Stock Market Voodoo | Podcast Episode #321

0:07
Hey, I’m Ryan Mallory and this is my swing trading the stock market podcast. I’m here to teach you how to trade in a complex ever-changing world of Finance, learn what it means to trade profitably and consistently managing risk, avoiding the pitfalls of trading. And most importantly, to let those winners run wild, you can succeed at the stock market and I’m ready to show you how, hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market and got a good old-fashioned in my hand and using some Evan Williams bottle and bond. 100 Proof, good stuff, man.

0:41
Old Fashions, you just can’t beat them. And we’re talking about Voodoo in the stock market. What am I talking about here? I mean are we getting like weirded out here? Are we getting into like reading tea leaves and other weird stuff in some cases? Yes because I tell you what running the trading block since I don’t know, I’ve probably been doing that for 11. 12 years now and I’ve seen some interesting characters come in and out of the place over the years and I’ve seen a lot of interesting takes on the stock market.

1:10
So we’re going to talk about that stock market Voodoo and it’s inspired by this email from a guy will call them bow. Good Florida, redneck named Bo rights. There is a lot of strategies and theories. Followed by Traders examples, candlesticks various, waves and Cycles October is unlucky sell in May and go away.

1:29
The Monday effect just to name, a few, are there any common beliefs and trading that Traders follow that you consider Voodoo, or things that just don’t work. Sincerely, bow. It’s a good question. And so what I aim to do is I try to write down as many of the cliches and I know I’m probably forgetting some of them actually.

1:48
I’m remembering one right now and I’m going to write it down as I’m speaking. Don’t fight the FED. People say that stuff all the time, so I’m going to write that down as I’m doing this podcast and I’ll talk about that as well, because I have a lot to say about that. So anyways, I tried to write down as many of these things that I could possibly think of.

2:03
And I came up with a bunch of them and some of them are beliefs, some of them are sayings, some of them you hear on TV and they just either they add up to meaning something or they don’t. So that’s what we’re going to do. In this particular podcast episode, we’re going to talk about the different Voodoo stuff, the different sayings and we’re going to dissect each one of them individually.

2:25
So, the first one, he asks about candlesticks, should I be concerned about candlesticks? Absolutely, I think candlesticks are really important because they provide you such a great way of seeing and just a quick, snippet, exactly what the stock market did for those who don’t know what Japanese candlesticks are.

2:43
I use them every day in my trading, that’s how I look at Daily price action in different time frames. But the candlesticks are essentially like a square. And then, I’ll have little lines coming out at the top and the bottom, essentially, if it’s a day that finishes positive, the opening price is the bottom of the square. The closing price is the top of the square. Sometimes, they are rectangles, sometimes they’re very thin lines depending on how close the opening price is to the close price.

3:05
And then you have these little lines that protrude outwards. And those are like the highs and lows of the day. So it kind of shows you where the stock opened, how low it went, how high it went and then where it closed at and out of that, you can get some of the emotions. Like, for instance, if you have a market that opened up much higher than the previous day, and it shoots up like one or two percent, you get this long shadow on there, and I’m trying not to make it to where you need to see this to understand it, but it’ll have this long line on the top and then it comes right back down and then the price closes at or near where it opened up at that shows you that the market was able to sustain some of the momentum to the upside initially.

3:38
But it couldn’t hold on to it and it succumbed to the sellers before the end of the day. So it’s not so much important that you know about that candle for the purposes of this episode, what I’m trying to say is that there’s a lot that you can decipher from a candle. Now, do I think the candlesticks as a whole are all you need for successfully trading swing market?

3:54
No, I don’t think that you use them in isolation. I think it’s good to use them with something else. I think that you use them with technical analysis, like if you’re looking at a cup and handle pattern, when you get a strong candlestick that goes through the neckline. That’s a good way to use technical analysis and candlestick. If you’re using them with indicators, that’s also important.

4:12
But I think candlesticks just by themselves and nothing else, I don’t think it’s the best way to go about it. I think you want to try to employ the technical analysis that you know, and implement it into your strategy as one aspect of successful trading and your strategy as it pertains to the stock market.

4:30
Another one that comes up a lot is Elliot wave theory. Now, I’ve read this stuff, I’ve sat through people talking about it religiously like this stuff works out, but really all I found. And I’m going to offend some people here, and if I offend you don’t get mad at me, okay? I’m telling you my opinion and not all the things that I say are right, not all the things I say are wrong.

4:51
If you have an issue with what I say, do the research yourself and come to your own conclusion. I would even say that even about the things that I sound right about, always go back and do your due diligence. Do the reading, learn it for yourself so you can really know if Ryan’s right in what he’s talking about here and then just go figure it out because I’m a flawed human man.

5:10
I’m gonna say things on this podcast that are wrong that are not necessarily accurate. I’ll think that they’re accurate but I’ll be wrong about it, just like losing trades. I have losing trades. A lot of people who put themselves out there whether it’s in a podcast or YouTube or something else, they don’t like to admit they have losing trades, but they do and I’ve just never been one to shy away from them.

5:28
So Elliot wave theory. You know, you got these people that’s like, oh, this is wave A this is wave B this is what you see. It’s going to result in this reversal pattern that results into the down wave of A and the down wave and I’m probably sounding like I’m an idiot to somebody that actually knows Elliot wave theory really well.

5:44
But what I’ve always found about Elliot wave theory is that it’s really accurate in hindsight, it tells you exactly where the waves were, but when you’re in the moment, it’s so much more harder. It’s like, this is wave one of A or wave 2 of B. And then all of a sudden, it does the exact opposite than what you expect. Oh, it just that hasn’t formed yet.

6:00
That’s wave 2 of D or something. And so there’s always this like justification for why it did what it did in that in the end. It only looks good in hindsight. So that’s my thoughts on Elliot wave theory. Do I necessarily want to say it’s complete Voodoo?

6:16
No. But I do think that it’s just a really good thing to look at in hindsight. If I thought what Elliot wave theory was a very dependable theory, I do it’s a very structured theory but I just don’t think that it works in real time very well.

6:32
Now, there’s another one, the final 30 minutes of trading. Sometimes there seems there’s a little bit of voodoo in that thing because the stock market can make some crazy crazy moves. In fact, we saw one just a couple of weeks ago, where market was down most of the day, and all of a sudden in the last 30 minutes of trading, it just ripped.

6:52
It went like 20, 30 points higher in the last 30 minutes of trading. In fact, there’s a Twitter account out there called ramp 3:30 and it’s actually funny, the funny Twitter account. He’s always joking about it. Well, I would say he used to do it more. So back in the day, maybe like two or three years ago, he used to always make jokes about the 3:30 ramp, but that’s where his Twitter handle came from ramp 3:30 was essentially about end of day ramp in the market.

7:09
Sometimes it can just be that the market’s been selling off all day and the shorts are ready to cover their positions and not risk it another day and so in that final 30 minutes they’ll start covering and it’ll create a bunch of buy orders and then the market will go up. Sometimes it just happens to be that people are trying to front run a big economic report the following day or they’re afraid that they’re going to miss out to another gap higher.

7:27
It’s just there’s a lot of things that go into that final 30 minutes and that gives a segue into the first 30 minutes and the first 30 minutes of trading is something that I don’t like to trade at all because there’s no dependability to it at all. You can gap way up one morning and then in that first 30 minutes, give it all back.

7:44
And all of a sudden you’re trending lower the rest of the day and vice versa. And within that first 30 minutes, you have this thing that I like to call the 9:45 turn. Some of you guys may have heard of it before, but oftentimes, you get this big reversal candle no matter what the market was doing the first 15 minutes, once that 9:45-minute candle hits, the market does the exact opposite.

8:01
So I like to call that 9:45 turn where you just get the exact opposite reversal. Doesn’t necessarily mean it will last the whole time. Sometimes it only lasts a few minutes, but oftentimes I see that take place in the market, the 9:45 turn and I don’t get into a lot of these concepts.

8:17
I mean, I can maybe make a podcast off of the 9:45 turn and do a lot of dissection. I don’t think it’s really important to know the finer points of the 9:45 turn or why the final 30 minutes tends to ramp higher at times in just glorious fashion, but it’s good for you to know that these things exist.

8:35
We talked about the 9:45 turn and the first 30 minutes, the final 30 minutes. But in that final 30 minutes, there’s also that 3:50 mark that you can honestly hate. The 3:50 mark, I’m always like, can we just close the market out here? Because I just never know what that last 10 minutes is going to bring. But there you have a lot of people trying to sell their positions, buy positions at the very end, you have market makers just trying to settle their books at the end, trying to get all those orders filled for market on close and it can create some wild volatility.

8:54
In fact, you can see the market wipe out losses on the day or give up all their gains in the day in the final 10 minutes. So the final 10 minutes of trading is kind of like the final 30 minutes but on steroids. Now with these four different scenarios, the final 30 minutes, the first 30 minutes, that 9:45 turn, the last 10 minutes of the trading day, or that 3:50 mark, and I’m using Eastern Standard Time here.

9:11
Does that necessarily mean every day that we’re going to have some kind of crazy move at these different moments? No, not at all, but it’s just there’s tendencies there and I think it’s sometimes good to know that there’s tendencies.

9:29
Here is one that I think is just full of crap and that’s “sell in May and go away.” Maybe back in the day that there was some truth to it. Nowadays there’s not. People are like, oh man well, let me back up. I would say that a lot of it comes from the fact that, okay, school’s out, people on Wall Street like to flee to the Hamptons, if that’s a place that they still go to now, they like to take off for the summer break, there is not as much volume during the summertime, which is true.

10:02
The volume is almost non-existent in summertime. And then come like September when school comes back into session. Yeah. You start seeing an uptick again. It’s kind of similar to like Christmastime or Thanksgiving where if you have a holiday there’s hardly any volume on those half-day tradings or the day before major holiday. So the whole “sell in May and go away” thing though, I don’t subscribe to. The reason why I’ve seen more times than not summertime, yeah it’s boring, the price swings are not really all that big but it doesn’t mean that the market doesn’t move over the course of a few months that there isn’t gains to have been made.

10:20
I mean, what we did in July and August of last year during the 2022 sell-off, man, that market ripped higher and you would have missed out on a huge gain there if you were just like, I’m selling in May and going away, I’m not going to worry about anything. That being said, I don’t know if I really made much money off of that rally in July and August last year, but in hindsight, if you’re using Elliott wave theory, there was some money to have been made there and that was in the summer, that was in the doldrums of summer, the market just ramped higher and oftentimes, that’s what the market does.

10:41
It kind of has this like steady progression higher. Now last year, we were in a bear market. So some of the price swings are a little bit more dramatic, but if you’re in a bull market, yeah, there can be years where the market doesn’t do nothing or trends slightly lower, but oftentimes I see some really good moves, some of the best moves of the year over a two or three month period come after May in that June, July and August time period.

11:21
So, I wouldn’t worry about that. Another thing that people get hung up on is the fact that there’s been historically a lot of crashes in September and October, but I’ve seen crashes in other months of the year too. But those are like, you know, like the 1987 crash that happened in October. It was like down 23, 24 percent in a single day.

11:38
There’s been other crashes as well, but we had the fat finger crash in what, 2010? That was pretty dramatic. That was in May. 2008 saw some really dramatic downturns in the latter parts of the calendar year, you look at the 2020 COVID crash when did that happen? That happened in March.

11:55
So you look at 2022, when did we start selling off? When was it really bad? January, February, March. I mean, it was only the beginning of the year. So you can get hung up on the “sell in May and go away” but it’s that’s such a diluted expression. I don’t think it carries any weight to it anymore. And likewise they like to say, oh, you should buy in November?

12:13
Yeah, I would say most of the time November and December is pretty bullish. But what happened last year? December? Had one of the worst Decembers of all time. So what I’m trying to say is it’s bullish until there’s a bear market. It works until a recession hits or until there’s calamity in equities and then all of a sudden all those stats go out the window. So like in 2022, for instance, if you were like, okay, yeah, we’ve had a crappy year, but man, December is always a great month of the year, man, we always have that Santa rally, I’m going to get long on it.

12:31
Well it’s a bear market, man. Bear markets don’t care about your seasonality factors. They’ll destroy anything in its path and that’s what it did in December.

12:49
Oh crud. Here’s a couple of Kramer expressions that I’ve kind of grown weary of hearing. You know he’s all “there’s a bull market somewhere” and he will say “bulls make money, bears make money, and pigs get slaughtered.” You know what? That doesn’t make any sense to me at all either because you’re almost I mean, what do you describe as a pig?

13:04
A person who’s been holding on to an Apple since the 1990s? That could be piggish. I mean, he’s been holding it for 30-plus years, but guess what? He’s filthy rich as a result. Same thing with like Amazon or Google.

13:21
If you’ve been holding Google for 20 years I can’t remember, I think it’s been about 20 years now that it has been trading I remember the IPO of it actually. But yeah, I mean, is that considered piggish? I mean, he’s basically saying all you got to ring the register at some point. You do, but I’m a firm believer in letting your winners run wild, right?

13:39
So if it’s wanting to keep going higher, then let it keep going higher. If you’re into long-term investing, let it keep running. I mean, if it’s crappy, then yeah, I don’t want to hold on to it. I will follow my stop loss and get out. But getting into this whole “bulls make money, bears make money, pigs get slaughtered” kind of lends you to dollar-watching too early and “oh man, I’m up, you know, $200 on this trade, that’s a lot of money, I don’t want to be greedy. Bulls make money, bears make money, pigs get slaughtered, I’m hitting the sell button.”

14:04
Maybe by doing that, you’re just hurting yourself. But you know what you’re not hurting yourself with? swingtradingthestockmarket.com. swingtradingthestockmarket.com is the website for this podcast. It gives you all my stock market research each and every day. You’re going to get updates on the overall market like SPY, the Qs, IWM. You’re also going to get updates each week throughout the week actually video updates of the big tech stocks.

14:24
Then you’re going to get my bullish and bearish watch lists that I provide each week. That’s my master lists the stocks I’m most bullish on, stocks I’m most bearish on and then there’s going to be daily watch lists too. So check it out. I mean, some really good videos, multiple videos each day, swingtradingthestockmarket.com, for supporting this podcast in the process.

14:42
Now, we got a few more to go here. Goodness. This one’s taken a while in terms of how long my podcasts usually are. Blaming the market makers. This is one of the things that bothers me and this is kind of like a two-parter right here. Oh, the MMs. They don’t want this thing to finish at 200 or oh, the MMs are after my shares. Oh, the MMs made a run after my stop losses.

14:59
I mean, there’s always an excuse. It’s right, and we always like to blame the market makers. I don’t even know who the market makers are. I mean, there’s less and less people working the floor of Wall Street than ever before and yes, market makers still exist. But do I want to blame them? I’ve never felt like I’ve had a loss because of the market makers, and if I do, I don’t remember it.

15:18
So, I don’t blame market makers for anything that happened. The other thing I always liked and I kind of get caught up in this some too “they don’t want it to finish lower today,” “they don’t want it to finish higher,” “they’re making a run towards SPX 4000,” “they’re trying to keep it calm before…” Who is they?

15:35
I never know who they is. At least if you’re going to say they, equate it to somebody. And yes, I think I’ve gotten caught up saying it too. It’s like, “Oh my God, they just keep running this thing higher every single day,” or “Man, they’re just stopping me out of my trades each and every day.” And I have to ask myself, who am I talking about? And then sometimes, I don’t know. I don’t know who I’m talking about.

15:55
But I have thought about people coming and going from the trading block over the years. There was this one dude I hope he doesn’t listen to this but he kept talking about the moon patterns. I swear. Okay, complete transparency. He came into the trading block with this stuff the first time and he was spouting, “Oh it’s a full moon. That means we’re probably going to rally today.” I don’t know I don’t remember exactly what he said but I kid you not, first couple of times, he nailed it right on the head.

16:28
And I think everybody in the chat room was like, “What? What is this moon stuff that he talks about?” And then, you know, it’s like, “It’s the winter solstice,” and he would tell you how the market’s going to go down. And he was right that time too. And we were like, “Huh…?” Then he just like completely blew it up. I mean, the dude couldn’t be more contrary. And then it

16:48
cramer indicator. But it was funny though the first couple of times because he was like hitting it right on the head. You’re like, huh, these moons that this guy speaks of… I find it of great interest. But no, in reality, the guy couldn’t have been more out of his mind than anybody that’s ever graced the trading block before. But I’m glad I never took anything he said to heart. However, there’s literally people out there that look at the moon cycles and make trading decisions. I kid you not. And please don’t do that.

17:08
How about “as January goes, so goes the rest of the year”? There is some truth to that. I mean, you look at 2022 January was a flaming hot pile of poo. And the whole year was a flaming hot pile of poo. You look at previous years, I mean, I’ve seen it where it doesn’t work that way, but I would say more times than not, it does.

17:26
I think it’s one of those things too that here in 2023, January was really good it was one of the best Januarys we’ve had in a long time but 2023 is setting up to be a bad year. They’re talking about recessions in the second half. You know, that goes back to what I said earlier where essentially that January indicator works great in bull markets, but in a bear market, it will completely ignore it.

17:44
The Monday effect. That’s essentially where whatever happened on Friday tends to carry over on a Monday. Yes and no. I’ve been trading a long time and I’ve seen it. A lot of times, close very positive on Friday, you’re like, “Good, good, good, this should carry over well into the next week,” and it doesn’t it gaps down.

18:02
So I don’t necessarily think that there is a huge tradable outcome just using the Monday effect. And then my favorite and I talked about this earlier because I was thinking of it as I was doing the show “don’t fight the Fed.” That’s true. You don’t fight the Fed, though I will say 2022 made me want to pull out the remaining hair on my head at times because you see all these people talking about pivots and, “Oh the market’s going to go back up.” You’re like, you guys are just like fighting the Fed.

18:26
And it was the same people who would go on CNBC all the time, like, “Oh, don’t fight the Fed,” and then they’re like, “Oh, the Fed’s got this wrong. They got to pivot. They got to pivot.” Holy cow, if you did that during a bull market, you’d lose all your money. But these people were just adamant about it and it drove me crazy.

18:46
Eventually, they would be wrong, but a lot of times the whole market fell in line with it. It would just drive you nuts. But overall, I would say, “Don’t fight the Fed” is pretty legit. So there’s some things that work, some things that don’t. I wanted to give you guys a good chunk of the stuff that I knew.

19:04
I’m actually enjoying vacation this week, so I can’t tell you how much I enjoy being able to take a vacation. This is probably the first vacation where I’ve disconnected from the market quite a bit. I’m still watching the market and making trading decisions in my account, but I’ve been able to just step away for a week, go on a vacation with my family into the Caribbean and I’m really, really happy about that.

19:22
So I’m excited about getting back into the office. I pre-recorded this thing. I did it the night before I’m supposed to go on that vacation so that you guys would have a little bit of content from me this week.

19:41
So, but nonetheless, I appreciate you guys letting me take a vacation, for understanding that. I tell you what, I haven’t taken a vacation like this in 14 years. So very much looking forward to doing this. I’m yeah, probably, I’m too addicted to the stock market. I love it. I love my job. But like all jobs, you need a little bit of a break.

19:58
So that’s what I’m doing here taking a little weekly. So if you enjoy this episode, I would encourage you to leave me a five-star review, man. Keep doing it, guys. I appreciate you. You can follow me on Spotify. You can leave five-star reviews on Apple or whatever platform you’re listening to, and keep sending me your emails.

20:15
I really don’t think enough you guys send me emails. ryan@shareplanner.com, I read them. I try to make podcast episodes some people come up with so many good episodes, I like use four or five of their emails in the past just because they make some really good emails, bring up good questions. So don’t be a stranger. Send me your emails. ryan@shareplanner.com.

20:30
Don’t forget to check out swingtradingthestockmarket.com. I’m telling you, some really good research. Thank you, guys, and God bless.

20:48
Thanks for listening to my podcast, Swing Trading the Stock Market. I’d like to encourage you to join me in the SharePlanner Trading Block, where I navigate the stock market each day with traders from around the world. With your membership, you will get a 7-day trial and access to my trading room including alerts via text, email, and WhatsApp. So go ahead sign up by going to shareplanner.com/tradingblock.

21:11
That’s www.shareplanner.com/trading-block. And follow me on SharePlanner’s Twitter, Instagram, and Facebook, where I provide unique market and trading information every day. If you have any questions, please feel free to email me at ryan@shareplanner.com All the best to you, and I look forward to trading with you soon.