Looking For Reversals in Indexes and Stocks | Technically Speaking: Trading Stocks & Options

[Music] [Music] well good afternoon everyone welcome to our webcast on technically speaking trading stocks at options i'm connie hill happy that you would join me here today you know the market is a new and exciting adventure every day i have a question for you from the get-go that i'd like you to respond to in the chat okay who do you think is in control of the market right now do you think it's the bears that are still in control or do you think the bulls are starting to get a handle on things okay i want you to tell me what you think and then we're going to talk about today some ways that we can use charts and technical analysis to help us identify if that is indeed the case all right so welcome to one plus osborne frank robert george texas bj frank happy that you're all here with me today i'm also glad barb armstrong is here in the chat barb is such a great resource if you're learning option strategies she's got a fantastic series that i recommend you go to i get to do the chat in her session and so i get to hear how she explains all sorts of options strategies in the getting started with options series and so if you're learning options fantastic place for you to go now just getting a little bit here free says the bears are still in control ron agrees that it's the bears uh some george texas paul all of you think that the bears are still in control that would be this lovely grizzly guy all right we'll talk about it well as we start up here i do need to remind you that i'm on twitter my handle is at chill underscore tda i'd love for you to follow along i'll post educational content throughout the day things that i notice maybe in charts or things that are coming up in some scans i like to share that information with you you'll want to follow barb as well she'll also put some helpful tips out there about thinkorswim and how to do certain things she is b armstrong underscore tda you don't want to miss out on some information that could be pretty helpful to you well what we talk about today is intended for educational and informational purposes only not investment advice or recommendation of any security strategy or account type options are not suitable to all investors as a special risk inherent option trading may expose investors to potentially rapid and substantial losses while this webcast discusses technical analysis there are other approaches including fundamental analysis that may assert very different views stock markets are volatile as you well know and can decline significantly in response to adverse issuer political regulatory market or economic developments past performance of any security or strategy does not guarantee future results or success please no soliciting no photography take lots and lots of notes okay take as many notes as your heart can handle all right as far as our agenda here today uh i want to look at a couple of our previous class example paper trades and i think it's an important thing to follow up with those trades on an ongoing basis so that you are fully in the know of ideas and considerations for managing trades uh you might not necessarily do all of those trades yourself in your paper account but i think it's helpful to see the process and kind of see what the thoughts are behind the moves that we make uh if you were not here in a previous week no worries i'm going to go ahead and put a link to last week's session down in the description in my post-production work of our our webcast here today and then i want to spend quite a bit of time today discussing and comparing the information that we get from relative strength and from rsi sometimes people when they're new might confuse the two but actually we can use both of them together to give us some really strong information and then as we look at some of those readings on particular charts i am expecting that we are going to have some trades that we can work on here so let's go for it i'm going to jump over to thinkorswim it's going to be our starting point here today and i've brought up united airlines which is a stock that we have a paper trade going on as an example trade in our class actually we have two different trades going on with it i'm going to let you kind of take a glimpse at the chart here and maybe i'll zoom in about like that we have two vertical trades that are both bearish on this stock uh we got in to both of those last week on the 12th of may i like to put an oval on the date where we do that and it looked like at that time that united airline was breaking some short-term resistance and might be headed down lower well now we're ahead five days from that decision and what has happened well it's gone completely the opposite direction it ran up for a bit and then ran back down now one thing that i've noticed on this particular chart is that we're still seeing lower lows and lower highs meaning it's still in a short-term downtrend right we have kind of this high point here and then a higher low oh that's what we get our lower high and certainly our lower low and right again here we still have a lower high so that short-term trend is in effect and one of the nice things about verticals is that you do not have to be peter perfect when you're doing the trade meaning with verticals there's a little bit of fluctuation of the price that can take place and have the trade still work out for you so for example on this particular one we have a short call vertical it's a 45-47 that means our 45 is the short leg i like to put that in a green dash line so i can keep track of where my short legs are so the expectation on this trade is that the price of the stock will stay below uh as we get closer to options expiration day we're wanting it to be below 45. it's there right now but we might not be that profitable in the trade yet just because of the price action that's occurred since we got into the trade now the second trade we have on here that we did last week is a little bit um more i'm going to say more aggressive because it required movement from the stock in our short call vertical trade here we just wanted it to stay below 45 so it could go up a little bit it could go sideways a little bit it could do what it's doing right now where it went above our strike price for a day and then the last couple of days has come back down below it this simple trade however we did a 4143 long put vertical where we were looking for the price of the stock here it's low had been a little bit lower than 41 that day but we needed it to move below there and we still need it to move below there so when you're trying to size up a trade like this one thing to ask is has the trend changed am i totally wrong in my assumption that i had here did i blow it or did just things change or major news happen right just because the trade isn't going your direction doesn't mean you're bad trader it just means the stock at that point point in time that we're really examining closely isn't doing what we thought it would do could both of these trades still work out well tomorrow is options expiration for my may options uh may monthly options i should say so if that were the case we might not feel too comfortable we might be thinking we're in our window to get out but these are actually june trades if i come over here to my monitor tab and we just kind of take a look here on united airlines we'll see we have 29 days right these are the june monthly expiration so we have time for the trades to work so we're going to do just that i want you to see here our short call vertical we're down about 15 on it's not a big deal uh on our long put vertical this is a little bit more interesting we're only down about five percent which i think is quite interesting okay so for our purposes of what we're going to do in our class we're going to continue to let them work now let's take a look at love love is in the air if it's an airline i guess it's in the air if we open up love i did it we did a similar thing here where we put on a spread this one happens to be a call short call vertical okay where the expectation just like united was that it was going to go down let's see where we are on the trade right now we brought in a credit of 63 cents in a let's see here looks like it's a five dollar wide spread this strike is a 45 and we brought in 63 cents right now if we wanted to go buy it back it's going to cost us 68 cents so we're off on the trade a little bit but let's see how horrible or not horrible it looks okay let's bring up the ticker symbol love i've drawn a green line in here on my chart to let us know where the short leg is it is 45 now this particular one i've got an entry back here and i don't think that is the one we're in but i'm going to check it out uh oh oh do you know what we don't have a vertical going on here we have a diagonal going on i take that back we are short the 45 strike and we're long the 50 call so we actually have a shorter uh dated option we've sold against and our longer dated option is the one it's got until september 120 days now as we just look at this i want you to see uh this particular option the long option when we got in cost us 4.25 look where the price is right now 188. this is one we had sold a call against last week we rolled that call i know that was a little bit confusing to some of you if we next time we roll something we'll go ahead and maybe take it at a little bit slower pace so i don't lose you this one uh our short we brought in 63 cents on it and would have to go buy it back for slightly more so let's kind of just go back and examine the trade here knowing better really is a diagonal and not a vertical and so yeah we got in here the stock looked like that time where we got in it was breaking above diagon or horizontal resistance it had a nice little breakout here before the day ended it started to fade now the question you need to ask yourself is this still a bullish trending stock if it's not maybe we should not be in the trade anymore right if the trend no longer supports that type of trade so if we come along here we can see yep it did have some decent horizontal resistance up here about 47 or so and since then it made here's its low it made a lower low on this day and it made a lower high on this day now if something is not going the direction that you need it to go that it changed this one didn't get any higher than the day we got in on there are not enough calls in the world that we could sell against it to make up for that i mean we can sell some calls and bring in little chunks of money little chunks of money little chunks of money that help lower our overall output for that option in this case this this diagonal spread but if the trend isn't going that direction then maybe it's not a good place to be for our purposes since now it's formed a lower low and a lower high since we've met together i'm going to call that a trend change it is short term sure we have a lot of time but that long dated option in september is decaying decaying and in fact right now it's less than 50 percent of the price of the option so for our purposes today we're just going to close out both legs of the trade uh we're really not uh far well now we're uh three cents off our short leg it's gonna cost us three cents more oops sorry about that and uh this is what 425 if we were looking at half of that that would be what like two dollars and 12 cents and here it is it's down below 1.87

so this particular airline stock is not going bullish like it looked like it was going to do when we got in about three weeks ago all right we're going to close it out then let's do so create a closing order and if you choose the top one it grabs both of those legs it grabs our short paul egg flips it to a buyback and then our long leg it puts it to a cell so here we see our september leg selling and then our buying back that leg you're going to see it stays as a diagonal and it's going to cost us a little bit here well i shouldn't say cost it is it the net effect that we're going to lose money on this trade but we don't want to lose any more money okay some people might say well we've got a lot of time maybe we should just wait and that could be an approach that some somebody might decide to make but when we see the trend change i think that's a key factor to knowing maybe it's time to get out all right so for our purposes for our class that's what we're going to do we're going to hit confirm and send notice there's going to be a little commission because obviously there's options involved there just review it make sure it represents what you want to do i put in the midpoint price here i think it really uh put it near there right here 121 and so we're going to take that and we're going to let that work hopefully that'll click in just the next couple of minutes for us all right those are our two existing trades we needed to do some follow-up work on now i want to get into our discussion about rsi and relative strength ah good it changed it took our took our order for us let's first of all take a look at spx uh while we're here as we're kind of transitioning topics i want you to notice something over here i've got a lot of notes in my little scratch pad here the note i want you to pay attention to if you are new and haven't done this yet or if you're old and haven't done this yet and when i say all not really age but time with us working with us in in education and coaching if you haven't subscribed to the trader talk uh youtube channel or the investor insights channel you'll want to do it that's how you're going to be able to keep up to up to date on the different classes that we're trading or teaching rather and be able to be in the loop for those okay if you turn on your notifications it'll send you some reminders lighting you know hey this particular class is coming up so if it's one you want to make sure you hit then you've got a reminder of that we'll also have some content out there and this is true on the trader talks channel right now we'll also have some information and some uh sometimes short tutorials on things we're not teaching and broadcasting out everywhere for example right now brent morris has a series out there i think there's three there might be four little videos on using the thinkorswim platform that's the web-based not the download version like we use every week a lot of you have expressed interest in that and that's where you could find that information that otherwise you might miss out on okay that's enough for subscribing hopefully you understand the message here all right the other thing i have on here i have what we risk in our portfolio which is about 750 per trade and we're going to reference something here when we get to rsi okay so i just want you to kind of see those notes there we're going to start out here with adding to what we're looking at here we are going to add relative strength now relative strength is a comparison uh let's see relative strength here it is down here and i'm going to add it on here twice and i'm going to drop my volume to the bottom because i just like to see volume at the bottom and the relative strength by default says it's going to compare whatever the ticker symbol is right here to spx well if you take spx divided by spx it's going to be what it's just going to be a 1. it's going to be a flat line we'll see that here in a moment i'm going to take this relative strength and i'm going to change the index that's going to be compared here we're going to use the ndx which is essentially the nasdaq and on this let's uh make this a little fatter here too and i'm going to change the color to kind of a purplish color they're not on the same pane so it might not matter quite so much but just let's look at this right now what information do we now have on the chart that we didn't have just a second ago now the first relative strength comparing spx to spx see that number right there one everywhere along here is one because something divided by something else is one but the the the value here is actually seeing how it compares maybe to other indexes or to other stocks now i'm going to come up here we're going to use a couple of stocks from the nasdaq 100 here today and i'm going to pick out here we're going to spend just a short amount of time on pdd now what we're looking for here is is the this little line is it trending upwards flat or downwards if it's trending up and the lows get a little bit higher a little bit higher then we're going to say pdd is stronger than spx meaning it's trending more strongly it doesn't necessarily mean though that it's upward trending it could be downward trending and just barely be outperforming spx the second one here ndx well so here would say maybe it's ever so slightly outperforming but it's not anything really stupendous on the nasdaq it looks like it is its uh strength is a little bit stronger than the nasdaq overall and so we'd say okay yeah maybe that comparison if it's a nasdaq type stock maybe that might make some sense but let's look at another one here i'm going to put pull on in our snps synopsis we see that smp was just kind of trending very similar to the s p but i want to see what the low is here the low here is 0.65 and then the low gets here to 0.66 and then it gets to 0.68 and then yesterday it got to 0.69 so if we were going to be connecting those we would look and see that we have kind of an uptrend oh my line doesn't want to draw oh well just know that that should be an upward trending line and we're looking for the trend we're not looking for day to day ups and downs and ups and downs we're looking for the overall trend of that relative strength now of course today look at the move that it's having i had drawn a diagonal resistance line here because i was interested to see if it was going to stay above it when i looked at her dirty or guess what it wasn't that far above it it looks like it's really starting to take off right now up 12 when i saw it initially it was only up like three or four percent okay but now it is really strong strong and so we can see this vertical line just pop up here and basically it's saying today yes this stock is definitely outperforming the spx it's how performing the ndx the nasdaq 100 okay that's how we can use that we're going to look at another stock here we're going to look at adi we're going to see a somewhat similar picture here we're seeing again another diagonal resistance look uh the high points were getting a little bit lower and a little bit lower and then the last three days it looks like it's been trying to break out of this diagonal resistance earlier today it was up here it was looking strong but the price has faded down a little bit but look at the comparison against the spx is it trending stronger than the spx yeah it is it's performing better than the spx which we i'm assuming you all know is downward trending several of you told me yeah the market's still bearish connie which means we're still seeing the lower lows and lower highs same thing on the ndx we're seeing some real strong comparison there um question is coming in here uh chris had a comment to me and actually chris i'm not sure what to make of your comment i think you're trying to help me out there you said your drawing tool is is in the arrow and i think you're meaning uh right here and that's maybe why it wasn't drying my trend line maybe it didn't skip over there like i wanted it to let's try it out you might get the bonus points of the day there we go connecting those lows definitely upward trending that's what i was trying to do and i haven't noticed that the drawing tool switched over to the arrow i thought i had had it sitting there thank you appreciate that m says do you consider implied volatility when selling covered calls absolutely yeah you want to know if implied volatility is high or as low you want to see how it is on that particular stock in addition to seeing what's happening with the vix so that is absolutely something that you want to take into consideration it's not something that we're really going to explore here today all right next thing is i want to add on rsi and i know some of you that are new you're learning all these new studies and what they are and sometimes they kind of sound similar right rsi and relative strength yeah you might think they're the same thing but i'm going to show you here why they're not we're going to add that study on we're going to click on our added studies and we're just going to tar type in rsi that is the actual name of it i'm going to grab it and i'm going to double click on it and i'm going to change the look of it just a little bit i want that line for us to see i want to see it a little bit more bold okay so i'm going to change that to a three and the r inside has an oversold value kind of an oval sold area and an and an over bought area i'll show you those it's it's it's ranged our relative strength there are no ranges it can be whatever number it turns out to be mathematically uh let's see our overbought i'm going to make this line a little bit bolder oversold in our overbought lines just so we can see them a little bit easier fatten them up here we're going to say okay and i'm going to drop volume down there again there we go and i'm going to say okay again now relative strength is an oscillator that some might think is very similar to the stochastic because it has this area 70 above that's considered overbought 30 and below that's considered oversold and sometimes those have negative connotations think of overbought as uh bulls are in control or buyers are in control and when it's down in the oversold area think of it as sellers are in control okay or maybe short-term bears are in control you can kind of think of it that way now i want to show you here how ranges come into play and the direction of the trend now we already looked at adi and we saw yeah it's outperforming the spx it's outperforming andiax but what is it doing here are the low points getting a little bit higher they might be let's see if we draw a line what direction does it tilt okay if i connect the lows there it's definitely upward sloping sometimes we might look to see if that's the case we might just look at its sheer numbers uh we might look at what direction is it trending is it making higher lows like this one isn't making higher highs now i'm going to put my mouse i'm going to actually start it right here at this low point and we're going to see what the reading is the low here is 40 and then it goes to 43 and it's around 44 43 and then here it gets to about 48.

now down here i have some little notes that i've typed in here because we can use this these ranges to let us know hey is rsi in a bullish range or is it in a bearish range so we were just seeing low points here in the 30s and 40s if the rsi is in a bearish range the lows are in the 20s to 30s now we didn't see any 20s we were starting to see high 30s and actually right here that number was 43 and it got up as high here it to 52. so it looks like it's moving into the range where rsi tends to be a little bit more bullish and so we can look over here if it isn't a bullish range then the lows are in the 40s and 50s typically now could it go beyond those ranges absolutely it can we're just trying to see some ranges where it tends to hang out so based on a lot of things here maybe there is some changing or some strength starting to move in to this stock particularly not the overall markets but we can use these tools in looking at the overall markets okay we're going to come back to adi in a minute let's come over here to spx and let's see what value we have by adding rsi on our bottom pane here to the spx we know it's bearish you guys even told me yep big and grizzly bearish let's see where the lows are here so we've got a low here 3270 and for those of you that aren't really sure where i'm looking to see that reading up here where it says rsi 14 periods is what it's measuring is and that's a a nice default for us to have shows us our overbought and our oversold range and then whatever day we're pointing to whatever this number is right here okay that's what we're we're where we're cueing into that value so come back here our low is 34.97 38.8 33 31 so it's going down down and right here looks like 38 and right here the most recent dip point before it bounced up looks like it's about 36.

so as we look at this one thing we could say is consistently is consistently right now on the spx is it staying in the bearish range or the bullish range okay staying in the bearish range isn't it and so we may want to look for other signals on the chart that might show us that things might be changing a top question i think a lot of us have is how long is this sell-off going to last how long do the bears have to be in control here this is really frustrating i know it is for some people if you are a bear in the market right now and you're up and good on your bearish option strategies you might be having a heyday okay but for most people it's hard to see that downward decline of the market okay so we're seeing pretty much nothing here on the rsi to tell us we maybe should have some strength even though spx is trending stronger than the nasdaq so we might look for some additional things we might decide to look for in conjunction with are the ranges shifting do we have any reversal patterns so we might look here at the spx and say well it came down to this 161.8 retracement area from our fibonacci not so concerned so much about that as i am so much concerned about could we be seeing a double bottom we might be right how would we know if it's a double bottom a double bottom typically means a reversal and technicians will look for the price to get above this little midpoint here so i'm going to draw a fake candle and we don't know when that would happen but if the spx were to get above that okay and cross this midpoint some technicians might go ahead and start to trade it bullishly would would it be premature to do so right now we really don't have any evidence right now that that's what's happening we've got to see price confirm something we're looking at that says hey this might be setting up for us now how about the dow jones dollar sign dji as we look it up the dow jones it looks to be uh outperforming the s p 500 kind of seems to be in line here with the nasdaq they're both kind of going along flat not a very big range tops look very similar bottoms look very similar so i'm going to call it about the same as the nasdaq and then when we get to our rsi what do we see here we see i'm going to come back to this point we've got a low here of 37 another low at 41. but then i drop down here to 32 39 35 are those numbers in what range are they in the bearish range of the bullish range they're kind of in this bearish range all in the 30s okay and so we might look at that and say well it doesn't look like it's doing anything stupendous yet we're again going to look for some reversal price patterns here we're doing a lot of technical analysis today and somebody might see this low point here and this little point some people might think they look like equal lows maybe a double bottom i see it going a little bit lower so i'm saying maybe it's forming an inverse head and shoulders pattern right where this is the first shoulder that's formed imagine a person standing on their head and this is the head and then we would wait for the shoulder to form if it does we don't know if it's going to but that's what we're going to watch for right we all want to be watching for what might give us some answers to if the market is really turning around or if just individual stocks are outperforming in the environment that we're in all right so that's what we can look for now we're going to go back here to pdd it is looking like it's man it's trying to get above here we saw the bullish activity here with the rsi that those lows moving up into the bullish range and so maybe somebody would say you know maybe i'm willing to take a chance on pdd i'm going to let our price action be a little bit beefier here i'm going to squish these other guys and somebody might say well i see a double bottom and i see a lower or a higher low right this low here is higher than the low that we had here about four or five days ago they might be seeing possibly a change of trend we're going to put on a conditional order here which means we are only going to get into the position if the stock does something for us gets to a particular value uh let's see let me see what ramesh is saying here does spx 3852 look to be good enough support here or another low can be expected uh let's let's look at that real quick and then we'll come back to pdd because we're just focusing on the sps so your question is does the 3852 look like it's going to be good support today it didn't technically touch it okay did it get in its rate in its area in its region it did for me it's close enough to say we've got a double bottom there but we'll have to see if we get confirmation right and the confirmation is going to be just what we talked about you know having the price action go above kind of this midpoint here wherever that happens to be we would want to see the price go past it and then somebody could perhaps if they wanted to aggressively be mildly bullish expecting the reversal but we've got to see price confirm if you walk away from anything here today it's the the price is king we've got to see what the price does because we can have oscillators showing us maybe a different range we can have oscillators trending their direction but if the price doesn't confirm it it really doesn't matter okay so let's go back to pdd here we're going to take the role of an investor that wants to maybe be a little bit aggressive maybe has seen a little bit of selling off in a stock that they think otherwise is healthy and maybe if it's going to reverse they want to take the ride back up so in this scenario we're going to do just a simple stock trade but we're going to say all right stock you have got to get up here a little bit higher you've got to look like you really mean business and so if we did a what's called a buy stop order at about 45.50 we would be getting above these little high points here okay we'd be getting just above them and we'll say okay if stock you get there then we're willing to enter the trade but if it doesn't if it just continues weak down here we're not in the trade it's not going to execute for us which is good and you may even give yourself a time frame you may even say let me check it in three days let me check it in five days see if it's made a lower low and indeed maybe you just don't want that trade out there at all anymore so let's go ahead we're going to put it on so we come over to the trade tab we've got pdd we're not going to do any options with it it's got some decent trading volume today almost 11 million shares already and because we're going to buy it we're also going to put a stop loss on it and so we're going to say buy with a stop loss and really the stop loss is to get us out of the trade if it runs up here hits our order and drops back down into the triangle okay if it drops back down be below this diagonal support then it was a false breakout it's really not following through the fact that we have some decent volume and we're still pretty early in the day that purple line is our average volume uh i think it's a positive signal but um but not absolutely telling us anything it's just like okay that's a little bit positive we're seeing that today so we're going to put in our buy stop and if it gets lower here if it gets below 39 which is about right i'm gonna get my mouse to it pretty close to here pretty close to where these lows are are 39 in fact we could even say uh let's say 38.75 okay we're going to do 38 38.75 is our stop

and our target where we are getting into the trade i guess it's not really a target we're going to say entry price is going to equal i said 45.50 okay we wanted to really get above these fairly recent highs if it doesn't there's not that much evidence so as we come back over here to the trade tab i previously did some position sizing and i determined we could do 115 shares of this stock based on our entry price minus our stop price okay so 115 i'm going to put that in there i'm going to click on the link so that those quantities sync up and then here we're not going to do a limit order this is where we change it we're going to change it to a stop order and that stop order says okay stock get above this price and i forgot to type that in that in the in the chat for not the chat but the scratch pad we're going to get in at 45.50 the stock doesn't go that high we're not in the trade and we don't want to be in the trade but we don't know if that would happen today or tomorrow or the next day we don't really don't know so we're going to put it as a good till cancelled but then our stop we're going to say all right if you get up there and you trigger and then you drop down we're out we don't want to be in this trade it's not really reversing on us and again it is a little bit more aggressive because we haven't seen evidence that the price has gone there and let's see here we're going to put our stop at 39 i'll put it 39 even we'll make the math easy this also is going to be good till cancelled now remember on a stock market order if the price of the stock gets to 39 or lower it triggers that market order is it a guaranteed price of 39 no it's not the intent is that hopefully it might execute close to that but if the stock drops down to say 38 or 37 then the fill price is probably going to be closer to where it gapped down to and started trading okay so just know may not be exactly 39 but we're doing our best guest physician sites there so uh ramesh says there is not confirmation yet oh oh i take that back barb's helping you out there that there's not confirmation that downtrend is over right there's not this is us saying if it is over we're gonna we're gonna put in a trade here to execute so we're gonna hit confirm and send we'll see if it gets filled by the time we meet again next week we're going to submit it now i'm going to go to adi adi we had a very similar thing except that maybe it's a little bit stronger is stronger because it's outperforming the spx and the ndx and its rsi is up here in bullish areas okay so it probably has a little bit stronger statement that it's making that maybe it will reverse but again we don't want to get caught just barely inching out and dropping back down so we're going to do another buy stop order here on adi i went ahead and position size this before our class as well to determine we could do 62 shares so we're gonna do our price of entry at 167 so that's going to be just a little bit above the high of this day which was 166.33 we're going to say hey got to get a little bit above that 67 cents and then if it drops back down in here we want out quickly we're not going to say oh yeah drop down here and just dink around no we're only doing this because we think the stock might break out don't know but we're going to put conditions on it so same thing on adi we're going to do a right mouse click and we're going to say by custom with stop we're going to change this to a stop order and then we're going to change our price here to 160 what did we determine here 167. it's got to get higher than that and then our stop loss it ticks it drops back down we're going to put a stop loss in place around 155.

that one we are giving a little bit of latitude to now when i position size this had a class i just took the difference between where our purchase price is looking to be 167 and where we might stop ourselves out of the trade which is about 12 worth of risk so we're not going to be doing a ton of shares here we're just going to do 62 shares so 62 here 62 here and we're going to make it good till cancelled on both of these and remember this stop loss order says if it gets 155 or lower then get out of the trade we're going to see if it actually executes or not we wouldn't we wouldn't like put this order in and go on a trip to hawaii and never check it okay somebody would might want to stick around okay meaning be able to take a look at it once a day or so just to see what's happening okay no commissions on this particular trade we're going to send it to our trading stocks and options bucket we're going to send it off if it fills it fills if it doesn't it doesn't there's no harm done now one last stock chart i want to show you and we're going to do this in a little bit more rapidly here is conoco phillips and what do we see on conoco phillips well where's this rsi oh that low is at 47. that low was at 57 this low is at 55 almost 56. so its low points are where are they in the bearish region or the bullish region yeah its lows in the 40s are in the bullish region and so we're seeing outperformance of the spx outperformance of the nasdaq conical phillips of course is an energy stock we know what's been happening with that sector now it is up against some horizontal resistance and that could keep some people out of the trade but there is about three bucks for the stock to roam and move before it gets there so on this particular trade we're getting in on a nice little bounce it's only up a percent today so not huge but what we could do on this trade we're going to put in play here is a short put vertical okay we are going to do an options trade on this we're going to let it execute and i'm going to look to sell a 30-something delta so we're going to sell the 100 97.50 if this is a strategy you're not familiar with again get over to barb's class she'll teach about every single option strategy she might be getting to verticals right now i'm not positive on that but uh she can tell us since she's our chat person so we're going to sell this vertical we're going to bring in 68 cents credit i'm going to play with this order a little bit i'm going to put in a buy back order that if we get the majority of the gain of our 68 cents that we wanted to close it out early okay but we're seeing all those indicators that we're looking at looks like conocophillips is outperforming them right now okay hopefully that makes sense to you and again i'll come back after our class is over and i'll put on that buy back order and get us all set up on that trade and then we'll check on it next week so we looked at our existing trades we spent a lot of time talking about relative strength rsi what they're doing okay how they're different and then we looked at using those indicators to identify new potential trades now for you what would i want you to do i would want you personally to take a look at your watch list and on your watch list see where the relative strength is is the stock that you're looking at trending up that it's more that it's uh stronger or is it trending down than the spx and the ndx or whatever you want to compare it to what might be appropriate and those rsi ranges put the rsi in your chart and see hey does this look like it's going bullish gee if it is is there anything else on the chart that might indicate that it's going to move to that bullish direction so i want you to basically uh practice what we learned here today now real quickly just a slide here for those of you that are newer in the markets we've got lots of classes geared towards your level so take advantage of that one of those is going to be barb armstrong's class that she teaches today a little bit later on your uh i can't remember what the word is barb with your portfolio just basically how do you how do you work with a portfolio what does that mean what are the elements of it i think it's portfolio it might even be called portfolio management all right well i do need to remind you what we talked about today is for educational and informational purposes only not a recommendation of any security strategy or account type now james boyd's going to be up next he's going to be doing trading the trend it is a little bit more possibly a little bit more of an advanced class for some of the material that james covers in there so that might be right up your alley for those of you that would like to attend that now i did not see a survey out here today but if this was helpful to you hit like on the way out make sure you get subscribed and follow barb and i on on twitter so you get those little tidbits have a great afternoon everyone we'll check up on these three trades next time in our class have a good afternoon bye-bye [Music] [Music] you

2022-05-22 04:43

Other news