Keith Richards

No, it's actually easier when you get signals that are either extremely bearish or extremely bullish. Last year, we had an over-the-top bullish market. So we were very overdue a strong correction. He's been raising cash.

He's been saying since January that we were going to fall off a cliff a bit, not only for the Trump tariff thing. The market is like a balloon. You blow up the balloon, and then the balloon gets too tight. The market just looks for an excuse to deflate.

Tariffs come on, and markets sell off. Look at Covid, the 2008 sub-prime bubble, the 2000 tech bubble. Even in 2022, the market was overdone on both technical and fundamental factors.

He's seeing sector trends. He's been trying to rotate into commodities that aren't related to financial assets like the stock market. Not all commodities look great. 

He bought tons of gold and still likes it, though it's really had a run and probably a little overbought. A couple of months ago he said to buy nat gas on its breakout, it's done quite well, and he still likes nat gas and its producers. He bought some US bonds, as it's likely that their economy's going to be a bit tighter with tariffs and stuff. They've done OK.

There's always stuff you can buy that makes money. "Money doesn't sleep" as they say; it always goes somewhere. He's holding cash, bonds, and non-core-related assets. He does own some stocks that have suffered, but it's counter-balanced by the things that are doing well. You have to be really mobile.

He uses money flow, and volume is a component of that -- it takes whether the market went up or down, and then attaches whether the volume went up or down. The resulting line tells you whether money was flowing into or out of the market. Then he looks at the momentum of that money flow, using an indicator such as MFI (money flow index).

For a while now, money flow has been falling. Volume's been going up, so it can fool you! The money flow was telling him that volumes were up because people were getting out. If the market keeps moving down, he's looking to raise more cash.

Technical analysis is the main tool you want in markets like this.

Chart shows a downtrend -- both peaks and troughs are going lower. Also, he's assuming it's below its 200-day MA. Going back to June 2024, there's some support around $90. If it bounced off, may be the end of the downtrend. But until that happens, at best it's consolidating with a big question mark.

The shorter indicators move around a lot. So the 200-day takes out a lot of the daily noise and tells you the general trend. 

As well, a lot of what he does is behavioural finance -- all about what people think is going to happen. So many people believe in the 200-day MA, it becomes a self-fulfilling prophecy :)  The S&P recently broke the 200-day MA because the market's bad; then people point to it and say, "Oh no, the 200-day MA broke, so that's bad."

Chart shows a neckline ~$22.50, and it's trying to break that. You'd probably see some of the momentum indicators hooking up on the nice move. Struggling a bit at that $22.50. If it breaks out, very good news. He wouldn't buy until it broke out.

Icing on the cake. It can matter if you get too many shorts on a crowded trade, and they suddenly have to start covering because the stock's moving up. For example, if the stock broke out of a base. That's the only time he'd pay attention to it.

Airlines are economically sensitive stocks. Technically, the chart shows a base, which suggests a swing trade. If, and only if, AC arcs up with definite conviction off support of $15 or so, it could head close to $24 (though might not quite make it).

Don't do it until it breaks out. Plus, you'll need a fundamental reason (such as Trump backing off tariffs).

If something breaks out, you don't buy on day 1. If something breaks down, you don't bail on day 1 either. You have to count a few days, because you can get a head fake. His rule is a minimum of 3 days, usually 3-6 days, before he makes his move. And his move means legging in a little at a time. The range he waits and watches is 3 days to 3 weeks.

Beware of the "dead cat" bounce. 

One of the original concepts of technical analysis is that everything is discounted in the price. So, for example, we already know about the tariffs, so they're already discounted in the price. But you don't know what's going to happen next. He likes the more liquid stocks, because more participants make up a crowd and you can read the crowd sentiment.

Here, he can look at support on the chart and know that it's real because we know about tariffs and the merger with VRN. He needs a bounce off support; if it doesn't bounce, and goes below support, then you have a problem and don't want to own. If it does bounce, then you have a target of between $11-12.

Concerns about tariffs are already built into the price, and that's why it's down.

He sold a little while ago, and here's why. Chart shows it moving up, and then it consolidated (which he's fine with). Old resistance became new support. Then all of a sudden it broke down. He gave it a couple of weeks, then sold.

He doesn't do intraday analysis, it's fairly meaningless for him. He looks for trades that can last him 3-6 months, or longer if they can. 

He owns about 50% gold, but the seniors. This is a junior. There could be a catchup trade. But he wouldn't buy this one until it breaks out.

Old resistance becomes new support. So what we're seeing now may, may, MAY be support (note the repetition ;)  There may be a bounce, but a couple of days is not enough evidence that the market's starting to forgive whatever it was they didn't like about it. Until that happens, why risk it? He'd wait and watch closer to his 3-week timeframe to confirm the bounce.