Green Candle Equals Uptrend? | Technically Speaking: Trading the Trend
Hello and welcome to technically speaking, trading the trend. Weeks to months. My name's James Boyd. We welcome you here today Alongside with me. Got my good friend Michael Fairborn is in the chat fellow instructor. You could actually
follow us on Twitter. Take a look at that. Just real quick as we're getting started like to welcome George, Texas Wiley tm tm Orlando Raphael, Don Len, uh , Amy, Jill, Sandeep and many others. Hello and welcome to
you. Let's hop right in. We're talking about trading the trend weeks, two months. This is going to be pretty important. We actually take a look at this. We kind of been talking about this situation that we've been in lately where the moving averages crossed over negative. And then
there's been some ongoing developments, obviously, with Russia and Ukraine, etcetera. And that's just kind of added to that trend Deterioration. We'll talk about that. Just as quick as we're getting started. Want to give us a quick reminder that the content is intended for educational informational purposes? Only that investment advice or recommendation of any security strategy to counteract options not suitable for all investors. Also when we talk about investing, we're going to demonstrate the function of the platform. Ah also, we're going
to use actual symbols. Tdameritrade does not make any recommendations determine suitability of any security strategy for individual traders in Austin, We will be using the paperMoney platform here today. You should review the transaction costs what those are And might that affect maybe the decision to apply certain type of strategy and also remember the option Greeks as well, Now, just real quick as we're getting started. The three things we
really want to kind of discuss here today is Number one. The markets. Okay Uh, is this kind of like is a carving out a lower low is the volume there to get a tradable bottom. What about volatility? Okay Those are two things You want to see a spiking and VIX. And a spiking in volume
. Okay Are we getting that? Uh I think this is very important. Understand We've been preparing that Russia might invade And then last night they did invade is the market now kind of coming more to grips. Of that. It's not an unknown now it now becomes known, and I think that could be a major piece, Elise as far as actually things getting down to a tradable area as far as the index in some stocks, we'll talk about that Now. We'll also take a look at last week, I asked you what are some things you like to discussion classes. And I wrote
them all down all 29 of them. And one of the common things that came actually, actually, quite a bit was relative strength and actually looking at the Ivy plus technical script. I think we can use that here today. So Relative strength.
We're going to be really talking about trend, which is actually paralleled to what this class covers, and then we're going to. Actually from that Those two things will discuss what talk about trade examples and then go to your questions now, just real quick as we hop right in. Let's take a quick look at The SPX and if we look at, let's say the SPX-- Ah, here it is now. You know, BJ? Well there's been kind of some comments regarding, I thought today was going to be worse. Okay Remember futures trade overnight and they weren't nice. Okay They were down 800 points. Okay at least on the Dow
Futures. And if you actually take a look at that, say the SPX-- This is what we're really looking at. Let me kind of clear this up, and here we go. Now
what you're going to notice is the last What? Four days We've been down 1234. Today's being the fifth and what we need to actually understand is when sometimes when you have selloffs Sometimes prices get a little farther away from the resistance , which might be a moving average. Right. And if you take a look at this, it did gap down . It's still down, but it's trying to kind of go back up a little bit. Okay Now, this also kind of teachers at the last moment if the market is efficient The market is going to trade to the expectation What are we talking about? The market actually thought Russia was going to you invaded Ukraine, and they thought that risk was rising. Investors try to sell out ahead of what That expectation is when something finally happens like Russia, Ukraine or earnings. You kind of sometimes see more of a muted reaction again. I think that's a
potential positive here. Now. I'm not looking for the one thing. Okay, that the canary in the coal mine. I'm just saying. We've now kind of gone through the speculation could well they they have. And now how does the market absorbed that? Okay now, if we actually take over the S and P. If I were to ask you the question, Where's the potential support on the S and P. Does
anybody know where that potential support is? Anybody Anybody looked at it and said, if we fall down to support that support area could be wear. Well If we're taking a look at this, we're kind of down to that first level support. Then futures trade that we actually did on Tuesday hit the target last night. At least one of them did . Okay The other one is still on and the margin account is still on. If we looked at the secondary level support, we might kind of say in the ballpark of Let's say 39 42. And
then maybe a little bit large. 38 38 40. These are the levels here. Okay Now this class is
trading the trend. Weeks to months. So the ambassadors kind of thinking What is the trend? Okay not just today, Or maybe tomorrow. What is maybe the
ambassador thinking, Mike and I happen over weeks to months when we look at this trend that we've been dealing with Is we've actually seen the moving average cross. They went negative. They've been negative. Okay It just last night added onto it.
So when we actually look at the S and P. What you're going to notice is it's more of the same . It just dropped down to a fresh new law, Okay? Now. Are there any questions on the indexes? So if we said here, James is the paperMoney count going to be super bullish, we would say no, It's not going to be super bullish, okay, if it does do bullish trades, it's probably going to focus. Plan a
perspective of trying to capture higher volatility. Okay now, if we look at the VIX, Okay, now, I'm going to ask you a question here. What have you learned from the vixen last couple weeks. If the vics is going up, have you now realize wow. More stocks are
probably deteriorating, right? And so if you actually take a look at this, we saw break Diane. No resistance. We saw break horizontal resistance. And there's the VIX goes up the percentage of stocks above support shrinks. Okay now, so when we can take a look at this We're still kind of thinking still more of a bearish trend. If we're now there can be some stocks that are maybe being evaluated for potential entry.
But maybe an investor might not buy the shares. They might do an option trade that might have defined risk. Now before we actually talk about her agenda item number two. I want to see if you have any questions. Okay now the common from Sandeep is There is an RC divergence on the ES and nq but not the Y M. Okay So let me kinda this is a very good point You're bringing up.
Let me kind of just bring up and look and see. Is there A divergence? Not Sandy Bacci says a Rs side divergence. I don't have an RSC divergence. So let
me actually bring this back to the screen here. But if we actually take a look at least on the Mac D I don't see a Mac D divergence. Okay But Sandy is actually saying on the RSC. It's
showing a divergence on the NASDAQ on the S and P I would like to actually see that kind of more confirmation. At least let's say on the Mac D because if you look at the Mac D that Mackey is stepping lower and lower and lower, and this Bhakti is looking at 6 39, so if there's any shorter term, turning up It would be more sensitive to catch it. So Sandy by like what you're bringing up, But we kind of like to see confirmation on that of the Mac do And right Now we see rejection. We don't see that. Okay The Mac Jesus going, It's bleeding Lower. Okay, now, just
real quick. Ah! Yeah Okay. Dom actually mentions the NASDAQ is green. Now here. Here's what I kind of want to. I already
mentioned this. Okay, but I want to tell him the last two questions. Did you understand what I actually said? If the market is sufficient, and people trade the future, not just historically. If investors thought Russia was going to invade Ukraine, they trade to that expectation, Meaning they don't just wait until it happens. They get out prior to it happening. That's number one number two when they if that expectation, word of finally happened. They already knew that
they thought it was a high expectation. That's why they're so before they don't wait until the final news comes out. That's my point. Now, if we take a look at this, remember what we kind of said, is the date most dangerous thing the investor could say. It's a green candle if you just look at a green candle. The investor is not
putting together Is this a green candle above support? And it's just green candle that's actually broken resistance? No So if someone said it's a green candle, we would say So. What? Because it's not bouncing off support. It's not above resistance, so you won't hear us talking about a green kin on isolation because it means nothing outside the fact that it is higher than where it opened. That's it like to see the green candle. Get about the moving average one or two there and get back above If there is a green candle about 1 14,044 Now it's actually something more interesting. Until then, it's
just a green candle. Do not be suckered into that. So many people love that green candle. But they're blind to what the trend is. And as as little actually says, people get suckered into green candles, and they're not looking to see what trend is. My daughter and I actually say that right, Len? I should say land, but our blends are we on the same page. This is
so important, because if people were just buying on this green candle, this screen candle this green candle they get in And they're not admitting what the trend is shown. Okay? All right. Good, okay? Now, James, calm down there. No I just telling you, I think all of us have kind of bit or bought on it Green candle and then said that was not a great entry. And now what
actually happened is the investor buys. On a green day later on recognized. Oh, my gosh , I just bought in a downtrend. Okay so be very careful that lend has warned us all. Okay And then I added on top of that, Okay, good. Now So let's kind of
talk about this, so one of the other things that was asked is Rodat, she says, So just wait with the hatch. Now. We talked about on Tuesday and I talked about on Wednesday. Hedging and I talked about using an index etcetera on that. Do we see any
reason here to maybe take that hedge off? Or is there maybe potentially still downward trend? This is the last question I have. Do we see anything here to take the heads off, Okay? To paint money's answer is it's going to keep the head on. One of the trades did hit the target . But the other two remaining the margin and the I R A.
They're going to keep the head John. Okay now, let's kind of talk about just briefly before we talk about agenda Item number two. Let's go talk about the performance of asked these portfolios, which have more bullish positions that bearish positions how they've been performing, okay. Well that's kind of take a look at this yesterday. It was actually up. Okay Was that 1 20 today, getting hit a little bit more down 2000. 2 22 21 to 22 to 23 to 24. It's down to 1 18. This
portfolio is. It's down, Okay? It started at 1 25. It's a 1 18 . It's down about 5.6% okay? Now when we look at this and say now, how much of that portfolios Ambassador? It's all invested, Okay, now the S and P and I'm going to repeat this portfolio the margins down 5.6. The S and P is down. 12.9 The NASDAQ is
down 18 and the Dow is out. Don 11 Now the bigger dollar count before we actually start looking at trends and examples. The IRA account was even positive yesterday, even on the down day.
How is that possible? Well, because those two hedges we talked about on Tuesday really helped a lot. But as today dropped, you're going to see that it hit the account This started this account started out in a million. It's at 9 64. It's down. 3.6% remember the S and P is down 12.9. NASDAQ's down 18
the Dow's Down 11, so the hedges whether it's a future or protective put or collar things like that that's actually helping as far as Minimizing some of the impact. Not all minimizing some. Okay now what? I want to come and do it, and you're right. It's a green
candle right now. But it's not over. The keyword is yet okay. Good Let's talk about Agenda.
Item number two. Okay now, how many of you have actually kind of been thinking as the VIX goes up? Could this be a potential opportunity to try to be a seller of an option? How many of you actually thinking that Maybe when the stock fall down, you might not necessarily want to buy the stock. But maybe the investor might say I like to maybe be a buyer. At a lower price than where the stock is now, anybody Okay. Now one of VIX actually goes up. Sometimes
he's levels might not be sustained. Okay And when the VIX goes up some measures they don't want to take A dollar for dollar risk, they might want to do strategies that have more probability associated with it. Then let's say as much profitability as a potential stock. Okay now, if we actually
take a look at this, I'm going to bring up an example. Here. I'm going to go to the market Watch. And what I'm going to do is I want to kind of just briefly talk about this just briefly. And if you don't mind, let me actually just kind of grabbed if I can let me see if they will run that list here. I'm going to look at this column right here. I'm just pulling up the Dow. Okay I'm on the market
Watch went to quotes Dow Jones. Now the one thing that you'll notice is there's a column heading. You can find it on my Twitter page, right? The very top. It's called Ivy plus technical. Let's kind of talk about this, and then we're going to kind of break this to talk about trends with relative strength and reducing trade examples. Now, if you look at
this what you're going to notice is 101 101 101 101. Of those hundreds, representing 100. Whay percentile. On the stock on those options. So stocks like CRM Honeywell Coca Cola Trip Lamp VZ. Some investors like to see that maybe that is closer to the high. Okay now, if you look
at this, not everything is that 100. There's also some stocks here that maybe you have an I V of like like Chevron, 90 to 90 to 90 87 86 that is very high implied volatility. Okay so the numbers and the boxes represent the ivy percentile. If the ambassador is a seller, they might want to see those numbers closer to 100. If it is 100. That doesn't mean it's better, and it's guaranteed to make money. That's not true. That
just means that it's quietly the highest I ve it's been in the last 52 weeks now, if we right click on this heading. And then go down to where it says added formula. Okay Now, if we right click on the head and go edit formula. What you're going to notice is and I mentioned this yesterday, but I asked you on Twitter. What are some of those
questions you have. This was one of the predominant questions. So we're gonna loop this into our discussion on trend day. Okay
Now what? You're gonna notices that's going to tell you what the what The colors mean. Okay Now we call this I V plus. Technicals, okay? The technicals are the moving average. The
Matty the moving average convergence divergence and the stochastic. Okay So when we say , plus spectacles, those are the three technicals we're talking about. Now, if we actually saw let's say a darker green box. That means the price is above that moving average Mathy more than three days, so there's not just been a bounce, but it's been a little bit more sustained. Okay It's bounced and it's been going up the last three days more of a confirmation if the ambassador says, James, maybe I want to get a little closer to a bounce gang. This is within the last 1 to 3 days. It's actually uh, you
know, up the last 1 to 3 days on the moving average. Okay, Matthew cassocks. Why would someone try to focus on that? Well, maybe they're thinking if I bought in to the stock Maybe it's closer to support its not as not bounce up as high as for as long now, if we look at great , it's in the middle of the number of days is all only wonder two days. Now some investors like to be a little early. We know who you are, or you know who you are. I should say, Okay, Some investors like to get in right near that air support resistance and try to get in expecting about now. What
is that light grape like red mean? What actually means that the price is below the moving average. Matthew Stochastic, and it's the key is its beloved. So if someone said James, I'm looking for embarrassed friend.
Well they might be looking for some, like red colors, or maybe something that's like a. Dark red the prices below the moving average by more than three. Days. Okay? Now you're actually thinking of the Sided. Not over anyone. Is anyone actually
thinking I don't think the trend of the downside is over yet. Now. Let's for example, say that the investor, said James, I don't know how to really fine bearish bearish trends. Now what I want to do is I want to kind of bring up right on what actually posted earlier. And I
want to kind of show you this picture now. I want to kind of talk about really this this picture right here. I'm just looking to see what it looks like on your side. But I want to kind of talk about this, okay? Because this is when I asked the question. What questions do you have? How might we actually use a Webcast to really answer your questions? This was brought up a lot. Okay Now the first thing is when we talk about trends if I said a stock was up 5% this week. Does that mean that the
stock is up board trended. At the stocks up 5% this week. Doesn't mean that the stock is upward trending. No it just
means that for the last week 5% So when we talk about relative strength, we labor us rs. We know that, for example, just looking at one time frame might be track. Okay that it doesn't necessarily tell you more information than the last five days. So if we were actually saying, look, we're shorter term type of ambassador. We want to
kind of look and see. Let's say bullish potential trends. Well, we wouldn't be talking about looking at some stocks. Maybe the Ukraine green to that darker color green. If someone said I
am shorter term and I want to be bullish. Those are the stocks that are in the S and P list that are showing more abortion move relative to the S and P 500. But that doesn't necessarily tell us about trend . Okay It just tells them stop performance relative to the S and P 500. Now what would kind of give us a better gauge of trend? Okay well, if we actually looked at some stocks that Aubert couple different time period had better. Performance
over time. Like what? Well if we actually looked at, for example, these stocks example given like these ones. There we go. What you're now going to notice is all we're different time periods , we see that it out performed in many different time periods. The 51 week. 10 2 Week, 21 would be one month 42 trading days will be two months and 63 trading days would really mean three months. So if we actually see that it's up Up. Up. Over
all those different timeframes. What do we think the trend is going to be showing? What do you think It's going to show? Okay Now this is training 10. Weeks to months, right? And so the investor when you look at these different time periods if they're seeing that, maybe over time that they're all green. Or it was, let's say great to a light green or dark green. That's actually saying that the trends been pretty strong over time. Now when we actually look
at stocks when you see stocks like G D. Chevron Abby be ex cetera. Okay now, this is if we're talking about bullish trend, So someone asked me. How could I find bullet straight and I would say, Have you put on the relatives? Friends, actually on your Mark watching them. Do you actually understand what relative strength is actually showing you okay? Because if they did, they wouldn't actually need to understand that the stocks that are in let's say gray, light, green or green.
Those are the ones that are actually showing trends over time. Now. James for example, doesn't have to always be green. The answer is no. One of the
investors, says James. It was red. But then now lately, a started to turn gray That could be an earlier trend. If we actually said James couldn't even be red, and maybe then go green. The answer is, of course , yes. That one. James couldn't be a stock. For example, that
was read. That goes green answer is yes. So it doesn't always have to be green the stops, for example, the say that we're all green. Those have just been very strong trance, a stock like e X . I believe it's uh $DXY and another stock. Let's say like, for example, I think Bristol Myers Those would actually be stopped, for example, that have had trends where they continue to heat up relative to the S and P Now. That's if someone was bullish. If someone said, Well,
James, I'm kind of looking for bearish trends. What might they actually do now? What might they actually do now? And said, James, I am looking for bears strength. While we went straight nearly to the bottom, the investor might say I'm going to look for a stock that on a relative basis has shown in history of underperforming in all different time periods like this one. Or James. I'm actually looking for one. That was strong
where maybe we're starting to see some deterioration where it's not green anymore. Then it's turning red. It was announced starting that underperformed. And we can also look at these stocks down here and say, James, these ones don't look very good either. So what the investor might say is, they might say, Look, I'm going to look for stocks that are generating over time looking for bears trends and I might be looking for say, Let's say some stocks. That have some high implied volatility. Now I want
to kind of take a look at one as an example. So let's say someone, said James, one of the stocks is Caterpillar. Okay And Caterpillar was doing okay was doing okay. And all of a sudden , it just started to go down down and when we actually take a look at Caterpillar INDA's at the 90th. I ve percentile. So we
see this is actually looking at the trend. The ivy percentile plus technicals that's actually looking at what is the implied volatility and it hasn't started to drop. Okay. On the moving average, the math in stochastic , So someone just kind of have this You could actually see which ones had a history of a trend up had a trip had a history of a trend down Now, if we actually look at, let's say stock example. We're going to take a look at Caterpillar first. Now one tends to happen. If we actually were in a in a in environment where war breaks out, What is the US dollar tend to do? What does the U. S dollar tend to do? Doesn't tend to appreciate depreciate. Was
intend to do. Now, If you go look at let's say the euro dollar. The dollar Canadian. Uh go look at the pound Dollar okay ? The dollar actually tends to appreciate As ambassadors say, Look, I want to maybe invest in Treasuries and they want to put their money where there's the greatest liquidity okay, or one of the highest out there. So the dollar tends to appreciate its people liquidate assets. They put the money in US dollars. Those dollars are eventually invested potentially in Treasuries. They say. I want
safety here, Okay? I'd rather have almost flat returns, then negative returns. Okay, now. If we looked at Caterpillar, what do you see as the trend now, the next 20 minutes. We're just going to talk about all about trading. Okay trading the 10 weeks to months. If we look at this and said, is it upward training? Well, couldn't say that. Because the stock just
broke down below support. Now, one of the problems is an investor. If you look at a chart and actually say, Hey, I see it's now in training, but that doesn't mean the investors comfortable. Was actually
practice trading bears one of the first strategies the ambassador might start with is just like a classic short called vertical. It's like a covered call in the fact of the ambassador selling the call, but they don't own the sheriffs. And when the ambassadors if you've ever treated a covered call before investigating covered call, you know that the investors selling a call Where the investor doesn't think the stock is going to give it up. Get above that. But wonder if they're wrong. Well what they do in this case is they sell the call short to call, and they're buying along call just in case.
Because they don't own the sheriff's. Now if the ambassador said James, I think eventually Caterpillar marks a below 1 90. Now let's go. H and now we're Okay, options. It ends at the 85% on the how earth we come to this Well. Bring green last two
weeks. We went, it went red. So that the relative. Here's the has to teary. Plus. Technicals Present. What is that mean, but
that means everything bachelor, said. A seven something premium. Probably. The bigger the higher the But now remember one Old support. Okay. What was the. It was 1 90. So whatever street
That the investor Bells is where they think the stock could stay below. So if the ambassador actually said Right, Click on the bed. Go to sell, and now what you're going to see Is this where it's going to say vertical ? Okay Matthew Investor sells the 1 90. Then I used the 1 95. There's a match loss built into the trade. And now what? You're going to notice it is there's a credit, they're a dollar 67 per contract. Now if you look at this, if it was you again, go back in time and say, I wish I would have done a bearish trade where Do you wish you could actually have considered Yesterday. The day before the
day before. That right where? What sometimes investment. What they want to do is they say, Look, James, I wanted maybe put on the Bears trade when the stock price is closer to resistance. What if the
ambassador was trying to do that? They're probably looking for the ivy, Plus technicals. That column maybe to be the lighter red collar or even gray. The great just means it hasn't really dropped yet. The lighter red actually means it's really dropped 123 days. So remember that the ambassador saying, I changed. I want to put this on a little bit closer to resistance . They might want to say I'm looking for a high ivy percent top number one But maybe looking for a gray box or a light red where maybe that drop hasn't quite happen potentially yet.
That's an important distinction there. If the ambassador says, I'm going to always put on a bear's trade when that box is burgundy red, that just means the drop has already been happening. More than three days . Does that make sense? Okay Now, while you're going to announce the on this now, By the way, the question is, Is there a bullish Maggie divergence on this? No I don't see any divergence. Okay We're still seeing that this is going down. If this last Mattias down How could you have a divergence? Okay It hasn't even turned up yet. The McAfee is still stepping down. So if this is not
shallower than why was the previous day it can't be a divergence. Okay, not yet. Now, If we go back to the trade page , let's actually take a look at this now. I asked a question yesterday on twitch. Family and you know what fighting the trend means. God you guys know what I
mean by that fighting the trend. What does that mean? How many of you have ever seen a downtrend you've want, you know, it's been down training and you know, it's been down drinking. No it's been down training and then investor finally places the bear straight. Right when it's near support, right, Let's diverging . Okay Right from the VIX hits 90. Well, the investor in that case, it's not really trading what they see. Trading what they
want to see the trading on how they feel or want to feel Okay knows in this class if the trend is down It's going to look for a bear strategy or consider bear strategy to match the trend. Okay? Two. A doesn't have a bias. It's really isn't an uptrend going to look for a bullet strategy if it's silence, neutral strategy and its downtrend bearing strategy if you buy us the charts, the that investors probably going to have a greater are probably a greater drawdown because they're actually letting their emotions get in the way of what they see on the charts. That's a very expensive thing to do. But they
can do what they want right now. If the ambassador says you know what James are gonna sell that night, 1 90 by the 1 95 confirm and send, you're going to notice that the stock can even go up somewhat. So if that stock is at 1, 82 and for example, that breakeven stock prices at 1 91 67, you're now going to see that this stock could go up about $9. And it could still be at break even but to be in a maximum game . The stock needs to be below 1 . 90 Cola actually says, doing the opposite of the market. The
question is cola. Why What? What's making the investor do that? Okay? Now if we actually take a limit, JX could the shape of the candle Doje signal a change in trend. Okay, now one candle does not a trend. Make the dough G If you if you're getting a Doje, it looks like a plus. He's just saying the clothes and the open are pretty much at the same level. Could he
indicate a change in trend? Maybe Okay, Shorter term, But you got you got to remember is you got to be very careful. I've been seeing this a lot where people are falling in love with one day candles. And if you look at that one day candle, you gotta put the candle in context of the trend. If you break supporting you make a lower low . It's not unusual to see the stock retest and touch If that stock comes back up to 1 88 1 86 1 88 doesn't mean it's up training because of the color of the candles. Green No. It just
means it's going up. But it's still not above resistance. Okay so be careful falling in love with the color of the candle, but the cult put the candle in context of the trend. Put the
candle in context of support. Resistance You're falling for a trap. Okay if you just look at the color of the candle if you just fall in love with that and say it's a hammer or its whatever you have to put, you don't happen. You can do what you want. But technicians. One actually look at that 10 on context of trend. And support and resistance. Okay now, if you
take a look at this at this stock were to go off that far. But the biggest actually thing is this trade is really Can the stock stay below 1? 90 Now what? You're going to notice this. The ambassador is going to come down and go confirm and send And notice. This is going to look at that one contract basis now, another thing that people ask me in terms of like, go over is risk management. Okay I think we hit this pretty hard, but let's say, the ambassador, said James on any given trade. I'm going to
risk $1000 on any given trade. Look I don't think there's anything wrong with that she's saying in a higher, more volatile market, I'm going to cut the risk in half. Which means smaller position sizes. I think that's probably prudent for some ambassadors. But if the investment says no on any given market, I'm gonna risk $2000 in this case they would really be doing about well. Three
contracts now, when the ambassador does this and changes this 123 Going to go confirm and send Now What you're gonna see is the match profit match loss of just and so does the commission. Okay? Now if you take a look at this, I'm now going to actually go down to where it says Send. Okay now I want to kind of talking about Let's say also a bullet example that we talk about the other day. And I want to look at the example of Let's say, CF now one of the things we actually talked about this year in the beginning of the year, we said, actually wonder if let's say markets became more volatile. Setting
stops might be well, they might be, stocks might be stomped out more frequently, and sadly, that is kind of become the case. Okay uh, when we kind of talked about taking One positions on stocks that might have relatives maybe have competitive vantage compared to their peers and also maybe something where the ambassador says, Look. The hack with this or the heck with that they just want to own the stop long overtime, and many investors do that. They're trying to have an allocation to stocks. Now I want to kind of show you what our trade is, and I want to contact about maybe adding to the trade. Now if we
actually take a look at this What is this trade? We're going to go to the trade tab and what we're now going to see as the stock shares of stock The short call. Now, what is that, right there that I just highlighted 500 Shares of stock A short call. What is that, right? Well that's a cover call. Okay That is that is welcome. Two options
one on one. That is the most basic option trade you could do because the ambassador already owns the shares and they sell a call, Okay? Not not really that bad. The ambassador of the added one more piece to this. It's
really adding the long put now, while you're going to notice this The stock is up whenever you actually see that both the long put in the short pole are using that actually tells us of the stock has gone where Rather , the stock has gone up. So the loss of her actually on okay. The protection, but the gains are still in the stock net net. There's still $2200 in that trade now. Could the investor maybe alter this in some way? Remember where I said on Tuesday if this stock were to break resistance, let it right level.
If this stock were to break resistance, it actually has an obligation to sell the shares at 77 a half from now to expiration. If the stock brakes resistance and goes above 77, the trade really becomes like a cover, call and obligation of cell two shares at 77 a half But could the ambassador maybe do anything else in the shorter term? Could they do anything else or do they just have to sit here and watch it? But what are they actually said? You know, James, the stock is actually breaking out to the upside or trying to the investigators. I was kind of thinking of maybe about maybe trying to maybe sell something. Thinking the stock and stay above a certain price. Let let the pre existing trade God let it go. Okay try to make
80 9100% of the maximum game. But could there potentially be a new trade? What type of trade might be investor, Consider? Well if we were actually going to the trade tab and said, Let's go down percent to and let's see what that is. It's at the 77th percentile. Okay Now, when we're talking about CF industries, we're talking about fertilizer and remember Look at gold. Look
at oil, Right. Look at Cole. Look at fertilizer. When you have war, these commodities the supply Gets disrupted. The demand of it doesn't necessarily change, but the supply get disrupted and I did not include natural gas. Okay you can throw a natural gas there. Now If we
take a look at this and say, Well, maybe could the investor shell put Okay now members, some ambassadors. They when the volatile inside they might not be as confident to buy shares of stunk that make sense they might not want to now is anyone with me? That maybe you don't want to buy shares of stock. Now, why might this pay money accounts say that Well, they might say, I don't want to actually put that much capital to work at least right now. They don't want to have maybe that sensitivity to direction right? So when the ambassador maybe does cash secured, Put And Misha Lee keyword. The sensitivity
direction is not as high initially as a stock position in a stock position. The only way it really benefits is The stock has to go up, whereas if we look at this case is the stock doesn't have to go up. But time needs to go by. And if implied, volatility went down. That would be wonderful. Okay So in other words, is other ways that trade could benefit not just going up . So if the ambassador said, you know what? I'm gonna sell those 75, okay? Thank you that maybe that stock could go up November . The invest 30 had some share of already. But for thinking
there might be a pretty good chance to stop might go out. They might say, look instead of actually taking away what that current trade is. Maybe the ambassador says, I'm gonna take another You know, 40 50% of a position size and try to sell to more put's If the ambassador cells to 75 that Delta there is 38 the premium there is really 4 30. Now what you're going to see is if the ambassador looks at this Confirm and saying, And what this is really doing is It is the obligation to buy the stocks and now to expiration. At 75. Less the premium and the break even has 70 70 now. If we
actually take a look at this, we see Max profit Max lost Max loss is the assumption that those 200 shares of stock go all the way to zero. Now, even in the current market. There are some stocks that are kind of bucking the trend. Okay And if we take a little this if the ambassador sold two of these, it's a dollar 30. Okay Remember when the
ambassador does this, they have to really be thinking if they bought 200 shares of stock. Do they have the capital? Do they want to really buy the shares at the strike price? If they do this, they can send the order. And now it's going to actually try to sell that. Sell the 75 Okay. Strike it fills and 4 30 Now what I want to do is I want to go to questions now. Okay? Two major things we highlighted.
The I V plus. Technicals Maverick. The Ivy is for the percentile and the tactical XYZ for the moving average magazines , Cossacks, whether someone is a bullish traders or bears trader, it could be used for both. And if someone says I'm looking for bullish trends or bearish trends , irregardless, the relative strength can help us find shifting or continuing momentum or trend. Thinking that that could go up or another words, vice versa if they were red, thinking it could potentially go down. When we look at our
current market, it's not unfathomable to think that some trends might not be done going down. That's what we're talking about A short call spread. But in this case if we're talking about some commodities, okay, like a CF, or yesterday we talked about, for example, like arch coal. These types of stocks that are, let's say commodity related. It's gonna be
interesting. Come see us with a lack of supply or disrupted supply chain. Do they actually fetch a little premium? It's going to be interesting to watch and see. Now let's kind of go to your questions here. I got about three or about three minutes or so. Any questions that you have. Okay now, one of the comments was the S and P h e went. Let's
say positive. Well, if we actually take a look at the S and P, If we're talking about potential support, you know kind of getting that the reason why the paperMoney count set a target. Okay and I'll go back and kind of look at. I think our target on that bears hedge was 41 25 it hit that overnight, okay? If we want to go back and say could I quickly see where that trade was? Well let's go back and look and see. Yeah Last night Let me actually double check. It actually looks like,
um, let me see to do anything. I got to see what times on this is it looks like it was off now. I actually was just it was at once. 23 It was actually yesterday. Okay Follows last night. It was that 10 minutes
before the market close. The S and P fell down to the target price of 42 17. So that was about 100 points there so now You're going to notice that as it goes down to that support, okay, some investors by now Here's the Here's the trick. Are
they really buying? Because they're bullish. Or is it actually that they're actually just exiting a bearish? Trade. Yeah Now on that arch. That was the example of stock not options because the spreads are horrible . Let me go back to the question if we actually looked at SPX-- Is it because investors are probably more buying, or is it probably that let's say bears traders are really actually at a support level, expecting that it might bounce in the shorter term. We might speculate that it
might be the ladder. Okay so just because it goes up and the color of the candles, Green does not mean an upward trend that can actually just mean that ambassadors actually targeted out on a bear straight. Just like the paperMoney can't deal that we talked about from Tuesday. So be careful that okay
, remember until we actually kind of see, Some of these stocks are more stocks get about their moving averages. The trend. It's not up and it's and we'll continue to monitor that.
Okay I'm out of my time here today with what we discussed. We kind of talked about some principles and potential practices. Remember trend is dominant. Okay, It's the most important candles. Come after that. Okay We look at trend first support, resistance and candles last. Because candles
are only a day trend is looking at multiple days and so support resistance. Remember with what we talked about here today was done for educational informational purposes only. Also remember that coming up right the top of the hour we'll have our next Webcast. Want to also remit give you a reminder if you enjoyed today's session, reach out and smashed that thumbs up button know that this has been recorded. I like you to practice as a takeaway using the relative strength and the percentile on your in your paperMoney platform. Make sure you know how to use that. Can it
help you actually identify some up and down trends with that said, Thank you so much. Take care goodbye.
2022-02-26 15:30
