Swing Trading Days to Weeks | John McNichol | 10-8-19
Here. Good. Morning everyone John McNichol here and this is swing trade in days two weeks our topic, today is, going, to be divergences. And the, swing so stick around. Once. Again good morning everyone appreciate, those you that are here live today, Michele Patricia, Cole, basil, Ron Ricardo. Thanks. For being here as well as though she is listening to the archived session, I'm your host John McNichol swing trading days two weeks our topic, once again is going to be looking. At divergences. And the swing let's take care of disclosures, and we'll get right into it. Options. Are not suitable for all investors as, these special risks inherit, the options trade and may expose investors, a potentially, rapid and substantial. Losses carefully, read the previous body copy of characteristics. And risks of standardized options, spread, straddles, and the multi like option. Strategies, can, entail substantial, transaction, costs, also. Advanced. Option strategies, often, involve greater and more complex, risk than, single leg option trades and investors, should also consider a contact, and a tax advisor regarding. Attached treatment, applicable, to spreads and though the multi leg option transactions. Now. In order to demonstrate the functionality of the platform we will be used in actual symbols, keeping. In mind 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. Now. We're, utilizing the demo account for our practice trades looks like a real account but it is not you have the ability to practice what you learn as well, with paper money that software. Is for education, purposes only and successful. Virtual, trading during one time period does, not guarantee successful. Investment, of actual funds during a layer time period as those, market conditions change continuously. All. Investing. Involves risk including a risk of loss and while this webcast discusses, technical, analysis, other approaches. Include, fundamental, analysis, may, assert very, different, views. Okay. So. Once. Again, what. We're gonna do is we're gonna we'll. Take a quick look at the market see how things have opened up a lot, of news coming. Out also. We'll. Go ahead on focus, on our topic which is divergences. We're going to take a look at the MACD. And how, that may come into play on swing. Trades for mentum, for. Reversals. Of possible. Trends, counter. Type trades, and, what. We'll do is we'll, apply that not only to the market but looking at some individual, symbols so by the end of this session one, should be able to identify a. MACD. Divergence both. Bullish, and bearish and could, potentially trade. A counter. Swing, trade. Alright, let's, go ahead and bring up the screen, and we'll take a look at, what we have here today. If. You have any questions feel free to utilize the chat would certainly love to hear from you. And. As. We're looking at the sp500. Let's. Go up on the brick screen here. Going. Into Friday a lot of good news as far as with with. Some unemployment are not necessary good news but good, news as far as, pointing. Towards the Fed possibly. Being continue to be more dovish going. Into the end of the year I believe as some of the statistics, about a 40% chance of. The Fed lowering. Rates at least twice going, into the end of the year markets. Reacted, a bit favorably, to that as we look, at the S&P 500, after, the sell-off from, that previous week. We. Had essentially. A. One-third, about. A sixty, one point eight retracement. Of that, previous, trend, let. Me go ahead and adjust something. Here real quick. There. We go. With. That drop-off. In. The market earlier last week on Thursday and Friday market. Went ahead and actually. Wednesday, going, into Friday retraced. About two-thirds. Of that sell-off. There and actually did it very quickly. So. What. Looked relatively. Bearish earlier on the week you, know kind of showed some signs of recovering. Then, as we came into the, weekend and in. The pre-market. Concerns. As far as with the, China meetings. Already, possibly. Falling apart. Push, back in the middle east as well. With some, international. Movements. And we're, seeing basically more, of a gap down at. The opening, on the sp500. Pretty. Strong move they're essentially, taken back all. Of the gains from. From. Friday's, price action there now that's, happened at the opening doesn't mean the markets nests are going to close in that area, we'll see if markets, are able to push back into that. Friday range now, if we go ahead and take a look at the the. Russell, small-caps. Bring. That up. Russell. Down as well now. Not. A gap here. But. Certainly a strong. Drop. At the opening, there now, interest, in on the SPX, usually, on the cash indices, you typically, wouldn't see gaps so there could be more, of just a bad, price.
Mark There usually, it would go. Ahead and form up but, looking at the Russell price. Is trading below the. Low of a high day kind, of more of a classic. Bear. Flag, with. The Russell being relatively, weaker, on the strong move run-up, over about, two, to three days and prices. Bouncing, so there may be some small cap stocks that. May be showing that bear flag and pushing. Down now. The Russell had only retraced, not. Quite, as much as far as what the broader. Market, had done on the sell-off it was about a 50% retracement. If, you want you can take your drawing tools on. The, thinkorswim. Platform, select. That percentage, tool. And. Basically. You know draw from a low. To. A or, in this case from a high, to a low in, that. Previous, swing and. Just. Went ahead just a little bit there it was actually a little more of that sell-off. From last week, about two-thirds, as well but, once again a bearish, bounce on the downside there that's, so we can bring up the Nasdaq, real quick. And. NDX. And. Kind. Of the same motion, there so. From a bullish perspective, what traders would be looking for is a. A. Breakout, of, price. Breaking, above some of those previous high since the shorter term trend has, been coming more, down. Kind. Of connecting off those. Highs. Again. Strong bounce on the Nasdaq from Thursday, coming. Up to that resistance, and back, and off of that here. This morning. So. We're. Doin. Psa's come. Into play here well. With, prices. That have more. Sold off over. The, last few weeks some. Traders may be looking for well is there any potential. For, support. And, where. Is that potential. Change. Where. Those, downward, swings may translate, more towards, an upward, swing, so. There's various tools, that traders can utilize we're going to utilize the MACD. As an, example today the MACD, histogram you. May see this on a lot of charts not only on my own but. If you watch Ben, Watson. Brings. Up Mack DS James, Boyd a lot of technicians may, bring up the MACD, histogram because. It has a tendency of being a relatively, easier, indicator, to observe and kind, of show some of the subtleties, of the momentum. That occur in a, trend, so. For an example let's. See we have the Nasdaq let's go and bring up the Russell again. Bring. Up the small caps. And. That's, our UT. And. A. Great, example of this going. Back into the summer, months, this. Is something I actually tweeted, out as well on, Twitter if you looked at the title screen you. May saw my address there along, with a lot of the other instructors usually. It's their first initial last name so with myself it would be Jay McNichol, underscore.
TD A if you wish to follow but, as we look at the Russell and. What. We're doing for a divergence. Is comparing. The price. Action with. The indicator and when. One, a price action with the indicator it's, typically going to be doing one or two things the indicator, is going to be following, or, confirming. The, price action or. It, may be telling. Us something different, otherwise. Referred to as divergent. So, when we look at the Russell, our UT and, looking. At some of these previous. Lows here, now. I showed you one indicator, that you can use if you're trying to identify some, of those lows is come. Up to the pattern, tool on thinkorswim. Once. You're on that pattern tool, select. The drop down for select, patterns, so. We do that one more time. Select. Patterns. Once. We're there it's actually part of the candle, stick, patterns. And, come. Down all the way down to the bottom, williams. Fractal. We'll. Go ahead and we'll add that and. Click OK and. Then. When you see that you'll see some of these carrots, that are on the chart so you can identify, hopefully. Clearly, some, of the lows and highs that may occur into Trent so, as we look at the Russell. We're. Seeing a series of lows, notice. Those lows are making, lower. Lows now. At the very least we're looking to compare to price, points but certainly, more, the better so, we're seeing a series of lower lows. However. At. The same time that was occurring we have the MACD, histogram on, the bottom. The. Lows, on the MACD, we're, making, higher. Lows. So. This, is an example of a positive, or a what. Other traders may refer to as a bullish, divergence a. Bullish. Divergence or, a positive divergence, is when, price is making, lower lows. And. The. Indicator. Is making. Higher, lows, now, our example, is with a MACD, other, traders may use other indicators, like a stochastic. RSI things. Like that. Now. So, that would be an example of, a bullish. Divergence, now, an example of a bearish.
Divergence. Now. This would be a more, of a an example, of a minor, one. And the reason why I say that is for. Divergences. Usually, we're comparing kind of major lows or major highs. Looking. At the indicator. We, may see kind of multiple. Drops. In the indicator, or multiple, rise, in, the indicator, kind of like you, know bumps, mountains, or valleys so, to speak. But. In the sp500 there. Was a smaller. Divergence. A fairly, recently, a little. More subtle but. If we look at the highs, and. This. Would be an example of a bullish, divergence in, this case price, was making, a higher, high or. Possibly. An equal, high can, be compared as well and at. The same time the indicator, if we, look at the same, points. Was. Actually, going lower. So. Higher, highs on, the. Price action with. Lower. Highs, on the, indicator, that would be an example of a negative. Or a bearish, divergence. So. Once again. Bullish. Divergences. We're comparing, the, lows, lows. Of the price action to the lows on the indicator for. A bearish. Divergence or. A negative, divergence we're. Comparing the highs looking. At the high in the price compared. To the high, in the, indicator, so. What does this tell us what does eye divergence. Tell us as we looked at these two examples. Well. It doesn't necessarily, tell you that the prices. Go into reverse direction, as some, people may assume it, may. What. It is telling us is that the, momentum. Of that existing. Trend the momentum, of that existent. Price action has, slowed, down. So. What can happen after that price action slows, down well, typically prices, makin solid, they. May form a price. Pattern it, could be a rectangle. Inverse. Head & Shoulders double, top it, could be any type of price pattern that. Could be one of the first signs for a swing trader if they, see that. Type of pattern form they. May forego, the, bounce of an, existing, swing trade and weather a look to trade the range, of the pattern, or. B wait. For prices to actually, break out. So. That, is what a divergence. Does, let's, go and see if we have any questions there and we'll go ahead and we'll look at a few stock, examples, as well. And. Once. Again Diane you can never be late, because. Usually, after this session should be able to review, the session on the, archive. Which. Is accessible, to you right at the top of the screen. By. Our education. And. Select. And webcasts. Usually. Within about and. A couple. Hours one. Should be able to, access. Some. Of your favorite webcasts, there. So. Here's the upcoming webcast which were live on swing trading, good. Friend Barbara Armstrong will be doing getting started with futures at the top of the next hour. And. If you want to go ahead and go in the archive. You. Can see some of the previous sessions such. A good friend Ben, Watson doing. Cover calls and cash secured puts. And. Like to thank James, Boyd, for. Covering me yesterday as, I. Took, a ill, late. Sunday night there. For. Technically speaking reversal. And bounce patterns. And. While I'm here if you're interested in following, me on Twitter I'll go ahead and also mark. That in our, scratchpad. Also. On the title page. And. Some, of the various chart patterns, a phenomenon, that we see in the market you, may see me chart a few things on some of those charts as well. All. Right I don't see any questions coming up so let's, go ahead and continue. So. You know as far as look, in for, examples. Of divergences. Unfortunately. I haven't been able to find a. A. Good. Example, of a search. That. Would pinpoint, or find, these divergences, doesn't. Mean it doesn't exist, but. You know there are areas where some.
People May look. For these and typically. It, would be potentially at a longer-term, area. Of support. You. Know as an example with the with. The rustle that we've, tweeted time. And again you, know it's been in a channel, it's been in a relatively wide range. You. Know about about hundred, hundred, and fifty points and it continues, to do that. You. Know whether we're gonna go ahead and retest, those lows again we'll, see so far not looking too good on the day. But. The low from last week is higher than. The low from. Back, in the end of August. Now. There's no divergences. Showing themselves right now but. If price action. Did. Continue trading lower, and. Making. Lower lows. Then. Technicians, may look at the indicator, and see if it is making higher lows and that is likely to happen as. Prices. Come down to a key area support, the momentum has a tendency, of slowing down now. That's not necessarily a sign over reversal. Although. Some traders may speculate, on that and try, and capture. Some. Of those upward moves, from. A contrarian standpoint, and. Continue. With. That or capture another swing as the, price goes ahead and breaks out. Now. Cole says MACD. Versus MACD histogram seems. Like they're the same. They are. The. Same indicator. It's. Just viewed a little bit differently, the. Histogram basically, just shows the relationship. Between. The. Moving averages, that are used in the, MACD calculation. The, crossovers. Are going, to occur at, that. Center line the zero line. So. Positive, and negative crossovers, would occur at that zero line. It's. Just a different way of viewing that call. Now. One thing one, may also do is looking at stocks at you know maybe in. Their watch list that. Over, the, shorter. Term or maybe even the intermediate, time you, know may have been knocked. Down a bit. You. Know prices trading below some of their moving averages. As. We kind of go through a little bit of our, list. Here. Let's. Take a look at Goldman Sachs you know into financials. Now. Some stocks may be, having, earnings, that, are going to be coming out. Let's. Go ahead and bring this up on the big screen. You. Know we're gonna get ready to get in the earnings season once again in the last quarter so, as we go ahead and take a look at. On. Goleman Sachs they. Do have their earnings coming out a little bit later this month, but. It is a stock that has sold, off, at. Kind. Of more of a, longer. Term support, at least more recently an intermediate, area of support. Comparing. The price action looking at prices, making. Lows and. Potentially. Making lower lows if that occurs and the, MACD, is making. Higher, lows, that, would be an example of, a bullish, divergence now. Notice, there's not an example of that occurring right, now. Let's. Take a look at some other ones and. I just went ahead and screened, look. Through some of the stocks you know in the, penny, increment, list your. Challenge, and welcome to do the same thing. One. May also consider. You know not only stocks, but kind, of looking at some of the sectors first, that, have been kind of knocked down a bit over. Some, of the previous, weeks. You know retailers. You know have been coming back and forth let's. Take a look at. Jwn. For. So. We can bring that up thought I had it on the list here. We're. Going to plug that in real quick. J. WN. Now. This is a stock we, actually had, did. A tweet on this as well kind of illustrating, some of the price patterns discussed, in the, technical. Least, speaking class reversal, and bounce patterns, an. Example of the head and shoulders pattern but, from a shorter tape time from a swing trader we, can see we have a smaller, pattern of. Zoom in on this. You. Know as price action has come, down and then made some lower highs it. Even made some lower, lows as we, compare. Those. Lows even. Though price has made lower lows the MACD, indicator has. Made higher. Lows more, of a bullish, divergence if, I go ahead and actually bring this chart out again. So. We can bring that up you. Can. See this comparison, again. Lower. Low. Comparing. The lows higher. Low. Bullish. Divergence now. Notice coming off of that divergence. There, was a, bounce. And this is what a lot of swing traders may look for is looking for prices to trade above the, high of that low day and kind, of set that as a very, least possibly. A counter, move or anticipate. In that the prices, will continue to rise and, breakout now. As we Yuliya, jwn, today. Certainly. Rolled, back a little bit similar. To what the rest of the market has so, the, divergence. Trading. Off of that divergence, would, be kind, of the first potential, entry, for, a swing to try and capture, that initial, momentum. Secondly. Is if. There is a price, pattern, the.
Follow-through Is if that pattern breaks, out to be another, example, for capturing, the swing as that, momentum is coming back and, then. Finally, if prices were to pull back and, retest. That. Breakout, looking, through that follow-through bounce, so, by, looking fight for divergences. In stocks, in your watchlist, that, could be some of the tells on looking, for changes. In momentum, in this. Example for, a bearish. Or neutral, to possibly more of a bullish, swing, let's. Go and double-check we'll look at our questions, here make sure we're not missing anything let's. Say everyone's doing ok there and awesome. So. That's JWM, a couple, other ones. So. You can bring that up. Let's. Look at coca-cola. So. Here's coca-cola as, well. Keep. In mind earnings coming out a little bit later in, the month. We. Can see what's occurred, with some of that price action we, can even use some of our drawing tools as well. If. I click on the drawn tool and, let's. Go ahead and select a, trend. Line and. Notice. I still have the fractal points on there so if we go ahead and just connect. The dots so, to speak, it. Allows me to a. Little. Bit touch here today, that's all right let's see if we can refresh this. I'm, going to use my backup drawing tools here just connecting, the dots. Diagonal. Resistance. Looking. At the Lowe's price, making lower. Lows at. The. Same time looking. At the MACD. MACD. Making. Higher. Lows. Prices. Going lower MACD. Coming higher implying, that the downward, momentum has. Slowed down. Now. Notice at that divergence, you had a hammer. So. Looking for a bullish, candle at, that, divergence. Could be the first, possible, attempt, to, capture. A swing. The. Target, initially. Could be a counter, move so, for instance the resistance. And knows how, nordstrom's. Did trade up to that resistance, and backed. Off of that now. If, this divergence, continues, playing out and, we're. Seeing a, higher. Low for.
Instance. Another. Bounce that. Could be a potential. Another. Entry. So. Just looking for price to trade above. The, high of that low day and. Then. The follow through once again is looking. For the breakout. Of that. Resistance. And. It, looks like we're having a little issue here. There. We go. Alright. So that is Coco, so a couple examples of, those, bullish. Divergence is, there. Let's. See let's take a look at. Another. Area of the market that's been. Knocked. Around and hasn't shown as, much movement, is. Looking. At some of the materials. Let's, see if mosaic, has, something here now. Mosaic, this wasn't a recent, one but, looking at the lows, a. Lot. Of this was with, a lot of small cap stocks. Again. Going into the part latter part of the summer price is making lower lows the, indicator, is making higher lows bullish. Divergence look. At it now you know prices, coming down you. Know the indicator is still relatively, down so essentially, saying the same thing. Then. While the other ones was looking, at AE M. Let's. Bring that up. Anglich. Oh Eagle minds. Notice. Again kind of a correction kind, of a multi-week, correction. Price. Action. Coming. Down now, this is also a good example and some. Of you may be going, through this, as. We've, had, a market, that. Is essentially. Range-bound. Although, it's a relatively, wider range, if. One is able to trade kind, of the highs and lower that range that's, great but as far as overall bullish, momentum a, lot, of that has slowed down hence, this is one of the reasons why I'm going over this, example, with you but even with divergences. Can you, know bring up some challenges. You, know as far as you. Know what trade do you take because. As we look at it right now this. Is potentially. An example, of. A more, of a bearish, swing trait a bearish. Flag and, a. Trader still, may, look to trade that however. If they, see a divergence. That. May add a bit, of question on how. Much to expect on that downward. Momentum. Unless, price actually breaks below some support so, some traders still may take that bearish train but, instead of capturing, a full swing may, look to maybe just capture. Going down to that previous low or testing, that. Otherwise. We. Do have an example of a bullish, divergence as, prices. Made lower, lows and. We're. Seeing on the indicator making. Higher, lows. So. Bullish divergence. I've. More of a doji, on that, divergence, we're, spinning top and. The. Follow-through not, as much but considering on what the markets been doing over the last few, sessions this, is actually more of a consolidation. There. So. Traders. Maybe again looking for that. Higher low looking, for another bounce or. Looking. For a. Raiga that trend. Rodney, mentions about RSI. I. Have. Utilized, RSI. If. We want to go and bring that up as a comparison. Some traders may look to do that as well I'm going to go and click on studies we. Will select edit, studies and. In. That list, there's. RSI. Not. To be confused with relative, strength. Which. Compares against the market this compares the stock against, itself. I'm. Gonna go ahead and apply that. Click. OK. That's. Going to be the bottom indicator, on this, chart. I'm. Going to right click on it will. Edit. That we can make these lines a little bit thicker so everyone, can see them ok. Okay, and then one can go ahead and apply the same principles, here, so.
We're. Comparing the. Same price points, and the. Same points on that indicator, so you, know with angle, who Eagle Minds again. Looking at the lows lower, lows looking. At the RSI. The. RSI technically, went a little bit lower but a flattening, out can, also be a sign of divergences. Both, from a bullish, a bullish, perspective, and then. Even looking at things from a. Traitor's. May apply this to, some, of the indices, I. Think. There may have been one on the. SPX, we, go and look at the SPX. Comparing. The highs. We're. Again we see a high. Whether. Equal highs the higher highs and at. The same time not. Very strongly, a little more subtle but the, RSI. Did taper off forming kind of a slight divergence, there, so. One can determine which indicator, that they would like to use it's. Fully up to you. And. Let's, bring up let's, say we got time I think for one. Or two more there. I'm. Going to bring up Wynn. Wy. And N. And, this may end up being an example of a, back. D that does not follow. Through. But. We were looking at the we're, looking at this one previously. Let's. Bring that up, and. Comparing. The price. Action to, on. The indicator there on. When. Prices. End up going a little bit lower so we, can kind of zoom in a little more on this one here. Kind, of go in this going in on Friday, here. We. Can see that the price action went lower, forming. A lower low. Well. That's not working here. We'll. Keep working it. For. And a hammer which some traders we consider that to be a bullish pattern looking. At the MACD the, MACD, was. Going. A little bit higher there so, contrarian, may be looking for price to be trading. Above that hammer. Unfortunately. With alive and with, the events from this weekend. We. Can see so. Far what the result is and price. Ended up actually trading. Lower, on the day. And. See if we can find anything, else in our list here. Mark. Says do you keep a list of upcoming subjects, for your webcast I'm viewing the Twitter page but, didn't, see, anything. That's. A great, suggestion, there mark I. Do. Intend. To kind of put on possibly, a little schedule so you can get an idea of an, upcoming educational, topic. Fairly. New to the Twitterverse, there so. Kind. Of still working on what I refer to a battle rhythm there to. Get stuff out on a regular basis, I've, been focusing on some of the broader market, topics, as well.
As Technical. Patterns, but. I will, start pushing out what's. Going to be discussed in, an upcoming session, so. Great suggestion, there mark thank you. Alright. Let's see one thing. Let's. Take a look at our watch list as we wrap up and see. If we can maybe pick out any other divergences. That. May appear. And. Just glancing at the market. Stole, rolled over kind of close to the loads of the days there we'll see if if. There's any reversal on that. Bringing. Up here's a here's. Federal Express. Federal. Express basically. As trading below the low of the high day so. Some traders may be looking for a downward. Swing if you're inclined to be in more bearish and then some, traders may look for a bearish. Type move. If. I want to here earnings, looks like we're fairly recent. I'm. Gonna go ahead and put in an, example of a spread. Trade something that we'll talk. About in. Our, Wednesday, class on train verticals, which is at 3 p.m.. And. Spreads, could be a good, option when, you. Know market, direction, is a, bit, more dicey err a little. Bit more back and forth. Some. Of your spread trades may be a little more forgiving, on some, of that direction. So. I'm gonna go ahead and look an example of a call. Spread. I'm. Looking for a Greek, that is somewhat. Out, of the money there so I'm going to look at this. I'm. Only got a 1:45, strike I'm going to right click on this and I'm. Gonna select sell. Let's. Try that again sell. Vertical. So. This is a $5 wide it, has a dollar 46, creditor potentially, a dollar 46, credit. The. Idea on this is that price, stays, below 145. Between. Now and. 15. November. If. I go ahead and hit the confirm, and send. There's. Potential maximum profit, and. There's. A maximum loss with one credit spreads the risk is as far, as loss is. More. That's. Because it's considered to be a higher probable, trade. Traders. Would look at the return on risk, so. If I go ahead. Let's say. We'll. Bring up our calculator. Bring. This up so we can see a little bit better. And. If it allows me to switch, to gadget, we're. Going to go ahead and take. That, maximum. Profit. Divided. By the maximum loss of 147, divided, by 353. Spirits. Can also be a good option as well if one's looking at doing, some of those divergences. As well if they're expecting, that, a pattern, or a range may form. So. I'm gonna go in position size this I'll do. I'll. Do five contracts. Which. Based off in that position size should be approximately about half. Half. A percent of my account, actually. I'll do four try. And get below fifteen hundred. There. We go there's our maximum loss of thirteen ninety-six I'm. Gonna go ahead and click send and, we'll see if that gets filled. Leave. Some of the other questions and comments. Coco. Says. John. Does toss have a public, watch list for divergence, everyday or any scripts, for scan in this well as I mentioned, earlier. I. Haven't. I. Haven't. Been able to create, one. To my satisfaction. That. Would identify. Divergences. However. You one can search for stocks that may be at or near a major. Supporter resistance which, has a tensity of being subjective, but maybe look for stocks that are within a certain percentage, of a, 50-day, moving average, or, a 200-day. Moving average. Could, be an area where, some of those divergences. May form, but, unfortunately, nothing specific. That I. Have been able to come up with. Patricia. Williams fractal, came from the study yep thanks for sharing on that on the Williams fractal once again it. Is part of your. Pattern. Tool that's on the upper right hand corner of the chart and, Williams. Fractal, is part of that candlestick, list, usually. Trying to highlight, that. Usually. Almost every week we'll bring that up because it's a great way of identifying. Some. Potential, highs and lows in the trend. Rodney, says can explain the difference between the ATR and the RSI. Well, you know the ATR, the coincidentally, if you actually go back and look, at last.
Week's Session we. Took a in-depth. Look at ATR. ATR. Stands for average true range that, is the. The. Move. Or. The average range, of the price during, a particular period so. In case of Federal Express with, an ATR of, 423. Or 428. That. Is on average how. Much the stock may move on a given, day based, off the last couple of weeks that. Can. Have some benefits, on helping, identify possibly. Some realistic, targets, as well as technically. Using, it for, possibly. Utilizing. It for stops, and if you review the session last week you'll. Be able to get a deeper dive on that. All. Right and Patricia let me know got, some great help there on the chat hopefully. You found that Williams fractal, within. The pattern tool. Okay. I'm. Going to take another, look on the list and let's see if anything. Else maybe. Appear in one. Of the things to do is if you're looking. At your watch list. And. If you're utilizing some, similar script looking. For bounce, patterns. Such. As the cold. That's. What I have sorted right here and. You. Know looking at some stocks, that may be bouncing. As. Far. As a bullish bounce. And. Bring, out the chart a little more. So. We have price that's trading above the high the low day. However. Price has broken below support, so. The trends a little more on the downside, traders. May be looking for more of that breakout, if. We look at the MACD the MACD is not doing anything different, then price is doing so no divergence there, let's. Look at the airlines. So, as far as more recently on the downward move on, Lisa's, American Airlines price, making lower lows but. Notice the indicator, doing, the same thing on the MACD it's. Even doing the same thing on the RSI, so basically confirming, that. Downward move. However. If we go back and look at in the summer. This. Divergence, was more prevalent price, was making lower lows. Indicator. Was making higher, lows. Now. This is a lesson here as well on the, divergence, notice, that, you. May have a, good. Counter, move. But. There's no guarantee, that the trend is going to reverse at. Least at that point. What, happened after that price did bounce and actually went lower made. A lower low, but. Notice of divergence, kept playing out so. Given another attempt, at a counter. Move which. May translate, into a, reversal. Of the trend. You. Know in the inverse of this you, know home builders have, been. You. Know very popular, as well some, traders may look for divergences. Here, on the. Upside. Prices. Have. Gone higher now. They add backed off a little bit so a little more consolidation. But, the indicators, are basically, showing, the same thing, no. Divergence. All. Right see what. Else, well, do here on. Angle. Go Eagle mines is, since. We do have an example of crisis. Making. More. Of a resistance. A horizontal, resistance, you. Know we can right-click and set a price alert if. We want to be alerted if this, price, changes. Direction, so, I do create an alert. Put. A question mark. Adder. Above the. Price that we clicked on click. Create and, there we go. Alright. Last chance for any questions folks. Before.
We'll Go ahead and we will wrap up here, so. If I can bring up this penny increment list up a little bit higher so we can see it. Can. Only bring so much up on the screen at once, all. Right. Is. Anything on to bearish bounce front. Here. You, know Twitter trading. Below the, low, is a high day, some. Traders may be triggered, into a swing. Trade here. Or. May. Wait to see how things happen at the end of the day notice, there's a lot of things that can change for, instance this again, this was Wednesday, you, know Wednesday things were pretty ugly early. On, and. Then. Prices rallied back we don't know if this is what's going to occur today but. With some traders if they're looking for more, of a bearish plays Trace trades below the low is a high day they, may wait for that last hour, of the day last half hour to, see if price is still trading and attempt. To trade that, price action down. See. If there's any divergence notice. There's no divergence. Now. Just, because there isn't a divergence, doesn't mean there can't be a reversal. But. Certainly seeing divergences. May. Portend, a. Reversal. Observant. Cole there. Said. Why. Did you change the default on, MACD, histogram to. 817. 9 so. Cole, was looking at the. The. Indicator here and showing. 8 17 9 and he's correct, the, default, settings I believe is 12. 26. 9. I believe. It. Goes back to the, gentleman, who created. The. Indicator, there were actually worth 2 settings, that. Were commonly used for the MACD. 817. 9 and the 12 26. Notice. An indicator, that with a smaller number would. Potentially, be faster. And. With. A larger, number slower, now, faster, doesn't necessarily, mean better. But. What one of the original, intent for, MACD. As far as trend trading was, to use a faster. Signal, to, get in, to. The trade but. Use a slower, signal, to, get them out, to. Kind of help minimize. Whipsaws. And things like that. So. When. Head did that also, for those of you that have been with, our education, for quite a few years this. Was a common, setting. That. We've utilized, in the MACD, faster. Doesn't necessarily, mean better it's, just exactly what it is faster, great. Thanks for the feedback there, Ken and thanks for that question there Cole and we. Are just about out of time I'm just taking a another. Quick look. See. If anything stands out. On. That, penny increment, list, outside. Of stuff being down. You, know the technology side which have been knocked down quite, a bit going. Into the summer, you, know there has been some recovery, there although you. Know still could be some pressure as far as with the China trade on who's involved with. Chinese. Companies can't, have an impact nvidia, down, after. Kind of breaking out on friday, so, blowing, back into the pattern some, traders may look to see if there's any bounce and getting back above. That range there. See. If there's any other types of positive. Momentum. Going, on. So. Traders may be getting a little more defensive. Another. Celgene kind of pulling back after, intraday, break and higher. Wal-mart. Kind. Of making a lower high after the bounce kind, of similar to the market. Looks. Like it's trying to push in a positive territory. And. It's. Take a quick look at Activision. Activision. Relatively, holding, up breaking. Out of a diagonal resistance. A. Sharp. Move, up. Knows. It didn't give back the gains that other stocks have done over the last couple of days so relatively. Stronger player, price. Pulling back you, know about a one-day pullback, there. Could potentially be a flag. Breakout. Setting up here traders. May go ahead and attempt to target a, previous. High. Or. Look. At that previous swing, and. Project. That. Move. Out which, looks like if, there was a successful, swing that's $60. Area. I believe, coincides. With I. Think. This is going back to a gap that. We had from last year, or that maybe in an analyst, number not, sure. All. Right well there you go folks. Patricia. Strong. Work finding. The Williams fractals air let's. Go ahead and wrap things up. So. Once again what we did today is we. Introduced. You to. Divergences. Utilizing. The MACD so a MACD, divergence, from.
A Bullish perspective, remember, from. Bullish perspective, prices, making lower lows the. MACD, making, higher, lows, positive. Or bullish divergence a. Bearish. Divergence didn't. Quite have as many examples there because prices have been more, down but bearish divergence is, when prices are making more, higher highs and, the. Indicator is making, lower, highs that's. An example of a negative, or a bearish, divergence, we. Went ahead and applied some examples, to the market as well. As looking at some individual, stocks there we. Also went ahead did a practice trade, on Federal Express a, short. Call spread just, with the expectation, that on any downward swing on downward movement, that price would stay below a certain, level in our example. $45. If you want to learn more about verticals, feel, free to join me tomorrow at 3, p.m. for, trading verticals. But. That's all the time that we have today folks appreciate, your support as always, and remember. In order. To demonstrate the functionality of the platform, we, had to use actual symbols. Keep. In mind TD Ameritrade does not make recommendations, or determine the suitability of any security or strategy through the use of our tools any, investment, decision you make in your self-directed account is solely. Your, responsibility now. As remiss as I was looking at paper money disclosure, is. Practice. What you've learned here today go. Through your watchlist and see. If you can identify, whether. Currently. Or go. Back and take a look in the August. Time period, if you can recognize, bullish. Divergences. And, if. You were able to recognize those. Divergences. At that time what, would you do would you have done something different. Than, what you may have done at that point and, more. Importantly go, ahead and practice what you did as well so, you can see what some of the results, are we don't have control over the outcomes but, we can see with practice, on what some of those potential outcomes, are so. Once again thanks for being with us here folks we have miss, miss, Barbara. Armstrong on top of the hour, getting, started with futures so stay, with us bye now. You.
2019-10-20 03:39
