How to Trade When the Market Flips From Bull to Bear

I am Andrew Raider with the Raider Report. I'm flying solo for a few minutes till some other people join the call, but I did want to talk about a few different things. Uh today in the breakdown, a lot of people were, you know, especially across the markets are worried about the re-acceleration of the AI narrative getting worse. Over the last few weeks we've had a sell-off in the queues, but found our footing over the last 2 weeks off, you know, Anthropic's S1, Oracle's improved earnings. Some of the sentiment had lifted higher, but with the miss of Intel and Amazon specifically, uh as well as other earnings, we're seeing this kind of narrative bleed back into the market, but it's very mixed. It's not necessarily all across to everything. We're seeing some names like software, uh Microsoft hold up pretty well uh because of their kind of posting of good earnings. We're also seeing names like SNDK and these kind of names post good earnings, but still step back um and pull back. So, there is a lot of combat uh between the different narratives of bulls and bears, and I actually think that this is kind of a sign of a deeper pullback coming um at least in the next few weeks until narratives improve. Right now, probably the biggest narrative that could relieve the market is the Iran war, uh but as it stands, um you know, we haven't been seeing that bleed through into any of the earnings or anything like that uh since it's not um gone over. Uh so, that's something that's really interesting. Now, one of the biggest trades today I wanted to talk about was going to be Reddit. Um this is a really interesting trade that I thought uh was an easy kind of low-hanging fruit in this market, especially when you turn from one uh kind of period to another, that being bull to bear, and where the market start to really sell off, mirrors the early 2022 period. Now, does that mean we have to drop as much as 2022? No, but in this environment, whenever environment shifts, certain trades work better or worse. Remember that in a market environment uh change, you know, there's obviously going to be trades and opportunities that you want to lean into more as a trader. Recently, it's been move to move. If you've been holding overnight, a lot of those trades have been failing, especially multi-day swings. And so, things like Reddit here, I thought was a super clean trade. Now, why was it a super clean trade? Number one, you have a catalyst in favor. This had by far the worst earnings out of anything that reported last night. And if you actually want to look at kind of the narrative that they painted, it was very similar to Google yesterday. Google yesterday in their narrative talked about AI spend actually or excuse me, AI actually hindering on their revenue because whenever you search something in Google, the little AI summary box at the top that gives you that kind of uh summary was hindering on a little bit of their ad revenue from search. And that's kind of a really scary narrative, mirrors the SAS apocalypse that we saw a few weeks ago or a few months ago rather, when Wall Street was worried about companies, specifically software, how would they survive in an AI environment? Are they actually appliable? And what happened was the software company said, "You know what? Screw it. We are going to adopt AI and we, you know, cuz we have to or else we're going to get kicked out." And so, by being forced to adapt AI, they've almost swallowed a poison pill, at least some of them. And some of them are going to be big losers, some of them are going to be big winners or at least survive. Google said, "Hey, you know, we adopted this AI by force cuz we had to and now it's hindering our revenue slightly." That's a huge deal and Wall Street doesn't like that narrative. With Reddit specifically, they had a very similar narrative and that was that, you know, their search kind of things like that were getting hindered by a lot of this AI. It was hurting their revenues. And so, Wall Street of course in the morning, huge gap down, consolidated in into low day, you had a few bids. There was a couple hundred thousand to a couple hundred thousand shares there sitting on the bid around 95 and I thought that was a super easy trade to just hit that and then it slides lower. So, Reddit, again, low-hanging fruit. I think these kind of opportunities are the ones that you want to be looking for in the market. Uh there was other opportunities such as the Intel kind of overextension bounce was down over an ETR into the morning, but these are much harder trades that weren't less size. Um especially given you're you're buying against the trend. So, these kind of different trades, market environments, things like this, uh you know, as a trader, the biggest sole focus of mine and from what I've learned from other traders on the desk here is you want to be receptive to what is the current market environment, has it changed from recent weeks, and if it's changed, how can we ultimately change our playbook to capitalize off of that? In early January to February, the biggest playbooks that were working were swing trades, overnight gaps, breakouts, buying highs worked in this market. If you buy a high into strength, that's often where you will just see it reverse and and sell off, right? So, buying highs doesn't work, and what does work though is buying, you know, VWAP reclaims and buying dips and then selling into strength rather than the opposite. So, things like Oracle today was actually dip buy for me in the morning. It came down to the kind of quote-unquote unaffected price from the really good earnings. And yeah, VWAP reclaim, just simple trade back through high day was relative strength, something to consider there. Bro, can you hear us? >> Yeah, how are we doing? What's going on, guys? Good good. >> you're on the floor there. You're looking looking quite dapper and professional there. >> I appreciate it, brother. Yeah, no, I mean, sometimes throughout the week I try to look a little bit more professional. Sometimes I'll throw on the collar, you know, we we got it going today. But it it was only right we seen volatility pop above 20 briefly and then we're finally starting to see a little bit more air come out of like INCC, Micron, some of those names. So, you already know we've been stocking a lot of those semiconductors. What have your thoughts been on them so far? I want to hear what you got, Andrew. >> Yeah, so I was just telling them over the last few minutes that, you know, this re-acceleration of kind of this AI narrative, it's just the same reiteration of that, you know, the Iran war's still going on. You really don't have any thematic support like we did just a couple weeks ago. Had the S1 of Anthropic drop, Oracle's really great earnings last week. People were thinking, oh, you know, the sentiment's starting to improve. But again, with the mixed bag of now Intel with their miss and, you know, other read-throughs with that, I just think it's so combative narrative right now. And if you want to play like big brain like when is this market going to turn, it's probably going to be when the Iran war ends. Um and that to me is the only obvious catalyst I see ending this kind of um you know, just bleed lower in across a lot of these AI names. >> No, I like that. I mean I mean I think you make a really good point, especially with uh the conflicts that we have going on with Iran right now. First of all, it's crazy that we're still having these conversations about Iran. There's been so much uncertainty. And it almost feels like I don't know about you, but to me it almost feels like it's in it's been intentionally dragged out a little bit longer, but regardless, I know whenever we look at the options contracts on forward slash CL on oil, we can see those back months, the volatility is starting to get above 100, which is also kind of giving us some insight that this this might not be over anytime soon. So, maybe we get a little bit more volatility, but as you know, Andrew, volatility is a trader's best friend. So, it's a fun environment to be in at the same time despite all the uncertainty. >> Yeah, absolutely. And I think you know, in this mirrors early 2022 when we had a lot of people talking about, you know, the market environment shift, especially with low floats. Low floats were super >> Uh kind of I miss them. >> in 2022, right? And even this week, there's not many people you might see on X complaining about low floats and that there's nothing happening there. Large caps equally are very hard. They're combative. A lot of traders are uh you know, grow up into trading, if you will, thinking that buying strength and buying momentum is the right way to play large caps, but when you walk into an environment like this, it's actually you have to be almost opposite of that. You have to be almost buying weakness in the scary points, and then selling into when it looks like the best long. Um so, it's super challenging environment even for a lot of people I work with and alongside. It it is a challenging environment by every means, but you have to be able to step back and look what is changing about the markets. And right now, definitely intraday trades, if you were looking at a multi-day trade, it's probably very difficult to to justify, or at least the probability is a lot lower in this environment just because of overnight news risk, because of volatility risk, because uh you know, nothing is kind of falling through when it's supposed to through high day and low day. >> Yeah. >> That kind of makes it all intraday scalps, for sure. >> 100% and as you know, sometimes whenever the market isn't following through on either end, right? You got to recognize and know when to evolve and adapt to the market, but you already know how frustrating like these type of environments can be sometimes with traders. Especially yesterday, we have FOMC data coming out on Wednesday. We're waiting for a little bit more follow through. So we're like, okay, maybe that comes on Thursday. We're range bound all day and then as the market closed, we finally get the follow through down to the downside and then there's the opportunity. So to the point, just piggybacking off of what you said, sometimes it takes a little bit of sitting on your hands until that market environment that you're looking for, you know, comes about a little bit more there though. Uh I see you got INCC pulled up. No, go ahead. You What did you want to add to that? >> I was going to say one best practice as well in more volatile markets, it's often best to actually downsize your size and use the volatility as your increased kind of uh sizing. And what that means is like you're putting less on your initial bets, but you're expecting more from that bet. So your risk reward is higher. It comes out to around the same EV. So, you know, some people get ran into a wall because they keep the same size in this market and then they find their hit rate lower and they get burned. But if they have a smaller size, their bigger RR is natural. So it makes up for that. >> So what you're saying is that that'll help us keep our cortisol levels down a little bit. Is that what you're saying, right? >> Hopefully, yes. >> [laughter] >> Hopefully, yes. >> No, I got you. I got you. We're looking at the the oil market right now. Again, oil trading at 104.99 a barrel. We had seen a little bit of a dip earlier in the year, you know, at around in the end of September time. Now we're getting more follow through there. Um have you been paying attention to bonds at all? Uh Andrew, Gus and I were making the point how crazy it is to see like a V-shape recovery in something like bonds. You're not expecting that to be one of the most volatile assets, but over the last 30 to 60 days, it became kind of scary. We we saw more of a shake up than we're used to in in these markets. >> Yeah, it was kind of funny because the markets were selling off almost into uh the last few months with the concern of yields and bonds, you know, going lower. Every day, bonds going lower was a pretty big sentiment gauge of to risk on or risk off uh for equities. But then all of a sudden they V-shaped and I think that was that flight to safety. I don't know what flipped it necessarily, but people just started to pile into safety names as AI started to bleed lower. Um and you can see that across the market. I mean, if you just look at like KO and these other names like names that I wouldn't really trade or still probably wouldn't trade, but just use as indications. Walmart and KO were vertical from their lows. And that was just people trying to escape the AI trade and even looking at Apple today, which is relative strength. Uh, people are doing from AI and trying to fight um, into these names. Not that that's a necessarily a trade because they're only moving half a percent or percent each day. But, it's definitely a sign that, you know, I think whenever you see these improve uh, across the board, it's going to be a pretty big trade for AI. But, I will say if you look at RSP, breath is widening across the board. And that's something to consider. Um, you know, everyone looks at the market and thinks, "Oh my gosh, you know, doomsday coming." But, if you actually look under the hood, the the the breath is slightly improving across a lot of these names. So, you know, does this set us up for a post-November kind of uh, Iran deal conflict deal to the conflict? I hope so. Uh, and in that case, USO would probably be one of the biggest shorts uh, trades of the year for sure. Um, and so I'll definitely be looking for that. >> Absolutely. Let's keep it top of mind. It's funny, this last 365 days we had so many different markets to trade. Silver, gold, oil markets. I mean, so many things have created so much volatility this year. Yeah, absolutely. Crypto last I mean, I didn't even see that one coming, which we're going to have to circle back around to that one later on, Andrew. The volatility index trading just above 20 right now. Last Friday, a week and a half ago, two Fridays ago, we saw high of 22. We're going to see if we can exceed those levels. Andrew, any last thoughts before we wrap for today, brother? >> Uh, just into next week, uh, you know, one of the biggest things you can do is, you know, watch lists aren't working. So, just come every day early in the morning, an hour before open if you can if you're a trader out there, and just look at what are the biggest movers. Volume will be kind of the decider of whether an opportunity is likely good or not. I know that seems cliche, but in this market especially, watch lists are less effective. So, just come intraday super prepared for news and intraday setups uh, because those shorter dated time frames are the best uh, trades right now this tomorrow. >> Very well said. Well, guys, be sure to stay tuned in amazing content coming on next. I believe we have Chris and another amazing guest. Be sure to stay tuned. We'll catch you guys here shortly. Peace.