Bullish Base Hits?? | Swing Trading (Days to Weeks)
well hello everyone welcome to swing trading my name is barbara armstrong and i'm delighted to be filling in for mr mcnichol today in this short-term trading class for those of you who were with me last week it was um an entertaining class to say the least um so i'm so glad that that many of you are back again um i love how interactive this class is so hello to kiana and wayne and saul and larry and lucy and aina and brenda and robert and clictition that's kind of a cool handle um glad to have you guys all on board we also have pat milali with us in the chat if you were in the last class which pat taught you will know that brings with him a wealth of experience so we are fortunate to have him with us this afternoon and grateful for it you can ask go ahead and ask questions if you have them between pat and i we should be able to answer or hopefully can if you're watching this in the archives know that you too can ask questions just type them in to the comment section i do check those every trading day and i will get back to you quickly if you love the class you can type that in there as well and the last way to reach both pat and i and for us to reach you outside of webcast like this is through the wonderful world of twitter with that little blue bird so at b armstrong underscore tda and for pat it is at p malawi underscore tda um this morning i get requests for this um fairly frequently so this morning i retweet it retweeted my word um these cheat sheets on candlestick charts and so this is just kind of you know some of the types of things that we might share this one is bullish patterns i used to have these in those plastic folders and taped to the walls in my office when i first started trading and i found them to be very very helpful i still call this kind of pattern an inverted hammer whether you know it's at the bottom or the top and but they do have specific names and um yeah i just wanted to make you guys aware that those were there okay so let's get back to our important information we'll spend very little time on slides today but know that everything that we do in this class is for education and informational purposes only none of it is to be construed as a recommendation on the part of td ameritrade or myself know that options carry risks with them and they aren't suitable for all investors they can expose investors to potentially rapid and substantial losses last week we did all option trades this week we're going to do kind of a mix some stocks some options um and um and know that you know however we're trading um all options have risk we are all trades have risk we are going to use the thinkorswim paper money platform with a short option one of the differences between a paper money and a live account is that a on on the paper money account a short option will never be called out early can that happen in your live account yes it can have i seen it happen yes i have um yeah so you've got to be aware that that is a possibility okay so what's on our menu today well uh for today and i mean this always looks so simplistic doesn't it we're gonna have a quick look at the markets then we're going to do a little bit of trade management just from what we did in this class last week and then we're going to place some new trades so that's kind of what's on the menu and i'm going to go over this fairly quickly as far as a market review primarily because i know many of you come to multiple classes throughout the day and you know as we can see if i come to a year-to-date time frame i think we've kind of clobbered this one to death in that i mean we are still down year-to-date you know on the s p 500 we're down about 14 um and i don't think anybody enjoys if you know oh sorry just a minute let me go to my fix my screen okay there we go so i don't think anybody would enjoy a 14 or 15 hit to their account it this was one of the first this was one of the worst halfs of the the year the beginning of 2022 in over a hundred years so it was a really sobering start to the year after you know a pretty bullish run um you know as we went through the pandemic um but we can see since the end of or middle of june here we have recovered you know to the tune of about 13 and a half percent one of the things that i would like to point out though is that as we're seeing this little upward channel it has come and hit the r a resistance level and appears to be pulling back now will it just look to pull back for a couple of days you know we don't know but what a a bullish investor would be looking for what we'd be looking for is for this to break through this diagonal resistance line and then this next resistance line on a longer term channel around the 41 4182 ish kind of range okay let me just catch up with the chat yeah um shirley is asking does anyone know the name of my class last week are you trying if you surely are you talking about screen are you talking about this class swing trading because if you are it will be in the swing trading um archives and the easiest way to see that just for those of you who are new is there anyone new to this class for the first time today if you if you are you can go ahead and type that into the chat we'd like to welcome you but if you just come bring up a new tab and come out to youtube and then you're just going to this is on the trader talks channel so you're going to type in trader talks webcast from td ameritrade and when you click on this green button you'll want to subscribe to this channel if you haven't done that but if you come to playlists we can see that swing trading is what's playing now but we can scroll through these to find the swing trading class i'm trying to look at them pretty quickly here here's swing trading and view the full playlist and then you can see you know last week's class which i called the ups and downs of swing trading last week was particularly frustrating because there were a lot of things setting up that weren't quite there yet and so somebody is saying that they're new to swing trading and so you know it we've got a couple of people new to this class so the idea and i am going to um you know take a page out of pat's book because he was talking about las vegas sands just a few minutes ago lvs and if we bring up lvs the idea of a swing trade is that and you know we could look at this a number of different ways is to just enter a trade with the idea of exiting when it gets back up to a previous high and so you know a swing and in this class you know right on the first thing it says you know this is looking at um you know days to week so this would be a short-term trade so that's what we're looking at doing in this swing trading class class both bullishly and bearishly um these are short-term trades but i digress let me go back and we'll just have a quick look at the other indices so when we look at the nasdaq it's kind of more of the same except it it's kind of bonking its head looks like it might be breaking out around this 12 900 level we're at 12 940 and again these are ranges and is it going to continue to break through if it does then we'd look for it to get up to this 13 561 and again i mean year to date this is still down over 20 so the intermediate term trend is uh bearish the short-term trend since the middle of june has been more bullish and it's just bonking its head on the ceiling here and the question is will it break through or will it you know pull back and then if it does pull back how far will it come because what we saw here is it hit these similar lows you know once twice three times a lady oops let me get my drawing tool working here okay let's try again oh why does that not want to kill me okay so it came up and hit this floor three times and then the the fourth time it didn't come all the way back down to this line and that would be you know some technicians might see that as a a more bullish sign and you know now is it going to be able to break through or is this going to be kind of like an optimistic fake out but it could it could just come back for a couple of days you know and then continue on up we don't know or it could come all the way back down and then bounce or it could come all the way back down and break through so we can't really trade what we think we can just trade what we see but you know what we're seeing is somewhat bullish here on the nasdaq and with the dow it you know all of these major indices kind of more of the same now this one kind of broke through and has come back to retest so the question will be you know will it continue on up or will it come back into this range which is within a broader range which is down trending so again intermediate term you know bearish short term you know has been bullish now the russell you know up about a third of a percent today but we can see this has broken above this short term range and now this old ceiling appears to be acting as a new floor which is quite bullish and then our you know our next line here around this 1917-ish mark we'd look for it to break above that so you know this looks you know quite bullish in the shorter term and you know the russell being the biggest of the small caps and then last but not least our volatility index you know things are moving up today so i am just going to wait and hope that this feed comes back okay so it looks like we're back so yeah we should be back so can you hear me now um yeah there are storms in the in my area okay good okay so sorry for that uh temporary digression there okay so we're back up and running okay so that's that's our market overview now there were a couple of positions that we put on last week one of them if we come to the monitor tab was on zoom and zoom we bought a put for 650 and it ended up hitting our stop and we we can see here that we put in an exit and said hey if this option loses half its value we would like to exit and so on zoom um we bought it for 650 we were out for 325 and and you know the point can be that um you know when we put in a stop there's no guarantee if zoom had gapped up because this was a bearish trade if it had gapped up we could have ended up out for far less than 325 as it was we got filled at you know the price at which it was triggered but that you know doesn't always happen okay so with this one we took a 50 loss and were we okay with that we were because we said you know what and this was in our trading a smaller account account that's you know at 30 000 and we said we're willing to risk up to 500 so did we lose more than 500 we did not and so it met that parameter the other thing is if we go back and we kind of do a postmortem on this and we say well when we look at the chart on zoom did it make sense that we chose a bearish entry so this was a stock that has seen a significant downtrend i mean even now you know with this resurgence it's up 26 at one point you know it was down 45 percent over the last six months um but we saw it come down hit a support level um and then this 30-day moving average it couldn't break above started falling now we were a little late to the party but we put a target it was based on the previous low of 96 11 and it didn't quite hit that and so we did end up stopped out on that yesterday now when we're doing a swing trade um you know if we're talking about mid management rules some will say hey if we're expecting this to move in five days if it doesn't move half the distance in half the time we may decide to get out the other thing we might do is say hey if this is a bearish trade and we have two updates in a row we might have chosen to get out then also and that would have mitigated our loss not in a big way um but it would have mitigated it a little bit the and and i think i may have just been in a rush but this option was an august expiration and we probably would have had less of a loss had we gone out to september because time decay was a bigger factor you know if we come to the monitor tab and look at a trade that we really only had about 25 days to make happen um yeah so there's a question on you know do you get those fills on your stops um sometimes the fills on stops are at the beginning of the trading day and the option prices can be all over i would call and talk to the trade desk i guess about that i really i haven't had a lot of experience with that not working in in my favor and in paper money sometimes things will translate a little differently than than they do in your live account um but anyway that's that one so if we come now to current trades and there was nothing in particular we had to execute on that but we had a long call oh and this one is in the other account on biogen and so we bought this call uh for 12.10 it expires in september and this is a bullish trade and we're down and we're actually down today now what the last time i looked at this this was up a little bit um and you know so we didn't have this 220 loss but when we come and we look at biogen so we placed this last last week in this class and you know was the logic there like so many other things you know we had a stock that had been down trending we saw a bit of a pennant pattern kind of setting up it was bouncing off the support level and you know when i looked at this a bit earlier it was actually up but you know if we look at this and what we could do is say you know what if this breaks below this we could adjust our stopper we'll just watch this on a daily basis and if it breaks below this stop by more than you know two percent and you know if we look at it right now our low our low for today is 20903 so if i say 20903 times 0.98 so if it goes down to about 205 we could put an alert in and say you know we don't have to wait until it loses half its value if it comes down to around 205 we may choose to exit the trade now some might say well why wouldn't you just put a stop in and the reason is you can see a lot of like long wicks on these candles we'd hate to kind of trigger a stop get nicked out on a wick and then have the thing close up on the day have i seen that happen yes is it painful and annoying when it happens you bet it is so we're just going to come here right click create an alert this is saying you know we're going to say hey if this goes below 205 it will send us an alert and this is just a note that only you see so we're going to send a note to ourselves um consider closing a long call on um on this position so we're going to consider closing out our long call and it will send it either to your phone it can send it to your email or both i mean however you choose to set it up so that's how we're going to manage that one we're going to leave our target the same but if this came up to like 217 or 218 and then looks like it's about to roll over we don't have to this isn't set in stone we will often look at these and then say you know what i'm going to exit this um you know because it's close and it looks like it's rolling over there's another question asking where you can see your notes and so when i come to working orders when i come to bib here i can see that i have a note and you know we had a swing target with an exit below the recent low that actually was an alert not a note but we can look at our alerts also if we show the alert on the chart so if i come over here i can say show my alerts and now it'll show that there's an alert here and i think if i just hover over it it'll tell me what it says i thought i could just click on this i seem to be having trouble today okay so that's that i'm going to take that back off just so that it doesn't distract us if i put alerts on some other stocks okay so that's it for trade management but yeah being able to view your notes and i often will put notes in when i place a trade okay okay so now let's go look at some new at some new setups okay so the first one i had brought up las vegas sands and one of the things that i was you know struggling to find today was a lot of setups like this where we saw something it came up it broke above and you know technical analysis you know it is a bit you know in the eye of in the eye of the beholder i'll sometimes say you know i spy with my little eye and it's a little sloppy but you know we've seen this come down and hit this area four times but like a bit of a double bottom right and then it broke out came up and hit this previous resistance level and then has come back to retest and is it common when something breaks out to see it come back and re-test we have seen this frequently we have seen this frequently and now it's bouncing and so if we look at this and said well you know it's at 38.31
this previous high here was around 40. so you know would it even be worth trading for a dollar seventy you know that's not going to have me living the lifestyles of the rich and famous but if you look at this and you say well first of all what is this as a percentage of my investment so if i came over to my calculator and said well if i were to make a dollar 70 a share and i divide that by 38.30 that's a 4.4 return how long might we be expecting to be in this trade well on an average day if i get rid of this i've got eight one atr on my chart this stock moves about a dollar fifty so we might only be in this trade two or three days less than a week so how many people would be throwing themselves a pity party if they only made four point four percent in a week or so you know like you probably wouldn't get a big turnout for that kind of thing like that you know a lot of investors would say well i'd be okay with that type of return now if you want to manage your risk because we could do this a couple of ways we could buy the stock or we could buy an option but if we looked at this and said okay we're going to buy the stock our recent low on this which was yesterday was 36.73
so if i said okay i'm going to put a stop three percent below 36.73 so i'm just going to come over here to my handy dandy calculator i'm going to switch my gadget um that and say 3673 times 0.97 uh that i would be out at 35 62. and so then how much am i risking well if i'm in at 38.31 we're risking 268 a share that's our risk now is there a guarantee that we'll get out at exactly 35 62 if it triggers our stop no um but hopefully we'd be out in the same neighborhood now if it gap down um you know then that's a different story we could end up out you know with a larger loss than we were anticipating now if our stop our recent high here was 39.98 if we come back over here it was
40 37 40 28 so i'm just going to put 40 in and somebody said well where did your dollar 70 come from well it came from taking that target at 40 and then subtracting the current price and of course we're live in the market so it's kind of waffling around but we stand to make potentially a dollar sixty six you know so that's where my dollar 70 ish came from and if we wanted to do this trade so you know if we're doing putting this in our trading a smaller account we can take a position size up to 5 000. but if we wanted to make it easy we could just do you know um we could just do 100 shares and the most we're willing to risk on this is 500 on any single trade and so if we came here and we just wanted to do a hundred shares we could say we want to buy custom with an oco bracket so we're getting in at 38 33 or somewhere around there and then our target would be 40 dollars or you might want to make it you know 39.95 sometimes things come so close and then just don't quite hit the ten dollar mark you know is a big big mark and then our stop on that would be at 35 62. now a lot of accounts right now like we've got of our almost thirty one thousand twenty nine thousand four hundred and forty two available to trade so we've had a lot of money sitting in cash in that account this year um because of the way the market's been behaving um you'll notice this red notice here and what this is just saying is with a stop order there's no guarantee that it's going to be filled near the activation price and we've already discussed that and so if you don't have a swing trade set up i do you can set up a swing trade and then you know when you go to look at this hey this isn't a trend trade i'm not in this for a long time i'm in this as a short-term trade okay so we've got that so we don't even have to put a note in because we know why we've placed this and someone is saying you know might you not want to target the next resistant level resistance level and that's a good question because we could absolutely do that but what some might do especially with the markets you know having moved dramatically and fairly quickly this year is say you know what i'm willing to take this little win i've called it the year of base hits i'm willing to take this little win um you know a four and a half percent win perhaps and then if it goes above there's this is a stock trade so there's nothing to say that when it goes above here that i couldn't say okay thank you i've taken that gain and turned it from an unrealized gain into a realized gain if it continues to go up maybe it goes up comes back and touches again then i could trade it back to this previous high so or you know you could say well i'm going to do 200 shares and i'm going to put one with this shorter term target and one with a longer term target you could kind of do it either way you could also do this with a with an option and again you're going to come here does it trade over a million shares a day yep um if we come out to september you know do the options trade heavy volumes well look we've got a six cent spit-ass spread almost 10 000 contracts on the at the money strike and you know the other question you might ask yourself is you know is earnings behind us yes it is and so if you wanted to do this as an option trade you know you could do it in exactly the same way now instead of investing 3 800 you're investing 289 dollars and we could you know again do set this up as a swing trade um and when i i do that we could do by custom with oco i find it faster to go in and just do it as a single why is that because i'm going to then say first trigger sequence right click opposite order make this a market order good till cancelled and then i can put in both my target and my target was if this goes above 39.95 or if it goes below and that was 35.62 we want out the trailing stops are an option david pardon the pun they are a choice that we can make but the challenge with trailing stops is if you have a day where you have a lot of activity in the market and it goes up and then comes back down you can end up out on an up day if that makes sense um so you can kind of get triggered out sometimes when you wouldn't have intended to be out um often trailing stops will be used when you know something's just continuing to march up the hill and has been very profitable and you're just saying okay this is going to end at some point and so i'm going to use a trailing stop and i mean that same type of thing can still happen but so we want to buy one of the 16 september expiration 38 call which is the one closest to where it's currently trading that's the strike and then we want to exit when it either hits our target or if it comes down and hits our exit again no guarantee that we'll get out if it gaps up or gaps down we could end up how much you know losing more than we're intending um you know what's our max loss what we paid to get into the trade and so we're risking less um you know than we were when we you know when we buy the stock sometimes right because how much are we risking well technically the stock could called could fall to zero so we're going to be able to compare this to the stock swing trade and actually we're going to put this in our swing trade bucket because this is it's a long call well you know what i'm going to put this in long calls and we're going to put that with swing trade okay wait i mean you can put it in whichever bucket you like okay that's that one i i wanted to look at a couple where i looked at them and said yeah not yet one of them was fdx and and i'm bringing up more of these in the last week or so because i get asked a lot like how do you find and i'm sure pat has the same experience how do you find you know the the examples that you choose to trade and often i'm just going through the s p 100 you know i just pull up a watch list so i'll switch my gadget to a watch list and then i'll just go out to public watch lists and i'll just say okay let's look at the nasdaq 100 and i'm just kind of clicking through i'm linking my chart and i can click through pretty quickly and when i look at um fedex and this happened with a lot of the positions that i looked at last week it's okay double bottom or like an inverted head and shoulders type pattern setting up but has it broken out yet no will it well we don't know and this is kind of where patience ah it's frustrating it is a virtue and it's not like one of my strongest virtues but it hasn't broken out so we're just going to continue to wait and and watch that one and you know another one you know that i looked at today was shopify and okay that one looks kind of squishy because it's had such a dramatic downfall like from 176 down to 30.
and you know some say what goes down must come up or what goes up must come down not necessarily sometimes things go down and stay down but you know we're looking at this one trading within a range and let me come to a shorter time frame so when we look at this this has been kind of range bound right and so might there be an opportunity but this is a 10 range like that's a 30 from 30 to 40 is a you know it's a 30 some percent move from 30 to 40. um but when we look at this you know if we had been looking at this on this day would have said you know bob's your uncle go for it you know we just had earnings or maybe even on the following day but now it's not quite at our resistance level and it's not quite at support and at 38.15 you know that would be a two dollar move to get to 40. we're kind of
in the middle so we we missed the entry so with this our ka hold would have been on this day here or close above the high of the low day or even in the middle of it it would have been here well i guess today would be a close above the high of the low day but you know i i said ixnay on this one a just because you know it's already made so much of the move now if you know if we're watching this one and it does come up above you know it comes up here and maybe it has like a two-day pullback and then it breaks through well now we are we've got a different conversation because a technician might say well my my target on this then would be around 50. and so you know if it comes down and then bounces then that's you know a different kettle of fish but we're you know we're not there yet we're we aren't there yet okay i wanted to look at tesla and so when we look at tesla and again this is a three-month chart i know many of you have looked at tesla you know and and and saw like just how humbling it was to see this stock go from twelve hundred and forty three dollars a share nine months ago all the way down to six twenty and we've seen this first of all this diagonal break but we are now seeing you know a bull flag and you know we're midway through another bull flag um and oh these arrows if you're referring to these arrows these these arrows here are just an indication that something has crossed either above or below the 30-day moving average and you can add those to your charts easily by coming to edit studies and then when you come to your simple moving average this is the 10-day if you click on this sprocket show breakout signals if you change it to yes you'll get those little arrows that was a question in the chat from sydney and that's how you can add those if you're interested in having those on your chart something like it it's just kind of a reminder but again with tesla okay somebody asked me if i would draw the flags and yeah i can do that so when we look at tesla here come up pulled back now you know on friday this would have been considered an entry because it was breaking above here so we have another flag and again some might say well we've missed this move because when would the first entry have been the first entry would have been on this day july 27th which was last wednesday when we had a close above the high of the low day the next entry day might have been when it broke above this previous high here it and that would have been on on thursday and and some might say well i think it's going to continue to go up others would say well it may come back and pull back i've you know i have missed this entry and this is one of the reasons that if you have an active watch list you're going to want to look at these things on a day-to-day basis so how can you prevent missing the next entry well one you could put in an alert and say hey if this comes back to this 8 35ish level so we could put in an alert and say hey if this comes back below 8 40 let us know and it may continue falling but if it bounces um consider a swing trade entry and who knows it's just saying hey come back and have another look at tesla but if we come and we look at costco now today we have a pullback and i mean the day isn't over yet and it's not a big pullback but when we kind of hone in and you know somebody has asked if i would draw some of these flags you know we saw this come up and it had a two-day pullback and this came up had a two-day pull back then it came up again one day pull back up again two-day pull back so if this turns out to only be a one-day pull back we could say well what's the high of today and so if we look at this we could say okay the high of today is 550 104. so this is a very expensive stock um and and you can guarantee that the options will be pricey on this one also but we could say hey if this goes above 550 104 and you know we could say even by a dollar so if it goes if it hits 552.04 then we would like to buy some shares and if we wanted to have a swing target on this this was our previous high around 605 and so if you take a look at it 550 you know if we're getting in around 552 and if we got out at 605 that would be about 60 dollars a share or 50 dollars a share that's you know in the neighborhood it's not exact of about a ten percent gain and so you know in a thirty thousand dollar account we couldn't buy very many shares um you know we could buy if you said okay our max position size is five thousand dollars so if i took 552 5000 divided by 552 we could buy nine shares now i do have another account um but you know what what's wrong with buying nine shares and if you ended up out of that trade and you made you know fifty dollars a share that would be two hundred and fifty dollars and this account started the year at 20 000. so 250 like that's one one percent increase in the original value of the account nothing to sneeze at you know what i'm saying it's it's a base head it's it's you know what we call you know it's a small win and so if we looked at that and said you know what i would be okay with doing that then we'd right click um and we'd want to now when would we want to get out so we might say well here's our previous and it just depends on how much room you want to give it to move but if we said here was our you know our previous high here around 532 if we put our stop three percent below that our stock would be at 516. so where's costco 516.
and our target would be let's call it uh 600. you know if it gets up into that neighborhood okay so we are going to right click we are going to buy with an oco bracket and how many shares are we buying we want to make sure we're not trying to buy a hundred because that would blow up our account it probably wouldn't go through if you click that little paper clip and then hit enter it will make our exits match and our target so first of all now we can put in a buy stop order i don't know the way my brain works i kind of like this conditional order to say hey i only want to get into costco if the stock goes above 550 204 and this is one we want to watch on a daily basis because if it pulls back for three or four days we may want to change our entry and get in earlier than that so okay 5204 no we wanted it to be 550 204 y5204 so we can see down here we only want to get in if it goes above 550 204 and so that's a market order and then given that we get in we want to get out when it hits 600. is just shy of the previous our swing target and we want to put a stop on it if it goes below 5 16. 516.
and so what are we risking per share if we're getting in at 552 well 552 that's 5 16. we're risking 36 a share times 9 shares so is that less than 500 it is so does that mean our trading parameters um it does for max risk and so you know the cost of this transaction four thousand nine hundred and four dollars so is it under five thousand it is and then we would put this in our swing trading group and of course we're not going to hear this fill because it's not above 550 204. looks like all your lower studies are moving down oh on this chart yeah so you know we could look at this you know this is a potential macd divergence and so we could see this soften and you know that's a good point our atr dropping what this means is the um it's getting lost less volatile and these numbers were especially skewed when it gapped down on this day and i think that that was maybe in reaction i don't know if that was reaction to the walmart news but there was a a couple of retail events that have happened that have hammered that whole industry group so guys the time sure flies by doesn't it um if you wanted to practice there are you know you could look at a stock like general dynamics which you know we're seeing a diagonal resistance breakout on and this is in paper money of course and where might you put a target so some might go all the way up here some might aim a little closer to home for something a little shorter um if we look at isrg whoops i s r g they're kind of picky about that and again here's an inverted head and shoulders breaking up to the upside today and you may see these discussed you know later on in the week as well um but yeah so i think we've done what we set out to do we had a quick look at the market we looked at two trades that we placed last week one on zoom which we're out of and one on bib um biogen and then we placed um three new example trades on a couple of different stocks we did a stock trade we in fact we did two stock trades and then we did an option trade as well so keep in mind that everything we do in this class is for education and informational purposes only none of it is to be construed as a recommendation on the part of td rare trade or myself if you found this class helpful my ask for you is that you smash that like button um also don't forget to follow pat and i in the land of twitter at the armstrong underscore tda and at p malala underscore tda thanks to pat for joining us today and last but not least you'll want to subscribe to this channel so have an awesome day everyone take care and i will see you in a webcast coming up soon bye for now