The Next Hot Streak Begins In 3...2...1.... transcript

all right everyone so in today's episode I'm going to talk about when the market is going to heat back up because this is a question that I see a lot of you asking me here today and I generally see it anytime we go through this hot and cold cycle when it's hot everyone's excited we're all enthusiastic we're getting big Winners and then when it's cold people panic when is it going to heat back up how long do we have to sustain this cold stretch now there's a a quote from a movie uh I think it was 1999 film with Johnny Depp uh it it was quite a long time ago and the name of the movie was uh blow and there's a scene with Johnny Depp uh and his father who is played by Ray Leota and Ray Leota owns a plumbing company uh they they in wayth Massachusetts and uh so he's working at this Plum or he's running this plumbing company but eventually the pluming company uh files for bankruptcy and they're in the bank together and uh you know they're doing the bankruptcy filing stuff whatever and when they finish um you know Johnny uh John Depp's father Rota says you want to go get ice cream and he says I don't want ice cream dad you know what are we going to do aren't we poor and he says um what's the name of that car George he says Georgie this is the way it goes when when you're up you never feel like you're going to be down again and when you're down you never feel like you're going to be up you know and and and there's something about that line um that really stuck with me maybe it was just the way they portrayed that character maybe was Ray Leota life goes on and just his ability to roll with that big punch and I think about that with trading a lot because you know when trading is hot you feel like it's never going to get cold and then when it's cold you think it's never going to heat up again and I've said that before um you know because that that is how it feels now I'm also going to just preface um maybe I should have said it sooner for those of you guys watching this recap on YouTube you may be like wow this guy's trading from a uh a boat house or something uh this is my traveling trading station right now I'm trading on an island off the coast of New England and um I've set up you know my laptop and my two USB mon here I've got my emergency light here just in case now hopefully of course I don't lose um power but just in case I do I've got my emergency light with my little beacon on the bottom so I am fully uh prepared here to be offline uh I've got a kayak over to shore um later today to get some milk and bread but anyways um I so I'm I'm on my traveling trading station here enjoying uh a week uh here during the the month of August with my boys my two boys and uh you know little family trip here uh but I do of course prior you know work is important to me and I try to show them um and lead by example that it's important to see their father is working and I work every day regardless of where I am so this is my environment for right now and I'm I'm enjoying it uh but as it turns out this week has been quite slow you know the last month of July was phenomenal it was the best month I'd had in two and a half years of trading and then all of a sudden um it kind of died off and so I've been noticing people saying Ross when's it going to pick back up so here's generally the way I view and perceive these Cycles uh we have hot and cold Cycles in the market we also have some degree of seasonality in the market and by the way you can see my p&l for today $481 17 barely enough to buy groceries today well certainly not if I get mixed nuts um but as long as I keep it moderate I should be able um to get some groceries so it's it is a slow day today and I think what's going on uh and what I typically see is that when we have a period of big momentum when we have something like what we had last month usually that cycle if you're trying to figure out like where did that even come from I think that's important so how did that cycle begin well let's go back and look at last month so um I'll pull up my metrics here for the month of July and let's see we'll look at the very first kind of the first day where I started to break out of my standard deviation of like normal uh kind of green days this is the last 30 days right here okay this is pretty wild so obviously you know really took off and now kind of you know plateauing a little bit which is okay certainly better than going like that I don't want to do that I'd rather go kind of sideways and then pick up for the next leg higher so if we do a report here um we can actually look and and actually this is an exciting moment here cuz let's just check this um there it is I have just crossed over 13 million in gross profit that happened yesterday 13 million in gross profit wow that's exciting $1 13, 887 so uh I imported my trades from the week just this morning and I had that's the first time I checked it so I have now turned $583 into 13 million in gross profit that is before fees and commissions uh fees and commissions are 1.2 million and 300,000 so net of fees and commissions the net takeaway is 11.4 almost 11.5 million now some people would say well what's the net after taxes well don't even get me started on that first of all it's none of your business no but uh so I traded in my Roth IRA uh about 6.7 million of that is in my Roth IRA so 6.7 million is taxfree the remaining um three million or four million or whatever it is um was in a taxable account and so I paid like 40 you know 40 plus percent income tax on that which is a which was a tough pill to swallow but um but you know it is what it is so anyways my marginal or my average tax rate on the 13 million is I probably paid about 2 million in tax so a little less than uh maybe like 18% not bad um All Things Considered okay so anyways so let's so the reason I came in here was to look at the month of July so we look at last month here July and if we look at the calendar for July we do the overview here we can see that um July 1st here was $273 July 2nd was $496 okay so obviously that was pretty slow maybe we should just back this up a little bit more into June and just kind of get a little more context here of you know what what June was like so we'll do 90 days here and what you can see here is this is the end of June so it was kind of hitting you know decent days 6,000 4,000 3,000 4,000 couple red days $11,000 uh this is a red day 800 this is a red day 2,000 this was a bigger red day at almost 10,000 uh that was back in June 6 so about two months ago um and this was my last red Day on June 27th there uh but it was kind of a really slow stretch right in here you know had a red day and then a couple tiny green days and then all of a sudden right here um a $6,900 Green Day again this is net versus gross gross is going to be a little bit more before the fees and commissions so that day there was um June sorry July 3rd and the stock that I was trading on July 3rd was C Koss was the beginning of this hot cycle all of a sudden out of nowhere there was a thread on Reddit that really took off and cost goes from $5 all the way up to $19 a share I think it actually went a little bit higher after hours trading but nonetheless an incredible move made 8,000 bucks all right so then the next day cost um continues to be volatile we get a couple more days of price action on it and that was the beginning of that hot streak it started with cost and then um a couple days later I'm trading zap zap that was the stock that went up several days in a row so we had this nice move on zap let's see that was I think um the eth or so and then we had sngx I'll just do daily charts so you can kind of see these were some of the big movers so that was zap from $2 to 20 snx this one a couple days later ends up making a a another really big move let's see so we had that one and then we had that was on this day where it gapped up and then we had uh let's see what do we have GX GX so now we were in a hot cycle where basically everything that was popping up was squeezing maybe that was a pre-market one um LG VN this is another one and so now we're in this sort of cycle where we're just seeing like backto back big moves LGB you know down here from a dollar all the way up to seven that's another big move then we had SCV serve this one you know huge move here the stake by Nvidia it kept going higher and the moves just continued until we ended up sort of peaking with a couple of insane 600% squeezes in the middle of um in the middle of July and those were uh these days here 45,000 42,000 right so a couple huge green days but now um it's started to slow down again so let's clear that out and basically what's happened is you know we had this cost and then five six days of huge momentum it slowed down a little bit and then we got a stock that went up 600% and we got another one the next day so right now it slowed down again and what I'm waiting for is the next stock that goes up 500 600% because when you're in this type of Market that shift from cold to hot can happen like that it can happen so fast what ends up usually happening is we we have a lot of strength in the market and then so when you get this type of big move on cost or on zap initially when you're coming out of a colder stretch a lot of short sellers are going to be confident because there's been a period where they've done well shorting stock stocks to squeeze up and they roll over and so then they start to get squeezed out on these first few that just keep pushing higher so what does that mean if they're small they're going to be a bit more cautious to jump into these the short side when they first start popping up and that's going to mean less overhead selling and that means most likely the stock is going to have a higher imbalance between supply and demand that's going to go to the buy side so you get an even bigger squeeze up all right so now stocks are getting more exaggerated moves but if Shorts are smart they're going to wait for it to roll over they're going to short the top and then let it kind of unwind back down and when you start seeing stocks that go straight up like 200% and then come right back down that's the sign that we may be near the end of that hot streak because during the beginning of the hot streak you have stocks that don't do a full round trip they just keep going higher and higher and higher and higher so anyone that starts to short at the top forced to cover it goes higher they try to short again they're forced to cover again it goes higher and it goes higher and higher but then when you start getting ones that do the full round trip what that's telling us is that the news wasn't strong enough to sustain the move Traders jumped into it they were eager hoping it would be the next one to go up you know whatever 500 or 600% but it wasn't able to hold those levels and so then shorts get the reward coming back down so now shorts start to build a little more confidence and Longs start getting a little more cautious because wait a second we just saw how many stocks do a full round trip I'm going to be a little nervous to jump in the next one shorts are going to be a little faster to jump the next one because they're expecting a round trip and so now that you kind of get this correction back down to Pops rejecting people being more cautious getting in and so right now what we're seeing is um like at this point I'm not as confident jumping in something with breaking news because even the ones with breaking news have been a little Hit or Miss if we think about yesterday I had three trades two losers One winner I was at, 1500 bucks they were all news trades and it was sort of you know it wasn't great today I have five stocks I've traded I'm green on three out of the five we'll sort this by p&l I'm green on three out of the five here but you could you could almost say these are all break even trades because none of them are up are down more than a th000 bucks which you know for me generally I'm looking to make at least a th on a good trade so none of these really played out that well which means I took five trades today well I had traded five stocks and I actually had had um seven total trades I believe it was seven total trades and of those seven trades let's see I had um four winners and three losers so it was four winners and three losers which you know that accuracy is not phenomenal it's okay but uh but I didn't have any big Winners today right so today was a day where it just wasn't really happening and you know to tag on to what I said yesterday in yesterday's episode I followed the process today just the same as yesterday yes the topic of yesterday's recap was process process versus profits and if you focus on process you take the same steps every single day you do the same thing other profitable Traders are doing you're following the right path now look today I followed the process but I don't have a big green day does that mean I should abandon the process and give up and switch strategies no the process works the very iable for trading and certainly the variable today was that we didn't have any really good uh opportunities the stocks that that we had just didn't end up giving us the big moves that I was looking for and so the result of following the process today was that I only had a small green day and it could have also been a small red day which would have been fine but you know it just happens that it's a small Green Day the process works but right now I have to respond to the current market conditions this is the concept of trade the market you're in not the market you want to be in I'd love to be in a market right now where I'm making 20 30 $40,000 per day that would be phenomenal but that's not reality and if I try to trade the way I would trade on a day where i'm up 20 $30,000 I'd be trading with big size super aggressive holding my winners longer if I did that today I'd be down 10 grand easily right this isn't the market today that calls for that type of strategy or that type of uh risk and level of aggressiveness so today generally speaking I was more conservative I took smaller size and I would on a day I'm being really aggressive and I got in and got out quickly I was hopeful that we would see some momentum that something would start to pull away but it just did end up happening today now it what did surprise me today was that Buu didn't go higher Buu is a stock that we've been watching since last week and I think I mentioned it on my watch list on Sunday it actually had news this morning so they had a news headline this morning at 8 AM and it pops up and I was like this news headline with a 300,000 share float this has the potential and I was shocked this thing didn't rip so that sort of speaks to the fact that right now Traders are being more cautious because I bet that news headline two weeks ago would have sent the stock up 100% right the the float the imbalance between supply and demand like the recent reverse split the daily chart it was all set up well but today right now in this market not a lot of buyers people are being more cautious and maybe shorts are being a little more aggressive and that all leads to you know following the process but the end result well not as exciting and that's fine you know that that's just the way it is and you have to be uh willing to adapt to that this is one of the things that was really hard for me to do in the past to cool off and to ease off the throttle when things started to get slow I wasn't good at pumping the brakes I would just keep going really hot I would be really aggressive and next thing you know I'd be down you know 5 10 15 20 30 grand over the course of three days and now I've dug myself a huge hole into a cold market and then it's going to be hard to recover loss imagine if I was down 15 grand right now or whatever I'm still only up $400 today and because I'm at alltime highs this $400 just feels like well I'm just chipping away making a little profit that's nice but if I was down 15 grand there'd be a a high degree of this isn't enough I need more you know I I've just lost so much I need to be taking bigger chunks out of the loss to really recoup and I would start trading my p&l I would start forcing it I'd be getting emotional right how quickly I lost 152 Grand and how hard it is right now in this market environment to make it back and so that's classic for me that I'd have a really nice hot streak and at the end of it it would end with a big loss and now I'm in the red and that big loss was just because I was being too aggressive while the market cooled off and now I'm stuck in the position of trying to recoup losses during a cold market and then by the time the market Heats back up those first few winds are digging myself out of the hole that I dug at the beginning of the cold streak then it starts to pick up and you know I'm making new highs and whatever only for it to happen again at the end of that next hot streak so that for me what used to happen is you know I had bigger waves in my p&l here and I've been trying to smooth that out as much as I can uh you know obviously you know you have to have you have to be reasonable there's only so much you can do but um but I'm trying to smooth this out so right in here you could see I I had a little bit of a dip there there's a couple dips but but overall the last 90 days have been pretty good right you know like I said a $10,000 day there an $8,000 one there 6,000 there 6,000 there so these were days you know nice Green Day and then red Green Day red Big Green Day red so I'm right now having some big green days I'm trying to prevent going red but you can see what's happening with the p&l right it's getting smaller and smaller so I'm setting myself up if I keep being aggressive to have a big red day I've got to keep it really tight each day trade with smaller size be a bit more conservative not try to hit those home runs or do anything crazy just slow and steady wins the race so when is it going to heat back up again Here's my thought my thought is that we're going to need a stock to come out with news and it's probably going to need be a pharmaceutical stock some type of Biotech Pharmaceutical stock that comes out with news and Traders initially short it so initially it's going to pop up it's going to look like this it's going to pop up here and it's going to drop down it might even do a full round trip but then it starts to curl back up pulls back and then it rips back through and makes a new high and right there that's when we're off to the race because it rejected and then came back up that's going to be important because that's going to prove that the news is strong once we get that first squeeze back up then I'm going to be buying those first pullbacks right here for the next leg higher and if that stock happens to be you know trading with a float of less than 5 million shares less than two million shares we might see a really nice squeeze out of it now I see Indo moving up Indonesia Energy company this is one that it's given some moves I don't expect it's going to be the one that goes crazy again look I could be wrong it may end up being that we switch sectors we move off of pharmaceuticals and we move into something else but I don't really expect it's going to be that um I'm hoping it's not a penny stock sometimes you know a penny stock that goes from 30 cents to $150 will start a new round of momentum really specifically on those low price stocks which I know some people really like but I don't trade them that well cuz I just churn commissions and they're hard to kind of jump in and out of for me so I I'd prefer that the next um cycle of momentum is also sort of focused in the price range where I do the best that'll be the luck of the draw maybe it will maybe it won't but each day I'm going to follow the same process I'm going to be sitting down I'm going to be watching my scanners I know what I'm looking for and today Buu was pretty nice it was a pretty nice looking setup and I stepped up I took the trade and I was disappointed that I didn't get more out of it you know but that's the way the cookie crumbles today is just a day where there wasn't a lot of that momentum in the market typically what happens is after you have that first big move a lot of people will miss it because they weren't trading aggressively they were being conservative the market was a little cooler so they're like oh shoot I just missed this huge move and then it's the next one and the next one where the moves get bigger and bigger and bigger that's what typically happens and that happened perfectly in July it started with cost a lot of people were caught off guard then it was zap Z then znx then IVF and then it was you know a and a couple others sxtc or whatever that ended up going up 5 600% you're like that's when it got really crazy so it was sort of those the waves were getting bigger and bigger and bigger sometimes a hot streak will just be you know one trade makes a big move for 3 days and there isn't really any sympathy momentum it's just that that one stock and then you know once that one's kind of over it's over that's been more typical of the last year this hot streak from July was um you know definitely one of the nicest ones we'd seen in a while where it was a lot there was a lot of sympathy momentum and it was sort of backtack stocks that were squeezing and pushing higher so as a as a beginner Trader you know whether you've been doing this for just a little while or even if you've been doing it for a while I'll say that it's hard to tolerate days and days or even weeks where it's slow and sometimes people will say Ross what's the longest slow period you've ever seen and usually usually I go back to 2017 so uh so in 2017 let's see it Go year um so let's see we'll look at 2017 here uh was it 20 I think it was 2017 though um it's 2018 no I think it was 2017 yeah yeah okay so sorry I was looking at trade distribution by month it was 2017 so 2017 I had a really good first quarter January February March and then I was read in April May June July August September this stretch here was so dead it was so slow 2 4 6 months it was just so dead and then boom all of a sudden it came back in with Q4 so basically n 80% of my profit was from half the year from q1 and Q4 and I finished really strong so that was a six-month period where it was pretty slow now it doesn't mean I wasn't making money because I was but generally it was pretty slow I had to be content with hitting base hits now if we look at 2023 20 23 was also for me a pretty slow year relatively speaking not a bad year all things considered but still relatively slow Green in January and February red in March all right that was the last Red month I had I think so then April you know but slow in May June and then slow in June and August and then September oh it was September that was really good last year not August that was that was my mistake it was September that was really good last year and then October was good and then surprisingly November and December were slow it was just kind of a weird year so there's you know sometimes we think I I think there's a cycle where I usually do better in the uh end of the year sort of October November December in January February March but you can see year over years we kind of compare these years it's not always like that now 2018 was really strong in January and then by the end of the year cryptocurrency was crashing as I recall Bitcoin was dropping and you know really threw off the overall Market 2019 you kind of split 2020 just totally outside the norm because of the pandemic was slow to start and then went crazy 2021 really good in January GameStop then it slowed down 2022 good in August and September 2023 good in a in September and October and now here we are 2024 had a huge month of July out a so you know I I show up every single day that's that's my rule of thumb is I show up every day you know this is two four six eight nine years of trading data that's just in in Trader viw because that's when I started using it in 2016 and you could see nine days is showing up pretty much every single day so I I think that one thing you'll learn is that if you are not willing to um adapt your strategy to the market the market will force your hand and it will force you into submission that means either it'll force you to give up and quit or it's going to force you to get disciplined and slow down when it's cold and so for me I was beaten into submission so during 2023 I was trading with small size I was just sort of chugging along I you know I was trying to hit home runs periodically but it just wasn't working and so I just eventually kind of gave up and when I came into this year I was like all I can do is just keep you know aiming for that, $1,500 a day 2 3,000 if I can stretch a little bit $55,000 days are great but the market might continue to be slow for a little bit and I thought about traders who maybe had gone through the dotom bubble you know they'd experienced years of heightened momentum like I did from 2020 through 2022 only for it to die out you know after the bubble burst and you know the pandemic didn't exactly you know cause a bubble bursting like the dot bubble um but things definitely went got a lot slower when the Federal Reserve increased interest rates in 20 um 22 going into 2023 so you know that's that's the reality and they put the breaks on the market things cooled off and I had to be able to adapt my strategy so I cooled off I slowed down and you know when the market is showing me opportunities I'm happy to pick back up but if I have to go back to just you know taking 10 15 cent little breakout trades or dip trades I'm also perfectly capable of doing that as well and I hope that you'll learn to do that too so that means be quick to take your profit when you have it don't overstay your welcome especially when the market is colder when the market starts getting hotter you'll probably just be able to trade more in total that's usually what ends up happening for me I just see more opportunities and initially I'm still focusing on taking profits quickly and being pretty aggressive just to you know book that profit but then I'll get back in book The Profit get back in book The Profit get back in and it's not till we've had a few days of really solid momentum that I start saying you know what like let's kind of let this thing ride and see if I can get 50 cents or a dollar a share and when I start seeing trades like that that's when things get really exciting so that is where we're at right now today it is a slow day traded five different stocks um Buu that was one with news oen that one squeezed up hit the scanners we had Lumen higher float stock wasn't sure I wanted to even touch it we had lgcl this one is a Chinese stock so you know overall today it was kind of choppy didn't get a lot follow through but that's okay a small green day and you know what we will live to trade another day so I will be back at it live streaming first thing tomorrow morning it'll be my last day on the island uh for trading tomorrow and I hope to see you guys uh here bright and early so those of you guys tuning in on YouTube if you have not already checked out a twoe trial we've got a link for a twoe trial I'll put it uh in the top of the description uh and link to the top comment so pin to the top comment so you guys can check that out and I hope to see you here real soon I'll remind you guys as always trading is risky my results aren't typical so manage your risk take it slow and practice in a simulator before you put real money on the line I'll see you guys back here bright and early tomorrow morning