Brian Shannon on Trader TV Live

Key Concepts

• 5-Day Moving Average (MA): Used as a primary intermediate-term trend indicator; the speaker avoids buying while the price is below a declining 5-day MA.
• Anchored VWAP (Volume Weighted Average Price): A technical tool used to identify support or resistance levels based on specific historical events (e.g., IPOs, ceasefires, or market lows).
• "Guilty until proven innocent": A philosophy applied to stocks in a downtrend, meaning they are avoided until they demonstrate a clear reversal of trend.
• Double Top Pattern: A bearish reversal pattern where a stock hits a high, pulls back, rallies to a similar high, and then breaks below the intervening support level.
• Cup and Handle: A bullish continuation pattern characterized by a "U" shaped price action followed by a smaller consolidation (the handle).
• Inverted Head and Shoulders: A bullish reversal pattern indicating a potential shift from a downtrend to an uptrend.

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Market Analysis and Methodology

Brian Shannon, a CMT (Chartered Market Technician), emphasizes a disciplined, trend-following approach. He argues against "bottom fishing" or gambling on earnings, preferring to buy strength after a trend has been established.

• Market Outlook: The current market is described as "grayer," with the SPY (S&P 500 ETF) trading below a declining 5-day MA. Shannon notes that while the Nasdaq is weak, the Russell 2000 and biotech sectors show resilience with intact higher lows.
• The "Double Top" Framework: For the Nasdaq (QQQ), Shannon outlines a potential bearish scenario: if the index undercuts recent lows, bounces, and then fails to break higher, it could form a double top. This would project a move down to the 635–640 level, which aligns with the 200-day MA and year-to-date anchored VWAP.
• Earnings Strategy: Regarding Micron (MU), Shannon advises against playing the "coin flip" of earnings. He prefers to see the stock sell off into a key support level (around 950–960) before earnings, which would create a healthier setup for a post-earnings rally.

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Sector and Stock Specifics

1. Tech and Software

• Palantir (PLTR): Viewed as a "broken stock" in a clear downtrend. Shannon suggests it needs to reclaim the 130 level to even be considered neutral.
• OKTA: Shows promise due to a recent "shakeout" and recovery. It is currently riding its 20-day MA, which is above the 50 and 200-day MAs.
• BAND: Identified as a potential setup due to a pullback to the April-low anchored VWAP and the 50-day MA.

2. Biotech and Defensive

• ILMN (Illumina): Highlighted for its weekly "inverted head and shoulders" pattern. Shannon notes it is currently in a tight consolidation and could target the 190 resistance level.
• Colgate-Palmolive (CL): A defensive play showing a "cup and handle" formation. Shannon expects a breakout above the 92.50–93 level.

3. Financials

• XLF (Financial Sector): Currently consolidating below resistance. Shannon suggests waiting for the 5-day MA to flatten before entering.
• KRE (Regional Banks): Acting stronger than the broader XLF, though currently "stretched," suggesting a need for a pullback before buying.

4. Cryptocurrency

• Bitcoin/Ethereum: Shannon characterizes these as "dead money." He notes that he exited his positions during the recent decline, citing lower highs and lower lows as evidence that the primary trend remains downward.

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Notable Quotes

• "I don't like to gamble. I don't like to buy the dip. To me, that's foolish. I want to buy the strength after." — Brian Shannon
• "It's so much easier to buy dips on uptrends and find key levels to do so than to try to pick bottoms." — Brian Shannon
• "When we have all these longer-term moving averages heading lower, it's still guilty till proven innocent." — Brian Shannon (referring to stocks like Lululemon and Nike).

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Synthesis and Conclusion

The core takeaway from the discussion is the importance of opportunity cost and risk management. Shannon advocates for ignoring "shiny objects" or stocks in perpetual downtrends (like Lululemon or Nike) in favor of assets showing structural strength. His methodology relies on waiting for technical confirmation—such as moving averages flattening or price reclaiming key anchored VWAP levels—rather than attempting to predict market bottoms. The current market environment is viewed as a time for patience, with a focus on defensive sectors and specific setups that demonstrate relative strength against the broader market's weakness.