Okay folks, so we got to give a violent update on the market and plays and then we have to have an honest talk about some of the red flags that we're seeing in this market right now and how to prepare before market corrections. And the only thing that I ask in return for all of this is that you hit that ravishing like button and also don't forget to subscribe either. Okay, Marquette to mix big tech up Down down S P choppy growth down. Kathy Wood has gotten real used to these down days.

Crypto market in its best attempt at a winter for several months. Maybe we'll finally get some good juicy dip buying opportunities. You did see some of that momentum chasing capital come back which made Charlie a very, very happy man. I think this is the best catalyst play we've had since Dwack, but our Lg Vn catalyst play ran this morning.

In the briefing, we said Lgvn announces it got desired Fda designations, any rebound rallies as more volume flows in after open. This was a big stinking deal, and this designation is the next step at getting the Fda approval and they're probably going to have priority review, which means perhaps a faster approval time and a faster to market time. It hit my allotted bold criteria and ended up running from 339 to eight nine at highs, more into the after hours all the way up to 1008. Obviously, the market doesn't give you these types of plays all the time, but when it does, Oof.

Okay, moving on, Vozo! So we briefed on this one at about 11 57 30 minutes prior to market open. This was because their voters had approved a proposed merger with Weho back on September 19th. In the context of their work with Palantir, we talked about how Ho is a huge leader in the connected vehicle data space, which of course, is crucial for helping fulfill Ai demand. when it comes down to automated self-driving vehicles.

They cover something like 95 of roads in the Us, and they're working with Microsoft. In the context of recent euphoria around Ev cars and next-gen vehicles in general, I saw this as quite simply a massive, massive opportunity for Momentum traders. and not only did it have a lot of hyping potential, but it also had a lot less risk potential as compared to most big runners. When we briefed on it, it was trading only a couple bucks over that S-pac floor, despite the fact that it had a massive, massive catalyst.

So you have a limited downside and massive massive upside. That's a huge rarity in Momentum markets though, but still, when we see them, we try to find them. But anyways, it ended up going from that briefing price at just under 12 to 19 dollars and 90 cents. I'm a big believer in having a combination of long-term high conviction plays and short-term momentum traits.

These can certainly be a lot of fun as part of a trading style, but you have to have a clear plan. These aren't plays that you can just go and buy into and then oh, it's going up. I'm never going to sell it because it's going up and then when it goes down, it's like, oh well, I lost all the profits that I just made on the uptrend. You have to have a clear entry point and a clear exit point, and even before you get into the position, you have to set certain bull and bear criteria.

What does it have to hit for me to consider this a good position? What elevating factors does it have to hit? Where is my risk management? You certainly can't control the moves or when you get the biggest moves, but you can control how you attack the moves and that's where all of the gains are made. You have to have standards outside of while I'm yoloing in because moon Bro, Now it's time for the main entree. I want to discuss some of the red flags I see right now. so Number One stocks falling on good earnings.

We are seeing a lot of great companies, especially in the growth sector, report great earnings and still get beat down in some cases, like for example, upstart. It's obvious why, because they pre-factored in earnings way way way too early, but it also suggests that we're now in more of a market that has bid too high a premium on stocks that are expected to beat earnings and you're getting a lot of post-reaction profit taking capital that quite simply wants to buy up stocks before they report earnings that they expect to beat and then just cash out really, really quickly. Capital that doesn't really have trust in these companies to perform better on the next earnings, or capital that thinks that they've already gotten way way way way too pre-factored in the market, just hasn't wanted to stay in a lot of these companies. Whether they are beating on earnings or not, their time span has gotten a lot shorter term.

Even on the best beats on earnings, you're just not seeing Wall Street want to stick around. Secondly, not only do you have good stocks that are reporting good earnings get beat down, but obviously we have stocks that are reporting bad earnings that just keep getting insanely destroyed like two dozens of percentage points. Like major companies that suggested, there's a lot of capital that's getting caught off guard, not expecting bad earnings. and then all of a sudden you get a bad earnings report and people are going and panic selling.

And generally speaking with panic selling, What happens? Well, it overdoes it because people get margin called and then the stock gets beat down way way way way too far away, too quickly and an overreaction. and then you get a lot of dip buyers. But the debt buyers are nowhere to be found with a lot of these companies, even on companies that obviously are going to get back on the right trajectory or quarter or two later capitals like hell no, I'm not getting back into that. I want something different.

The market right now has no patience for good earnings. it has no patience for beats on earnings, and it's willing to take a massive loss and abandon complete conviction on a one-quarter setback. And the third problem is there's a lot of disappointing earnings out there. Even in some of the larger companies, you're starting to see a lot of Wall Street targets get missed.

Which comes back to why the first two red flags are such a big deal. The more Targets miss and the shorter time frame that Wall Street has, the more stocks are set to fall. Number Four, Capital is ignoring a lot of undervalued companies, and Wall Street is again choosing to go a lot more speculative and a lot shorter term in the last couple of weeks. What did you see? You saw tons and tons of Wall Street big massive money players pour into stocks like Rivian, paying sales numbers that Riven's probably not going to do for 10 to 15 years, while avoiding similar companies with much, much better fundamentals and much much lower price points that Capital is not going to be standing Rivien for long.

You've already started seeing them leave. They're playing it because it's a spec play that they see a lot of momentum to chase. Same thing with Lucid. We love Lucid, but Wall Street hated our lucid play all year.

and then all of a sudden you get a little bit of momentum and a little bit of hype. And what happens, All these big players start saying, oh, it's all by Lucid They bit the price all the way up to the nosebleeds, which is fantastic And I'm not complaining. But you gotta acknowledge what's going on here. This ain't no value investing market.

This is. uh, I'm gonna chase whatever thing is hot market And it's not retail traders that are doing this. It's also big Money Wall Street right now. Lots of big money players right now want to chase big bucks, but they don't trust a lot of stocks right now enough to stick around.

Number Five markets have factored in growth that is taking longer than expected to happen, leading to valuations at extreme highs in comparison to sales. The market's recovery and boom in 2020 came from an anticipation that we were going to bounce back massively and the economy was going to be on fire. and for a certain amount of time that was true. But people paid sales numbers that were so insane that they factored in years and years and years of solid upward trajectory.

But guess what? Now that we're getting into 2022, what has happened? Well, we have a lot slower Gdp growth, a lot worse job number growth numbers than we had expected. Supply chain issues are punching consumers and companies in the throat, and you're quite simply not able to hit these numbers that the market has factored in already. There's foreign market turbulence, Chinese economic data is looking rough. there's regulatory crackdowns over there.

everground debt fud. Going back to inflation. Inflation right now isn't really boom driven. it's supply chain driven.

And it's squeezing consumers. And what happens when you squeeze consumers? Well, they have to pay more for less goods, and the more money they spend on essential goods, the less money they have for anything else. And their salaries aren't going up as fast on average. If you have inflation caused by an economic boom, at least at least people's salary should be going up at the same or a higher rate than the inflation numbers.

But right now that looks like a fairy tale. Next, inflation won't go down until supply chain issues are solved, or until people dramatically cut spending. And if supply chain concerns really start getting under control in the next couple of quarters, then obviously a lot of the red flags on this list are going to disappear. But what if they don't? If we're making a red flag video, you have to be honest about the red flags, and that's a massive, massive red flag.

The longer this goes on, the bigger of a problem it becomes if they don't and we're still in the situation for a lot longer. What happens when consumers are going to have less and less money to spend on other economic activity besides the exact essentials. inflation is going to force them to cut non-essential spending. And if they don't Fed may be forced to step in even more and have to overcorrect the situation and raise interest rates a lot faster than expected.

And the other con is the Fed only has so much that it can do. The Fed does not control the supply chain, and while they can raise interest rates and over correct and bludgeon all asset valuations and the economy, in the meantime, they may lose control of inflation if the supply chain issue is not fixed. I don't think that that's favorite to happen, but you have to be honest about the implications of this. continuing on for a very, very long time.

in terms of some other residual effects that I'm worried about if you think about the over concentration in gains, the market as a whole has done great this year as it had last year, but a lot of those gains are concentrated in a few massive players: all big tech. your Microsoft, your Tesla, your Nvidia, your Google, your Apple. In a world where the Fed overcorrects in a world where you have a lot of investors that are forced to shorten their time span to maybe a year or two, a lot of these big tech companies are going to see a massive, massive rug pull. A lot of people ask me what are you worried about when it comes to the market and this is really my list of red flags right now.

I am a person that believes over the long run you buy really good companies and they go up, but you have to acknowledge the red flags and market cycles when you see them, and I think it's my responsibility to present them. now. On the flip side, supply chain issues I believe are likely going to subside in 2022.. the other thing is that interest rates are on a 40-year downward trajectory, making it difficult to compare current day valuations and the impact that raising interest rates to a small degree would have on valuations.

The other thing is that it's also true that a lot of you hire multiple companies, have higher multiple growth in upcoming years, which means that companies in many sectors can actually catch up to their valuations if given the time. And if they aren't given the time and their valuations are bludgeoned, well, they're going to be massively massively undervalued. There's this narrative that we're in like dot com bubble 2.0 but a lot of the companies right now have growth that's gonna show in the next five to ten years. I'm thinking eevee, I'm thinking software.

I'm thinking Ai's a little bit farther out, but Ai certainly some bubble stocks out there, but there's a lot of stocks that have high multiples that are going to achieve their multiples in the upcoming years. The last green flag that I would highlight and don't take this the wrong way. but cash is trash. Which is to say, there's not many good places to put money during periods of high inflation.

Whether the Fed decides to go dovish or not, the only way to guarantee that you're losing your capital over time, or at least the value behind your capital, is to keep it in cash. I'm not saying don't have cash, but on a macro level. when you're thinking about all the capital in the economy, people who have capital aren't keeping it in cash. they're keeping it in cheap coin.

So go buy sheep coin. That was a joke, but on a macro level, this creates an incentive for capital overwhelmingly to flow into asset classes like the stock market or real estate. So pragmatically, what are we to do? We are in this environment where on one hand, asset prices across the board, stocks, crypto, real estate are all at record highs, and interest rates are only expected to go up punishing asset classes. And on the other hand, inflation is that 30-year high.

So it's not exactly a brainiac move to move everything to cash, either. It's a difficult environment. If you invest, you're worried about buying at the top. If you don't invest, you're worried about losing your money due to inflation.

If you're already invested, you're worried about losing your profits during a downtrend. If you sell out, now, you're worried about paying those capital gains taxes or even worse, short-term capital gains taxes. We're in this world where you're damned. if you do, you're damned if you don't So my thought process is, why not do a compromise and focus on what you can control and let the market handle what you can't Why can't we control? Well, we can't control the Fed And how hard the Fed fights inflation? We can't control who runs the Fed.

We can't control policies that come from the Fed or from the government that control the inflow and impact of our dollar. We have no control over how long supply chain issues last or labor shortages. We don't know other looming threats on the horizon that could have domino effects, and we don't know when the next capital cycle is coming that's going to reward a lot of higher, multiple stocks or a lot of sectors that we like. These things you have absolutely no control over.

But what do you have control over? And what should you focus on? Number One: Focus on getting good deals on growing companies that you did the math on and make sense at current prices. Businesses that you understand some could be ones that are very, very stable and established. other ones I think should be growth stocks that you understand very, very well and are in massively emerging industries, but know your own risk tolerance. Do the math on them and then compute the prices to see where exactly you believe a good dip buy opportunity is and then buy it in hotel.

Number two: slowly add capital over time to your positions instead of all at once. Why? Because this way you have a little bit of a compromise between buying stocks and experiencing the bull trend, but also being prepared to add more and get extra alpha during dip periods. Number three: exploit market cycles, not listening too much to the euphoria or the dysphoria being direction independent. If it goes up great.

if it goes down great. We don't have control over whether something goes up or down tomorrow next week or even next year, but we do have control of how we play it based on what it's doing. This includes taking profits early on stocks like for example, Lucid that over factored in years of your price target. Or it includes short-term cyclical momentum trades like Dwack, which you get in, you get out, you go running.

It includes swing trades on stocks that includes extra dip buys during bad cycles, so on and so forth. Focus on what you can control play the cycles, don't expect anything and just be very, very consistent in terms of your plan and I think you'll come out on top in the end of the day. Anyways, folks that caps off the video. if you have any questions, feel free to reach out to us below or join us on Ziptrader Circle.

If you'd like to learn how to trade with our step-by-step lessons, our private chat, and of course our daily morning briefings, well I'll go ahead and put a link to Zip trader you below. Of course we do have that 100 off Black Friday 100 coupon code discount so if you are interested this might be the time to do it. So go ahead and check us out below. We got a video that walks you through the course and what we offer.

Anyways, that caps off the video, have a good one. I'll see you in the next one.