Swing Trading Days to Weeks | John McNichol | 6-15-21| Swing Setups and FED Preview
good afternoon everyone john mcnichol and welcome to swing trading days to weeks what we'll do is we'll look at some swing setups we'll do some practice trades and we'll do a look ahead for the fed tomorrow so stick around all right hey it's great to see everyone live with us today such as vj william eric peter krista we got bill remy m.a tom giles al robert larry ricardo peter and everyone else hey we have mr james boyd helping us out on the chat those jedi here live if you have some questions i am unable to get to i'll be more than happy to help and a shout out to those you listen in the archive session as well uh if you wish to follow me along with other fine instructors uh you can see us on twitter uh at j mcnichol underscore tda and mr james boyd will put in the chat but it should be at jboid underscore tda if you wish to learn more about ourselves and also hopefully get some insights on the market as well let's take care of disclosures folks we'll get right into it options not suitable for investors as well as spread straddles other multi-leg options strategies often involve greater more complex risk include multiple commissions in order to demonstrate the functionality of the platform we are going to look at actual symbols keep in mind td ameritrade does not make recommendations or determine suitability of any security or strategy for individual traders any investment decision you make in your self-directed account is solely your responsibility the paper money application and we encourage you to practice what you learn with tools such as paper money application is for educational purposes only in successful virtual trading uh during one part term one time period does not guarantee successful investment of actual funds during later time periods mark ignitions change continuously a stop loss order will not guarantee an execution at or near an activation price once activated they compete with other income and market orders as always folks all investing involves risks including the risk of loss all right and let's go ahead and bring up our agenda as i mentioned we'll look at some swing setups practice trade along with the fed preview keep that in mind fed uh coming up with their decision uh tomorrow uh we'll take a little more of a deeper dive with that but knowing that there are uh partic potential market moving events when it comes to swing trading very short term trading uh that can certainly have an impact whether positive or negative and should be considered when evaluating some of those trades so let's go and bring up the thinkorswim platform and uh just a kind of a snapshot of the market here the the s p uh made another intraday high today uh before backing off we can kind of see uh some of the trading range for today here uh still a little negative but as you look at some of the price action the lows are still going higher even though we are a little negative on the day you know utilizing some of those moving averages i know james utilizes some of these in his webcast as well on technically speaking and others you know one can still see that bias there price actions still above even a shorter term average in this case a five period uh looking at the uh nasdaq and dx you know we can see the same principle now some traders uh may be concerned again uh not an intraday high on the nasdaq and uh more of a inside day although a very wide inside day uh but uh inside that previous day you know some traders may look at this uh as more of a bearish uh formation however confirmed if the price does break down below the low of the high day which is uh one of the common techniques we teach here that would be a potential swing exit if one was trading the previous upward momentum price trading below the low of that high day so this could be something to keep an eye on going into the fed announcement on whether prices break down uh or if they go ahead and continue to the upside uh looking at the russell rut we've talked about this uh extensively over time as far as with that trend you know more in a range however the shorter term momentum coming off the lows of may uh still continue even looking at the intraday you know now did price did uh break down below you know the lows of the high days there but notice you know still kind of more in a consolidation when we look at the bodies of those candles over the last six sessions and traders seeing uh that failed move to the downside in this case holding above a 13 period ema at least an attempt to hold that price level which you know may be a potential bounce price is trading or closing above the high the low day or a hold and you can see over here we have some of that productivity script for those i know james shares some of those as well on his webcast a little bit of a variation there and again something to keep an eye on uh with the fed tomorrow uh and uh finally uh dj x uh you know has been you know continuing to kind of slope back there uh notice it is below some of those uh relatively shorter term averages uh intermediate trend is still intact but you can kind of see some of those differences between some of these indices as uh overall for the dow a bit more on the neutral side once again uh traders may be looking to see from a bullish perspective if there's going to be a bounce and possibly break in you know that diagonal resistance and these types of patterns we talk about and technically speaking uh every wednesday that'll be tomorrow i believe at uh i believe 1 pm eastern time and you know kind of more of the concept of in this case a little more of a bull flag or a larger bull flag um and that'd be a big question mark as far as with the fed for tomorrow all right uh and looking over at some of the indices and this could be part of a driver as we look at some of the swing setups uh for today you know we don't have a choice on what happens on this particular day but energy stocks are up utilities uh are up industrials financials looks like materials after uh taking a bit of a hit trying to move into the positive so that may even get some insights to our discussion a little bit later uh on uh how the market may be seeing things uh leading into the fed but let's talk about our setups first okay uh arif mentions a will you trade commodities also in this class now uh this class is uh geared more towards uh equities and uh options on those equities uh however we do have uh two futures webcasts uh i teach one on monday at the market open where we do talk about commodities uh not a recommendation endorsement of that and also uh if you check out some of the webcasts i believe on thursday ken rose has a webcast on that as well you can simply just go ahead and take a look on the calendar by going the education tab you can go to upcoming webcasts and also look at the webcast calendar and you can see uh some of those sessions and ken rose's would be the next one which should be coming up on thursday uh you can always look in the archive uh on the archive webcast for anything that i or can teach i appreciate the question there all right let's go ahead and bring up on the platform look at a a few of these here uh not in any particular order this is uh acn it's one of the stocks that was uh more positive earlier in the session uh if we uh go to the analyze tab and uh look at fundamentals uh this is actually on the it side on consultant services there and if you notice it's actually negative today but looking for a potential breakout now uh price was trading above it intraday let me go ahead and actually bring up a horizontal line just kind of looking at some of these previous highs as far as resistance it was traded earlier notice we're below that at that point uh we may take a closer look at this one tomorrow on the breakout strategies as this would be breaking out of a rectangle and one of the benefits of you know identifying these different price patterns that we teach in the technical analysis course also a technical analysis workshop is measuring the distance between that support and resistance and projecting out a potential target and swing traders may look at those as ways of setting a target based off of those previous moves if we go ahead and just measure that we'll take a rectangle and i'll just go ahead and overlay that and we'll activate that so we can try that again boxes the little box is getting away there we'll plug that there and then uh that would potentially look at a price at or above some of these previous highs from may just go ahead and mark that area there now don't notice as far as price uh you know a relatively more expensive stock one potentially may look in the options for that however uh do want to make sure that you know the options are relatively uh liquid meaning the distance between the bid and the ask price are relatively smaller and you know some traders may use this as a uh a stock replacement strategy uh for instance if they were uh you know doing a relatively uh smaller move you know maybe looking at the slightly in the money if they were doing more of a trend trade which is usually the time frame in our breakout and reversals class so we'll talk more about tomorrow you know we may be looking at a little more of those in the money deltas there and have a defined risk trade on that okay so that's a setup uh we may follow up through tomorrow on that breakout and reversals let's look at some other ones that may be showing some things uh today and let's see uh i believe was a e e go in the analyze tab but this is a utility this is one of the stocks that uh you know tied to kind of that top-down action with utilities doing relatively stronger today sort through that being a second performer there stocks like amaran may pop up on that and this would be another example of a potential breakout again intraday looks like it was kind of touching up on that resistance which is why you can see that there's some you know kind of follow through on what we're teaching here in the swing trading class as well as on the breakouts and reversals and we don't have any control uh over the particular setup if it's going to be a a bounce or a breakout and as you can see with this example a resistance area you know intraday you know did trade above that resistance not quite take out that high but again with a rise in support supporting the trend we have an ascending triangle and again traders may go ahead and look at the distance between that support and resistance kind of a general range here didn't get that exactly there let's try that again just again looking at the area between support and resistance and again we can project that level out now if you'll notice uh sometimes uh the the drawing may reset a lot of that depends on how much space you have over on the right hand side kind of a tip for those of you that you know may be new to these charts you know if you uh there's a few ways of doing it but probably one of the easiest to just click on the gear on the chart up at the top and if you go to the time access this is where you can go ahead and expand the bars over to the right uh depending on your time frame notice i got 30 bars on here as an example and go ahead and click on that and apply and i'll give you more space to the right there and then likewise you can get more space on the top by just left clicking dragging on those price levels and now if we go ahead and right click activate that drawing you know move it you know close to that projected breakout point uh then we can have an idea of that uh potential price level and then possibly the required time as the the time distance of that pattern uh may imply on how long it may take for the price to potentially hit that goal although usually based off of momentum when price breaks out one may see half that move in a relatively short period of time and may hit those targets sooner but that can help as far as determining one who's trading options in some of that trade selection there are some questions uh mentioned about volatility uh you know being relatively low although uh did uh inch up today some traders uh have referred to you know potentially the calm before the storm seeing if the fed is going to add some volatility into this but with volatility being relatively low uh you know that would benefit option buyers uh if uh volatility was to rise and or net long uh option strategies such as uh diagonals that i teach on thursdays and uh you know calendars and a few other different strategies can benefit too as well as just individual long options all right uh let's see what else we got going on here you know just kind of running down the uh the list here uh unm uh this is kind of more on the financial side as we notice the financials uh were a little bit positive today uh kind of more in the insurance and disability and uh go into uh the charts on this you can see an example of a good overall intermediate trend higher highs and higher lows and notice a low being set today and potentially seeing where the high range setup would be if tomorrow price uh closes above the high the low day that would be a potential bounce okay so just have a few setups here uh exxon mobil actually broke out of a flag kind of a one-day uh flag here uh as far as taking out that high in one fell swoop we can see the price action now i believe we have an existing uh position on this one uh from a uh a breakout trade that we did uh earlier on let me go ahead and switch up i think this is in the breakdown reversals this could be a good subject on some profit management here exxonmobil 200 shares and this was done uh back in early march uh or correction early may so it's an example of a a little more of an overall trend trade as a exxon mobil kind of reversing after a bit of a correction here and notice you know energy markets can be a bit volatile so you know when it comes to swing trading there's a little potential give and take there currently uh looks like uh the stop i have on here was based off of some previous lows from a swing trader perspective you know one may adjust that stop up to a previous low and if the price continues to trail higher for instance here's another higher low may set it just below that area i'm going to find an opportunity to talk about it next week but utilizing trailing stops if the price keeps swinging higher the weather manually and one can manually adjust off of those lows as the price goes higher or utilize a another example we've done this in previous sessions called a a parabolic sar or parabolic stop where we can actually trail that price higher so stay tuned on that i'm going to try and integrate that in next week but that may be tied to what kind of momentum we see post-fed tomorrow so notice a few of these stocks are from you know some of these areas that have been performing well today on the financial side uh we have american express a good overall trend uh price pulling back over a couple of days this is what some swing traders may be looking for after a previous sharp move along the lines of a bull flag notice we have the low day of that pattern here's the high of the low day and notice in previous sessions we had a harami a bullish hirami which this kaholt script over here would identify a couple of days ago and at least potentially get it on trader's radar and then look for the price to basically trade or close above the high the low day or in this case an inside day and notice it failed to do that on this day this day and it's done it today so we got a bounce going on right now now if one wanted to do this we can do an example of a stock trade i think a good example for this one is potentially a long vertical a defined risk defined gain trade do a few of these since i do teach this on thursdays for long diagonals and and verticals or it's actually long verticals and diagonals let's go ahead and take a look at some of the options on this one i'm going to go ahead and go to the trade tab now again doing this for illustrated purposes you know some traders maybe look to see you know how are things post fed and as far as uh you know number of days uh would be kind of that duration uh usually on the long verticals you're looking at examples from 30 to 50 days so if i do want to you know go nearer term we can do that example and uh as we look at uh some of the strikes uh the selection of the strikes uh may be a matter of again how directional uh someone wants to be if we are looking for a relatively smaller move now with 30 days out these are about five dollar wides so we don't have uh as much of a a selection here but if i was to go ahead and select uh one of these that's uh slightly uh in the money technically this one's close to being at it's closer to the underlying stock price i'm going to right click on this and i'm going to do buy vertical and notice again for you know short term traders you know versus buying uh you know 100 shares or even 50 shares you know on the underlying stock you know one would be tying up a bit of equity here uh by doing this example we are defining some risk here the most we can lose on the trade is what we pay for that spread uh so there's a defined risk if we hit the confirm and send uh we can also see there's a defined gain as well now the maximum profit would be attained if the price is at or above 170 30 days from now but we can potentially capture a potential chunk of that maximum gain and usually in our class examples we may be targeting about 50 percent of that maximum gain if one's looking for a relatively smaller gain you know like in and out you know maybe targeting you know 25 to 30 percent okay uh notice the return on risk on this you know would be over a hundred percent that's usually kind of common from an at to slightly out of the money spread as far as a target the other thing we can learn on this uh is from a directional standpoint the price doesn't have to move as much for this trade to be profitable at expiration you know that's only a move of about about 60 70 cents if that okay uh so let's say we go and do this as a practice trade i'll go ahead and edit this and i'll position size this uh to a maximum loss so let's say as an example wanted to risk about 500 then we can go ahead and do two contracts or do it two times so i'll go ahead and i'll do that we'll uh take care of that in fact actually let's put this in the swing trading one and we'll do two contracts we'll do a confirm and send now there is a little bit of a spread here this may or may not fill right away if we want to get it filled quickly you may need to move it to closer to the natural price but that's not a large spread let's see if this one fills and notice it did your results may vary let's go and take a look at uh some of the comments there once again do appreciate james helping out there and eve i do appreciate you enjoyed some of the previous classes and some of you are making reference to uh moving average crossovers and let's see just look at some of those there like gary's mentioning first time attendee notice using a 13 uh ema or moving average you know what advantages does that have over using an 8 or a 21 well you know all those numbers that just mentioned are examples of uh fibonacci series and you know i've utilized fibonacci series uh over time i wouldn't say there's an advantage you know one way or the other over uh those uh an eight period is a is a fine swing uh example uh for uh for some of the price moves and a 21 period moving average is the average of a monthly uh trading range uh the reason why i've utilized the 5 and 13 is since it's a smaller period a smaller period may have a faster uh crossover now faster is not necessarily better but that's just based off of a lot of history uh that i've utilized you know this example uh was something uh that i came up with uh believe it or not about it uh over eight years ago um and the the principle behind it and usually i'll talk more about these crossovers in tomorrow's class uh is these crossovers typically may precede a price pattern or price pattern breakout you know not all the case uh for instance on fireeye yeah we're seeing crossovers but there's been plenty of crossovers over a relatively short period of time when you have a trend that's flat you know one needs to think about a range and look for those prices to break out let's see here costco costco is actually one we've been looking at uh and uh we looked at this and technically in our technical analysis workshop last week and it's another good example too of what we call whip saws when price action is going back and forth if we see those types of whip saws one needs to consider uh you have a pattern right whether a rectangle or a triangle and we've been seeing a lot of these and notice we have a well-defined uh triangle and you can see what the potential trade idea is and you know traders may sit back and wait for that to occur and guess what on the thinkorswim platform i can go ahead and right click on or near that price action and let's say create an alert and be alerted to that event and possibly decide to take action at that point now we can also utilize orders called buy stops which we have done in this class as well to trigger a trade as soon as it breaks okay and if one has a bullish bias you know one may look for a bounce here alcohol price closing above the high of the low day anticipating that that momentum may continue so another stock to look at going on tomorrow as far as with the fed again not a recommendation but you know seeing what the momentum that shows itself there okay so do appreciate the questions here great discussion uh let's go ahead uh and uh continue here and i know if you do follow james james may be utilizing some similar indicators of different variations but the principles are typically still the same all right i think we got through once again james thanks for helping out there uh let's see how are we doing on time i think we got a few other ones to look at here uh you know we looked at exxon mobil uh in the energy space you know a couple other ones uh hess you can see an example of the low day here is the high of the low day not quite there but we can see some upward momentum uh going into the um going in the afternoon here where traders may be looking for that bounce now those are that very new to technical analysis you know one may struggle on you know identifying you know some of these highs and lows that are in the trend um in the technical analysis workshop and i bring it up here in this class is there is a patterns tool and if we go to show patterns and select patterns under the candlestick tab is the williams fractal and what it attempts to do is it attempts we'll double click on it to add it it attempts to identify candle reversals that are in the trend this can also be helpful for those of you that are learning different candle patterns such as bullish formations or bearish formations uh may be able to go ahead and back test and look at these now there's no guarantee that those patterns would uh you know continue uh to appear but one can you know see that and you can also get an idea of you know previous swings from a swing low to a swing high you know these are patterns that some traders are trying to capture that momentum with the more recent swing not as strong okay but we can go back and take a look on you know how other swings may have played out and on average if the price bounces you know projecting where that next swing would be so if we're like let's say in this example um and i'll just look at it a little more from a conservative standpoint those probably would have look at this as a higher low there since we had a one day reversal now the fractals would not necessarily pick up as a subtle of a pullback there and i'll go ahead and right click on that let's say we do a duplicate line and kind of project out a move based off of that now notice in this swing i'm placing the low of that swing at the potential higher low if the price trades higher above the high of that low day okay and then seeing where that target would be and this case here again this is for you know illustrated purposes uh we have about a half hour left to the market opens so it's uh anything can happen but if i did put in an order if the price was to trade above the high this low day that could potentially trigger today uh if it does it tomorrow i'd have to set it for a gtc or set it for tomorrow now a potential stop maybe setting it below the low of this day or above this flag so my cursor on that the low is 87.60 we can see that by looking at the low here so if i take 8760 switch gadget bring up a calculator we got 87.6
times .99 that would be a stop that would be one percent below this low uh if i go ahead and take a horizontal line plan that out uh 86 72 now you can just drop the line and then right click edit properties we'll make that 86.72 we'll make that red representing that that would be a potential stop now keep in mind stops are not guaranteed to fill at that selected price uh once triggered uh it'll compete and it will get filled at the next available price which could be at could be lower could even potentially be a little bit higher but there could be some slippage there potential trade risk if we look at the potential entry uh let's say 20 cents above the high the low day that high is 90 67 so that would be potentially 90 87.
let's go ahead and right click on this stop do a duplicate i should say the stop line go ahead and try and get that area there i know it's kind of being blocked there uh let's see uh 9087 i can right click plug that in and we'll make that orange for this example and then likewise that potential target uh we'll right-click again do duplicate drawing obviously plan to trade trade the plan you know about 94 38 in this example now some traders may go back and you'll look at you know previous highs now there's no recent highs on this may have to go back even longer you know to see if where some of these highs were and this is actually going back to 2015 so multi-year highs you know one may look at some of these longer term areas have to respect those as they do come into play so there's around the 95 to 98 area there so notice a little bit of a correlation there with that potential target and a longer term resistance so it looks like we're still kind of within that range all right and if i wanted to place a trade let's do an example of a stock trade now this is what makes it relatively simple folks if you know we spend the time planning all right and uh see where potential outcomes are i can simply right click on the chart we'll do a by custom with oco bracket that's going to enable us to place the potential buy order as well as those exits we'll leave this as 100 shares and i'm going to go ahead and plug in an example of a stop limit now i'm going to make this gtc i'll have to look at it tomorrow that way if it doesn't fill today the setup would still be in play for tomorrow and the next day and the next day after that unless i go ahead and cancel it okay so the stop is going to be the trigger price which is 9087. okay so we'll go ahead and plug that in a second there did not mean to blow that chart up get those levels on there with me for just a moment trying to see if we can get those numbers on a little more clearly and just have to believe me there so we're looking for a trigger of 90.87 for that example 20 cents above that high and then once it hits that price it's going to trigger a limit order and in this case we can specify you know whether at that price or how much above we're willing to pay let me just account for a little bit of a slippage there i'll just put 20 cents above that that'd be 91.07 okay
so we got that that's the potential entry and then we got the potential stop and the target uh we'll make these sell orders again gtc for good till cancel want those orders to remain working uh i will plug in for the stop 86.72 so that'll cover us on the downside and then the potential target i think we said was 94.38 we'll put that for the limit good way of thinking about it so you're don't get dyslexic as i do from times is limit is better price stop is worst price and that could be applied whether you're long uh or or bullish or bearish okay in this case bullish better price is going to be the target price which is to the upside stop being the worst price is to the downside okay uh so looks like that's okay we'll hit confirm and send this is where you can double check make sure you have your the numbers right as far as the potential entry triggered at 9087. the potential target
9438 and there's the stop 86 72 okay now notice from a standpoint of uh you know reward to risk you know this is kind of a one-to-one uh trade some traders may be looking for uh you know more of a larger move but again we're doing this for illustrated purposes here so let's go ahead and click send notice the amount of equity that's being locked up 9000 so some traders may consider as far as position sizing on how much money they may want tied up into a trade and let's go in and click send all right so we got that there um quick highlight of some of our existing trades and then let's do a fed roundup there uh if i uh go to the monitor tab you know here are uh you know trades that we had just put on for instance american express and there's hess as far as the orders there um fortunately electronic arts one that we have on the on a long call taking a big hit as a lot of tech is going into the fed here we go and take a look at a chart on that ea it's kind of a little hard to avoid you know as we look at uh the potential target now we were a little more than halfway so as a matter of profit management uh one can at least adjust uh to a break-even point which i believe looks like i already have uh in that case if we go to the monitor tab and uh look at this example we actually have a sell order for that option that is tied to the underlying stock now it doesn't necessarily plot on the chart as directly but we may need to do is let's right click we'll do actually we have to do is let's open it up once you open it up then we can right click and do cancel and replace order and then take a look uh at what that stop is which we can also do on the monitor tab uh currently we have it set for 150 as far as the target and currently uh the stop on the downside set at 138.80 now if we go ahead and look at the chart on that you know that's actually down around the initial stop what we could do uh is well the cat's kind of out of the bag as far as trying to adjust it based off of these higher lows is you know take a look at uh today's low and set the stop just under that so that's at 144.31 let's say i do that you know about one percent below that 144 31.
we go calculator times 0.99 yup try that again let's see 144 70 correction 144 31. 31 times 0.99 that would be 142.86 so what we can do is we'll go to that order there right click cancel in place order or you can also do this under your working orders up at the top here too if you can find it okay and as you can see sometimes it may take a little work to find it but here it is here right click cancel and replace order go to the gear this was a conditional order we set on the option and i can go ahead and adjust this up 142.85 we'll hit enter save and confirm and send we can double check so there's the new bracket there and we'll send that off okay and let's see what else um close that trade up uh in the case of uh etsy there this is a case of a bearish trade and a a long put vertical we're looking for it to trade down to 165.
uh that turned the trade positive after kind of hanging out a little bit we still get about a month left if we look at that you can see the bias there to the downside although notice uh it kind of hurt us a bit as the price just kind of wanted to hang out there uh we're just basically looking for it to dip down below these lows here and so uh got a little help today uh we'll see if that plays out and uh verizon uh another example of a a long put looking for it to just be below 55. that one's been a little stubborn as well as we've seen lots of consolidations versus necessarily moves hence why volatility also being relatively low you know looking for this to roll over not quite doing that so tomorrow maybe a decision point if the price does break to the upside is to close out those positions or at least close out the positions if it's going the opposite way all right folks so uh with the uh with the fed tomorrow you know as we look you know a lot of the arguments have been and i know uh james probably has some insights on this too would uh certainly welcome him you can share on the chat make sure you join him on some of his webcasts uh over the next day or so i believe you have some tomorrow james if you if you wish please share that uh but you know we have energies industrials you know financials you know even the materials which you know kind of supports more to that inflationary uh aspect there uh possibly with the exception of utilities there uh whereas when we go ahead and we look at the losers at least for today you know growth retail sales was a big miss today and information technology which has had a a good run up uh with yields uh falling you know just taking a pause for today so you know not we're not necessarily seeing you know anything dramatic there and if we look at t and x which are the yields you know we can see how they were squeaking up here over the last two days which you know can put a little bit of an impact on those growth companies now the fed's not expected to raise rates uh there's even expectations they're not going to talk much if at all about tapering at least specifics the conventional wisdom is they may not talk about that until next month in august that's at least some of the market expectations so if there is language talking about taper in sooner that may have an impact on some of those growth areas there now again that's just a matter of opinion those opinions may vary but we can see as we go into that event we can see what the impact is on some of those sectors right now and and see what some of the movements in those sectors may be tomorrow before that event all right folks so this is what we covered down here today hopefully you found it helpful uh we went ahead and did some swing setups got a couple of practice trades there and uh we talked about a bit about with the fed and looking at some of those different sectors on how they've been moving today and we did some trades based off of some of those sector movements all right do appreciate it all as always folks would encourage you to practice what you learn here today if you enjoyed what you learned make sure you click like on the video as well as subscribe to trader talks so you can see some additional content such as that provided by james boyd 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 suitability of any security or strategy for individual traders any investment decision you make in your self-directed account is solely your responsibility so thanks for joining us here folks uh we'll see you tomorrow for breakout and reversal patterns have a great day bye now you
2021-06-21 20:36
