Technically Speaking: Trading the Trend | James Boyd | 1-28-21 | Pullbacks as Potential Opportunity?

Technically Speaking: Trading the Trend | James Boyd | 1-28-21 | Pullbacks as Potential Opportunity?

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um hello and welcome to technically speaking on trading the trend weeks to months my name is james boyd welcome everyone out here today uh we call thursday trend thursday and today's date is january 28th welcome to all we have annette terry uh what white belt investor but i'm going to call you black belt investor charles a.j lewis orlando len yoku dom tim ram jonathan peggy mark and many others and also ray just real quick uh just want to do a quick shout out to everyone it looks like you guys are ready to go and let's go ahead and take off now remember you can also follow uh myself and we also have pat malali on twitter uh you can actually there's our handle and also be aware of that and also remember that when we talk about trends here today we're going to talk about stocks and options okay this is not a fundamental class uh it's about technical analysis stocks it's about options so that's what this class entails now remember when we talk about options options are not suitable for all investors they're special risk and trading options make sure you're aware of that use paper money to find out some of the things you might not know and also remember we're going to demonstrate the function of the platform we're going to use actual symbols remember that td ameritrade does not make any recommendations determine suitability of any security or strategy it's up to the investor to decide what they want to invest in also remember that also all investing involves risk and there's actually the option greeks as well now just real quick as we're getting started the lay of the land of what we'll cover here today is we are going to look at the index is we'll look at the s p nasdaq and the dow we're going to talk about account performance just quickly and i think it'd be interesting to kind of see how it's done the last couple days with some of the volatility and then we want to also talk about stops okay and the risk was stops and what are some alternatives to those want to also talk about some individual positions uh as well in the account and then we're going to talk about new positions with trend in mind short term and longer term trend so no further ado let's let's go ahead and hop right in so first off here we got the the s p first off okay let me kind of reset that chart so when we actually take a look at the s p can anyone kind of tell me what is different about yesterday in comparison with the last two to three months what was different about yesterday that we had not seen in a while okay now i'll give you kind of a little hint to that take a look at the color candlestick right that color candlestick was actually red okay now the color of the candlestick it it means something right it means that the price got down below the 10 the blue line and it got down below the red moving average as well it got down below both now if you go back about the last since 1957 that's what it seems like but that's not true but if you go back let's say all the way to about the one november 5th that was november 4th okay before that that was the last time that the index was below the at below the 30 period moving average so yesterday's just a little reach out and touch and close below that 38 moving average it's done that one time in the last three months now who is upset well who's upset is the person that got in their whole portfolio on january 26th we don't know where they were before probably lived underneath the rock but the person that's upset got in right on january 26 and then the market went down they said see every time i gets in and goes down well the market really since about that low point in late october until now is up about 19.8 percent low to high so at least getting a touchdown to the 30 period moving average that's not unusual and we might even say that that's unusual of how long it went up without touching or closing below the 32 period moving average there were times like here and there were times like here that it did go out and really touch the 30 period moving average but the difference was it didn't includes below and that's why the color of the candle is red now i want to kind of give you a quick heads up real quick uh some of you uh have asked about the color of the candlesticks i want to give you a quick reminder that if you go to that twitter page you'll see that i did post that today so if you said james i've had kind of some questions upon why are the color of the candles different and how could someone get a shared chart or script you're going to see that i post that about 30 minutes ago and the it's really in relate it's the price in relationship to the moving averages and the color of the candle changes based off where the stock is in relationship to the moving averages so hopefully that helps now i want to go back to something just real quick let's take a look uh look at the nasdaq now if you look at the nasdaq and you just look at the difference and say did the nasdaq come down and get down below his 30 period moving average it did not okay and if you actually take a look at that the the high of the nasdaq was just four days ago slipped down below the 10 period moving average that's why i went purple and now what you're gonna see is the price is back up about two percent higher than where it was yesterday and the dow jones if you look at the dow you're going to actually see that the dow sitting here uh did also follow the pattern of the s p 500 but what you're going to notice is kind of getting a defined level of resistance now i want to answer your question if i said look there's only the s p one s p 500 nasdaq 100 and the dow which index would maybe an investor consider in maybe going bearish which index could you kind of tell me which index well maybe an investor says you know i might consider going bearish the dow maybe why well because if you take a look at the dow you can see a defined level of resistance that's actually really hard here is that when an investor wants to be bearish or take a bearish trade the biggest actually thing is the investor needs to see a defined level resistance of the three indexes that we named it's the dow that we can actually see a defined level resistance right around about uh really right around about 311. all right so let's take a quick look at really uh the the vix latch and we'll look at the account when we actually take a look at the vix you're going to see that the vix here it was actually went to what price level 36 yesterday vix actually down to 27. still what you need to recognize is here in this case is the the vix still broke out of its sideways range remember what we said yesterday when the volatility goes up that means there's a greater likelihood of stocks going down and so the investor needs to be paying attention to the stocks and what is their risk management are they setting stops are they exiting just manually are they using options of protection what are they doing okay have a plan now with the volatility actually going up this has probably laid a little uh red mark on on the portfolios well let's take a quick look this is actually looking a margin account and this is taking a look if we go to net licking day trades we can see the account balance over the last couple days and yes you will see that the portfolio is about sixteen hundred dollars lower than where it was on january 24th so it's probably about a percent and a half lower okay than where it's been so you're gonna see that as the market goes down and this portfolio is bullish it's actually chewing away etching away that account balance now does that mean the paper money account doesn't know what it's doing no it just means that it's holding bullish positions the bullish positions are going down and the account balance over time is reflecting that okay now the investor would want to see how is the account doing maybe relative to a benchmark let's say the s p 500 now if we go take a look at the let's say the ira the ira has actually been hit a little bit more it was at about 498 000 and it's about 495 okay so if you take a look at that uh you see three thousand it's not even a percent for the week so far it's probably down about three thousand i don't know it was about six tenths of a percent seven tenths of a percent not very much so luckily so far the portfolio and even if you look at let's say the portfolio from two days ago really didn't do a whole lot of damage on either account yesterday with the account with the portfolio excuse me the index dropping 600 or so points okay so it held in there pretty decent okay now what i want to do is i also want to see if there's any questions on the indexes on the sectors let's take a quick timeout see if there's any questions that i could actually answer now the question from actually uh cola says jb the djx is in that kind of summer condition ah let's go back and double check so when you go back and quickly take a look at this uh you're gonna see that so let me kind of give you this full view here and so let's kind of also really zoom out let's go all the way well yeah so the answer is initially is the answer is no to that okay so it's more in what we would call that fall condition so what you're going to notice is when the price is in between the 30 and the 10 period moving average that's what we call the fall condition now let me kind of show you kind of posted that so that's kind of where you have that orange color and so if you take a look at this what you're going to recognize is go back to the dow that's the color of the candlestick so right now we're kind of in between both of those moving averages that's what we see right now okay other questions that we have okay so if if we're saying by the way some people call it like say summer that just really means that the price is above both moving averages okay and there's not probably a prior high and or resistance but that's not what we're seeing right now not right now now if the price got above let's say both moving averages and maybe let's say did not have a high or etc and or resistance yeah you'd actually be more in that uh summertime condition but not right now cola okay yeah uh okay so i'm just bringing that back up so let me just put this back now when we take actually look at this uh and that says energy sector reversal pattern well let's bring it up so we know when we actually take a look at energy and this kind of fits nicely with uh at least two stocks that are in the paid money portfolio so let's switch now let's talk really about uh we're gonna look at the energy sector based on the nets comment but we also have a a paper money account uh from the class discussion so what i'm gonna now do is let's just bring up ixe now we know that ixe has really been falling down really below both of its well actually it was at least below its 10 period moving average and then yesterday the color of the candle went red why well go back to the quick cheat sheet the cheat sheet says why does it go red price below the 10 and the 30. that's why the color of

the candle went red so if we take a look at this now we can actually see that is the price reversing i want to open that up for everyone so is the is is energy reversing or is it maybe not quite yet at what point does someone say that energy is reversing how does someone really know well first off i think you can kind of go back and really draw a diagonal on right you kind of skim the top rights of these candles and if we were to kind of say now listen to what i just said nicking the top right of the candles okay and if you nick the top right of the candles you're really kind of getting an angle of resistance so if we weren't going to say hey is the price above or below that line well it's below so we can't say right here that it's actually a uh breaking diagonal resistance now on the bottom if someone said james could we see like a macd on this could we maybe see is the macd diverging and the answer we would say is a no it's not diverging yet and neither is the price breaking resistance so now and that actually says could maybe a cold tell us that well if we go back and actually say well okay based on today's candle what type of candle is it it is a bullish engulfing it is not a coho the key word is yet because the price would have to get above yesterday's high so the best thing about this chart is it is bullish engulfing that's a start but it's not going up to such an extent where it's getting above yesterday's time not yet and if if it did start to get above yesterday's high then it could be poking its head really above resistance so it we're kind of in those earlier innings of maybe a potential bounce but it's not reversing the key word as yet can that go hold lead to a breakout yes but we just don't see that yet okay all right okay now let's actually go back we're gonna bring up the example of a little chevron here and what i'm going to do is give you a little test okay so i want to go back to the ira account just real quick with what annette is saying the paperwork account has a position and the position is as follows okay so here's chevron and can anyone actually tell me what the strategy is here you got let's say a hot 300 shares of stock you have a short call at the 94 and a half and you got the long put at 90. okay so what are those three lines if we looked at those three lines and said what are they what are they well that's a caller right we know that the long shares shares you got in this case you've got in this uh you've got also that doesn't want to do that you got long shares and a short call that's a cover call and now what you're going to see is it also has the put added which is the right to sell that strike price notice that actually the protection it is up so that means the stock price has gone where if the protection is making money that means the stock has gone down now i'm going to give you a quiz here okay there's no curve this is you either hit it or you don't at what price or maybe area might i'm going to ask this question first should the investor look at these this protection say yes i've made money on those let's exit that protection is there a reason to exit the protection or is the stock is that protection maybe still a good idea why is the protection still a good idea what would make someone actually say the protection is probably still a good idea okay here we go so the one the one thing you're going to notice is first off the earnings is still coming probably still want some of that protection just in case that stock were to go down the paper when account has a right to sell so there's no reason to take out the put right now okay and don't fall in love with the gain on the put because that's the protection okay number two if you said geez is this stock breaking up back up through the temperature moving average no it looks just like what the end the sector does did and if we said hey is the stock breaking up through that area of resistance 94.80 no so in this case we could say hey you know what that protection is still going to stay on because the stock is recently pulling back and the protection ding ding ding ding is doing its job okay the purpose of the protection is to offset the give back of the gains in the stock okay okay good looks like we're on the same page yeah so this is not taking the protection off okay no now what i'm gonna also do in this case is and and you're gonna realize how long does this protection go for it's actually good till about uh 22 days from now that's what it has okay now i'm gonna go to a different one so we talk about energy okay don't see a bounce yet we take a look at that actually chevron position we don't see a reverse yet has earnings tomorrow hasn't broken resistance hasn't broken the diagonal hasn't broken the horizontal so there's kind of uh a reason to keep the protection on still okay now if you take a look at let's say that the second stock we're going to bring up here let's switch sectors is a little horse little filler named actually microsoft now microsoft came out with those earnings about the day before and you know steve ballmer and bill gates you know if you saw my twitter post you kind of know that they might be kind of thrilled that sacha nadelli took over because boy he's done quite the job there he really has oh wow and if you take a look at this we see that the price is doing to the upside now it's going almost straight up from 212 to 242. now notice how the stock rallied prior to the earnings and it's rallied up quite aggressively now we know with when a stock goes straight up like that it's not normal that it just keeps on going now put it yes okay the stock went straight up like a rocket ship and maybe after maybe something like this maybe could the stock exhale maybe could have pulled back a little bit now when you look at the three year weekly chart this is what it looks like okay and we kind of talked about this being a symmetrical triangle even had a bullish macd where it was starting to get up and you're going to notice that macd was actually the highest level that she had been since about august now the paper money account in this case has a position now the position is as follows it's a hundred shares of stock now what type of strategy would you say hey just let the stock continue to potentially go or might the investor consider a covered call now the reason why this is actually brought up is if the dow is not able to maybe break up through resistance and maybe the dow falls down okay microsoft is in the dow so if someone sells dow they're selling the stocks in the basket of the dow okay now i'm just gonna show an example uh in this case of a covered call so it has the shares already this has helped the portfolio somewhat about 1577. now what you're going to notice is we're going to go to the trade page okay and we're going to go to trade page and we're going to bring up an example here and so the idea behind doing a cover call is a lot of times people fall in love no right they fall in love with their stocks don't they they almost like them like a little puppy okay but you gotta remember these stocks are tied to the basket of the index if the index is sold off the tide goes out and the boats that are in the harbor the stocks the tides the market the boat is the individual stocks okay that also drop and get pulled out with the index so the investor might be saying is here is there some maybe risk and the dow that it might kind of pull some of these stronger stocks in there and i think that's a risk okay now if the investor said you know what james this 15 is just too short maybe the investor says 22 days that might be the shortest but i kind of want to walk through a little process and let's say the investor said james i'm okay with selling a covered call for a short period of time but i don't want to sell a cover call that much farther because there's greater risk of the stock to close above that strike the longer there is till expiration you with me on that now let's kind of look at an example just real quick okay and i think it always kind of helps to really see really in this case a picture and what i'm going to do in this case is i'm going to bring up a little example here if you don't mind let's kind of take our little sheet of paper here okay so first thing what we want to look at is what was microsoft purchased for okay so what was the entry price and we want to kind of look and see well wonder if the stock goes up wonder if it goes sideways wonder if it goes down let's take a look so we know that that stock on microsoft had a trade price of 225.76

all right so i'm gonna go ahead and type in 225.76 okay now actually 225.76 the current stock price right now excuse me is actually at where uh that's the mark value and it's at 241.77

okay now the investor gets to pick which call why would an investor sell shorter they would sell shorter if they don't want to give it a lot of time okay so let's say the investor decides to do the the february option okay maybe they're thinking that stock went straight up and it might pull back and consolidate a little bit might not get above that strike go back to the trade page which strike isn't and that strike that we're actually looking at here and that beach ball is kill me but if we actually take a look at this the strike that we could actually look at is which one which strike could we actually look at which strike tell me which strike you're actually seeing on your side well we can actually take a look at this and say the strike that we that the investor might really pick is a strike above the current price level maybe where the the investor doesn't think the stock could actually go to now i'm actually showing this on purpose because i think sometimes a lot of investors they get greedy and they don't they're not really looking at the numbers of what is really going on and the odds so in this case let's say the investor we're going to sell let's say the 250 strike for the february expiration okay and what we want to do is let's kind of say in this case and let's pull them back up here but if we were to actually look at this and say okay the 250 strike price that strike price in this case let's go back to the trade page microsoft 250 that's going to give us a delta of let's say 33. that is saying a 33 chance to close above that strike by a penny so if the investor were to say you know what i'm going to sell that 250 okay 250 and what is that premium well the premium in this case is if we just took the bid price it's 345. okay so 345. if we actually said well

what is that premium now remember the premium that's just taking the option price and dividing it back into what the investor bought the stock for and so in the next 22 days that's 1.5 percent okay that's what you that's what it is now let's kind of look at the three scenarios wonder if the stock goes up what if it goes sideways wonder if it goes down well if the stock actually goes up the upside strike we said was 250 the stock appreciation okay from where it is now could go up another eight dollars and 23 cents from where it is right now that's eight dollars more but you gotta remember it's also the option premium that three dollars and 45 cents so grand total in the next let's say 22 days if that stock were to close up above that 250 the cap is 11.68 that's about another 5.2 percent above and beyond where it is right now okay now wonder if that stock were to go flat though okay let's say that stock just stays where it is 241.

the only thing the investor gets is the premium 345 it theoretically lowers the price of the stock not really though because the stock is going to show still what it bought it for but at the end if you kind of think about theoretically the option price reducing the stock price 238 that's that one and a half percent option yield but the stock would need to be above 238 if it is lower than 238 it's getting down below we call the break even at expiration okay now how does the now how many of you would actually consider now sam is actually saying maybe sell and consider the 260 okay so going up higher okay how does the investor in this case maybe sell that 250 well what they could actually do is all they have to do is just click right on they could click simply on the bid of the 250. if they click on the 250 okay how many sell how many shares are they going to be selling how many shares well if they had 100 shares they're only going to be selling one right so they sell one and so the investors in this case just gonna sell the 250 strike okay now if we click on the 250 strike it's going from a stop position to a cover call why is the paper money account only selling 22 days because the trend is still strong it's just kind of forecasting that maybe that stock might consolidate a little bit if the stock were to go up and let's say get up above let's say that 250 strike you gotta remember there's still eleven dollars potentially more okay we showed that now if we bring this up how does the investor sell that call they simply can just click on the the uh call gonna go put that back to the ira there it is and let's kind of just verify yep there's the hundred shares right there selling a call at the 250 there's actually the 340 mid price okay and if the investor's okay we're saying yeah i'll sell you those shares at 250 okay just bring money along the way and you now you're going to see us confirm and send and the one thing we need to actually change now is if we don't cancel the stop in and adapt it to the covered call strategy it's going to say illegal so i'm going to change this cancel that order and now what the paper money account is really going to do is send that back and now it's not going to say legal but once we have the cover call on we could then go back and re-establish that stop okay now in this case if that's okay the investor could get a credit of three dollars and 40 cents less the commission 65 cents and if that's okay send the order okay and that one actually fills now let's and there it is right there 100 shares of stock check and there's the short call okay now any questions on that okay any questions on that just want to go back and kind of see if i missed any questions okay okay yeah so believe it or not uh i don't so we we've kind of been used using this excel as a sheet of paper right and so we could kind of take a new sheet of paper just i historically i've been writing it on the screen but i thought just for a time standpoint it'd be nice to kind of i don't have anything to share we're just kind of using this as just kind of typed it in the current stock price and it just kind of speeds up the example wonder if it goes up wonder if it goes flat wonder if it goes down things like that okay so and please don't think this is like an unbelievable spreadsheet because it's really not it's just very very basic okay all right so now which of the dow stocks are we talked about actually microsoft we know that johnson and johnson has also been quite strong okay and that's actually a stock is actually hitting a brand new high not only on a daily but a weekly as well but also when we take for example we look at something in this case like uh the apple stock apple stock after actually doing its earnings yesterday is really not in a bad situation it actually announced its earnings yesterday the stock is down about 236 and i want to ask you a question is this a potential opportunity to maybe try to enter a bullish position yes no well so if you take a look at this if you kind of go back and kind of say is this maybe stopping kind of near like an area of support right like here maybe like an area about right there so these might be areas of support 137 131 126 okay now you're gonna now see if we take a look at this the stock's only down two points now let's say the investor decided you know what i want to consider doing a bullish position but let's say the investor decided they did not want to do a stock position they wanted to kind of have different ways to try to benefit three ways number one is direction number two is time decay and number three in that case really is volatility contraction okay and we know that when these stocks actually have earnings the volatility declines and if the volatility declines it actually contracts or shrinks the option price now in this case let's go back to the trade page and let's look at an example and let's just kind of run through uh now let's kind of also take this standpoint wonder if the investor did not feel comfortable in selling farther out okay let's look at this example we're going to switch to a stock example let's say the investor said james i'm okay with maybe buying the stock at 133 134 well the lower you go the lower the probability of the stock to close below that strike now let's just quickly run the numbers let's get an idea of that reward to risk we know that when someone shorts the put they have an obligation to buy so let's just kind of run those numbers just real quick now when we actually take a look at this these would be very basic things of what the investor is asking hey like what's the stock price we'll we'll show you why that matters in just a sec if we said okay what is the option premium well if they were going to sell let's say the 134 that has an option premium of let's say 315 that premium yield 2.25 what's the strike 134 why does that matter well because we need to get to find out what's the break even okay and it's break even at expiration okay so the paper one account has an obligation to buy the stock at 134 less the premium and so that's really at 130.85 now what this is really showing is how much could the stock price dropped so the stock is here 139.75 and then all the way down to breakeven now when i say all the way trust me all the way down when the market goes down a thousand points it can go down that much in a day okay so don't don't take that out of context but there's eight dollars and ninety cents that's really saying how much it can drop from where the stock is now because remember what we said before is if someone's buying at a discount the question will be well how much of a discount well it's 8.90 from where it is now on a percentage basis how much is that well it's about 6.4 percent from where that stock is

right now that's really that's that's looking at the break even at when at expiration now if the paper money a kit again said you know what remember we kind of talked about this from day one right we said for the margin account it would really be a position about eleven thousand to fifteen thousand dollars on the ira account we talked about what proper position size and we talked about a position about 25 to 30 000. so in the paid point account the margin account it would just be one contract in the ira it would be two contracts so you're just following through what we talked about before and now what you're going to see in this case is the paper money actually clicks on that 310 it's going to actually go to where it says 315 single cell minus 1 315 limit okay now what you're going to notice in this case is if we go to confirm and send the reason why we're going here is we want to really go to where it says single account and now what you're going to see is it's going to go to let's say where it says multiple accounts okay now what you're going to see is if we take a look at this we're going to change that margin to 1 negative 1 selling one or short and then on the ira negative 2. now when we talk about position sizing this is the same we actually when we talk about the position size initially it was the exact same thing that was on the technical analysis virtual workshop okay so this is nothing new or different than what you would see in the online course we're just kind of practicing applying it in a paper money format one contract actually on the margin two contracts on the ira understand there's the net credit that's for the three contracts total that dollar 95 that is actually for the three contracts as well so remember this obligation to buy the stock at the strike price always remember this is from now now till expiration if someone did put these shares to this account it still means the investor would get all of the 315 even though it's not at expiration okay send the order and there we go now let's kind of go back to let's say uh just real quick some other stocks but i'm going to switch the discussion now let's kind of talk about uh stock in the nasdaq one of the stocks in the nasdaq was actually tom cast now if you take a look at a stock maybe like comcast it does kind of have okay and it's not normally one we talked about it kind of had a strong upside move kind of like lows that were making lower low and then now what you're going to notice is you're going to see that there's kind of more like a flag the flag is where that stock kind of zigzags more sideways or it could actually kind of droop down a little bit and zigzag nevertheless it's zigzagging between a support and resistance that could be horizontal or diagonal doesn't matter but if we take a look at this the stock is really trying to break up through the top of that now let's kind of go back and verify when are these earnings well the earnings on this one they already did it actual 56 cents 48 cents was the estimate and if we go back and say take a look at the three year weekly chart here's what it looks like okay so we see a candle let's go back to the next comment right a next comment was really looking at the lowest most recent red candle that is on the 11th if the stock were to hold close above the high of the low day could that lead to a breakout yes okay now that doesn't predict or guarantee that the stock is guaranteed to go up after that no it's just saying at that moment in time that's what's happening well if the investor said you know what james i want to buy some shares of stock and i want to kind of show you an example of this where and a lot of investors think this that geez i'm going to buy the shares of stock and every time i get in i'm going to do a full position that's a bunch of garbage they don't have to if they said you know james it's up near resistance and i'm not gonna buy it now okay well why would the candle be so large that the institutions knew where that where the resistance was they already know that's where the resistance is they already know that why would they be buying into the resistance because they might be thinking that that might not be resistance anymore no no okay i mean really by millions of dollars of stock thinking that's resistance you just buy at the top maybe they don't think it's going to be resistance anymore but let's go back to the position sizing okay and remember as an investor you might scale in scalia just means i'm going to buy some here and if that stock were to potentially break out and or break out and bounce maybe they add that other half of the position now let's say in this case the portfolio is sitting at about 151 000 or so okay we identified before that the portfolio was willing to risk a half of one percent okay now notice you never get to a point where you outgrow this i've been investing for 20 years it doesn't matter you always go back to the basics okay what's the entry price well if the investor bought the stock now it's 52 23 or so where's the potential level of support these will be questions that the investors should be asking to themselves well a support area might be kind of this prior love about 48 43. so if the investor said you know i'm gonna set a stop let's say two to three percent below that it's really going to be about 46.98 now remember if it's gonna buy the

full amount it's going to buy 144 shares in the margin account but if the investor said james you know what i want to do i just want to buy in potentially increments of 100. so let's say the portfolio buys 50 shares now and then tries to add another 50 if that stock were to break out now what about the bigger dollar cam it's funny you should ask so if we were going to look at the 50 that bigger dollar account and you take a look at this and say well how many shares about 121 okay so if we actually take no it actually let's double check let's go back take a quick peek just want to kind of put those we're just putting those numbers in okay how many now okay this looks better okay there it goes so now we can actually see on the bigger dollar account total it's really going to be about 316 shares so let's say the pink money accounts decides to get in half now and then a potential other half if the stock were to break out and or if the stock we're going to break out and maybe even try to bounce how does the paper money account do it let's go in and actually look at this we're going to right click that sheet right on the chart we're going to drop down to where it says buy custom we're going to go right to where it says with stop now if we do that i'm not even going to mess with any of this nothing i'm going to change that stop dave gtc and we're going to go back and actually say what was that stop again using this as a little sheet of paper well the stop we said there setting a stop last two to three percent is 46.98 well if we actually looked at this and said okay 46 98 stop gtc okay that's the stop if we go to confirm and send right now and if we go right back up to where it says single account we're just going to move it to where it has multiple accounts we said earlier that the pay money account is going to buy about 50 shares that way if it broke out it added the other 50. on the bigger dollar account that would actually be about 150 shares now why because remember it could buy up to 316 uh 316 okay shares we're trying to keep these in 100 200 300 if possible so if we said look 300 was the ceiling in this case it'd be a half of that amount 150. okay now in this case what you're going to notice is the paper money account is going to understand remember the way that stop works first off the stock has to be purchased first okay that's first okay now by the way where where's where is that stock price 5116 so it's not really that far off we're six cents away okay matter of fact why okay it i'm gonna kind of push that up see if it can't fail and this is kind of why hey watch i'll push it down and the price will go down i just want to verify okay that looks about right okay there you go confirm and send now remember the stop is not valid unless the stock is purchased if the stock is purchased and the stock were to go to that price or less it sells the shares it's not saying it's going to sell right at the amount of 46.98 it's a market order it could fill lower than that price always remember that commission on that zero okay now if the investor actually says okay i'm good with that i'm gonna send that order it fills has 50 shares actually in the margin 150 echi shares uh in the ira now i want to kind of go around and look at maybe some other stock just kind of show us uh micron for example is a stock that's kind of at that old resistance new potential uh support if we kind of were to draw maybe a level of resistance a diagonal line you'll kind of see that it's right at it and maybe kind of bumping its head right on that 10-day exponential moving average so not necessarily a breakout yet but sometimes when these stocks go down go back and look what was the old highs the old highs could actually turn into the new lows you start to get multiple lows at the same price level you start to get a divergence you start to get a divergence you can start to get a hold you start to get a hold you actually start to get a potential breakout it's just like a domino effect potentially okay and that's what and that's that kind of the repeatable things that the investor would see on on a falling down to support okay here comes the go hold there's the potential dying of breakout and then the question gets asked could it swing to the prior high and or could it extend now i'm going to bring up a couple other stocks another stock today that was actually quite strong was abbot abbott actually today we actually saw that the socket she got above this old area of resistance kind of has i'm just going to call it like a u pattern some call it like that cup it never really did a handle now by the way that's not bad okay you're going to notice in this case that the stock had to rim pull back and then it just poked up through resistance and now what you're going to see is it might try to pull back and try to make really a higher low so this is that area of health care it's actually one of the stronger stocks in the healthcare space now another stock that's actually been in there and it has not pulled back yet okay at least not yet and that the stock is neat knee went from 75 to 87 went through the earnings today's candle is not abortion golfing it's trading inside the previous day it's not alcohol but sometimes these red candles that's what boss investors might be saying come down to support calm down come down come down and they might be saying come down to support get close to that moving average get a little closer to that blue line and then maybe start to show like a w pattern nia is actually one of them that might be in that process of the early stages of really trying to make that little double bottom or that that w pattern here uh the other one i'll bring up is also dd now this is also another stock but we actually see an upward trend and if you take a look back and if we were to kind of draw like a diagonal line on this this is another stock that's going into the earnings and you're going to kind of see like a downward slope of resistance okay now remember annette brought up the common right how does the reversal start first you start to make a goal yesterday was the lowest down day the lowest most recent red candle if today's price closes here it would be closing above yesterday's high if it closed above yesterday's high the investor might be actually thinking could that stock start to really get above this diagonal line of resistance that might cause some other investors to try to take some bullish positions and really if you kind of take a look at this it's showing a potential like flag there's a bullish pole and then more like a kind of a flag a recent draw down we call that flag really a zigzagging between support and resistance and if that stock actually starts to break up through the diagonal line you know maybe that exhaling of price action is done and could investors be trying to push it back up again so those might be some stocks that the investor is really watching okay now remember when stocks pull back in the shorter term yes the investor is watching and managing positions sure but actually when these stocks pull back and they're red colored candlesticks and they're falling down to old resistance new support have an understanding that the pullback could be springing or seeding the next potential opportunity of a bounce pullbacks aren't bad okay they're a part of the trend and when you start to realize that you'll actually say geez if i can manage the stocks that are pulling back yes it's giving some money back but it's more controlled but then if i could actually keep an eye on some stocks that the investor might consider an owning if those stocks were to actually pull back and start to bounce back up the pullback then really becomes the opportunity and as soon as you realize that you can't be able you can't sleep enough okay and then i know how you feel so with that said i'm out of my time here today we talked about chevron the energy space thanks to annette we also talked about microsoft doing the cover call we we did the example of apple and then we also did this uh last we also talked about uh comcast the stock position and then looked at abbott knee and dd as well okay so i'm out of my time here today uh also if you have questions about how to link the account you can call the broker and say could you link my accounts to a single username and password and that could be something they could do now today with what we discussed uh again what we want to really make sure is make sure you're using the paper money platform to get practice remember we today we demonstrate the function of the platform we did use actual symbols okay they were examples not recommendations remember the td ameritrade they don't make recommendations or determine suitability of any security strategy if you enjoyed today's session we talked about stocks and options old positions new positions reach out and smash that thumbs up button as well stay tuned for john mcnichol coming up at the top of the hour talking about long verticals and uh he'll be coming up right at the top of the hour thank you so much for your comments and questions i will have an announcement about two classes i'll be doing tomorrow i'll post that in about 30 minutes from now on that my twitter account as well so with that said thank you so much wish you a great day thank you pat and everyone for your questions there is a survey if you fill that out just a quick questions about today's class that uh that'd be great

2021-02-03 15:36

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