Non-Verbal Communication? | Technically Speaking: Trading the Trend
[Music] hello and welcome to technically speaking on trading the trend weeks to months my name is james boyd we welcome everyone here it's good to see you back and uh geez it's been like what a week so uh let's just reacquaint ourselves my name is james sport i normally teach at this time and we would like to welcome sheckles our miller kathy george texas frank todd and many others we welcome you as we talk about the session where we talk about stocks and options and our focus really is talking about trading the trend weeks to month so we're not just talking about short-term trends we're going to really try to emphasize really the intermediate and longer term trends now just real quick as we're getting started we also have uh connie in the chat as well also remember that she's a redheaded and so am i so double trouble here today we should have you covered so uh let's go ahead and actually get started just real quick want to give us some quick reminders uh in teaching this class the content is intended for educational informational purposes only not investment advice recommendation of any security strategy or account type options not suitable for all investors special risk energy trading options you want to be very familiar with the pamphlet called the characteristics and risks of standards options you should have also gone through the online course for the options material there's even an online workshop for that as well so make sure you're aware of those also remember futures and futures options trading speculative uh there's also trading those that involve substantial risk not suitable for all investors and also remember when we talk about paper trading here today we will we will be using the paper money application for educational purposes only and also remember when we talk about investing you should review the transaction costs and when we talk about options be aware of what the option greeks are so today what we're going to really be talking about is the following we'll actually take a look at uh the market posture i'm going to look at a number of charts with you here today i think the indexes uh the sectors and also the commodities they're telling a story sometimes some of the most strongest communication you can ever get is non-verbal and we're actually going to use the charts as nonverbal communication as far as what is the market really thinking now we'll also talk about some new setups stocks and options and again forgive me or thank me later when we look at a number of charts okay today and we're going to fast-forward a number of charts and we're going to look at some stock and option setups there we'll also talk about enclosing some vertical management as tomorrow is expiration so no time to waste let's actually go ahead and kick off here so if we actually take a look at the dow this had been kind of really more of our symmetrical triangle if you want to call it and then you earlier today you really saw the dow break down below that okay so there was a lower low getting down below the diagonal support and it was a lower low relative to where we were here now this kind of goes back to even though i was on vacation okay and someone said hey james isn't it kind of maybe the normal if someone goes on vacation the market is down that tends to be true okay and what you'll notice is that diagonal yellow line that looks like a highway strip we're still actually seeing that downward trend now here's the thing sometimes when we talk about truth sometimes when we talk about dominant trend we tend to kind of fight that because we have tendencies of what we like to do okay well if we see a downtrend we're going to talk about a bear strategy if you're not comfortable with a bear strategy you've kind of been maybe of trying to maybe say i want to just do this promise that's maybe not what the trend has been doing so dow and the s p look very identical you're going to see that both of those kind of been that's more symmetrical triangle if you will the s p maybe did not take out the low as much as the dow did but if you look at this still the overhead resistance that we talked about same line from last time still is about 39.09 now i think it is interesting a little bit when i looked at that i looked at it in a week okay when we look at the two different performances of the ira account on 710 here is at 9 68 and on 7 14 it's at 9.79 what does that tell us if the market's gone down but this per portfolio has gone up in the past couple days what does it tell you about positioning strategies stock selection right uh sector selection whatever asset selection whatever well it kind of tells us that we've been maybe in the right spot even though the market's actually gone down we can see the balance over time where it's actually gone up and so this tells me there's some type of bearish trends because the balances wouldn't be up if there wasn't okay if we had more bullish trades or stronger bullish trades than bearish probably should have been down now that's actually we're seeing that same pattern in the margin as well again i hadn't seen this for a week it was at 113 not as strong as the ira it's at 114 but again the marking went down and these two portfolios they actually offset it a little bit now how is that possible i'll tell you how it's possible well we had heads from two weeks ago on the twitch on wednesday we have a class on wednesday put on a hedge one for the margin account another one same type of instrument for the ira account and that hedge on the s p 500 it's helping and it's offsetting the majority of the drop the key word is so far we'll continue to monitor that now if we actually look at the nasdaq just briefly on the two remaining we don't see a new low there that's kind of interesting maybe a canary in the coal mine why is there canary in the coal mine should be here right the nasdaq a hammer-like candle and has not taken out the low interesting so some investors may be trying to find some select stocks in that area and if you're a small cap uh investor you see that we did not take out the low but does look more like a descending triangle for the most part okay so if i kind of said something that kind of stands out a little unusual it's the nasdaq and when you think of the nasdaq you also think about the socks socks isn't down today socks is up socks is actually the semis so as the market has actually dropped there are some investors kind of going through the rubble of price action and they're trying to really maybe look for some stocks costco that maybe might have a stronger trend and gosh darn it costco costco's been one of them that's been quite strong we'll come to that in just a sec so i want to kind of talk just i want to fast fire a couple sectors okay and i probably won't speak to them a lot i'll just show them to you technology again it's going to look just like the nasdaq okay when you look at discretionaries you look at that and i'll zoom in on it so you can see it discretionaries again a little interesting again this is another canary in the coal mine if the indexes are actually going to new lows or are at new lows how come we're not seeing tech and discretionary new lows that's interesting to me if anything they should be leading the way down not seeing that right here okay not yet if we actually take a look at basic materials and we talked about this we said hey if we start to see a slowing of the economy do you start to see a contraction in the demand for the products like steel okay etc copper will leave alone for just a sec but you see base materials below the 10 period moving average and just using that blue line as a as a level resistance that's a fresh low on base materials getting taken out to the back of the barn and whipped and if you take a look at let's say industrials okay james well don't go out to the back of the barn because we know that could be bad well if you look at let's say industrials that's a fresh new low here today so we're seeing on base materials and industrials we're talking about the backbone of the economy per se and you're seeing that stuff fall apart okay now if you also take a look at let's say the financials and if you look at financials that is a fresh new low on financials now if you didn't read what we talked about on today on twitter regarding jamie dimon things like that we repost that twice where he actually made some comments regarding the economy that's if you take a look at this if the financials are actually making a fresh new low that's a liquidity for the economy i think it like the financials as the oil to the engine if the oil is taken out of the engine not good okay so we are kind of still seeing some darkening clouds but that's not new because we've been talking about that but again you're just kind of now starting to see the fruition of what we've been talking about because we just got those earnings and so here when we let you look at let's say jp morgan's earnings which i'll just pull up now when you look at jpmorgan that gap down didn't drop a little bit gap down you want to actually kind of go through these conference calls and actually see what are they saying on that earnings call what are they saying what are some of the comments okay if you're not doing that i mean you got some tidbits there you that you can grab and i think it would be well time well spent looking through because these companies they have visibility into all sectors because all sectors are borrowing from the financials hello right of course we know that now if we actually take a look at let's say i just want to kind of speak to just real quick uh on the commodities okay not even gold has been able to kind of offset that decline gold has not been shiny we know that silver has been well it's not been high ho silver it's been high low silver okay and silver actually down to a fresh new low and then if you look at the the commodity that we've been kind of seeing is just that nonverbal communication here and we've talked about copper if this is going down in this fashion in this steep decline okay it's telling you something okay it's saying the man is falling a lot i'll go back to jp morgan when jp morgan came out with earnings today it was down 28 28 not two not eight 28 and so this collapse we're actually really seeing in these commodities in steel etc it's real okay and and now we're kind of starting to see the numbers come out from it now don't get so upset no i just think a lot of times people fight it and i it just makes me wonder why they fight it now if we take a look at the last one and i'm going to go to questions right after this because i took the first 10 minutes i feel sorry now what you're going to notice is if we take a look at let's say the crude oil okay which has been so crude sometimes okay want the oil but not the crude part now if you take a look at let's say oil 95-16 we know as we mentioned before there's a lot of political pressure getting the prices go down a lot of the inflation has to do with the prices of energy we've actually come down falling down to a support line we have a bullish macd divergence on that we did we were trading lower the next support level is about 84 so if we can actually get down below 95 dollars the path of least resistance is down to about 84. now yesterday i went to sam's to fill up my truck and it was like the end of the world okay as far as filling up for gas wondering what was going on but if you take a look at this okay uh it is diverging as far as lower lows on the price macd go in the opposite direction but again this support area 95 looks a little soft i didn't say twinkie soft i just said soft we saw the price intraday get down below there fighting to actually stay above there but if we look at this and said what's the odds of maybe crude going a little lower maybe the odds are increasing okay let's take a timeout let's see if there's any questions okay now i want to kind of go back to something one of the things we've actually been talking about so if you said i've never come to this this class before we actually have two different accounts we have a margin account we have an ira account and when we look at let's say the both accounts what we've actually been talking about lately a lot has been using a vertical strategy bullish and bears and there's been a dang good reason why we've been talking about bullish and bearish verticals in this market it's been harder to find bullish candidates and i don't think it takes a whole lot to explain that so the biggest actually thing is we're also trying to do is we're trying to actually do strategies that have a lower breakeven my gosh how many times have i said that okay and so we're trying to do strategies that are let's say more forgiving on volatile price moves with lower breakevens okay so if you don't know anything about verticals today watch and learn because we're gonna knock down a couple okay and we're gonna manage a couple now if the market became more bullish we would like to do more stock candidates some of the examples today will be stock candidates but that's going to be a minority not the majority because of what we see in the index trends the sector trends etc now if we actually take a look at this i want to kind of start now talking about some of these positions now i'm going to kind of go through dow stocks first and i want to kind of speak to a couple stocks that kind and we got to imagine that not everyone in this class is a bearish investor or is willing to trade bearish or even maybe use as options so i want to kind of talk about maybe a couple stocks and a fast fire couple one of the socks that's kind of standing out today on the bow is really walmart okay we know that it fell down a lot but it's actually done a pretty good job as far as really making some higher lows higher lows and really what you're going to notice is if that stock actually gets up too much higher than about 128 or so let me kind of explain the marking here the the 118 is really the first level of support over time the 120 represents like a higher low than 118 and then this area right here 123 really being like another right higher low if we actually get much higher than where we are 128 it could be trying to reverse that drop and that decline and sometimes you can actually see stocks they can fill in the gaps okay so remember we talked about in this class we're big fans of dollar cost averaging what we're going to show is just kind of a third third third okay that's it and so the first trade we're going to look at here is maybe buying the stock okay buying the stock we're going to go down to where it says buy custom we're going to say with stop now the investor has to kind of think about how much do they typically allocate now if someone said james in any given position i look at i allocate uh thirteen thousand dollars eight thousand dollars whatever it is let's say we splice that into three okay so let's say the investor said james i normally do twelve thousand dollars you separate it out in three chunks that's gonna be uh four thousand dollars four thousand dollars times three twelve thousand dollars if we actually come back and actually said well how many shares would that be we're gonna actually say uh change that to dollar amount excuse me for that now put that in okay and all it's really doing is it's just trying to buy some okay so it's very difficult to actually nail the bottom okay very difficult and so what investors try to do is they try to build a position over time and only try to add to it typically when it starts to show technical improvement such as making a higher high making a higher low etc okay getting above the moving averages things like that so if we look at this first trade here what you're going to notice is we're going to set a stop right down below that area of support it's only about a third of a position we'll set an alert on the second position we're going to set that stop right below 121 okay now we might say i'm going to set that stop right below let's say the moving average 124 that's probably going to be a little tight but if we set a stop three percent below 121 it's going to be 117. now you got to remember is in a more volatile market some investors might try to go to stocks that have a history of being less volatile we could also say lower beta that does not mean they don't go down they just don't tend to have a history of being as volatile as let's say the s p so the first trait we're going to actually look at is a third of the position on walmart which is 31 shares entry price stop price it's saying if the stock is entered okay sell the stock if it goes to 117.37 or
lower stop gtc remember that can be filled at a lower price now let's read what's in red this order is based upon the dollar amount selected in the price of security at the time the order is routed to the market with stop orders there's no guarantee that the execution price will be equal to or near the activation price so the risk is with the stop is wonder if it gaps down what if it goes down to 115 it can could be filled at a lower price so that's nice to read those orders down there now if we go ahead and say send that order ah that's weird okay i'll fix that but now what you're going to notice is and i'll um well i'm i'm going to fix that right here so if we were to actually kind of uh change this and say where do you think maybe that second position might be added well we might just kind of say could we put like a buy stop order okay now if you don't mind as i talk i'll i'll trade as well and i'm gonna put that right back and we're gonna make sure we get that little we're to get it filled and so dave let me actually put that right in the margin same trade i just want to make sure that trade gets filled okay same trades before 31 chairs there it is same stop as before let's make sure it gets filled okay that gets filled so what i want to do is i want to go back and i want to set like an alert okay and uh i want to set an alert if it goes at or above that 128 price threshold so i'm going to put my pencil right at 128 right click we're going to go down to where it says create an alert and what i'm going to do now remember the alert is not saying get in okay it's just saying alert me and i want to put that alert a little lower let's say 128.50 and i'm going to kind of write down second position question mark this will be that dollar cost average and so now what you're going to see in this case is if that stock goes to enter above 128.50 i get an alert on the platform email text etc and now what i'm going to do is i'm just going to say create now that is not an order to get in it's just like an alarm clock okay now the other one i also want to take a look at just real quick is apple apple again on a down day has done quite well if you look at apple is there any type of price pattern that might be trying to form now remember it's one of the few stocks that's above a 30 period moving average it's one of the few stocks that's above a 10 period moving average and again it wouldn't take that long to see that but if we were to look at this and say is there any type of price pattern that we're seeing on the chart now when you have a pencil in your hand you're dangerous okay so we kind of go down like this and we go down then we go up we go down we go up now this is a little awkward i think if you kind of look at this and you look like it went up it went down i think if we kind of just looked at it from this point we might say is there on the bottom here like an ascending triangle i think it isn't noteworthy to kind of look at the macd is staying above the zero line this kind of has like a shoulder head shoulder i don't think it's symmetrical of course but i think it's the same type of idea and if you look at the area of resistance you're really talking about maybe 149 150. the earnings are actually coming up now how many of you are actually thinking that maybe apple might be bullish that apple some investors as markets drop they might try to buy businesses that actually have a high cash on their balance sheet how many of you actually think apple might be potentially one of the winners in the drop and then maybe portfolio managers might look at it as maybe one of the companies that might dominate in its peer space well yeah okay now let's kind of go look at this remember we said we're going to try to focus really on verticals one thing that's said well i don't want to do a stop business because i could get gap down it is a dollar for dollar risk understand so let's go to work on the trade tab and now what we're going to do is we're going to go over here look at the august expiration august 36 days left okay we're going to go look at maybe selling in this case maybe like the 140 which really has a delta of 30. delta's just saying what are the odds of the stock being a penny below the strength at expiration 30 chance to be below 70 chance to be uh 70 chance to be above the strike and if we look at this the investor could say could i sell the 140 and then buy the 135.
now if we actually did this we could actually sell the 140s and then buy the strike below now here's the deal the purpose of the strike below is the safety net it's the protection this is really the side of the trade that we care the most about is the stock above that strike at expiration if it is okay well that's how you make the money right this is the premium side of the trade you stay above the 140 strike price at expiration the investor can keep all of the premium okay that's the bullet side of the trade the 140 short foot strike the 135 that's the bearish put that's the safety net now what you're going to notice is there's a set credit here a dollar 20. that's the most the investor can make five dollar wide spread 380if on the max loss now we like to call this a potential max profit potential match loss we want to also remember is that we have a 140 short put strike which means we could be assigned at any time whether it's in the money or not if there's time remaining it can be assigned so these are the numbers given the vertical trade but if this stock was assigned to buy in this account at 140 the max loss is not 379 because the trade is no longer a vertical so you need to understand that this could actually be altered if there is an assignment on the law on the short put but what about the 135 isn't there risk there well remember who has the right we do if we buy that 135 we have the right to exercise we trigger that okay but whoever is short has a standing obligation at any time to be the buyer of the shares at that strike price so this kind of goes back to what's so glare i can't barely see is if the investor didn't want the shares they probably wouldn't do cash secure puts if the investor didn't want the shares they probably wouldn't do short put verticals either if they really understood them now if we take a look at this we have cost of the trade including commissions there we go 119. now let's assume this account can really risk let's say a thousand dollars if it was willing to confirm and said change it to two if we change it to two now that max loss is 758. now i want to kind of actually take a look at this now when you alter it like that it does change the commission it's now 260 because now we're talking about two contracts so on this type of trade it is a vertical a short put vertical and i want you to notice what the break even is stock is at 148 and the braking is at 138 okay so we're talking about strategies where if the investor gets in at 148 on the stock price the stock there's even some buffer if the stock were to go down and as long as it expiration is at 138.79 or higher it could still be above break even if the investor buys a stock at 148.43
30 days from now it better be above 148.43 i think that's a more challenging strategy given the volatility in the market hence that's why we've actually talked about verticals a lot if the investor's okay with that they're going to actually send it we're going to see if it actually gets filled there now remember some investors might say james don't you feel like that's risky with earnings coming up learns come up four times a year anyway we already know that the risk is gap down okay but if we actually go back and see where the break even is the break even let me mark where that break even is it's at 138 so if it does actually get down which it can okay that's the break even not today not tomorrow monday no at expiration so that's why the investor might choose a lower strike to try to account for that drop in the price now there any questions with that okay so uh now what i want to actually do is let's just i'm going to fast fire a couple stocks let me know if you have any questions ibm if you take on ibm ibm's actually challenging the bottom of that diagonal line kind of having a little having a tough time what do you mean kind of dropping down it's been a while since ibm actually made a fresh new low needs to defend that 135.75 if we take a look at let's say a stock like merc which we watch quite a bit stock is still not broken resistance but it's still up near the area resistance disney oh my gosh this has not been the funnest stock on earth okay it's been the greatest pain on earth and if you actually take a look at disney hopefully ben watson's not here uh as he sometimes talks about disney and uh he's a fan of going to the theme parks and what you're going to notice is that's at a fresh new low here today now if you look at the stock for example like goldman sachs should not be a surprise that that stock actually did go to a fresh new low here today did also hit the prior low which we'll talk about in just a moment and the last one here on the dow that i'll just bring up is caterpillar which again when you're on the south side of the 10 period moving average doesn't tend to be more pleasure tends to be more pain it's been a lot of pain for caterpillar so let's kind of talk about just briefly some of these verticals that are now coming down into really their earnings excuse me their expiration so if we actually look at let's say a couple of these i'm going to kind of close everything up we're not going to spend a ton of time talking with each one of these in length because what you're going to see is there's a number of trades that say itm itm itn itin this is actually telling us right now there's a lot of trades inside 10 days to expiration i want to focus on the ones that said itm first so what i'm going to do is i'm going to look at whirlpool and what you're now going to notice is what type of trade is that okay now if we look at whirlpool whirlpool is it is a is it a bullish trade is it a bearish trade what is it well it's a long 175 foot that's bearish and it sold the 170. okay so let's go back to see when this trade was actually placed he was put on on june 10th now what type of trend was that a whirlpool now if you don't mind i'll fast fire on this but we couldn't go back and say where was june 10th on this june 10th was right there okay and i'm gonna put a mark right on this line okay that line right there that's the entry what you're gonna notice is the stock has stayed below the june 10th day kind of if you will you can even say that it went sideways a little bit to down you go back and look at this trade is what you're going to see is it's in the money what happens if we let it expire in the money well you're going to have an exercise and then the assignment the investor doesn't have to do that they can do it themselves they could actually come in and just close out the order that's what i mean by just do it themselves what you're now going to notice is the price for the put was 1105. it's not
1640. the gains are in the bearish side of the trade and if the investor wants to sell that create closing order the longer they wait or the closer they wait all the way to expiration the harder it might be to get filled as you go towards expiration the open interest gets smaller and smaller and smaller and smaller so it's not great if the investor waits the very end to where the only contract in the stinking world out there left so that's why we always talk about four to ten days expiration when there's higher open interest and typically a tighter bid asked friend if you want to wait till you're the last last person to have that last one contract then you have to imagine the spreads are going to be wider who are you going to sell to right less people so now what you're going to notice is we're just going to go out and do this individually try to sell that for 16 30 16 40 send the order see if that fills and now on this one you can also see that that short put it's higher why is it higher well because the stock went down and when the stock actually goes down the put becomes at a higher value gonna go ahead and buy that back remember that's short put that's the obligation to buy the stock don't want to have that obligation especially if that stock is in a downward trend taking that 650 dollars and really just trying to get out of the trade now if that trade fails it's now exited and now we don't have to wait till tomorrow to see what's going to happen one of the other ones that has itm right there is royal caribbean now what type of trade is royal caribbean well remember if you got a long put that has the higher strike value and you have the lower strike that bought put below this is just a long put vertical why we talked about long foot verticals why we've done that well a lot of people don't like buying puts where they pay for the put by selling a put by itself selling a put as well with buying a put it lowers the debit and it makes the break even where the stock doesn't have to drop as much to break even greater probability could do that it doesn't have that same upside as just someone who buys a put by itself but what you're now going to notice is as royal caribbean if we go back and say let's look at royal caribbean on 6 16 and enter we can see that right there let's go back to the chart and remember what we kind of said is when you look at some of these ships i mean it looks like they've been taking on some serious water no pun intended and no i did not think about that before but if you actually look at the date we actually got in as the bearish trade it's actually outside these three days it stayed below the resistance outside three days and hit a fresh new low so here's the thing in trading the trend weeks to months it does not have to be bullish if you're actually seeing some stocks that are going down there are some strategies and the most basic of those strategies is a vertical short call vertical or long foot vertical those two would be the foundation stepping stones to bearish university okay understanding how to play bearish trends now what you're going to see is before we look at this new we'll look at the how can we actually just get out of this together highlight both those lines right click create a closing order if the investor just want to sell out and not get out manually uh we could try to get that filled and on that order let me bring that back up create closing order sell so it's trying to get out for really a 334 credit again when you only have a day remaining that might be a little harder to do okay and this is the problem we wait to the very last second phil's become harder okay now let me actually kind of go back to something just real quick we saw on whirlpool if we look on whirlpool just real quick and we're going to look at the strike that we have and we said how many contracts are there in the world that are open and on exercise rcl just filled there's only 47 contracts in the world okay that are still open on the 170. so what you should see over time is the this number here shrinks and when these numbers shrink the bid and ask spread get wider and wider if someone understood that they would say wow probably don't wait to the very last second that's the point you you get it's harder to get a fairer fill okay now let's actually come now nick actually says how did you get in the money there well are you talking about on wh r whirlpool nick or you actually talking about on rcl now by the way as i see kind of what the answer next question is we talk about exiting on whirlpool okay just accident but if the investor actually thinks that maybe could that stop go down further could they try to maybe roll the position because they actually say you know james i want to maybe do a short call vertical still a bearish trend the answer could be yeah and if you look at that stock like rcl that is one that is still quite volatile and matter of fact let's actually do this if you go ahead and look at the option table you actually see that those paths go look on the put side to the right of where it says puts the implied volatility the annualized number it's 94.99
pretty high now if the investor said what i like to actually practice is how do i sell a call now maybe when someone says i'm selling a call maybe they think about this like a cover call i'm fine with that but when you do a covered call you're thinking i like to get the income but i want to maybe just be able to keep the stock okay fine here that's a cover call here we don't have the shares though that's the major difference but it's the same idea we're trying to sell a call where we don't think the stock can get above that but we want the income so the investor says you know i'll sell that 35 strike let me get that premium of a dollar 88 but wonder if i'm wrong wrong wonder if the stock actually goes up well that's where the investor could buy the strike above and that's a right to buy the shares and that's protecting that 35 strike from an infinite loss on the vertical so here we're talking about a short call vertical the other type of bearish vertical we're going to right click on the bit i'm going to go where it says south going gonna go right over to where it says vertical and now what you're gonna notice is this is a bearish trade selling the 35 bearish buying the 40 protection upfront credit credit not that credit that's the most this trade can make given the vertical now what you're gonna see in this case is if we say on a one contract basis we gotta break even and knows what that break even is pretty forgiving stocks at 31 and a half break even's at 36 so the stock can go up literally like four and a half dollars somewhere in that that range just to get the break even over ten percent now i'm not saying it can't do that because it can't and the fact the implied volatility is that i saying it can max profit just what the credit is potential max loss 387. now remember if we're talking about let's say risking a potential thousand dollars this would be really two contracts and just so that can get filled you're now going to see that there's the two contracts potential max profit potential max loss and now been adjusted so when someone gets out you might reevaluate and say hey do you think the trend could continue this is what we really mean by trading the trend weeks to months that the the drop in trend might not just stop because we've now reached expiration that drop might continue now the reason why i kind of chose a short call vertical is because the implied volatility is really high and with that high implied volatility might we try to do something that actually has upfront credit with positive time decay with that iv that high if that's what the investor actually wants to do i'm gonna go ahead and actually send that order so that was exited on the initial position and then we just established a new position going into august now let's kind of talk about some s p stocks got about seven or eight minutes here let's kind of talk about some of these stocks and one of them that for example i'm going to kind of fast forward on some of these some of the stocks that were kind of showing maybe a little they were different than the general market a stock like q-com if you actually look at that you'd actually say james is that maybe a stock that's breaking out of diagonal resistance now you got cubecom you got apple you got q comm which i believe double checkme is still one of their still one of their suppliers on some of the parts or at least a potential supplier okay of apple parts and that stock is breaking out ahead of apple's earnings why why is the stock actually breaking out ahead of its earnings so q com actually get breaking above that downward diagonal channel another stock here just real quick that's doing something different is t-mobile and if you actually look at t-mobile what you'll notice is it's over time just kind of creating some higher plateaus you know you have maybe a level of support you know for a while at 122 you have had a higher base again maybe 132 area of resistance maybe about let's say 138 when you look at t-mobile there's many many many other stocks it's been one of those stocks has had some uh some relative strength and when you take a look at them compared to let's say verizon att hasn't even been close if you take a look at dollar tree okay the dollar tree got above the diagonal line went up doink doink doink twink went up to a brand new high pulled down one two three days to the rising ten period moving average oh that feels so nice when it's acting in support and now what you're noticing getting a little bounce trying to off that tip here moving out some technicians might look at this and say james is it really kind of showing more of like a shorter term bull flag and i think you can actually say that and i think kind of the marker kind of here with maybe that higher low it's probably right in the area about 163. the technician might kind of measure that pole that bottom of the pole is about 152 pull the tape measure out 169. so i think you're talking about a potential 17 pull 17 from where maybe kind of this recent pullback is maybe setting up a potential potential price target about 180 okay now i'm also going to kind of show this kind of go back to one that we've talked about which is cascade okay now costco was one of those discount retailers it fell down it did fall down so it dropped down went back up over time created a little base of support at 450. went back up to the area of horizontal resistance made a higher low at 467.
went back up broke above the area resistance fell down one two fell down to the area of support and it ended up on a green candle now i want to kind of zoom in on this candle right here on 7 13 that was a gap down the open price was pretty much the low you could barely let me get my binoculars out i could barely see a low lower than where it opened so the stop actually gaps down and that is the lowest price today pretty much within pennies so someone people plural thought or a person entity etc someone bought on the gap down now that's not usual that you see stocks gapping down and they buy on the gap damn okay and then actually this morning the stock gaps up now wait think back to what was this morning dow was down 400. and costco doesn't got down with the rest of the market it was up three to four and if you look at what happened it really had what we call a down day closed higher than where we opened and then gapped up and not only to throw that out there it actually goes down to the temperature moving average goes back up off the temp here and moving out sells off of them to almost the penny bounce off 10 and goes doink back up and get 20 to the upside and so what's interesting is kind of these candles the trend telling a story it doesn't talk but when you actually think about for example what does that mean if someone's actually buying in that quantity on a gap down someone obviously thinks it could go the opposite direction when you see actually stocks for example taking the opposite side of the trade of the market markets down big and the stock gaps up someone is building a position now could they be dollar cost averaging they could be now when we actually go back to this we got about three minutes left we're going to go look at the august expiration we're going to go look at let's say the 495 with a delta of 35. we're going to sell that strike the 495 with the delta 35 and we're going to buy the put below that for protection cell vertical now this type of trading selling the 495 buying the 490 that is a bullish trade what we also could do is if we want to kind of widen out the spread a little bit so we're not doing as many contracts which we'll show here we're going to sell the 495 and then buy the 485 to one contract versus two that way we're not doing as many contracts and then just commissioning this portfolio more now what you're going to notice is if we did this breakeven 492. look where the stock price is now potential maximum profit given the vertical potential maximum loss considering a vertical whenever you see that profit less than the max loss we know it's a probability based trade if the stock would actually close above the 495 and expiration this is how it really actually makes the most or tries to benefit the most in this vertical now since we're only doing one contract given a thousand dollar max loss we're not having two commissions okay now if we actually take a look at this gonna go ahead and send that order okay so let's kind of wrap this up and kind of talk about what we mentioned here today so when we look at the trades that we actually got filled on number one was a an entry into uh walmart okay starting to build a position we talked about where that second position would be we talked about exiting actually royal caribbean and whirlpool based upon near max games we also talked about for example the costco example as well okay adding to that position and we also did kind of talk about those also as well keep an eye on we did apple as well we talked about cucumber maybe one of its suppliers is that maybe kind of some early indication of what those potential earnings could be cucumber apple walmart okay costco those are the ones we actually talked about here today we also didn't make mention of dollar tree so with that said i'm out of my time here today what an absolute pleasure that i could be back with you remember with what we discussed here today it was done for educational purposes only thank you thanks to you for all of your questions and thanks to connie my uh fellow redhead that we were able to hold this class and have some good times together but it's great to be back with you and i don't have any vacations coming up soon so i'm going to be here so with that said thank you so much
2022-07-19 00:35
