PREMIUM: Trading profitably and prudently as the world reopens

With unprecedented monetary and fiscal stimulus as well as a new administration taking shape, trading opportunities are shifting with clearer winners and losers — yet volatility remains. Stephen "Sarge" Guilfoyle, President at Sarge986, joins Yahoo Finance's Jared Blikre to help navigate the emerging post-COVID trading landscape in stocks, bonds, commodities and cryptocurrencies. Focusing on trade selection and setups along with prudent risk management, viewers will also learn how to unlock the power of Yahoo Finance Premium.

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Video Transcript

[MUSIC PLAYING]

JARED BLIKRE: I want to thank everybody here for joining our latest Yahoo Finance Premium webinar-- ninth in the series, by the way-- Back to Basics, Trading Profitably and Prudently as the World Reopens. I'm Jared Blikre. And we're going to be joined by Stephen Guilfoyle, a.k.a. Sarge, in just a minute. He is president of Sarge986 LLC and a former floor trader on the New York Stock Exchange.

And we're going to be getting back to basics here-- some fundamental aspects of trading, must-know stuff for new traders, and concepts that are worth reviewing for veteran traders as well. And we're also going to be demoing Yahoo Finance Premium, showing you how to get the best out of it, selecting stocks and optimizing your portfolio.

Well, if this isn't your first rodeo here, you know how the BlueJeans software works. It's owned by a parent company, Verizon. But if you don't, a couple things here. We're going to be conducting polls throughout the show. And you can access those on the right side of your browser. There's a little tab there.

And you can also submit questions. There's another button for that. You can do it anonymously. Feel free to use your real name as well.

And then this is important too. In the bottom right, you have some slider options. This is how you're going to adjust the presentation size of me, Sarge, or whatever we're presenting. And you probably want to maximize that, so you can see the charts that we're referencing.

All right, now, let's start off with a poll, as we like to do here. And this is going to be, the best time to think about a trade's exit is? Before I enter the trade. When the trade is in the money. When the trade starts to go against me. When I get a margin call. I don't worry about exits. Maybe you buy-and-holders will choose that one.

All right, so, Sarge, I'm going to bring you in. And as a former New York Stock Exchange trader-- I mean, we can call you a veteran here. And yet, a lot of people are surprised by the current market environment, because we're violating a lot of historical norms, um, seeing some huge moves. We had the GameStop fiasco, if you want to call it that, a month ago. What's your assessment of the current market environment?

STEPHEN GUILFOYLE: You know, it's not the worst we've ever seen. It's not the-- we're near the top. So we're not-- nobody should be down so much where they're starting to panic. You need to keep your emotions in check. You need-- you need to basically watch what you're in. You need to know your parameters when you enter a trade.

You just asked that poll. This is-- I don't want to change people's answers right away. But you need to have a-- what did Mike Tyson say? Everyone has a plan until they get punched in the face. In the infantry, we used to say, everyone has a plan until you make first contact. Here, you need a plan. And you need to stick to it. It's no-- your plan can change. But you can't forget you have a plan once you get into trouble, because that's the only way to keep emotion, as best you can, out of the equation.

JARED BLIKRE: And how do you do that? So let's see-- you pick a ticker, here. You gave me a couple that you're interested in. What do you think about-- what are you thinking about as you're trying to get in a trade? And how do you manage-- how do you manage your risk once you're in?

STEPHEN GUILFOYLE: All right, actually, you know what I'm going to do right now? You're going to actually catch me doing something. I'm going to sell a little AMD right now, which is one of my favorite stocks.

JARED BLIKRE: AMD, we--

STEPHEN GUILFOYLE: But it just went through my-- Advanced Micro Devices, Lisa Su's stock. My panic point was $82. And while we were talking, it went down to $81.31. So what I'm going to do is take off about 20% of my position, just so that I don't make the fool's mistake of giving away money I've already made, because I have a big profit in this name. But it's been on a way south a little bit lately.

So what I'm going to do is take a little bit off here and reassess my situation. So my panic point was $82. I don't have to sell it all there. In fact, I will never sell all my stock or buy all the stock I intend to buy at the same price. But I'm going to get-- I'm going to take something of a profit here, because, hey, this stock was a $99 stock. I've already lost out on some of my profits. I don't want to give them all away. So I take something off. I reassess. And by tonight, I'll have a new panic point.

JARED BLIKRE: Yeah, and you mentioned the panic point. I think that's very important, because that means you're thinking ahead of the trade. You're sitting on some profits. And you're not necessarily actually panicking in there.

STEPHEN GUILFOYLE: No, no.

JARED BLIKRE: But you're thinking about the exit. And just-- and by the way, I just want to mention, I think this is a first for our webinar series where we have somebody actually trading live during it. So that's-- that's kind of impressive here. But yeah, so what--

STEPHEN GUILFOYLE: I don't know if it's impressive, but [LAUGHS] yeah, OK. It's authentic. Yeah, so--

JARED BLIKRE: Yeah, but the fact is you're able-- I'm sorry. Go ahead.

STEPHEN GUILFOYLE: No, I was going to say, for the folks at home who are new or not that experienced, when you-- when you like a stock, all right-- when you think about your point of entry, which you'll probably make based on technical analysis-- you'll like the stock because of your fundamental analysis. But you're going to decide where the bus stops are. The fundamental analysis tells you which way the bus is going to go. The technical analysis tells you where the bus stops are.

So you're going to have a target price. You're going to have a pivot point, which provokes your action. And you're going to have a panic point which, like you said, is not really a panic. It's just a fun name we have for it. And you're going to set those differently. You want-- you want your-- you most likely want to set your pivot based on some kind of setup. You want your target price to be a minimum 20% higher. And you want your panic point to be a maximum 8% lower. This way, you could screw up almost three times as much as you can be right and still break even if you're-- if all things are equal.

JARED BLIKRE: Yeah I just want to follow up on that, because I think it's important, because it gets to a concept called risk-to-reward ratio or reward-to-risk ratio. And the parameters that you were just outlining there basically give you 3:1. You mentioned that 3-- that ratio of 3:1. Most traders actually have-- they average losing trades in quantity. But if you have your parameters right, if you're taking more profits than losses on them over time, you can make a lot of money.

And so I just want to read the results of this poll. And I'm pretty happy here, because everybody's-- just about everybody is going with the first answer. The best time to think about a trade's exit is before I enter the trade. That got 24 votes. Not many for the other answers. In fact 0% for when I get a margin call. That is not the time to think about exit. But we do like to--

STEPHEN GUILFOYLE: It's not your-- not your decision at that point.

JARED BLIKRE: No, no. That's-- that's Robinhood's decision, isn't it? Um, well, I-- before we proceed here, I want to get to our second poll, because these are fun. And then we'll hit some, uh, viewer questions here.

So the second poll is-- here we go. Uh, who do you think is culpable for the GameStock fiasco? Is it Robinhood and the other brokers? Is it Reddit's Wall Street Bets and other forums? Citadel and the other market makers that pay for order flow? Or is it that the entire system is flawed? I guess you could say, if you think it's rigged, use that one. And then the final answer-- what fiasco? Maybe if you made money, you don't care that much. But we'll get to those results in a second.

I do want to hit some questions here, uh, from the audience. We have-- uh, the first one is by Adrian. And it's about bond yields and tech. "So bond yields are still rising and hitting stocks, significantly tech. Is this a sign of economic growth or inflation? Can tech rebound? And how much time is it going to take?"

Well, a lot of this has to do with the rise in interest rates, because when they were plummeting when we had that big sell-off last year, you know, it was-- there is no alternative. And people were rushing into growth stocks and tech stocks. Now it's the value and cyclicals, energy, financials in play here. But I'll tell you what. If tech doesn't participate in a rally, you're not going to have the overall market, like the S&P 500, heading to new highs. Um, I just don't see that happening. Sarge, what's your take?

STEPHEN GUILFOYLE: OK, now, for Adrian here, yes. It can be a sign of growth and/or inflation. I think it probably is a sign of growth. I think there's a chance it's a sign of inflation. I don't think it necessarily has to go there, because we all know now, through the-- through the blunders of the Ben Bernanke and Janet Yellen era, that money supply and the monetary base does not control inflation. Inflation is controlled by velocity.

So if you control the liquidity in the world out there, but if-- but if Joe and Jane are both making $14 an hour, they're not going to chase much supply. So you're not going to have the velocity. So there's a lot more to it than that. I-- I can't promise you inflation. I can promise you some short-term growth, which could be artificial for the time being.

Uh, and what was the last part of the question? Can tech rebound? I definitely think tech is going to rebound. That's why I'm looking at certain stocks-- let's say, like Salesforce, which we'll get into in a little while-- as a-- I look at this sell-off as a buying opportunity. I-- I think that there's almost no way that we move forward without technology.

I mean, there's going to be winners and losers. But without the software stocks and the semiconductor stocks, the cloud names-- that's software. But I mean-- but the-- more specifically, the cloud names-- and-- and green energy, which is-- which really should be in the energy sector. But it's in the tech sector for now. These are the areas that we almost know, even if they take a hit now, we-- I think-- we don't know anything. I think in 5, 10 years, you'll be real glad you got long these names.

JARED BLIKRE: All right, yeah, and we're seeing some weakness in the software names. I'm going to put Salesforce back up. And, uh, let's just hit this. Take us, walk us through what you're seeing in this chart here. And as you can see I've-- I have highlighted an area, um, that has acted as resistance and support historically, that the price just broke through today. So what does that mean to you?

STEPHEN GUILFOYLE: OK, this $212, $213 area, which was support-- I started buying Salesforce again recently. So it's actually being stuffed in my face a little bit here. But I'm OK with it. Or I think I'm OK with it, because as it breaks through support, I have to start thinking now about where I really want to buy it, because it's not just that support level that broke, OK?

If you-- if you had all the averages-- you do have the 50 and the 200 up there. The 21-day EMA-- the Exponential Moving Average-- is also-- all three are almost colliding in the $220s right now. And if you get the 50-day over the 200, you're going to have the, uh, you're going to have the death cross. Now, if you get the 21 EMA over the both of them, you're going to have a death cross on steroids, which will provoke an algorithmic reaction.

So you have to be-- you either wanted to sell this yesterday or the day before or be ready to buy it somewhere. And I'm thinking-- I'm thinking probably-- I'm probably not going to spend any equity here. But I might put on maybe a $200-- [? $200-$190 ?] bare put spread that will go out to maybe April 16.

Now, we'll think about selling the $200-- the April 16 $200 puts for a little over $6. And we'll buy the $190s with the same expiration for about $3 and 1/4. OK, so the whole trade will cost us a little less than $300 if you're doing one contract each. And, uh-- and you might-- if it goes down through $190, you'll make-- you'll make $1,000 back. So you'll make a $700 profit on a $300 investment.

JARED BLIKRE: Yeah, and you outline a lot of these trades in your daily newsletter, or I should say, newsletters. You have usually a corporate position. And you kind of trade around it with the options market. So you might own Apple at a certain price but buy some puts-- or actually, sell some puts. You put some money in your pocket. Is that kind of your approach? Because it seems like you're more of a long-term trader. And then in the short term, you just kind of trade around these positions. Is that--

STEPHEN GUILFOYLE: Well--

JARED BLIKRE: Is that fair to say?

STEPHEN GUILFOYLE: Yeah, what-- what traders can do-- and this is a key part of risk management. I-- I know people who are long like to buy puts and-- and the opposite with your-- with your short positions. I-- I think that's actually a fool's game, because what you-- what you need to do is erode net basis on your long positions over time. So you want to be-- the simplest way to do that is to sell covered calls. If you own 100 shares, sell one contract.

And of course, you make-- if the stock runs, you'll cap your profits. Oh, well, you'll learn from it and move on. It's not the worst thing in the world. But what you want to do is if you get into a stock, let's say, at $30, you want to sell the call for $1. Now your-- now your net basis is $29. And you want to do this over and over again. And I'm a little risky. So I'll sell puts sometimes where-- on places where I know I want to load up on equity. So if I do get tagged, at least I'm buying it where I thought I wanted to in the first place.

And the whole time, you're-- you're working that net basis lower, because there-- it isn't just the stock going up that makes you profit. It's also making your cost basis, your net basis, lower or a combination of the two. I have made money on stocks that I have sold for less than I bought them at many times, only because I work it as hard as I can through the options market.

JARED BLIKRE: That's-- that's quite profound. And I think it's important. The biggest takeaway is that you have a plan, and you stick to it. And, uh, if you don't do that, you simply don't have a chance. Now, I want to get to the results of our last poll, because I think this is instructive. And it kind of leads-- feeds into the discussion here.

Who do you think is culpable for the GameStop fiasco? Robinhood and the other brokers-- that's only 3%. Personally, I thought that might have been higher, but no. Reddit's Wall Street Bets and other forums-- that's 20%. Citadel and the other market makers that pay for order flow-- 18%. The entire system is flawed or rigged-- 45%. And then, what fiasco? That's 14%.

So you know, there is a lot of chatter, uh, especially among new traders, that this is simply an unwinnable game. And I'll tell you what. I've been looking at charts for over 20 years now. And the charts look pretty much the same. Now, we've seen some violent extreme moves. But it's still possible to make money in this market, if you manage your risk correctly. Um, and I'm not going to say that the system isn't without its flaws. And I think there are major reforms that could be made to make it better for everybody. But if you're disciplined, you can still make money in this market. Your thoughts, Sarge?

STEPHEN GUILFOYLE: Oh, sure, and the system is somewhat flawed. Uh, my own personal feeling is that there should never be the possibility for the short position in any stock to be greater than the entire float. I mean, that's absolutely ridiculous to me.

JARED BLIKRE: Yeah.

STEPHEN GUILFOYLE: As for the guys over at Melvin Capital, I cannot believe-- I mean, I just cannot believe that any 20-year, 30-year veteran of the business didn't hedge his position in any way, that he was able to get run over so hard that he had to run to his old boss for money.

JARED BLIKRE: [LAUGHS]

STEPHEN GUILFOYLE: And thankfully, thankfully, that guy likes him. I mean, you-- or had too much money invested in Melvin that he had to-- he had to keep it propped up, which is absolutely ridiculous. Uh, as for payment for order flow, I think it's-- I think it's truly evil. I think it impacts, uh, price discovery, pure price discovery. I don't think it's part of this problem. But I think it is a pervasive problem across the industry that has negatively impacted the marketplace.

JARED BLIKRE: Yeah, I have to agree with you there. And I'm not going to get into the weeds on why that might be. But I do think we need some reform in that area. Well, I'm going to do our next poll now. And then I'm going to show everybody what-- some of the great features that we have in our premium package.

First to the poll-- do you trade options? First answer is yes, I only-- only trade call options. And that's typically what's allowed for newer traders. Yes, I trade both calls and puts. Yes, I heavily trade options such as spreads, collars, maybe butterfly spreads, et cetera. No, but I'm thinking about trading options. Or no, options are not for me.

All right, so now I'm going to share my screen in a second and just talk about the Yahoo Finance Premium package here and some of the features. The way I personally use it the most is simply from-- uh, let me find my screen here, so I can share it with everybody. And I don't think that's it. Um, sorry for the delay here. Yeah, there we go-- moved around on my screen.

So if we go to our-- our dashboard here-- and I'll bring that up-- it shows you can import your positions from your broker. It's very easy to do. Connect it to your brokerage account. It'll show you how your portfolio is doing versus the S&P 500. It will show you if you're too heavily concentrated in various areas, so very good for risk management. Shows you fair value, the Peter Lynch valuation method. Some fundamental traders use that.

But what I really like to do is look at the technical events and also some of the fundamental events. And those fall under an area called Investment Ideas. And I'll just go through a couple of the ones that caught my eye today for-- for instance, this one on Domino's Pizza. This is going to be a fundamental call. We use Argus Research here. And I'm going have to make the screen a little bit bigger, so we can see it. No, that's not-- that's not participating. But nevertheless, we have some reasons here why Argus is bullish on Domino's.

And this usually-- these ports usually are updated after earnings announcements. So we have quite a bit now, since we've just gotten through earnings season. And then you can, uh, see what's happening with-- on a technical basis with the charts. So even though there's a fundamental view on this stock right now, I'm looking at this right here.

We got short-term bearish. And I don't know if everybody can see where I'm pointing here. But if you go up from this cursor, you see short-term bearish, medium-term bearish, long-term bearish. And this thing just kind of fell off a cliff. So I'm not sure I like it on a technical basis. But because of the report, at least it's on my radar.

Now, go back and take a look at another. This is going to be a technical call here. And these are generated automatically. Here's Comcast. Now, this is great. Technical pattern-- ascending continuation. And we'll just view it in the chart here. And there we go. And you can see the pattern is drawn in. And so on the right here, this explains what it means.

"Increasing higher lows and constant highs within this pattern tell us that buyers are more aggressive than sellers, confirmation-- confirmed by a breakout through a resistance level to signal the continuation of the prior uptrend." So here we have the prior uptrend, the higher highs, higher lows. And now we have this breakout of this consolidation pattern. Looks like we got some decent volume on it.

So with the report, it's going to give you potential exit levels, so you can calculate if it fits your parameters, your risk parameters. And I'd say with here-- let me go back. Um, I think you could have a stop-- conservative stop would be farther down, probably around $51, $55. But, uh, you always want to evaluate these things within your own risk tolerance. Um, you don't have to use the suggested levels. But they're definitely-- they definitely help.

And another thing I like about the premium software-- I was checking out Tesla earlier. And I was getting this teed up for you, Sarge. Let me see if I can get this-- this chart looking a little bit better. There we go. And I'll bring you back in a second here to talk about Tesla potentially. But-- so I have an anchored view WAP line. People from previous webinars know what that is. I don't have to go into that now. It's one of our free indicators, one of our many free indicators on the site.

But I was wondering, why was there this gap up? And so you can go to Events. And if you're a premium subscriber, you can select all of them. And you have the explanations right on your chart here. So on this particular day, it looks like it was responding to the announcement that S&P said they're going to join the S&P 500. And we did get a big rise off of that announcement.

So let's bring it back in, Sarge. And you just give me your-- your opinion of Tesla, because this is a huge sentiment stock. Um, what do you-- what do you think right now? Because it looks like we're at potential support. But it's been kind of weak lately.

STEPHEN GUILFOYLE: Oh, it's definitely kind of weak. You have the 21-day EMA crossing over the 50-day SMA a couple days ago, which is a negative for the-- for the algorithm crowd. Uh, let me pull it up on a different chart, here, and see what that tells me. Uh, OK, it's not exactly oversold. You got an RSI reading of about 35, 36. You'll see from late August through November, there was a flat base, a period of consolidation.

That was your springboard, OK? That gave you-- that by my rule would have put the target price around $600. You can see, it went up to $900. But that's because it's got a cult following. And-- and everyone was still excited about the split and all that. Then obviously, it was way overbought.

Uh, I think it probably comes into about $600, which it's getting close now. And that's where we can reassess. I don't see a-- a discerning pattern since that flat base. So right now, it's pretty much trading on things like Elon Musk tweets and perceived competition from other electric vehicle makers.

JARED BLIKRE: Oh, and Bitcoin-- let's not forget about that $1.5 billion--

STEPHEN GUILFOYLE: Oh, yeah.

JARED BLIKRE: Tesla is now a Bitcoin proxy. And we will get to-- we'll get to some of those crypto charts in a bit.

STEPHEN GUILFOYLE: That's kind of funny, actually, Jared, because when I-- I write a lot of articles, as you mentioned. And I-- when I used to write something negative about Tesla, I used to get attacked by the cult until I started-- I-- and then I figured out that they were right. So I started only playing Tesla from the long side. And I was much more successful. But after that, I started writing negatively about Bitcoin. And so I got an even more aggressive cult coming after me every time I do that. It's-- it's really amazing how passionate people get about these things.

JARED BLIKRE: Yeah, well, just, uh, don't issue a short report on GameStop. Leave that for the others. All right--

STEPHEN GUILFOYLE: I would never issue a short report on something I was short, because I think there's something wrong with that.

JARED BLIKRE: I-- I hear that. Um, but I'll tell you what. We've discovered-- not we, but-- um, serious frauds have been discovered through short sellers. Luckin Coffee comes to mind.

All right, so here are the results of our last poll. Do you trade options? Yes, only call options-- just a small percentage. Yes, calls and puts-- 9%. Yes, heavily-- 4%. Uh, no, but I'm thinking about it-- 57%. And then 24% said, no, they're not for me. So most people not trading options here.

You know, my-- my view on this-- and I thought it was a little bit too easy for Robinhood to just kind of bring in new traders into call options, because they don't potentially understand the risk. But, uh, could you just take kind of a basic breakdown of how options work and how you can get hurt by them and maybe avoid some of that risk?

STEPHEN GUILFOYLE: Well, the most important thing for everyone to understand is that, uh, there's a time premium built into every option. So they're always going to be overpriced [? in terms ?] [? of the ?] risk, uh, as far-- according to how the algorithm perceives the risk. So you're always better off selling options than you are buying them, because they're-- all things being equal, the value is almost always going to go down to nothing by expiration date.

So like I said, you can't-- you can't manage risk without using options, at least-- at least equity portfolio risk. I mean, you can-- yes, you can buy precious metals. You can get into land and, you know, real estate and all that. And that can be a way for a person who doesn't trade options to-- to manage their risk. But if you're going to-- if you're going to trade an equity book and manage that risk, you need to be able to find a way to either-- to either protect yourself or reduce that net basis through the use of options.

There's-- there's really no other way I see to do it. In fact, when I trade a stock that doesn't have a liquid options market, I feel almost handcuffed, because I refuse to, you know, buy or sell options in a market that has, like, $1.50 spread. So I'll just-- I'll just hope for the best in those names. And I'll just-- I probably won't end up with a very large equity position, because I'll be afraid I can't protect myself.

JARED BLIKRE: Great. Well, I want to do our next poll. And this one's going to be, do you trade meme stocks? And the first answer is yes, I dabble. Yes, a lot. No, but I'm thinking about it. And no, they're not for me. So simple answers there-- do you trade meme stocks? And we'll get to that in a minute.

But now, I want to take an audience question. "What are the advantages and disadvantages of investing in ETFs?" This is coming from Benny. And I want to encourage everybody to ask questions here. Post questions. We'll get to as many as possible. We love the user interaction here.

But my answer to what are the advantages and disadvantages of ETFs is number one, uh, you tend to mitigate idiosyncratic risk. And what does that exactly mean? It means that you're not trading just one name. It's a basket of a bunch of names. So you get something out of left field. It sends one of the members down 20%. It's not going to kill the entire ETF.

And different ETFs have different risk profiles. So SPY-- that's, you know-- my handle on Twitter is @SPYJared. That has a lower risk than something like the ARK Invest ETF. And I'll put a couple of these on the screen as, uh, I just toss this to you for your answer on this question, Sarge.

STEPHEN GUILFOYLE: All right, I generally don't like ETFs all that much. I tend not to use them unless I'm-- unless I'm adjusting my exposure to gold or silver, because they-- paper gold and silver work great for short-term adjustments. You like to have a physical stash of gold or silver somewhere. But if you-- let's say-- let's say, you decide to put 5% of your-- of your exposure into physical gold. But you want to have for now a 7.5% exposure to gold. Well, you would do-- you would accumulate the other 2.5% through paper gold, which is futures or ETFs. That way you can adjust it more rapidly, because those-- those products actually trade.

As far as for ETFs that are comprised mostly of equities, I think they're great for someone who is new or doesn't really understand how to go about even starting looking at a balance sheet. So you don't-- your fundamental-- your fundamental analysis skills aren't really that strong. So if you're just starting out as an investor, yeah, probably your first investment should be in an S&P 500 ETF or-- or something like that, something that tracks an index or-- a broad index like that. That way you can start learning about individual stocks.

And once you're confident, you can decide that you can pick winners and losers. Or you think you can, anyway. And so you don't have the ETF averaging it out, so if the market goes up x percent, you go up x percent. You can either outperform or underperform the market based on your own performance and what stocks you chose in that sector or whatever kind of ETF we were looking at.

JARED BLIKRE: Yeah, and I just want to point out today that Qs here-- this tracks the NASDAQ 100-- this is breaking support as we speak. Um, and I'll get your interpretation of that in a second. But I just want to wrap up the ETF question by noting something about USO. This is an oil ETF that has historically really not tracked the oil market that well.

And that's-- one of the downsides of ETFs is they have fees. And they-- if you're trying to-- not only do they have fees, but if you're trying to track a commodity, um, it's very difficult to do that through-- because they have to trade futures. And they have to roll their positions. And a lot of times, there's going to be a spread. And they're going to miss. So profits in futures don't necessarily-- in the underlying-- don't necessarily translate into profits in the ETF. And when oil went negative in April of last year, USO really underperformed and didn't track the oil market well.

But, Sarge, I want to go back to the Qs here and just get your take on what's going on with tech here. We noted the-- the weakness in software. Any of this concerning to you?

STEPHEN GUILFOYLE: Oh, sure it is. I mean, take a look at the NASDAQ composite today. You'll-- you'll notice yesterday, the 50-day line was support. And today it was resistance. That's a little concerning. The 21-day has been resistance for about five or six consecutive days. So we're definitely-- we probably have to say we're uptrend under severe pressure. Or we're actually in a downtrend right now, uh, as far as the NASDAQ goes.

And when you take a look at the technology sector, which is now down-- the XLK is down 2 and 1/2%. The Renewable Energy Equipment Index, which is one of these smaller indexes-- but it's actually should be in energy. But it's in tech. It's down 7.2% right now. How you track that would be the Dow Jones US Renewable Energy Equipment Index. That's your Plug Powers and your Fuel Cell Energies and names like that. Software-- the software index is down 3.2%. The semiconductors are down 3%. And hardware, a.k.a. Apple, is-- that one's down 2%.

So the entire group is giving it up right now. And that's probably-- you know what? Let me see where the 10-year is trading. It's probably correlative to the 10-year, which is now trading at 1.475%.

The 10-year, if it goes above 1.48%-- and it has been above that today a couple of times-- will draw out the growth names, because 1.48% is the S&P 500 dividend yield. So once the-- once, for more conservative investors, a US 10-year looks competitive to the S&P 500, stock prices being equal, it will draw investment away from equities.

JARED BLIKRE: Yeah, it's a very important point. And I want to get to one more question here. "What could be the forecast for 2021 for the travel and tourism industry-- airlines, hospitality, cruises, et cetera? Can we expect a recovery in 2021?" And this is from Raul.

My answer to that is yes, I think we're going to see a big recovery. The question is, how do you play that in some of these stocks? Because a lot of them are still beaten down. But some of them are up 100% off of their lows or 100% since the reflation trade really took hold in November. Just interested in your thoughts in this sector, Sarge. And any tickers you want to hit, just throw them out.

STEPHEN GUILFOYLE: OK, the-- yes, it all looks good right now. But the virus is still in charge, right? This is a virus. I've had this virus. It's awful, OK? I can't-- in my entire life, I have never been that sick, anything close to it. It took me many months to recover. So if any of these variants get out of the-- escape from the-- from the vaccines, this will prolong the recovery.

I'm seeing the-- I'm in Love Airlines right now, Southwest. That one's worked out great for me. The industrials are what I have seen the best right now-- the Berkshire Bs, the Fords, the General Electrics, the Honeywells, and the URI. URI-- United Rentals-- is-- is a-- is more of a infrastructure play for later in the year. This is one that I think, if President Biden and his political allies get their way, we'll probably throw another $4 to $5 trillion worth of spending on the Fed's balance sheet this year. And this will be, in my opinion, the key beneficiary.

So yeah, you're talking about kind of the fun stuff-- the cruise ships, the airlines, and all that stuff. I don't see as robust a recovery in the air-- for the airlines as everyone else, because I don't think international travel will recover nearly as quickly. That's why I like Southwest. It's only domestic. Plus I don't see business travel ever recovering to the-- to what it was prior to the pandemic, because we've all discovered that we can work like this.

Jared and I, who used to meet each other on the floor of the New York Stock Exchange to discuss stocks, now meet over Yahoo. And we have a conversation with probably a few hundred people paying attention to us. And that's the way people work now. I've worked out of this office, you know, for a year now. And so has everyone else. And if you're a white collar worker who does not have to be on location, that's one thing to think of.

If you're the company that employs white collar workers, like a large investment bank, well, why the heck would you need a big footprint, a big expensive footprint in a city like New York or San Francisco when you can have a small office somewhere nice, like Miami? And your employees can be working from wherever they live or wherever they want to live. So it's not going to recover. You're not-- your old normal is not going to be your new normal.

JARED BLIKRE: Yeah, and I think it's important to highlight that, you know, let the market-- let the prices tell you what's going on here. You don't have to second guess absolutely everything. But I want to-- I want to go to a clip now. This is-- let me see. This is from Airbnb. And we have, uh, the founder, CEO Brian Chesky. This is about 90 seconds. But it's well worth the listen, because it fits in nicely with what you're talking about here, Sarge. Let's go.

BRIAN CHESKY: We've seen, [? Melanie, ?] a paradigm shift in how people are searching for travel on Airbnb. It used to be that people knew where they were going when they went to Airbnb. That's why there's a search box. And it says, where are you going? And then, they knew when they were going. We'd have a date picker. And they'd say check out-- check in February 10, check out February 15.

Now, 40% of our guests who come on Airbnb either don't have a location in mind or don't have a date in mind. The reality is, they're in a house. They're saying, I'm feeling stuck in a house. I want to go somewhere. I'll go anywhere within a, you know, couple mile radius. And I want to go in the next couple months.

So we're going to do is we are allowing more flexibility. On Tuesday of this week, we announced flexible dates. So when you go to the date picker, instead of adding your dates, you can just tap a button. It says, I'm flexible. And you can say, I want to stay for a weekend, a week, a month. And you can say, in the next week, in the next couple-- next month. You know, you can really pick these really broad searches.

And I think that's where it's going to go, that fewer people are traveling for business. Fewer people have very set destinations. And it really means they're open minded. And this means we can point travelers and demand to where we have supply. So it really helps balance supply and demand. But it also, I think, levels the playing field, because instead of people going to just 20 or 30 cities, now they're going to go to thousands of cities.

They're discovering national parks. They're discovering smaller communities, rural towns. And so I think this is a really exciting opportunity for travel. And that leveling of the playing field rises the boats for everyone in travel. And I think that can also benefit Airbnb.

JARED BLIKRE: Yeah, the bottom line for me is-- back to your point, Sarge, everything is changing. We're not going back to the old ways. And it's impressive to me, the way Airbnb pivoted. He said earlier in the interview, they lost 80% of their business in about one to two weeks. And talk about a hard pivot there.

Well, I want to go to the results of our last poll. And this kind of ties into our next discussion. Do you trade meme stocks? And first, yes, I dabble-- 31%, so almost 1/3 of you. Yes, a lot-- only 2%. No, but I'm thinking about it-- 24%. Or no, they're not for me-- 43%. So at least half of the people here either play the meme stocks a bit or are at least thinking about it.

And I want to-- I want to go back to you, Sarge, and get your take on these. I think it's-- first of all, I'm very supportive of the whole Robinhood movement. I think it's great that we're getting new traders involved. A lot of the lessons are painful. And they're-- it's easy to jump to conclusions about it being a rigged system, everything. But how do you see the GameStop phenomenon playing out over the long term?

STEPHEN GUILFOYLE: I think that-- I think you're right that we probably have brought a whole new generation of homebound young traders into this industry, which is probably a good thing. They talk about the democratization of the industry. Well, that's actually a great thing. I think we're going to have the people who go away because they got hurt. And we're going to have the people who were successful, so they come back. But they get hurt next time, because it wasn't-- they're not-- it's not going to be so easy.

And we're going to have the other people. And those are my people. Those are the people that learned how to manage risk, because they either-- they got hurt. Or they saw someone else get hurt. And those are the people that are going to venture into options. And you know what I-- when GameStop was spiking to $300 and $400, do you know what I was doing in GameStop? I was selling. I was writing $10 puts two weeks out for over $1.

JARED BLIKRE: Lottery tickets.

STEPHEN GUILFOYLE: No, no, there was no risk at all. And-- and I was writing lots of them. And there was still $10 puts with a stock trading over $300. It was-- it was still worth over $1. I couldn't believe it. I mean, it was the easiest money I have made probably in my life. It was-- it was ridiculous. But I was glad to take it [LAUGHS].

But it doesn't always work. I've been-- on these like Rocket, I'm checking. I'm trying to do the same thing every time one of these stocks moves. And yeah, it worked-- it worked in AMC. It worked in Blackberry a little bit. And it worked in GameStop like a charm. But it hasn't worked so much with the other ones since, because they've kind of caught on. Plus-- plus nobody else has a 140% short position with a gigantic hedge fund chasing it because the guy's an idiot.

[LAUGHTER]

JARED BLIKRE: Well put, Sarge. I-- we're going to-- I'm going to leave it right there. I want to get to another question, though. And this is particularly relevant, because this happens to traders, new and veteran-- hopefully not to the veterans as much. But how do you proceed with stocks which are below what you would have been stopped out at? And so in other words, you're underwater in the trade. You know you should have gotten out. But it's down another 5%, 10%. What do you-- what do you do?

STEPHEN GUILFOYLE: Well, if you still like the story, you have to throw out your old homework, and do your new homework, and decide if you would buy it here if you didn't have a position. And if you decide you would buy it here, well, then you got to do some dollar cost averaging. I don't-- I don't recommend dollar cost averaging for anyone who does watch the markets. If you don't watch the markets, it's fine.

But if you decide you would buy here if you had no position, then you can proceed. If you decide-- if that little voice is telling you, you know, I probably shouldn't own these, then you have to bite the bullet. You have to take the loss. And you have to say, I learned my lesson.

JARED BLIKRE: Yeah, we've all-- we've all done that. And the question is, do we actually learn our lessons?

STEPHEN GUILFOYLE: Oh, we do.

JARED BLIKRE: Well, I just want to get to-- yeah, sometimes we forget them though. I want to get to another quick clip that we have. This is Charlie Munger, who we recently interviewed. And he's weighing in on Robinhood. Here we go.

Charlie Munger: Robinhood trades are not free. When you pay for order flow, you're probably charging your customers more and pretending to be free. It's a very dishonorable, low grade way to talk. And-- and nobody should believe that Robinhood's trades are free.

JARED BLIKRE: Well, there you go-- payment for order flow. And it gets back to the discussion. We don't have to follow up on that. I just wanted to present another opinion in the matter.

But, Sarge, one of the stocks that you highlighted earlier was Micron. And this is a stock that's still in a very solid uptrend. I'm going to get my chart up here in a second if I can find it. If not, I'll just make a new one. Here we go. All right, so let me share this. And you can just start doing-- so Micron-- and let me type this ticker in.

STEPHEN GUILFOYLE: Take a look at that, all right? No discernible pattern, really, since maybe October. The stock has just taken off. That stock is actually riding the 21-day exponential moving average. And every time it tests that line, it bounces right off it. It had a lot of good news regarding pricing of late. I think this is probably one of the names that is in the best position right now.

It's not overbought. Despite where it is, the RSI reading is only 55. The daily MACD is in pretty decent shape. I am long the stock. And I think if you could throw-- if you were able-- I know you can't here. But if you were able to throw an Andrew's pitchfork on this, or a Raff regression or some kind of trend following model, you would see that this stock is really in great shape.

In fact, I'll do that on my own right now. I'll put a little bit of a-- and right now, we're actually in the lower-- if you know what an Andrew's pitchfork is, folks, it's a three-pronged-- that's why it's called a pitchfork-- trend following model. And right now, $95 is actually resistance for Micron for the lower chamber. If it breaks through that lower chamber, you're talking about $110 a share.

And you really don't have to worry until it gets down around that-- around $80 a share, which the 50-day moving average is $81 a share. So you have a double whammy sort of protection right there-- not protection, but a reason for support. So you-- where is it now, $89? $89-- your target, right now, is probably $110. Your panic point is probably $80 to $81.

JARED BLIKRE: Gotcha.

STEPHEN GUILFOYLE: I want to-- just based on that-- go ahead.

JARED BLIKRE: Yeah, and I want to pivot now to another stock that you brought to my attention. This is going to be JP Morgan. And this is interesting, because you pointed out, this stock right here-- and let me draw in-- this created a huge cup and handle formation.

So here's this beautiful-- and this is something that we see in stocks quite a bit. I didn't draw that very well. But you get the idea. There's the handle. And then we just shot up from there. This is a basic pattern. And these happen all the time in stocks. So how do you screen through this? How do you use this? And how do you trade it?

STEPHEN GUILFOYLE: Oh, JP-- I actually-- I've been long this stock most of the time. It's my-- it's my favorite bank. It's the one-- even when banks were out of favor, it's the one bank I stayed long. And I obviously bought more when the handle was formed. Like you said, it's a year-long cup. I'll give you-- my target price right now is $170. My panic price is-- was $130. I probably have to raise that a little bit. And as you can see, the pivot was $142.

There was this long period of distillation in 2020 where the stock traded between $90 and maybe $105. And I really have very few times seen a cup that formed in January of one year and came to a resolution in January the next year. You could-- you actually almost-- you could also-- you can't do it here. But if you could draw the pitchfork that starts at the lows of March and goes to the present using the June high as number 2 and the September low as point number 3, you're still in the lower half of the pitchfork. So you potentially-- if you do get run away-- a run-away 10-year pushing the three-month tenure yield spreads too far apart, you're going to see JPMorgan hit a home run like Babe Ruth.

JARED BLIKRE: I like that analogy. Here's another question from the audience. We got time for just this one more before we go, because we're hitting up on our limit here. "What does the future hold for oil, gas, and marijuana stocks?" Kind of a broad question--

I'll just hit marijuana real quickly. Industry has been going through rapid changes. We're probably going to legalize it in the US in what-- analysts say, two to three years. But as we saw in the prior run up, when Tilray got out of control a few years ago, when there's a lot of movement into a space in general, sometimes you end up with excess capacity. That's what ended up in the Canadian market. Possible it will end up here.

But I like the fact that some of the ETFs have been showing strength. And I don't think it's the quite similar situation that we had in 2017. I think it's more real now. It's kind of like a crypto story. And you got more institutional participation, because you see the legalization window in the US finally opening up. So your thoughts on marijuana stocks or oil and gas stocks as we wrap here, Sarge?

STEPHEN GUILFOYLE: Oil and gas-- I like Exxon, because I think they're-- and I'm long it-- because I think they're the one that will still make money as fossil fuels rise in value. But they're also trying to do the right thing as far as climate change is concerned. So they kind of-- they still have a big footprint in something that people don't really want them to be in anymore. But it's going to be profitable for the short term.

And they're moving towards the next chapter, which-- probably ahead of a lot of their competitors, except for maybe British Petroleum, which-- and oil stocks are starting to go there too. But I think Exxon is probably the stock you want to be in-- or I want to be in anyway-- for oil and gas.

As far as marijuana, I think it's a real low margin business. I don't think it's what we thought it was going to be a couple years ago. I run a portfolio for the street, for real money, called Stocks Under $10. We did OK in Aurora Cannabis in that portfolio for a little while. But as you can see over-- I don't know-- years now, it's really-- it has spikes here and there. But even Nelson Peltz got out of that one.

It is really-- I don't think there's a huge future profit-wise. Although I do agree, it should be federally legal, because-- not that I want to smoke pot. I've never smoked pot. I was in the military for 12 years. We don't smoke pot. But if it's not going to hurt anybody, and we can tax it and we have this huge fiscal deficit, then why not?

JARED BLIKRE: [LAUGHS] And we're going to wrap right there. I want to thank the audience for sitting through this. And Sarge, it was really great to get some of your pearls of wisdom here. I want to let everybody know, we're going to have our next webinar in five weeks. That's going to be Wednesday, April 7. Got a special lineup for that. So make sure you attend to your email boxes, because we're going to be sending you registration links. So again, thank you, everybody, and good trading.