Technical Difficulties

April ‎20th, ‎2018

Join Chuck and Ken while they discuss the current state of the market on the Money Life Network.



Intro:We are experiencing technical difficulties. Please stand by. The market is always having technical difficulties but Money Life can help. Every Friday we’re talking technical analysis. We’ve come for help and we’re not leaving without it. Are you confused by the technical jargon in terms? This is what makes you confused. Don’t you get it? This is confusing you right now isn’t it? I guess we’ll talk about the techniques they use each day to analyze the market’s and tell you what they see in now is some of the numbers and charts. Please stand by. Technical difficulties are temporary. They’ll tell you about the trends they see and how you might react to them to plow through the markets technical difficulty. Yeah, I’m pretty confused alright. So, stay tuned and get ready to cut through the confusion with Chuck Jaffe talking technical analysis on Money Life.
Chuck:Indeed I am and I’m very pleased to be welcoming to the show today Ken Berman strategist for Gorilla Trades he’s making his debut here on the show. If you want to learn more about Gorilla Trades after hear us talking, well, it’s Gorilla Trades dot com and there on Twitter at Gorilla Trades. And, I’m also pleased to say that Ken Berman, like your, host here is a proud graduate of the university of Michigan. We actually breathed some of the same air as our time in Ann Arbor overlapped but right now our time can overlap because we’re together on Money Life. Ken Berman welcome to the show.
Ken:Thank you for having me Chuck.
Chuck:It is your maiden voyage here and we talk with a bunch of different guys who use technical analysis and they use it in different ways, because there are a lot of different ways to do it. You use a mix, technical and fundamental. So, before we get too far ahead of ourselves and just throw you into what’s happening with the market. Explained a little bit how you use technical analysis and and how you mix it with fundamentals to come up with the things that you like and dislike.
Ken:Well, I’m an individual stock basis we typically use technical analysis to find individual stocks, identified them. However, on a more of an overall market atmosphere environment we use a combination fundamental and technical. Our subscribers are looking for individual ideas. So, this is based on technical program and when we send them an email we then talk on the fundamentals of the market.
Chuck:So, now, let’s put this to work in the market that we’re seeing today. Because, what we’ve had happen at the end of January, we saw volatility come back, add that has scared the heck out of people but, which has affected more? Has it simply been a technical change? Yeah you got more volatility and you’ve got more on the volatility measures or has something fundamental changed?
Ken:Well, you know, I always look at how our subscribers react and like the market itself. There was no panic during either of these corrections. To me, they’re a great test of the strength and the resiliency and if what, nine year old bull market now. There was no rush to the dollar or gold or silver or government bonds. The only thing that happened was we saw several high, multiple names being corrected. Things like Google, Facebook, Tesla, Nvidia, Amazon, a bit. But. more interestingly, if you look at Apple, for example, which I believe is still the cheapest of all technology names. It didn’t correct. In fact, it rose two percent during the correction.
Chuck:When you talk about a correction so many people in the market saw the volatility come back and had that little downturn, so many people are saying, “Up, this is just another buying opportunity buy on the dips.” But, the interesting thing to me, was while we were having a dip, it wasn’t back to levels where people going, “Ah, look , the market value price.” They just brought the prices down from the big run up they had in early January, back to levels that they were seeing near the end of the year so, it wasn’t like everything’s on sale it’s kind of like everything’s not as expensive as it was a month ago. Is that a real buy on the dips opportunity or is that kind of a fake out?
Ken:The big key here is, too us, is the two hundred day moving average and during the last poll back believe it or not the NASDAQ remained above its two hundred day average throughout the entire pull back. We look at small caps. The Russell two thousand, above its fifty day moving average again quickly. But again, if we look at the two hundred day and we see that it holds well, we’re still fine and I believe the markets fine right now. We needed that test.
Chuck:Do you think that, that test shook significantly enough off the market that we don’t need another test? Because, there is definitely some argument between technical analysts about, did we really see a true correction are we still waiting for one?
Ken:Well, you know, let’s look at multiples. They seem elevated right now trailing basis. But, the forward twelve month basis they’re very reasonable. Especially, given the interest rate environment and the growth prospects right now. The S&P and the Dow retreating about eighteen times forward multiple. NASDAQ, yes, closer to twenty, twenty one. But, stocks, well they’re not cheap. There was far from being a bubble at anytime. So again, I don’t see any reason for panic here at all or any reason for a negative attitude toward the market.
Chuck:We talked about how you use a mix of fundamentals and technicals. So, let’s take a look at a company or two that have been in the news. You mentioned Facebook and Amazon. Those are stocks that have been affected by extraneous events. Now, you might say, that in at least, in the case of Facebook, it’s a core sort of thing, in the case of Amazon, where’s the President tweeting. That’s certainly extraneous. In the case of Facebook, well you know, the congressional hearings were extraneous, underlying issues maybe not so much. Were those technical events or were they fundamental events and are those the kind of thing where you say if I’ve got good fundamentals in the two hundred day moving average who cares about what the headlines?
Ken:Yes, like for example, Facebook, Cambridge Analytics, Analytica came up and it was a fundamental story that affected the technicals of the stock. And, we’ve both been around long enough Chuck, to know that when a stock gets hit hard like that, you know, and dips below its two hundred day moving average, especially, if there’s a lot of selling, investors have to wait thirty days to buy back in order to take, you know, a lot. It’s dead for thirty days and again you look at Amazon, it held above its two hundred day even though it had some negative tweets from the President. It still looks good and if you look at it, it bounced back very quickly.
Chuck:Ken, this was great and I hope we’ll bounce back quickly and have a chance to have you back on the show in the not too distant future. Thanks so much for joining me on Money Life.
Ken:Thank you. I appreciate you having me.
Chuck:Ken Berman, everybody. He is a strategist at Gorilla Trades. Just like it sounds. If you want to get more information,, on Twitter @GorillaTrades. All right, we are heading for home on the Friday, April, 20th edition of Money Life.
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