Understanding Low Volume Sell-Offs | Podcast Episode #53

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Learn to trade, stocks successfully, learn to profit consistently. I’m Ryan Mallory and on my weekly podcast, I’m going to teach you the in and out of a complex ever-changing stock market.

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You will learn to trade better trait, smarter and profit bigger. Now let’s go trade. This is Ryan. Mallory swing trading the stock market. And today’s episode, I want to talk about the volume sales and their meaning.

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So we’ve had two significant sell-offs in the last six months or so actually I would say it goes back further than that because of the self actually started back in October of 2018 the fourth quarter and we saw a self that ended in December about six months ago and then we have one again.

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Am a. So what are we what are we looking at here? What are we Able to deduct from those to sell offs and how to play am now in the first sell-off. I was much more aggressive to the short side. In the later, sell off the one that just happened.

1:11
Here this past may I never really short of the Mark. I tried a couple of times, my timing was never quite right, but nonetheless, I had took two different approaches. Why did I do that? And the bottom line is, it comes down to volume and the rings that we’re getting from there.

1:27
So, going forward, what, what can we deduct from sell us? Well, the big thing is, is volume. How much Panic is there in the selling and met? There wasn’t a lot of panic. Yeah, we saw some pretty significant so off, but we didn’t see These massive like Panic sells these rushes to the exit where people were just wanting to get out of anything and everything.

1:44
A lot of times you see that most decisively is when the utility start selling a really, really hard and once that starts happening, then there’s really nothing. That’s safe. But the utilities actually stayed, you know, up near their all-time highs for the most part of May. And I never saw a huge amount of selling, but you also never saw a lot of panic selling.

2:02
Like in terms of, okay, we could go down like 20, 30 points and all of that. But you never saw that like, 60, 80 points were all of a sudden the Dallas trying to like hit 1000 points down. You just never saw a really true amount of panic selling in the market.

2:17
So met with a hard month to trade though because of the fact that we didn’t see the Panic selling. So I had a hard time ever getting any kind of real conviction about shorting the market. And I’m always pretty careful about that because I don’t want to get caught in short, squeeze this? But instead we just had this, like, ambivalence towards buying stocks, it wasn’t so much.

2:37
There’s a ton of Eople selling is just there wasn’t anybody? Buying them? And so people were just getting disinterested in the stock market and there wasn’t any buying going on. So what we’ve seen since then here in the month of June, starting on June 3rd, when the market finally reached its bottom, we then saw this subsequent rally that just was off the charts, where the SP is now as of yesterday and today hitting new all-time highs.

3:04
That’s pretty crazy because met was down like over six percent. So that’s a lot. To Grapple with a lot of Russell with. But it all comes back down to the reason why we saw what we saw in June was because of the low volume in may. Now we definitely bounced back in January when the market sold off and Market sold off like practically 24 Center.

3:27
So and we ultimately reach new all-time Highs, but we did not do it nearly to the same Gusto or degree that we saw here and recent June. And the difference was is that there was a lot more concern. The tip wasn’t getting bought up, we tried to buy the dip in November twice and that failed and then ultimately in December that they get but but in May, there was never even an edict by and there was just like a slow steady drop day after day after day throughout the course of the month.

3:56
And then, of course, June came to the rescue and push the market right back to all-time Highs but then I don’t know, like a two or three-week period, but in the end that can all be traced back. Back. Two volume levels because of the volume. The reason why I talk about the volume is the volume shows.

4:13
What kind of panic, what kind of fear there is in the market. So the S&P was like selling off sometimes. 20 to 30 points and you had a negative volume Buzz of like 30 or 40 percent sometimes even 50% and the reason Why that’s important. And why I use the volume buzzes it Compares volume rings to previous day’s at different points in time.

4:34
It gives you a reading on how strong the volume is, for this particular day, and each time we would see these. These – volume buzzes, I mean, sometimes you would have so offset. So, average or slightly above average volume. But if you go back to October November and December, there was some serious, serious sell-offs with some huge volume. to them, I mean, double and doubling the, the average volume levels, I mean was that kind of crazy and then if you go back, To, I think it was like February, 2018.

5:09
You saw some similar behaviors to where the market just really sold off and you had, I think Vic’s, one time that was up over a hundred percent. They shut down an ETF, a lot of people got burned on that. Those are Panic levels. We never saw any of that and the month of May none. And so it was really hard for me to want to get short on the market because I felt like at any point this Market was just going to just burn anybody who tried to short this Market because there was no Panic.

5:35
Eric and and the tape. So there’s very little reason to think that this Market was going to go down for a long or extended period of time. I was actually a fat surprised at how long it did go down for and the other thing too is it took for us forever just on a simple 12:3 stochastics it took us forever.

5:54
To get into oversold territory. It literally took the entire month practically before we got over, sold on The Daily. Whereas, if you go back in October, November December, man, we were getting oversold, very, very fast. Now, going forward, is that mean, I think the markets going to keep trending higher and it’s a new all-time highs and keep printing printing, printing them each and every day, I don’t know, I don’t know. I mean, I’ve got two positions open right now.

6:14
My portfolio, I sold tiene for 18. + % & row to the other day, for 15 percent ahead of the Reaction to the fomc. Presser, I sold in between the fomc statement in the presser.

6:31
However, I really don’t know where it goes from. From here because there is such a summertime malaise where the volume is weak. There’s not a lot of interest. So if we do see continued Prince of new all-time highs, I expect that we’ll see like two and three points to the upside.

6:48
That’s what we saw a lot of last summer and previous Summers. There is a headline risk. There’s things like Iran doing there saber-rattling and shooting down drones, and Trump saying that he’s going to attack, but not going to attack and then you got North Korea talk About launching their missiles and then you have the China trade talks and the Mexican trade talks that we’re supposed or the Mexican terrorists that were supposed to happen.

7:14
But never actually did happen because apparently there was an agreement reached, there’s a lot out there, there’s a lot but I wouldn’t have huge expectations for the market going forward because the summer time is such a Fickle e time in the stock market, you’re not going to get a lot of interest from Traders.

7:30
There’s a lot of people going on vacations and there’s a lot of people that really aren’t as interested. The stock market at this time, I even see it on my own website. So don’t have high high hopes for the stock market in the summertime. As long as there’s no, major news headlines that crisis, the market, I think you’ll probably see a continued increase in the stock market, but marginally at best also want to take a moment here to thank you guys.

7:54
I continue to get, you know, people sending me emails and cards in the mail and and letters over my mom dying. That that so nice of you folks. I I really do appreciate it for a lot of you guys. I’ve only met you online here, you know, whether it’s through the social media platforms, or in this swing trading Splash Zone, but I really do appreciate it.

8:16
And my mom was really awesome. I really, I really do miss her. She gave me thirty eight great years as my mom, and she was a, she was truly an angel and she had, she had a heart of a Thousand Angels, to be honest.

8:32
But she was, she was She was the best. And there’s not a day that goes by where I don’t think about her. And wish I could have that one more day with her, but I also know too that in life, you know, you have to go to new chapters in life. And sometimes, as much as you enjoyed in the previous chapter, eventually, you have to go to the next chapter and that’s kind of what What I’ve had to do here with the passing, my mom.

9:00
I’ll always cherish her always love her my son. You know, they were like Best Buds and everything. He’s 11 years old and he still talks to her or talked about her but you know, you hold those memories fondly and your heart and and you keep moving forward.

9:16
I am a Christian and my, my beliefs and I do believe that, that God had does have a purpose for everything. I don’t always agree with what With what he chooses to do in my life. Certainly I wouldn’t have preferred my mom to go when she did but also do know too that he’s God and I’m not.

9:35
And that’s that’s the thing that I do have to embrace going forward and to trust him and his Divine Providence. So I do appreciate all the, the letters, the condolences and sympathies. I appreciate you guys.

9:50
Extending that towards my my way and my family’s way and everybody’s doing pretty. Good. We’re sad about her passing but this isn’t something that that you can allow for you to set you back in life. In terms of not moving moving forward.

10:07
It doesn’t mean you move on from her but you do have to move forward and that’s what I intend to do. So once again I appreciate everything that you guys have done you guys mean the world thank you. God bless thanks for listening to this week’s podcast of Swing trading with Ryan Mallory.

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10:42
The go ahead and sign up by going to shareplanner.com, backslash Splash Zone. That’s www.shareplanner.com/trading-block, backslash Splash Zone. And follow me at SharePlanner on Twitter, and on SharePlanner’s, Facebook page, where I provide unique market, and trading ideas. Every day. If you have any questions, please feel free to email me ryan@shareplanner.com or call the office at three, two, one, five, two, two six, seven, three, three, all the best to you and God bless.