Why bad news is good news in a bull market: Stocks in Translation

The major indexes (^DJI,^GSPC, ^IXIC) are in a record-smashing year as bullish calls on the S&P 500 pile up. RBC recently revised its S&P 500 (^GSPC) target to 5,700, yet, the analyst behind the call noted growing risks of a near-term pullback. So how should investors play the market?

Kenny Glick, owner of HitTheBid.com, joins Yahoo Finance’s Jared Blikre for the latest episode of Stocks in Translation to discuss the state of the market and break down some of his investment strategies.

Glick explains how he uses volume-weighted average price (VWAP) as a trading strategy and how early investors can use the metric to inform their own strategies. He notes that earnings season is usually a catalyst for the market, and contrary to popular belief, weak earnings could be a good thing: “I like to see bad news because bad news, you have what we call the gap down. And the gap down in a bull market is quite often bought.”

Be sure to check out more Stocks in Translation here.

Video Transcript

Welcome to stocks and translation.

Our essential conversation for cutting through the market mayhem, the noisy numbers and the hyperbole to give you the information you need for your portfolio.

I’m Jared Blicker and I am joined as always by Sidney Fried here and today, a very special guest.

We have Kenny Glick.

He is the owner of hithe.com.

He’s an active trader and a market technicals purist who operates quote, possibly the most entertaining trading room on the planet.

Kenny, a lover of candlesticks and V Wop very near to my heart.

So uh welcome guys and thank you for Jo journey out here on the docket today.

Guess what we’re going to talk about and focus on price action.

It is the lifeblood of technical analysis and the basis behind every stock chart that we read.

And our phrase of the day is V Wop.

Don’t play the drinking, the drinking game because you are going to hear it a lot.

And this episode is brought to you by the number 24.

That’s a number of hours each day that stocks may soon trade seven days a week.

We explore the insanity.

Uh So Sidney Kenny, let’s get, excuse me, let’s get down to the uh what we’re talking about today, we are talking about price action and literally that is the lifeblood of what we’re talking about here.

Let me just dive into it with you.

What does it mean to you, Kenny Price action is life.

You know, again, I follow the VW.

So everything about price is right there for you.

So, you know, again, when you talk about price, it cuts through all the nonsense.

I think you kind of said it at the beginning there.

Um, you know, you don’t have to worry about who the President is.

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You don’t have to worry about economic numbers.

You don’t have to worry about really anything except what the stock is doing at the time that you’re in it.

And again, when you follow the V wap, that really is, again, my point of clarification, we’re gonna get into the definition of V wop.

But you’re pronouncing it.

V wap a little vwavww do.

Yeah, exactly.

My dad was a big dow fan.

So, I, it’s, it’s the meo tomato kind of thing.

I hear it.

Wap.

But we go whoop.

I tell you what, Brian Shannon, one of the many books on V wop or one of the few books on V wop, he calls it V Web and he makes a compelling argument.

I’ve been down at the New York Stock Exchange and they tend to say V Web.

So, who’s to say, um, but let’s get down to nuts and bolts here.

Um, just talking about the market.

You’re a day trader.

How do you, how do you sit down in the morning?

How do you approach the market?

Same thing every day.

It’s actually like groundhog day at this point.

I’m kind of getting a little psychotic about it.

But, you know, again, you turn on the news, see what’s going on.

I am a big fan of volume obviously.

So you’re looking at some of those small cap stocks in the morning.

There’s always some weird name, some, you know, some tiny stock that has, you know, 2030 million shares out of nowhere.

And I’ll take a look at those but we generally sorry.

Yeah.

Yeah, generally it’s just gonna, you’re gonna look at what’s in the news because the more volume, the more better.

So today, you know, if I don’t want to date the show, but you know, Tesla was all the rage today because you had some, you know, some big news on there.

So that’s where you go and you just follow the VW and follow the price.

Can you help me understand how volume actually works for an early investor?

So where all the money is going today?

Let’s say you’re saying, follow that.

Yeah.

Yeah.

Yeah.

And again, you could take, what, what I say is I, I live in the nucleus of the market.

So if you could conquer the day and just understand the price action and the volume, then you could take that and expand it and keep expanding it and keep expanding it.

So for the, for the, for the newbie who wants to know it’s like, that’s where the action…