Trading $50M At 25 Using One SIMPLE Market Cycle Strategy (4 Stages) - Ted Zhang

Over $50 million being managed at 25 years old, surpassed now $400 million at Revere Asset Management.

We always say it's impossible to predict the future, and anyone who says they can predict the future is just full of crap. If there was a way to quote unquote predict the future, it'd be studying stocks.

Introducing Ted Zhang. In this episode of Chart Fanatics, Ted runs us through the exact framework that he uses to manage over $50 million.

This price cycle is called stage analysis. We will find out why it's timeless. You'll see this repeat in all the asset classes. We can go through each individual stage at a time.

Through this concept, you will be able to identify any of the 4 stages of the market. This is exactly how you can create high reward-to-risk profiles within the market.

So this is stage 1. A key tell for me is when the MAs, moving averages, start slicing through price and price oscillates up and down. Stage 2, And this is the uptrend. This is like early stage 3. How you kind of tell a stock is topping is when you've had a big move and the rate of change of the stock kind of goes sideways. This is stage 4, which is the downtrending phase.

This is why it's so important that you'll be able to identify the exact theme and where you need to be positioned within the market.

You want to forget the first eighth of a move and the last eighth, and they're often the two most expensive eighths of the move. So forget about this first eighth, forget about this last eighth, just catch that sixth eighth in the middle.

Stop guessing and start learning from true professionals like Ted.

In any strategy and system, you want it to be based off timeless principles. And in the universe, you know, one phenomenon that comes up time and time again is the concept of—

Welcome everyone back to Chart Fanatics, the go-to channel for all of the very best strategy and concept breakdowns in the world with the very best traders in the world as well. Talking of which, today we have someone who we just hosted recently on Words of Wisdom. The famous, I would say now at this stage, but absolutely incredible. No, the impact was real. The feedback was incredible as well. Over $50 million being managed at 25 years old, surpassed now $400 million at Revere Asset Management. You already know who it is now. It's the one and only Ted Seif.

Thank you, Riz, for having me on. It was a great opportunity to come on to, you know, your other podcast, and I'm excited to be here to talk about some topics about the markets and trading.

It's not just topics that we've got, like the cycle of all markets. Yeah. Is that what we're going to go over today? Oh yeah. And I'm super excited. And I know that you got a ton, a ton of real life examples.

We got a lot of examples. You know, we'll give them some quizzes as well. Perfect. Give the viewers some time to think through after we showcase the examples, think through like the different parts of what I'm about to teach.

So I love that.

I love it.

So where do we begin?

Yeah, so jumping right into it, I kind of want to start off, you know, higher perspective. In a trading strategy, or really in any strategy and system, you want it to be based off timeless principles. And in the universe, you know, one phenomenon that comes up time and time again is the concept of cycles, cyclicality. You know, you see it, maybe I can draw it here. We'll just say cycles. Oh, sorry. You know, you think about, you know, from life, you have the cell cycle, you know, I was a bio major, like I shared it.

You still got it.

Yeah. I was a bio major. You have the cell cycle, you know, cell division that goes through and then eventually cells die and our bodies have processes of destroying cells and then creating new cells. Uh, you think about just in the business world, you have the business cycle, you have boom and bust in the business cycle. You have the credit cycle with the Fed jacking up interest rates, pulling it back down. The loosening and tightening of monetary policy. You have the water cycle. And then in the markets, you have the economic cycle. And then we're going to talk about the price— oh, sorry, the price cycle today. And, you know, I learned this concept from Stan Weinstein. He has a book called Secrets in Profiting in Bull and Bear Markets. And my time at Traderlion, which we talked about in the first podcast, I did an internship with Traderlion and Stan Weinstein was working with them creating like a course on stage analysis. I was able to help build some of that and learn a lot from himself too. So his price cycle is called stage analysis, and we will find out why it's timeless. You'll see this repeat in equities, commodities, fixed income, crypto, all the asset classes, currencies as well. Yeah, currencies as well. In real estate, eventually, you know, they tokenize it and it will trade, trades on the blockchain. So Starting high-level perspective there. And now let's introduce stage analysis and the 4 stages. Say stage analysis at the top. And then so pretty much what stage analysis— I want to go through the downtrending part first because to me it's easier to showcase the whole cycle starting with the downtrends. Yeah, just say a random stock. And I'm just going to draw the price line. We're going to be simple here and then we'll go to the charts. So let's just say it's oscillating, it's building a top, and then it trends downward. So we have this downtrend right now and 2 or 3 key moving averages to keep in mind. Oh, I do need some other colors. Yeah, yeah. 2 to 3 key moving averages we should keep in mind. So let's just draw something like that. The red, we'll just say, is the 10-week moving average. It goes like that. We'll say this is a 30-week, and the 30 and 40-week is really the key moving averages to keep an eye on, to really judge what stage of the cycle a stock is in. And I'll do—

you know, would they be the Grateful Dead? Simple moving averages.

I use simple. I use Simple.

Yeah, I remember we talked about it, I believe.

And then we'll just say gray is the 40-week. And we'll definitely show this on an actual chart. It'll make a lot more sense than like squiggly lines. So right now you have a stock, you know, building lower highs, lower lows below the 10-week, 30-week, and 40-week moving averages. And this is stage 4, which is the downtrending phase. You know, price structure, lower highs, lower lows below the 10, 30, 40-week. And you know, when the slopes of the 10, 30, 40-week are trending downward and then the 10 is under the 30, 30 is under the 40, we're definitely in a downtrend. And from an asset management perspective, we're more longer-term traders. We want to have the longer-term trend in our favor when we're buying something or shorting something. So in this stage, you want to look to short, not to buy the stock.

So this is actually stage of shorting.

This is the downgrading stage. Yeah. So This is the Cathie Wood ARKK ETF that I want to show. And here, so the moving averages, I have the 10-week is the red line, the 20-week is the green line, the, the 30-week is the magenta line, and the 40-week is the white line. As you can see, just like on what I drew, prices— this is a weekly chart, by the way— price is building Higher lows— I'm sorry, lower highs and then lower lows throughout this whole stage, firmly in the downtrend below the 10-week moving average, the 20-week, the 30-week, and the 40-week. And you can see they're all stacked on the bearish— they're all bearishly stacked with the shortest moving average on the weekly below all the longer ones. So that's how you quickly tell, you know, at this point when you start enough charts, you can instantly look at a chart and tell if it's in a downtrend or not. So that's a highlight of stage 4. Why don't we go to stage 1 now? So stage 1 is essentially when the stock starts, you know, the rate of change of the stock, the slope is like, like that. It's like a 45-degree angle or more. Eventually the rate of change of the downtrend starts flattening, right? So, you know, it just starts, it starts oscillating and it turns flat at the same time. The 10-week moving average catches up to price and starts to head below it and price starts surfing the 10-week moving average. Eventually, let's say maybe you have a pop right here, but it comes back down and continues to base. Mm-hmm. The 10-week will continue to be under price. And this is where the 30-week moving average starts catching up to price, price, and it starts slashing through price. Okay. The 40-week moving average, whereas the green one also starts to catch up to price. And eventually when the 10-week, you know, gets back above the 30, those lines converge. We can say this is in the stage 1 basing period.

Is that what kind of establishes it?

Exactly. So in this stage, oftentimes news is the absolute worst at the bottom. You know, Bitcoin bottom when FTX blew up, when those banks also blew up. Like Silvergate, and a lot of times, yes, the news is the worst at the bottom. However, price isn't being pushed lower. So that is a huge tell of whether a stock is done going down. Just horrible news. Sentiment is terrible. Everyone's neglecting it now, says it's complete, just stay away from it. Let's just say trash. But price starts to build like in this page, higher lows and higher highs. And it the rate of change flattens. And a key tell for me is when the MAs, moving averages, start slicing through price and price oscillates up and down, above and below the moving averages. So this is stage 1. And in this stage, I kind of see it as selling pressure has stopped from institutions and now they're starting to accumulate it again. They might see some, some brighter future coming in from earnings or sales. If it's cyclical stock, they might see, you know, interest, interest rates coming down. Let's say if it's a homebuilder, a brighter future for those types of stocks too. So that is stage 1. And if we go back to the charts, let's use ARKK as an example. You can see exactly what I drew. The 10-week moving average starts oscillating through price. And now price in this early January 2023 period gets above the 10 and the 20-week. You can see the 30-week magenta line come to price as well. And the 40-week. And like I said, right here, all the moving averages are slicing through price. Price is oscillating up and down between all the moving averages. Sometimes stage 1 can last for a few weeks, a few months. For this example, ARKK Cathie Wood ETF, it lasted, you know, for almost 2 years. I'd say stage 4 ended around early 2023 and then stage 1 ended around this May 2025 era. So almost over 2 years in the stage 1 period. In this stage, if you try to anticipate and buy too early, you can get really chopped up and take a lot of unnecessary losses. Of course. So now I want to enter the stage 2 phase of a stock, and that is where, you know, more swing and position traders should go long or think about going long. And again, the stage analysis is more of a longer-term overview or just a higher-level perspective of whether a stock is in a downtrend, basing sideways, building that stage 1 base, or in an uptrend. So let's go back to the drawings and just everyone remember this photo right here. We're going to erase it and then I'm going to talk about us entering stage 2. Let's just go through one more. A&F, Abercrombie Fitch. This is like ARKK, the Cathie Wood ETF, and A&F, Abercrombie Fitch, literally highlights the stage analysis process picture perfectly. We can see two full stages actually here. You can see Abercrombie Fitch was in a downtrend below all the key moving averages, the 10, 20, 30, 40. Eventually The moving averages catches up to price. The rate of change of price in the downtrend flattens. Eventually we get above the 10, 20, 30, 40-week moving averages. The 20— the 10 stacks above the 30, which is the magenta, and above the 40, which is the white line. And we're in a stage 2 uptrend and we're going to get through that like right now. And then you can see again another stage 4 period below the 10, 20, 30, 40-week moving averages. The 10 is below the 30 and 30 is below the 40. That to me is the key tell instantly to see or to examine if a stock is in a downtrend. Just look at the price structure of price and then relative to what it's doing against the 10, 30, 40-week simple moving averages. And you can see went through stage 4 and then had the stage 1 basing period, which didn't last too long. So now we're going to—

let's go like an example of a shorter period stage 1.

Shorter period stage 1. I'd say the shorter period only lasted Like 6-ish weeks. Wow. Yeah. So that's a couple examples of stage 4, stage 1, and I'm gonna introduce stage 2 and then eventually stage 3 before again, inevitable stage 4. And then we'll go through a bunch of examples. Sounds good. So just picture the other side of the chart that I drawn, you know, so the coming down.

Yeah.

You have the stage 1 period. You have the 10-week now kind of slicing through price. Price is sometimes surfing it, sometimes coming back below it. Let's just make that better. Again, the magenta, the purple, is the 30-week. You can see it's like that. And then the gray is the 40-week. So this is like kind of picture-perfect stage 1. The price is oscillating in between moving averages and eventually enough supply and demand digestion. Institutions are accumulating stock and pushes into stage 2. It now is surfing above the 10-week, 30-week, and 40-week. So you start to see something like this where the 10-week starts expanding upward. The 30-week, because it's a slower moving average, it trends below it, but there's that gap. Yeah, we're not going to do the 20-week here just for the sake of excessive drawing, but we'll show on the chart and I'll talk about how I like to use, you know, the 10-20 week crossover as a shorter-term— a shorter, longer-term trend indicator. But I'll talk about exactly when I— when the stage analysis process indicates to you that it might be entering, you know, a longer-term uptrend or a longer-term downtrend.

So to dictate the different stages, is the— does a lot of it come down to the moving averages?

Yeah. So it's price structure because we can take moving averages out of the picture. It's looking at, you know, an uptrend. You have higher lows, higher highs, and it's typically, you know, sloping at a 45-degree angle. And then when it starts accelerating, that might be a time where you have to think about selling the strength. And then downtrend are lower highs, lower lows. Yeah, but the moving averages helps you normalize and smooth out the trend.

I guess it's part of the trade management, right? Exactly. In terms of being able to scale or trail, right, into, out of your trade.

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But for, for the viewers, you can easily just quickly tell price relative to the 10, 30, 40-week moving average.

Gotcha. And then when it comes to stage 2 and trying to not execute necessarily, but when you are trying to position, is it based off anything specifically when it comes to price at all? Or is it mainly once you've identified it, you then depending on the price action and the particular stock or crypto, whatever it may be, depends on what price action you're seeing at that time?

So for stage analysis, it's more of a longer-term trend gauge. For entries, we like to go on the daily chart as well, coupled with the weekly chart. And that's not really for this session that we're talking about, the specific entry points. We're just going to go first on identifying, you know, the most basic thing. Is the stock in a longer-term uptrend? Is it kind of topping out or is it in a downtrend or is it starting to base? Gotcha. And if you have that, you have like the foundational first part of trading for us as asset managers and position traders. Like what is the direction of the longer term? And you want that wind behind you.

Well, plus once you have that as well, that, that insight and foresight into where we are within the market cycle and the price cycle, regardless of whether you are a position trader or even all the way down to scalping, there's benefit into having that long-term insight so that you know what the higher probable movement direction is.

You know, and as traders and money managers, we always say it's impossible to predict the future. And anyone who says they can predict the future is just full of crap. But if you study cycles and how they work, it can give you an idea of what to expect in the future. And if it doesn't align with it, then there might be something wrong. You have to kind of reevaluate your analysis.

Of course. Yeah.

So if there was a way to quote unquote predict the future, it'd be studying cycles. You know, also the human nature, emotional cycle of the markets too, from euphoria to depression, greed to fear, optimism, pessimism, you know, risk aversity, you know, during a bear market to risk taking. Oftentimes that happens at a top when most people are, you know, saying, I want in, I'm going to take more risk. That often happens when things are kind of frothy. So let's keep going in to this again, the gray. Or the silver is the 40-week moving average. And again, because it's slower, it trends below it. And I'm just going to draw this up like this, finish drawing the moving averages, and then we'll draw price. So now, as you can see, the stock is in stage 2, and this is the uptrend. And this, again, I'm drawing kind of like the weekly moving— weekly chart. So, you know how stocks they'll make moves up and then oftentimes they'll base sideways and the 10-week can catch up like that. And from that, again, with the base, that's just proper supply and demand digestion of a stock. Institutions accumulating stock off of weaker hands, you know, maybe day traders, short-term swing traders. But when institutions betting on a longer-term trend to happen, they'll keep accumulating and creating that support. Which is the lows of the base. Sometimes there'll be undercuts, shakeouts, and that's institutions grabbing that stock from the people and traders getting shaken out. So eventually you have a base. This could be, you know, a few weeks, 5, 6 weeks, 7 weeks. It could be multiple months. And later on we'll talk about one of my favorite setups, which is that first multi-month base after this initial big move up into stage 2. Yeah. And so eventually you start breaking out, go for another leg, The 10-week continues to follow suit.

Would this still be stage 2 even with that?

Yep. Still stage 2. 30-week follows suit. 40-week as well. So this is stage 2. So why don't we show a few examples and then we'll transition to stage 3 and then we also showed stage 4. Maybe I could do a quick schematic of the whole cycle.

Yeah, probably.

And then we'll go to a bunch of examples, some nuances as well. Because sometimes you can enter stage 3, it looks like a stock's topping, but then enters another earnings cycle, has another surprise, goes back into stage 2. Or there's another nuanced setup that Stan Weinstein taught, and I'll actually show you a trade we did for our Turbo Protection portfolio, you know, many months ago last year, is a stock's in stage 4. Yeah. And usually we won't trade stocks in stage 4, but if it becomes extremely, extremely stretched to the downside away from the 30, 40-week moving averages, then it forms a base around the 10-week, you can get the opportunity to trade that mean reversion back into the 30, 40-week moving averages and still catch a really nice move. So this is stage 2. Back to the charts. I'll just use the first 2 examples because they highlight this stage analysis so well. This was the COVID crash, and that was a quick reset, like it went into stage 4 quickly, then back into stage 2. But again, let's just focus on stage 2. You can see, like I drew, the 10-week price is building higher lows and higher highs above the 10-week moving average and just surfing it so nicely, respecting it perfectly. The 30-week is far below it since it's a longer-term moving average, and then the 40-week is below the 30-week, just like we have here. You can see 10, 30, 40, price is oscillating above. Yeah, you can see there's some basing form— formations as well. And Abercrombie Fitch, you can see that same thing here. We have the stage 4 below the 10, 30, 40, stage 1. And oftentimes we're not going to talk about this setup, but Pradeep covered it in your recent ChartFidax, the episodic pivot. A lot of times when a stock goes from a downtrend stage 4 to that stage 1 basing period, What it takes or what a stock needs is that catalyst. And we'll refer you to that pretty video to watch, like his concept of episodic pivots. And I know Abercrombie Fitch had one here. You can't see the gap because we're on the weekly chart, but that sent it into this huge stage 2 uptrend, which made an 800% move in 52 weeks, about a year. And as you can see, super linear trend. This pretty much locked everyone out. You can see barely any like multi-month basis. You had a few week basis to get on, but other than that, it was just a smooth trend above the 10-week. You can see the red line above the 30-week and above the 40-week, just like we have in the schematic here. So now let's transition to stage 3, which is the topping phase. As the quote says, nothing can grow— like, trees don't grow to the sky. And eventually a stock will get tired. Institutions forecast or foresee worse in earnings, they might think the valuation's too high. And as trend followers, we're, we're riding the coattail of these institutions, the BlackRocks, the Vanguards, the Fidelities that operate hundreds of billions of dollars accumulating these things, distributing them, and eventually a stock falls into a downtrend. So remember what we had before in stage 2 when the stock was in an uptrend? And we'll just picture that the continuation here, and I'll draw the top of the period. So we had this uptrending stock, it based, broke out. Let's say bases again, breaks out, tries to base again, and then it fails. It failed breakout. Maybe it's on an earnings report and they release poor guidance, or even sometimes the worst is great news, great earnings report., but some, for some reason institutions forecast worse earnings coming up in the future. Mm-hmm. You have to remember the markets are a discounting mechanism. It's all about what is the stock gonna do in the future, 6 months, you know, 12 months down the line. That's what institutions are looking for. So let's say that failed breakout happened. Let's draw in the moving averages now. Mm-hmm. The 10-week, let's just say like that. And then Again, just like on the stage 1 side, stage 3 is essentially the opposite of stage 1. Stage 2 and stage 4 are the opposites. So the characteristics are, are pretty similar. So in stage 3, just imagine you flip this over. It's pretty similar. The 10-week starts catching up to price. Price starts oscillating in between the 10-week moving average. Now the 30-week moving average. Starts catching up too, and eventually the 40-week moving average starts catching up. So this is like early stage 3. Yes. When the rate of change— I like that rate of change term. I talk about loving Druckenmiller in my Words of Wisdom podcast. He talks about rate of change as well and how he like kind of tells— and this aligns with Stan Weinstein as well— how he kind of tells a stock is topping is when you've had a big move and the rate of change of the stock kind of goes sideways, just like when you have a downtrend and the rate of change of the stock starts smoothing out as well. And for us using moving averages, that can be a simple gauge to tell what the rate of change of the stock's doing, just from the slope of the moving averages, the gaps in between the moving averages, and how price is respecting— and price is respecting moving averages or not. Is it chopping in between the moving averages like we have here in early Stage 3.

So would rate of change be noticing the rate of change in price movement, volatility, etc.? Like these components are starting to shift. So during Stage 2, no doubt the volatility is higher, the price movements per day on average are going to be higher.

Kind of what I mean by rate of change is like, it's kind of like a math, like calculus concept, but we won't dive into that. For example, a flat line has a zero rate of change, and then you know, you can have a—

it's kind of like your degree.

Yeah, you can have a tangential line to price, and then that's a higher rate of change. This is even higher rate of change. This is like a vertical rate of change. And when that happens, usually you want to start to look to sell into some strength. Cool. And that might put in at least a local top, or maybe I'll start to adjust a major top. And then that's like on the upside, right? And let's say now you have a downwards rate of change. You have a downwards rate of change. It becomes steeper and now it starts flattening. Yeah, that's kind of the stage 1 facing period. Of course. And now eventually it turns up again. So we'll erase that. This is early stage 3. Can you just take out all of it again? Yeah, I just wanted to highlight early stage 3 and eventually we enter the topping period and that can last, you know, multiple months as well. Eventually fall back into stage 4. So let's just say We have this topping period, maybe some undercut, some failed breakouts, and then it breaks down in the stage 4. And typically the 10-week probably is oscillating in between. And then— oh, sorry, can you erase this part? Yeah, I drew that wrong. Yeah, 10-week. All right, perfect. The 10-week is now above price and price is surfing below the 10-week like what we saw in stage 4. Oh, yeah, yeah. In stage 4 before. Now the 30-week, you know, like I said, it catches up to price eventually. The 10-week crosses below the 30-week and now the 30-week will slow down too. And then the 40-week is the slowest one. Eventually they'll start sloping down too. So now you have the stage 3 topping process. Like I talked about, again, opposite to stage 1, you have the worst of news. Stage 3, you have the best of news. You have great earnings, like everyone's in the stock. There's only good news on CNBC and Wall Street Journal, Times, Barron's a lot of times.

But you're expecting price at that point, even with all this news, you want to not really be adjusted.

Exactly. With the good news, you expect price to go higher. But if there's some, like a failed breakout here off good news, and then the moving averages are catching up, you know, getting above price, price is starting to get very wide and loose and sloppy. That could be a big indication that a stock might start to top.

So like in this example, just to highlight, let's say if news, good news came out here.

Yeah.

That might be what causes it to go up, but nothing significant happens. It almost keeps its resistance.

Exactly. It fails.

Yeah. Fails to make any sort of meaningful move.

Yeah, even worse if the good news comes here and it briefly makes all-time highs and then fails. Yeah. That a lot of times it's like, all right, this thing's probably done. Or, you know, the news can come here too. Like it causes a short-term rally and it just fails. Yeah. And I'll literally show you an example on Abercrombie Fitch and it's something I shorted too. So. Okay.

Yeah.

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Let's get back to the episode.

Not, not in clients because we can't short clients, but This is done personal, so I'll still talk about the short. Typically I can't talk about exactly what I do in the personal. It's more client-focused. Of course, I'll still talk about like where I got it and things like that just to highlight it. So now we've gone over the whole stage. Now it's the fun part. We get to go through a lot of examples. We'll go through some full cycles. Let's get back into the charts. You have Art K here and this is just— it's such a perfect topping formation. It's, it's just incredible. It's like textbook. So you want to screenshot this chart right here if you want to see the full stage analysis. This is stage 2 above the 10, 30, 40. It's about a 1-year move. And eventually you have this huge crack. You can see the 10-week is now slicing through price. You can see the 30-week is catching up to price and now slicing through price too. You can see the 40-week is also catching through price and now it's starting to slice through price here. At this point, the 10 crossed below the 30, not below the 40 yet. Another few weeks, it crossed below the 40. Now the 10 is below the 40, it's below the 30. But that's not the full bearish alignment when you have the 10 below the 30, below the 40. And this causes a lot of frustration. Imagine trading on this. You have 28 weeks of just chopping up and down in between the moving averages. You can see The moving averages are completely flattened now. Yeah, price is oscillating in between it.

This is what we're talking about, what we're talking about. Yeah.

The rate of change.

You can see that exactly to the upside.

That's sloping. Exactly. Exactly. And eventually something just cracks and see how tight the moving averages get here and they start forming that bearish alignment. 10 is now below the 20, is now below the 30, now below the 40. Price is below all the moving averages and now we're building lower highs, lower lows, lower highs, lower lows. So that is the full cycle right here. Exactly.

Yeah. Would you say through understanding these cycles or this particular cycle, should I say? Yeah. So through understanding this cycle, is there an element where you can be purely technical based then through following the cycle through the price action with test size?

Definitely. And what Stan Weinstein, he had is a famous quote. It's called the tail, the tape tells all. However, it's like, if someone just fully trusts price, which one definitely could, you can just trade price action in the price cycle. But for me personally, for Conor, for a lot of guys at the firm, we like to back our price cycle analysis with some sort of narrative, story, theme, some sort of maybe fundamentals and/or some sort of catalyst, maybe a technological—

Do you think that helps with the confidence behind it?

Yeah, conviction. Exactly. And you know, as money managers, we have to be able to explain to clients because like, you know, price is doing this, just trust it, you know, just trust the price. But yes, you can do that. But for clients, they'll feel much better if you actually understand the story.

That's one of the nuances that people don't realize, I think, because they— one, it's like almost a positive on the just a retail independent trader side to be able to just do that, to just use price, not have to explain really anything to anyone other than yourself. But then equally, a lot of people's goals align with trying to be in the position you're in and what you guys do. Yeah. But then they don't kind of realize, okay, we have to take a more professional approach. Right. And a deeper understanding.

Yeah.

Regardless of whether how powerful this concept and, you know, the cycles may be, we still need to add those layers. And those layers help though.

Those layers help a lot because not all charts are built equally.

Probably helps with that nuance that you talked about, like making sure stage 3 is actually a stage 3 and we're not going to continue up. Exactly. Which I'm sure we'll go through.

Because if you have no idea what the news is doing, that's kind of like what we talked about. Oftentimes news is worse at the bottom, news is best at the top. You can see like what sentiment is like with the stock. So there's a lot of layers, like you said, to add on to just this price analysis to give you more conviction, to give you more edge. Because when there's a confluence of everything, you can be more confident in your analysis. And, you know, we're not talking about a lot of other nuances, but two stocks of equal setup, one's in a stronger theme or group, that stock in the stronger theme or group likely makes a bigger, more explosive move. Yeah. So, or a stock that has better fundamentals as well, you know, better story, there's that catalyst around it. So those are things we're not going to get into. We're focusing on the longer-term stage analysis to help you at least align yourself with the longer-term trend.

So would you say stage 1 and stage 3 are centered around sort of trade management and positioning, while stage 2 and 4 are where you could take positions?

I would say stage 1 and stage 3 are the avoid stages. That's where you get chopped up. That is where institutions are accumulating in stage 1 and then distributing in stage 3. But for us, we're not managing tens of billions. We can surf the smart money.

So I mean, in terms of management, what I mean is you'll be coming out of stage 2. So that's where you're starting to scale out.

Exactly.

Yeah. And then same with stage 1. If you have shorted, then that's where you would look to be again scaling in terms of management. Yeah, exactly.

I understand your point. Like if a stock's turning from stage 1 to stage 2, we'll put it on our radar and start like digging into the news. Now asking AI, Just understand the story, what's going on, are there fundamental catalysts, is there a predominant, you know, technological revolution or some sort of theme?

What's the process to do that in terms of identifying when a stock could be changing from stage to stage or phase to phase?

It's like I talked about the rate of change in the stock and then the slope and alignment of the moving averages.

But in terms of like, how do you do that? Are you just manually going through these stocks or is there a particular scanner or settings or? System that you have that will allow you to identify?

Yeah. So this— so I personally like to use my eyes more. I have basic filters like a price filter, average volume filter, and then in DeepView, this is the charting platform I use. It's called DeepView and they have these relative strength or absolute strength ratings. And so I like my momentum scans and typically most charts in there are probably in stage 2. Gotcha. I don't need to quickly go through it. Okay. But when I'm like, so we have a, like I said in the first podcast, we record a video every day the market's open. We go through this inter-asset correlation of stocks, of bonds, of crypto, of other asset classes. And for that, you know, we use our eyes to see like what stage these—

But you're pretty up to date anyway in tracking these things regardless.

Exactly.

And like you said, this is a longer term perspective.

Exactly. Or going through ETFs like the ARKK, we have ETF list. We'll go through those. We're not screening things out. We're going through it to see, you know, what are sectors doing? Is our homebuilders in stage 4 right now or is tech in stage 2? And with this analysis now and on DeepView, there's a really cool feature where they'll plot the number of stocks of the DeepView universe, like they'll categorize it between stage 4, 1, 2, 3. And so you have the numbers and you'll get a feel of like how the numbers are changing. If a lot of stocks are starting to morph into stage 3 and the far majority of them are in stage 4, you can, you can in your head start to get a little skeptical of the markets. Of course, like if most of the stocks in the whole universe are in stage 3 and stage 4, it's probably not going to be that great of a market. So we've gone through a full cycle with ARKK. We'll quickly just start running through, you know, 5, 6 examples in stocks, go through crypto, commodities, bonds, currencies, and then we'll go through more stocks.

Would you say that this stage analysis, is it fractal in nature or is it predominantly for the higher timeframes?

Oh, it's definitely fractal in nature, 100%. We can go on the daily chart and use 10, 20-period moving averages, put a 30, 40-week on, you'll see quicker cycles.

Yeah.

And they could be more for swing traders, swing cycles. I don't know what day traders would use. Maybe an hourly chart for their quote-unquote longer-term chart while they mainly operate under a 5-minute chart. But I'm not a day trader, so I can't speak for them. But we primarily operate under the weekly chart for a longer-term trend and then look for entries on the daily.

And then it's interesting, like you could say it's cleaner or easier to do from a higher time frame perspective, less noise, but then it's patience.

Exactly.

To be able to wait for this next stage to take place. Exactly. To then also, even if you do execute in a stage 2 and then hold throughout and manage your trade for that length of time, and then look to try and manage accordingly when we move to stage 3.

Yeah, that's, uh, typically we're not, typically we're most likely not holding through the whole stage 2 period because we don't want to hold through those basing periods, especially modern markets. You can have a quick 50% drawdown in these stocks. Unlike, you know, in the '80s, '90s, a lot of stocks will be like an ANF. They'll just trend straight up the 10-week moving average. For these first two examples, it's like a perfect linear stage 2 uptrend. Yeah, but a lot of modern-day ones, they'll mean revert back to the 20, 30-week. And for us, we don't want to go through those drawdowns in that period because there's so many opportunities in the bull market. We just want to rotate our money into the next stock that's ready to bring out of a base. Surfing the MAs, you know, hold a position.

Even if you do have these cycles, the reality of, uh, was it getting in at the absolute bottom, getting out the absolute top, is obviously—

it's not possible.

Yeah, it's, it's a great goal to have, right, to strive towards, but the reality is it's very far from different because a lot of people will hold out, hold out, hold out. Yeah, probably get blinded by then what the P&L looks like and then not actually then manage or execute accordingly.

And a quote that I repeat in my head pretty much every day is Jesse Livermore. And he found this 100 years ago. He pretty much said, as trend followers, you want to forget the first eighth of a move and the last eighth. And they're often like two, two most expensive eighths of the move. And when we look at a chart, the first eighth is like in this area, in the stage 1 area. The last eighth is in the stage 3 area. And that's where all the chop frustration are. Yeah. So forget about this first eighth. Forget about this last eighth. Just catch that sixth eighth in the middle. It's often the best. Same with on the short side. Forget about this first eighth. Forget about the last eighth. Just catch this meat in the middle. So we went through RK, the full cycle. We'll go quicker now since we've broken the stages down. Of course. Yeah. So stage 2, stage 3, and then stage 4. And now another stage 1 basing period that has lasted over 2 years. And now we're back into stage 2 uptrend. Hmm. Abercrombie Fitch, stage 3 to stage 4, stage 1 back into stage 2 above the moving averages. Rate of change of the stock slows down. Moving averages are oscillating and cutting through price. It's basing, building lower highs, and eventually breaks down and makes lower lows. And now we're below the 10, 30, and 40-week moving averages. Now in a stage Stage 4 downtrend again recently. Actually, I want to go into some nuance here. Right here, this gap down into Stage 4 was actually catalyzed by better than expected earnings numbers. And that's what I was talking about on that example. It looked like potentially we could have been basing and maybe went back into Stage 2, but it was a clear telltale sign where you have great news and it gaps down. And that's actually the week I shorted it. And it was a nice move down, very nice linear move down below the 10-week moving average. And on the flip side, you spent a lot of time in, in stage 4. Now moving averages are slicing through price. This is stage 1. It's very messy. It looked like, oh, we were about to break down into stage 4 again. And these are another one of those nuances. It looks like we're heading to stage 4 again. But Abercrombie Fitch reports great earnings. You know, the Federal Reserve's cutting rates. We're entering this potentially economic boom cycle and boom, you make a 100% move off the lows. We're back in stage 1. You can see price above the 10-week, above the 30-week, above the 40-week. So that's some nuance there. Let's go to the semiconductor ETF and I'm going to start going faster now because everyone should understand more about the nuances. COVID crash, stage 4, V-shaped recovery back in stage 1, and now we're back into stage 2. Stage 2 lasted for a better part of almost 2 years. Stage 3 started happening, moving averages start cutting through price. We have multiple rejections at the 10-week, 30-week, and 40-week moving average, and now we fall back in that 2022 inflation bear market below the 10, 30, 40-week. So stage 1, I mean stage 2, stage 3, stage 4. Back in stage 1. And then this is a choppy stage 2, but still stage 2. Another ETF, ARKG, another family of Cathie Wood's ETFs. This is just textbook again. You can see stage 1 basing period. You see how literally it just goes sideways. Yeah. Moving average, it's just sideways. That's a clear telltale sign. And then boom, you have a catalyst. And the catalyst was the COVID crash. The Federal Reserve starts printing trillions of dollars. The government starts printing trillions of dollars as well. Of this huge move up again. You can see 10-week now, surfing the 10-week. Yeah, 10-week has that price gap above the 30 and the 40. That's oftentimes you can say that's in stage 2 uptrend. You can see all the moving averages are strong, moving bullishly aligned.

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And let's get back to the episode.

Higher lows and higher highs in price. Eventually you have this big crack like RK. We start oscillating in between the moving averages again. They start flattening, they start bearish aligning, and then price breaks down in a huge stage 4. And the reason we really want to know the longer term trend is because like in a microcosm. Yeah, you can have a temporary short-term uptrend on the daily, but you're buying that, it rejects the 10-week, and you enter frustration and you want to step aside. Because look, when we enter stage 4, the point of stage 4 to the bottom of stage 4, that's a 66% drop from the all-time high. You had a 78% drop. So a lot of damage can be done in stage 4. That's a lot of give back.

And for every crypto trader's journey.

Oh yeah. And for our clients, you know, like what we talked about in the last podcast, our mission is to protect the downside of our clients who most— a lot of them are headed into retirement or in retirement and they just can't afford to have 30, 40% drawdowns in their assets. So, I mean, no one can— no one should want to go through a 30, 40% drawdown in their client assets. And again, this ARKG ETF is actually still in a stage 1 basing period after like almost 3, 3.5 years. And actually this is a current—

just about, yeah.

Yeah. And disclaimer, this is a currently owned position in Turbo. We recently initiated it.

You can see stage 2 beginning.

Yeah, it's the beginning of stage 2. 10-week, 20, 30, 40, all bullishly aligned. Price is surfing the 10 and 20. And, you know, I will quickly review kind of the story and narrative. To me, I was a bio major. I took some biotechnology classes and AI. There's so much data to analyze in biology, all the, you know, phase trials, all the data on proteins, how they fold. And with AI, you can analyze data so much faster. So I think AI is going to augment genomics in a big, big way, and it hasn't really reflected in price yet. I've seen a lot of breakthroughs, but again, we're just starting to enter stage 2 uptrend. And even just the retracement back to previous all-time highs is a 250% move, which is, you know, pretty good. So we'll see what happens here. No one knows if it's going to actually play out. We can just enter back into stage 4, but that's why you manage risk and have stop losses. Mm-hmm. ELF is another textbook one. You can just see, like RIZZ, you can see the stage 2 uptrend. Yeah, you got a stage 4. In that 2022 period. Then you had better than expected earnings. You know, this became a fad. I had some friends who were girls talk about, you know, they're going— they're buying a lot of e.l.f. It's this like relatively quality but cheaper makeup you can just put on, especially people in college. I was in college back in the day or just out of college. So people aren't affording the top of the line makeup and perfect trend above the 10-week moving average., which is above the 20, which is above the 30, which is above the 40. And I might be repeating myself a lot, but that's what it takes to really master this concept is that repetition, looking at a bunch of charts and identifying. Yeah, exactly. And aligning yourself with the longer-term uptrend.

So what would you say there? You see how we were in stage 2 and then we dipped down very slightly and then went straight back up.

What would that be? You're talking about right here? Yeah. So without hindsight, this is a stage 3 topping process and actually at some point broke down to stage 4, but just institutions decided it wanted to support the stock at an earnings report right here and it went back into stage 2 for a little bit, but then it entered stage 3 and then eventually stage 4. And again, just look at the damage that can be done in stocks. 78% decline. And so a concept I learned from Mark Minervini is his 50/80 rule. When a market leader goes through its bull market period and it tops, there's a 50% chance it drops 80% and an 80% chance it drops 50%. So we want to avoid that kind of destruction. Of course. So that is 5 full cycles. Maybe I'll go through, you know, we're going to— I'll save the rest of the stocks for later. I want to go through a couple of nuanced ones, and then crypto commodities, fixed income bonds, and then circle back for the other stocks. So FTI is an example— is this nuanced example that I talked about where you have a stock that looks like it went through the stage 4 period, stage 1 basing, a huge stage 2 uptrend, and it gets wide and loose. Moving averages start slicing through price, price is slicing through the moving averages. It actually breaks down to stage 4 and then it comes back through up the moving averages. Moving averages are still flat. So you can say it's in the stage 4, stage 3-ish period. Yeah, it's like, okay, super wide and loose, but eventually this thing just refuses to go down and it enters another stage 2 uptrend again. And recently it broke out to new all-time highs on this piece of news that they're actually converting their aircraft engines into power turbines to meet the power or energy requirement needs of data centers. So I like to label my charts with key pieces of news. And now we're just in this super nice trend from that news. We made an almost 80% move now.

So in those scenarios where these nuances take place, is it just a case of you still need to follow your system in terms of what stage is representing that in real time?

Exactly. Exactly.

Like your job is just to manage risk. Exactly. I was not interested.

We're looking at the stock in this period right here.

Okay.

Too wide and loose. There's nothing. But when it starts to get above the 10, 20, 30, 40-week and that starts foolishly aligning, I'll put it back on my radar. It builds this handle within this big 1-year cup with handle and on this catalyst that breaks out into new highs. So that's a nuanced take. AMR was another perfect one right here. Like when you say this is starting to look stage 3-ish, you had this huge stage 1— sorry, stage 2 move above the 10, 20, 30-week. 40-week moving averages, moving averages catches up, catches up the price. You see this wide and loose action. You can see like what we talked about before, the moving averages are flattened, prices oscillating in between. In another reality, this could have broke down and retraced the whole move, but institutions decided there's more left in the move and we entered another stage 2 uptrend. Yeah. So that's a couple of nuanced situations there. So like I talked about how cycles are universal in the world, in the universe, they're also universal across asset classes. So I want to go to some crypto first. Let's go to Bitcoin, Bitcoin weekly chart. And with crypto and commodities like gold and silver, because it's— there's no earnings reports, there's no CEOs being fired, there's no CEOs committing fraud, there's no news events, there's no short reports, it literally trades off supply and demand and human nature, which is timeless. Jesse Livermore observed it 100 years ago and it stayed constant throughout this whole time. So let's just zoom all the way out to Bitcoin. You could— I could even see like not even zooming in, I can just start seeing the price cycles. There's a stage 2 uptrend here topped in 2017. We can zoom in more. Again, people should know the colors of moving averages now, so I'm not going to keep repeating myself there. Moving averages slices through price. Price builds lower highs and lower lows. We're in a Stage 4 period again. Now the rate of change stops going down. You start building higher lows here. We reclaim the 10-week, we reclaim the 20-week. Eventually we reclaim the 30, 40-week. All the moving averages catch up to price. They start bullish aligning. 10 is above the 20, above the 30 and 40.

So in this case, when we're seeing that change, Where would be, where would, doesn't have to be you personally, but in terms of the concept. Yeah. And the, the stages, where would we, the sort of eyes start to be looking more intrinsically for potential, you know, positioning or entry in terms of the EMAs? Is it once we're above all 4, or is it once we're noticing, okay, we're looking like we're in a stage 1, okay, we're starting to transition to stage 2. Here's where it might get interesting or where on average most people should start to look?

Typically, I would want the price to be above all cumulative averages. Okay. With at least the 10-week above the 20-week and above the 30-week.

Okay. So you want to see a real transition first.

And then we'll talk about, you know, more of a trader continuation setup. Like I talked about the multi— the first multi-month base. Yeah. After the first initial leg. There's earlier entries as well, like on episodic pivots. And again, I'll defer the listeners to the Predapes. And then there's more of a quote unquote Weinstein investor buy, which is buying like the first consolidation above the 40-week moving average, like maybe right here around this $5,500 level.

So there's almost different nuances, approaches that you could take.

Yeah.

But following the same thesis.

Exactly. And right now I don't want to focus on entries, because everyone's probably like, where do I enter? Where do I sell? I just want to focus on a higher-level perspective of the trend.

Well, the beauty is you can go to other episodes for entry techniques, for example. But entries are usually very particular to a trader's personality.

Oh, exactly.

And their time horizon. Exactly. Right. Because a lot of people watching, no doubt, probably more shorter term. But the beauty of this is, as we talked about, when you have this knowledge and awareness, and because it's a universal cycle, price cycle concept that can be applied to all of the markets that people are trading. It allows you then to have that one bigger picture. It's fractal in nature. The thing I would say when it comes to it being fractal is then you have to learn the nuances of those timeframes, right? Exactly. So if you were to look at it on a daily or even a lower timeframe, you would still have to spend the time, as you said, for what you've done on the higher timeframe perspective of building those reps, of seeing the stages and how they look on average from that time horizon.

Yeah.

So for you, if it's been like weekly, daily, if someone was a day trader or even a scalper looking to utilize this cycle concept, they would then need to do the same work, right, of going to the whatever relevant time frame. Exactly. So that might be 1 hour and so on.

And, you know, I've provided a bunch of tickers and examples. People can go back and chart it themselves. Yeah. And put on these moving averages and identify it. So let's just go through Bitcoin quickly. You know, enter stage 2. This one didn't last too long. Another stage 3, quick stage 4, and then stage 1 again. And then you had this 2020 move. Yeah. Stage 2, stage 3 that lasted a year. And then this big stage 4 above the key moving averages right here. The snapshot. Remember it. You can see the whole cycle. Stage 1, stage 2, stage 3, stage 4. And again, and that's stage 1 right there. Stage 2 continuation. Stage 3. I mean, sorry, stage 2. And now you have this potentially a stage 3. And I'd say we're, we're definitely in stage 4 right now building this downside continuation base. So it's funny because we have Tom Lee giving $250,000 price targets. We have other people giving massive price targets for 2026, but that's not happening until you get back above the top. 10, 20, 30, 40-week moving average.

So you'd say it's actually quite good in a sense as well, going back to what we talked about earlier about the sort of fundamentals and news.

Yeah.

But then also the technical side.

Yeah.

Actually, one of the benefits is it can almost allow you to not get heightened by the news.

Exactly.

And the price target projections.

Exactly.

Because, you know, okay, doesn't really mean much because we haven't shifted back into stage 2.

Yep. And then—

Or stage 1 to stage 2.

And then once price starts shifting back into stage 2 and the news is bullish, you can corroborate the news, the fundamentals, the macro with the price.

And I can take it on as more of a key factor.

Exactly. So that is Bitcoin. I'm going to quickly go through Ethereum and there's actually a nuanced trade here, but let's go. Let's just do the 2020 cycle because people, we don't need to go through the whole thing of the whole Ethereum life cycle. But again, stage 1, you can see moving averages oscillating through price. Slope is pretty much flat. Then price starts surfing the 10-week, higher lows, higher highs above the 10, 20, 30, 40. Eventually, this is late 2021 into 2022. Moving averages slices through price, price breaks down below them. Now it's below the 10, 20, 30, 40-week moving averages. Again, stage 1 lasts a couple of years. Now we entered stage 2 briefly. This is where it gets messy. It then breaks down to stage 4, then breaks back up into potentially stage 2, and then, you know, just chops around. But that one nuanced trade that we talked about when I was talking about Stage 4, that Stage 4B- that Stan Weinstein talks about, it was down here. So price gets extremely stretched to the downside. It comes back up and it builds its base on the weekly. You can't really see the base. I will go on a daily chart real quick and I'm going to delete the lines so no one sees that. On the daily chart is what you saw here. You can see, yeah, the stage 4 move below the 10, 20, 50, 200-day moving average on the daily and had this super, super tight base, little shelf above the 10, 20, 50-period moving averages on the daily chart. And so we just bought in this area and caught a nice mean reversion into the 200-day moving average. But I don't want to talk about that too much. Let's stick to the full price cycle. That is Ethereum. Let's go to gold now, which has been an extraordinary move. But let's go back to history. Let's just talk about— let me see. Let's just talk about this. Let's, let's talk about the big bull market in the '70s. Again, this was 50 years ago. Stayed constant. Timeless. Yeah. Again, we don't want to— we don't need to talk about too much of the context of the 1970s, but we all know that was a stagflation decade. Huge inflation. Oil spiked and gold as well as inflation hedge as a hard asset. The futures, it seems like it started at least on TradingView. It started in 1974. So we don't know what happened behind that., but stage 4 period again below the 10, 20, 30, 40-week moving averages. The stage 1 didn't last very long. It quickly entered stage 2. Now we're trying to build the 10, 20, 30, 40-week moving averages. And this stage 2 lasted a while. It lasted from 1977-ish to all the way to 1980. You can see price got extremely extended above the 10-week and it blew off, put in a top. Sliced all the moving averages. Now we're going through that oscillating period. And eventually a year later in 1981, that is when we had a recession/depression-ish, when, when the economy contracted before Reagan came into office or was in office since he cut a lot of costs. And I forget the Federal Reserve chair at the time, but he was hiking rates to finally kill inflation. And we entered the Stage 4 period. Again, you can see below the 10, 20, 30, 40. That trended for a while. Again, these trends could last much longer than you think. Eventually we broke back into Stage 2 above the 10, 20, 30, 40. That didn't last very long and we had this a lot of chop. So that's gold. Silver is also making parabolic move recently too. But I want to go back to the 1970s period with silver as well.

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This price action looks pretty weird because probably less liquidity back then, but it still highlights it. Look, look at this amazing, crazy parabolic move. Maybe we get that this time around. Who knows? But you can say this is a stage 1, really choppy period, just going sideways. Now you see the ascent of the price going at a 45-degree angle above the 10, 20, 30, 40-period moving averages. And now remember we talked about the rate of change, the slopes. I'm going to draw this real quick. I think it's a good exercise. You can see the rate of change was pretty much flat here. Then it turns up. And these are just tangential lines. I don't remember too much calculus, but this is a derivative of price. You can see another tangential line. You can see how it's becoming steeper and steeper. You ready? And now you draw another tangential line, you know, steep that is getting. And then this final one, it's like it's literally just vertical. So that's when, you know, like it's starting to get unsustainable. And I'm using log charts on the weekly where, you know, 100% move is reflected the same. For example, a $10 to $20 move is the same on this chart as a $100 to $200 move because they're both 100% moves. Okay. If I change it to arithmetic, it just looks— it's— it kind of makes something look more parabolic than it actually is because a dollar is the same. Like, a $10 will completely bleed out a $10 move like down there.

Okay.

Yeah. So that's why on longer-term timeframes, I use a log chart.

Okay, so we're kind of even it out to what in terms of percentage.

Exactly. Versus dollars. Yeah. And like, and since this made a parabolic move, when assets make a parabolic move, it can often top even faster. So you can see it made a 150% move in like 10 weeks and then it dropped 72% in like 16 weeks. And that's a quick stage 4 crash. Didn't last too long. And then it tried to get into stage 2 again but failed and resumed the stage 4 downtrend. So we've covered a full cycle in equities. We've covered full cycles in crypto, which is— you can call it an asset class. Some people don't think it's an asset class. We'll just call it an asset class for the time being.

I think by now it should.

Yeah, which recently came like 15 years ago. You know, gold and silver have lasted thousands of years. And I bet if there was enough liquidity, enough history, we'll see the same cycles happen, you know, when Jesus was born in year zero or something.

If you go to like silver's breakout and gold's breakout these last couple of years, it would be following the same exact cycle as well.

So, you know, gold had one of the best setups I've ever seen in my life. You know, the cup with handle. Yep. This is a 10-year cup with handle. Yeah. And the bigger the base, usually the more sustainable the move. You know, we've had this 2-year move just trending above all moving averages. Stage 2, obviously. Yeah. So I, I would say this is like—

So would that be stage 1 though?

Yeah, I'd say this is stage 1 the whole time.

So you could really, if you think about it, because we're in there, if we wanted to sort of zoom in a bit, you could also go through smaller—

Yeah, yeah. We could do that as an exercise. But it's very messy, like a quick little stage 4 here. Yeah, it might be back to stage 1.

It doesn't mean you've traded it. Exactly. And even if you did trade it, you would still be following the protocols you need to put in place. Exactly. Because I think a lot of— we should say that, don't get mistaken in terms of thinking just because it is stage 1 or 2 or wherever it may be that you need to execute anything.

Right.

And even if you do, then there's other layers that then need to come in between, dependent on your viewpoint and your time horizon. Some people maybe, you know, you get into stage 2 and they're only looking for the quick pop the first 1 week, 2 weeks versus like there might be others waiting for a year.

Exactly. To your point, this is a weekly, right? So, you know, this is stage 1 for a while. You can potentially buy it over this pivot point, like $1,850, and that gave a quick little 11% pop. It's gold. And so this was when the Ukraine war broke out. So you could have had a quick little, you know, macro catalyst trade and it just fell back in, fell back into stage 4, back into stage 2, stage 3, stage 4, quick stage 4, back into stage 2, and then boom, out of this 10-year cup with handle and it's made an enormous move so far. And what's funny was I remember trading this too. Obviously I didn't hold this whole time because we're shorted more shorter term than holding the entire stage 2. But back then when gold broke out, there wasn't nearly as much of a talk of $38 trillion in debt, this huge deficit, geopolitics, whatever. And now gold's starting to go parabolic after a 2-year move. And people are saying gold's going to the moon, hard assets are going to win, dollar's going to zero. And that's exactly the type of news where I start thinking like, okay, I'm a very— do I want to start looking for a stage 3 to start happening or Do I want to start looking for this verticality to continue and then finally blow off?

Because it looks very vertical. Yeah, exactly. It looks extremely vertical and it looks like we've been riding mainly the 10 for 2 years now.

Yeah. And this could go on for another 2 years, who knows? But when you start hearing everyone rushing to gold, people waiting in lines to buy physical gold, our clients asking us like about gold and silver, So we start, yeah, we start, we start putting on that contrarian hat. But you don't want to be a contrarian too early because, yeah, you know, a lot of people want to be contrarians just to be contrarian. And I'm kind of taking— I'm kind of stealing this wisdom from Stanley Druckenmiller. He said contrarianism to him is oftentimes overrated because a lot of the money is made with the crowd. The crowd often is right for a lot of time and If anything, when you have those bubble moments, you can make some of the most amount of money in the shortest period of time. There is those periods of time where you do want to be contrarian, but just because you want to be, quote unquote, more intelligent than the crowd and just try to pick tops all the time. Yeah. And try to be a contrarian just to be contrarian. You can really get chopped up and lose more money trying to be a contrarian than just being with the crowd.

Because even like Michael Burry, you know, the famous everyone likes, The Big Short. But he held that position for so long. Right? Because even though he was right, the crowd were able to, the markets were able to continue on its path. Exactly. Even though, yes, he was right and he'd done all the research, knew the numbers. And that was a big part of the film they made, right? Where he was confused, why is this happening? This is wrong. And then it finally happened, but it could have been a case where he could have got liquidated if it kept going, right? Exactly.

Yeah, I think he had credit default swaps on with the big banks, I mean, here in New York City. And he's probably paying like $100 million plus insurance per month. And so he was able to hold out enough. Like investors were asking for their money back. He's like, no, I'm not giving you. Like that wouldn't fly in today's market. If an investor wants their money back, you got to give their money back.

But here's the show, because like you can be, like you said, you can go against the crowd, but you have to be very mindful of where you try and time it, right?

Exactly.

Normally you will probably, even if you're going against the crowd, you want to see some form of catalyst. Exactly.

Sort of lead you in or some sort of like pure, pure euphoria vertical move. Like right now it's still pretty controlled. It's starting to get a little bit, but it's still pretty controlled.

You'd probably see one multiple gap, big gap.

Yeah. Like if you go back to silver and remember, this is the weekly chart, not the daily chart. On the weekly chart, this thing was gapping all over the place. Now this is probably never going to happen. In today's age, because there's like, you know, it was just less efficient market back in the day. Of course. But you might have a kind of that type of—

You see like the last week in particular, Gap Top, we see a big percentage move.

Yeah.

And if that was to continue for another, say, week or two, then we're in really, you know, that territory. You know, because you see all the articles and news, there was such a focus on silver, which has never been happening.

Exactly.

They've raised margin limits across many brokerages and and firms. And again, these are things that do not happen unless that euphoria and that moves happen. You can see in the price action as well.

Right. And, you know, we probably also have experienced traders watching this as we speak. For them, they definitely skip over a lot of the content. But I'm teaching this to someone assuming that they know nothing about stage analysis. Of course. And that's kind of my intention here.

Of course.

So I'm trying to cover every single detail. Repeat myself a lot because—

Well, I think you would agree, like I said, because we do have a good stock audience, but I do think probably a large majority is futures. Okay. And then we do have crypto and we do have Forex as well. Okay. And with that though, is that this is a universal concept. It focuses on cycles as well. And again, even if you don't, in terms of your trading, if you're a scalper, day trader, no problem. And even if, this is something that you might not utilize to take trades or even manage because of your time horizon, whatever it may be.

Yeah.

This is going to allow you to understand the overall cycle, and especially even just from an investing standpoint. Yes. Because I'm very big on, I was very big on, oh, everyone should learn to trade, but I don't think so. I think everyone should learn to invest, right? As in everyone, especially traders, because investing is the thing that will probably make them the highest return in comparison to, say, a lot of people just kind of get into a random crypto coin. Yeah. Someone, they heard it somewhere, read it somewhere. Yeah, exactly. While using, and again, even with crypto, they could use this same—

Exactly.

Stage analysis.

That's why I think this is a very, you know, timeless principle. It's also very universal. Mm-hmm. And I think a lot of your viewers, like you said, will all gain value from this because it's— it's timeless across all assets. So, you know, we've covered full cycles in equities, we've covered crypto, we've covered some commodities, and I'll actually give a bonus right now. And I just— more of a current analysis that could lead to a potential huge move in the future.

Okay.

I don't know the future, but it's uranium. This is spot uranium. And let's go through— this is a 20-year chart almost. The last high we made, all-time high, was in 2008 in the great financial crisis. You can see I'm not going to zoom in. I'm going to be more of a macro overview. Stage 2, stage 4, a lot of like just randomness doesn't matter. We've entered the stage 1, potential stage 3, sorry, stage 2, potential stage 3, then reenter stage 2, came back into stage 4. Now we're potentially in the stage 2 again. When I look at this, it's a 20-year cup with handle, cup handle, and we'll see over this 33.8-ish level. That to me is the pivotal point, as Jesse Livermore would say, and there's a huge fundamental and story backdrop to uranium as well. AI, it's pretty simple. I'm not going to get into details. AI requires immense energy. Nuclear is one of the safest— people don't think it's safe, but it's one of the safest, most efficient, and cheapest form of energy. It also doesn't pollute the environment, and uranium is the fuel for that. So we'll see what happens here. $33.9 is really the big level. You could have snuck in in this $27 0.2 area. We also have some uranium exposure, not directly to the spot uranium, but we have other nuclear stocks as well in the portfolio right now. So that's a bonus. I wasn't planning on sharing this, but I would say this is a current setup. Pay attention to it. You can also look at the URNM ETF, which is Uranium Miners. This actually broke out into all-time highs. We're in stage 2. Above the 10, 20, 30, 40-week. These are the miners. URA is another uranium miner, also in stage 2 as well. So pay attention to that. We see there's a pretty good forward-looking prospect for this idea and we'll see what happens and plays out. I mean, this is a definitely secular trend with power generation because we just need so much of it to win the AI race. I mean, all countries, all the biggest countries, China, Russia, Iran, of course, the United States are all in this huge energy race to, of course, lower energy for residential homes like ourselves and just the average American or average citizen. But we need so much energy for data centers as well to power AI. So that's that. We've covered commodities. I want to quickly cover fixed income. Again, it's universal bonds. I don't know if there's bond traders that follow you., but this is the— sorry, this is the 10-year note. So the 10-year bond or 10-year note futures, as you can see, there is a perfect stage analysis here as well. Sorry about that. Stage 4, Stage 1, Stage 2, Stage 3, and huge Stage 4. During this 2020, 2021, 2022 period that lasted all the way until late 2023. The 10-year note futures dropped 25%, which is a huge drop for US Treasuries. Like, it's— the Treasuries, fixed income markets is probably besides currencies, it might be on the same par of currencies, one of the biggest markets in the world, most liquid, most money flowing in. On the debt markets and it's the US debt markets and credit markets. So trillions of dollars are flowing into this. It's how we fund the government. Like the primary way is taxes and then issuing debt. So I do want to bring up a point here, if you don't mind. So a lot of, you know, traditional asset managers, traditional advisors, like what we talked about in Words of Wisdom, they're quote unquote pie chart advisors. They'll, if you're 60 years old, they'll typically have you maybe 60% bonds, 40% stocks, maybe 70% bonds, 30% stocks. And they'll tell you bonds are safe. Hmm. Are they really safe though? Well, looking at the evidence here, when inflation hit, that broke all these advisory models. Bonds dropped more than stocks in 2022. So a lot of people in retirement got killed because stocks dropped a lot and then bonds dropped, which is supposed to be the balancing part of the portfolio. That the models expected, you know, bonds to go up while stocks drop. But no, if you looked at a simple chart and stage analysis here, you can tell that bonds was topping out as well. Yeah. And entering stage 4 decline. And you want to be out of the way for that decline. You know how bond yields and bond prices are inverse to each other. You could have looked at the US 10-year yield again, but since it's inverse, while bonds had a stage 2 uptrend, the 10-year yield had a stage 4 downtrend. And when the 10-year yield was basing, the 10-year bonds were— notes were topping out. And then when the 10-year yield entered stage 2 uptrend, bonds were in stage 4. So that's another way to gauge prices of bonds.

Correlation.

Yeah, they have inverse correlations. That's just bond theory. We don't have to dive too much into— I'm going off on a tangent again, but I just want to cover quick fixed income as well. That's a 10-year note. And then finally, let's just cover our currency, the US dollar. Let's go to futures, go to the Dixie. You can see— I want to see if I can find a better price cycle here. You know, I like this dot-com era more than the current one. But actually, let's just talk about the current one. You can see after 2020, in 2021, the dollar dropped like 10%. Again, you can see 10, 20, 30, 40-week moving averages downtrend. And from that, you can just— so March 2020, this spike here, that was off the COVID crash. Looks like the dollar was a safe haven at that time. And when the Fed stepped in, printed trillions of dollars, did a lot of QE, you know what happens when that happens? When you flood the system with a bunch of dollars, the dollars you currently have become worth less. So we had this huge downtrend in dollars. And in, in economic theory, when a country or central bank, bank wants to protect its own currency or back it, it starts to raise interest rates to protect from inflation. And that's what, that's what happened from 2021 into 2022. We wanted to beat interest, sorry, beat inflation, the highest accelerated inflation since the 1970s. Federal Reserve jacked up interest rates to 5% and the dollar skyrocketed in the stage 2 uptrend. 10 greater than 20, greater than 30, greater than 40. And then vertical nature, you know, at this snapshot, this kind of looks like right here. Just picture that in your head real quick. Screenshot that in your head. Remember, if you go back to Art K, go back to this weekly, doesn't look similar. Here, I'll just quickly tab through. Pretty similar. Yeah, the stage 2 uptrend, this huge sell-off like right here. Price oscillates in between moving averages. Eventually, you know, this had a lot more chop, but eventually it didn't enter this downtrend. And right now it's, it's into the stage 1-ish period. But actually recently the dollar sold off hard this week, potentially back into stage 4. So that's the dollar. We covered currencies as well. We covered commodities, precious metals like gold, silver. If you were to look at— we won't do it in this video, but look at cocoa beans when they had this huge move. I mean, you know what? Let's just go over it. So it's a great— it's a great— it's like a great example. Of course. Stage 1. Look how— look how choppy this is. You want to trade this, Riz? You just get whipped around. You'll lose so much money. The moving averages are slicing through price. Price is slicing through. And eventually, boom. I believe with cocoa beans, there is a fungus or virus that wreaked havoc in the African cocoa farms. And that— with commodities, when you have— yeah, when you have these imbalanced supply and demand, you can have these monster moves. And look, look at the stage 2 uptrend. It went vertical above the 20, the 10, 20, 30, 40. Eventually, again, the stage 3 potential formation, stage 4, had one last push at a failed breakout, and then it topped in this huge stage 4. You can see this huge You can see the stage process going here. And so what I would want to see for cocoa beans, where cocoa futures, the bottom is, you know, price starts oscillating sideways. The 10 catches up, 20 catches up, 30 catches up, 40 catches up, and then potentially we can go for another stage 2. Orange juice. Everyone loves orange juice. Stage 2 uptrend, stage 3. The stage 3 didn't last long. Crash in the stage 4. Yeah. And that— and I believe this uptrend in orange juice was caused by— this was a virus in orange trees that again, supply and demand imbalance. And I believe they resolved it here quickly and that's why prices crashed. And then coffee, same thing. Everyone drinks coffee. I have coffee right here. And if you want to chart the price of coffee, you can as well. Stage 2, Stage 3, Stage 4, Stage 1, back into Stage 2, briefly dipped into Stage 4. And now I'd say this is in a Stage 3-ish and potentially looking to Stage 4. So we might have some cheaper coffee going forward if this continues downward, which would be nice. Yeah, but, but what, like, I mean, a quick tangent here, you know, all these big corporations like Starbucks, orange juice corporations, cocoa bean, like chocolate corporations, they probably have economic analysts. They might even have technical analysts. We don't know to chart the futures so they can hedge against whether prices are falling or not. And obviously, as you know, Starbucks, I would like lower prices in coffee. And when prices, you know, if prices are turning up to stage 2, we can buy some cocoa futures to hedge against, you know, prices going up. So that's a more real-life application even with this type of analysis. So we'll continue on now. We've gone through every single asset class, just showed you that it is a universal analysis technique. We'll go back into some stocks, we'll quickly go through some other cycles. And then for this time around, I'm going to have a brief pause. So listeners can join in as well. So NVIDIA, the leading stock of this AI bull market, let's go through it right here. Federal Reserve jacked up interest rates around this area throughout 2021 and 2022. What is this period right here? So that's stage 3. What about here? You have the 10 below the 20, below the 30, below the 40. That is stage 4. And now this is what? Basing period. You see the stock and the MAs converging. That is stage 1. And then late November here is when ChatGPT launched, launched, and everyone, institutions realized to power ChatGPT, to power Groq, you know, Gemini Cloud, you need these huge data centers with a lot of chips. Also known as GPUs. NVIDIA perfectly was in prime position to take advantage of this AI bull market and AI revolution. You know, GPUs are graphics processing units and they were used just for gaming processing, you know, the graphics in games, video games. And perfectly enough, they just in a way, quote unquote, got lucky just being in the right place at the right time with the right technology. And look at this stage 2 uptrend. NVIDIA made so far. It potentially topped out here into the tariff crash. But this is another one of those potentially looks like stage 3 and stage 4 and back into stage 2 just because we're in this AI supercycle and NVIDIA continues to come out with new products. Now the B with the new B300, no, yeah, with the new 300s generation of their chips, we have the H200s as well, which is the current generation. And this could just be in a multi-year supercycle. So hopefully that was a good exercise. We'll do another one. SMCI. I'm going to delete these. This is more of a temporary move, but they supply the racks in the data centers. Also made a big move, but racks, it's not really proprietary. There's not a huge moat to racks. A bunch of companies can come with racks like Dell as well. So you can see a stage 2 uptrend. We had this base here, had a great earnings report. It had this blowoff move where it made like a 200% move. And then I'mma quiz the audience here. What is this to you guys? So that's stage 3. And why? Moving averages have caught up to price. Price is building lower highs. It's getting wide and loose now. And then what happens when it breaks this line I've drawn here into this area below all the Kumo averages? That is stage 4. Now, what are we in right now? You can see slopes of the moving averages catch up the price. We're back in stage 1. Tesla. Everyone knows Tesla. We've gone through so many price cycles. We'll cover the 2021 and the 2022. You can see stage 4 decline 2019. Like I talked about, like Abercrombie Fitch, some sort of catalyst that sends into its new uptrend around this area. Late 2019 was earnings report. They, they delivered better than expected on, you know, Model 3s, Model Ys and Tesla vehicles and catalyzed this 2,500% move. Also fueled by the quantitative easing by the Fed and a lot of injection of money. However, when interest rates came up, Tesla topped. What is this area? I gave you a hint. That's a stage 3 topping phase. And then what about now? Now the 10 is below the 20, below the 30, below the 40. Price making some lower highs. Now this is stage 4 decline. And again, let me highlight the damage from all-time highs to lows, 76% decline. And that's on Tesla, a trillion-dollar company that wiped out to like $300 billion, $200 billion. So a lot can happen in stage 4 and you want to get rid of— just stay clear of that. INOQ really has no fundamentals. It's this quantum computing company, but again, it respects the laws. Of supply and demand, of human psychology. And that's why stage analysis applies. You can see this price cycle here. Stage 2 uptrend. Stage 3. What is here? You're below the moving averages. That's stage 4. What about this quick little few weeks? That's stage 1. Back into stage 2. Stage 3. Try to poke its head in stage 2. And now it's back into stage 3.

I guess the challenge of this really is in real time, it can be hard to identify the stage more precisely, but your job is to, again, as we talked about earlier, you try and identify and you manage risk according to the stage.

Well, for this next one, I can, we can go through real, pretend to go through real time. So RGTI is another quantum computing name. Let's scroll all the way back then. What is this? 10 is below the 20, below the 30, below the 40. That's stage 4. Let's just go in real time as it plays out. You can see it's still in downtrend, still surfing below the 10-week. Oh, and now you have this price spike. Now it's slicing through the moving averages. Moving averages are converging. Okay, to me in my head now, I'm thinking, yeah, this big volume up. Yeah, moving averages are converging. You're starting to surf the 10-week. This is a potential stage 1. Let's see if it can develop into Stage 2 uptrend continues to work. You know, the 10 is getting back above the 20 and back above the 30, back above the 40. And now look, you see how the moving averages are curling up now? Mm-hmm. It's, it's stage 2 now. But now you just don't know what can happen in the future. That's why you manage your risk, right? Sometimes stage 2 will last forever, but this time around it chops around and just back in this super choppy period. And then eventually RGTI has this huge stage 2 move off some catalysts here. You know, Google came out with their Willow chip. This is why it's so important that we're talk— I'm, I'm bringing up some news events and some context, but backing it up with the price cycle, the news flow catalysts, then you can put a lot of—

we've seen this prime example here. You could move to stage 2. 1, 2, 3 times, right? Yeah, exactly. 3 times you've been there. And as long as you've managed your risk, you might take 2 losses or break-evens, or however you manage. But then as long as you continue to follow your system and your plan, when it comes to the 3rd attempt, it then works out. And that, you know, they a lot of the time can be 20, 30, 50, 100% moves.

Yeah.

Which can make all the difference on a yearly P&L.

And so now it's—

well, is the volume, as you can see at the bottom, is the volume an element to the—

oh yeah, like when it comes to the—

yeah, exactly.

This, the more volume you have on a breakout from a stage 1 base, the higher probability is that it actually might sustain a stage 2.

Is it the same on the flip side as well?

When transitioning to stage 4, you don't necessarily need high volume selling because stocks can fall on their own weight as well. If you don't have buyers, it And there's only sellers, it doesn't have to be a lot of sellers, it can still collapse. Got you. So we've gone through, you know, RGTI was this situation where you had this huge move. It started to look stage 3-ish, but it went for another stage 2 move, a shorter one though. And now it's back in the stage 3 oscillation period. Got you.

And even then, so right now oscillation period, but we could, if we see moves back to the upside, the moving averages start to slope in the right direction, we could go back to stage 2 again.

So I'm going to go through a few more. I'll be quicker on these ones because the list is very—

Yeah, the moving average aspect. Is there any particular settings that you use? I know you can change the settings accordingly, right? So is that close to just—

I use the 10 simple moving average on the weekly, the 20 simple, the 30 simple, and the 40 simple. Just very simple. I like, I like simplicity. So Rocket Lab, space launch company. You can see the IPO quickly entered stage 4, stage 1 for 2 years, and now the stage 2 uptrend right here. Planet Labs, another, you know, more satellite imaging company. IPO'd pretty much stage 4 straight off the IPO because it came out in that 2022 period when interest rates are high. Yeah. Like it just wasn't a favorable environment to IPO. There wasn't demand for stocks. And you had the stage 1 period and now the stage 2 uptrend again above all the moving averages. And to me, like I can instantly look at a chart in a second, tell what stage it's in.

That's the repetition.

Yeah, that's the repetition. Looking at like hundreds of thousands of charts. And now I want to go into this example of Moderna here. So we had this stage 4 and Moderna was tricky, right? You had this huge stage 2 uptrend move during COVID They supplied the vaccines. Of course. Then it topped in stage 4. It looked like it was stage 1 basing. You see that? And actually briefly into stage 2. Yeah. But sometimes it could just fail and back into stage 4. Continue to stage 4. Oh, potentially stage 1 here. Oh, we're poking its head out, but then boom, it failed again. Back into stage 4. And this will just happen. You just don't know in real time, and that's why you have to have your stop losses. And look, if you bought here at that stage 2 breakout, that was a great buy. In hindsight, it might not work, but I'd say from a stage analysis perspective This is a great buy, very clean flat base above the 10, 20, 30, 40 moving averages. That's a great buy, but it just failed and you have to get out.

And is this another, is this an aspect of why you guys do like the shorter term in terms of the trades-wise to sort of negate any of these failed breakouts and larger pullbacks that might take place?

Yeah. Like from high to low here, that's 30%. Like we're gonna be all out by then. Like if we bought this, if we go on a daily chart, we'll definitely be out. And we'll try it again if there's some other time. But look, from that failed breakout high, it dropped another 86%. And what's crazy is from the tippity top to that point, that was a 75% drop. From that point, which was a pretty valid stage 1 breakout, it was another 80% drop. So you can have destruction in stocks. But now this one is starting to look more real. You see, like the volume wasn't as big here, Now you had on the downside volume increase. You can consider that capitulation. Again, the moving averages catch up to price.

Probably news moving averages.

Moving averages start converging, getting super tight. And now you have this breakout in Moderna.

A much cleaner breakout.

Exactly. Moderna talked about its forward revenues, revenue guidance, and it broke out this flat base above—

But there's an element as well with that, the lower it gets, the kind of higher the chance of Club Breakout.

Not necessarily. No, because this was a special case where you had many, you know, you had stage 4, then it comes back into stage 1 and it fakes out, goes back into stage 4. Yeah, this is not as clean of a one. There's more noise like the ANFRK, SOXX, RG, ELF. It was very clean. Stage 1, stage 2, stage 3, stage 4, stage 1, stage 2. So these are the nuances that sometimes can happen in stocks. And so I'll skip a couple of these smaller ones. This is a current turbo trade, actually. And this, I think, is a perfect segment into the first big linear move up from Stage 4 decline in Stage 2. And then we'll talk about the multi-month base breakout setup and then we'll wrap it up for this segment. So this last example is a current trade. You can see, again, perfect stage analysis. Stage 1, this basing period in 2020 into Stage 2, Stage 3, Stage 4 in this rare earth ETF. Then we have the Stage 1 base, high volume breakout into Stage 2. This is a really big linear move and this is where, um, one of my favorite setups is the first multi-month base surfing the 10/20-week moving average in a Stage 2 uptrend. After a big linear move up and you start to see the characteristics of a shakeout at this week here, it reclaims the lows, it starts to get tight, it builds higher lows, it tightens up on the right side, and we're entering the 75 area. And it's been, you know, a nice 20, 30, 25, 30% move so far off that.

Yeah.

So I have so many other examples of multi-month basis, but we won't get into this. Specific setup and concept in this episode on Chart Fanatics. Perhaps if Riz likes to have me on in the future, I don't know if I do well, we can talk about this concept in the future. 100%. So appreciate that. You know, to summarize, we've talked about stage analysis. It's this timeless and universal principle that we've seen in cell cycles and life cycles and business cycles and human nature, you know, euphoria, depression cycles. Everyone's seen that one chart of like, you know, someone's in depression and then you start to get a little optimistic, then it becomes thrill, then becomes euphoria. Then it's like, uh-oh, some fear. And then you repeat that again. Exactly. And now you have the stage analysis price cycle, which is a more longer-term analysis to keep you in the longer-term uptrend or downtrend, keep you away during the stage 1 and stage 3 periods. So I hope this helps, especially for the newer people or individuals getting into the markets. And for experienced people, I hopefully you learn some nuances with stage analysis as well, which I've picked up over the years through Stan Weinstein himself and helping build his course with TraderLion. So we love that.

No, well, Ted, thank you for breaking that all down for us today. Everyone at home, drop a comment with your biggest takeaway from this episode. Any maybe particulars that you've noticed when you go to try and look at some of these charts that we've covered today, or even charts that you've looked at yourself. Any questions, drop them in the comment section below. Any links for Ted will be in the description, so make sure you check those out. As always, other episodes are on screen. Hit like, hit subscribe if you're not already. I imagine you are, but if not, then you should, right?

Thank you, Rhys. It's a pleasure. Thank you for having me on.

Honestly, it's been chanfnaggs.

Hope everyone learned something.

100%.