Aug 21, 2026 · 1h 13m
Market weakness tests exposure rules as software stocks rebound
Power Trend On The Ropes; Palantir, Snowflake, Toast In Focus
The episode examines how investors can respond to deteriorating breadth and support without abandoning flexibility when selected groups remain strong.
- 1Weakening power-trend signals and failed support argue for reducing exposure as market conditions deteriorate.
- 2Historical case studies show why investors should follow market chronology rather than rely on fixed future-return studies.
- 3Software, materials, copper, Bitcoin, and gold-related ETFs reveal rotation beneath otherwise steady broad-market indexes.
Don't miss
Mike Webster’s historical comparison shows why reviewing the sequence of market deterioration matters more than judging fixed returns after the fact.
The brief
Justin Nielsen and Mike Webster open with a weakening power trend, explaining how follow-through days, rally lows, and exposure rules shape decisions as conditions change.
Their central argument is chronological: investors should respond to failed support and moving-average deterioration as it happens, rather than trust a market level months later.
Historical examples from 2016, 2017, and 2022 show why similar-looking market outcomes can follow very different paths, making sequence more useful than hindsight.
The discussion then shifts to software, where Palantir and Toast offer distinct setups, including a strong but unconventional move above major moving averages despite overhead supply.
A weekly-chart review broadens the lens to SPY, the Nasdaq, Bitcoin, materials, copper, and gold miners, highlighting rotation beneath steady indexes.
The episode closes on the practical tension of a slowly declining equity curve: reduce risk when evidence worsens, but stay flexible when leadership reappears.
What was said on this episode
26 statements · 14 positive · 8 negative · 1 mixed · 3 neutral
An immediate 21-day moving-average breach after a power trend begins is negative.
“When a power trend starts and right away you hit the 21 day, that's a negative sign”
Listen at 8:23
The power-trend termination signal is intentionally delayed.
“Our signal for the power trend turning off is very late and that's on purpose.”
Listen at 8:36
Investors should largely exit positions when an index falls below its 50-day average.
“if you got underneath that 50 day, you'd want to be kind of long gone with most of your positions.”
Listen at 8:52
Another follow-through day is unnecessary before buying resumes.
“we don't need another follow through day here in order to start buying again.”
Listen at 11:14
A rally remains valid above its rally low and fails when that low is undercut.
“as long as we stay above that, that's when, you know, when we undercut that, that's when the rally fails.”
Listen at 11:27
The cybersecurity group should move higher the following week.
“what would be normal and natural is for this group to then move on next week”
Listen at 15:48
The cybersecurity ETF should have found support at its 21-day average.
“it should have stopped at the 21 day.”
Listen at 16:43
Large-cap AI stocks are driving movements in major technology indexes.
“the large caps and the mega caps that have so much of the AI thing going on there that are just moving the S&P and to a greater extent the Qs and the NASA composite up and down”
Listen at 18:06
A close above the 21-day average is the first recovery signal.
“First, a close back above your 21 day. That's your first sign.”
Listen at 24:52
Three rising days with lows above the 21-day average indicate recovery.
“at least three consecutive days with your low above the 21 day and closing up on the day”
Listen at 25:06
Investors should substantially reduce exposure after an extremely severe market breakdown.
“you'd just be burying your head in the sand if you lived through that and you didn't at least reduce substantially.”
Listen at 29:49
Dollar-cost averaging into SPY often outperforms active trading.
“Many times you'll be doing a lot better doing that.”
Listen at 34:09
A pullback to the 21-day average after a breakout can offer a swing-trading entry.
“when you break out of a base and you have a decent run up, which this definitely did. And then you come back into your 21 day, especially if you have an upside reversal or an upside reversal outside day, like we had, You give it a shot.”
Listen at 36:02
Snowflake’s chart is substantially stronger than CRM and ServiceNow.
“the snow looks a thousand times better than than these.”
Listen at 39:09
Palantir appears capable of reaching a $300–$400 share price.
“this to me looks like a $300 or $400 stock.”
Listen at 41:27
Palantir is positioned for a substantial upward move.
“right now, this looks set up to have a big move higher.”
Listen at 41:36
Toast should rise to $40 soon if its move is normal.
“from here, it should move higher and should be at $40 in a short period of time if it's normal and natural”
Listen at 45:24
Traders should exit Toast if it closes below recent lows.
“if we close underneath today's low or certainly yesterday's low, then you've got to back away from it.”
Listen at 45:32
Capital rotation into cryptocurrency-related assets is favorable.
“I think it's good to see this money rotating into this space”
Listen at 48:00
Freeport-McMoRan has a constructive breakout and should move higher.
“the FCX looks solid. It was a, you know, clean breakout out of a clean base. I think that... that's good. I mean, it just looks normal, like it should move higher.”
Listen at 49:42
Gold-mining stocks are currently extended and poorly positioned.
“the entire group of the gold miners just looks extended and out of position.”
Listen at 51:14
Gold is extended and needs a cleaner entry setup.
“I'm just going to be looking for kind of a clean entry. It's just extended from anything.”
Listen at 52:42
Commodity trends can persist for extended periods.
“when you have commodities, when they trend, they can trend for a long time.”
Listen at 52:58
SPY is likely to move sideways or lower next week.
“This gives me the impression of sideways to down”
Listen at 54:23
The Nasdaq need not lead, but should not become a major market drag.
“the NASDAQ doesn't have to participate. We just don't want it to roll over and be a huge drag”
Listen at 1:09:00
SPY needs three rising days with lows above its 21-day average to confirm recovery.
“we want to get that low above the 21 day for three consecutive days and close up. And then that'll tell us that we're more to being out of the woods.”
Listen at 1:09:19
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
Books & mentions
Some links are affiliate links — PodLume may earn a commission if you buy.
Weekly email
State of the Pod, every Monday
The week's most-discussed names and stories from podcasts, with the moments behind them. Free, five minutes, unsubscribe in one click.