Technically Speaking: Trading the Trend | James Boyd | 10-15-20 | Weekly Charts and Moving Averages

Technically Speaking: Trading the Trend | James Boyd | 10-15-20 | Weekly Charts and Moving Averages

Show Video

Hello and welcome to technically, speaking on trading the trends weeks to months we welcome you here today today's, date is october. 15th. Yeah, about two weeks we're gonna be doing trick or treat. And uh then we're cracking, into the winter months so hopefully you got your coat. I know in utah where i live it's got a little, nippier. That's why we go indoors. And play tennis indoors. All right we'd like to welcome bill uh. Sir surrender. Elizabeth. Fred, rajmi. Lj. Maurice. Yoku, tom irene, amun. Neal and many others jill. And uh we welcome everyone here today. I also want to give us a quick heads up cameron, may also an instructor. Is in the chat. Uh so. And i always laugh when i kind of think of cameron being in the chat because cameras, i always joke that well he's not joke he's a foot taller than i am so when we used to teach live it was always kind of funny together. Uh but he's a good guy and great instructor. So just real quick you could follow cameron, or myself, on twitter, go to twitter.com. Type in cameramaid, type in jamesboyd, any of us instructors are on twitter. And you can also remember as we talk about uh. Stocks today and options potentially, remember that options are not suitable for all investors, special risk inherited trading options. Also make sure that you, realize there is a pamphlet called the characteristics. And risk of standardized, options make sure you have that you've read that, and, remember that in order to demonstrate, the function of the platform. We will use actual symbols. Also. Remember that td ameritrade, doesn't make recommendations. To determine suitability, of any security or strategy. They are a broker. The investor, gets to pick, what they want to invest in and the strategy. Okay, remember that also when we talk about, paid money trading. All investing, involves risk, and there's the option greeks. Now today. We kind of had a jarring in the market there's been this back and forth of no stimulus, stimulus, no stimulus. Jobless, claims. Taking up actually here today, kind of affecting the markets a little bit, and a lot of coven news coming out that's not necessarily, positive. Okay the only positive, is maybe the death rate is lower, for sure. Different than what we saw before in new york city, that's good, hope that's continues, there, but there's a lot of kind of news and then you got that up up and coming presidential, election. So we're going to talk about the markets, how it's faring from all of that backdrop. Talk about the volatility. Then since this class is really focused, on trading, the trend weeks to months. You know what i was doing i was home. I was actually looking at some weekly charts i've got some weekly charts i want to take a look at i want to talk about weekly charts, and then identifying. Setups on a daily chart. What could be some potential, entries. Exits, and stop adjustments. Using. Weekly, charts. I think if i went back one of the main things i would say that i failed at or stunk, at, was not really being able or not really looking or realizing, the importance. Of daily, charts. Sure. But for sure not looking at weekly charts i did not do that so we're going to spend some time on weekly charts here today, got a number of examples, we'll talk about that will be stocks, and option, examples. Before we actually do that. A couple things i just want to make sure you're aware of when we actually say go to twitter a lot of people don't maybe look at twitter use twitter, i did post some things today that i think are noteworthy. To take a look at, a lot of people, uh maybe when they look at the the they think of the market they don't really know. That the dow jones, companies. Uh, they've not just been the same companies, over time they've been actually something that's been dynamic. I did actually post kind of i, labeled it as what's the background on the dow 30. And this really actually breaks down and don't worry when you pull this up. And i did also provide the link as well, where you can actually see it better on your screen.

It Shows a history since 1928. The original. Companies of the dow. And then going, forward the transition. Over time. Which, companies, actually became a part of the dow. I also for example, today kind of talked about the, industry. Groups. That have actually been hit the hardest. And which states have actually borne the brunt of that, okay. And again that might come to some investing, ideas. And for example i also talked about by state or region. Which areas. Really have actually been hit, aggressively. Which ones have actually performed, okay. And a couple you actually said hey utah is quite strong and we welcome, any. People, to utah, you're always welcome to come, couple you georgians. You actually said you're pretty strong too yeah you are, and so i also kind of talked about how does amazon, make money, and i brought that up because we know that amazon just had their big prime day, and there was a couple billion dollars worth of, a lease of sales. And so i kind of posted that so i post charts, i post economic, data, and those actually might turn into potential, investment, maybe. Ideas, that the investor, might be thinking of, now no further ado let's actually go ahead and, hop right in. Let's take a look at the spx. And if we look at the actually the spx, now, today, at 7 30 in the morning i got a phone call from a friend of mine. And the phone call the very first line went like this. That, the, dow. Is crashing. I looked at my screen. I asked my friend i said what do you mean. The dao is crashing, is down, one percent, yeah it's crashing. Be very careful when you take those phone calls people are gonna say some very interesting, things the dow being down one percent is not crashing. And, saying it's crashing, without, actually identifying, where the support levels are. Shows, maybe, uh where they are potentially, in their learning. You want to actually look at the point movement, and relate, it to. Support. Levels. Okay. So the biggest actually thing when you take a look at this you would say. On a weekly, perspective, or a weekly, chart. Is the s p crashing. Did today's, price action even come down to a support, level yet. No. Okay. So if you take a look at this now what you're going to see is, today we did some fluctuation. Price went down we had some negative news absorbed. Price actually pushed back up, s p is really down about 12 points or so. Three tenths of a percent. Okay. Now when we actually take a look at the s p on a daily chart now. Pull it up, you're going to kind of see that on the daily chart it's fallen, down to that 10-day exponential, moving average. Which we again we kind of classify. As the momentum. Trend line. And as it fell down to the 10-period moving average some buyers stepped in and pushed it back up, so far. And when you take a look at let's say the nasdaq. Same, idea. Now again this is very important to understand this and i'm going to say i. I'm the one that thought about it. But it even took me years for me to understand, and i was the one that thought about it. If you think about when investors, potentially, have the most, money. That they've made, unrealized. It always, comes down to one, thing one. If the price is above that blue line. And the price stays above the blue line that exponential, 10 day moving average. That's when there tends to be bold flags, higher highs and higher lows. So if this market is going to keep that momentum. The price. Which is currently, still actually above the 10 day moving average. Needs to stay up above that blue line. If you want to know when investors, tend to give a lot of it back. Okay. It's when the price goes below the blue line now that's so, simple, to say. But if you really understand when do investors, try to make the most amount of money or, or. Have what's called risk on, it's when price is above the blue line, they're seeing lots of examples, of entries.

Prices Below the blue line, lots of examples, of. Stocks, breaking, support, or, positions, that are probably getting, stomped, out. So if we looked at this we would say. Really we don't see the market breaking support, but. It did fall down to. Really that 10 period moving average and this could act as a potential. Level of support. Okay, now what you'll notice is has it done that historically. Absolutely. You're going to see a touch there near there near there, and what you're going to see is if that stock were to stay up above the blue line. That's when you really have this, strong. Momentum. So someone asked me the other day why do you use the 10. Exponential, the reason why we use the 10 exponential. Is we're trying to track the momentum. Why 10. Well because we want something, shorter. Term. To track, the price, action. And the exponential. Is weighted to the more recent, days. Versus, the red line which is an average. Okay. And it doesn't there's no waiting, towards the more recent days just takes an, arithmetic. Average, that's it, if you're a math kind of person you might say geez, what you're saying is maybe that. Exponential. Is like geometric. Yeah that's the way you could put it all right, we'll leave the harmonic, out but you know where we're going, so the biggest actually thing is if you take a look at this. See price down. And now what i want to kind of do is, but it's down near the support low hasn't broke. And i want to kind of go and take a look at a couple charts and i'm going to start, with. Nasdaq. Stocks. And as we do this i just want to take a quick look, nothing has changed here but i see someone asked me about it, what about the volatility. My comments from a week ago and maybe before that the volatility. Could be likely, to stay a little elevated. Based upon. The upcoming election, and then you have a lot of earnings. Right. So seeing the volatility, stay up that high could bring an opportunity. If someone maybe like to do selling strategies, or maybe short vertical, puts, etc. Now what i'm going to do is i'm going to start. By looking at weekly, charts. In the nasdaq. Okay. Now what i'm going to do is i'm going to bring up let's say a stock now i'm going to kind of go to. Stock. And one of the stocks, i'm really going to bring up in this case is, zoom. Okay. Now this is the chart of zoom now how many of you, in your own life. Have had to jump on more, conference. Calls or video, calls. Because of the coven 19 crisis. If you know your wife or your kids who have actually had to use this type of technology. It's like a webex. This has actually been something that's been pretty dominant, now we kind of think that oh it's that was historical. And the trend is over, well here's the deal. If covin, 19. Continues. To maybe hit, record, numbers. And in many places it is. Is the demand, for the product, going to go down. Could more and more people, adapt. Or i should say, adopt. The technology. Okay, so this might be an idea what you're gonna see is if you look at. As the stock has actually gone up, what is the stock used as far as the support level, the blue line. Okay, now i'm thinking about making some t-shirts, of a, 10-day exponential, moving average in a 30-day, simple. And say which line do you want to be above. Probably sell them a lot, now here's the deal, you're going to see that when we look at this weekly chart. What type of price, action do we see, well if you take a look at this what you're going to notice is this looks like a big poll, would you agree with that. Does this recent, run-up in price, just like look like look like a big pole, now what you're going to notice as far as price. It kind of looks like in this in that weekly chart kind of like a symmetrical. Triangle. And or pennant. Squeezing. Okay, so i'm talking about squeezing. High well. When i say squeezing. Lower, highs higher lows, and then today. Doing. To the upside. And you're seeing that price up about five percent here today, now again what might elevate, that trend higher well. If we actually saw something in this case where, coven, 19, just got worse. Okay. This might make it where the, the demand, for the product, and or service. Could even surge. As much as it was historically. And maybe even potentially, more as more companies. And people. Adopt. Okay. To using their product. Now they're not the only ones, now if you look at now on the daily, chart what you're going to notice in this case is, what is the stock been using as far as the support level. Oh that blue line, oh the blue line. The blue line. Oh my gosh. The blue line. Oh my heavens. The blue line. And now what you're going to see if you take a look at the candle what type of candle.

Do We actually see here on the right hand side, now, if someone, says to me well i can't invest in, and maybe zoom because, it's too high prices for as far as the stock. That's why they created, options. Now the biggest actually thing is the investor might be thinking well i'm not going to buy a call it's still pretty expensive. I, don't feel comfortable, actually, shorting the put because. Well, there's the potential, obligation. For that downside, risk, but maybe could an investor, consider. Maybe a. Short put vertical. A long, call vertical. Let's go take a little look. So it is right now really um the candle is a bullish engulfing. And it is also something that is closing, above the high of the low day. Now if we go to the trade tab what we're going to show in this case is we're going to bring it up. And when someone actually is doing, a vertical. Now you can structure, it in different ways and have different. Delta, profiles. Right, but when you take a look at this the investor might say you know let's take the structure that we talked about. Maybe selling like a delta. Of 30, to 40.. Now remember if the investor, picked a delta. That had a lower. Picked a strike. With a lower, delta. Well, they might be looking at maybe something like the 490. Okay. Remember, lower, delta. Equals. A lower, probability. Of closing, below, the strike, price. The delta's, not stagnant. Okay. It's dynamic. Okay. That. Can move, based upon the price, the volatility. How much time there is to expiration. So if someone was actually going to look at this and say let's consider, maybe the 490. And maybe looking at let's say the 480.. Now i like to think of it like this the investor, is shorting the 490, that's the obligation, to buy, but. They're taking, some of that premium. And they're, buying. Protection. Below. So whatever, put they short. That's the obligation, to buy. Whatever, actually, put they, buy. That's the right to sell. So i like to think of that. That strike below. As really like a, safety. Net. Okay. The goal of that 480, is not to make money. If the protection. Makes money. That tells you it did not trend in the right direction. So now what you're going to see is there's an initial, credit there of four three not three dollars and 45, cents. Now i want to kind of ask this question okay. How many of you have actually, seen or heard people. Talking about i gotta get on a zoom conference, call. Now. Here's the thing that i think all of us i think we could all beat ourselves, up including myself. When you see a trend like this. The question. That the investor, might ask is, how, much, of that trend did you make. I mean as you saw things, changing, and shifting, online. How much of that trend on xyz. Stocks. Did you make. If the answer, is nothing. Do, do we think maybe the investor, or myself, could do better, i think they could right so that's really the goal the goal is not just to look at it the goal is to actually say hey. How are you able to benefit, from trend, okay. Now we know if the investor work can consider, a short put vertical. This does not have, unlimited, upside. The upside, is the premium. Received. And if the investor were to go confirm and send, we can now see a built-in, maximum, gain. And a maximum, loss now here's the deal. If this paper money portfolio, can really risk about, fourteen, hundred dollars. Okay. Which is true. Okay, it's about half percent of the portfolio. If it were to lose. This would really be doing. Not one contract. But, two. Contracts. Because the max loss per contract, is 655.. So in this case. This trade is actually going to come, come back. Change, it to two contracts. The numbers, will now adjust. Let me move that back up so we can see that. So there's the max profit. There's the max loss. And now you're going to see there's the credit, and there's the really the commission. Now remember, if someone said but james i have a smaller, account i can't do these type of trades well, not easy. The biggest thing is whether we did this in a margin, account, or. We did this in an ira. If this was done in ira. Let's say the portfolio, had ten thousand dollars or something like that twenty thousand dollars. Thirty thousand forty thousand whatever it is. Whatever, the loss, is. Max, loss. That's the buying power effect.

So, It's not tying up that much capital, and there is a built-in. Maximum, loss, so this is going to be our first trade now number one we looked at the weekly chart. Number two we've been talking about i posted yesterday. Liverpool. To manchester, if you've ever been over there i was there last summer my son was playing soccer at liverpool. And. They shut that place down and i was just there last year for crying out loud, so this covet stuff if it continues, to kind of, ramp, up. Some of these stocks where we might say well geez it's already so high well we could have said that a month ago two months ago three months ago get the point. So the biggest, actually thing is. Could there be maybe some support, underneath. Some of these, covid type stocks. Send the order. And there it is now i'm going to take actually. A second one here, now when you also think about maybe like a stock that might benefit. From. Covin, 19.. Well we actually might be thinking maybe about, something. Like. Docusign. Now if you take a look at docusign, let's start with the weekly chart, so if we take a look at this on a weekly chart what you're going to notice is. Now. I don't want to leave the witness too much but tell me the price pattern. That actually got filled, tell me the price pattern you actually see on this chart, so if i were to kind of just strip, it where there's no lines on it, is there a price, pattern. On the chart, now docusign. This is where maybe if you're doing a real estate transaction. Health care, online. Something like that. You're signing, your name etc. Online, versus, coming to the offices, of that corporation. Business. So that way you don't get sick or at least, you know, increase the chances. Now if you take a look at this what you're going to notice is you see also on this one as well. A big run-up in the price. On the weekly chart. You're actually seeing, on this where you see a flat, line. Now the deal here so we kind of have a pull the diagonal. And then we actually have kind of a sideways, consolidation. And there's your you're more flag now remember. Flags, can be where it runs up and pulls back. Flags, can actually also be something that kind of, drifts, sideways. Okay. And this is really more of the ladder. Okay. Now what you're going to notice is on the weekly, chart, what do you notice. What do you notice. Now remember, the purpose of seeing a flag. Is when does the price, break the diagonal. Resistance. When does the price break the diagonal resistance. On the second type of flag, one. Two. When does the price break the, horizontal. Resistance. So here's the deal, we see right now the price right now really getting above the, horizontal. Level of resistance. Now here's the deal. Do you know anyone. Who ever is like a, black belt of being able to read all the charts.

Okay There was there's a friend of mine, he would always say. Just, as i speculated. And i swear he knew everything. So i asked my friend i was like well, so how much of that move did you make. And he said in my paper money account and i thought. Wait. It seems like you're always right. Okay. If you feel like you're always right. Could that maybe lead you to buy maybe a share of that stock, okay, a little fun there, but here's the deal. If the investor actually thinks that stock potentially, is breaking out, they might consider. A trade now remember this is also 237. Dollar stock. Let's imagine, someone is actually trading in a smaller account. They see the longer term trend they're wondering how they can maybe potentially, try to benefit, from that trend. Option number one is to sit there and stare at option number two is say hey. What a great way to get some practice, let's go practice, in the paper money account. So now the investor says we see that on the weekly chart but what about the daily. Well when you come to the daily, chart what you're also going to notice is the resistance. Area. Is kind of about right there. And if you kind of were going to talk to a shorter, term, type of trader. You see a, prior. High. Now when you actually see the prior high that is where some technicians. Shorter, term, they might say the swing. Target. Or schwing. Target. Is really maybe 290.. Now nobody, knows if it's going to go up to that 290. it's a probability. Okay. But the idea is if it could break out a horizontal. Resistance. Could it target, that 290. And try to, double, top. Maybe at that area, okay, now, let's go back to docusign. The trade, tab, bring it up. Now if we do that. Let's say the now the investor, does not have to go the monthly, options. They might even go look at let's say the, weekly. Options, okay. Now. You you know one of the advantages, of let's say the weeklies. Okay. And so i just kind of want to tell you why i tend to jump to what i tend to jump to. When you look at let's say, the weeklies. And then you look at the monthlies, that are in black.

Weekly's, In purple, or lilac. You're going to see that there's a pretty big difference here on open interest. Now that's not always true, but in this case we kind of see wow there's, a lot more open interest in the monthlies. If there's more open interest, it might. Might. Have a tighter, bid-ask, spread 30 cents there. We see that this one is a dollar, twenty, so would you like to trade spreads, that are wider. Or would you like to actually use options that are tighter, that's just up to you okay. So, let's cut so let's close that weekly but i just kind of want to tell you that's why the paper money account is going to the monthlies. So if we go over here let's kind of use that. Foundational. Point which is. Maybe selling a put with a delta 30 to 40. Out of the money, below, the current price well let's take a look. Well if the investor, said james i want to be a little bit more conservative, then they might go with a lower delta. 30.. Now in this case what you're going to notice is. That's the 220, strike 845. 865. Ask. Maybe something. In the middle, maybe about 8.55. Remember the investor, here is buying the strike, below. For a safety, net. Just in case that stock were to go down, so if the investor, shorts the put at 220. That's where they have the obligation, to buy, if the stock were to tank to zero. They have a right to sell not just a zero. They have a right to sell at 210. And when you buy, the put or long, the put. That's what the protection, does. And i'll be honest. I think there's many people that don't have they don't know it very they know very little about protection. Okay. Very few people know about protection. Protection. Is very important. Especially in this type of trade where you actually create a max loss. So remember when the investor is long the put that is the protection, for what. It's a protection, for the short put. But it's also the protection, for the portfolio. And it's also a reduction. In the collateral. To do the trade. All right so let's practice. Right click on that 850.. Okay james you kind of got fanatical. About that protection. Man it just. It's unbelievable. Okay. Click on the cell. Go right up to vertical, okay, now what you're going to see is there's a short put, now what you're going to see in this case is we're going to see that the mid price. Okay. Right there. We take a look at that you got 315. That's the mid, price. Okay. 220. 210, we need to verify. Now. How many contracts, let's bring this order up so we can see, the order on the bottom, and. This top piece the order confirmation. So this is saying the max, profit, max, loss. Now the nice thing about short puts or short put verticals, is, the stock, does not have to move. Anywhere. If it just. Stays, exactly, where it is right now, or. Maybe it goes down a little bit, as long, as expiration. Is at. 216.85. It's at break even now what does the paper money account really want it wants it above 220., it's above 220. It gets to keep all the maximum, profit now.

If The paper money account is, is able, to risk, 1400. Okay. Where, where do we keep getting that number well fourteen hundred dollars. On an account. That is about 162. Thousand dollars. Let's just kind of quickly run those numbers now this is showing the ira, here, but i want to kind of bring this up where are we getting that. So really the fourteen, hundred dollars if the investor were to lose fourteen hundred dollars. On an account. That was about a hundred and. Sixty, two thousand dollars, worth. It would be about, eight, tenths of a percent. So. You'd have to have a lot of those losses, to really do some damage, on the portfolio. So remember what we kind of said before we wanted, all losses. Below. A one percent, threshold, or. Below, a half a one percent threshold. Had a question that was asked to me. How do we actually, control, the risk. Well someone controls, the risk by actually applying protection. Someone controls, the risk on an option trade. By also at the same time, applying. Proper. Position. Sizing. And having a plan that if, hell froze, over and this did go to the downside. How bad would the loss be 1400. Now what we're going to see is we're going to change that right there to two contracts. Confirm, and send. Now we actually see right there. So it does update that max profit max loss. Credit, and then. Also. For the commission. Now i'm going to put that right, back. In that marginal account that's the one we've been trading out of i've just been showing the difference in a, ira. Account. And if that's what the paper money account wants to do they can go ahead and actually send this in. Now what i want to do is i want to kind of just kind of stop. And let's see if there's also, any, questions. Now. The one thing i also kind of want to say is, sanfram. Sam, said. And i'm going to bring this up, so. When someone puts on the vertical. Okay. And if someone says james can i also set a buy back. That if it were to go at or below, a certain price, if i could buy the option, back. For a certain, price could we, automatically. Put that in. Yes. Now james, why didn't, you show that, well the reason, why is because i try to do all the paper, trades. You're wondering if your, internet's. Like. Caught up i was staring on purpose. We do all the, paper trades in the webcast. So i don't like to necessarily. Set the target. I like to actually show the management. The exits, the rolling. In the webcast. Because if we set a target on everything. The trades, wouldn't be done in the webcast, where you could see the exits. You get it, so that's why, that's why the paper on account doesn't show that but if you said hey i want to see that, i know later. We might not be able to see it because it could trigger. And then we don't, see how to manage or exit the position. But if you said okay i get that now. Right click on that line. It just now says create opposite order it'll now, flip that to a green line. And now what you're going to see in this case the investor could say well how what percent, of that, credit. Is the investor trying to get if they said look james, i like 80 percent. Well if the investor grabs 80, they leave 20 percent left. And that's really going to be a debit there, of 62. Cents. And they could, do data. Gtc. Simple as that okay so i answered that question. Okay. Uh now, monty man actually said what when to loss ratio, are you looking for, on a vertical. Put spread. So first off when you take a look at the wind, loss, ratio. Okay, so first off the initial probability, is 30. So imagine you did 10 trades. Okay. So first off. The win loss ratio. That someone has in a portfolio. Is not just based upon what the dealt is. It's based upon, market, conditions. Okay. And the market conditions. Can. Drastically. Affect. The win loss. Okay. So if the market, is bullish. The investor, does, 10 put spreads. They might be able to win on all of them, if the market was bullish. Okay. If the market, actually goes down. And someone did, 10, put spreads. And the market went down, which affects individual, stocks. What does it do to the win-loss, ratio. Pushes it down. Okay. So win-loss, ratio, that is why on every webcast. And you'll see on my twitter account, every day. I talk about. Market, posture. Okay. Market, posture, if someone gets the market posture, right. It can affect, the win-loss, ratio, and expectancy. On someone's portfolio. Okay so that's important there it's not, just looking at the delta. But when we talk about if we were just going to look at the delta. We're trying to actually in this case, try to go something, out of the money, we say all the money probably something like 30 or 40.. If someone said james i even want to have a greater. Probability, of success. Okay, they might even go a delta of 20. And what would that actually do to the wind loss ratio. Well. The lower the delta. Typically, the higher the wind ratio. But the wind ratio, is not going to tell you what the expectancy. Is, okay. So that's important you need to understand that, all right.

Thank Okay, good. Fantastic. Now i want to go to a different uh i want to go back to the monitor, page. And last week we actually brought up the example, of utility. Stocks. Okay, so let me give you a little backdrop. On this we know. That the tnx. Has mainly, been, in the garbage, can, okay. So when we actually look at the 10-year, yield this is actually looking, at. The 10-year, yield, and this number up top. Is really actually showing. 7.31. If we move the decimal, over 1. This is saying, 73, basis points. Or in other words. Seven, tenths of one percent. So if you think about financial, companies jp morgan. Okay. Morgan, stanley, goldman, sachs. Uh. Zion's, bank. They're sitting on, mounds. Of capital. Now think of it like us where if we had a cd at a bank. If we had cds, that were getting, seven, percent. Oh my gosh. Could you imagine. Just, i i, choked up when i said that okay. But what you're gonna see if those. Cds, that the investor, actually rolled over if the yields are going down it means they roll over their money. At a lower rate. Thus, making, lower income. And we as consumers, we deal with that, we see that in savings accounts. Or cds. So you're not probably going to be able to get a cd for five years for the next, five percent. For the next year if you do, it's amazing. Be very. Make sure you read the risk disclosures. Okay. Now the biggest thing is if investors, feel like this is not enough. Of a return to offset. Inflation. They actually might go look at maybe other areas that might be potentially. Safe. Now when i say potentially. Safe that does not mean they don't fluctuate. But they might say what are some areas. That maybe are also, maybe. Have a greater, likelihood. Of reaching, their revenue. And their earnings per share. The hell regarding. Even if there is a pandemic. I mean, did someone stop taking a shower brushing their teeth because there was epidemic, probably not, okay. Maybe. But the biggest thing is when you take a look at utilities. Whether it's good or bad. People just need water. People need to see in their house so it's not dark. So the biggest thing is we want to kind of bring up right now is what we're seeing in the utility, space. Now, the chart that we're looking at here. The three year weekly, chart let's kind of bring this up and i'm going to kind of, oh we'll just leave those lines right there. Now here's the deal. On the weekly, chart this class is trading, trading the trend. Weeks to months. Now i'm not asking you if you know about that i'm asking you what, potential. Paper trades. Are is the investor. Practicing. On okay. Does that make sense. It's not i know about it which paper trades are you practicing. Okay, the proof. Is in the application. Now, if you take a look at this what you're gonna see is we see kind of a triple top uno, dos tres. And we see actually the price. Poking, its head up above that resistance, now, sometimes, people say but i don't want to do utility, stocks or staple stocks, because they don't move that much.

Or I don't have i don't want to put that capital, in, well who says you had to do the stock you could. But maybe there might be another, option, here. Now, if you take a look at this we're going to actually drop down to that wheat daily, chart. And you're going to kind of if you, zoom in what do you see on the chart. What do you see. Now that's going to start down here. Okay, that 921. 928. Right down there. And then the stock goes. Now. That little. Run to the upside. Was a run, that smashed. Through resistance. Okay interesting. Now notice. Price. Then, spends the last couple days. Dripping, down. To the 10 period moving average now i did not take a sharpie. Marker. And then draw, a tail. Right on the blue line, this is a, chart you can pull up yourself. But you're going to see that it just. Randomly. Went down to the blue line. And then goes, doink. To the upside now, could this be a potential. Bull, flag. Now the idea is if it were to let's say, have a pole. Have a high now i remember there's a guy that said this over and over and over and over, and i don't think it ever got through my brain. Of what he was saying and the impact. The person, said. If the stock actually made a higher high, the greatest. Likelihood. The probability. Is that the stock actually makes a higher low. So if the stock, three or four days ago. Made a higher high. And that stock. And the stocks, price starts pulling back, that does not mean a potential, bearish trade. If someone understands, that, the pullback. Is a part of the process. Of making a higher low. Oh my goodness do you know how many bears have lost money, because they didn't understand, that, they think the red, candles. After making a higher high, is a bearish, entry, it's a lack of understanding. Of trend that's why we're talking about it i don't want anyone to go through pain if they don't have to, that's not, probably, a great. Practice. There, if you just made a high, the pullback, is a part of a trend, now what you're going to see in this if we look at utilities, option number one, investor, might just buy the utility, space. Which is a collection, of stocks, but wonder if the investor says look i don't want to buy the collection. Maybe i want to actually look at individual. Stocks well let's kind of look at an example, here. We're going to bring up in this case. X. E, l. Now i'm just going to kind of show these two examples, now what you're going to notice on xcl. Let's first start off with the weekly, chart. Okay. What are we seeing on the weekly, chart now what we're seeing on the weekly chart is very similar to what we're seeing on the. Sector, chart. Okay. Now if you kind of take a look at this what you're also going to notice is resistance, 71 and change. And then we see low. Higher, low, higher low, higher low. Remember. When the investor looks at the chart the question that they could ask is, not can they identify, that. How much money. Are they up on the trade, as they identify. That in their paper money account. That's where the robber meets the road on the asphalt. Okay. So the biggest actually thing is that the paper money said hey. I just now saw the utilities. Are there any potential. If we're talking about trading the trend weeks to months here, where maybe the investor might see not just a chart that go up might potentially go up for a couple days, but maybe something that that trend might go for a while. Potentially. Well okay so i'm going to bring up just one other charts, before, we actually, same area. But i want to bring up let's say duke now when you look at duke. The difference, is here, yeah, it is also, broken, above. But if we're talking about let's say, between, one. Versus the other. Which, one. Really has a stronger. Trend. Over the long term. Duke. This one, or is it really xcl. If you look at the first one. It's really xcl. That stock this stock has really shown a history. Of just a stronger, trend, where duke, was up pulled back more aggressively. It's kind of more of like a trend reversal. Where this one on xcl. Is really. More, of. A, uh, continuation. Now. If you are a cup and handle, person. I don't know. Okay. I think when we ever talk about cup, and handles. It's never going to be perfect now remember the only place you find perfect. Technical, analysis, patterns. Is in a book. Maybe, by someone who doesn't even trade. Do they. Do they. Okay maybe they're just good at writing books. Now what we actually see in this case you pull back and then it comes back up. So. Patterns, aren't perfect, we see that same type of similarity. Though, pullback. Base. When we talk about support we know that it's not, a, point. It's an area. Most of this support, is probably right there in about the area, of 58. Or so if we're just being. Honest. Right around about 58.. Over on the right hand side we kind of see the little cop.

Using My little, index finger here trying to get my finger in that cup, now what we kind of see is that's that potential, flag. Here we are on the weekly chart. So if you take a look at this if we're going 58, let's say to 71. Well that's a potential. About, 13. Okay. So from 58, to 71. That's 13, dollars, the technician. The stock investor, somebody's trading options. They might say hey maybe over the longer term, maybe. The stock might try to really get up to about 84. Over. Time, but there's not a guarantee. That it's ever going to really reach. That, point, so if you take a look at this what you're now going to see is there's, some stock, trend. There's also a potential. Technical, pattern on that weekly chart and on the daily. And then if you come back and say is there any little icing, on top of that cake in terms of a. Dividend. Yeah there's a yield of 2.37. Which is not huge. But it's bigger than the 70 basis, points on the t and x. So what could be happening is some of these institutional, investors could be saying you know what. 70 basis points is not enough. They might say to really, hold their earnings, up and the, earnings. From. Okay. The cash that they have. Affects, their earnings, just go look at some of these financial, companies they call it net interest. Margin. Okay. Net interest. Okay, and a lot of these financial, companies they've been talking about how their net interest. Year over year, has been going down, which has been hurting their what. Their revenue. And their earnings. What do those businesses, consider to offset. Well they might go up the pecking order, of sectors, and say. What are some sectors that have a high probability, of hitting their revenue, targets. And their earnings per share. And, holding, the dividends. Not cutting them, holding them, and maybe even increasing, them now in this trade what we're going to actually show in this case is, we're going to go back and you can kind of see the stock has kind of yanked.

Right Back down to the support, now. When we talk about the close, above, the high of the low date there's a debate, back forth back fourth, does someone, actually use the lowest, most recent red candle. Or. Does someone actually use. The lowest, day. Period. Well. In our examples, we like to show the lowest, most recent down day to be a little safer. But if someone actually said james i'm going to use the lowest. Most recent, down day. Which so far. So far, was today. And if the investor, actually said in that case look i'm going to actually, enter a trade. If the stock were to go at or above. 72. 91.. Okay. So let's how does the investor actually, put a stock trade on with a target. And, this stop. So let's, right click, in this example. Right click. Drop, down to buy custom. And then just go to. With ocl, bracket. Now the bracket is actually just putting the target. And then having a stop. Now, before we forget. Okay. I have four children i'm always like zach caleb colt and abby. Just what are you come over here, okay. So as i'm getting a little, older. I know they're my children. Okay. So. As i'm getting a little older. I want to put in that target. First before i forget. 84. Now don't laugh at me okay. Just say james you're special, i know you're special okay thank you very much, now a little fun there i'm just having a little fun, so 84. Was that potential. Target okay there you go. Limit gtc. So we wouldn't forget, okay. Now, the support. Okay. Where's that potential, support if the stock were to go below, what. Area. Well the 71. Area that's going to be really tight. Maybe the investor says you know what james i kind of like the area that investor, says. Of maybe. 68.77. Maybe giving the stock a little bit of. Wiggle, room there, well okay. 68.77. Take the calculator, out, okay. If the investor would have set a stop two to three percent, below, that. That would actually really be setting a stop, at, 66. Okay. 70.. When you kind of think about this as well, if the paper money account could really.

Invest. Let's just say about fifteen thousand, dollars. And this stock, is. 72.93. It's going to really be allowed to buy, about. 200. Shares, of stock. Okay. So we're trying to keep all the positions, where there's a certain, capital, amount. 15, 000. And we want to make sure that if the stock were to go down from here. To here. That the loss, does not exceed, fourteen, hundred dollars. Okay. So there's a capital. Certain. Ceiling, how much capital can be invested. And if that capital was invested. What would the loss be. This loss would not, exceed, 1400. And we're making a big assumption there. We're assuming, the stock, actually gets stomped, out near there there's a risk with the stop. And the stop, risk is that doesn't guarantee, where it's selling, out, that's just saying sell the stock. If it goes to that price. Or less. Now what you're going to see is we're going to go to day, to gtc. Now let's kind of read what this order is actually doing, i'm going to bring this order up so we can see the order down the bottom as well. So it's saying hey look. Buy the stock now the one thing we didn't touch on, so far. Okay is that, order price, and for this example we'll come back to that, target, stop we just talked about the stop, and the commission, the commission, is really zero. Okay. So the one thing we want to also consider, let me go back to this chart. We want to change that for this example, to really. Stop. Day to gtc. Because what that's really doing is it's saying, don't, get in. Until the stock gets the, 7293. Or, what. Or higher. That's what that's showing, okay. We talked about that taking the low, day. Okay. Where's the high of the low day. It's right about 72.93. This is saying do not get into the stock unless the stock goes to that price. Or higher. Okay. Now if it does. It enters, the stock. At that price, or higher. If that's what the investor wants to do, they could send the order. And now you're going to see that that price. Is sitting right there. With the stop. And also the target, up above and we can see that target. Right, on, the chart. So what i want to challenge you to do. Is i'd like you to actually go out and really, look at. Stocks, for example, that are. Showing, patterns. And or trend. On a weekly chart. Now just today i took five minutes myself, used the scripts, and just visually looked at charts took five minutes. I started, seeing a couple stocks just in the dow, just in the nasdaq.

That Were showing some of these trends also looked at the sectors. And i think once you start to do that you start to really see some longer term trends, that are still developing. So if the market goes down 100, points. That doesn't necessarily mean it's breaking sport. Okay, so that's the biggest thing to be watching, is. Someone who's trading short term that might matter. But for someone who's trying to trade longer, term trends. They're really more focused, on, the changes, longer, term versus. The dow is up or down 200, points which is less than a half percent. Okay. So that's the goal we want to talk about here today the learning outcome the trades, that we talked about here today was number one. We talked about zoom, we did a short put spread. Number two, we did the example of docusign. Number three we talked about the utility, space. Okay, and we actually talked about the example of a stock trade, on. Xlxel. Okay. So those are the things we actually talked about here today. Now the one thing i also want to kind of also bring out here is coming up in just a moment. We're going to actually have a class, let me actually go to. Oh right there, so, john mcnickle, is going to be doing a class on long verticals, and diagonals. Coming up right at the top of the hour. If you enjoy, today's, focus, of being able to see these charts on a longer term perspective. And then zooming, in on that daily, and then practicing. A trade whether it's a, an option or a stock. Give this, video a big thumbs up. Make this a part of your routine where on a weekly basis. You're watching, what these charts are doing longer term. Remember ask, that golden, question. How much. Did the investor, benefit. From the trend. If the answer was zero, or closer to zero, that investor could probably do better, the biggest thing we want to actually be able to do is read the chart. And then practice. Placing. Paper trades. To try to. Harvest, or, gain. From, the trend, okay, so we talked about using those two moving averages, here today to do so. And track the momentum. And the trend. Now also, want to give us a quick reminder, what we did here today is we demonstrated, the function of the platform. Remember that tv ameritrade, does not give any recommendation. Or determine, suitability, of a strategy. Or security. The investor, gets to put to pick that. You can follow us on, youtube, by following the trader, talks. Channel. Or investor, insights you can see all our videos, and upcoming videos. And last you could also follow cameron may or myself. On twitter, where we also post educational, content, it's been my absolute privilege. Uh, stay tuned for, john mcnichol, coming up next and with that said thank you so much take care. Bye-bye. You.

2020-10-20 20:37

Show Video

Other news