 Welcome to Access a Trader, the number one community for those who are committed to taking control of their trading in order to achieve success, profitability, and longevity. Thank you for joining us. Here's Dan Shapiro to help you find your edge, master your process, and own your future. The next question comes from Muhammad. Dan, what do you expect when a stock loses a macro pivot or goes down aggressively and goes sideways for multiple days? Well, I'll give you a perfect example. Let's talk about some real-time examples, right? So when a stock loses a macro pivot, okay, so let's use a whole bunch of examples, real-time examples that we had pivots on. Let's start off with letter Z. One of the better earnings lows shorts that we've had, because it basically went straight down, okay? When a stock blows up, and I don't care if that stock blows up, there's a big misconception here. When a stock blows up, whether it's on earnings, FDA, downgrades, right, there's multiple ways a stock can blow up. You know, loses, you know, 10% of its value. Let's just call that as a blow up. Everything above it is obviously a lot more. So when a stock blows up, okay, it puts in its initial low. So here is a perfect example of Zillow putting, you know, they came out with earnings. I forgot what the earnings were. They were bad. Apparently they got caught with inventory of flipping houses. Apparently I thought they were real estate site. Apparently now they're flipping houses. Apparently Zillow is the only company in the world who's not taking advantage of the whole real estate craze in the last two years, but okay, no judgments. So every single stock when it puts in a low, right, puts in a low of its individual isolated event, what it usually does is it kind of goes sideways for a little bit or even kind of attempts to go higher over the course of the next week or so. And usually what that means is there's a lot of retail buyers coming into the stock and say, well, wait a minute. The stock is unwarranted because in everybody's minds, you know, the stock is always unwarranted and getting hit. So a lot of retail comes in and says the stock is unwarranted. I think the stock in the next two months will go higher, right? How many of you guys have said that, especially as starting investors or starting traders? Stock doesn't deserve to be here. It should be higher. There was an over exaggeration, overreaction. Okay, that's cool, right? So whatever your rationale is by buying a stock that blew up on either earnings, downgrade, FDA, whatever the case may be, you're saying to yourself, see, it's not going down anymore. It stopped going down. That's the bottom. So what usually happens, Mohammed, the stock will go flat to up a little bit, right? Flap to up, flap to up, flap to up, flap to up, flap to up, flap to up. And a lot of traders believe that, see, the sellers are comfortable at these levels. There's no more selling pressure, right? Think about it. It's going sideways. It already blew up. All the bad news is in the stock. Ha-ha! The bears got trapped. The stock is going to be higher. It's going to be backed out, you know, previous, in this case, earnings highs in the next two months. This is a gift, right? How many people you see here say that on social media? This is a gift. What they don't realize, when a stock goes down, when a stock goes sideways after a blow up, or after earnings, whatever the case may be, it's not going sideways to go higher. It's going sideways to go lower, okay? And the one thing that happens is all these traders, right? All these retail traders or even funds, right? You can have, and I love you, right? I don't want to say a bad word about you. I think you're a genius, right? But you have the Cathie Woods of the world turning around and saying, well, I love the stock at 100. The stock is obviously putting in the bottom at 63. Let me get along the stock also. So you got retail getting along the stock. You got the Cathie Woods of the world defending their positions, right? Defending their positions and this thing. Let's say this is the bottom. It's going to go sideways. The problem is that's not the way it works. When a stock gaps down, it's not buying time to go higher. It's buying time to go lower because eventually, when a stock doesn't go higher, all those funds that didn't sell, right, Muhammad? Think about it. There's a lot of funds that sold after earnings, but there's a lot of funds that didn't. And they want, and they're saying to themselves, what, you know what? Let me give it a little bit more time, see if it could come back. A week goes by, two weeks goes by, nothing is happening. And now they're seeing the stock start going lower and lower and lower and lower. And all those traders who bought that quote unquote, all the bad news is out. Now they start getting worried, right? They start getting worried. The stocks that, you know, the funds that double down on the earnings lows, they start to get worried. Retail, they bought more. They start to get worried. And what happens is after a week or so, two weeks or so, it finally loses the earnings lows. Guys, everybody see that? So it finally loses the earnings lows. And now, all those people who bought the stock that went sideways for two weeks and they couldn't get any appreciation, now they have to start making a decision. Do I stay with this thing or not? Okay, do I give it a little bit more time or not? A lot of traders and they have very, very basic technical analysis. They'll turn around and say, well, if the stock doesn't hold its earnings lows, I'm out. Now imagine 10 traders saying that. Imagine 100 traders saying that. Imagine Fidelity Magellan turning around and say, well, now it's going lower. It lost its earnings lows. Let's start selling. All of a sudden, the people who double down in their position, or if their earnings blow up, let's start selling. So what usually happens after multiple weeks of attempting to grind higher, getting rejected, you can see it got rejected here, on the linear regression line, on the 5-day moving average, on the 10-day moving average. And the first close, the first close below the earnings low, starts a cycle of complete disgust and the stock becomes unmotivated to own, unmotivated to hold, and now they just want out. So for all those stocks that lost their macro lows, as Mohamed just asked, they start drifting. They start drifting below their earnings lows and usually starts a cycle of a week or two of lower prices. Sometimes you'll get a 5% move down. Sometimes you'll get a 10% move down. Sometimes you'll get a 3% move down, as a case we've seen, a 2-3% move that we've seen and beyond. But it always works out the same way. And if you look at multiple stocks that lost their earnings lows and lost their macro channels on a close, usually what started is usually exactly the same thing. And you see it here. Here's the earnings low on Zillow, right? Stock went down 10. Here's the earnings lows on Fubu. And it's the same thing, right? Fubu, here's the earnings lows. It lost the earnings lows. Again, it started a cycle of, you know what? This thing is going lower. Let me get out, right? You have Roku, same thing, right? Roku lost its earnings lows when sideways got absolutely destroyed. Even this garbage beyond, that by the way, everybody should be out of today, you know, beyond as much as we bitched and moaned about beyond, the stock still came in $4 for us. Let's be honest. It still came in $4. It trades like garbage. But again, you can see this same scenario playing out over and over again. Stock gap down into earnings, right? It tempted the gap up, right? It tempted to go higher, right? It attempted to go higher. It got rejected. It got rejected. It got rejected. It got rejected. And then once it lost its earnings lows on the close, you know, the stock came in, did come in $4. I mean, it really did come in $4. Now, you know, it's just kind of drifting all over the place. But you see these examples over and over and over again. And just remember, guys, this is very, very important. When a stock gaps up, right? When a stock gaps up, for example, I'll give you a perfect example. When a stock gaps up, for example, like a Qualcomm, right, on good earnings, and then go sideways, it's not going sideways because there's no more buyers in the stock. It's going sideways because the bulls are resting. So if you flip that to the other side, right? If you flip that to the other side, it's the same thing. The stock is not going up because the stock is oversold. It's going up just because it's a little dead cat bounce. But once it resumes, once it resumes and starts putting in channels back to the downside and closes below the earnings lows, it's going to start drifting. So anytime, guys, you look at a stock and you say, hey, Dan, what do you think about the stock? It gap down. Now it's going sideways for the last two weeks. What do you think? The answer is get the hell out. It's not resting to go higher. It's resting to go lower. So anytime you see a chart, a gap down sideways, it's just resting to go lower. You see a stock gap up, resting. It's just resting to go higher. And unfortunately, a lot of traders, when they've never been exposed to this type of information, they believe that the stock is oversold. Guys, remember, keep this in mind, especially for all you new traders, there's no such thing as oversold or overbought. The last price at four o'clock is fair value. Years ago, years ago, years ago, you had Kramer come out during Google's Dutch auction and say, whoever buys Google at this Dutch auction at 100, this is what, 205? 204, 205, maybe 206? Whoever buys Google at 100 bucks, okay, they're idiots, right? Whoever, you know, going back to 99 and 2000, anybody who buys Amazon at $300 a share is an idiot. It's trading at a PE of 4,500, and it was. But the point is, it's only overvalued if the market dictates it's overvalued. The last price at four o'clock makes it fair value. So my opinion of the stock, your opinion as in stock, is irrelevant. Fair value is at four o'clock, so don't think for a second, just because the stock gap down 25, 30 points, it's not going to go down another 25, 30 points in the next couple of months. So it's very, very easy to kind of let your opinion and let your bias and your love, quote unquote, of the stock dictate your vision of seeing what's about to happen in the future. So that's kind of my taste of, that's kind of my take of the stock, moving lower, digesting, moving higher, digesting, but more important, moving lower, digesting, okay? So that's that it.