Hull Moving Average Pt 2 - Scans | Ken Rose | 10-14-19 | Generating Income with Dividend Stocks
Besting. In the stock market, again I do, want to welcome you here to our webcast here today great, to be here to discuss investing, in the stock market here once again so. Last time we talked about identifying. Value with regards to stocks and before that the previous session that we talked about metrics. With regards to quality once, we have found a stock that has good value, and has good quality, what, determines, the timing, with regards to an entry of that stock also, with, regards to stocks we've already purchased. You know stocks that have shown good, metrics with regards to value and also quality those stocks we're already in what, determines what, are some of the metrics we look at or some of the some, of the signals we look at as far as potentially. Exiting, those stocks, well, that's primarily. What we're going to be discussing here today we're. Going to be looking at some of those key areas. You. Sugan, investors do want to walk you be here today and for our discussion, and our discussion, is going to be focusing. On technicals. With, regards to managing a portfolio and, when we're looking at an during or exiting stocks what are some of the technical, considerations, we're talking about technicals, we're talking about technical analysis. My, goal here today is that everyone, will understand, the. Role that technicals. Play you know the rules when we're talking about roles the technicals play we're primarily talking about support/resistance. Trends. Also the. Use of moving average lines these are these are tools a lot of a lot of technicians use, in, order to accomplish that goal or agenda, here this evening will, include. Definition. Of highs, and lows and trends. We'll talk about those, we'll talk about time periods, that you have on a chart and how that can affect the, definition, of your trend is a long term trend is it a short term trend we'll, discuss moving averages, and moving average crossover, you, know different different time periods ik that can be used a time period that we that. We basically adopted. For for. Teaching purposes for example purposes, with, regards, to our discussions, here given, time we'll also look to pay, per trade either into new positions or out of existing, positions, depending, on what the technical signals are providing to us but, before we get too far along let's go ahead and run through our disclosures, and just, reminder, that you can follow me on twitter and my twitter handle is at, KR.
O Se underscore, TD a I do post things over there on Twitter related. To technical. Analysis, as well as a stock market in general, so if you'd like to follow me on Twitter love to have you there as well in, wave disclosures, your investors just to reminder that when you use a paper money application. In this session this is for educational purposes, only successful. Virtual trading during one time period does not guarantee. Successful. Investing, of actual funds during later time period as market conditions do change continuously, in, order to demonstrate the functionality platform. We need use actual symbols, however, TD Ameritrade does not make recommendations. Or determine the suitability of any security or strategy, for individual traders any investment. Decision you make in your self-directed account, is solely. Your responsibility and. Just reminder. The transaction, cost commissions, and other fees are important factors and should, be considered one, evaluating, any trade. So. The, investors just reminder here I'm just gonna pull this up here just a second, yeah. And we've got a little writing tool here we'll see if it's functioning, here tonight I believe, that it is we'll give it just a second here and well. Maybe it's not gonna function maybe it is it's nice if it is okay. We'll go ahead and use we'll just use the pointer for right now so, in here we basically take, a a chronological. Order. In here you, know our lesson one is why dividend, stocks answering, that question is why would someone consider, purchasing, a stock that pays a dividend, versus, perhaps a stock that is primarily, for growth purposes, and second. We look at income, how much and when if we're looking at purchasing a dividend stock that does pay a dividend, that's considered, to be income usually, in making those types of decisions we want to we want to have a good understanding for ourselves in other words we want to make some kind of a forecast, that determines. At what point in our lives we'll be needing that income it could be immediately, it could be out there a few years at, what point we'll be needing that income and how much income we'll be needing then, we look at metrics for quality, dividend stocks these are metrics that that, help to ensure they don't guarantee but help to ensure that the underlying company, can continue to pay those dividends, and hopefully, continue to increase, the amount of those dividends, then, we look for metrics, of undervalued.
Quality, Dividend. Stocks just, because a stock has good strong underlying. Quality. Metrics, it doesn't necessarily, mean it's a good time to purchase that stock now, some time stocks would be considered, to be overvalued and a lot of investors would like to look for those quality stocks at times when they're considered, to be undervalued, rather, than rather than overvalued. And this is our session here today managing. A portfolio of dividend stocks after, talking about the first four areas then we want to then we want to spend one will actually probably spend two sessions in this area today, we'll talk about a Rhian relationship, to technical, analysis, next time we'll take a look at it in relationship, to dividend, yields we've used that we've used that dividend yield study before we'll start we'll look at that primarily from an exit standpoint, where previously, we've looked at it primarily from an entry standpoint, but today we'll, be looking at portfolio, managing. A portfolio of, dividend stocks primarily. In relationship, to technical. Analysis. There's. A little picture myself been. Here, for. Almost, almost 15 years wait time flies when you're having fun and it. Has been a lot of fun working. Here a lot of opportunities, to learn their stuff. And. It's been good all, right so let's let's go ahead and get underway here then investors, and to, do that we'll chip gears and come over here to the thinkorswim platform right, here I'm just going to use the SPX, as a beginning point for our discussion here on technical, analysis, I do want to grab a little drawing tool though to, illustrate. Some things as we're going along here. Here. We are right here so we, just come over here we'll make a little drawing so when. You you know if you if you look at the SPX here you'll notice that sometimes. It's going up sometimes it's going down sometimes, it's going up sometimes it's going down sometimes. It'll take a big run like this sometimes it'll go down and then it'll be these periods of times where it will it'll. Go up and down but it really doesn't but, but it stays in somewhat, of a range and it came all the way down here, and then it came all the way back up here and then to pulled down here, and then it came up here, and, it pulled down here then it came up here then it pulled down here started to move down right here well. When. The when the underlying, security. Moves. To the upside and finds it finds a peak in other words in other words it's sometimes referred to a resistance, level and. Notice why that period came up here you'd, hit this level right here and then it changed direction, and it started to move down, notice. That we have several peaks on our chart right here we have a peak right here. We. Have a peak right here. In. This period of time right here where it was going up and going down but really, staying. Within a certain range, we, had several Peaks right here during this what. Would what's what some investors, would consider to be sideways. Movement, okay. And. Notice up here we have a peak right here as well, and. We have a peak right here as well and we have, a peak right here as well so. Just keep in mind that when a stock goes up hits. A ceiling, and then reverses, it starts to move down we. Can refer to that in two ways we can call it a hi I. Have. To excuse my writing with my mouse right here we, can either call the higher we can call at a resistance, level. And, I kind of tried to squeeze it in there right there so he cannot call the high resistance. Levels also, sometimes people will refer to that as. Supply. And. Why, would they refer that as supply. Is. Because when the price gets up to a certain level there, are investors, that see that as an opportunity to sell their stocks, so.
They There go ahead and they're coming in there and they're selling their stock so there's plenty of supply of that stock, available. For, available. To buy because investors, are moving in and selling, and so, sometimes that these. Resistance, levels are also referred, to as supply, now. Of course stocks, don't always go up right they go down and when they go down they create support, levels. Now. Keep in mind in order to have a resistance, level you not only have to move up but you also need to reverse direction and move to the downside. So. In order to have a support level you not only need to move down but you need to reverse direction start, moving to the upside. So. Support, these support levels right here I'll just. Highlight. Some of these, we'll. Go ahead and we'll just use circles, here for support just to defin just to make. A difference between these we could be getting a support level over here it's a little bit soon to know that just yeah but. Support. Levels are also, sometimes referred to as low so, the. Stock goes down it finds a base and then. It starts to move to the upside and, that's. Often referred to as a low. Or. Support. So. Let's Silva, so that's it so so, so, so, it's, important, to keep those it's important to keep those two concepts, in mind. Because. If you don't have a feeling, or if you don't have a definition. Of what support is and what resistance, is of what a high is and what is what a low is that, you won't be able to identify your trend it. Just becomes an impossibility. So. With that understanding then, of what a high is and what a low is. Then. The next thing you'd want to ask yourself is this. Hmm. What is that what is the nature of the pattern, of these highs and of these lows. Are. They getting higher, as a, group are. They getting lower, as a group, or. Are they staying flat. If. We come over here for just a second notice right. Here I'm going to just change my the color of my little drawing tool here to read but. Notice right here we have this high right here. Then. We have this high right here, and what's. Happened, the, high has, gotten, lower and, then. Notice right here we have a low right here and then. We have a low down here, what's. Happened there the, low has gotten lower. So. During this period of time here there what technicians, would say is that, the chart here and this is a chart of the S&P 500. They. Would say during this period of time the, sp500, has, broken into a downtrend. And. Usually. If you have a downtrend. Or an uptrend for that matter you, can draw you can draw parallel. Lines that can, visually, be seen as a channel, I'm. Going to try to draw a parallel line here, freehand. With my mouse which is a little bit difficult. There's. One line right there and if I come. Down and bring a second line right there there's my downtrending, channel, now. We can see however that down trends don't last forever neither, do up trans last forever and, you. Can see right here we're in a downtrend but then as a stock first. Of all it broke out of the channel right here. Right. There broke out of the channel that's the first indication. Of, a trend reversal. But. The confirmation that is when the stock actually. See. This high over here the. Stock actually comes up here, and, creates. A higher high once. It created that higher high right there then, we would say yeah, the downtrend, that we were in it's over it's. Uncertain, at this point are we going to drift into another uptrend, or are we going to drift into a downtrend, or. Are we going to go sideways, the, reason it's uncertain, is because at this point what. We have is we have one. I'm. Just going to use shorthand here we have one higher high. Find. That and that higher high is right here. Because. We've gone up higher than this previous, high over here, but. We don't have a higher low yet. We. Need to pull down and see if we come off of a higher low did that happen, well. Over here we started to pull down. Here's. Our previous, low right here we came down here here's. Our previous low down in here. Did. We come down and create a lower low I'd say, there's an argument to say that we didn't in fact let. Me let me redraw that line I'm going to come down here to measure this more carefully.
We. Didn't we didn't come down and create a look we didn't come down and create a lower law but even come down and touch that we came down here and we bounced and started to head up so, at this point here where, we're coming off right here when works when we start bouncing, up right here this. Is before we have this channel at this point here we could say hey we. Are now, appearing, to shift into an upward, trend, because. We have our one higher high right here and right, here we're bouncing, off. One. Higher, low right here. So. At that point it's saying hey we've. Gone from a down train now we're shifting into an uptrend, but. What. Eventually happened, here did we move up down this bouncing, we move up and come, all the way up here and. Create. A higher high we didn't, we. Moved down again. Then we moved up again then we moved down again, and so, what happened right here is is we. Were looking to go into an uptrend but rather than go into an uptrend, we, got locked into a sideways, channel. This. Little guy right here. That's. A sideways, channel, a. Sideways. Channel so I mean. You're when you're in a sideways channel what many investors will do they're not sure if the stock is going to break into an up trying to break into a downtrend, they'll, usually look for some kind of a break out of that sideways trend, in. Order to in, order to determine, what. Their posture, currently is for that individual security, are, they so bullies are they still bearish, they don't know they're, gonna wait until they break out of this sideways trend right here and you, can see here that we broke out of that trend we came down here. And we created a lower low so. Then what, have we got well we've, got a lower low this, sideways, movement, right here the, top part of that. Is. Considered to be a high the. Bottom part of that is considered to be a low. So. This high right here, is, lower. Than this high over here. And. Now we've come down we create a lower low so now we're in a downtrend, but, now, we pop back up here and we moved up here then. So. Then, what happened from here well we came up here we created a peak right here. We. Came down here we created a low right here. Where. It were was our previous, high our, previous, high. Was. The top part of that channel right there so, at this point right here what have we made we've. Made. One. Higher. High. And. Then. We came down here and we bounced. Right here this is this low right here, now. Right there we bounced and we started to head up I'm just going to put a B therefore bounce was. This low, higher, than the previous lower the previous low is the bottom part of this channel. I'm. Gonna draw that freehand, it looks higher than me, so this point right here we got a bounce, and that. Bounce was coming off of it would that bounce was creating, one.
High. Or low so. Now what's going on now we're kicking back here and we're kicking back gear we're kicking back into gear and we're, moving into an uptrend, we, came up here. Created. Another higher high we came down here created, a higher low so, at this point we should be able to draw a channel right if. We drew a channel, I'm just gonna try to freehand, this I'm gonna come across here. Like. This and this. Would be our parallel, line coming across here well, what happened, right here. We. Fail to make a higher high right there so. This calls, into question our. Uptrend, that calls it a question that uptrend, but, then we came down here and what's going on down here well it appears we could be bouncing, and moving to the upside if, that, occurs, then, we're coming off with a higher low. So. We fail to make the higher high but now we're coming off of a higher low so, the trend, is still in question here, and it's. Still in question until, see. This this lower high that we had right here we. Felt to make the higher high we rolled over to lower high did. We come down and make a lower low no, so. We don't have a downtrend, now we're coming off of a higher low if this higher low kicks up here and gets. Us above that previous, high then what do we have then, we have an uptrend again. So. These are all important. Considerations now. Just, just just a little reminder here, investors, that take. All of our drawing off their who that kind of gives your eyes a little bit of a rest there right so this. Class were there this class we're discussing here it's considered to be an intermediate, class, and. As we're going into some of this it you. Know it's it's it's. Somewhat assumed that you do have kind of a basic, understanding of. Price. Movement, of candlesticks. Of bars you know being able to follow things on charts, if, you felt a little bit lost during this little during this little discussion we've had here I would, also encourage, you to attend a couple things to look at attend. Our getting started with stock investing. That's on Thursdays, at 11:00 a.m. with Connie Hill, that's, going to be a little bit more about just using the platform, okay, using the platform's kind of a kind, of a beginners, point as far as using the platform becoming, familiar with the platform the charts and those types of things if, you feel comfortable with the charts maybe you're a little bit kind.
Of Kind, of confuse. A little bit with regard as the highest the lows and the trends, then, I'll also encourage, you to attend our Monday. At 11:00 a.m. getting. Started with technical, analysis, session that's that's with Cameron May, now. Also I want, to invite you to continue to stay here with us okay because I do try to craft things in a way that, will be beneficial to everyone, you know whether whether you have an in-depth understanding of, this or not I do try to you know craft the words in the presentation. So it is beneficial to everyone so you're more than welcome to continue. To join us here today. Well. So when we're looking at, highs, and when we're looking at lows and we're looking at trends. What. Are some of the considerations with. Regards, of potential, entries. Well. There's there's typically, entries. I'd I would, say that often time, investors. Will divide entries, up into, an aggressive entry, a moderate. Entry, and a, more conservative, entry. And. We'll, talk about that here for just a little bit, okay. So the what, would the aggressive, entry be I'm just I'm just going to come over here and draw a little bit I'm, going to make this a, bigger. Part of what we're looking at because I primarily, want to have a drawing space down here so. We're talking about trends, right. So. Let's say that we have an underlying security. That. Is trending down. And. We're looking at or saying hey you know this this movement to the downside, it's, creating, some attractive, dividend, yields, and the. Stock has some has some quality, metrics, that still makes it intriguing. When. It comes down here and then it moves up like this now notice here what's, going on, lower. Highs and. Lower. Lows so we're in a downtrend, then. The stock comes up here and, it. Moves up like this and. It. Breaks out of the channel. Some. Investors, may consider, on the channel, breakout.
They. May consider that an aggressive entry right there that's very early, right we don't know if the trends going to change, so. That would be one potential, for an aggressive entry let's, say it's broken out of the channel but it hasn't come up and. Made. A higher high yet and then it pulls down here. And. Then it starts moving up here so this point. What. Do you have you have one. One. Higher low. Now. When you see one, higher low without an accompanying higher high to go along with it, some. Vegetables will take that as an entry, and, that would also be considered by some. Investors. To. Be an aggressive entry. What. If you hang in there and the stock comes up here and boom. It. Comes up and it, makes a higher high, okay. So. Now it has made a higher high so at this point when. It makes that higher high it may not have hit a peak just yet so. Some. Investors, on the higher high they may consider that as an entry, before. It's made a peak. That. Would also for, some of us that that, that entry right there is it's making a higher high right there without creating, a peak first some. Investors would look at that as being a a. Moderate. A. Moderate. To aggressive entry. Kind. Of you know. Moderate. But also somewhat, aggressive, because. When it's extended, itself like this at some point it's, gonna it's going to reverse and head down. Some. Investors will wait until it does head down then when it comes down. Notice. Now it's, made it's made a higher high. Okay. So at. This point we knew when when it broke above this previous, high we knew it was going to make a higher high at. This point when it rolls over heads down now we know where that high hi izzat. Okay. And now, it's pulling back want to pulse back for that higher high and then bounces, and starts to head up well. Now what's happened it's coming off of a second. It's. Coming off of a second. High. Or low. After. Making a higher high this. Entry, right here on this bounce trade right here coming. Off of a second higher low after creating, a peak that's a higher high, someone. Vegetables we'll call that, just. To flat-out. Moderate. Entry. So. You've got you have aggressive entries. On a break out of a channel coming. Off of a high or low you have moderate aggressive, where you've coming off of a higher low and you've broken above a previous high then, you have a moderate.
Entry What some investors will consider to be a moderate entry now, you don't, need. To. Be only one of these with regards to entry, you, may you may you may have a certain amount that you've allocated, for an investment and say you, know right here perhaps right here I'll put in. Fifteen. Percent. Perhaps. Right here under under, under moderate, right here perhaps I'll go ahead and put in another. Fifteen, percent, then. Up here at moderate maybe we'll put in another. Thirty. Percent, so, now. What now what are we what are we have we have 60 percent allocated. Well. What's something else that some investors look for as far as another, technical. Indication. The stock has strength some investors, will look for a technical, indicator. To. Confirm underlying strength and what, they'll do is they'll, use moving, average lines see these dotted lines right here. The. Shorter-term one the one that has more activity, for. Purposes, of our discussion we're, using a twenty period. Simple. Moving average, that's just the that's, just the moving average of the stock over the last over the last twenty twenty candles, the. Longer, line here the one that's less active, for, purposes of our discussion here. We're. Using a fifty. Period. Simple. Moving average, now you may want to use different moving averages you may want to use a ten and a twenty combo, you may want to use a fifteen to 200 combo and that's fine per. Person of our discussion, here we're using a twenty, and a 50 so. When. You think about it if the 20 is above the 50. That. Is a that is a technical, indication. That the stock has strengths it's, a technical, gait indication, doesn't, guarantee it's going to continue to go up but it's another technical indication, the stock has strengths so, some investors, may look for not only the trend, but, also a technical, indicator, in our case two moving average lines looking for a crossover. They'll. Look for that and then maybe at that point that's where they put in their what do we got but, maybe with that then B they're looking at a.
Conservative. Entry right here. And. They'll drop in their last. We. Got here we got thirty thirty sixty so they dropped in their last. Forty. Percent. When. They have a conservative, entry or they. May just say you know what I just like conservative entries, I'm going to hold off until I get my, conservative entry, I got the trend going I got the crossover, go and then I'll go ahead and I'll go. Ahead and put in one one hundred percent one isn't necessarily better than the other just determined, somewhat of what your trading style is okay. So we will so we've looked at some of these now. There. Is consideration, as far as what, is a long, term trend and what is a short term trend. Well. You know you you, know sometimes you, sometimes, that can be confusing. Particularly. If, the definition, that is used is just is the timeframe on the chart, okay. So we're looking at a two-year chart, that has weekly candles. Okay. So let's, say let's say I change this chart down and I change it to a one-year, chart. And. I look at this chart I say okay I'm, looking at a one-year chart here because. I'm looking at a one-year chart and the. Moving average lines of cross over here and, everything this is a short-term trend. And. If I come out here and change my timeframe to five years. Instead, of. I'm. Looking at a five-year chart just kind of looking at this and saying okay. Overall. I'm looking at five years here looks to me like this is my long-term trend it looks like the, long-term trend is bullish. Well. There's another way to look at it that simplifies, things and, for, some technicians, they would argue that it gives you a more accurate way to determine a long-term trend and, a short-term trend it's, simply, determined. By. The most recent price action on. Your. Chart where's, the most recent hi where's. The most recent low. And. The. Aggregation, period, that you're using on your chart. So. Purpose, of our discussion we'll, say okay I don't, need a five-year chart here I just need to come over here and say where's, my roast most recent hi where's my most recent low when, each one of the candles, here represents, a week. The. Combinational. Highs and lows is going to be a long-term trend. It, could be a long-term uptrend it could be a long-term downtrend, it, could be a long-term sideways, trend, but. The combination of the highs and lows when I use a weekly aggregation. That's going to be a long-term trend if that's a long-term trend then what's a short-term trend a short-term. Trend would be changed your aggregation, here, from. Weekly, to daily, which is what which is what many of us more often see and. Again. Come. Over here and take a look you know this you know when, you go into weekly, chart you have a lot more noise. But. Look at it and just visually, determine okay where's, my most recent hi where's, my most recent law, where's.
The Hi that preceded, it where's the lo that preceded, it probably, up here somewhere and, then. Make your determination whatever. You see with regards to the highs and lows when you're using daily, aggregation, other words daily candles or daily bars that's going to be your short-term. Trend. Now. There's some considerations. Here you know how many days to the downside creates a high how many days to the downside creates all of those types of things. You. Can look at charts and kind of get a visual idea for yourself I'd also again encourage, on refer you back to the. Technical. The getting's the technical analysis, with Cameron May on Mondays. At 11:00 a.m. but if you look at a chart and you're saying okay maybe I'm good with two days maybe, I'm okay with a move that is that, is visually, impressive you know that's a little bit that's, that that is subjective, but the nature of technical, analysis, is subjective. So we want to keep that in mind okay well. With that understanding, then because. We're dividend, investors. We're. Playing the part of the dividend investor, the looks of things more from a longer-term perspective they're, you know concerned. About the ability the company continued, to maintain their dividends checking, out the underlying fundamentals, looking, at where the yield is that not, being, taken, in and out of the stock by every, whim of price movement. For. That reason we for, purposes of our discussion here we use a weekly, chart that. Filters out a lot of the noise. With. Regards to determining, trend direction, and entry next considerations. So, let's come back up here then investors, will go back to our time frame here let's, go back to two years, which is enough time generally to pick out things we'll, say okay here what, we want to do is we want to look at a couple stocks and we're going to look at a couple stocks here from, our value, stocks, list here these are some stocks that have. In the past had, had indications. Of value. Okay.
Value. So. Let's pull up one here which is going to be. Ppg. Let's. Pull this one up this should be an hour listing over here actually let's see if it's in our listing here PPG, materials. Here. It is right here. Notice. That. The yield on this is in a relatively, high area of the range wow it's really come up here right it's. Had some big spikes here but still in the high end of the range rather than the low end of the range so that's one consideration we'll, get more into this yield. Consideration. As far as it being in the high end of the range when. We're looking at possibly. Entry. Well. Actually, let me just let me just come back off of, that a little bit we, have talked, about. Considering. Entry, on a stock when it's when the yields and the high end of the range we've talked about that in previous sessions, particularly. Last, session with regards to values, that part of our discussion, last time when, we're looking at exiting, then we're looking at looking, at stocks we're taking a consideration, stocks, in the low end of the and in the low end of the area here I don't know that we'll get into this net this week but, we're fine doing that for next week okay but this is up here so, what how does this stock check out with regards to trend if. We're looking at trend well, I'm, looking at it right here and it looks to me like it could be breaking into a sideways, trend why is that because. I can bring a horizontal, line across these tops right here I can. Bring a horizontal, line. Not. Quite along those blobs it looks like it's having difficulty, breaking this resistance, level though right. So. We don't you know we came up here here's a high we came down here same high having time breaking above it same high over here I'm not seeing a nice kind of some. Nice fluidity, with regards to higher high trouble up here we got the moving averages where we want them right we're. Just having difficulty, break breaking, above this resistance level up here were these highs right here so, let's let's kind of Pat let's go let's kind of back off of that one for a second, let's. Look at another possibility, other possibility, we look at here is lows. Again. This one should be on our list here as well oops. We all need we don't need the S on there do we. And. There's lows right there so, what's what's going on with lows right here well. Notice. That we're. Coming off of a low right here. Low. And lows I guess they know that right those are I'm a little bit so. We're coming off of a low right here. After. Making, a high right here where's, our previous high our previous high is right here, where's, our previous lower previous, low is right here. So. Lows appears, to be in an uptrend does. It not. And. Notice, where our dividend, yield is that our dividend yield is relatively, high right here so. We should be able to and again what you know when we're dry when we're drawing these these, channels, they're not going to be perfect, you know they're not going to fit, things perfect but they should generally, fit, the data right here but if, I use the channel tool I bring one channel, up here like this and. I bring another channel, across here, I'm. Going to get. Rid of this circle right here for a second, so you can see we, came down we didn't quite make the ball over the channel okay we could have come all the way down here so come off of a higher low but it does appear that we're bouncing and moving to the upside, we. Can also see that from a technical standpoint, we. Also have a moving average crossover, back here where the shorter term moving average crossed above the, longer, term moving average, so. This looks interesting at this point. So. How would we go here with regards to with regards to potential, entry. Here on lows. Well. We. There's. That there are you, know looking at it right now we're currently last, week where did we closed last week well last week we didn't, close above, the high of the previous, candle.
However. We. Close significantly. Higher than the previous week we. Are using weekly candles, because. When you have weekly calendar you have a significant, amount of volatility do, we need to have a week where we closed above the high of the previous, week in order to take an entry not necessarily. But it's nice to close above, the, body of that candle, will. Do here days will play the part of the investor, that's, okay, with. A clip, with a body that closes, above the body of the previous, week without. Necessarily, without, closing. Above the high the previous, week if we, wanted to we could play the part of the investor the one to have that closed above the high the previous week will play the part of the best where that doesn't need that and then, here we are today on Monday and we're continuing, to hold our place right here. So. How, would we go ahead and put, in and put in an order here then for this stock well, would want to identify our, support, level. Our. Support levels where we got our last bounce. And. I'm going to use the bottom of this body rather than the bottom of this shadow because, we're using the top of this body for entry right on the top of this shadow for entry that's, going to be our support level, right there we. Want to be able to see that. Let's. Show. That to us shall we. Okay. So there it is right there down, here we have the Average True Range this gives us an idea of the volatility. Of the stock and, some, investors, will you this in setting. Up a a stop, lights now keep in mind that a stop loss is verbal. In nature, in. Other words it's it's we call it a stop loss but it may or may not take. You out at the desired point that is set up to take you out at it's, actually likely to take you out a little bit lower because the stock could be moving down rapidly, but. Stop losses do tend to perform in such a way that many investors, find, them useful to use. So. We've got the average to ranger this is just giving us the average, of the range of the stock tends to trade in on a week-by-week basis. Not a day by day because our candles are week by week and then, average true range is five dollars and 49 cents I'm just going to use 550, here we'll round it to that so. Let's say that we wanted to give it. Three. Quarters, of an average true range below. Support. As. Far as giving it that much room to wiggle here. Before. It continues to move back up. Well. If we're going to do that, our, support, level is at. 107. 0.23. And. What. Is three quarters, of our average true range I, thought I was hoping I could save that somewhere but I can let's, calculate our three quarters so we're 550, here is our. Average True Range on a week-by-week basis. Volatility, the stock week by week takes, into consideration gaps. We'll, multiply that by 0.75. So. We've got. Four. Dollars, and. Twelve. And a half cents, I'm going to find the difference between that, and. Our. Support level right here. 107. Point. Two three. And. That puts our stop then I'm just going to make a note of this here that's, our stop at. 103.1. Will. Just say 103. 103. Dollars in ten sands. Well. How much are we willing to pay for this stock then let's. Just say to keep things simple in the interest of time here let's say we're let's, say we're interested in investing, five thousand, dollars in this stock okay. So. If we're going to go five thousand, dollars I'm going to go five one two three, I'm, going to divide that by. $110. And it, closed today at 110, 67, let's say we're okay paying because it may actually gap up a little bit in the morning let's. Say we're okay paying 110, dollars and, 80.
Cents Okay. So. We're looking at 45 shares, then. 45. Shares. We. Were saying 110, dollars and 11 cents. Is, gonna be a limit order so how would we set our order up the end. Well. We can actually do it from the chart we can right click on the chart here and we, come down here and choose buy custom. With. Stop. Yeah. And would like the stock to be moving up okay we'd like it to be at or greater than 110, 67. If it gapped way to the downside we may not want it okay. So. We're gonna make this let's set our quantities, here we'll set our quantity here at. Forty, five shares we'll click on this guy, 45. An or 45 and exit on our, on our buy order here we're gonna make it a a, stop. Limit. Buy, order, okay. This. Does it allows us to say hey, this. Stock needs to be greater, than 100, or equal, to or greater than 110, 67, so let's put in 110, dollars and. 70. Cents so we need to be at 110. 70 or higher. Okay now, the three cents above this in order for us to buy it and when we buy it then what's the maximum we're willing to pay the. Maximum we're willing to pay here is this will be our limit order at. Stop order will trigger a limit order and the maximum are willing to pay is 110, dollars. And. 11 cents, and where. Do we want our stop. You. Want it or stop at 103, point. One zero. So. How much risk do we have in this trade theoretically. Because we know the stop isn't guaranteed to, get us out of that particular point well. Theoretically if, we come in at a hundred and ten dollars. And. 11 cents, this limit order should hold we should, pay. Anything more than 110 11 that should hold okay. If. We entered in that and we get stopped out at a route I'm staying around because we may get stopped out at a point lower than this but if we get stopped out at around. 110. 11. Minus. 103. Point. 7, that's. Our risk for share of six dollars and 41 cents if we enter here and we get stopped out here and we'll multiply that, risk per share by. Forty five shares, so, we have theoretical, risk of two hundred eighty eight dollars and forty-five cents that's theoretical. Okay. We could incur a loss that is greater than that okay, all. Right so with those numbers will play the part of the investor that's okay with this, we'll go ahead and. I'm. Gonna click on confirm, and sand. Alright, and let's send this over to our, dividend. Income area, yeah. And we'll send it in we'll see if we get filled tomorrow or possibly we don't alright ready so what we talked about today well. We. Talked about, we. Talked about technical. Considerations. With, determining, entries, and exits with. Regards, to stocks the word that we're either considering, entering in, or stocks that we're currently in and we're looking to exit we talked about technical considerations, because. The market is so bolus today I can tell you I, didn't. Spend a whole lot of time finding for finding, we, are in our current account right here actually went through some of these before discussion, here today and, everything. Is quite strong at this particular point in time and. Well. It looks like caterpillars. Bottoming in here a little but I guess that was a consideration but most of them I don't know that say most of been many of them are like this so, it's difficult to find one with regards, to exit because the market is as bullish as it is but, we'll talk about exit. More next time because, we're going to be talking about yield. And, using, where yield is that as an, extra consideration. And also taking, a C in consideration, the technical, analysis, but not, encourage all of you to do is get, a listing of stocks and think about, blows.
Highs, Support, resistance draw, some trend channels. Some channels, in to interpret, interpret interpret, the trend pull. Up a couple of moving average crossovers. And do some paper trading using, average to range with regards to ten shil entries that's a great way to learn this stuff alright. So with that the investors, will go ahead and wrap up today just a reminder that in order to demonstrate the function of the platform we need these actual symbols, however, TD. Ameritrade does not make recommendations. Or determine the suitability of, any security or strategy, for individual traders any investment decision you make in your self-directed account, is solely. Your responsibility. And. We've, got a second, here I can just glance over there into, questions. Let's, say. Lakeisha. Me hi Ken Rosa fire all, these tips in my daily trade how much percent of his income will. Generate, I don't have those kinds of numbers I'm sorry okay, what, what I would suggest with regards to using these things everybody keep, a trading journal because because, this is a subjective area, and what I experienced, could very well be different of what you experienced you may you may your, experience, may be may be better than mine okay but, keep a trading journal that's that's, that's really the best place to get answers to questions what kind of percentage return, and, those and those types of considerations do, do, or do appreciate the question also remind your folks you can follow me on Twitter again at kr. O SC t, da and following, our discussion, here we, have coming up, we. Have active. Trading active, trading is usually with James Boyd but he has a special guest commentator, today that's our very own Mike flood he does a great job so. Make sure to stay around for Mike everybody hey, everybody I hope you have a great, rest of your week best of success you're investing, and. We'll see you later everybody, we'll see you thanks again.
2019-10-23 02:29
