 Okay, can everybody hear me? Let me know. We're gonna get started. I'm gonna put this screen up right now and if people come late, I'll just let them in as I'm talking here. For those of you that are new to this room or coming to listen to me speak, you have to go down to type and choose my name in the chat here. So if you want to ask a question you go down to individual user, then you got to pick Melissa Armel, then you'll write something. Okay, so if you want to give me a hi, let me know you know how to do that. I'm the only one that can see all the comments and questions and everything, but that is how the room is run. Everybody understand how to chat? Forgive me, I'm kind of losing my voice today, but on the phone a lot today, talking a lot today. So I'm a little hoarse. Some of you I recognize, some of you I do not recognize. So for those of you that don't know me, my name is Melissa Armel. I run a company called the Stocks Flush and what do I do? I focus on shorting, shorting, shorting, shorting, shorting stocks, a gap, shorting the overall market, shorting anything that gaps down that rates 20 points or more per my 26 rating system. That's what I do. One person has no sound. Can everybody hear me? Do you want to sign out and back in to test the sound? People have sound, right? Okay. One person doesn't have sound. I'd sign out, sign back in. Okay, just making sure it's only one person. So getting back to what I was saying, what do I do? I prefer to short. This does not mean that I don't go long. I will go long. Okay. The reality is that you can make money in the market going long and shorting. Okay. For me though, I find there's an advantage to knowing how to short. Why? Because you can get big moves fast in shorts. I like to do fast trains. I'm less at risk if I'm in and out quickly for the profit. And if someone could told you, you could make $2,000 in five minutes or $2,000 in six and a half hours, which would you choose? Five minutes. So it's an easy, easy, easy, easy answer to me. Okay. And you're less at risk of the gyrations of the market and other things that can affect you or your trades, I should say. But I also find that trading to the downside shorting has given me advantage because many people don't know how to short. They're scared of shorting or they're not good at it, quite frankly. So again, we're going to talk today about the market and what happened today. And I was going to give a lecture on momentum. Okay. But then this all happened over the weekend. So then, or really since Thursday Friday with the Silicon Valley bank, you know, being taken over by the FDIC. So when that occurred, I figured we talk a little bit about that. That did push the market down. So let's go, let's backtrack first. Is there one see the chart? Let's backtrack first till last week. So if we go back to last week, where we were from that point, in fact, what was Monday? Monday was a six. So last week, we started out Monday. Things looked optimistic, but we failed into the close. So we gapped up Monday morning one week ago, and we failed. What do I mean by failure? I mean, we failed to go up. So we failed to follow through with the gap up because we closed red on the day. Small loss, but we still fell because at one point the market was up rally $3 plus higher. The day was for a 745. Then the very next day, which was Tuesday, the seventh, we actually did gap down. You could have shorted the market this day. We had a big sell off this day. This was the seventh. Again, you can go back. Why did we sell off this thing? That thing? What made the gap down? If you want to follow fundamentals, that's fine. That's great. But there are many times you get a bad news in the market falls, and you can have good news in the market falls. So it's neither here nor there. The news that created the sell off in the last couple of days was bad news. But sometimes the market falls on good news, just so you know. Anyways, we fell this day and you could have shorted the market. And lots of other things too. Then the day after that was the eighth. So that was right there and we were up slightly. Gapped up a little bit, fell, tried to hold on, and did hold on into the close. We actually were green. That was the eighth. So that was Wednesday. It was only a couple of days ago. I was before all the scuttlebutt. Then Thursday we were up. So I wasn't really surprised on Thursday and morning when the market gapped up because we followed through on the rally. We were on support. We gapped up here. We tried to rally and we fell. Again, looking back now, you could say, well, certain people knew certain things were going to happen before they happened. You can say interest rates. You can say lots of things. The market's been gyrating a lot because of interest rates. Speculation as to what the Fed's going to do. So the Fed talked last week. Topped last week and on Tuesday and Wednesday and that created then some of the selling we saw here on this day. But then also could have been some of the things that people knew something was going to happen with the banks before it did. Then on Thursday, I know that was Thursday. I'm sorry. Thursday was the day we fell. Then on Friday we gapped down. We tried to rally Friday. This is Friday morning and then we fell and we pretty much fell into the close. There was no looking back on Friday and that was that. And then over the weekend, obviously everyone knew what was going on with the banks, which we'll talk about in a minute. And then today we gapped down on Monday morning. So we closed on Friday, just looking at the spy here at 385.91 and opened that in the morning at 381.81. So that's not nothing. That's not nothing at all. So it was like basically 386 and then with an open at around 382. So it was like a $4 plus gap down from Friday to Monday. We fell early, then we bounced and then we fell hard into the close. Now let's just look at what we're doing right now here in the post market. We're trying to rally a little tiny bit. So no one knows where the market's going to open tomorrow because tomorrow morning at 830, there's actually a CPI number which always has a market reaction. It's called the consumer price index number. So the market will gap tomorrow. I don't know where it gaps because it's going to react in the number. So at 830, you can watch the number, you got an hour before the open and I will look at the market gap and I will rate the market gap to determine if I want to short the market or if I don't want to short the market. If I want to go long, short, whatever or what stocks we're going to do. And that's what I do every day in a nutshell. I look at what's happening in each and every individual gap and the market and determine if I think the gap's going to fall through to the downside or not. Now, as far as what happened here that created this momentum, part of it is interest rates, but part of it what's happening with events, which we're going to talk about in a minute. But when you understand how to trade a gap and when you understand how to trade momentum, which in the case of how we've been trading it, we got to sell off. So the momentum in the last week was what? It was down. And no matter how we closed today, doesn't even matter at all, we were down in the last week. So you just go back to Monday, which is what we just talked about, the Monday a week ago, the spy was over 400, not by a baby amount either. We closed that day at 40447. We were good enough over 400, well above it. And we're nowhere near that today into the close, despite the rally on the day, we're at 3d5 and change. Okay. So in a very, very short period of time, just a few days, the market dropped 20 plus points. And that's how fast it can happen. What's selling? So selling when it comes in, it's panicky, panicky, panicky. You saw that Thursday, you saw that Friday, you saw that last Tuesday, you saw that between Friday and this morning, you saw it yourself. So panic, if you understand where the panic's going to come in, be the driver for the selling or whatever, then you can short that you can buy put, which is a short as an option, or you can short a stock or the market as an equity trade on margin and trade it. Okay. The benefit of trading momentum is you can get big moves and capture big moves. And why is that good? Because as one individual trader, you don't want to have to take some absurd amount of size to make money. And you can position yourself with small positions, a couple hundred shares, a couple contracts, or even a couple thousand shares, which I still consider a small position in the market in order to get a big move. Okay. You don't have to take hundreds of thousands of dollars of risk on to get a decent move or decent profit return in a trade. And lately, the way that the options have been priced to do even puts, they've been priced, I think, fairly well actually. Now they may change this week, but over the last few weeks, I think they've been priced pretty good actually. So any questions about anything I said so far? Any questions at all? But anything so far what I said? Is everybody with me? Okay. We got sound now. That's good. Now, what if you're a person that wants to actively trade this market? The best thing you can do is capture the momentum, getting it out, getting it out, getting it out, because things are going crazy where it looks like we're going to go up, then we go down. Looks like we're going to go down, then we go up. Okay. So choosing a side, picking the direction, getting in the right timing, letting the trade play out, sizing yourself correctly, and I call it chunking it out, which is booking the money. You take the trade, you're up, you get out. Boom, boom, boom. That's the best way to play this market, and the best way to play any market that's volatile, because you could be up money in a trade and then it all goes against you. Or if you take a trade, you could be down, and then it could go in your favor, and if you kill it, you take a loss that you didn't have to take. So you've got to let trades even if they're down play out. You know what I'm saying? I'm talking about if they were never up yet. Okay. Now let's talk about what happened. So what's the biggest takeaway? If you've been watching the news, if you've had the news on which everyone's been talking, talking, talking for the last three, four days, about Silicon Valley Bank being taken over, and the other bank which was taken over in New York as well, that happened over the weekend. There were bank stocks collapsed today, some of the smaller banks, some of the smaller banks like were halted actually today, if you shorted them, which we didn't do any of the banks today, some banks were trading and were halted. Okay. So there's a concern that some smaller banks, some community banks, smaller, meaning smaller than Silicon Valley Bank, which was a large bank, may go under this week in the next couple of days, may have problems. So they were down today and they were halted today and we stayed away from them because I don't want to be in a trade or a stock that gets halted. But what's the biggest takeaway from this big bank, which is the Silicon Valley Bank being taken over by the Fed? What's the biggest takeaway? Anybody, any comments? What's the biggest takeaway? Daryl says, panic run in the banks, people want to take their money out. Well, that's what happened, which we're going to talk about in a minute. Right. Gary got it right. Daryl is saying, don't keep all your eggs in one basket. Well, well, that's true. But even if you didn't keep all your eggs in one basket, if you have eggs in any bank, if you have money in any bank, you don't want to lose that money. Gary said management of risk and that's the biggest takeaway. So as someone that has been teaching people how to trade for 10 years, okay, 10 years have been teaching people how to trade. I hear this all the time from people. I hear this from people, many people that are interested in taking my course and they say, I don't have enough money at Melissa. I want to save up. I need more money. I don't have enough money to make enough money to trade, to, to, to risk this much. I need more money. I need more money. I need more money. If only I had more money. So a lot of people that I talk to in general always think if they have a lot of money that they could all of a sudden make all this money in the market. If there's one takeaway that you get from what happened here, there's other, there's other takeaways, but this is the one point I want to make is that even if you have a lot of money, it doesn't guarantee that you're going to be successful or make money in the market. And if you have poor risk management, you will lose money, no matter if you have a little bit or a lot. You could have a small account and be successful with a good system and good money management and good, good risk. But what often happens is, and again, I'm just talking from my experience as someone that has taught regular people for 10 years and traded myself, what tends to happen is people with small accounts will blow up their accounts. They don't need to do that. They will put $5,000 in an account and trade it till it's all gone, looking for some big trade to explode and double their money and triple the money and just do crazy things that they shouldn't do because they're like, I've got to get it up. I've got to get more money. I've got to have it. And they'll take risk that they shouldn't be taking with any size account, but particularly because they have a small account, or it could be $2,000 in an options account. You can trade options with two grand. So I find people with small accounts tend to want to blow them up. It doesn't make any sense, but from talking to people in my experience, people very often do that. Now, you could say, well, what if somebody has 100 grand? You say, what's the chances of them blowing that account up? Let me tell you, somebody could blow up an account and people do blow up accounts with 100 grand and they do it all the time. How do I know this? I have friends in the industry and I have friends that are brokers. So people do it. People do it. And in an environment like 2022 where the market fell for the majority of the calendar year and people bought every dip and the market kept falling. Yeah, people lost a lot of money, even people that had a lot of money because they were taking positions they should have been taking. They were doubling down if you want to call it that. Okay. And again, while they had more cash maybe than somebody with a small account, they still lost. And it's, it hits you hard when you take a beating with percentage wise of your money, no matter whether you have a little or a lot. Okay. It's just what it is. So the one takeaway you should get from the thing is that if you have this mindset that you would be successful, if you had all this money, while that, that will allow you to take more risk, you're still going to lose what you had if you don't have a good system that works consistently in any market, which I do. And if you don't have good risk management, so you could still have a great system and bad risk management and you could still lose. You could come, you could take my class and if you don't size yourself right in the trades, and if you don't get out when you're up and you don't put stops in, you could still lose even using my system, which wins more than it loses, but you could still lose if you have poor risk management. So getting back to current events what happened in the last couple of days. So this bank, SVB bank had really made decisions that in my opinion, and obviously in other people's opinions too, were based on poor risk management. Now I heard this morning that I don't, I didn't verify this. So I don't know if this is true, but I heard this morning they did not have a risk manager for the last nine months. I did not verify that that was true or not, but let's say they did, let's say they did it, it doesn't matter. Somebody should have been charged at risk of the bank. So what really happened with this bank? For those of you that don't know what I used to do before I started trading, I actually did mortgages and before that, I started out in banking. So I started my career right after college. I became a teller where I would cash your trek. I'd be the lady behind the desk and I'd be cashing your check when you come into the bank every day, every week. So I would count the money in the vault, we would order the money in the vault and I would cash people's checks and I started at a teller as a teller. So I worked for big banks. I worked for small community banks and no bank has enough money to cover everyone's deposits cash on hand ever at any given time. That would be too much of a risk for the bank actually and when we would order money, which would be the busy days like the days where we knew we had to have money because we had payroll coming in on a Friday or we had social security checks like on the first or the third when they come in. There were different times of the month as a teller. Again, I was in charge of the vault. I was often trusted to count the money with one other person. You always had to have one other person in the vault with you or you were supposed to and we would have to order the cash. So we didn't always have the same amount of cash on hand all the time. There were different times of the week, different times of the month we had more, but we never had enough that if everybody ever came in to take all their money out, you would be able to cover even the regular customers to be able to cover everyone's deposits if they wanted to cash out. So this morning, we were talking about this in the trading room. There's a really good old fashion movie. It's a black and white movie. It's called It's a Wonderful Life. If you've never seen that movie, you should watch it. It's actually a Christmas movie. They show it around Christmas time, but in that movie, there's a run in the bank. It's a great movie. It's one of my favorite Christmas movies. It has a lot of lessons. But what happens is George Bailey, which is the character in this movie, manages a savings and loan, owns a savings and loan, so people had money on deposit at this savings and loan, and then the savings and loan lent people's money to buy their home so they could take out mortgages. So banks, what do they do? How do they make money? They make money by lending money to people in the form of loans and mortgages and lines of credits and credit cards, and they make money on interest that they charge for those loans and they make money on fees. And they also obviously have deposits. So banks are supposed to have a certain amount of liquidity or cash on hand at any given time or deposits and their loan balances have to do with that too. So they can't lend out every dollar that they have on deposit. So there's a ratio that banks are looked at, and there's an annual stress test that banks go through. I thought it was quarterly. I didn't remember. I looked it up this morning. It's only once a year, which maybe it should be more than once a year, where banks go through stress tests, where they are checked to see are they capitalized, are they not capitalized? So the reality is that they had poor risk management, James is saying, like poor risk management, which we're going to get into in a minute. How am I even getting this poor risk management? Well, I'll tell you in a minute. But anyway, it's getting back to the idea of how banks work. No bank, not even the big ones, bigger than SVB, which was a very big bank. Not even the biggies have all the money to cover all depositors. Now, I'm just talking out loud here just to talk about banking because I have 17 years experience in the banking industry. What if banks would call all the loans? So I just told you banks give a lot of loans, okay? So you probably have had a loan or you do have a loan right now. Could be a car loan, could be a home equity line of credit, could be a business loan that you had, could be a credit card. That's a loan. A credit card is a loan. They're lending you the money on credit and you make a payment and you make a payment every month. You pay it off, but they're still lending to you. Banks can call the notes. So like, let's just say every bank out there called every debt and every note to cover a run on the bank. If there was a run on the bank like George Bailey, okay? Then theoretically, the banks would be fine with the cash on hand and then everybody would pay back the money that they owe the bank because you owe money to the bank when you borrow. They're not knocking on your door every day. You make the payments on time. They'll leave you alone. But could every person that is borrowing right now pay back their debt 100% if a bank called the note, credit card, mortgage, line of credit. No, people couldn't and they can't. Not ever, not now, not ever. So you see how the system is set up and just think it through, okay? The system is set up that you're like, scratch your head and you say, gosh, how does this system exist? So we exist in a system that's basically exists based on debt. So you hope that there is never a run on the bank because the system would collapse if there is, because no bank has enough money to pay everybody out the deposits and people don't have enough money to pay back all their debts to the banks. So what happened last week is, and again, I was wondering how this occurred. Well, then I was reading about it. Apparently, someone let loose that they should take out their deposits at this bank on social media. And again, there are a lot of speculation while this kind of unraveled. But anyways, I'm sure the authorities will figure it out or Congress will figure it out. But once people got scared that the bank was in trouble, they all tried to get their money out. This was last Thursday, Friday, and they couldn't. So then the then the Fed came in and shut the FDIC came in and shut the bank down on Friday and took it over. Now in normal environments, you'd only have 250,000 in insurance to be covered. And there were many, many companies that were at this bank because it was a big bank in Silicon Valley that had way more than 250,000. First of all, there are a lot of wealthy people that that bank at banks. Okay. For example, I live in Manhattan. There are many, many, many wealthy people that I live in my neighborhood in my building. Okay. Millions of millions of millions of millions of dollars. They don't have 250,000 dollars at this bank, that bank, this bank, that bank. They don't, they don't, they don't have accounts at 500 banks. They have money at banks that they trust. These are stable banks, big banks. And that's what it is. So when any big bank goes under, which this bank did, where you have companies that could not make payroll on Friday, had millions of dollars, way more than the 250,000 that would have been covered. They couldn't make payroll. There was like a panic situation that happened that if the Fed had not come in to cover the deposits of the companies, the companies that were banking with SVB, it would have reverberated through the entire economy and banking industry in a way that would have been very, very, very, very problematic. Okay. Now you say, well, they should have all gone under. This is the rules, blah, blah, blah. It's a bailout. Just like back, and I don't know how many people remember what happened in 2008 and 2009. Again, when there was a problem with the insurance companies with AIG, the reality is that the Fed stepped in to do the bailout because everyone's connected. So the system itself is really sort of like a house of cards. And again, I'm talking to you from experience because I know how it is. You pull one card out, and then everything collapses. You cannot have everybody running to the bank to get their deposits out. There's not enough money to cover it. And if banks start to call all the loans and notes that are on hand, people aren't going to be able to pay them. Do you see? So the bad thing that happened last week was that people pundit and got scared and wanted their money out. If that had not happened, okay, that bank would not have gone under. All right? But it did. Now we're going to go over why it happened in the first place, but somebody's saying, why are other small banks in trouble? Well, first of all, the Fed is going to try to find out now what banks are might be in trouble. They're working on it as we speak. So we'll find out in the next couple of days. Do I think any more large banks go under? No. Could they? Yes. Do I think that they will know? Low odds that that happens. I think there was poor risk management with this bank. So what did this bank do that created them to have the problem where they didn't have enough cash or got people scared enough to want to pull their cash? They bought long-term bonds. So again, we talk about this. How do I make the decision that I want to short the market or stop? I'm looking at the gap. I'm rating the gap. And I'm looking at things that tell me that institutional money is going to sell this stock or the market or buy it. What is institutional money? And I've talked about this so many times before, but people don't get it. And I'm explaining it to you now. Institutional money controls the market and stocks at all times. Even if you think it doesn't, it does. Even if you think it's not there, it actually is. So what was happening? Well, institutions invest. Now, when you buy bonds, I'll say you buy government bonds. They're basically 100% backed by the government. Now, you can buy municipal bonds, and they are, they're good places for people to save tax money. So the whole idea of buying bonds is something besides like people that are very wealthy, again, people that are very, very wealthy, which was a lot of in the country. They have money. So they have money in the stock market and they have money in a money market that's liquid and they have money in bonds, for example. And they own real estate, okay? They have real estate portfolios. So people diversify in bonds because it's safer than, for example, the volatility that you'd see in the stock market. Government-backed bonds know that you'll get the value of the bond back, whether it's in two years or 10 years or whatever. However, and I'm just going to really simply make this really, really simple so you understand, say you buy a bond today and it costs you a dollar. You can say you buy a 10-year bond. I'm just making this up. It costs a dollar. Tomorrow, that bond could be worth 75 cents. So you lost 25 cents. You, you can't wait till maturation in 10 years from now because you need the cash. You're like, oh crap, I've got to sell it. I've got to take the 25 cent loss on it. I can't wait 10 years. Okay. You get 75 cents. You take a loss on the bond because you can't wait it out. Now, what if you buy a bond today and across a dollar and tomorrow it goes up and it's worth a dollar 25. Oh, you made 25 cents. You don't, you don't have to hold it for 10 years. You could sell it, but you must sell it based on the current value. So you could sell it for a dollar 25 and make 25 cents. Okay. So bonds give you the flexibility that you could sell them, but it's at market value. Whereas say for example, you took a CD. Okay. A CD, you cannot take it out or you always pay a penalty if it's before expiration. If you open up like a $10,000 CD at a bank or something, which you can get right now like for 5%. Okay. It's a good rate. Anyways, if you do, if you do a money market, for example, you're going to pay taxes. If you put bond, if you put money in a municipal bond, then you get out of avoiding paying taxes on the interest you use. Anyways, long-term bonds in an interest rate environment that where the interest rates are going down are good investments where you'll earn actually more money and a longer-term bond investing in an interest rate environment where interest rates are going down or stable, you know, basically not going up or not going up fast is good investments and then you can often buy them and sell them when you want to with a profit or without a significant loss, you know, depending on what the interest rates are the cost of the sell the bond at the time. We've been in a low interest rate environment up until 2022. So people wanted to buy bonds to diversify what they were doing. So banks again invest money. So this bank bought long-term bonds, this SVB bank because you can earn more typically, typically, typically on long-term bonds in an interest rate environment where the rates are going down. If the interest rate environment is that the rates are going up where you can make more money in a short-term in a money market or a one-year bond or two-year bond or short-term bond that a long-term bond because rates are going up, which has been the case most in 2022 and now into 2023, then and your then and then long-term bonds actually will lose value. Now, you can say, well, I have eight more years of the bond. Okay, fine. But if you have a run on the bank and you don't have enough liquidity and people want their money out and you need cash and you have to sell the bond and I'm just making a number up. Say you paid a dollar, the value now is 50 cents. You could sell all the bonds you have, take a huge hit and you still can't cover all the depositors because you took a loss in the bonds that you sold because you put the risk on for too long and you and again this is only a problem if what everybody wants their money out. Do you follow me? Now, people should also know that banks can call the note at any time. You probably don't know this because it doesn't really happen and it hardly ever happens and it's so rare to happen. It usually happens actually with businesses. And again, how do I know this? I was in banking, started as a teller, then I was a customer service rep, then I was an assistant manager, then I was a manager and then I started doing mortgages and then I'm here. But the fact is that usually when what the bank does, if we gave business loans to businesses, small businesses, medium-sized businesses, we gave lines of credits and loans and we would have to do reviews of those businesses once a year where you look at the business. Are they cashline? Are they making money? Are they making their payments on time? So sometimes a business was not doing well. So we would not renew the line of credit. We would call the note basically and say some of the bank had extended a $50,000 line to a small business and they were maxed out on the line. They were not paying the line down. You might say we're not renewing the line next year. So the line would be shut off. This is, I'm just giving you one scenario where the bank would cut someone's credit off. So then that company would have to go to find another bank if they could, or they would be left with $50,000 in debt that they just have to make payments on to pay it down and revert into a fixed loan like a 12-month loan or a five-year loan, or they'd call the note and the company would have to pay it. It's called a demand letter where they would, the bank would send you a demand letter where you must pay this back. Coffee, sorry, but somewhere in some credit you've taken there's some little language because banks can call their loans at any given time for any reason just like they can close accounts that they want to for any time at any reason. They could close your account even if you're not late and you need to know that. But banks simply don't want to do that because they want to collect your interest. They want to charge you 30% of credit card. They want to charge you 6% in a mortgage. Banks make money charging, charging interest, but if there's a run in the bank and they need cash, they can call notes. The problem with SBB was they didn't have enough liquidity and they were in long-term bonds that were going down in value because they might need to get a little losinger. Can everyone understand what I just said? Sorry. Say what about the big banks? It's like a Goldman Sachs. Is Goldman Sachs going to go under? No, but now Goldman Sachs is going to look at everything they have on. They will be scrutinized by regulars. They will look at everything that they have. Do we have enough deposits? Do we have enough deposits? Do we have too much exposure to long-term bonds because of interest rate hikes? Now, for a long time, like, I don't know, the last six, seven months, I've been saying that they're going to keep raising rates. Why am I saying that? Because the Fed's saying that. So anybody that was betting that they would stop raising rates or lower rates in 2023, I don't know where anybody got that because the Fed never said that. They never said it. But if you watch TV, there were a lot of people on TV. I talk on TV, there were people on TV that said that the Fed's going to crash the economy, the Fed's going to create a recession. They're going to back off rates, blah, blah, blah. In fact, I was Googling last night reading about this. I actually found an article that was written at the end of the year and they said, 2022 is the worst year for bonds, but that's it. 2023 is not going to be a bad year for bonds. It's going to be a good year for bonds. And as of March, then Fed is going to stop raising rates. That is wrong already, that article. That was the prediction that somebody made that's already wrong. Okay. So does anyone know what the Fed's going to do next week? No. Why do we rally today? Well, because everyone thinks now the Fed is not going to raise rates next week or not going to raise some 50 basis points, which last week, when the market dropped, people thought that the Fed would because inflation is not going down fast enough. Now, what do I think is the problem? First of all, if the Fed raises rates and continues to raise rates despite hell or high water, whatever happens with the banks and everything else, whatever other banks go under, if any other little banks go under, whatever, the Fed is hell bent on getting the inflation down to 2% target as close as they can that will not happen by the end of this year, no matter what they do. And they've already raised rates pretty quickly, pretty fast. If you have watched mortgage rates, you know that. If you applied for a mortgage, if you got a mortgage, if you didn't lock your rate in, you know that. Or if you have any variable type of rate line of credit, you know that because rates have gone up because they're tied to prime, which has gone up. I don't think if they keep raising rates, it's going to really bring inflation down. I personally don't understand why inflation is so high. Now, we could have a discussion about this until midnight, but it's got something to do with COVID and it's got something to do with the supply chain issues. And it's got something to do with the fact that too many people left the workforce. And it's got something to do with something that is nothing to do with interest rates because that's just what it is. So yes, if they keep raising rates, will it bring inflation down some? Yes. Do I think it's going to solve the problem in totality? No, because they have raised rates quite a lot pretty quickly. And it's barely, barely brought inflation down at all. And personally, in many, many products that I buy, food is one. Food products have doubled. Food products inflation is not 6% or whatever they're saying it is now, 6.4%. It's like 25, 30%. So they average that number when they give the overall inflation. So I don't know how to solve this problem. And I'm not sure anything the Fed does will stop a recession. And we may go into recession. Now what is recession? A recession is when the economy slows down. That's not good for anyone. That's not good for anyone that has a job because the company could lay you off. It's not good for anyone that has in his retire that has investments in the market because the market tends to sell off and lag and companies sell off. So then you have retirement funds and your stock portfolio is down, which is already down if you were along the market going up into the beginning of 2022. So the recession isn't good for anybody. It's not good for companies. They don't want to lay people off. And they'll make less money. They don't want to do that either. So prices are already higher for everybody. They're paying more for gas and everything else. So they have to cut prices to compete. And the things they're paying for already go up. So then the profit margin is less. So you see all of these things like a recession isn't good for anybody. And so people are afraid that Fed will push us into a recession if they keep raising rates, but they seem hell bent on doing that and they probably will. Unless they say something different next week, which they might, but I don't think they will. But they might change their tune later in the year. But by the time they do that, we may be ready in a recession. And then it's hard to get out of it. So all these things are cyclical like happen after the fact just like what happened with this bank. So like, did somebody at this bank know that they were too heavily invested in long-term bonds? Yes. The, I guess the CEO of the bank sold stock before this happened last week. I don't know what's going to happen with that, but he probably knew. But he didn't know that everybody's going to run and get their money out and how that all happened. I do not know. But panic and fear are very powerful emotions. People act and ask questions later. And that is why stocks fall fast and quick and big. They have been doing that. That is why shorting is very beneficial and something that you should know how to do. And it's why I focus on doing it in the market to trade. There's something else I was going to say and I forget we're talking about the Fed. Anyways, any questions about what I said so far? So people hate the Fed. They mess up the market. They mess around with rates. The market has high rates. It's volatile with the Fed messing around with rates. Yeah, that's true. But because, because we have so much debt now in this country, because there's because, I mean, basically everything with COVID, all the free checks, everybody got all the free money out there. The way that Congress spends the government debt, the way the system set up now with banks that play the spread that can invest all of it. The Fed will always exist. The Fed basically in my mind exists for things like this to basically so that people don't lose money to come in and step in and save companies or people because the reality is that as much as people hate the Fed, the Fed is there really for this purpose because it's like a house of cards that again, if you just said, well, then let all these companies fail if they're going to fail. Yes, but it's, it's, it's a house of cards because if you remove one bank from the system, then too many other people get negatively affected that it wasn't their fault. So all the companies that had accounts at this bank, it wasn't their fault that this bank with under poor leadership and poor management and poor risk management made decisions that they should not have made where they took too much risk in long term bonds. You understand? But the Fed will exist forever in my opinion because now it's like you, it's too late to correct the Fed and not have it be there because of the way it, because everything's too tied together. Like, does that make sense? So anyways, getting back to trading, if you're an active trader, you can go long in the market and you can short the market and you go long stock, so you can short stocks. But I think a lot of people don't understand how to short. So if you understand how to short, it really is something that it's very, very special. While there are trades I take that I lose in where I short and the market does not go in my favor or the stock doesn't go in my favor. It doesn't happen in the time of the option that I take the trade and I lose in it more times than not. I win and this is a tricky, tricky, tricky market where you do need to have something called conviction. It's something I teach in the class. It's something I talk about like you have 100% conviction that you believe in the trade and the risk you're putting on or you have no conviction. Like so, again, the people that are saying that they want the Fed, like they're saying the Fed is going to lower rates, that's what they want. That's not what the Fed's saying. So you have to take every trade and say, I am willing to risk and I'm just going to use a number here, $500. And I believe that this trade is going to work. I believe the market slower. I'm going to take the short and I'm just saying the market. It could be anything, anything at all. You put the trade on without being in fear. When you have the fear factor comes up, then you don't make good decisions, just like that bank didn't make good decisions. And you then mess up the trade. The fear comes from not having the right information or the right knowledge to believe in the trade. Even if you take it and you're down in it, that leads to doubling down. It leads to blowing up your accounts. It leads to doing stupid things that you shouldn't do. But anyways, take an amount of risk that you take in a trade and be able to afford that risk. Like I started out talking, that's the most important takeaway. And understand what you're doing and why you're taking the trade so you can hold the trade to its logical conclusion, whether it works or it doesn't. Any questions from anyone about anything at all. So I think it's an interesting environment right now, but there's a lot of takeaways from from again, from today in the last couple of days. Understand risk, have good risk management. Even if you have a small account, you still can make money. You can lose money with a big account. The same thing. Know what you're doing in the market. Take an amount of money of risk that you can afford. And you can do well if you know what to do, even with a small account. It's possible. And really, shorting is something that you have to have in your arsenal and you need to know how to do. You're asking what to trade now. You have to, I look at the gap every day. We just talked about this at the beginning. And I don't know if you were here. I don't know what I'm doing tomorrow. And I never know what I'm doing the next day because I wait for the gap. There's data, a CPI number out tomorrow morning at 8 30 a.m. I have no idea how the market's going to react to that. So I make decisions in live time, live time. I get up in the morning in the pre-market, read the gap and rate the gap using my system. And then I make a decision on the live day at 9 30, when the market opens, what I'm doing and what I'm trading. So what to trade now is nothing. It's five o'clock at night. You have to look at what's happening in live time in the pre-market and the post market. Right now, nothing's happening really tonight. We're just kind of flat. But that's the whole purpose of coming and taking my class and learning what I know to that you would prep in the morning in the pre-market before you take a trade. But do nothing right now. You have to wait. You're not clear on the logic of shorting the gap using a put. You don't know if there's a gap on the ETF until the market opens. But by that time, by that time you sent the put, it's too expensive because the move has already happened. Okay, I don't think you understand what we're doing, Darren. First of all, this is again, I'm just going to use today. This is the spy. The market was down this morning before the open. So what do you mean that you don't know before the open? Yes, you do. Yes, you do. The market was down today before the open. So you absolutely knew the market was down today before the open. Yes, you did. So that's the first thing. Okay. So you know that a stock is gapping up or down before the open. Always. That's where I'm seeing the gap in the first place. Now, as far as what you're talking about, I think you're confusing being in a trade overnight. For example, I'm just going to make this up here, Oracle. We shorted Oracle Friday as a day trade. I didn't call any puts in this, but did I know Oracle was going to gap down? No. I thought what you, I think what you're thinking is that this is the money. I think that's what you're thinking. Like you've got to get into the day before to make the money. No, that's not true. That's not true at all. Now, am I sometimes in a trade before it gaps in my direction? Yes, we were in the market to date. This morning was a good example, but Oracle had earnings this night. I didn't know what it was going to do. So I didn't take any trades in it. I didn't buy any calls in it. I didn't buy any puts. I didn't know what it was going to do. You're thinking the only way to make money trading Oracle is if you get in it and know that it's going to go down so that you could buy a put and I'm just making this up like by the 85 puts and it closed at 87, then you get up in the morning. It's under 85. No, you could take a trade on the live day here in Oracle and make money in it. Yes, you can. You could do a day trade here. You could do a put. I didn't call puts in this, but you could have and you could have done it and got in, got out. By the time the options start trading the next morning, the puts too expensive. No, you're, you listen to what I'm saying. Listen to what I'm saying here. You would not take a trade before this happened because you don't know this is going to happen. And if this had gapped up to 92, you would have lost an 85 puts. You don't know what this is going to do. You don't take it into the earnings. You should be able to buy a put on Oracle on this day if I call a trade at 830 in the morning on what would have been Friday the 10th. I did not call a put in this. We did a day trade, but if you bought a put at 930 into the open, yes, you could have made money on it. You could have got out that day. You could have got out here. It dropped today and fell this morning at 82. In fact, it opened at 8332. You could have done a put in this, made money. You got to get it out here if you got in here and out here. And they wouldn't have been too expensive. No. You don't know the process because you didn't do the class, but if you sign up for the options newsletter, you will not know my process. You will not have any idea about that process. You learn that in the class. You will trust the process and take the trades accordingly, but I'm not calling trades before they happen. I'm good at predicting stuff, but I'm not. I can't predict what an earnings report is going to do. No, we don't do that. That's a crapshoot. That's a 50-50 could be up, could be down. We're not doing 50-50s. Now, I think what you're confusing it on is something like, for example, the market. Now, in fact, I'm going to just let me look this up here because I don't remember what time I sent this. So I'm going to give you a good example here. Friday, which was the 10th. Where are we here? Friday the 10th. I called the 388 puts in the spy. I sent this at 942. So it was after the open. So let's go look at 942. She was saying it's too late. It's too late. It's too late. No, it's not. So here's around 942. You see where my arrow is? So I called it basically at the money for an expiration of this coming Friday. Are you with me, Darren? So you would have taken the trade. The trade would have been down first. It would have been down. It would have been down. Then it would have been up into the close on Friday. You could have got out, but the best exit was where? The gap down today. So guess what? If you got out of this this morning, look where the price of this to buy is. Are we down? Yes. You captured the bigger move in the overnight gap down because you did the 388 puts and we were like $7 through the strike. See it? So that is how I do call some trades. That was an Oracle and we didn't do anything in Oracle. But you're thinking, oh my God, I have to know where it's going to go and in earnings, no. Do I sometimes know where the market's going to go? Yes. Does it always happen exactly when I wanted to know? And timing is a big, big bugaboo with the market because if you don't get the timing right in an option, you will lose even if you get the direction right. So anyways, this is momentum. The momentum is you take it, get in, get out, boom. But you could have got out. Again, Darren, you could have got out Friday before the close. You could have said, I'm getting out here because at this point we were what? $4 plus through the strike. You were up money here if you took the trade around 942. So it wasn't too late. The market fell on Friday and you could have exited this trade before 4 o'clock or you could have held it. Actually, I didn't even look at what this please close that. But where we closed today was still underneath the strike. So exactly where did we close today? We closed today still under the strike even still. Look at that. It was a nice call. So we closed at 385.36. We closed $3 almost under the strike I called, which was 48 hours ago. But I think everybody should be out of that trade because again, the idea of trading is take it, get in, get out. You chunk it, chunk it out. You get in and out. That's how you do it. You don't hold it forever and ever and ever. Again, you can hold options forever because they have an expiration date. You can't hold day trades forever because the market closes at 4. Does that make sense, Darren? Again, you have not signed up for the newsletter yet. Some people sign up for the newsletter to try to make money to pay for the class. You can do that if you want. I think it's a better idea for people to take the class, learn it, understand what to do and then start trading. Some people do the reverse. They want to see if it works. They want to take the trades. They want to make money. But sometimes I'll call a trade and the trade will be down before it's up. This was down before it was up, but it wasn't for a long time. But I might call a trade on a Monday and it's down on a Monday and it's down on a Tuesday and it could be down until Wednesday and then all of a sudden Wednesday it's up. If you kill the trade because again, your risk might be too big and then the trade goes on to work before the expiration, you'll lose in a trade that goes on to work. Again, this is how we started the discussion today about risk management. Don't risk more than you can afford to lose. Don't play everything for piggy targets. Again, even people that you think are conservative, everyone thinks every bank is conservative. No, that's not true. I don't even know why people think that. So this bank was far from conservative. They took too much risk. So everyone says, oh, people who are rich are always conservative. No, banks and hedge funds are always conservative. No, people out of money are always conservative. No, oh, that's not true. They have the same problems you do except for on a much larger scale. Can you imagine losing millions of dollars if you had millions of dollars to lose what that would like emotionally and mentally do, you know, to your psyche besides the financial repercussions of your life? Really. So, you know, people want to complain in general that they aren't rich and don't have enough money and demonize wealthy people. Everyone I think should strive to do well financially just for the comfort of life and they'll keep your stress level low that you can pay your bills and not worry in good times and bad times in the economy, inflation recession or whatever. But the reality is that don't be depressed or upset if you don't have as much money as you want to and you want to trade. Take the amount of money that you have and make it work for you and do it. At least you're doing something to improve your life and better your situation and you're learning as you go along and you're getting better because there's plenty of people, like I said, that are well themed that don't make good decisions or take too much risk. And that's the takeaway really from the last couple days too. Any other questions? I think this was a good discussion. Does anyone have any other questions about gaps or anything? Thanks for the explanation of how banks work it's enlightening. Yeah, a lot of people do not do not realize that. A lot of people do not realize that. And I could do I could talk about different things with banking all day long actually but you know because of my experience with banks but I like again where does this go from here? I don't think anybody really knows but I don't think any other large banks right now are going to fail but I don't know. I don't know. But again I think it was a one-off situation in the case of that bank but there are there are small the smaller banks that could be problematic could have too much long-term bond exposure with interest rates going against them or they may have been tied into this larger bank and that could be the issue too. So it's it's sort of like a you know again how everything's going to shake out they're working on it obviously they scrambled all weekend to try to find a way to make all these depositors whole past the 250,000 threshold by Monday morning and they did it. Now a lot of people are upset about that because I think they're using taxpayer money but like I explained at the beginning it's a house of cards. You can't have all these companies go under it will reverberate throughout the economy and will affect many other companies many other banks just it will just affect so many things that you just can't have it happen kind of like back in 2008 2009 with the bank bailout like it would it the whole system would collapse but the interesting thing is if you understand how the system works you realize wow this system is like building a house of cards because if if people can't pay off their debts in full at like that on demand and the banks don't have enough cash you know to ever make depositors whole like on demand because you go in you say I want to close out my account right now and all my money say you have 350,000 in a in a in a savings account say I want all my money out today give me a big suitcase they don't have it there so for everybody so it's sort of like you know you you once you understand the whole system how it works you're like jeez and you scratch your head the system works as long as people don't panic and there's no run on the banks and again if you never saw that movie it's a wonderful life it is a it's a great movie Jimmy Stewart is a great actor but it's a great movie and and again it's it there was a run in the bank there but that was during a war it's a fictional story but it's based on real life circumstances where there were problems during the war you know anyways great lecture if you have questions about the class the next golden gap class is in two weeks not this week in the following weekend march 25th and 26th I am doing a march special the trading room and options newsletter is free with the golden gap course combo through friday if you sign up by friday if you're interested email me for forms for that if you have questions email me I think lectures like this to just talk about charts on the fly are good but again trading momentum is a very advantageous way to trade but you've got to get the momentum correct and again it's always about institutional money which is something that I always focus on but sometimes people get tripped up they get tripped up and that's the whole process of learning good discussion risk management is a matter of scale because be a personal corporate that's correct that's correct that's right so but again people tend that are individuals that are traders they tend to complain and always want to have better circumstances where if they think that they would do better if they had a bigger account that's not necessarily the truth you may be less worried about losing in one trade that you take or taking two stops or three stops on a monday because you have a big enough account to have the that downside and then come back the next day and that's all well and good but you're never going to come back the next day if you don't know what to do and if you have too many too many drawdowns where you are again risking your whole account or 50 percent of your account or some absurd amount of money of your account percentage wise then it's it's just it's just too stressful to train and you're you're risking too much you've got to keep your account intact it's baby step it and that goes for options or day trades actually all right have a good night everyone I'm going to rest my voice today I've had a long day I will see some of you in the trading room tomorrow morning and some of you if you're interested in the class feel free to email me at melissa at thestockswish.com you're welcome