price reacts off of the same levels a number of times and when it breaks down. I'm going to move this down to our breakdown level. You can see we got a punch below $30,000 and then broke right back up.

And in fact, I was on one of our live shows with you when you said this is a bullish pattern because you've got a flush out of weak longs-- people who would have had short stops-- but then you found immediate interest. And we've just gone sideways for now. But the reason I've become a little bit more bullish on the Bitcoin fundamentals is because of the hash rate. I don't want to get into the weeds here on this either, but think of it as the total network capacity for processing Bitcoin. Now, in May of last year, something bullish happened. And that's when the halving-ning, or the halving occurred. And that's when Bitcoin miners get paid only half as much for mining new coins as they were before.

This flushes out weak players, weak miners, similar to how we see traders get flushed out of the chart. And then something interesting happened along the way, too, which is China really started cracking down on cryptocurrency. And we saw a lot of the weak miners there have to get out of the business. Some of them were able to transfer overseas and some of them didn't. But what's happened now is we have inflected. And this is very important. So if all the weak miners are gone, that means that there aren't as many bitcoins being mined, which is bullish. And that could fuel the next leg.

So just going back to our chart here, once I see the technical confirmation, if we can surge above $35,000-- I love these levels here that you were mentioning, Mich-- then I think we can go a bit higher. So this was in response to a question by David that I just kind of skipped over here. But where do you think cryptocurrencies are going from here? Will governments start their own cryptocurrency, like Venezuela? Just to answer that question real quickly, I think the governments around the world, including China, which has already done this, they're interested in digital currencies, not cryptocurrency, per se.

I don't think they're going to crowd out the other cryptocurrencies or the cryptocurrency, like Bitcoin. It's not going away. But you did see them start to get nervous, kind of, when Bitcoin was punching through $63,000, not a lot of positive comments from Janet Yellen, or Jay Powell, or various members of the Federal government. All right, so I want to get to another picture here. Oh , this is a big day in oil. I recognize that we're doing meme stocks and crypto. And we'll do some more of those. But Mich, you're looking at USO, or crude oil. Just tell me what you want me to punch up here.

MICHELE SHNEIDER: Well, with oil, we do have-- I mean, obviously, I still always believe that the technicals precede the fundamentals, generally. And what's interesting about oil is it look like it was going to explode as it got back over $75 a barrel, as OPEC was somewhat disorganized about whether or not they were going to increase production or decrease production. And then a little story I saw on Twitter came out today, which basically said that OPEC may be getting their act together. And I think that was enough of a. Reaction there's also, obviously, a huge connection with supply-demand and what's happening with the COVID variant.

And even though the United States is still doing better than a lot of the rest of the world, we have doubled the new cases recently-- for many reasons, obviously-- being unvaccinated is probably the primary one. And we're still seeing demand coming out of China somewhat sluggish because they're still coming back from this variant. So oil is another one. I traded oil in the Nynex exchange for many, many years. And so oil is one of those things right now that looks like it's the perfect reflection on whether or, not only-- forget about OPEC for a second-- but whether or not this global demand is going to stay robust.

And right now, the United States, after the reopening, people are looking at, what happens from here? Where's growth coming from? And that would include oil demand. Number one and number two is, on the flip side, is we haven't even gotten to full capacity in terms of global demand. So that's sort of my fundamental explanation here in terms of oil, itself, right now. Just like Jared showed you very quickly the reversal bottom we had in Bitcoin, we have a little bit of a reversal top here that happened in oil. If we look at the spike high from a few days ago-- Jared, if you want to put your cursor there.

JARED BLIKRE: There we go, almost there.

MICHELE SHNEIDER: Oh, you just went by it again. So you have that big wick that made that new high and then the body of the wick within, yeah. Then the next day, it closed lower than the low of the day before. That could be a potential topping pattern. So what does that mean? Well, we didn't see a lot of follow through when we looked at it on the Bitcoin chart. It had an initial pop and now it's been going sideways. So it could mean that we get about a 10% correction, which means if we're looking at USO at around $51 or $51.40, where it peaked-- maybe we'll see a $5 correction, down to $45, which would put us closer to the $50.

But it also could mean that, basically, we've peaked for now and we're going to go sideways, just like we're going to see in Bitcoin, until some other event gives us a reason to say oil's over, like production increases, or oil is just beginning because the demand starts to increase and the supply stays limited. The only way this gets negated is if we take out that high of that day, which I believe was $51.40, in terms of the USO chart. So that's something to be keenly aware of. So my feeling for oil right now is, again-- and I hate to say stand aside-- but right now, this is probably a good time to see how it reconciles.

Are we going to break down and head down to $45? Or can we get back up and go on to new highs and see more like $100 a barrel down the road, which is highly possible?

JARED BLIKRE: Yeah, well, before we go-- we've only got a couple of minutes-- we've got to do one more meme stock here. We're going to do the OG one, GameStop. And maybe you can just break down the technicals over a couple of minutes. Here's that huge spike high that we had around the original GameStop phenomenon, and then some other spike highs. And the price, the share price, has remained remarkably, at least in my opinion, elevated here. But what are you seeing the technicals?

MICHELE SHNEIDER: Well, you know let's go back a little bit on the GameStop because people think this isn't technical. It's so highly technical. If we go back to January of 2021-- and I'm actually going to put my glasses on here so I can make sure I see well-- if we go back to there, if you look at the moving averages, they were all sort of converging. Remember, we talked about the 200-day moving average. We talked about the 50-day moving average, and we talked about the 10. And right there, we were starting to see the price action-- and it's a little bit hard to see because you've got the volume bars kind of interfering there-- that's better Jared. Where are we? we're going to go to 2021.

JARED BLIKRE: So this right here is September. And we're going into very early 2021 right here.

MICHELE SHNEIDER: Right. In early 2021, it looked like it was going to hold the $200. And it started to clear the $50. And once it cleared the $50, for those who were paying attention, also look at the volume patterns. That showed that we had a sea change. We had a trend change or a phase change in this particular stock. And of course, the fundamentals hadn't really come out yet about, A, we didn't know, necessarily-- and what I say we, us, older generation, who hadn't really started following these stocks yet, didn't know that it had become a meme stock.

But also, just in terms of, I was seeing out-of-business signs on GameStops here in where we live. And yet at the same time, they were, at that point, starting to talk about going to more online gaming. So even if you were living under a rock and you just happened to look for things that were clearing their 50-day moving average, that was your first indication to go long. And it never really broke-- it broke down under the $50 a couple of times up and down. But it never broke that $200 again. So now let's go to more modern times right here, right where we are at right now.

And if we look into where we're at right now, again, we're under the 50. We're under the 10. But we're still well above the 200. Now, this is pretty much broken down. But we're heading into some support here. And if you look at the slope, by the way, on the 50-day moving average, notice the slope is declining. That tells us also that this caution phase or this warning phase is accelerating. So you want to see one or two things happen. You want to either see this thing get back over, say, $205, $206. Or it's possible we're going to get down closer to $150. And then if we break down under there, I'd be looking to see what happens closer to the $200.

But clearly, you can see whatever attention this had in terms of volume, if you look at your volume indicators, it's just kind of gone off to the flat line here. So it's certainly not the darling right now of the meme stock traders. And for that alone, I'd be looking for volume and one of those price patterns to emerge.

JARED BLIKRE: Well, Mich, we're going to end this with the results of our final poll. Let's if I can find this here. When do value stocks tend to perform best? 52% said when the yield curve is expanding. They have been paying attention to Yahoo Finance. That is the correct answer. When the yield curve is flattening, one third said that was the right response. And then when the Fed starts tightening, only 16%. But yeah, when the yield curve is expanding, that's when you tend to see those value trades, when the economy is reflating, really take off.

All right, we're going to have to say goodbye here. This has been incredibly educational and fun. Educational for me, too, I always learn something out of these. So I want to thank everybody in the audience. And maybe we can put that full screen on for the free trial of Yahoo Finance Plus. Get your phones out, feel free to scan that. And there you go. We're going to be doing this again in four weeks. We do it in the middle of every month. The next one is Wednesday, August 11, 2021. Watch your email box because we're going to surprise you, I bet. The next one is going to be a blockbuster too.

There's going to be a replay of this webinar on finance.yahoo.com or you can just go to yahoofinance.com it's also going to be emailed to all attendees. Finally, good trading, everyone. Goodbye and thank you.