Fear or Potential Entry Opportunity | Technically Speaking: Trading the Trend

hello and welcome to technically speaking trading the trend weeks to months we call thursday trend thursday so we welcome you here today you probably have your shirt on which makes sense it's trend thursday so it's that time so let's go ahead and get started we welcome everyone here myself james floyd michael keeley will guide you along as we talk about these trends today we're going to focus on two things we've got expiration management but we also have the topic of scaling in after pullbacks okay and what does that really mean and how does an investor consider on doing that we're going to talk about those two things now just for quickly like to welcome bill lisa fez roy meddy walter don bill uh mram gupta and uh looks like we're good on sound so double check your sound it looks like uh yeah sounds coming on my side so uh and many others welcome you here today let's go ahead and get started and remember you can follow any instructor on twitter we do post educational content there that daily a lot of investors share ideas on twitter and it's also kind of important to see what other investors are thinking as well so we do post on twitter check that out now just real quick uh yeah jb where's your shirt well i i need to actually wear a polo shirt but underneath this green shirt trust me all right here we go on there now remember that officers are not suitable for all investors especially risk inherited trading options may expose investors to potentially rapid substantial losses also understand that the traits involving minimal potential benefit can also be significantly impacted by transaction costs we're going to demonstrate the function of the platform we're going to use actual symbols remember that td ameritrade does not make any recommendations determine suitability of any security strategy for individual trader or traders also remember we'll be using the paid money platform here today for educational purposes and also remember when we talk about investing review the transaction costs and also be aware of what the probability analysis results show now uh last but not least the option greeks as well now as we get started remember we're going to kind of talk about two major things okay we have a number of trades that were actually done shorter term to try to take advantage of that longer term trend and there's a lot of those trades that are coming up for expiration tomorrow we're going to fast fire through a couple of these ones good ones and bad ones and then we're going to intertwine that with market posture okay would that be something that would maybe be rolled or maybe re-entered and maybe uh or maybe exited because we actually think the price could continue to go down so we're going to talk about that number of trades there we're also going to talk about some outliers and scaling in the bullish positions now when we think about for example outliers this would be something where the market is doing maybe recently been going down but maybe these stocks have been going up so outliers would just be the stock is maybe diverging away from what the index is doing or the sector and when we say scaling in you could kind of think of this as almost dollar cost averaging this will not just be dollar cost averaging blindly this will be getting in or adding to the position as it's confirming that it's technically going up okay and or making higher lows now as we go through make sure if you have any questions go ahead and raise your hand uh uh in the chat i could see that or just ask your question i'll read it out loud and let's see if we can't address it as we go now first off when we actually take a look at uh i want to kind of talk just about a couple stops four stocks we're going to hit these quick and then we're going to talk about some outliers so first off i kind of want to make mention of some of the positions that are in the portfolio okay 257 shares of apple we know that apple's been a little bit under pressure and you're going to see that that position is protected okay so we say protected it's actually meaning it's using the short call and it also has a built-in uh right to sell the shares at 145. whenever the protection is making money or up that actually means that the stock is still under pressure and we still see that okay so when you look at a stock like apple down another 93 cents here today when that protection is up okay that means that that stock is still trying to find some footing and if we go back and kind of say is this a potential sign of bouncing when you zoom in on apple you're thinking with magnifying glass or binoculars we're saying i don't really see a strong bounce here today now we're going to continue to monitor this because apple's fallen back down to support could it start to bounce signs of that could be getting above the any of the moving averages but it's not it's not doing that on any of them right now so that protection is going to stay there when we go down to a stock like disney well 100 shares of stock and it has a long put now what type of trade is that 100 shares of stock and it has a long put so the asset actually being the shares the protective put really being the built-in right to sell at 175 that's a married put now if you take a look at this the stock is down 2.8 280 the put is about broken even and if you go back and actually take a look at this and say is disney still staying up above its support i want you to vote now is it still in or above support if we said this old resistance was right in this area is it still above the support level yeah i mean it is but what you're going to see is like many stocks it's been following what the market has been doing meaning coming back down a little bit disney actually got up to that double top area flagging back and this is also something that when we look at yesterday and say was that a cold up yesterday no that's that's a piercing line that's not closed above the high the low day but today being an inside day not getting a bounce to an extent where we're closing about the high of the lowest most recent red candle we're not doing that yet so what you're going to see is that put still acting as protection on disney go down to the next one etsy now etsy actually was an old short put position boy did this work out nicely an old short put position that was put to the account at 195. the stock has rocket shipped up about 30 points and that stock is probably one that we're going to actually talk about here today is maybe considering on adding to a new position now when you look at a stock like etsy let me go back and take a look at this on a three-year chart since we are talking about trading weeks to months etsy has been one of the stronger stocks in this area i just want to kind of delete that there we go longer term trend when we go back and look at this big upward trend had a longer term consolidation and or pullback and now what you're going to see when we zoom up zoom over to the right kind of went up pull back use the old kind of resistance at support run up pull back and if this was the weekly candle i almost kind of hear the music [Music] okay name that song now don't not by the way don't do that little uh app what they call it shazam don't shazam because you could it probably could have picked that up of who's saying that song keely you're not allowed to answer now if you take a look at this i think keely was in that song or video now if we take a look at this a little fun there kind of more like a hammer candle now let's now the the portfolio currently has 126 shares okay is there maybe something that maybe if the investor said i want to maybe try to trade that trend or a portion of it is there maybe a type of trade here that might be done maybe with not a lot of capital now if we go back and look at this a lot you know a couple comments regarding it looks like there's kind of multiple areas of resistance now i'm going to kind of push back on this and say okay i agree with you there are kind of kind of a couple areas like right here i'm just gonna circle some of these hides and maybe this is where you're thinking that resistance is okay so let me kind of push back on this and say if that is true if if other investors are concerned about it then why are they buying the stock up into the resistance why i mean if they knew hey don't we have a lot of touches of resistance well if they're buying to the extent to where they're pushing that up well maybe they're not concerned about it maybe they're not just playing to this shorter term area maybe they're trading the longer term trend and when you really go back and really look at this maybe they're actually thinking that this is maybe just the fl the pull this is being the flat and it the stock might try to extend okay now i don't want to turn this into a fundamental class but you know i just can't help myself now when you go back to a stock let's say like if we go to analyze and we go to fundamentals the one thing that you've got to recognize here and i don't know if you've actually seen this now james how do you know about this my first doctor my daughter actually said james or dad i want to practice paper trading i said what do you want to practice paper trading she goes i want to i want to buy the stock etsy so we practice paper trading that this is the first one she ever did now in 2016 they were negative 42 cents and 17 64 cents and 18. 19 they were 73 cents 20 20 they're at 272. they

tripled that number now do investments really look at that we might question that now when we look at return on equity they're only at 60. now we're joking it's it's not only 60. that's a that's a really high number now if you take a look at this when we go back to the stock maybe investors are thinking that these numbers might even sustain themselves which these numbers are high but maybe those numbers might continue to grow relative to their peers and also grow relative to themselves where they've been so maybe they think to a resistance they actually think that stock might be worth more based upon its fundamentals okay so now some technicians are watching that other but other fundamentalists and technicians might be saying we don't think that tech those resistance areas are going to hold based upon the fundamentals may be improving even more now let's say the investor said in this case they want to go ahead and actually maybe go long the call now when the investor really goes long the call and i'm going to choose something in this case a little bit yeah let's kind of choose this we can uh all right we're going to choose actually in this case i'm going to show the example even going maybe oh i can't do that i'm going to go this and i i see what we have at the bottom we're going to go along the shares of this we're going to go along the call okay when the investor goes long the call that's the right to buy the shares of the strike price when they go long those that when they go along the call they want the stock to go up to get further and further in the money more intrinsic value now to help with the break even the investor in this case might say i'm going to sell a call above now when they do this this is really like a long call vertical very cover call like but it really doesn't have the shares so what you're now going to see is it's long the call to 220 and then selling the 230 call now i know what we have on that etsy position i see that it really hasn't changed that much but when you take a look at this long the call to 220 selling the 230 debit 458 now the reason why we want to know what the debit is is because we want to see what the break even is the stock the right to buy the shares is at 220 the debit is 458 and now we can actually see what is the break even which is at 224.58 that means the stock would only need to go up about two dollars from now until expiration which is not that much and the max loss is just going to be what the investor pays to enter plus that dollar 30. now if the paper

money account was willing to risk about a thousand dollars it would really be doing about two contracts okay and that's what it's going to really be doing now the purpose behind doing a long call vertical is to make it where there's little less probability and a little bit more potential profitability okay that's why it's choosing the long call verticals choosing to be more directional higher delta lower probability and when there's lower probability there's a higher potential max profit but there is also still that max loss if that's okay the investor could send that order let's put that right in that vertical section send the order and now it's actually going to go and see if it actually can continue to move up now the last one i want to look at in this place but the first training that you did is kind of added to the etsy position okay now if we went down into a stock and i'm gonna go back to one that's expiring tomorrow it is really royal caribbean cruise lines the love boat okay no i've never been on a cruise line i'm not sure if i'm going to okay but you could tell me about what it's like and i can marvel but now if we take a look at this what you're going to notice is this is just a short put and then it has the built-in put below now in this type of trade is this your more classic type of vertical trade or is this really like a short put was with some built-in downside protection what is it well we know it's a cash secured put but then why is this put so low that's not usual well what you're now going to notice is when you look at let's say royal caribbean when the put is that low this was really a put that was probably used as downside protection but also buying power reduction because remember when you sell the put there's buying power right and that foot was only purchased for 32 cents so in this case these other ones here being 29.29 we don't need to talk about those yet but if we look at those this is tomorrow that's what we're talking about this okay so in this position if the paid money account said i want to buy this back the short put okay by the way i need your help here remember we're kind of talking about management of these positions when we look at royal caribbean when we go back and take a look at this would this be something that the investor might roll thinking that trend could go up or would you say nah james it doesn't really look like it's going up just exit and profit take now what's your comment there accident profit take or james roll the position thinking the trend could continue what do you think remember if you roll you're saying exit what you have now and then put a new trade on i'm gonna kind of do what you tell me to do go ahead tell me what to do roll james i think the trend is going to continue if james i don't think the trend is going to continue exit profit take okay charles is actually he was the first one says roll okay so let's kind of talk about the roll now first off what's it like to know that 65 foot being worth something ah not very high the stock would actually have to go from 83 down to 65 not a very high likelihood could but not likely paid one account is just going to buy the short put back that short put back is the obligation it's going to buy it back for 21 cents now remember this is trading the trend in weeks to months when you trade the trend weeks to months maybe that first part of that trade was only third 20 to 50 days now those 20 to 50 days is over by the way when was this trade place the trade was placed on 8 25 this was about three weeks ago and now it's rolling into the future we hope that trend continues and if that trend were to continue what's happening now is it's rolling to the new expiration month speaking of that gonna go confirm and send buy that option back for 21 cents plus 65 cents if that's okay send the order now that's not rolling that's just exiting we're going to roll now by the way if you said james i want to play a little bit longer term you don't have to calm down don't don't get all upset you don't have to do the october come down the investor could actually choose a little bit further expiration maybe november and they might say in this case hey i want to maybe go a little bit farther try to trade a little bit longer term trend there now we know what happens in that case the investor probably sells maybe that delta 30 to 40 that's a starting point doesn't have to be but if they chose something like that that would really be the 80 selling the 80. now remember when the investor sells the 80 obligation to buy the stock from now until expiration stocks at 83.32 now remember when the investor sells the put uh the risk is down to zero the investor says i don't want the risk down to zero they can buy the put below that as some built-in protection now what that really does is when they sell the 80 by the 75 it creates a max loss the risk is not down to zero the risk is down to 75 and it has a higher probability and the credit or the max gain is not as high as let's say like a long call vertical okay confirm and send now let's take a quick look at this so what you're now going to notice is the break even okay stocks at 83 72 83 26 break evens at 78.23 so the stock technically can really go down about five dollars now how many of you lately have tried to book a vacation now this last weekend i tried to actually plan two different trips and one was just here domestically and the other one was to italy and i was dumbfounded like how expensive some of these places were to go i was gonna go down to scottsdale and it was like i think it was like for a place i typically go it was like 600 a night the cheapest place i found was like 380 at marriott okay uh even the days in for crying out loud was 209 a night for the days in that i thought about well maybe i just won't go okay but let's not be fooled here but just because it's coveted out there doesn't mean other people won't make decisions to go on vacation people are dying to go on now you wouldn't know that if you tried to actually book something at all and they're if they're if they are booking they're not booking for free just look at the booking holding stock okay now stock has made a big move lately there's some reasons behind that marry it too but if we take a look at this what you're going to notice is the pay fund account is going to change it to three now the investor when they talk about trading the trading weeks to months it does not have to be through a stock position they could say i'm going to use options as a way to try to capture that trend and over time if that trend were to continue they rolled the option to stay in that train now this is rolling out to november this is a short put vertical capital wise if you take a look at this that's what it looks like max profit max loss there's the buying power effect notice it's not costing as much to set capital aside even if the paid money account were to do this in the ira let's show that what would it be in the ira no different because it's a vertical and tony says desert camping intent is cheapest now don't laugh at me but i think the last time i went camping was uh 20 years ago before i think about six weeks i went camping my family thought it was the funniest thing to watch me go camping they they have me on video and i've had to try to pay them off not to try to post it on twitter but i i'm not camping for me as the marriott camping is nice as long as it's a nice place i don't mind to go camping but it's not something i do quite a bit okay now i i don't know it's just i i i'd rather stay in air conditioning let's put it that way now but there are some very nice places i'm fully aware okay but if you have some nice amenities or a camper love to go with it now send the order there we go now what you're now going to see is that was rolled so two trades that were done so far what were they well first off let's go back to the monitor tab so when we go back to the monitor tab the first thing that was actually done what was the order that was filled so first thing that was done was the call vertical on etsy the second one that was actually really done was really the short put vertical on royal caribbean okay now what i want to do is i want to kind of see if there's any questions okay are there any questions that we missed okay so those are the two trades we've talked about so far we did talk about some current positions in etsy apple disney and royal caribbean in that margin account we're now going to shift to the ira where there's going to be some work to do in that area as far as management now what i'm going to do here in this case is let's kind of talk about one management example and one of them i want to bring up is what you'll see is we have this little situation now first off it's closed and it says itm now you've heard people say that there's like four letter words okay well in the world of option trading there's what's called the three-letter word okay the now this could be good or bad depending upon if the investor wants the stock so this three-letter word itm for in the money now if we open this up we want to kind of say well what type of strategy is this well this is a long call at the 52.50 now remember when someone contractually has the right to buy those shares and they have that okay kind of think of this almost like in real estate if you contractually have the right you bought an acre of land for i don't know a quarter of a million dollars depending upon where you live that might be low or high but boy why do you have that right to buy that land for two-fifth you sure hope that the land goes up as you contractually have that right okay that'd be wonderful now what you're gonna notice is that call was purchased for 229.

now what's the kind of the problem with this well the call did not really appreciate in value matter of fact it went down a little bit that's the side of the trade that actually pays time decay okay and you see that right there that theta is really 18 a day for the 12 contracts where was the money made well what you're now going to notice is the short call was purchased excuse me shorted to try to offset the time decay and it was only because of that short call that there was some offsetting there and what you're going to notice is the stock is now in between the 52 and a half and the 55. oh my gosh i don't know what to do well let's kind of think about this okay you got a right to buy the shares at 52 and a half you got in this case the 55. so let's first ask ourselves the questions okay how much of the maximum gain does this position really have so let's pull it up okay now when we actually take a look at this what was the maximum game and why i asked that question i'm going to answer that myself it was purchased for 229 and it collected a dollar fifteen so the max it could lose was a hundred and fourteen dollars a contract okay the spread was 250 the debit was a dollar thirteen excuse me the debit yep let me go back the debit was a dollar fourteen so you actually have you got a spread of 250 you got a debit there of a uh really a dollar fourteen then the maximum gain per contract would be a hundred and thirty six dollars ah contract now what you're gonna notice is this unrealized gain is 924 okay now if the investor said you know what james i don't want to go down all the way to the expiration and have the potential risk of buying because if the paper account does not close these out this could be 1200 shares at 52.50 did you just hear what i just said if that stock closes above the strike that's a right to do what what is it the right to do it's the right to buy the shares at 52.50 how many shares 12 contracts 1200 shares that's a lot okay 1200 on a 52 stock that's 62 000 in stock if the investor said i don't have 62 000 or do not want to spend 62 000 the investor can just simply close the position prior to expiration right click on that create closing order sell the vertical guys and gals it helps so much when you don't forget when expiration is you all it also helps a lot when you think through what is your right or your obligation and if you let something expire in the money there's actually something that happens okay the exercise of this call would happen which would mean that those long call would now become shares of the stock the investor says i don't want that exit prior to expiration oh it could be so simple if you just kind of don't wait until the last second that's what we're talking about in that we're day early going to sell that it's going to take about that gain of 65 notice there's that credit less the commission this is for 12 contracts send the order now i want to give a quick look at the stock and kind of say is what do we see on the stock it's been very very very very sideways to say the least so if you take a look at this we don't really see a breakout we don't really see a breakdown it's very very neutral now the other comment by tony is by waiting this long don't you run the risk of not getting filled ding ding ding ding ding correct answer so when you actually get closer and closer and closer to expiration the bid in that spread can start to widen out why because the open interest shrinks then all of a sudden by the way the volume would probably be dropping as well so tony we're on the same page so what happens is you wait more and more more the open interest shrinks the open interest is the number of unexercised contracts they're open ain't on exercise but what happens is everyone else and their mom and dad and cousin uncle aunt uncle you name it stepbrother whatever they're getting out and when they get out and there's less and less people to sell to who are you selling to and when that happens that spread widens out and to get out of the fairer price becomes less likely we're gonna keep an eye on this and make sure this actually fails now let's kind of change the topic a little bit okay we want now i want to kind of talk about this outliers what are some of those stocks that are being outliers and scaling in the bulls positions now what i did yesterday is on twitter and i like to actually do this i like to kind of see some of the stocks and this by the way if you didn't even necessarily know what the columns were showing this kind of really shows a very uh lack of relative strength picture now what you're gonna notice is on this now how many of you actually went to my twitter page and saw this okay now i don't post this for my health i mean i could okay but what you're gonna notice is up top it's gonna show rs and that rs is for relative strength and we know that relative strength can be over different time periods now some of you here are short-term traders and you might be looking at that five or ten that's for five days or ten days okay some of you here are like in this class we're talking about trading the trend weeks to months and so we might be looking at maybe 42 which is two months of trading 63 which is three months of training now what you're going to notice is anything that would be in this greenish color that would actually be something that is outperforming the s p now the first thing that you should notice is wow there's not that many things that are outperforming the s p ding ding ding ding correct now if we actually saw something in this gray color that means it's performing in line with the s p over that time period and what you should easily be able to see is holy red okay wholly rent now first off is when you look at this as a trend investor sometimes you can be in a market condition where just the trends flat stink meaning there's not that many entry setups are we speaking the same language here now if you looked at this you wouldn't know that the other thing that would just tip you off immediately when you go ahead and look at this column where it says cohort which is some technicians would call a bullish bounce entry setup there's only two out of 30.

when you look about how many stocks in the dow that are actually hitting 20 or 55 day highs i'll make it easy for you let me count zero so this is what the investor in a trend now is facing the the picture of the stocks that are really trending there's not that many and what you're now going to see is investors like almost fish in a pond that's shrinking are all in probably the same stocks the only ones that probably have the relative strength intel mickey d's pg home depot microsoft and investors might congregate to that like that little water area because all those other areas they're leaking and when i say leaking i mean that they're actually creating a shorter term downward trend and there's probably not entry signals in those areas are you picking up what i'm laying down this is what trend investors are going through right now now this is actually in the dab okay now if we actually take a look at this i want it now first off one of the stocks actually in there is mickey d's noticed it over the last couple days here that was actually gray gray then it went light or green it doesn't necessarily have to be all green across the board but the investor might want to see that the relative strength over time from right to left is improving mickey d's is one of those stocks that has been increasing in terms of its relative strength compared to the s10p now we've joked about this a little bit and said mcrib pork sandwich is back okay now if you know ben watson you know that he loves the mcrib sandwich now if you take a look at actually mickey d's and we go back there has been now one of the questions we get a lot is how far do you go back and sing trend the answer is yes okay wait wait how far do you go back the answer is yes the answer is you go back as far as you can what you're trying to whether you look at a one-year truck chart and we go right to left we're just trying to be able to kind of see if i were to draw a line from right to left can i see an angle of support over weeks to months now if i go back and i'm able to kind of go back all the way to about right here that's march boy boys and girls ladies and gentlemen we're we're in september this has been the last six months actually we see an upward trend doesn't mean people are in it but that stock for example has shown a little higher lows over time downward sloping line of resistance now i haven't said this for the first 34 minutes of this class diego resistance okay now if you take learnings that price doink that's a higher high above resistance this is the pullback area maybe a little bounce off diagonal resistance and support moving average crossover and now all of a sudden you've seen that blue moving average cross above that red line saying hey it's momentum building here now i don't want you to think that everything we talk about is options okay but you gotta understand people ask me that if we buy shares of the stock people might say to me i don't have 100 shares i don't i can't buy 100 shares 50 shares okay so that's why sometimes i do talk more about options than stock so that way they can see how they can trade a trend without a a bigger amount of capital now let's say the investor said i'm 45 years old and i actually do have some capital okay now and they've been saving over time adding some making some adding some making some and they say i want to buy some shares of mickey d's okay now if we go back and look at the chart if we looked at this and said what is this doing today well this is a hold example that stands for close above the high the low day that means the stock if we look at the most recent lowest red candle which was on 914 if the price were to close here the price actually would be above that high now the other thing what you'll notice is that stock is also probably at a 20-day high okay uh let me go back and actually see let me let me kind of put this on let me actually kind of see if we're kind of if we're if that is a 20-day high let me see if we can oh my goodness gracious hit me right in the face so that blue line right there represents the 20-day high that's maybe a second area or way an investor might see a shorter term break-in it just plots the 20-day line now by the way that stock actually hit it here it hit it here it hit here they hit it here and they hit it here so in the last five or six days or six days that stock has hit the 20-day high five times now does that mean people are no doesn't mean people are in people sit and watch stuff left and right doesn't mean they take any action the paper money account is going to add to the position by buying the stock now when you say add to the position what do you mean by that well the paper money account is already long it actually has a long synthetic on the position already okay because we did that in the long synthetic class the paid money account is just going to buy shares of the stock and it's also going to set a stop it's going to right click on the ask price buy custom with stop now let's say the investor said james i i mean i have some capital but i don't have 24 000 worth and let's say the investor said james i'm gonna buy 7 500 worth of stock now notice what i just did here when you click on this the pool balls click on the percent click on that to the dollar amount what you're now going to see is if you click keep clipping okay it's changing when you go to the dollar amount this is the capital that is being allocated to the position do not be fooled and say well this is never going to become worth anything guys and gals you need to understand not everyone's buying 100 shares okay and that's not true that necessarily that just because he only buys 30 shares of stock that it might not become worth anything we've seen these trades where they're 20 or 30 shares sometimes they can make a grand just on 20 or 30 shares don't be fooled okay they can go down too but sometimes when people think i'm only gonna buy 7 500 that's never gonna become worth a couple hundred bucks maybe a thousand or more it can it could now the paid money account is going to go data gtc and we're going to look and see where that stop is now when we go back and look at a more recent area of support we're going to go back and say what is support well we could maybe say maybe is it 239 instead of the 30 period moving average 238 if the investor want to maybe give it a little bit more breathing room maybe they want to kind of set that stop below 236 and change well let's kind of take a look at this 2 3 let's say they want to set the stop load 2 36 44 they want to set a looser stop now by the way i don't know if you know this but if mcdonald's has an app it is one of the better apps i've actually seen okay now the app is interesting because when you go look at many mcdonald's stores like a starbucks at least in utah mcdonald's tends to be like what's wrapped around the building as far as clientele that app has been very powerful as far as allowing people to order without standing in line in the store and or through the line through the car line i mean just go look okay i mean as investor you have that right you can go look for yourself now if you take over this if we go now to confirm and send there's the capital there there's the stop and notice what you're going to see is there's no commission there okay now let's look and go see the question now uh orlando says how about bearish trades with so many stocks in the red zone now uh it's a good question but i'm going to go back to where uh so let's kind of talk about market posture with this okay so we're going to go back so now first off let's kind of talk about just market posture with what we're seeing and i did look at this before okay so first off when you go back and take a look at this let's kind of talk market here now and let's kind of talk about maybe bearish trades now one of the things we kind of like to look at is when the market has really kind of been at this area before they're going and i want to kind of look at the price in relationship to the macd that's a divergence in this example i'll label that as number one price sells off again what you're now going to see is there it is on the macd here's the price here's the macd and so if you were to look at this and you look at the price and then you look at the macd and then you look at the price and then you look at the macd now if you would have done okay trades in the market when the macd was in the same spot as it was here to here to here to here now past what happened in the past is not me in the future but if someone want to put on bearish trades when the macd was in this position in the market as a whole do you think those bearish positions would have worked i mean if you put a bearish position on when the matthew was in any like this area like this area you you do bears positions okay and what would have happened the market actually bounced okay and that baron's position kind of now is underwater okay now the pavement account did do two bearish positions this week it was on i well i'm going to say it was on gm which actually is expiring so we need to talk about that and it was on caterpillar i know that almost for sure okay so orlando and and i think it was diane diana put it on like a lot of bearish positions when the macd is down like that you know many technicians might be looking for maybe the market to diverge and that's something you got to be very careful about if that mackey is rotating back up okay now putting on bearish positions that might be tough if someone's going to put bearish positions on like new ones like probably more bearish positions this is maybe where the investor says look i want to put them on up at horizontal or diagonal resistance the investor does not have to put on bearish positions if they're maybe using maybe puts as a way to protect or callers as a way to protect they don't have to put on bears positions okay but if they said that they have lots of those positions and they want to that investor might have more latitude to do that but if they've already protected they might not necessarily have the need okay oh it's ibm too thank you for that ibm and it was caterpillar okay so uh now let me speaking of that bearish position i will not take long to talk about this but one of those that it's expiring uh let me just double check i believe it's actually let me just review this but i think it's actually gm let me just double check just let me see if i'm right on this gm is actually one no no that was actually gm let me just open these up just real quick and i just want to make sure if any of these uh so crocs i'll just verbally speak to these crocs would be one that would be expiring here today i do want to bring up a bad one too but uh the other one is actually the mcdonald's the short put that would be expiring you'll see those by one day and the other one that's actually going to be expiring or could would be actually netflix as well so i actually missed i i think maybe gm gm was the other one we actually had i want to go back to the other count usually i'm pretty good with actually nailing i just want to double check there it is okay so i wasn't it wasn't just in my mind okay gm was a short call vertical short call because it shorted the 55 bought the 57 and a half that's one that if that stock were to close below the 55 that would expire with that's a bearish position okay one of them was on but this paper money count probably only has maybe four bears positions and they're all verticals okay that's it now when we actually go back and take a look at this and say when was that trade place i got on that one august 4th okay right there all right now let's kind of go back so uh orlando and diana that's kind of maybe like a little bit more of the reservation maybe if you want to call it maybe about putting on bearish trades when you go back and kind of for example take a look at let's say uh or at least more this paid money account probably having four bearish positions but none of them really aggressively bearish meaning they don't have a super high delta one of the stocks if you take a look at this like when you go back and look at the nasdaq you know is that maybe that some signs of maybe bouncing off support okay now maybe if we went into let's say monday or tuesday we saw the market dropping below that support might that kind of say hey this support is not holding we might have to read a reas we uh review that but right now it kind of looks like we're going down to some neutralization area here okay now i want to kind of talk about two stocks that we're kind of seeing maybe some perhaps some unusual positions and we'll bring this up in terms of scaling in now there's two stocks archer daniels midland and mosaic now when you look at both of these stocks both of them kind of have like a down move you have a prior high then like a pullback so you kind of have like a base of support most of the touches of resistance were probably right in there you got another touch right in there okay now i'm going to choose for example these charts look identical they're in the same area i'm going to choose for example archival minimum now an investor might say but james i'm not going to get in because we're at resistance this is a high this is not resistance now first in the paper money account is going to do is it's going to buy shares of stock only a half position and what it's going to do in scaling in is it's going to look for the stock so let's say typically the payment account could buy about fifteen thousand dollars worth of stock example given the paid money account is only going to buy half the position now when the market is a little tougher in terms of volatility and kind of trying to find support the investor it might make sense for the investor not to buy a full position the paper money account is going to use this 30-day moving average as an area of maybe a place to set a stop below which is 60 33 and set a stop right down there about 58.52 now a lot of times investors what they do is they're just going all at once this is only a half position this is saying look i'm going to get in half now and if that stop where to break got to run back and bounce add the remaining half when the market is more volatile or less sure-footed if you will a stronger trend the investor might chop their positions in half or a third and just scale in guys and gals there's nothing wrong with that okay especially when the market kind of is the volatility has been going up and less sectors have been as strong by the way discretionary is actually hitting almost a new high again archer daniels midland is our last trade here at a half position with a stop now i'm out of my time here today i have a ceiling on what i can do but uh these are the couple trades we actually did now remember archer daniels midland and moss looked very identical okay if the people in the account actually did this and sent that order there it is the paper money account will be looking to see if that next week and it runs up and pulls back and maybe gets a flag but this is maybe a little stock that's getting above the high that's not resistance and maybe because that stock tried to go up to 66 maybe 68 ish some of that air you get a little reversal last thing i want to say here is keep in mind what we're seeing on discretionaries is it that double top formation of the mickey d's logo that's actually leading the consumer discussion something's leading because you're actually seeing if we were to close here this would be almost the highest close we've actually seen i'm out of my time here today i want to thank you so much for your comments and your participation quick reminder we demonstrate the function of platform we need to use actual symbols we talked about expiration management we also talked about uh entering new positions or rolling and then we also talked about the example of maybe scaling in and doing half positions with that said thank you so much stay tuned for our next webcast coming up just shortly thank you so much

2021-09-18 15:15

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