Transcript was automatically generated.

Frank Curzio 00:00

How’s it going out there? It’s Wednesday, December 17th.

Frank Curzio 00:04

I’m Frank Curzio of the Wall Street Unplugged podcast, where I break down headlines and, uh, tell you what’s really moving these markets. So I have a great interview for you today. It’s just one of the best technical analysts on Wall Street.

Frank Curzio 00:21

So it’s someone you’ve probably seen on CNBC numerous times over a 20-year career. Her name, her name is Katie Stockton. So Katie’s the founder and managing partner of Fairleads Strategies. She’s known for being a great, fantastic market timer. That’s why she goes on CNBC all the time. And we’re about to dig deep into her methodology, which is different from mine.

Frank Curzio 00:43

I’m a fundamental analyst. Uh, and we’re going to dig in in terms of what technical metrics she uses, because technical analysts use tons of different metrics. She obviously uses some. Did she change over the past few years with the market changing, where the government’s injecting so much money,right? Is that just like fundamental analysts have to change,right?

Frank Curzio 01:01

We have to realize the government’s going to be there for us if a bank fails,right? So you got to take that off the table because they’re always going to bail us out. It’s things that you have to adapt to the markets. I want to see how she’s adapted to the markets over the last 20 years, what metrics she’s using, because she does happen to be a fantastic market timer, someone I’m a very, very big fan of.

Frank Curzio 01:17

She’s also going to tell us where she thinks the market’s heading in 2026 and what sectors are the most attractive heading into the first three to six months of the year. Spoiler alert, there’s a few that are going to surprise you since she also covers exclusively, and a lot is Bitcoin and Ethereum. So enough of the buildup here.

Frank Curzio 01:36

Here’s my interview with Katie Stockton. Katie, I’m such a big fan. Thank you so much for joining us on Wall Street Unplugged.

Katie Stockton 01:43

Thank you. I appreciate that.

Frank Curzio 01:45

So known as one of the best technical analysts, and I say that very truly. Uh, you know, you’ve been doing this for such a long time. I’ve watched you on CNBC for such a long time. Like I said, I’m a big fan. Uh, I’ve watched some of your calls recently. Uh, and I guess, well, let’s start with the macro part. And I know that you seem pretty bullish that this bull market’s going to continue in 2026.

Frank Curzio 02:06

Uh, talk about some of the technical indicators. That is your background, if nobody’s familiar, but I’m sure a lot of people are who are listening and watching. Uh, talk about technical indicators that suggest this. Why do you think that we’re going to have a really good 2026?

Katie Stockton 02:18

Yeah, of course. And I, I, I don’t know if I’d say really good, but, but certainly good. We always assume that the prevailing long-term trend will continue until it tells us otherwise. And it has multiple ways of doing that. As it stands, the long-term momentum gauges, these are things like the monthly MACD indicator, for one, do point higher.

Katie Stockton 02:40

It’s not the momentum that we had in the earlier stages of the bull cycle, I would say, but certainly positive momentum long-term. And we have essentially new highs within reach for the S&P 500, NASDAQ 100. So of course, that’s a bull market,right? So we, we can acknowledge that.

Katie Stockton 03:00

And all the moving averages from a longer-term perspective are pointing higher. So we want to honor that long-term trend. And, um, of course, to suggest it’s ending, we would look for things like overbought sell signals on the monthly charts longer term.

Katie Stockton 03:17

We have some signs of exhaustion, I would say,right now from the DeMark indicators in particular, but nothing that’s been confirmed by that loss of momentum. So it’s on our radar, and yet it’s not guiding us to a major corrective phase.

Katie Stockton 03:33

And then, of course, the breakdown, any kind of breakdown is something that would be at least a shorter-term setback for the equity market. We do believe we’re in the midst of a corrective phase right now. And we’ve been telling folks to perhaps hold off on adding new exposure to U.S. equities for the last kind of corrective wave to unfold.

Katie Stockton 03:54

And, uh, and that’s for numerous reasons, but so far, there’s no impact, at least for now, to our longer-term gauges.

Frank Curzio 04:03

So you have lots of readings, I’m sure, if it’s, you know, MACD, overbought, oversold indicators, uh, sentiment indicators. Has anything changed? And you’ve been doing this for such a long time. I’ve been doing this for a long time. Has anything changed in terms of how you read things? Because everyone wants to say that, you know, historically, the market, you know, tends to rhyme.

Frank Curzio 04:23

But to me, it always feels different where, uh, being a fundamental analyst, I have to change my methodologies when I see the government spending trillions and trillions of dollars. When we just, you know, they’re all in all the time. I feel like if there’s a bank that’s going to collapse, the government’s going to come in here, and it’s going to be fine. They’re going to bail us out, no problem, because they made so much money during the credit crisis doing it.

Frank Curzio 04:42

They’re probably going to do it forever. Does that change on a technical level where you have to update your methodologies and things, uh, you know, and how you read things? Or it’s just like, this is the system, this is what works all the time, regardless of what’s happening under the hood, even though things are definitely different today than they’ve ever been?

Katie Stockton 04:57

Yeah, it’s almost a little of both,right? We still use the same technical indicators that we used 10, even 20 years ago, because they’re math-based. I mean, they’re really looking just at prices, and that’s not going to change.

Katie Stockton 05:10

But the market, as you allude to, is certainly dynamic, and we need to be willing to acknowledge certain environmental influences because we see them in the charts. And this year has been a great example of that with the move off of the April low by the major indices. I mean, we really never saw it look back until recently, until October.

Katie Stockton 05:33

So it was not at all a sell and may and go away type of year. And just the remarkable nature of the uptrend was that it was barely interrupted by even a significant pullback. So that’s not normal. And, um, and yet we just have to respect it for what it is.

Katie Stockton 05:50

And it could be driven by the concentrated leadership from the mega-cap complex. It could be ETF, you know, passive ETF flows, something of that nature. It almost doesn’t matter to us as technicians what the driver is, but more what’s happening and how it’s resulting in the supply and demand dynamic.

Katie Stockton 06:09

So in order to respect that upmove that was so persistent, we decided to kind of put to the side or give less weight to some of our short-term metrics that would normally be more impactful in our work. That would include the daily stochastics and MACD for one.

Katie Stockton 06:28

And that we have a lot of noise from these indicators for, it was for several months that we saw it. And, um, they just sort of lost their value, frankly, in terms of market timing or risk management. And because of that, we, we saw that start to happen early on in May of this year.

Katie Stockton 06:47

And because of that, we started to focus on a very simple trend-following metric in the 20-day moving average. So a pretty tight moving average. And we decided that that was going to be a way to smooth out all of the noise that was manifesting itself in these other short-term indicators.

Katie Stockton 07:04

And indeed, it helped us a whole lot stay on the right side of that intermediate term up move, which, of course, now has, has lost some of that momentum.

Frank Curzio 07:14

Yeah, and it’s interesting with the S&P 500, like you said, coming off the April lows and going higher. Uh, my question to you is, you look at AI, and some could argue in the past two and a half, even go three years, if it wasn’t for AI, there’s a possibility we could have been into a recession. We saw a major correction. Now we’re seeing this massive capex spend. We’re kind of seeing it roll over a little bit.

Frank Curzio 07:35

We’ve had false readings in the past, but now you could say, okay, with Oracle, you’re a little worried. I don’t know if Oracle is the one or Nvidia is the one that everyone looks at, but you could also look at Google, which Google kind of, I wouldn’t say rolling over, but you’re seeing it top out a little bit. Do we need AI to continue to drive this market higher? Because right now it looks like, and you,

Frank Curzio 07:53

you know, this is what I wanted to ask you, because you, you know, this is what you do. Are you seeing more money flow out of AI and it’s staying into this market? Or do you think if the AI trade goes sour, that means the market could actually, you know, get hit in 2026? Is it all dependent on AI?

Katie Stockton 08:08

I mean, I would say, yeah, so far so good in that the market breadth has been strong enough to keep the major indices elevated near their highs despite that rotation out of the AI trade, which is certainly notable relative to the low back in April, uh, when they began to really exhibit upside leadership.

Katie Stockton 08:29

So I would say it is, it is impactful, but it hasn’t allowed for the major indices to break down yet. And we’ll always take that top-down approach. We’re going to honor the action in the major indices first, and then we’ll drill into the sectors and the groups and the thematic trades that are out there like AI.

Katie Stockton 08:50

So I think it’s been a great driving force behind it. The sort of short-term shift that we’ve seen has certainly been impactful for some individual names, and that’s meaningful for them. Oracle is a great example. Uh, Google or Alphabet has been very, very strong and finally just now is showing some minor signs of upside exhaustion.

Katie Stockton 09:12

So there’s been enough, um, you know, players that have stayed strong to minimize the impact of those that have gotten into a pretty severe corrective mode. Uh, but that could change. And I do think AI is important to market sentiment. And I feel also that we’ve moved to some degree into a higher volatility cycle.

Katie Stockton 09:34

And that means that sentiment’s a bit more fragile. Uh, you can see it in measures like the VIX, uh, which is a transactional read on market participation and sentiment. And, uh, it’s, it’s got sort of a higher, uh, low than it used to have. And that is something that would suggest that we’ll see more and more,

Katie Stockton 09:54

uh, sort of corrective phases as we see this uptrend persist over the long term. And AI, you know, the loss of momentum and relative performance there could certainly contribute to that more highly volatile environment. There has been a lot of chatter around, um, you know, bubble in AI.

Katie Stockton 10:13

And I don’t see characteristics of that in my work. Of course, we do have some steep uptrends, but corrective action can resolve that and allow for a pause to refresh for some of these names.

Katie Stockton 10:27

So I wouldn’t give up on it, but I also wouldn’t be too quick to add exposure until we have evidence that we have a nice tradable low in place.

Frank Curzio 10:37

So when you say a correctable phase, what you’re, we’re used to defining correction would be a 10%. Do you see a 10? I mean, they’re up so much. It’s kind of like when I look at housing these days and people say, well, you know, housing has declined like 7, 8% in some areas, 10%. I’m like, it’s up 100% in some of these areas too. That’s coming down,right? So when you put it in perspective, it’s different. Uh,

Frank Curzio 10:56

I guess when you put it in perspective, is anything different for the market when you say a corrective phase? Is it a 10% correction? Is that a little bit more than that? Because even at a 15% correction, when you see where Google has gone, when you’ve seen some of these AI names have gone, you put it in perspective, it’s really not that big. But the headlines are going to say, well, we’re in a correction phase. And really,

Frank Curzio 11:15

it’s nice to take a breather when some of these things really get extended,right?

Katie Stockton 11:19

Yeah, it’s, you’ve definitely, um, sort of honed in on something important there. How do we define a correction? And to me, it’s not necessarily 10%, especially when some of these AI names should be and already have been in a way much more severe than that in terms of their retracement.

Katie Stockton 11:38

It’s a matter of how high beta either the stock or the segment of the market that you’re watching is. The higher beta names will exhibit downside leadership, and they will decline more than the S&P 500. And usually that downside leadership does come from high-growth technology stocks.

Katie Stockton 11:58

So it’s a pretty reliable phenomenon that that tech sector leads on the upside and on the downside because of the characteristics of those stocks from a fundamental perspective. Maybe they’re viewed as, uh, a little riskier, perhaps they don’t have such strong fundamentals, but have very good growth prospects. And when sentiment takes a hit,

Katie Stockton 12:19

they’re going to be the first ones to, uh, you know, come under pressure in that regard. So for a correction for us, it’s more duration, uh, of the pullback. You know, if you see a several-day pullback, I just call that a pullback as opposed to a correction. If you see something like a traditional ABC correction where you have an initial down move,

Katie Stockton 12:40

a relief rally, like we’ve just saw, mind you, and then a C corrective wave, that to us is the traditional correction irrespective of how low it goes.

Frank Curzio 12:51

Fair enough. You know, before I get into some of these sectors, you sent me something which is a one-pager. It’s called Starting Line. What is Starting Line? And is that, I don’t know if it’s daily or weekly, but it gave me a good indication of the sectors that you like, you don’t like. And before I bring that up, I’m going to give you a chance to plug that because it was really pretty cool.

Frank Curzio 13:10

It’s just a nice quick one-pager to talk about the S&P 500, uh, different indicators, and, you know, the market leader, which happens to be Alphabet again. I don’t want to give too much away in different sectors that you like. But what is Starting Line?

Katie Stockton 13:22

Yeah, so Starting Line is one of our research reports. We at Fairlead Strategies have a research subscription service. And as part of that, we have multiple reports that come out per week. The Starting Line report is a daily report. It’s a very cursory, but also a great way to just stay abreast of the market from a short-term perspective,

Katie Stockton 13:42

usually looking at the S&P 500 and a couple of themes. Today, as an example, we highlighted gold and how it’s seen follow through off of its triangle breakout. We talked about market internal measures recently, like new 52-week highs on the NYSE. And of course, we also provided some guidance on the S&P 500,

Katie Stockton 14:03

which we do on a daily basis. And it’s just one report as part of a broader service. We have coverage of all asset classes. We have an ETF-focused report and a sector-focused report. We have a crypto report. And so we covered just about everything.

Frank Curzio 14:20

Okay, let’s have some fun here and get into the crypto report. How deep is it within crypto? I think I saw that you cover Bitcoin, Ethereum. Do you get into some of the other, uh, areas and the altcoins, which some people call them shitcoins? But do you get into some of those? Because this is a sector that we follow as well. And the top 100,

Frank Curzio 14:39

150, I always said about 90% of this stuff and have been in this industry for a while. A lot of it you have to be careful of, but the technologies and basically the software companies, these things are very, very disruptive,right? And so is it just Bitcoin that you’re covering and Ethereum, or is it, is it more broad than that? And, you know, get your perspective on, you know, where do you think these are heading? Because Bitcoin arguably has been driving them,

Frank Curzio 15:00

has been a leader of the market. Can you say that like recently or?

Katie Stockton 15:04

It’s, it’s kind of the, the bellwether is the way I would put it. It’s, it’s the one that, that matters the most to the whole cryptocurrency market, not just because of its market cap, but because it was the first one that we all embraced as a new asset class. And it’s really, to me, a very exciting space from a long-term perspective.

Katie Stockton 15:25

We, we do review Bitcoin and Ether sort of from a deep dive perspective. We’re looking at multiple time horizons, short-term, intermediate-term, long-term. We’re looking at trend-following gauges and overbought, oversold metrics. We’re looking at Bitcoin versus Ether in our research always, because that can actually give you an indication of risk on versus risk off.

Katie Stockton 15:46

Bitcoin tends to be more of the conservative safe haven, if you will, within the cryptocurrency market more broadly. The way we address the altcoins is in relative terms versus Bitcoin. So we concern ourselves with where there might be some emerging leadership amongst the altcoins. And ideally,

Katie Stockton 16:06

there’s the technology to back up any outperformance that we’re seeing from those altcoins. So we have a rotational view that we track week over week for the altcoins, the top 10 versus Bitcoin.

Katie Stockton 16:18

And then we always highlight a theme, something that’s interesting, whether it’s market sentiment around cryptocurrencies or some kind of on-chain metric or an altcoin that might not be on someone’s radar. So we do a deep dive every week on the space.

Frank Curzio 16:35

And if I’m not mistaken, you just came back from a Bitcoin conference,right? In the Middle East, Abu Dhabi, is thatright?

Katie Stockton 16:40

That’sright. We were at Bitcoin MENA presenting on Bitcoin technicals primarily. And there was a great energy, of course, around this conference. And the UAE is making great strides and efforts to sort of bring more of these stablecoins to market and things of that nature.

Katie Stockton 17:00

So it’s really, I think, an exciting space and, of course, an exciting region for the support of cryptocurrencies going forward.

Frank Curzio 17:08

And I heard that you made a new best friend. Is that correct?

Katie Stockton 17:14

Okay. Yeah. I didn’t know you were going to pull that up. Yes. Yes. I told my husband that that’s my new, my new boyfriend in the UAE is at Camel. Um, so, you know, it’s, it’s a really interesting place coming from Connecticut. Uh, you know, I came home from the desert sand to snow.

Katie Stockton 17:35

So it’s a pretty fun place to go visit.

Frank Curzio 17:38

Yeah. I know the weather has been pretty crazy there. So, uh, let’s get to some of the things that you talked about in, in, in the Starting Line because some of the things that I found interesting with the sectors. And you seem very high on, on industrials, financials, communication services. I mean, maybe, maybe talk about industrials here, uh, you know, and utilities.

Frank Curzio 17:58

Utilities you seem like you’re very bullish on. So, uh, which I found. Yeah, go ahead.

Katie Stockton 18:04

I was just going to say, so when we put our, our sort of overweight, underweight, equal weight recommendations in the weekly report that has them, it’s called Fairlead Tactics. We really are talking in relative terms versus the S&P 500. And most of those sectors are equal weight in this kind of transition in a way,

Katie Stockton 18:26

because we have seen rotation out of technology. And because technology has such a huge footprint in the S&P 500, when you see that rotation out of tech stocks, then it tends to benefit a lot of other sectors. And that’s been probably most pronounced in healthcare of late.

Katie Stockton 18:44

We’ve had the downtrend in healthcare relative strength give way to a pretty constructive relief rally in that space. And with that, in absolute terms from a bottom-up perspective, we’re seeing a lot of breakouts and constructive action. Utilities had really already seen that kind of rotation and had already seen some breakouts.

Katie Stockton 19:05

So from an intermediate term perspective, we’re also constructive on utilities, which have a bigger tie to interest rates, of course. So we try to track these sector relative strength weightings from an intermediate term perspective to help people identify opportunities. Um, and yet when a sector is outperforming in a weak tape,

Katie Stockton 19:27

of course, it doesn’t necessarily mean that that sector is going higher. And that’s, um, a distinction that we have to make because usually when these areas of the market that have outperformed since, say, October or so are outperforming it, it is a weaker tape,right? The healthcare sector tends to hold defensive properties.

Katie Stockton 19:46

So I wouldn’t necessarily assume that an overweight sector recommendation from us actually means that we’re buying those stocks. It’s more important to have the sort of top-down views from the S&P 500 on our side to get there.

Katie Stockton 20:01

And as it stands, we’d be probably waiting to add exposure even to those more favorable sectors from a relative perspective.

Frank Curzio 20:11

So I’m an analyst, so I love learning,right? So, you know, picking your mind. So, so now with your methodology, you look at, say, top-down,right? You’re looking at, okay, healthcare, healthcare works. Now, say bottoms up, do you look at different areas within healthcare? What would be your next step of research when you’re looking at the chart is like, wow, all of healthcare?

Frank Curzio 20:31

Is it biotech, medical devices? Is it, you know, big pharma? Is it GLP-1s, which have, you know, huge growthright now, a nice momentum and, you know, backed up by the numbers? What’s the next process when you see rotation and it, you know, triggers some of those indicators? How do you actually find the particular stock that you really love within the sector?

Katie Stockton 20:50

Yeah, it’s a great question because it talks about process,right? And I think that’s a mystery to some people and how to, how do technical analysts approach the markets? So what I will say is for our healthcare sector deep dive report that we publish every six weeks or so, what we’re doing to get to those ultimate end ideas,

Katie Stockton 21:09

you know, the long, short ideas within the healthcare sector, we start with our top-down views on the S&P 500 and let that trickle into our views on, on the healthcare sector itself. We’re usually using a proxy, something like the, the Healthcare Spider Fund, which is XLV.

Katie Stockton 21:27

And we’re looking at that from the same perspective as we’re looking at the S&P 500, looking at those momentum gauges, the overbought, oversold metrics. We’re looking at it relative to the S&P 500 to have a sector takeaway. And then we actually do rotational work in the same way that I talked about altcoins versus Bitcoin.

Katie Stockton 21:47

We’re, we’re taking the subgroups within healthcare and looking at them relative to the healthcare sector. And that can be really interesting. And it is quite cyclical, in fact, as to what you’re seeing outperform in different environments. And we’ve had pretty significant outperformance by biotech.

Katie Stockton 22:05

And biotech for a long time had been out of favor and driving the downside and relative underperformance. And med devices, I would put in there as well as having more positive technical catalysts than other segments within healthcare. So it’s that group rotational work. And then truly what we do is look at charts.

Katie Stockton 22:24

We’re looking at the components of the S&P 500 healthcare sector to find setups that we feel are higher probability. So it’s a very visual exercise. And yet it comes from the technical methodology that we’ve always used.

Frank Curzio 22:39

Do you ever use fundamental analysis? Because I am a fundamental guy, but I use a little bit of technical,right? And look at different readings, but it’s mostly fundamental. I’m usually holding on the stocks that I believe that are going to develop catalysts, you know, over the next six to 18 months. Uh, and of course, you know, looking at all the numbers, does it ever come across? Do you ever look at PE ratios or is it strictly technicals for you?

Katie Stockton 22:59

Strictly technicals for us, but we believe that fundamentals are very important. I think that fundamentals drive the long-term trends. So, you know, while we’re guilty of giving an opinion about a chart without really knowing much about the fundamentals, we’re doing that to hopefully help folks that are doing that research on their own.

Katie Stockton 23:20

Uh, we believe in knowing, uh, the fundamental prospects before buying a stock. Uh, so we, we don’t advocate technical analysis as a standalone discipline for individual stock investing. We really think it’s important to have that on your side. Um, and yet on the sector level,

Katie Stockton 23:39

I think it’s okay to use, you know, just the technicals and of course on the broader market level as well. That kind of top-down, uh, should be pretty influential in how you’re thinking about individual stocks from both a technical and fundamental perspective. So I, I see technicals as complimentary and not at all conflicting,

Katie Stockton 23:59

but something that every fundamental analyst should use because they can help with market timing. That’s not a bad word. It’s actually smart to time the market. And that means you’re buying stocks that are closer to support levels, ideally into weakness, or you’re catching breakouts to the upside as positive catalysts.

Katie Stockton 24:21

So it is a way market timing, but it’s doing it that in that I think it makes it a more responsible, um, you know, sort of position that you’re taking because you know that the trends on your side, you know that that stock has discovered support there. Those types of inputs I think are key for fundamental analysts to consider.

Katie Stockton 24:41

And, um, you know, so that, that will also help with the sell discipline because I think that’s where maybe the fundamentals are, um, less value add. It’s, they take time to get you to the place to realize that that position has run its course. And technicals, I, I feel will get you there in an unbiased way.

Katie Stockton 25:00

They won’t let you get married to your position beyond its sort of life, its shelf life. Uh, once you see those momentum indicators turn, then that’s your cue.

Frank Curzio 25:13

And speaking of that, that is a good cue, a good segue. So let’s bring all this together. So I’m, I’m a, I’m a fundamentalist. Uh, I listen to people like you with technicals. And yes, the timing is very, very important. Let’s talk about a segment. You talked about biotech. Biotech has been so out of favor for such a long time before finally getting some a little bit of momentum here. Energy, oil stocks.

Frank Curzio 25:33

What would you need to see? So me looking at the fundamentals saying, wow, these companies are definitely structured differently because when they go through these cycles, you used to see them, it’s a boom and bust cycle. These guys have strong balance sheets. They’re still paying dividends. Yes, oil prices are lower, but they’re structured much better. They know how to lower costs. They, you know, much better managed business. So fundamentally you would say,

Frank Curzio 25:52

okay, we’re seeing growth overseas,right? Almost all the markets are doing much better here, uh, over there than they are here,right? So, you know, it’s a global market and you would say, okay, we’re almost there for energy. What would you need to see from the technical points for energy to come out for you to get constructive? Becauseright now it’s just this constant downtrend that looks really ugly. And I’m sure it looks ugly from the technicals.

Katie Stockton 26:13

Yeah. I mean, from a, yeah, from like a sector level, there’s certainly downtrends and relative underperformance that have been pretty persistent, unfortunately for the energy complex. And yet energy is unique in that it can trade quite differently from the S&P 500.

Katie Stockton 26:31

We saw that in 2022 when it was substantially in the green and everything else was pretty much in the red. So, uh, there, there is some real value to that lack of correlation. And the correlation is in part driven by crude oil prices and not gas prices.

Katie Stockton 26:48

So I think it’s key for the energy sector to watch those commodities that these stocks are generally tied to. And it’s when we see crude oil for one advance from its long-term downtrend, that’s when I think we have opportunity that’s higher probability. It’s not to say you can’t take short-term countertrend positions.

Katie Stockton 27:09

That can be a great exercise. We have indicators like our DeMark indicators to help us do that. So we’re not opposed to countertrend exposure at times. Um, but of course it’s a little harder to trade. It’s shorter lived.

Katie Stockton 27:23

And we feel that once crude can clear, there’s some resistance that’s sort of strong in the high 60s per barrel on WTI, above which it starts to look like we’re, we’re seeing crude get out of that bear cycle. So we’d be watching for that as a longer-term catalyst.

Katie Stockton 27:42

And otherwise, when taking positions in the energy sector, acknowledging those longer-term downtrends and being a bit more short-term in our focus.

Frank Curzio 27:52

Okay. So last question here. In 2026, I know things change. They could change, especially with technicals. You could be in and out and no motions. But what is, what is maybe one of your favorite sectors or one of the sectors that, that, you know, maybe you avoid? Is it energy? You know, can you talk about that going into 2026 where I’m hearing people love healthcare all of a sudden,right?

Frank Curzio 28:13

And biotech is coming back as we talked about energy. Is it that simple or do you see things shaping up where these definitely sectors I need to be at least through the first quarter of 2026?

Katie Stockton 28:24

I’ll like maybe oversimplify it here in that if we see the corrective phase unfold and into a C wave here, it should be technology that exhibits downside leadership during that C wave. Uh, that doesn’t mean we’re bearish long-term on technology.

Katie Stockton 28:40

Um, in fact, once we see, uh, what we feel is an intermediate term low for the S&P 500, if not already, the tech sector is exactly the sector that we want to come back to, uh, you know, with overweight exposure coming out of it.

Katie Stockton 28:55

So if we’re thinking about, you know, going into 2026, I think initially technology is likely to underperform, but ultimately should be the one that gets us out of this next, uh, corrective low. So it really is all about technology when the market is trending higher. And yet now here in the coming weeks,

Katie Stockton 29:17

we are more keen on, on the likes of healthcare and utilities, areas that tend to be more defensive, but also have these positive technical catalysts. We, we of course like the gold miners. So there are always spots of strength to take advantage of, uh, within the broader market. And, uh,

Katie Stockton 29:35

technology is something that when the market has this kind of high probability setup on the upside, that is where we want to be overweight. And it’s just not the case at this very moment.

Frank Curzio 29:47

So, and last thing here is when I watch you on TV and when I’ve done my research on you and, you know, I’m watching videos and again, I follow you for a long time and part of the markets for a long time. Uh, I, I see someone who’s very nice and modest. So I’m going to say this because I know you probably wouldn’t, but you hold the distinction of being the youngest female to obtain a chartered market, uh, technician designation.

Frank Curzio 30:08

Uh, and that was back in 2001. And I read that you’re also mentoring young women. Are you seeing more women come into this market now? Because even with our demographic here is probably 85% men. It always surprised me. Like why aren’t more women coming in? I don’t know if there’s these courses there, but are you seeing as someone who mentors young women in,

Frank Curzio 30:27

in technical analysis and are you seeing more women, uh, come into this market? I mean, is it exciting for them or are they finding themselves?

Katie Stockton 30:33

I, I, I want to see that. Yeah. Thanks for bringing it up. And, um, I appreciate that because, you know, women, I think are sometimes hesitant to move into finance.

Katie Stockton 30:45

I, I think there’s two things operating where at first in my business school, I noticed that women tended to go more towards accounting and marketing versus finance and economics. So there was just that kind of natural, uh, I guess interest level, um, from, from young women.

Katie Stockton 31:06

And so I, I can’t, you know, change that, of course, except to help educate,right? So we try to, you know, make sure that we’re guest lecturing at universities. And I always see in, in these classes, uh, whether it’s an actual technical analysis class or maybe some kind of finance one-on-one class that we’re addressing,

Katie Stockton 31:25

I, I would say there’s probably 25%-ish, uh, females versus males. So I think it’s improving, but I think it’s a long way to go in terms of seeing, um, a more balanced, um, sort of, you know, environment.

Katie Stockton 31:40

Um, and yet as a female, having been doing this, as you can tell with my CMT being awarded in 2001 for a long time, um, I, I’ve always found it more of an advantage than anything else. So I always encourage young women to, if they have an interest in finance, to not be afraid to pursue it.

Katie Stockton 32:01

It, it differentiates them. And, uh, you know, we do approach things maybe differently. You know, I am actually quite conservative in how I approach the markets. My ETF, which is the Fairlead Tactical Sector ETF or TAC, is a very low beta, low correlation, uh, ETF that allows for core exposure.

Katie Stockton 32:22

And it’s not a high-flying momentum, uh, ETF. It’s there to serve as a core that won’t, uh, you know, have significant drawdowns and that will keep you involved in stronger tapes via these sector positions. And so I think when, uh, folks initially think about technical analysis as something that can enhance asset management,

Katie Stockton 32:43

which it certainly does, they think, oh, well, it’s, you know, you’re chasing momentum,right? You’re going for the high flyers. But, um, in reality, it’s a great risk management tool. So it always appealed to me and my sort of conservative nature, um, you know, for that quality.

Frank Curzio 33:00

No, thanks for sharing. I really appreciate that. So thank you so much for coming on. Like I said, I’m a big fan. I know that my audience is a big fan. They’ve asked me to do this interview and I’ve been away for the past couple of weeks. So I’m glad we were able to connect and definitely do this. Uh, if someone wants to learn more about you, how could they do that? Find you. I know, you know, I showed X account,

Frank Curzio 33:18

uh, your Twitter feed and, and, and also, you know, your website. But what are some of the ways they can get in touch with you and learn more about you?

Katie Stockton 33:25

Yeah. I mean, by all means, LinkedIn, folks can access my profile there and start to follow us. We, we do post monthly updates about the TAC ETF there.

Katie Stockton 33:35

But what I would encourage people that are interested in technical analysis to do is to sign up for a free trial of our research and they’ll see it for a month and judge whether it’s useful to them in terms of the process and the time horizon and the content. And that can be done at fairleadstrategies.com. And, uh, we pride ourselves on being really accessible.

Katie Stockton 33:55

So, um, that’s a great way to reach us.

Frank Curzio 33:58

That’s great. Well, thank you so much for joining us and hopefully, uh, you join us again soon. Thanks, Katie.

Katie Stockton 34:03

Thank you. Happy holidays.

Frank Curzio 34:05

Same to you. You know, I love interviewing analysts who have different methodologies than me. And it’s kind of this thing that I do where I, I, I research these people to death. Uh, and I, I, I just, I don’t know if it’s I try to find flaws in it or I just try to see if it’s better for me,

Frank Curzio 34:25

but I’ve always had an open mind because, you know, I was fortunate. I tell you guys all the time, I had two great mentors,right? I had my dad and I had Jim Cramer. And they were both great mentors because, you know, my dad’s fundamental analyst and, and you have Cramer, who’s more of a momentum guy,right? And one’s a perma bull and one’s a perma bear. And you guys can figure those out.

Frank Curzio 34:45

But I always felt like for me, I always wanted to learn. So I always, I think one of the things that, that I pride myself on is taking the good out of, out of people and learning. And some people be like, well, this guy’s an asshole. Why do you talk to him for? Because he’s very brilliant in some areas,right? And I could learn from that. And when I looked at my dad,

Frank Curzio 35:03

who’s an amazing analyst, and I look at Cramer, who’s also amazing. And a lot of people have different opinions and I get it. I understand. Uh, but Cramer has done very well in many things that he said over the last 20 years and also has some losers just like everybody else. And I get it. Okay. Regardless of that, I always looked at, at, you know, some of the things that they got wrong. And one of the things I realized is they were both very stubborn in their investing where,

Frank Curzio 35:24

you know, my dad’s fundamental analyst, this is the way it’s gonna be and that’s it. And Cramer’s usually like bullish, bullish, bullish, bullish, bullish all the time. Until the market crashes and he’s like, well, you gotta get out of the market. And then usually that lasts for a week because he can’t last more than a week being bearish on the markets. And I always thought that was, those were some of the flaws, picking out minor flaws,right? In, in, in methodology.

Frank Curzio 35:44

That’s what I like to do,right? Because I’m kind of a perfectionist and I wanna learn as much as possible. And I feel like a lot of analysts out there, and I see this and I interview some of them as well, they are very stubborn. I think stubborn is, is the death of profits. Uh, you could see gold analysts where you’re looking at gold.

Frank Curzio 36:04

And this is why I’ve always felt it’s important for me. I was fortunate when Cramer brought to the table, I was forced to cover every sector, every stock,right? My dad has certain sectors and stocks in large caps and some small caps. Cramer, we, we were researching 2,500 stocks every single year. And we were really researching. It wasn’t like, oh yeah, no, we needed to research them for the show. So it forced us to learn every industry, every stock.

Frank Curzio 36:24

And that’s one of the things he says is always a bull market somewhere. And I believe that. And it’s true. And when I look at gold analysts from 2012, ’13, and going to all these conferences, speaking at these conferences and listening to them saying, you have to buy gold for 10 straight years, gold didn’t work. 10 straight years. You could say to 2022 worked a little bit in 2017 for like a,

Frank Curzio 36:44

a six-month period, then went back to shit,right? Uranium dead sector. You’re looking at biotech recently, still biotech starting to break out a little bit. But man, that’s been even worse than, than I don’t wanna say worse than Fukushima when it came to uranium. But you know, when you see people pounding the table and 10 years and these gold analysts saying you need to buy gold,

Frank Curzio 37:04

when you’re stubborn, you’re not looking at the facts because there’s times to buy stuff and there’s times not to buy stuff. And when it comes to gold, guys, when interest rates are zero, it’s the worst time to buy gold. It doesn’t pay you interest,right? And when you have a government that’s flooding the market, flooding the market with money constantly, constantly, constantly, constantly, constantly, QE, QE, QE, lowering rates to zero.

Frank Curzio 37:23

And then COVID, we had a little bump in the road. And then what do they do? They inject in money ’cause they close the whole economy, which is fine. Nobody knew the extent, whatever, again, benefit of that, whatever. But then you inject another five, six, seven trillion into the economy when, and this is from the end of 2020 when the stock market hit all-time highs, almost every single asset class hit all-time highs,right?

Frank Curzio 37:42

So you know, when I, when I look at people recommending gold during that time, it’s because they were stubborn. You gotta buy gold. The market’s gonna crash. And this is, we, we had the playbook from 2010. The government bailed out everyone. We knew the government was gonna bail out every single person. Not only that, the worst thing that happened is they made money off of everything they bailed out through Fannie, through Freddie, the AIG, through all the federal warrants, through the banks.

Frank Curzio 38:01

They made a fortune, which means when it happens again, what are they gonna do? They’re gonna go all in,right? They’re gonna go all in because they, they felt like they got itright and they saved the world,right? And you have to account for that if you’re a bear. ‘Cause every time you see, oh, well, there’s a banking crisis or, you know, the carry trade in Japan or whatever, what’s gonna happen? Well, we’re gonna bail out. Silicon Valley Bank, yeah, we’re gonna bail them out. We’ll be okay. You have to factor that in.

Frank Curzio 38:21

Whether you hate it, you know, and you should hate that. You should hate that because you could do all your analysis and be like, okay, I saw that they had too much leverage on their balance sheet with Silicon Bank. And then, you know, there’s a run in the bank and it goes down and all of a sudden it gets bailed out and then you get screwed. But at the end of the day, what is this about? This is about you making money. So you have to learn to check your ego at the door.

Frank Curzio 38:40

And I always felt like, you know, you need to learn. You always need to learn, learn, learn. And I, I never, when people say, oh, Frank, you’re smart about the markets, I laugh ’cause I’m like, there’s so many brilliant people out there. And I want to interview Katie because she has a different methodology than me. And I use technical analysis in my research,right? So, you know, just momentum indicators, you would, she’sright when timing, timing’s important.

Frank Curzio 39:00

You don’t wanna try to catch a falling knife. For me, I don’t always look at the technicals. If I see a lot of insiders buying at a certain level heading into the quarter, I’m pretty sure the quarter’s gonna be good and that’s gonna be the bottom. So if a stock goes from, say, 10 to $4 and it’s just falling like a rock, technical analysts might wait for a breakout, get above that 200-day moving average, the 50-day moving average.

Frank Curzio 39:21

And that would mean the stock might go to six,right? And that’s fine. That’s good. That’s confirmation. For me, I will look and say, okay, we have insiders buying the crap out of it. Uh, the last quarter wasn’t too bad,right? It was like a kitchen sink quarter because the difference between, you know, that stock going back to 10 or 20, you know, buying it at four is a big difference than buying it at six.

Frank Curzio 39:40

It really is when you think about it,right? So, uh, you know, you can go to 12 and have, you know, twice the gain compared to if you bought it at six,right? That’s big. That’s, that’s a, a massive percentage. So I’m always trying to get better and better. And I love interviewing people who have different strategies than me. And you should too. That’s the point of this. I’m trying to teach you where don’t be stubborn on your investments. If you are buying a stock for several reasons,

Frank Curzio 40:00

it’s not working out, get the hell out of it,right? Just get the hell out of it. You know, be smart. I mean, sometimes you gotta know when to take your losses. And that’s okay ’cause you’re gonna be wrong. And that’s one of the biggest mistakes I see that people make as well is they hold onto stocks much longer. And that’s why I say stop losses is a great strategy. It’s not foolproof, but it is a great strategy. And if you’re able to do that and limit your losses, you’re getting out instead of holding that stock.

Frank Curzio 40:22

And it’s not just you’re holding that stock and, and, and forever, but it’s the only thing you’re thinking about ’cause you wanna buy more when it goes down and then it’s down and you’re wondering what the hell’s going on. Every single time you come in, you look at your stocks, that’s the one stock you’re looking at and it’s kicking your ass when you have thousands of other stocks and ideas that you could be looking at and researching. Once you take that and the emotions out and you get rid of it,

Frank Curzio 40:42

it’s off your plate. And then you could look at it again maybe next year or six months from now or if they have a good quarter, whatever. But you know, just having, you know, those tools and being able to check your ego out the door and not have this stubbornness like, this is it. If there was one methodology that always worked, everyone would use it.

Frank Curzio 40:58

And then you, and then when everyone uses it, then you have people like just modifying it like we saw with subprime. I mean, it was actually a good idea to pool good loans together, put, you know, they’re gonna get high ratings ’cause the chances are they’re not gonna default on those home loans. But then what do we do? We said, okay, let’s, let’s do subprime loans. And then even subprime loans,

Frank Curzio 41:17

uh, you know, you’re not gonna see, you have the default rate on subprime loans. It’s still pretty low. Uh, but then you leverage subprime loans by 30 to one. Okay. And that’s what happens when you have a strategy. Then you get all these aggressive people coming in. It’s all, it’s with SPACs. How many big name hedge funds came into SPACs towards the end of that trend? They’re like, shit, everyone else is making money, burning every bond.

Frank Curzio 41:37

Let’s, we gotta do it. You know, how many, how many funds did you see come in late into these crypto, crypto treasury strategies? I mean, almost all of ’em got annihilated after that,right? So, you know, once you have a methodology and that works, you’re gonna see people come in, they’re gonna overdo it. They’re gonna try to leverage as much as they can using other people’s money.

Frank Curzio 41:57

And that’s how it blows up. My point is there’s never one strategy that works. And people ask me that, what’s one of the things you look at? I looked at, at, at 60 different things and sometimes five of ’em will be this, 10 of ’em will be that. You know, you could see that through my research is why I provide videos and some of ’em are 30-minute long if you guys aren’t subscribers. And I do the video and I break down the research process.

Frank Curzio 42:16

You could buy the stock and just not even look at it and not even care. But for me, I think teaching you about that and what I’m seeing and why I like a stock, I have to tell you why, why I think the stock’s going higher. It’s not ’cause I feel like it’s going higher. Here’s what I’m looking at. Here’s what I think people aren’t seeing. Here’s what I’m seeing that the people covering the stock and the Goldman Sachs and the Morgan Stanley people covering the stock, they’re not seeing.

Frank Curzio 42:36

Okay. Their estimates are either too high or too low. And that’s how you have to invest. You have to look and say, okay, the street’s expecting this. I think it’s gonna be much higher. That’s why the stocks are buy. Or I think this is way too aggressive. I would get outta the stock completely. But again, Katie on having technical analysts on, I thought it, it complements it. It, it, it helps you.

Frank Curzio 42:55

I wanna learn. And, and she’s fantastic. I do listen to her. Um, what’s his name? Cartworth is another one I think’s fantastic. Dan Fitzpatrick, I’d love to get him on a podcast again. He’s an old school guy that I loved. And man, he was edgy. He was, he was funny. Uh, you know, I’ve tried to get him on a podcast a few times. Same with Stephanie Link. But when, you know, Stephanie works at bigger firms and stuff like that, it’s a little difficult.

Frank Curzio 43:14

And even with Katie, you know, she didn’t wanna talk too much about individual stocks, uh, more sectors and stuff like that where I like digging down,right? Into, into individual stocks. But I love that interview. Let me know what you thought. This podcast is about you, not about me. So let me know what you thought. frankcoursierresearch.com. But, um, I’m glad she came on. Uh, she was awesome. She’s a great analyst.

Frank Curzio 43:34

Some of that admire. And not only that, she’s, she’s also a, a really good person. She was really, really cool to interview even before and after. She was very appreciative. And, um, yeah, let me know how you thought again. I say it all the time. This podcast is about you, not about me. I wanna get the right people on here, interview you, make you start smarter, make me smarter, so we become better investors and make more money together. ‘Cause again, that is the goal. So guys, that’s it for me.

Frank Curzio 43:54

Daniel and I will be back tomorrow with Wall Street Unplugged Premium. Have a great day and we’ll see you then. Take care. 

Announcer 44: 04

Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money, and your responsibility.