John: So today's capital market segment is brought to you by Alpaca. Now, the New York Stock Exchange's ARCA platform and the NASDAQ are getting ready to launch nearly round the clock trading. So get this 23 hours a day on weekdays, that's starting in December. And that means investors around the world and everyday traders at home will be able to buy and sell US stocks almost anytime. Now the change comes as trades now settle the next day and the rule requiring a minimum amount of cash to day trade has been dropped. And meanwhile, tech stocks are on a roller coaster this week. Meta is plunging after earnings and KOW fell again yesterday as investors wonder how the big AI and cloud companies will handle high borrowing costs. So joining me to discuss this is Steven Kalaian, a founder of SK Trading and chief market strategist and co-founder of TickerToker. Steven, thanks so much for joining us this morning.
Steven Kalaian: Good morning. Thank you for having me, John.
John: All right, Stephen, so we continue to see weakness in the AI trade and specifically around neocloud. So what's your take on the weakness we saw this week and how are retail traders playing the move?
Steven Kalaian: Well, good morning everybody. Uh, I think pretty much these stocks have been significantly been overextended and a healthy pullback was warranted. A lot of the retail investors are also kind of skeptical on the earnings growth potential and the spending that they're currently, um, you know, reporting. A lot of people are worried about the data center cost and the actual funding for a lot of these data centers, so there's a lot of skepticism that's finally coming back into play, which I think is also, um, been long overdue. I think the market's been very complacent for a while. Uh, you've seen some of these stocks have extraordinary moves Sandus Micron Advanced Micro Device, um. Uh, Nvidia, you know, a lot of these stocks have had enormous runs, and, uh, you know, uh, being in the, in the business for 45 years, it's, it's, it's OK to have a, a pretty good, um, correction here and let's, uh, let's regroup and let's see where they can, you know, pretty much bottom out here and look for the next phase and hopefully that these earnings, uh, these earnings, um. Uh, models going forward will, um, you know, uh, be in the scope where it justifies the price of the stock.
John: Yes, definitely, Steve, and it's obviously it's a roller coaster. I mean that's Wall Street for you, but I think the other question is how would you advise retail to trade periods like the past few weeks.
Steven Kalaian: Well, uh, you know, um, there's a lot of movement in these stocks. The volatility has significantly picked up. Uh, August was a pretty dead month. Uh, September was so so and October. You know, what, uh, uh, I knew it. Wednesday after Labor Day, uh, we got back from Labor Day, I knew that the volatility was going to pick up. Uh, still, I think a lot of people are trading these names, Whether it's options or the individual names, there's a lot of alpha in these names on an intraday basis. I mean, I literally watched Mike Ron Sanderskin advanced micro device tick for tick, um, during the, uh, market hours, and you can see the, the big runs and, and then you can see when they're dropping and the, the, the monster selling that they produce at times, but overall. Um, the volatility is significantly has picked up here and, and, and it really has been based from institutions and a high degree of, of retail traders.
John: All right, Steven, so I, I want to get your read on the strength of the market and the big conversation next week. The Fed will make their decision. So what is your outlook for the Fed right now?
Steven Kalaian: I don't believe they're going to cut rates. Uh, the 10 year bond has dropped from over 5.35, uh, Touch below 5%. Now, you know, I've been in, in the business for 45 years and whenever you had a 10 year bond, the markets would sell off substantially on top of that higher fuel costs here and the market is just resilient here. You would think that the S&Ps would, you know, would drop. We didn't even drop 3% yesterday on the S&Ps. The Nasdaq, I believe, was the first time we dropped 3% intraday. Excuse me, since, uh, March of this year. So, I still think there's room to go, but I do think that the pullback, Is going to be a, a healthy, uh, pullback. Um, and I think it's going to end up bottoming to the point where I do not think that the market breaks 7200 this year. And if we do get that, I think it'd be short lived. And I do think that, um, The gains going into the first quarter. I think there's just too much money on the sidelines. I think AI is still out there. Um, people are still hyped up about it. Um, I don't think the Fed's gonna cut, uh, uh, raise rates. I think they're gonna be completely neutral going into the midterms. And I also believe that. If they do, maybe one more cut, it'll be in December. But you saw when they raised rates, uh, you know, in the prior meeting, a quarter of a point, the market just shrugged it off. You would think that the market, the market actually rallied. The NASDAQ rallied. Uh, weeks, uh, a few weeks after that, and so I don't think that the markets are looking, I think the market's looking into 2027, and I think that they know that there's not gonna be any further hikes, and I think that there could be on the table actual rates being cut. Um, I don't, you know. I don't think that's the proper move. We haven't hit a 2%, uh, um, a 2%, uh, CPI number, I mean, a Fed funds number of, uh, 2, index at, um, 2% over for over 60 months now. I think it's 66 months we haven't hit that 2% target by the Fed. Um, inflation is still very high. I just think it's a lot of political back and forth here. So I don't think they're gonna do anything in October, period.
John: Yes, you know what, definitely the conversation right now here on the floor. So Steven, I want to talk more about your 40 plus years doing this. So you spent decades building your own charting tools. So which classic indicators like moving averages RSI still work today and which ones have lost their edge now that so much trading is done by these high speed computers? I mean definitely different from when you started.
Steven Kalaian: Mhm. Oh yeah, trading when I first started, we were in 8 point markets and there were big spreads and big depth in the markets. Now, you know, uh, the speed and the price has elevated significantly from when I first started, obviously. Uh, you know, one thing I, I tell everybody, price leads indicators lag. Uh, the indicators I built, I built some of my own indicators. And then, um, using the, the traditional, uh, Mag D's and, uh, ADX's and, um, uh, DMI's and, and, and when you see these things come in, so I built my strategies based upon what I've named combination methodology. So, when you have, um, certain patterns like yesterday, I, I got a very big cell signal on the 60 minute time frames and then I knew a pattern that was setting up around 12, 12:30 um on uh the 15 minute time frame and we dropped over 300 points on the NASDAQ so um patterns do tend to repeat themselves. It just takes time to uh understand the technicals uh behind the uh the indicators. But more and more people are gravitating towards technical trading, especially if the intraday trading, as you see now, the New York Stock Exchange is going to go pretty much, you know, 24 hour trading, and so a lot of people are really reaching out to really understand the technical aspect of trading.
John: And so Steven, I want to talk a little bit more about what has the market impact on algorithmic and AI trading been and how are retail traders embracing this.
Steven Kalaian: That's a great question. You know, uh, everybody, uh, I get phone calls all week long, you know, uh, people trying to use cloud and different, different, uh, types of mechanisms to, uh, enhance their trading. I'm very fortunate to have, uh, very, very, uh, significant person on my team who really understands that and we're building some great models for, um, for our. Community, uh, and, um, I think it's gonna probably in the next 6 to 8 months you'll start seeing a lot of, uh, people get more involved in, in that and trying different formulas. I mean, you know, you could always build your own strategies, but then the back testing takes forever. I think a lot of AI speeds all that up and tries to give forward projections, but you gotta be really careful and um. And, you know, and test it out for a while because, um, you know, it's based upon pure math on technicals. So, I think that what you need to really focus on is understanding that where the AI is going to take you that I wouldn't put all my eggs in one basket, uh, on a strategy. I would do, you know, significant, I believe in forward testing. I don't believe really in back testing. So, I think that, um, You're going to see more and more people. I see it on the internet. I see all these people trying all these different, uh, collaborations of different things and they're leaving out the, the big structure of how much data costs and everything like that. Uh, there is a significant cost to it. I don't know if the retail person could absorb all that. However, um, I, I do think it's going to take, become a very intricate part in the next, within the next 6 months to a year.
John: Yes, Stephen, it's definitely going to be an interesting time and obviously different, you know, markets are just moving so quickly, obviously changing so much, but Stephen, thank you so much for joining us this morning and getting your insight on what is going on in this world. Again, thanks for joining us.
Steven Kalaian: Thank you, John. Have a great weekend. Thank you, everybody.
