Expert defends technical discipline during market volatility

CHARLES: SO MY NEXT GUEST HAS BEEN RIDING THE WAVES OF THIS MARKET FOR A LONG TIME AND THOSE WHO FOLLOW AND TAKE HIS LEAD SCORED BIG BUT HERE WE ARE, YET AGAIN, ANOTHER MAJOR TEST, ESPECIALLY FOR SEMICONDUCTOR STOCKS. NOW TAKE A LOOK AT THIS , THIS IS NUTS FOLKS. MANY HAVE ENTERED OR ON THE CUSP OF ENTERING BEAR MARKETS. BEAR MARKET TERRITORY DOWN 20% OR MORE LET'S BRING IN EVERCORE ISI SENIOR MANAGING DIRECTOR HEAD OF TECHNICAL ANALYSIS RICH ROSS. SO, THIS IS A GOOD CHANCE TO TALK ABOUT STOP LOSSES, OR PORTFOLIO MANAGEMENT, BECAUSE I SEE A LOT OF PEOPLE WHO BUY THESE HIGH BETA NAMES AND USE THE OLD WALL STREET YOU KNOW, PUT A 5% STOP. EVEN IN CALM WATERS YOU'LL GET STOPPED OUT OF A LOT OF GOOD STOCKS. >> I FOLLOW A RULE LIKE MOST TECHNICIANS WHICH IS WHAT GETS YOU INTO A TRADE GETS YOU OUT OF A TRADE. WHAT'S NICE ABOUT THE SEMICONDUCTORS IS THAT WE SEE A LOT OF SYMMETRY FROM CHART-TO-CHART AND BY THAT I MEAN, THEY LOOK THE SAME. THE 20 WEEK MOVING AVERAGE HAS GUIDED US FOR THE BETTER PART OF THE LAST TWO YEARS, AND THAT'S WHERE WE'VE PULLED BACK TO TODAY ON ALL OF THE BIG STOCKS THAT MATTER CHARLES BOTH IN KOREA WITH THE BIG MEMORY NAME AND ALSO HERE IN THE STATES WITH THE INTEL, ARM, MARVEL OF THE WORLD AND MY CONTENTION IS THE TREND REMAINS INTACT, SUPPORT IS THERE BUT YOU HAVE TO USE THAT STOP TO GET YOU OUT. CHARLES: AS A TECHNICIAN, DO YOU EVER, EVER SAY, AS YOU GET TO THAT NEAR THAT MOMENT OF TRUTH MAYBE START TO SEE A LITTLE BIT BELOW IT DO YOU EVER SAY WELL THE FUNDAMENTALS ARE GOOD. OR DO YOU STICK WITH YOUR KNITTING BECAUSE THIS IS, YOU KNOW, YOUR WAY OF INVESTING. >> I KNOW THAT CLIENTS DO. I LEAVE IT TO MY CLIENTS TO CONNECT THE FUNDAMENTALS AND TECHNICALS SORT OF HOW YOU LED IN IN THE INTRO EARLIER IT'S A PIZZA PIE. PART IS FUNDAMENTALS PART IS TECHNICAL PART IS PSYCHOLOGY BUT IN MY WORLD I'M JUST THE MAN WITH THE CHARTS. I HAVE TO STAY IN MY LANE AND BE DISCIPLINED AND NOT BACKUP A LOSING TRADE TECHNICALLY WITH THE FUNDAMENTALS WHEN THAT'S NOT MY AREA OF EXPERTISE. CHARLES: CALLED DISCIPLINE. MEMORY PLAYS YOU JUST ELUDED TO THE KOREAN STOCKS. THEY ARE SORT OF LOOKS LIKE THAT BRBRINGS ME TO ANOTHER THING. WHAT I'M SEEING THERE IS MORE IN MY MIND NOTHING FUNDAMENTALS, ALL ABOUT 50 MILLION PEOPLE OPEN 100 MILLION ACCOUNTS, THEY HAVE GONE CRAZY, I TOLD THE STORY OF THE KID WHO SAID I'M HITTING THE RED BUTTON MAKING MONEY. HIT THE RED BUTTON EVERY TIME I HIT IT TO MAKE MONEY AND HE WAS UP 1,500 TIMES. HE LOST IT ALL SO WE'VE GOT TO UNWIND THERE AND THAT'S SOMETHING TO GRAPPLE WITH BUT IT FEELS LIKE IT'S ALMOST OVER FOR THESE MEMORY NAMES. >> LEVERAGE CAN BE YOUR BEST FRIEND ON THE WAY UP AND WORST ENEMY ON THE WAY DOWN NOW, STORY OF A GOOD NEWS IN AIR QUOTES WHICH IS BAD NEWS FOR THE KOREAN RETAIL INVESTOR WE SAW 1.3 MILLION RETAIL BROKERAGE ACCOUNTS EXPERIENCE MARGIN CALLS ONE IN 30 ADULTS IN KOREA. NOW WHAT'S THE GOOD NEWS? YOU'VE REDUCED POSITIONING, PUT SENTIMENT ON ITS BACK HEELS AND GONE FROM OVER BOUGHT TOTO OVER SOLD BUT TREND IS INTACT. THAT'S THE TYPE OF SETUP YOU WANT TO SEE GOING INTO EARNINGS. CHARLES: THE RELATIVE STRENGTH IS ONE WAY OF DETERMINING THAT FOLKS, IT'S IN THE RED, OVER BOUGHT TECHNICALLY, OR WE'RE UNDER THAT TO A POINT WHERE NOW YOU FEEL MORE COMFORTABLE PULLING THE TRIGGER. >> THAT'S JUST IT AND L LOOK AT THE RSI. HERE IS A LITTLE LESSON. OVER BOUGHT DOESN'T MEAN OVER. WE SAW THAT EARLIER IN THE YEAR WHERE THERE'S EXTREME OVER BOUGHT CONDITIONS, WERE EASED BY THE PULLBACK AS THE IRAN WAR BROKE OUT. NOW AGAIN, OVER BOUGHT CONDITIONS HAVE EASED BUT LOOK WHERE WE BOTTOMED OUTLAST TIME. YOU'RE IN A MUCH MORE NEUTRAL POSITION IN TERMS OF MOMENTUM BUT THE TREND REMAINS INTACT AS WE SAID POSITIONING HAS BEEN REDUCED. THAT'S THE KIND OF SETUP YOU WANT TO SEE. CHARLES: LET ME ASK ABOUT INTEL BECAUSE THIS IS A NAME THAT THERE IS SMART PEOPLE WHO LIKE IT MORE RECENTLY THOUGH SOMEONE LAST WEEK HAD A SELL ON THE STOCK. THIS IS ONE YOU LIKE A LOT. YOU REFER TO MOORS LAW HERE, BUY MORE, AND IT'S RIGHT AT THAT POINT, MAYBE WHERE YOU BE A BUYER RIGHT? >> YEAH, I'D LIKE TO THINK I'M PART OF THE GROUP OF THE SMART MONEY THAT YOU SPOKE WITH EARLIER. I THINK THE SMART MONEY IS MORE LIKELY TO BE A BUYER HERE AGAIN THAT LINE COURSING THROUGH THE CHART WHERE THE STOCK HAS BOTTOMED GOING BACK TO THIS TIME LAST YEAR IS YOUR 20 WEEK MOVING AVERAGE, YOUR HUNDRED DAY, EVEN AT NYU, WHERE I WENT TO BUSINESS SCHOOL FIVE DAYS IN A WEEK GIVES YOU THAT 20 WEEK. THAT'S YOUR KEY SUPPORT. I THINK WE HAVE A A CRITICAL DOUBLE BOTTOM AT THE LOW END OF SUPPORT PULLED BACK THE TREND AND ONCE AGAIN LOOK AT YOUR RSI, FROM A 91 RSI, HARKENS BACK TO THE 90S TECH BUBBLE NOW MUCH MORE NEUTRAL, MUCH MORE POSITIONED FOR STRENGTH WITH 56 ON THAT. CHARLES: THIS TAKES S AWAY THE NOTION OF IT BEING AN IRRATIONAL MARKET THE WHOLE PULLBACK DOES. I'VE GOT LESS THAN A MINUTE BUT LET ME SQUEEZE IN DELL BECAUSE DELL WAS UNSTOPPABLE, FELT LIKE A WILD, NOTHING WAS HURTING IT AND IT DID PULLBACK. THINK IT'S TO A DEGREE RIDING THE SUPER MICRO NEWS TODAY. I LOLOVE IT AND HAD SUBSCRIBERS BUY IT ON THE DIP AND I THINK IT GOES MUCH HIGHER. >> 100%. WHAT YOU LIKE TO SEE IS LOOK HOW WELL THE STOCK HAS HELD UP AS MOMENTUM HAS COME UNWOUND. YES IT PULLED BACK AND YOU CAN SEE BUT THIS DOTTED LINE IS THE 50 DAY MOVING AVERAGE SO DELL HAS HELD UP BETTER THAN THOSE SEMIS WE SAW PULLED BACK TO THE 20 WEEK OR HUNDRED DAY. I SEE A NICE BULL FLAG THAT EXTREME OVER BOUGHT CONDITION MUCH MORE NEUTRAL POSTURE IN TERMS OF MOMENTUM. I SEE A TREND READY TO RESUME IN