Swing Trading (days to weeks) | Ken Rose MBA, CMT | 11-3-20 | Trading Bull Flags & Timing Exits
Hello investors, and welcome to our session here on swing, trading, just going to turn on some lights here there we go. My name is ken ross, great to be here today on another. Exciting, day here in the market, so it looks like i was looking at the horses coming out of the gates here first thing looks like we have some nice gaps to the upside. We'll take a look at those and see how that, blends in with regards to our strategy here today so let's go ahead and get. Underway. So again welcome everybody here to swing trading, days to weeks. Just a little reminder you can follow me on twitter my twitter handle is at, krosc. Underscore. Tda. Hope to see you over there on twitter effect we'll take a look at some stocks i posted on twitter yesterday, see that they may be, potential, candidates, want to thank cameron may over in the chat window. Cameron's very knowledgeable in this area as well as other areas of investing, i'd encourage you to follow cameron on twitter as well that's at cma, why underscore, tda i'm sure can't be more happy to send over, his twitter handle over there in the chat window and way of disclosures. Here today. Just a reminder, that in order to demonstrate the functionality of the platform, we do need to use actual symbols however td ameritrade does not make recommendations. Or determine the suitability, of any security or strategy for individual traders, any investment decision you make in your self-directed, account is solely responsibility, we also use the paper money application. Here, this application, is for educational, purposes, only and any level successful, we may have in that paper trading account. Isn't necessarily indicative of the success you'll have in your actual life trading account, as market conditions, do change continuously. Been here for about, 15, 16, years, i love working in this area of trading this area love teaching, in this area. I specialize, in blending both fundamental, analysis with technical, analysis. I'm a contributor on the td ameritrade network i'm a chartered marketing technician i work with think scripting building indicators, triggers, and strategies, and the like. So. Our process here today then we'll basically follow the same. Agenda. Process, that we did last week and that is we'll do an overview of the market see what's going on, one thing that isn't here is we'll take a look at a position that we put on last week i was checking out a couple days ago it wasn't doing super good but, we'll do a little bit of an update see how that's doing, then we'll review.
Some, Quickly review some of the swing trading metrics some of the key things to look for. We will scan for potential, entries and we'll look to do a paper trade, one other item that isn't down here folks at the very end i just want to point you to. A special, webcast, that's coming up following, our webcast. It's a it's it is about building, and managing, and investing alike i'll show you where you can register for that as well. But let's go ahead and get underway here and to do that i'm going to bring up the thinkorswim. Platform, here. Okay i think or swimming i just want to take a look at the s p 500, and something that sort of jumps out to you, is a nice little gap here that we got here this morning. That's where we opened here today, and that's where we closed yesterday, so that's referred to as a nice gap. Looks like we're gapping, and we're continuing, to run to the upside so that would be, considered, bullish. From a swing trader's, perspective, what does this mean. Well it means that we're probably going to see a fair number of potential, bull flags if you look here. The market's pulled down here then it's starting to bounce. Is that what we're usually talking about when we're talking about, bull flag trading i believe last week we did a breakout perhaps today we'll focus a little bit more, on some potential, bull flags, the one challenge you have with the s p 500, here though. Is that it kind of came down like this. Went sideways, and rather than bounce up, continued, to go down. So from a technician's. Standpoint, because we broke through that support level before getting a bounce, from a technician's, standpoint, they're theoretically. Actually could be coming off of a lower low. Okay. After establishing, this sideways movement this is a short-term, chart but that's usually we're looking at here, is, short-term, trades at least at least that at least, at least for this week okay, i think something something you'd be looking for then, would be potential. Uh bull flag trades were having underlying security, that's doing. Something more like that and we're looking to catch. A bounce. Following one of these pullbacks. When you're looking at bull flags a couple things to look at one thing to keep in mind is that not all bull flags are created equal. As the pole is developing, this would be considered the pole, okay. Then it's not unusual. To see. Volume. Moving to the upside, pushing that price to the upside. As the flag develops. Right here. It's not unusual, to see volume. Start to collapse, and move to the downside. Then as you're getting your bounce right here. It's not unusual, to see volume. Move to the upside. Now you don't have to have a real, clear. Clean, example, of volume right here, we just want to keep this in mind that if we do have, increasing, volume with the pole decreasing, volume, with the flag, and then increasing, volume with the bounce right here.
From A statistical, standpoint, that tends to bode well for the trade it doesn't guarantee, a successful, trade but it does tend to bode well for the trade. What we're going to do here today and looking for potential bull flags i want to start off with some stocks. These are stocks i actually. Posted these on twitter last night. Not necessarily, all but a good selection these were stocks that, that when the market, went into the close yesterday. There were two things going on, one, volume, was high. And two, they were trading close to the highs of yesterday. So remember we were saying if we you know typically what we'd be looking for here, is we'd be looking for. Here's the poll here's the flag. The bounce of what we're saying is yesterday. These stocks were closing, close to the high. And they were closing, with above average with above average volume on there. So we'll see how they're failing how they are faring today, a lot of times when when stocks have this kind of strength. They will fade the following, day because of all the energy they took. Let's sort these by percentage, change just to bring the ones up that are coming out of the gate strong. Looks like we have, we have a couple of industrials. Plug, lift. Tap here. Are coming out here, here's our chart right here, i want to make sure we have volume down at the bottom let's go ahead and pull up plug here to begin with. There's plug, and right here you can see if you come down here, you can see there's our volume spike. From yesterday, right there, and you can see that we closed. At the top of the day, but what's going on here right now. What's going on right here right now is we have a. Doji, candlestick. Where we got the nice gap with the market but now we're wrestling with some indecision. Also notice that we have an earnings announcement, down here. That could also be potentially. Problematic. For a trade. We do have the nice move up here, you can see the increase in volume pushing that up. As we started to come down here you can see volume, fading and coming down here, yesterday, we got, the volume, spike we may come back to this one because it looks like we did have a good bull flag. Signal here with regards to volume and everything else but let's look at some of our other candidates, as well. Here. So there's lift now the problem you have with lift here is we don't technically, have an uptrend with lift do we. The stock that came down here went sideways. Broke down here. Movement up here, moved to the downside, of movement up here. Some strong some strong price movement here's our. Strong volume yesterday. Here's a strong move yesterday, here's our gap at least we're green here today. Now. If you're if you're more of a counter trend investor there's not necessarily, anything, wrong with that. Okay, for purposes of our discussion today we'll play the part of the investor that wants to trade with the trend. But you know some some investors, like to go counter to the trade in other words they're looking for stocks that have just been hammered. And moved down here to the downside then they're looking to call the bottom. If if you're looking to do something like that an indicator, you can use would be a, a sentiment, indicator, and, some of the more widely ones used is going to be is going to be stochastics. And rsi. We're looking at the stocks move down that it's it's moved down to historically. Oversold. Area right here, and you're attempting to call the bottom and say okay historically, it just, hasn't moved this indicator, any lower than this, so we're going to go ahead and attempt to call the bottom here. Now the advantage to that if you're successful in calling the bottom you've got to you've got some nice price movement to move up here, as this stock starts to reinvent, itself and try to create some some type of an uptrend. I did want to point that out this isn't necessarily. A. Poor trade situation. Because of the downtrend. If you wanted to play it as something that is so oversold. But you'd want to bring up an oversold, indicator, down here if we have time we'll go ahead and do that before sessions. Well let's let's go ahead and just bring one up let's go ahead and just do this i'm going to come here to studies i'm going to come down here to edit studies. And let's pull up stochastics. You know there's there's several. Of these that you can use. You can set them in different time periods you may want to. You know we're right right now we're talking about technical analysis, you may want to check out our, getting started, with technical, analysis.
Um Session. And we will take a look at i believe that's on mondays. In fact i believe cameron teaches that. But this is a technical, analysis, indicator, right here. Let's just make it a little bit bigger here so we can see things. I'm just going to focus here on, full k and again. You know if you you might want to check that technical, analysis, session where we go and where we go into some of these indicators, a little bit more detail, but. There we are right there so you can see that, we were pulled down into this area right here what you could do is you could do kind of look at it historically. When we pull down here, and we had enough of a move to the upside, to, justify, a bullish trade. We could go back over over time and assess that. And how far down here do we need to get. Okay, i mentioned that other session let's come over here for just a second. Speaking, of sessions, i'm going to come over here i'm going to come in here to our webcast, calendar, right here. By the way some of you may be asking okay how did you how did you get over here ken that would be a legitimate, question. Well either from the thinkorswim. Platform, or from the td ameritrade, sometimes referred to the gerd site, just come up over here to education. And then come down over here and click on webcast. When you do that you'll get this window that comes up, and i've come up here to webcast, calendar because i just want to check. On monday. Here we have it right here on monday 11 a.m eastern time getting started with technical analysis, and we talked a little bit about. Stochastics. Camera does a lot not only with regards to some of the indicators, from price patterns like so i encourage you to attend that, also i just want to point as long as we're over here let's point to something else. This is tuesday, right here. This is our session right here. Okay. And notice following our session we have this session right here, whole portfolio, management, building blocks for professionally, managed portfolio. What's nice about this is there's a little bit of a new. Angle to it we have one of our coaches here michael keeley, plus we have folks from fr from from tda. That, that, that are a little bit more geared towards, towards professionally, managing, things. This is nice if you kind of want to get an idea of what would be that good mix between. What i want to do self-directed. And what i want to do where, someone else is managing, it for me so just keep that in mind that's immediately. Following our session here today. Okay. Well, let's come back over here though and look at the, session, at hand that we have right here. Now. We've got lift here let's take a look at a few more of these we'll come over here and take a look at tab. Tap is, yeah you can see the actually taps had three straight, volume, spikes. It's too early today to know if we're going to get a volume spike but i think we can say. We can safely say that it's off off and running at this point you know it could fade i don't know. We did have a breakout, here. At this point right here. And it does look to be continuing, to run we could look at that as a possibility, just coming up against some other, portals, let's see let's look a little bit more for bull flags, here. Go through some of these so here's a, move to the upside to pull back on a bounce there's a strong volume yesterday it looks like it's continuing, to run plus it's breaking above that resistance, level. This is gds. Nice little pop there would be interesting to see what the target is there's our resistance. Go through a few more of these. Again a pullback, and a bounce, again some of these, volume spike yesterday, continuing, to run here today. Cvs. This this one is not in an uptrend, right, so we may be trying to call the ball here we are down in this oversold, area right here do we want to try to call the bottom well, depends on how aggressive we want to be looks like we have an earnings announcement coming up, here's. Myl. There's archer daniel middle it's a nice gap but we have this little spinning top here that's red. Here's a nice, nice move notice that we're, we're getting volume spikes over the volume spikes are decreasing, and we got a gap up here today and we're starting to fade just a little bit there on tt.
Li. A little bit of a fade a little bit of a recovery. Have a couple of energy stocks, here. And it looks like that is it for these stocks those are some interesting ones we came up with. A couple here that may. Um warrant some additional, consideration. This one right here i'm going to go ahead and jot down plug here it looks like that sort of reversed, itself. Let's do this let's go ahead and, look at that we have an earnings announcement, here right. This would be a shorter term trade, when is that earnings announcement, well let's. Come over here. And click right here this should tell us, so the earnings announcement, is 11, 9. And that is going to be before the markets, would want to be out of this trade. At the close on 11, aid so how would we structure a trade like this then. Well. Notice that. There's our pull. There's our flag, there's our bounds. If we wanted to do this trade we could do this. We could go ahead and, where would we want to set our stop loss well we're going to be in this trade over, because this earnings announcement is going to be a fairly short term trade right. I'm going to rather than come down here for our stop-loss, i'm going to identify, this little resistance, level right here. Can you see that you can see we kind of have some sideways, movement here then we then we popped up here to the upside. And, let's just see where we're at here if i can do this. Should be able to oops. Sometimes, in this environment, it's a little hard to. I'm just going to write it down 15, 35. Folks that's 15. And 35, cents. And what is our atr, our atr, value, is a dollar. Ten. Let's play the part of the investor that's interested, on this particular trade of investing, say two thousand, dollars, so come over here to the. To our calculator, here, it looks like we'd be coming in at about 1680. So if we've got two thousand dollars, then. We're coming in here at 16. 80, approximately. Look we're going to be doing 119, shares i'm just going to round that down to 100, shares. You know you know this is a relatively, low price stock i don't know that it has options available, to it if it did though we may want to do some covered calls or something i don't know we'd get a lot but, let's just go ahead and round that down to 100, shares. The next thing we want to see is where are we going to set our stop loss well our average true range is a dollar 10. we'll play the part of the investor that wants to set a stop loss, about 80 percent of the atr, below our theoretical, support level. You take a dollar ten here times that by point eight. And probably just between this 88, cents and our support level, 1535. So we'll take here 15. And 35. Cents. It looks like our stop's gonna come in here then, at. Fourteen. 47.. So what's our risk per share and if we're going to do 100 shares what are we looking at well if we enter in oh it looks like that thing's climbing, isn't it. Yeah let's go ahead and go with let's say we get filled at 17. Okay. 1447. Plus. 17. Risking, about 2.53. Cents a share 100 shares that's about 253. Dollars, this is a theoretical. Situation. We know that our style pleasant isn't guaranteed, to isn't guarantee hit we also know that we want to get out of this trade. Before that earnings announcement. On 11 nights we want to get out of this trade on 11 8. this is a fairly. Short term days to week we're talking about days here right. So how would we structure this then, i'm going to right click on the chart i'm going to choose by custom. With, stop, in fact i'm going to use with oco, bracket, right here. Okay. So here's our entry. And i'm going to take that little guy off there, there's our entry. Um. We're going to want to set a stop in here. And so this is going to be we'll leave that as just, a. A limit order. Put that as a limit. And. What have we got here folks, i'm really not i just want to have two exits here and i've got this thing that's kind of a little bit, goofy. I don't want a stop limit, but if i change that to market there we go, and there's okay here's our stop right here so, i'm going to change this back to a limit we'll see how to structure this, so here's our stop order i'm going to make these two good till, cancel. Okay two cancel, here. And. Good till cancel here.
Here's Our stop. Price right here and that's going to come in at. 15. And, 35. Cents. And this is going to be a limit order. But what do we want that set that limit order at well, this is where it's going to get a little tricky. I'm going to click on our gear on our limit order right here click on the. Gear. And, i'm going to submit our limit order, on the day and the time that we want to get out we want to get out of this thing on 11 8 right. There's 7. 8. Really, 11 8 before the market. Actually looks like it looks like we're gonna have to get out on the sixth. Because it comes out before the market on the night so so we want to get out here on friday here. Because these are there's you know this saturday, sunday we can't get out on those days so i'm gonna come over here and click on friday, the market closes, mountain time at 300. Hours. So i'm going to put this at 12. 55. Okay. So about five minutes before the market, closes, on the day that we want to get out i'm going to have this limit order. Okay. Limit order, and, i want to have that limit set to something, give me a choice here folks. There's the limit, link to, and i want to have that link to, we're going to be selling. So the link to the bid price. Okay. Plus. I don't want to take a dollar i don't want to put a buck there. I'm going to say the limit price. Which is the, bid price. Minus. Let's go with point. Two five. So in essence, this is an order that's going to go in, to get us out of the trade. Before the earnings announcements, we're not dealing with the earnings announcement. It's going to go in just before the market closes on friday and it's going to come in at the bid price which is actually the market. We're even willing to take 25, cents less than that, but we should be filled at the bid price. Let's see how this is going to work out here though, sometimes you get the layers here so that's set there, there's our stop look it looks like we're it looks like we're in good shape with this, now orders of this complexity, it's always a good idea. To paper tray something like this before you actually live trade it. Okay. So there's our limit to get out for the earnings announcement, here's our stop loss, in the event. We come down here and we trigger stop loss. Um. So. On this we were it looks like theoretically, we'll either get out a loss if a stock takes us out, or possibly, some level of profitability. However this thing could fade down and not trigger our stops we could still have, a losing trade unless we get a bouncer that's probably one of those trades that we might want to follow up on, on a daily basis. Well let's go ahead and hit confirm and send here. And we'll send that into days to weeks we'll go ahead and put that in there. It looks like it was filled so we're in our position, so there's others to order those other two orders are going to be in there to take us out in the event we drop down here, and or take us out before this earnings announcement. Well. One of the things we want to do is we want to look to see our previous trade this is one i was looking at yesterday it was not doing too good, looks like we're getting a little bit of recovery here today though.
You Know right now on the trade we put in last week we're down 493. Dollars we are making up a little bit of that here today. At 129. Right there. Okay. Oh. Got that set up and then here's our one right here now, when you put when you first put these orders in you're usually always going to show a loss just because there's a difference. Between the bid and the ask price this comes out and gives you the mid price. Let's see how little let's see how our little mktx. Is doing though on the chart. That's the. Mktx. Let's see was that the one. Let's do this i'm going to do right click and choose more info. On the chart. I think we're doing a little bit earlier, doing better this morning when it was bounced up so this thing's coming down here this is, this is our support levels we have a stop-loss, somewhere down here, it broke above resistance, it looks like maybe right here since then it's just been fading. So look to see if we get a bounce nice thing is we're beyond the earnings announcement here we'll see what happens. Going forward here we'll continue to follow up on this one, as well as the new one that we put in here today, as we're going forward in future sessions. All right folks well, um, we're looking at those. If i come up here then. Let's just see maybe we can pick out one more bull flag trade here. Out of the s p 500. I got some customers, by the way you'll see some of these custom columns. I don't really have time to, to send them out here today, i see a lot of familiar, faces here i want to thank. You know it's good to see mike here and, and brochure. And. Everybody, else ricardo. And. And marcus. And. And gary and john. And. Everybody, else yoko, and man high and everybody else so, a lot of you already have these custom columns but. Um. If you don't and you're interested in having them just just go ahead and contact me over there on twitter and i can send them out to you along with the video please be a little bit specific though like hey ken i was in the, swing trading class today and i saw this i saw your column some stuff for you you can use if you could send those out to me it would it would be appreciated. This one right here by the way is called falling knives. And this one is meant to find stocks that have pulled back but haven't bounced just yet, this one right here, is our flag, let's see if we got some we should have some bull flags in here, given what the market's been doing so here's some potential, bull flags out of the s p 500. Let's see what they look like. Come here we got ex, exr. I'm not seeing much of a bounce there. Looks like this thing just shifted, on me, cts8. So there we have, a pullback here in a potential, bounce, on ctsh.
Pnw. A pullback here, so it looks like we're trading, above where we're at right here that's why it registers, as a flag, but we have a red candle stick when mike thinks to be moving up typically. On a bull flag trade. Again, we're trading higher than where we close we had it we did have a bounce when the market broke up this morning but now it's faded so it looks like, we are seeing some fading in the market here. Pull down here a little bit of a bounce there. Ford motor company. Pull back here a little bit of a bounce not not too visually, impressive, though right. This one is a little bit more visually impressive, here's a poll. Right here here's a flag we're bouncing here we do have an earnings announcement, coming up here. That's just, in a day or two so that's that's pretty tight with regards to earnings announcement. And here's our, mktx. Again we did get a little bit of a bounce there. Come over here and shift gears here just a little bit maybe look at a couple of falling knives. Google, falling knife. How we doing on time you know what, so we so we looked at some so these this is just looking at looking at some charting examples, you can look at so i'd like to encourage all of you, you know uh, you you don't need custom columns to do this you can just pull up some stocks. Look for those formations. It looks like the market has started to fade here a little bit so some of those bull flags were looking at a little bit earlier. It looks like they're faded but the mark, the market continues, to go strong here so perhaps we need to, revive our list and maybe just come up here. On the s p 500, and sort by the highest percentage, movers. And come down here and look at some of these ones it looks like here's a movement of bounce so this you know right now i'm not. This just kind of shows you but but but this is, this isn't a downtrend that would be maybe more for a, free, free, for a concert, trader someone that's looked okay with trading against the trend but, you can see that we do have a fair number of bounces, here you just want to. Highlight, those and some of some of these are in downtrends, but you could attempt to call the bottom okay let's go ahead and wrap things up here then folks all right, so what did we do here today, well. We um. We did an overview of the overall market, right we looked at the s p 500, we reviewed we again we discussed some of the swing trading metrics with the markets doing. We were looking primarily, for bull flag types of situations, because that's what that's what the s p 500, was doing, we looked at some watch list and we scanned for some entries and we went ahead and did a paper trade, we also reviewed. From what we did last time, also. Also we encouraged, you to following our session here today. To come in here to the, upcoming, to in order to come to this webcast, whole portfolio, management. Remember, that we we clicked on the education, tab, here. Okay. That brought us over to here. Then from here click, click on upcoming, webcast. And in upcoming webcast. It's right here building blocks for professionally, managed portfolio. Click right there and that'll give you an opportunity, to go ahead and sign up here's a register it'll send you out a link so you can sign up so i wanna we're gonna we're gonna stop here so you have plenty of time, to come in here and get set up this is this will be this, uh this this will be excellent. With regards to some additional. Resources. And insights, and inputs. On your trading. With that then everybody. And also, a little heads up you can follow me on twitter you can follow cameron on twitter thanks again to cameron. And again a reminder, that in order to demonstrate the function of the platform we do need to use actual symbols however td ameritrade, does not make recommendations. Or determine the suitability of any security or strategy for individual traders. Any investment decision you make in your self-directed, account. Is, solely. Your, responsibility.
Hey Everybody, again thanks for joining us here for our session here today hope you have a great rest of your week, um get out and vote, you know i i think it's always i think it's always healthy to say vote this is this is a unique opportunity, that we have here, as citizens, of the usa. So i think it's okay i think it's safe to encourage everyone. To get out there and exercise. Your right to vote here today also, just reminder to be careful and be safe let's get on the other side of this whole culver thing, as happy, and, healthy investors, bye everybody and hope to see you next time thanks again cameron. Bye everybody we'll see. You. You.