Customizing Relative Strength | Technically Speaking: Trading the Trend

hello and welcome to trading the trend weeks to months we call this series technically speaking my name is james boyd great to be with you we got lisa sandy uh uh pierre louis grace tony and many others again we'd call thursday trend trading or uh trend thursday like to have a theme from each day and so we really this class has really talked about seeing those dominant trends over the weeks over the months one thing we know for sure it's just because trends have been going up doesn't necessarily mean that all investors are really taking advantage of that trend so we're going to be talking about really shorter term and longer term trends and we'll talk about relative strength bonjour to you now just real quick as we're getting started remember you can follow me on twitter i do post educational content there daily uh notice that that educational content could be technical nature fundamental nature option strategies really try to throw it all on twitter there and show a nice variance of content even fundamental data as well and macro data and just remember that with what we talked about today if we talk about options remember that options are not suitable for all investors special risk inherited trading options also remember that when we demonstrate the function of the platform we're going to use actual symbols remember that td ameritrade does not make any recommendations to determine suitability mainly security strategy and also remember as we talk about options the option greeks have dealt the gamma vegan theta now i think we're going to be in for a good time here uh my family about 20 minutes ago left for vacation i didn't want to go on vacation uh and so a hundred percent jb today okay now who uh my dog jax is here i might have a special guest uh so all right if you've never seen my dog jax he's a little yorkie and he likes to be in also in the riding seat as well all right a little fun now just real quick as we're getting started we're going to talk about the index and sector update we're going to heavily talk about relative strength on the spx on the nasdaq on the dow itself we're going to talk about stock and option examples and then questions as we normally do do please do not wait to ask questions at the end just ask questions as we go i would really like to answer those and i'll stop every so often and say are there any questions so with that said let's go ahead here and hop right in let's first uh take a look at the spx first so when we actually take a look at the spx this was the fib that we actually have drawn from the other day and guys i think gals i like to tell you that the trend is different uh but it's not okay we we have now there's that little saying that says sale in may go away uh just because it rhymes doesn't necessarily mean it's always true and lately it hasn't been true either okay now one thing i want to kind of show you when you take a look at let's say the s p that upside potential target we talked about was 43 52 and still we're kind of seeing a little grinding up near that area nasdaq if we look take a look at that that's the index that we actually said that was a little bit closer uh to that targeted area which maybe might cause a pause in the nasdaq a little bit maybe it might also cost some investors a profit taking the nasdaq shift over to the russell 2000 let me say it again if investors sell the nasdaq they might try to shift and go over to the smaller caps which are also higher beta now if we take a look at those smaller caps we are seeing actually a higher low here now i was on uh trader talk this morning with lee bull and we talked about when you actually look at the russell itself okay 30 probably 30 stocks or less really have higher volume and decent option liquidity in the russell i had 2 000 stocks about 30 stocks that's it so some investors might really trade maybe just the index itself something that tracks the index or trying to but if we take a look at this kind of a recent run up and then a short term pullback and then trying to get a little bounce here okay so when we actually look at the indexes let me just show one more and then we'll show you something but when we actually take a look at let's say the dow jones itself what do we see well the dow is kind of a little bit more neutral-ish okay but what we are seeing in this case is we are seeing that the the index the dow jones itself coming right back up to the horizontal resistance most of the resistance touches are happening right around 346. okay now i want to kind of show you something i i posted something just yesterday and i thought it would be just a nice intro piece to kind of what we're going to talk about here today now let me slide this over now how many of you have now brent morris posted this i retweeted it how many of you for example have really ever heard uh actually brett morris posted that but let me actually go down to yeah this right here okay so i'm gonna actually pull this up and i want to kind of show you this so this is we've heard of people that have said hey james the stock market let's say is at an all-time high okay now if you take a look at let's say the s p let's say uh the s p 500 in that year the ath stands for all time high okay in 2013 there was 45 all-time highs okay in 2014 there was 53 all-time highs fast forward to 2017. boy that was a good year 62 all-time highs and then 2019 36 33 and 20 and also if you look in 21 i'm actually seeing that i'm not getting that bandwidth i'm gonna keep an eye on that okay i'm gonna keep an eye on that i'll cut the video if i have to my speed should be good though my point in showing you this is if someone is afraid of all-time highs they could have been afraid of all-time highs really back in 2014 or 2000 2017. the point of bringing this up is if it's at a high the highest likelihood is to make a higher high then it could trend okay so this my point in saying that is just don't be afraid of potential let's say brand new highs uh you should be really watching what the trends are doing i think that's just something very important now what i want to do is also i want to bring up something real quick let's uh let me bring up twitter something i posted just about 20 30 minutes ago is i actually also posted right on twitter uh 30 minutes ago really rs 21 okay yeah i'm right by the router and i had 600 megabytes so i'll keep an eye on that uh but if i take a look at this this is actually looking at the rs21 for the relative strength 21 days which is one month okay now for the it's the relative strength for the s p 500. this is now actually taking a look at right below it is rs 21 but that's actually for the nasdaq 100 okay now some people don't like to look at the net the asp 500 they might like to take a look at let's say the nasdaq 100 third is actually some people like to look at let's say larger cap type of stocks now if we look at those larger cap type of stocks we also might want to kind of compare and contrast to let's say the rs uh 21 for the dow jones itself okay now if you take a look at this these scripts right there are going to show the code whether you want to compare to the s p 500 compared to the nasdaq 100 or compared to the dow jones itself so if you say i i really like looking at nasdaq stocks well then you might want to just take the relative strength for the nasdaq 100. if you like larger cap stocks

that's the relative strength for the dow 30. okay now 99.9 percent of the time we just kind of use the standard benchmark now what i like to do is when i look at stocks okay and this is right below that i'm going to bring up a list of the s p 100 this is list one and two this is not my list i've said this more than once this is not my list i split up the list in half that way all the scripts can properly load more quickly and what i'm gonna do is i don't have any uh zero examples of stocks i i want to kind of create this and do it together but if we look at this i'm going to kind of show you this first is if we go to the market watch tab what this is really going to do is we can actually see and i just have a list of sectors here in this case but if we were looking at sectors what you're going to notice is we have an rs21 we can see what sectors are performing stronger in the s p now again 21 so rs relative strength 21 that's 21 trading days that's for the s p 500 we have discretionaries which should not be a surprise we have technology should not be a surprise we also see health care should not be a surprise okay so when you look in the s p those are the three sectors that over really the last 21 days or one month of trading those have been the ones that have really been stronger now if we were to kind of say okay well which sectors have really been outpacing relative to the benchmark of the nasdaq remember the nasdaq's gone straight up okay the only sector in there that's really doing quite strong it's the iyt what a shocker when you look at these other ones they're trailing against the benchmark interesting okay but you gotta remember that nasdaq has been super strong now if we look at let's say the third what you're going to notice if we take a look at these sectors and we compare it to the dow now it's what you'd expect the dow has been really worse okay and what you're going to see is there's four sectors and we would also include in there well actually the s p isn't included in there so it's really you got the s p out performing the dow and the three other sectors we mentioned it's really uh discretionaries it's technology and it's healthcare now i want you to notice also in this space we see co holds on many of these we also see a 20-day high really in 55-day high on the s p 500 we also see a 20-day high and a 55-day high for the healthcare sector so let's bring that up we've talked about discretionaries quite a bit let's take a quick gander oh my gosh okay uh healthcare straight up kind of looked like energy this morning but if you take a look at this you're going to see a very strong really move in the healthcare space okay now let's just do if we could a quick check i want to kind of double check something as far as speed audio and video good i just want to kind of just refresh them just real quick a lot of you said it was good i just want to do some checking okay let's make sure all right yeah it looks like we're we're up on the time okay let me know if it's not and i'm gonna keep an eye on it one thing i might do that's actually really weird uh let me know but i'll keep an eye on the chat i'm just checking something just real quick okay now as we go forward here what i want to do is i want to kind of talk about okay good yeah for some reason it's showing up but i'm keeping an eye on it now what i want to do is i want to come back to this okay so this is how probably many investors okay so i want to kind of talk about these two i want to talk about this okay the relative strength but i'm going to talk about the relative strength really right here and i'm going to use really the s p 100 as our as our lips now feel free if you you want to look at the nasdaq you want to look at that have at it but i want to kind of talk about this list and i want to really zoom in here so first off when i take a look at this some of the questions that have been asked is does someone always have to pick the top i think i've addressed that but the answer is no so for example given one of the stocks and i'm going to kind of show this is someone could actually start down here at the bottom and they might say hey you know james i'm seeing bank of america really go from right to left bank of america has been a little stronger one of the stocks has also been a little stronger at least neutral or better has really been dan which has been dan or her which by the way is in healthcare and then if you look at something that's really gone from a red to let's say a greenish color is duke another one is bib and another one rekshi right here is that small one again a lot of people kind of distrusting apple's move lately but it's actually stayed green apple's been one of those names that's actually gone green and if we go from really uh red to green that's actually cvx another one that's gone really gray to green it's also avid oh by the way that's healthcare and the last one or two we're seeing in this case you got dow and you also got exe and let's just throw one up more on for good measure you actually see let's say uh general electric so my point of actually bringing this up is you can work your way up but you're probably going to be finding ones that were kind of let's say the relative strength was more red to maybe a grayish to a lighter green to a darker green now these relative strengths that i'm showing they're for example that's relative strength compared to what index uh i never told you yet well this is the relative strength compared to the s p 500 okay now how could someone customize that i mean how could you see what it's comparing to and if you wanted to how could you change it okay so what you'll notice is the reason why we use this is this would be a really good way to see trend okay notice we're looking at relative strength in a five day one week two week one month two month three month okay now does that mean that the investor cannot look at something like uh conoco phillips that has really just been in a trend for weeks on end hello that's what we talked about right so yeah you can now sometimes what happens is people think well if it's already been green for so long it can't keep going up i mean the patriots can't keep winning the seventh super bowl in a row but they did okay so the point is we need to get that out of our mind that just because they've been green for a while doesn't mean they can't keep going up that's why i showed you the data on the all-time highs okay there were people back in 2017 some investors that probably cashed out or sold a lot they've been sitting in cash waiting for the pullback and boy i mean there you go the point is to have exposure or to consider where are the trends we use the relative strength x to see where those trends are now i want to bring up something before we look at examples we're going to go to the market watch we're going to go right to quotes okay now what you can do and i want to just show you this okay so if you kind of want to do your thing uh and you want to change your time frame all you can do is when in doubt what do you do but when in doubt you right click well when you right click what i'm going to do is i'm going to go right to where it says customize now if you right click on the header and say customize you're going to see okay let me actually change that right click actually we can go to customize or we can go to edit formula just want to show you this where you can change it if you want to if you go to edit formula okay what you're now going to notice when you scroll down it's going to show what it's actually looking at or comparing against to spx spx now by the way if you wanted to if you want to maybe find some stocks that were let's say ixt could you just kind of take spx out there there and there could you take and maybe kind of put in the ticker symbol you want sure that's why i'm showing you this also if you wanted to you can scroll down to the bottom if you kind of have a secret hot sauce for you and you want to scroll down to the bottom if you take out 21 down at the bottom and you change that to 30 you change it to 40 you change it to 50. whatever your heart desires change it to the number of days i just defaulted it really there to 21.

okay now so if is that helpful i just kind of want to open up the hood a little bit and show you you can change what it compares it to to see the relative strength and you can also change the duration okay to what we're looking at as well okay now let's kind of talk about some examples so one of the examples i want to go back and i'm going to use kind of maybe a screen that you're looking at now where do you get these columns they're on my twitter page right at the top okay any of the ones we actually are showing we're going to use this as a home plate to find candy dates okay so uh herren says can you please show this again from the start uh you could watch the video from the start i probably won't go back and review that because now i'm kind of in that uh showing now examples but this is being recorded so what i will show you is if we go to my twitter page okay if we go to right to the very top you're gonna see that for today's webcast i'll post those here nasdaq 100 dow 30. that's going to give three different column headings looking at the 21 days one month relative performance to different uh in this case benchmarks okay now also so i would make sure you're aware of that now let's go actually go down to the list here so when we're actually looking at this what i'm going to do is i'm going to go look for something one of the stocks that's kind of caught some people's attention lately is a stock where it was red red and then green here and here and here now someone reached out the other day and they were kind of talking about hey i always feel like i'm late well the question is why are you late why do the tools not kind of help you are you looking at the tools on a daily basis are you not watching maybe four cohorts and breakouts so for example given okay i'm going to even kind of maybe vary it a little bit i'm going to say if someone said hey my i'm struggling with seeing trends struggling c entries why because if i go look at let's say conoco phillips that's actually been one that's been stronger for weeks on end so unless someone went on vacation for six weeks i could understand it but i don't understand it now if we take a look at this we see kaholt it's a bounce setup we also see it was a gap this morning which is not a shocker because actually crude oil is up about two 20-day high we see a 55-day high we all see a whole moving average crossover so if someone said i'm struggling with entries it's telling me that they don't really have a routine you can get many tools you want they don't have a routine they're not doing it as a business they're not doing it and actually looking on it daily so what i'm going to do is we're going to look at two stocks okay now here's the deal i'm going to actually pull up hd first and what you're going to really notice is hd has been a stock so remember i kind of said for example if someone said i'm late i would say why because if someone was actually looking at the screens that we have there they would probably be seeing let's say home depot probably getting above the 10-day moving average that would show a great green background with the number one well that's interesting if the stock for example got above the 30-period moving average that actually could also be showing trend change now remember the blue line is really your 10 period moving average the momentum line if you get above the red line that's actually showing momentum change now if if that blue line crosses above the red that's actually saying a moving average crossover okay now if we take a look at this well if we go back to that what you're going to notice now is it's also going to show us moving average crossovers like here it will say x for a crossover if it says x that means it's crossing over today if it says x plus two it's crossing over two days ago now by the way you don't need to have a computer be nice but you could also for example pull it up on your phone and see this on the thinkorswim mobile platform so if you're at doctor's offices taking your kids to the vet the ymca playing golf you could be waiting on the tee box and pulling up which stocks are showing the crossover what's your point in saying that i i don't think anyone has any excuses okay now if we pull this up what we're now going to take a look at here is if we look at actually home depot this is a bigger dollar stock we we note that okay now if we take a look at this can we kind of have like an area of resistance where it's right at 319 that's where the stock broke down that's where the stock retested right up in near the 319. now sometimes there are investors that might say when the stock is reversing they might say yeah but the stock is at the 30 period moving out i'm not going to get in yet yeah but the stock for example hasn't crossed over two days later it does yeah but the stock for example let's say is now the 321. so we can say yeah

but many times over right but the more the story is if you break about get above the 10 get above the 30 you have a moving average crossover and you have green candles going into resistance with a rising macd this is really showing a building momentum and you get a rising of momentum it's increasing the chances of breaking out of resistance yeah but so here's the thing the people back in 2017 said we're hitting all-time highs yeah but 2018 yeah but 2019 yeah and the thing is they're not really reading the chart because they're saying yeah but does that make sense so when people the question is is someone really looking for entries if they are they probably see them or are they really looking kind of for more excuses does that make sense boy james you you're just really kind of you're not really kind of padding what you're saying here look i think everyone has a goal to increase their funds right everyone needs to take their funds try to grow those funds for that potential future income they need to grow their capital base and have income now we're going to go look at actually home depot not from necessarily a stock perspective but maybe in this case a vertical perspective okay now if we take a look at this we're going to go down to let's say the on the put side the august expiration 50 days left when we go look at the annualized implied volatility with a 24 on the implied volatility okay 24 we know immediately the volatility the premiums aren't going to be super high because this is in the lower end of the threshold or the range 15 to 24 would be lower implied volatility and you could also probably see that on the the iv statistics as well but we're going to look at the 310 i'm going to look to actually sell the 310 uh short put right there with a delta of 33. now remember when you sell the put by itself buying power collateral is going to be higher if the investor does not want that what they can do is they can buy the 305 put be low now they don't have to do the 305 they can widen out these the rights and if they widen out those strikes what you're going to see is it's going to increase the credit and also increase the maximum loss okay now what you're going to notice here is this has 50 days to expiration now the other day we're kind of talking about if the investor in this case could ever if there's more than 40 days to expiration okay the investor might say realistically a target might be to get half of that or 65 of that now listen listen to this we don't normally do this but sometimes we're not always around watching okay we're going to do first triggers scq there we're going to right click right on that red line right click and we're going to say create opposite order okay now what what are we doing james we're going to set a buyback so on on our calculator we're just going to go ahead and actually type in 2.35 cents that's the premium of that uh 237 okay 237 and then if the investor was saying james i want to try to get 65 of that well if you eat 65 of the cake you would only leave 35 left so we're just going to take 237 times 0.35 and that's going to give us a potential target we're trying to buy that back at 83 cents or higher no 83 cents or lower now what we're going to see in this case we're going to go to data gtc okay so now what we're going to see in this case is 237 83 cents and now we need to kind of just double check on that position size so when we actually look at the maximum profit the maximum loss the margin account okay can really risk about 800 850 it's going to do one contract but the ira it's going to do two contracts okay so how do we change that we're gonna go single account multiple accounts and if we actually said minus one on the margin minus two in the ira and if we did that there you're now going to see the buying power is going to be what the max losses okay this is properly position size for both accounts if that's what the investor wants to do we can actually see what the max profit is for the three contracts the 390 there is that is going to be in this case four okay uh the three contracts the selling of the put the buying of the put and if that's okay they can send the order now in this case it's not trying to make all the premium it's just saying when it gets 65 of that or better buy that option back okay now i want to kind of uh the comment came from woods is can you show us on twitter how you split the s p into two different lists uh how did i do that i just did it manually okay so in other words i brought up let's say the market watch quotes and i went down to let's say the public list so i'm on market watch quotes this question is by woodsman if i go to let's say sector indexes that's just a list i made and if i went down to let's say public i manually so i took the s p 100 list and one day in probably 15 minutes i manually made list number one s p 100 list number one and it would shock you i took the s p 100 the other 50 49 stocks and made and called it s p 100 list number two i know that was really unbelievable now there again the reason why we did that is the scripts load faster and easier when you probably have a list of 50 or less stocks now i did the same thing on the nasdaq 100 now i post them on twitter multiple times okay so if you're not watching that twitter i'm sorry but the biggest thing i've posted that and i want you to see and on a daily basis you might kind of want to take a look at what some instructors are posting because we're not just posing random okay we're posting things that might be of helpful educational content there things that we wish we would have okay now if we also take a look now by the way when i do that i don't know if on this so i'm using a different computer but if you if you would say hey that would be really helpful for you to kind of post it i'll repost those lists or retweet that out but i've probably done that about every two weeks i just kind of retweet that okay uh now dave actually says how can you tell if a stock is included in in an index well the first thing usually if i had a question and if i said hey is xom in the dell 30. what i do is i would pull the dow jones itself and i would just rank it by symbol so it would just go a to z now when i do a to z if i look down this list it says is x on in that list and it's not then i know it's not in the down 30. it got dropped out of the dow 30.

if i said well is in the is x is x on mobile in the nasdaq 100 well i'll just bring up the nasdaq 100 list rank it from a to z and look and see is it physically looking at them okay i think that's probably the easiest way to check and see if it's in the index okay or an index now one of the comments actually from uh somebody kind of go back and hit another james you talked about on credit spreads and credits credit options and credit spreads potentially selling at 50 profit is there a way to set up an oco using an option price rather than on an underlying price yes so let me what i'm going to do is i'm going to go back to conoco phillips okay second example so here's conoco now if we take a look at conoco conocos really had a continuation pattern now i'm going to try not to freak out here okay i can't tell you the number of times we've talked about the stock where it runs up in the runs up in the price and then the price pulls back and then the stock actually runs up and it pulls back and it runs up and we kind of talk about what we call we label this as really a cop or a bowl okay now again what sometimes when people see a prior high and it pulls back people might but you gotta remember on an intermediate trend that's normal this pullback right here really might be a flag on an intermediate basis you wouldn't know that unless you actually took a look at that weekly chart that's what we said for the law take a look at that daily and the weekly so important if you went back to 1996 when i started if james could talk to james i would say james wake up brother i would say one of the most foolish things i could have done is only look at the daily charts foolish because if you don't go look at the weekly charts you're probably not going to see kind of things from a higher aerial perspective and see what that dominates trend is from an institutional viewership perspective now what you're going to notice is they kind of have like that little pullback we call that the handle now notice actually where these recent bounces are most of these bounces are really right here so just because conocophillis is going up do you think people have that stock they maybe do do you think some investors might have been missing the trend they probably did so here's the deal if we look at that stock what do we see on the price graph well what we see on the price graph is we see a 20-day high we see a 55-day high but we also see it behold so if someone said to me well james i just feel like i'm really struggling and actually defining the entries etc etc i would go back and say what you really need to kind of tell me is you're not really doing the routine are you now my family my kids really know my my son said to me he goes dad i i know you're never gonna give me a compliment unless i really deserve it that's true i said to my son colt and i said i don't give compliments for finishing second seventh place or ninth place if you could have improved you could have improved and sometimes you know i think that's very important as a coach or instructor if there's things that you can improve do not sugarcoat it if there's a bar that needs to be raised or held hold it okay so when we're looking at this whether we look at a daily or weekly perspective it's been green for weeks so what does that mean this probably should have been on the radar for weeks okay it's not just a day or two-day issue when we actually look at this and we say go hold now does this guarantee that since it's all green that it's just going to go up forever of course not it's just saying right now that's what it's showing now okay now what we're going to do is going to go back to conoco phillips and there might be an ambassador that says yeah but okay james i see this going up but i'm a little concerned now how many of you are thinking that yeah but okay well one of the things when we actually go take a look at let's say conoco phillips what the investor can do is they might decide in this case okay and i'm answering the question but i'm going to kind of change uh when we do oc order let's say the investor said i want to maybe do a trade where we go long the call and short the put now remember those are two single option positions long call short put both positive delta okay now if we right click on the ask price of that call now wait wait why are we jumping to the 60 we're jumping to the 60 because we talked about where we're gonna look at the first option that is in the money so really if you look at the stock price sixty three dollar stock you got a sixty dollar call that means there's one two three dollars of intrinsic value but those calls are not three dollars they're adult they're 470. so we know immediately there's about a dollar 70 of extrinsic value okay remember at the end these options become worth their intrinsic value okay that's why we want some intrinsic value to start with now if we right click on that ask price and we go to buy we go right to where it says color synthetic this is a long uh option trade that is really going to mimic the stock movement now what i'm going to show in this case is but how could we actually set up an order to exit based off the option price okay well what we could do is we could go to single order first triggers scq and wonder if i said hey james in this case i want to exit if in this case if that option were to go up let's say 500 okay well what do we pay for well if we paid two dollars and sixty four cents for it and we were trying to make five hundred dollars but five hundred dollar would really be in this case the target would really be a credit of well 764 okay so in this case what we're going to do is we could say 764 because that's going to give us really a five dollar difference there okay we paid 264. 764. so can you set the exit or the stop and by the way you could do that with a call as well okay sure okay so if you paid 264 and you get a credit back of 764 what's the net difference it's five dollars okay now that's that's how you could do it if you want to do like a call or a short put vertical it's the same thing okay now if we want to kind of usually take let's say what we typically talk about using the stock price data gtc we're going to go this chart price now when we look at this the the whole purpose of seeing technical analysis is try to use measurement techniques when we kind of see let's say a cop okay is we might kind of measure from old resistance really down to the lower area or the base of support so if we were going to kind of set a targeted area one of the target areas might be let's say 66.93 a second measurement technique might be taking the 200 percent now some investors like the 200 percent the 200 is just taking really that low to the high the width and then adding it right on top so remember technical analysis the study of price volume looking at trans momentum but it's also helping us really kind of gauge a price target okay now what's so nice about the fibonaccis is you're really being able to also kind of being helped with maybe where other technicians might set a target 67 is or maybe a targeted area about 71. now

if an investor said james i'm trying to get a higher uh potential gain that means there's a lower probability of going to that area but also what's nice about the fibonaccis is you're also it just makes me hungry thinking about italian food when i keep saying fibonacci okay maybe it's italian tonight but if i take a look at this we might also kind of take the 100 percent the 5968 or maybe take that 78 and use that as a plank of support now if an investor said james i'm going to use the old resistance as new potential support i'm going to take the 5968 less two to three percent and that's going to give us 57.88 okay so i'm going to write this down here all right so 57 it's really 57.89 if we said hey we're going to set a higher probable well a higher target that has less probability of going there some people like deeper targets this is also a train trading class so the investor might not have tried to set a target at the first level okay but how do we do that we're going to go right back to this where we can click on the gear click on gear and if we click on that gear we're going to kind of take the first row here and we're just going to say look if we go greater or equal to and we're going to type in 7184 now we don't know if it's going to go to 71.84 hope it does but we don't know now by the way you can figure out what is the probability of the stock going near the 71.84 you could go look at the weekly or monthly options okay that has a strike price near there and look and see what is the probability of touching sec we could also go back to cop mark less or equal to and this is where we're just going to type in the stop 57.89 okay now what you're going to notice in this case is if we go we want to check are these numbers the same as this not those numbers down the bottom they are now remember it's long the call short the put and if that is the case here there's going to be a commission of a dollar 30. now we kind of need to kind

of do some quick checking okay if the stock's at 63 and we have a stock down here let's say 58 ish the risk per contract would really be how much well what would be the forecast amount assuming the delta is a hundred now if the stock went down five dollars and the delta was a hundred per contract would be about 500 that means in the margin account we could really do one contract round it down and really do about two contracts rounded okay to the two contracts so now what i'm gonna do is i'm gonna do two con one contract and margin because the the max loss acceptable is 800. each contract is about 500 can't do two contracts in the margin okay in the ira gonna in this case do two can really risk about well actually really actually in the ira can do about three contracts because it can really take a risk about fifteen hundred dollars okay so three in the ira now let's go ahead and take a look at this so if we now send that order okay and it's adjusted now here for the three contracts well actually four excuse me one in the margin three in the ira grand total four okay send the order and now we're going to see if that order can fill and if that trend could actually try to push now i want to kind of see also if there's any other comments excuse me now rey is actually kind of talking about let's say the transportation stocks well if we look at let's say delta now there's been some discussion regarding uh vacation in general whether it's marriott hilton expedia when you look at let's say delta it is coming off the low still earlier into the bounce right conoco phillip fills if we take so i would say it's a little early there but trying to get a little bit of the bounce love okay early kind of that the wall of resistance if we kind of take a look at let's say love connie the the temporary moving average really acting as a ceiling so far and then if you take a look at let's say alaska airlines and say what do we see kind of see that the blue moving average line acting as a ceiling as well now uh if we go ahead and actually kind of take a look at those we would say it's a little early i'll take a look at maybe maybe boeing boeing is one of those stocks where it's also maybe a little early but if we start to see boeing maybe get above its 10 period moving average it might try to drag those other stocks up with it one of the reasons why maybe ray and other investors might be kind of looking at this they might be seeing maybe a potential double bottom they also might be seeing where the macd is rotating up a little bit that might be something to kind of keep in mind okay for us as well coming into the next week now thomas says james do you have a preference strategy on earnings trade no okay don't have a preference strategy so uh if if someone is talking about holding over earnings they might say i'm gonna do a vertical type trade where there's a built-in maximum loss if someone sells a short put over the earnings they're really saying i don't mind in owning the share just hand it over okay uh if someone does a long synthetic over earnings what does that really mean well that really means that they're very confident okay in the direction okay the higher the delta over earnings the more directional risk now i'm going to kind of take for example uh nike if we will and this has actually been one of the stocks now remember this is discretionary now the reason why we kind of keep each time we kind of talk about one of the reasons why we keep talking about let's say that the sector of discretionaries is if the sector goes up something is driving that performance okay remember there's two ways you could look on the td ameritrade.com you can look at the market monitor you can also go to where it says analyze excuse me market watch visualize you could pull up let's say the s p 500 and what you could do in this case is you could also shut that down try to yeah there you go scp-500 if you said james i'm actually looking kind of maybe for the discretionary sector what's been moving up strongly here's the sector of discretionaries right and one of those strong stocks been a little stronger today is nike now if you see over a pattern a period of couple days that nike is hitting hitting hitting it's strong okay the investor might say well geez maybe i could go look at that stock now if i were to let's say go look at uh nike itself okay i'm gonna bring up let's say the chart and what we're gonna notice here is when we pull up nike what's unusual is we might say well geez it gapped up on earnings quite a bit and remember the investor might be saying well i'm looking for the stock to pull back well the thing is is it's not pulling back and it had one day down and the next day it went up one day down the next day it shot up again now why do we bring this up look probably one of the most overused phrases in the stock market is i was waiting for it to pull back oh man that could be the most heartbreaking thing ever if it doesn't pull back and if you see that the red candles are probably three days or less that's saying that the investor is looking for it to pull back but other investors they're not waiting for it to pull back they're trying to buy in on any down days at all to try to push the stock up now if someone said well james the discretionary area has been moving up and i want to try to get exposure to potentially a sector that's been going up and i want you to notice something here it's been going up but it hasn't had any red candles okay now this is not going to be this is not so far in the guinness book of world records as far as number of green candles in a row but why do you think it's going up so strongly does do and other investors think that this is it do you think they're actually doing a strong bringing handle into resistance that's doubtful might maybe but the stronger goes up into resistance the bigger the candles are for the resistance and do not get fooled okay uh we need higher volume that would be nice but it doesn't necessarily have to have higher volume it's the price okay and then it could just have average volume or slightly less than average volume still smashing its way through resistance you're not getting fooled it oh every breakout needs higher volume that's not the case now our last right here we're going to look a little uh nike now if we were going to look at let's say nike and we said you know what james i want to have maybe some offside potential well we actually look at this what we're going to notice is if someone wanted some upside potential well they could buy a long call the thing with the long call is yeah you get upside potential but you've got to really in this case pay for that upside potential okay now whatever the investor pays for what you're gonna see is six dollars and sixty cents the investor might say geez now i need the stock to go up to about 171.60 to 160 160 to break even but what the investor could do is they could say could i sell something to help bring in some income to lower the break even okay yeah amir says he's been looking for uh nvidia to pull back okay look that's why i showed you that all if you did not see that on my twitter page the record number of all-time highs okay that's your homework i want you to look at that i'm telling you there's people you know that are probably sitting predominantly in cash since 2017 waiting for a pullback okay it's heartbreaking okay because they're missing some of those trends that could have benefited financially now just because there's been a potential outside does not mean there's risk we know that goes hand in hand if the investor said james in this case i want to do maybe like a vertical but a long call vertical one of the reasons why they might do a long call vertical is it lowers the breakeven we now see what the break even is okay if we just did a long call by itself it would have a higher break even lower probability okay we know that for example whatever the investor puts in that's what the max loss is spreads five dollars so we have a max profit of 250. now in this case in the margin account it's going to do three contracts so i'm going to go to where it says confirm and send single account multiple accounts gonna go three contracts and in a bigger dollar account we're gonna actually whoop three gotta change it plus come on there we go three and in the bigger one it's to really in this case do about i think safely it's going to be it's going to be about six i don't know why it's changing that there it goes okay there it goes okay we're better so long three in the margin six in the ira and what you'll notice in this case it then adjusts the max profit max loss and also adjusts the commission now here's the deal the last week of discretionary was pretty potent okay would not be unthinkable to maybe have a little consolidation a little flag but it's also important to say don't forget the major point someone does not have to buy individual stocks they might just buy the second second they might look for the stocks that have the relative strength so the reason why i showed you for example how to go in and you can right click on any of those headings go to edit format if you wanted to and say you know what i want to go in and i want to actually change the relative strength not to spx but i want to change the relative strength to ixy then they could have a list of discretionary stocks and rank those on different time periods that's up to you that's why i showed you how you can customize those okay now if if if we take a look at this i'm out of my time here but uh what you're going to see is that when we talk about technical analysis relative strength is huge relative strength can be customized on different time frames it can also be adjusted based upon different benchmarks and also different sectors okay and so what's that what's so nice about that is you might kind of want to customize it to your liking and so i think that's really important that you know how to change those and that's what we talked about that now coming up right at the top of the hour okay uh we have uh coming up right at the top of the hour let's actually just check that we have a uh a session and i'm actually taking a look at uh just it's actually portfolio management basics and with that said i'm out of my time and uh thank you so much for your comments and your participation but today's focus was really on relative strength with that said thank you so much for your comments and your participation if you enjoyed today's session uh uh smash that like button you can also for example as well remember that with what we did here today we demonstrated the function of the platform we needed to use actual symbols uh with that and with that you decide what you want to invest in yourself feel free to use the paper money account also as well so with that said thank you so much for your comments and your participation check us out on twitter and stay tuned for our next webcast coming up just shortly thank you so much take care bye

2021-07-08 23:06

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