[00:02] after loss trading catalysts after reading the headline or the earnings number thinking I knew what was going on. I would see tons of stocks make massive moves after earnings and it wouldn't be the stock I was in. It
[00:14] sucked. Then I learned what really moves these names. This is a process that I put hundreds of hours into figuring out. And in the end, there are five things I found really matter. Today we are going to reveal those five checks in favor for
[00:29] one you're going to want to pay attention to cuz this will make or break your success in this play. With these catalyst plays, we're looking for potential year making moves. The whole game is having the information to ignore
[00:43] the maybe setups so you can focus on the overwhelmingly clear ones. So how do we identify these crazy clear setups? We're going to pull back the curtain on our process and break down how to interpret a catalyst in detail, how to use
[00:57] pre-market scanners to hunt for institutional volume, and find these names before the market opens. Welcome to the Trading Floor podcast, episode 11. I'm Tim Beldin, joined as always by Garrett Dryen. So Garrett, you were the
[01:11] one last Thursday that found this trade. It was an earnings day one in Fastley alerted our team. So, what were you doing that morning? >> Yeah, so Fastley was not on our radar. It was not one of the earnings plays
[01:25] that we were like anticipating looking at. We weren't talking about it the night before, but I have this scanner that we used that I really love this that we used that I really love this thing. It's so simple and we call it the
[01:37] thing. It's so simple and we call it the pre-market extended hours percent AVAL scanner. And it's something we share in Bionic Trader inside Access meetings. Um, I talk about this all the time because we use it and we actually found
[01:50] this scanner or this particular indicator variable that we developed right? We were testing an earnings model. Oh, yeah. Trying to figure out what actually mattered to these plays. And we found that
[02:04] >> the more volume as a percent of its daily average volume the stock was doing in the extended hours, right? So when the report comes out in the after hours or if it's a pre-market report, you're just looking at the pre-market, the more
[02:17] volume it was doing, the higher probability of trending and making a move on that day. And we actually found that if if any of them were doing like less than 20% of their average daily volume, it really wasn't worth looking
[02:31] at for the earnings. We saw >> for earnings plays, right? Because they tend to do a lot of volume. So this is all like calibrated to earnings plays. Would you like to gain the biggest edge a retail trader can get? All of our
[02:45] daily and weekly in-house trader meetings are now available to you. Just head over to smbtradingfloor.com to find out more. scanner. It's earning season. Think of the earnings season. This is like how we
[02:58] find names that we might want to look into. The reason for it, the reason I love this so much is there are so many earnings reports to look through. like I earnings reports to look through. like I can't go into depth on every single
[03:12] report that comes out, especially when there's like hundreds of names reporting all at the same time, right? So, this is just a brilliant way of narrowing down that focus and like finding the names that you might want to look deeper into.
[03:25] that you might want to look deeper into. And so, sometimes we see 20%. Okay, definitely anything over 20 we'll like look at. Sometimes we see 50%. Sometimes look at. Sometimes we see 50%. Sometimes we see 80%. 80%'s big huge, right? We
[03:39] rarely see that. >> Fastley was doing 200%. Like we haven't seen this in a very long time. And that's that's it. That's what put it put the report yet, but I put it right in the chat being like, "We got to look
[03:54] into this. What's going on here?" Um, and that kind of snowballed, right? Okay. Cuz then you got a hold of it and and kind of ripped that report apart, which was great because you kind of came back to us pounding the table a little
[04:06] >> Oh yeah. >> And there's our first check in favor. >> Exactly. So volume is always a big one on these catalyst plays, right? Because
[04:18] important? Like obviously we've studied this on the quant side and we see that it is. But a lot of times when we like to actually take something and run with connect that to something that makes sense to us as traders. Like why does it
[04:33] make sense that something needs to be doing tons of volume in order to be valid on one of these plays? >> Yeah, it we found it's the best way. There are other ways to scan for earnings. Like you could just look at
[04:45] the gap percent and then what I found is you just look at the gap percent it looking at the implied move but the whole reason why the extended hours aval
[04:57] percent aval scanner that we have works so great is we're trying to find stocks in play. So stocks in play are stocks that are doing abnormal volume in the regular trading hours. So we're really trying to get an idea of what stocks are
[05:11] the most in play. And we found there's a pretty good correlation of the stocks that do the most volume in after hours and pre-market that then become in play intraday. And that's the whole game. >> Yeah. And like the way I kind of read
[05:25] >> Yes. >> In this report like we like obviously institutions can't do all their business in the pre-market like the big ones, right? Because it's gonna might take them days to get involved in something
[05:38] that they really want to accumulate. But we've got a lot of big institutions kind of doing the work for us, right? They're they've got people looking over these they've got people looking over these reports and reporting back and you know
[05:52] the the algos are on these things and typically the names that are generating the most interest based on that earnings report are going to be doing the most volume in the pre-market or after hours. So it makes a lot of sense. It's like
[06:06] just follow where the where the interest is, right? And there was a trader that we've talked to a ton uh for earnings where what he would do and it was very institutions is report comes out you're buying some off of the read through of
[06:21] the report that you're doing quickly and then you know you're buying more when it stabilizes in after hours you're buying more in pre-market and then the institutions are then buying the first like day second day third day fourth day
[06:33] because it's that much volume but if you have I don't know let's say hundreds of hours. That's the interest. That's the significance. significance. >> Yeah, that's the tell. And so we want to
[06:47] have high volume in the pre-market and that's a great way to scan. We want to have high volume once the market opens, right? This is a key criteria for how >> Volume's massive >> and it's Yeah. And it's a great way to
[07:01] find it. And it's one of the edges that we have as discretionary traders, as prop traders, or as retail traders, right? We're smaller. We're not we're not trading trillion dollars, right? So we can get in and out. We can trade in
[07:15] the pre-market. We can get our whole position at the open. Um so that that flexibility of liquidity of being able to get in and out is actually an edge that we all have. And so we should use that, right?
[07:29] have. And so we should use that, right? Right. And so we're we're using tools to um basically pick up on the footprints of some of these institutions and then we're kind of using our edge to be able to get in and out like much quicker and
[07:41] get our full position early. Um, so Tim, I gota like what I want to ask you is like once I handed this to you, you really like made this trade your own and it was it was a huge help to the team because we both looked into the report
[07:55] different ways, >> different lenses, really developed quite an amazing process at dissecting some of these catalysts um that come out because that really is like obviously
[08:11] like a big component of it. >> Do you want to sit in on all of our daily and weekly in-house trader meetings? There's no bigger edge retail smbtradingfloor.com to learn more.
[08:24] >> It's not just read the headline. Let me um let me kind of see if they beat right. There's a lot more that goes into that. And we're looking at the chart, right? We're looking at like can this actually run? Is there room on the chart
[08:38] does it have resistance? Does it make sense? We're looking at the theme that it's in. Does that actually make sense for this type of stock to be running in this environment, in this type of market? So, there are a bunch of factors
[08:51] that are going into um how we're going to grade this setup, but I really want to dive into like what you were seeing that morning because um you were you were super clear on this and you were picking up on some things that I think
[09:06] picking up on some things that I think that like you mentioned in that intro, a lot of beginner traders are kind of scratching the surface on these catalysts and not digging deeper. And I know I used to do this too, thinking
[09:19] that I understood what was going on when really um I I knew nothing about reading like did they beat and raise like and you you literally barely know anything about what's happening. So when you're when I'm handing this off to you, what
[09:36] doing? Like what are the questions that you're asking to help us figure out if this is a catalyst play worth taking? 100%. And to start, I am looking at the
[09:49] headline numbers. Like step one, I'll look at what everyone's looking at. And what I found is like the big difference with really being able to analyze these earnings reports and like actually interpret what the read through is is a
[10:03] lot of the time, and I've done this when I started my career. So, like in terms of getting to here, it's studying these plays, studying examples, but so often you get the numbers and you think, "All right, I read the numbers and I have to
[10:17] or not." That's it. And you try to have like a two-step process. And my whole process now is like you see the numbers, that's step one. But with earnings, like
[10:30] for example here, let's even pull up um Kurt, do you want to pull up uh image number three? So here are the numbers for Fastly. So like right off the bat, you can see the percent beats. You get an idea. They beat EPS 12 cents to 6
[10:45] cents. They beat revenue 173 million to 161 million. Upside guidance, you see that next quarter and fiscal year. Good raise there. So right off the bat, you get the double beaten raise. But if you're really trying to figure out the
[11:01] you're really trying to figure out the whole point of our A+ catalyst plays and looking for these special changing fundamental earnings reports isn't do they double beat. Is this an okay like they just beat that's a good report. You
[11:16] can't just look at it in a vacuum because what you're trying to find is an inflection in acceleration quarter. So by definition with acceleration, you can't see acceleration without comparing it to a previous quarter. So right after
[11:30] I'm looking at the numbers face value, did they beat jotting it down? Now I'm thinking, all right, what were the last five quarters? Because I need to build a story of this stock. All right, so you're looking at whether this is an
[11:44] inflection quarter. What other types of quarters are there? because I've heard you talk about this with the team where it's almost like you're breaking down these quarters, types of reports, in other words, like
[11:58] into categories to simplify it for yourself rather than thinking about like everything's different and and this is just kind of like a big like choose your own adventure. I wonder if this is good. Like you actually have sort of
[12:12] categories that you put these reports in. Can you get into that? >> Oh yeah. Oh yeah. So, what I noticed with looking at these reports, it's not like you just get this inflection quarter out of the blue, there's like a
[12:27] quarter out of the blue, there's like a very systematic like stage process that these companies go through where it's not exact science. It's not every time like last quarter it has the first stage and then it has its inflection then it
[12:40] and then it has its inflection then it has the third stage but usually each has the third stage but usually each stage will precede the ladder. So, if you're looking for the inflection quarter, the first type of earnings
[12:52] report that I'll look for is called I called it, but it's a first clean profitable beat quarter. So, this is the first time they've turned profitable. EPS could be gap or non-GAAP, but
[13:05] they're making money in the first clean profitable beat quarter. Usually, you'll see a strong day one. Not always. Usually it gaps up, but in order for me to look for that inflection acceleration quarter, I want the stock to have had a
[13:21] first clean profitable beat quarter. So those are the two right now. So it's first clean profitable beat. Okay. Now I'll look for the acceleration inflection quarter. And then usually either the quarter after or quarters
[13:36] following the inflection acceleration quarter, you'll get what I call a good stock continuing to crush it or they're still crushing it quarter where the numbers are going to be huge. They're going to have maybe even bigger percent
[13:49] beats on their top and bottom line. The revenue growth is still going to be strong, but it's not that huge jump in revenue growth and not that huge acceleration in revenue growth and EPS growth that we saw in the inflection
[14:02] continuing to crush it. >> And those are the quarters where sometimes the stock has run a lot and it actually gaps way up and and kind of profit taking. That can happen >> 100%. Um, so the the the quarter that we
[14:18] really simple. If we're just talking earnings plays sounds like the inflection quarter, that acceleration inflection quarter is the one we really want to pinpoint, right? Like the other
[14:32] ones we can trade, but like this is the bread and butter. And if we can go through earning season and find these, like that's where we want to do our business. And that that simplifies things like quite a lot to me, at least
[14:45] with the way I think because now I'm not looking at every earnings report almost like in its own universe trying to decide like how good is this? >> You know, you're you start to break it down like into categories. It's like,
[14:59] okay, has it had its first clean profitable B quarter? Okay, when was that Okay, that was here. This is how it acted. Okay, good. Day one went sideways. uh maybe the next quarter was like a non-event and then maybe here we
[15:14] are now with a big beat and raise and the question that we're asking ourselves is is this the acceleration inflection quarter so and and and if it is we want you quant how do you quantify this? Like how
[15:30] inflection quarter? >> So the whole idea with these companies is they turn profitable. So, they're telling the street that they're making money, the business model is working, but then what you're really looking to
[15:45] but then what you're really looking to see is a huge jump in revenue growth the past quarters to be able to see that. So, with Fastley, what was super interesting, you get your first um we're going back to Q4 2024. So, the revenue
[16:02] growth year-over-year was 2%. They're losing money, 3 cents a share. Next losing money, 3 cents a share. Next quarter it's 8%. So massive jump. I mean you know 300% jump there. Still not profitable though. Then you get Q2 2025
[16:18] profitable though. Then you get Q2 2025 12%. So then what is that? 50% jump between the past two quarters. Still not profitable. So now we're going into Q3 2025 and this was their first clean profitable beat
[16:34] quarter. So they make seven cents. So I'm not paying attention to the revenue I'm not paying attention to the revenue growth from Q4 2024 to Q1 2025. It's profitable. But then we get this quarter where
[16:51] revenue growth comes in at 23%. So the previous jump, the rate of change between the revenue growth in Q2 2025 to Q3 2025 was 12 to 15%. So 25%
[17:05] rate of change. Now going into this report from last week, this is now back report from last week, this is now back to a 50 50% estimating 50% rate of change. So huge jump in the revenue growth aka acceleration in revenue
[17:21] growth after turning profitable. So to like why is that significant to you? Does this does this have something to do with those participating in this to do with those participating in this stock are now able to project revenue
[17:35] into the future and more profitability into the future? And is that why, you know, people aren't waiting on reports like this and these things get so much legs on on this type of report? I would say exactly like with any catalyst, not
[17:50] just earnings. Like the big three things you're really trying to figure out is like what's the surprise factor? How much did this catch the street off guard? Then you're trying to decide how much more future revenue visibility do
[18:04] we now get in the stock? And then third, is this a catalyst that's going to cause the street to rerate the stock and the valuation isn't right. So with the revenue growth, it's a big one for number two there where you see the
[18:18] revenue growth usually it depends on the sector but this could be in the form of RPO. are like their remaining obligations. This could be their backlog like growing at accelerating rate. But the idea is they're not just making
[18:33] money. That last quarter, the first clean profitable beat quarter wasn't a random one-off quarter. Like they're sustainably making money and now they can see in the future that revenue growth is accelerating and they're going
[18:45] up. >> Yeah. Um slide slide number five please Kurt just so we can we can get a little um you know this is like a work of art a
[18:57] little bit like just so we can see what this thing did. Um you know breaking out still has resistance. You can't see it on this chart but ran like 90% on day
[19:09] one um including the gap and then had a nice follow through on day two. It's exactly the kind of action we want to see. Um, the thing that jumps out to me is that volume like we talked about earlier, right? It's like the by far the
[19:23] biggest volume bar on the chart. That's that's a hallmark of a play like this. You rarely ever see a move like this without that volume. Um, what I like about our process is that you can you can kind of see that volume before it
[19:38] happens because obviously that candle closes and you see that big volume bar. I don't really see that volume in the morning, but looking at that pre-market volume in terms of its average daily volume, seeing that it was printing 200%
[19:53] between the after hours and the pre-market that morning, I remember talking to some traders who were looking at this saying, "Yeah, I think I'll trade it if it does pretty good arval like in the morning, you know, then I'll
[20:08] look at it." And I remember saying it's going to print really high arval. Like we already knew that because of this indicator because if it's doing 200% in the pre-market in the after hours, it's going to it's going to do a
[20:23] lot when the market opens. And when it did open, I mean, it was doing 3040 >> which is huge. 30 40 times its average volume at least like right off in the morning. And you know, and it just exploded out of the gates, which is
[20:37] exactly what you want to see. So, I just wanted to highlight this chart because this is this is really like a beauty. Um, but the thing that that I'm so interested in a play like this and and the more we trade this because this is a
[20:52] very specific playbook like this is an earnings play. Um, the broader category would be this is a catalyst play. So, we have a certain way, a certain operation around a catalyst play, a certain way of trading it, and a certain way of grading
[21:06] it, like figuring out, are we going to take it? Figuring out how much risk we're going to put on, is this really, really good, or is this just kind of good? And the thing with this play is like so much of that work happens before
[21:20] the market opens. And so, like everything that you just went over, you can know before the market opens. And everything that we talked about with the volume, we can know before the market opens. So this is just like a classic
[21:35] stock selection situation. Like we always talk about how important stock always talk about how important stock selection is with with with the most important inputs that we'll be talking about today that went into determining
[21:49] whether we wanted to take this and the grade of the setup were all known before the market opened. Now, of course, we want that price action to confirm our thesis. Like, we're always looking for the market to tell us that we're right.
[22:03] And so, of course, we want to see that price action and the volume when the price action and the volume when the market opens. But there's a lot of power in knowing what stock you're watching right off the open because I think I
[22:17] bought this thing on like the first two-minute bar because it broke that pre-market high. Um, this is not the kind of name that I would want to be caught off guard on and and say like halfway through the day have someone
[22:29] today? Like this thing ripped." Right? Like that's that's what we're trying to Like that's that's what we're trying to avoid with this kind of process. Um, avoid with this kind of process. Um, what are so like I want to get into more
[22:43] of what we did in the pre-market before we start talking about like how we intraday chart because I think that's just so important because we really teed just so important because we really teed this thing up and had plans of putting
[22:56] like x amount of risk on if you know x y and z happened like you know by probably nine o'clock like as a team. So, what are the other things we're
[23:08] looking at? We're looking at the chart. We want to make sure it can run. What factors here? >> Here's a mindbending stat for you. SMB >> Here's a mindbending stat for you. SMB traders have 20x to 40x higher odds of
[23:23] success than independent traders. Find out why and how to greatly increase your odds by visiting smbtradingfloor.com. So just to even reiterate like the catalyst is one check in favor. We're grading this an A+ catalyst. So that's
[23:40] one check in favor. Then we're looking at the higher time frame technicals. So right now we're just looking at the daily. Um but this is a stock that ran in COVID got sold insanely hard on the weekly and now had a nice weekly base at
[23:55] near the lows. So, it was breaking out of this weekly base and above this weekly breakout level. So, we have our higher time frame technicals check in the catalyst to the table. That's just one piece of the pie. So, then we're
[24:11] thinking like whenever you see that revenue growth, like it's super important to then ask another question. So, like the whole idea is you keep and you're like, well, how are they doing it? You know, like what's
[24:24] changing? like how are they making so much more money, you know, how is their top line so much better? Then you start getting into the theme, which is lot of work on with this, but the idea is you want to have an idea of like,
[24:38] yeah, what's going on? Like this is an inflection quarter. Why? >> Yeah, absolutely. It's like you see that growth and you want like what's the reason for that growth? Like that's that's something I'm always interested
[24:52] >> because especially in a market like this, market. >> Yeah. It's I mean, we like how how split like everyone's talking about it. Like I feel like dispersion is like the word of
[25:08] about >> that and and but it's true, right? Like we've got some themes and some some groups that are running. We've got some that are just completely dying out. And a lot of it has to do with that AI
[25:22] >> oh yeah, >> think things that you can um you can touch and feel and drop on your foot are running things that can't be um disrupted like airlines and and cheeseburgers, but you've got software
[25:36] just taking it to the chin because the whole market is just completely freaking out. And I it seems like nobody really knows yet because I mean they're selling the whole basket. It's like there's no software name that's going to survive.
[25:49] like no one knows what's going on right now. So, let's just sell all the all the enterprise software software as a service names are just getting crushed. service names are just getting crushed. Um, let's buy oil and infrastructure,
[26:04] you know, >> and John Deere and and and McDonald's and and airlines, right? Um, so it really matters where you are in this market, right? And that's that was at the forefront of my
[26:18] mind this morning when we were going over this because when we saw that big beat, I'm thinking, okay, like I haven't really traded Fastly in a while. Do I even remember what they do? But of course, I went to our theme tracker um
[26:31] course, I went to our theme tracker um our notion database which has um lists of of all the themes in the market and we do a we do a really thorough job of we do a we do a really thorough job of compiling these baskets down to you know
[26:45] all like all the software themes like enterprise and and gaming and and and you know digital infrastructure which would be like you know data centers and um edge computing and and cloud and networking And you know, I could go on
[26:59] and on, right? Um, >> I want to stop you real quick or you could keep going. I wanted to say this one was even crazier in terms of theme. It was so misinterpretive what theme Fastly was in and you cleared that up
[27:11] thought it was software. All right, continue. A lot of people thought yeah a lot of people thought it was suffer because traditionally Fastly is cloud which is very closely tied to software because in you know initially cloud was
[27:26] because in you know initially cloud was cloud computing was really for software because software was the big thing that was the application I'm already saying was as if software is dead that's that's sad
[27:38] this is probably the like just buy software now is probably in the bottom software now is probably in the bottom right Um but but cloud is infrastructure. Cloud is not software as a service. It's
[27:52] not enterprise software. It's not the application. It's the infrastructure application. It's the infrastructure that allows for things like software to that allows for things like software to occur and also things like AI to occur.
[28:05] So if we break down the taxonomy and this is why I love tracking our themes because it makes it crystal clear is that like cloud infrastructure is not under software even though it's linked to software it's under digital
[28:20] infrastructure along with all of the other um physical infrastructure that is being built in order to enable artificial intelligence.
[28:32] So, a lot of people thought it was software. It's not. But if you look deeper in that report, and this is what I was finding that morning while you knew you would do that, so I didn't even get into it. Um, I was asking the
[28:47] question like, why did they beat? So, where do you go? Well, you usually it's the conference call, right? The CEO is going to like tell a story. So, I'm looking for the story. I'm trying to answer the question where does Fastley
[29:00] fit in to our theme taxonomy and therefore the overall market like this entire disruption that we're seeing is it a winner or a loser? where is it positioned in all of this craziness that
[29:13] we've been seeing? And the CEO was talking about how a large part of their talking about how a large part of their acceleration and their beat was due to their edge computing component >> and that got me excited like bells
[29:28] started to go off because and he even said like this should scale with AI and been tracking edge computing. Now, this is a theme that hasn't gotten hot yet.
[29:41] It's not like currently on the tip of everybody's tongue, but it's a theme that we're tracking because it belongs under that digital it belongs under that digital infrastructure category. It's a theme of
[29:54] infrastructure category. It's a theme of names like AKAM, AAM, um NE, um AET, like these are all names that are also in the theme. Macam's like one are also in the theme. Macam's like one of the leaders that are helping enable
[30:08] the inference to operate away from the data center. So that might mean in a device, that might mean in a car. It just means if you need that inference to happen really fast, you can't wait for that signal to get all the way to from
[30:23] the data center to where you are. Like so a car is perfect example, right? Like it needs to make a decision quickly. So the more AI the more AI story expands and it gets beyond just
[30:37] the llm on our browsers, right? It gets into our devices and in our cars and in that story in robots, that story starts to um develop and accelerate. Theoretically, edge computing demand should increase
[30:54] because that's what is enabling all of that stuff. And so if a big part of their beat and acceleration was due to their edge computing component because this isn't an edge computing theme and they're traditionally a cloud company
[31:08] which is also infrastructure, they're clearly not software. They're clearly not into in that category that's being cannibalized by AI. Instead, they're theoretically in a category that should be growing with AI expansion. So that
[31:23] be growing with AI expansion. So that alone made me feel a lot more interested in this because not only did there did they beat tremendously, but they beat in a way that aligns with the way the market is acting right now, which is
[31:36] rewarding infrastructure and rewarding those names that are either a immune to AI disruption or b helping it or joining it with AI, right?
[31:48] are >> that they're worried about being cannibalized by AI. G, do you remember I think it was either maybe our fourth data centers and we were talking about our notion with our themes and that was
[32:05] like right when we were just starting like digging at the surface for edge computing and we're like oh this could have like real applications in the happen on the edge >> which is what you're saying closest to
[32:18] the source and then there's even like stuff about maybe this has a role in confidentiality talked about edge computing at the end of one of those earlier episodes and we
[32:32] do the work for this like >> yeah this is why we do the work. We we did an episode on themes and why it's valuable to track themes and I think we called out edge computing as something to keep an eye on because you know it's
[32:44] fun to do like this is the like this is great like we we get to look we get to >> like a little bit about everything like that's what I love about trading is like we're not we're not experts in anything but we know like a like a tiny bit about
[33:01] like a million different things >> mile wide inch deep tracking tracking these themes is is a blast because it's wild especially in these times and so um
[33:13] you just it's it's super meta too because you're just going on AI to kind of do some research about AI disruption but you know ask ask chat
[33:26] GBT or Gemini or cloud or whatever whatever you >> perplexity comment assistant >> perplex yeah you know just just have a they'll chat about it like hey what what could be some disruptions down the line
[33:38] like if AI expands in this way like what certain technologies might become hot themes right and these these are the simple questions to ask and you start to kind of verify and you're like oh yeah this is cool I we might as well track
[33:52] >> you know what was a cool tidbit with this too is you do the work on the themes and we're like oh net is a big competitor and then go back to interesting aspect of this report was you look at
[34:07] the valuation difference between Fastley and Net and Fastley was trading at three and a half time sales and net was at 25 times sales. So to answer that third question, does the street need to rerate this stock? Is there a potential for a
[34:22] rerating? You see the valuation gap and you're like, oh yeah, maybe like definitely could have a rerating. >> So even that's where the theme helped me after you saw Net. >> Oh, right. Because you never would have
[34:35] thinking edge compute >> and you you're thinking a different just making sure double checking it wasn't an IGV. Like that was my first >> right? Yeah. We can't we're not allowed to buy anything in IGV for a good six
[34:51] >> That's not true. That's not true. We were probably trying to bounce it. >> But the theme is super important. And then honestly the last part >> that we talked about that morning was the market environment we which we were
[35:04] the market environment we which we were in which is our last check in favor. an A+ right. >> But then we're looking at the market environment and we're looking at how
[35:16] other earnings plays have followed through. How have breakouts been trading? What's the market behavior and what do we gleam there? these earnings names have not been working. Yeah. Like a lot of the a lot
[35:29] breakouts in general have been tough. And of course like this comes with a huge caveat because it matters where you are. I mean not working. And then if you're like an oil trader, you're like what are you
[35:43] talking about? Right? So it's that's not necessarily true. But, you know, generally like growth stocks, tech stocks, like they've been, you know, the Q's have been stuck in a big range and um we haven't seen a lot of these big
[35:56] um we haven't seen a lot of these big inflection quarters this quarter in tech stocks and a lot of these day ones have been kind of rough. So just from an environmental market behavior standpoint, that was really the only
[36:10] standpoint, that was really the only factor of this trade to your point that wasn't kind of all systems go, right? And we were we were keeping that in mind because I mean I don't think we'd >> we'd had like a we haven't been really
[36:23] taking many of these, but like the last few we took were, >> you know, were kind of duds and a lot of the things we've been watching have been kind of duds. So that factors into it. like the environment is pretty big. So
[36:35] like the environment is pretty big. So we so that downgraded it to an A when we >> when we find when we got the final grade which which happens >> and swing trading in general has just been very difficult
[36:47] >> and this is a swing trade for us >> but we'll talk yeah we could get into the actual execution because there's many ways to play a stock and play like this but what were you gonna say? >> Well so so just to review so we've gone
[36:59] we've touched on the five things now. Yeah. So, we had we had the volume. So, that's pre-market. Checking that in the pre-market and then see that volume there. And we'll we'll talk more about the intraday stuff. Um,
[37:12] we want to look at the the higher time frame chart to make sure that there's room to run and that there's some kind of like a base breakout. We want to look of like a base breakout. We want to look at the numbers of the report to identify
[37:25] at the numbers of the report to identify whether this was an inflection quarter, right? Look for that acceleration. to see that we've already had our first clean profitable beat and that this is now the inflection quarter. And then we
[37:38] want to understand what's the story, what's the theme, where does this fit in to how the market is behaving and and which themes are hot and which themes which themes are hot and which themes are getting slam dunked. And then we
[37:53] look at the overall environment as an overlay to just kind of check ourselves to make sure that like in a super hot environment this would have been A+. >> Oh yeah, 100%. >> Um Kirk, could you bring up please slide
[38:08] number six? Let's let's check out the intraday action cuz I I don't want to intraday action cuz I I don't want to gloss over how important it is for us to let the market kind of tell us that we're right because I mean we're sitting
[38:22] here kind of pounding the table and and we were pounding the table that morning we were pounding the table that morning and you did a great job of that. Um, and it and it is there is a lot of power in the pre-market prep around this as we're
[38:34] kind of outlining, but at the same time, I mean, we've been wrong a million >> Oh, yeah. >> We can't just we can't just go on that. We want the market to tell us that we're right. So,
[38:47] >> what happened that that this morning that that told us that we were right because it happened pretty early on >> and for our joint, that's how we went into the trade. It's like you have high conviction. We need price action to
[38:59] confirm. But yeah, right off the open, we get a huge candle. A ton of volume in the first two-minute bar and it breaks above the pre-market high. So that's the first confirmation signal for us.
[39:15] >> And then it doesn't fade. It doesn't just like wick the high. Volume keeps coming in and we get a massive first two-minute bar. run, I've noticed, and we've studied these, like you get a you get a power
[39:30] Like you don't always do. There are there are great day like swing trades that don't start that way. But what I've learned is if you do get that and it holds and doesn't just stuff and does great volume and follows through like
[39:46] you there the the probability that we've got a runner on our hands is like much higher especially backed by all the things that we've kind of gone over because you've got a bunch of institutions that are piling in at the
[39:58] open, right? you've got that opening imbalance and you've got that first like two-minute candle and like the volume that that first two-minute candle did. And when we see that, we've seen so many examples of these earnings plays where
[40:11] actually like that. Like we're not afraid to chase something like that >> And we've seen on the high short interest names that they tend to do that more often as well. And this was I believe 12 or 13%. Was it I think 13.
[40:28] Yeah. Percent short float. >> Yeah. Which is a good That's a good bonus factor for a trade like this. >> Exactly. Kind of just like alludes to potentially. >> Yeah. I mean, it's not it's not
[40:41] necessary. Like it's not something we always look at because sometimes these have it. But if they do, I think what I found in studying these is that it can really open up a great day one when it has like a higher short interest. like
[40:56] it doesn't speak as much necessarily to like the full trend like on the daily chart, but you see a lot of these day one these massive day ones with with high short interest names. >> Have you heard this study of tens of
[41:12] millions of traders which shows that only 1% of retail traders actually make it? Don't be a statistic. Visit smbtradingfloor.com to greatly increase your odds. So yeah, we get that pre-market high break and at
[41:27] that point we're like, "Oh, this is game on. This confirmed our conviction through. The volume's proving it. The price action's proving it. So then it became a game of how do we want to accumulate a position for the swing
[41:42] trade for our catalyst play setup. So one spot I know you bought Garrett was the pre-market high break. So that was the first spot and then at that point it has a pretty big opening drive and what we did to execute was just looking to
[41:56] get involved on dips. We got some on that opening drive and then we were like let's continue accumulating and building this position on dips. So you can kind of see those dips back to the VWAP area. There's like three pretty significant
[42:10] ones and that's where we were building in our swing position with stock and also our mentorship program. you know, we've been doing the there's also a play on, which was interesting, but we're
[42:24] executing. We were just using stock. >> Yeah. And what I thought was great about Cam, who's a member of our team on this play, play, everyone's got different strengths. And
[42:38] Cam's great with price action and he's a really good active trader. And like he might not be looking into the report at the same depth like the EU are for instance, and therefore he might not be pounding the table quite as much in the
[42:52] pre-market. like he might be deferring to you like, "Okay, this is definitely what we're watching. I tr you know, like I I trust you. I've seen you've seen you do this a million times." But he is waiting to for that confirmation. And
[43:06] what was great about this morning was I remember Cam who was kind of quiet about all this in the pre-market. Like we knew he was on board, but not everybody, everyone has different roles, right? So it was like you were really pounding the
[43:20] guys, this could be this could be a really big play. Um, here's the grade. This is what I'm thinking. This is why. Didn't hear as much from Cam. He's just like, "Okay, cool." Market opens, it
[43:35] explodes, pulls back, and then holds. And you could see after a big explosion like this, it started to hold on the tape above VWAP. And the market was really weak. And this was way stronger than the market. And
[43:50] Cam just you could see he just woke up like out of a slumber like we hadn't heard him at all and he goes, "Guys, Fastley's acting really well. We need to be getting a lot bigger than we are right now." And it was like it was a
[44:04] great moment because like he wasn't saying anything about risk or size until that point. And then all of a sudden like a flip a switch got flipped and he was just like, "Guys, this is it. Like this is working. like let's get
[44:18] >> And it's great. It's great to have communication like that with like people with different different skills. It's kind of the the point of having a pod. >> And at the same point, yeah, we have a team of four. Shane was in there also
[44:33] using his price action trading skills, executing a good amount for us as well. But it really helps having a team because yeah, compounding the table because yeah, compounding the table intraday really helped us get up to the
[44:45] risk we wanted. Yeah, then there was a great day trade out of that first consolidation above VWAP. Um, that was a place to add to the swing. That's where I added. Um, I think that like if you're scalping it, like
[44:58] if you're not a swing trader, I think you can do all of the same analysis for this kind of a play to understand the tailwind that something like this might have and then you're just scalping it to the long side. And this certainly
[45:12] offered like plenty of opportunities to do so after it went sideways for that period of time above VWAP as you know it showed tremendous relative strength while the market sold off. >> You're talking about that wedge breakout
[45:24] after the two three higher lows. >> Exactly. And you know it it starts to turn up takes out highs and then it trended you know for for almost the rest of the afternoon >> off of that. So, I thought that was a
[45:37] great spot to to add to the swing or to just be trading it. Um, and the tape was really active. The the spread was really narrow. You could tell there was a lot of order flow. Like it was that kind of thing, right? And like sometimes you
[45:52] tape on some of these earnings plays. It kind of depends upon the name. Um, but this one this one kind of had everything, you know, especially once the market opened. So you could have got, you know, you could really control
[46:05] tight. >> That was my biggest uh review point of this trade actually where like you said, you can control your risk. This gave a great intraday opportunity where I was mainly focused on the catalyst play and
[46:21] the swing trade, but that consolidation break above VWAP is a spot where you can double your profits taking that as a separate trade in an active intraday trade. So that was my biggest review point. And then the other aspect of this
[46:36] trade that I thought was interesting was when the market gives you so much on day one where this is a swing trade but we were taking profits because this is a huge day one move. One of the biggest we've ever seen.
[46:51] >> Yeah, it was. And and you're right about that intraday opportunity. And that's know in the pre-market if you're going to get like you don't know if if the And you just got to take what the market gives you. So, if you're watching this
[47:05] name, you're definitely watching the right name. And I think that like to your point with the review, you know, you've you've nailed the potential of this kind of play by doing all that work in the pre-market.
[47:18] Then you're seeing it confirm telling you that you're right. But then there's like another level where now it's like setting up intraday in really tight ways with tons of order flow, giving you another opportunity that nobody knew was
[47:33] going to happen and making like a really really great day trade. Like to your point like you can get a lot of size on that wedge break with a pretty tight stop and moves in your favor immediately and like trends trends for the rest of
[47:48] the afternoon. So that that was a great play all around. Um so yeah yeah yeah so look we in in the bionic trader meetings in
[48:01] inside access we are sharing this percent aval indicator that helps us percent aval indicator that helps us find these types of names so so join us um we are on Spotify now for those of you who just watch us on YouTube check
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