Technically Speaking: Advanced Charting | Pat Mullaly | 9-13-2019
A chart. Stick, around. All. Right good afternoon good morning good evening everyone depending on where you are in, the globe my. Name is Pamela Lee this is technically speaking today we're gonna look at my conviction, indicator, and. Discuss, topping. Processes, bottoming, processes, and some things on the in-between, before, we get into any of that though please remember, follow, me on twitter at p Mullaly, underscore. TD a capitalized. PM and like, and subscribe, and share us. On youtube. If you like what you see today please share it with your friends if you hate what you see today share, it with people you don't like just share it alright. Important, information options. Are not suitable for all investors as, a special risk inherent to options trading may expose investors. To potentially, wrap, it in substantial, losses trading, futures involve, speculation, that's not suitable for everybody spread straddles, other multi leg options strategies can entail substantial, transaction, fees which, can impair trades, with minimal benefit. Remember. That we're going to use actual symbols today too when we use those symbols that does not mean we're doing, anything in the form of recommendation. That's just it's just for educational purposes only any, investment, decision that you make and your self-directed account, solely, your responsibility and. Of course as always, past performance, of any security or strategy does not guarantee future results. Delta. Gamma vega theta should we talk options, that's the price that's the option sensitivity, to changes in price time, and volatility those. Are the three things that, you can use to define strategy, and define risk in your portfolio, alright, let's get out there and start talking about the. Conviction. Indicator. And. This. Is a. Discussion. Today basically, is going to be about, you. Know a question, about whether or not you, know you if you have ever asked. Anybody, hey, is, this, the bottom or has anybody ever asked you is this the bottom of this bear market or is this the bottom of this correction or is this the top you. Know we in a top what what's going and we get all different, kinds, of answers, usually. When we when we're at in some kind of a corrective, phase going, into a bear market what are we here oh this is just a healthy, correction it's, a healthy correction and and, gonna head back up so just go out there and and keep, doing what you've been doing and then, we get into the throws of the bear market and then, we hear things like at this rate the. Nasdaq. Is going to be at zero by, July, or whatever you. May actually really, hear things like that but we hear some absurdity, and, so nobody really knows, and so.
Panic, Ensues. On. The other side we, say hey is this the top of the market should the market be pulling back here and people, will at first say well it can't go any higher there's, fear you know well you better take it off the table and, we. Watch. People, get out and we watch the market move higher or, they're. Fearful they're gonna miss out and it does continue higher and then everybody else piles, in and, so. There are some, some. Really. Interesting. Explanations. For people why they stay in why they get out those types of things and what we want to do is is look, at something today that. Will hopefully help you make those decisions and, it is called I call it the conviction indicator now we have talked about this before a couple of weeks ago we looked, at this to help. Decide. If the, IBD. Investors business daily follow-through. Day is is. Working, or. Is they is it not working if it is a, viable, follow-through, day and that's what we're gonna we're gonna dig, a little bit deeper into, this today. So we're. Gonna look at. What. We call 10%. To down days. 10%. Down day is what I call 10%, down days and 90%. Up, days. Okay. 90%, up days so basically, what, we're looking for is. Panic. And. In. Demand. Okay so supply. And demand so this this is not gonna be your typical indicator. This is not your typical oscillator, and why, why, is that a good thing. To know because you can use this with, your other indicators, right nothing's. 100%. There's. Not one certain, thing that necessarily. That you can use may perhaps you're, good enough just use price and volume that's fine but, this is something. You can use along with your, regular. Momentum. Indicators. And, some. Other things out there so this. Doesn't necessarily, the. Thing you got to understand about this indicator, is it's, not like. Say. A MACD. That on a big strong up day it moves to the upside it may actually go down, and. So it's, gonna take a little getting used to but I think once, you get used to it you're gonna see the. Worst to add this to your, your. Basket, of things you might look at to try to determine what, they engage, what the market is doing, and. It measures basically, the, conviction. In the buyers and the sellers that's, why I call it the conviction, indicator, it's a it's a combination of price and volume after a fashion and it's going to measure that volume and.
The Buyers that are in that volume it you know are they are they buying it up are they pushing it higher or are, they are on. The up day or are they not really, buying very much and yesterday. I tweeted, out and, you can follow me on Twitter of course at Pat, Mullaly at. Excuse me at P, capital. P capital M you. Ll a ly underscore. TDA I tweeted, out, a. Question. And. Yesterday. This, candle right here yesterday's, candle, we, had seen it. Was up near the top here but. The conviction indicator, was, really, down just, barely. Above 50, at the time and so, the question was is this, is there a lot of the. Power. Behind this or will, we see this pullback and it can you know it closed. At. The at, about where it opened and the day there's some gyrations, and you know to, be expected, oftentimes, because why it's sitting, at a, resistance. Level don't forget, all the things that, you use price is king. So. Support, and resistance, trend lines those types of things all right before. We go any further. Let. Me say. Hello because it looks like we've got a lot of people in the room today. Our. Tour was the first end today and. So he wins the first prai's whatever that might be Edwards and Tom Remy, hello. Ricardo's. In. Misery. She is. In knit Nicholas is in alleys, in Donald's, in lis Scott. Ashley B there's a few more coming in so. Hello to everybody thank, you very much for being here and hopefully, this will be a fruitful, discussion for, you okay. So, this. Indicator. This. Isn't, anything necessarily. New it is I. Have. Researched. This, because. Somebody else researched, it so you, know, you. Know you can believe them but maybe you better verify, right maybe very verifying, that's what I want to ask you to do look at this indicator, and learn, and learn from me today how to use it and those types of things watch. The archives over, and over to. Make sure you get an understanding of it but originally. What, the idea was they're, trying to find bottoms and we're going I mean we're talking about look going all the way back into the 60s and 70s where, this was really, kind of discovered, it really never made. It's. Made it out as some people have built you know they've smoothed it with moving averages this is raw data this, is raw data we're dealing with personally, I believe. In the raw data and. That's why you don't see me really, using a lot of moving, averages, for. In it for. Triggers. And those types of things I do sometimes but this, is the raw data and this is what we want to be careful I want to be. Careful that we understand, it's going to be pretty. Radical, up and down. So. We're, looking for bottoms right and we're, looking for tops primarily. Bottoms, are. Oftentimes. Easier. To to. Find. The general area of the bottom which, means that. If we can if we can get somewhere near the low right, so when everybody's fearful, we want to be greedy, that's that that's what they say out there buy. Low sell high how many other axioms. Are there out there and.
So That we're going to use different types of indicators to help us build. A, lower. Risk idea, and this could be part of that so, it also might help you. Not. Jump in too soon right. In other words all this is a healthy just a healthy correction right and it might be the beginning of, a, of, a downtrend so let's look at what I've got on the screen here. Right. Now it's zoom out a little bit here so first, of all we know we've got ninety. Percent down days I mean up days 10%, down days or. You could say, subtract. 10 from 100, and say you got a 90 percent down day so let's. Look at the structure first and then we're gonna get into some of the some. Of the ideas, and the structure is like. Like. This if we look. At, these at. These, pink. Circles. And we certainly, went over those the last time you can watch the archive from. A couple of weeks back on. The. Follow-through. Days using. The conviction, indicator, to see how much conviction there was and follow-through days what. We're gonna look at here is today. We're, gonna look at these. These. Bottoming, processes, so hopefully you'll be able to see. The. Let. Me scoot this up a little bit here and let me collapse this. This. Whenever, price, pushes, through or an excuse me whenever this indicator, pushes, through, this. 10%, area, down here that's. Some extreme, selling, in other words this, is. Some. Possibly, some panic right it's not maybe not possibly, so, this is going to be about supply and demand so, when we see. Excuse. Me when we see the indicator, push below 10. That's some plot that's some heavy supply, coming on the. Market conversely. If the indicator pushes. Above. 90. That's. Some heavy demand, okay so we're talking about extremes, here we're, talking about extremes, here and. Identifying. Those extremes. Oftentimes. In a lot of different areas you know that's, where we can say okay things, are getting a. In. The, in the bottoming process things, are getting a little bit out of hand, there's panic coming, in people are willing to panic, okay so, it. When, we see an inordinate, amount of supply coming on the market. That. Can one. Thing we know is that extra. Supply coming on the market cannot. Be overcome, by. By. Just regular, old demand, it's got to be massive, demand and that's what these, 90-day. UPS days are so heavy, selling. You, know heavy, distribution. Heavy. Panic. So. Everybody's taking, shares, out of their pocket and throwing, them in the air that's just an analogy they don't really do that you don't really get shares anymore.
But. They are electronic, so let's take a look at this real quick and. Look at get. An understanding of what. We've got here so here, back. On the. Last. Year 10 10 so. October 10th of last year we, had a long range down day. Right you've heard me talk about these. Expansion. Days, suddenly. The. Complexion, of the trend changes, and then, well that's that's fine that, could be a couple of things could be just a tweet, it could be some kind of news announcement, you, know and we'll look at some of those going. Forward today but, look. What happened here so that down day after a strong uptrend that we had going into September, October of, last year we, saw that, that. Down day actually be a little bit more of a panic day so, that's where when, we think about hey, are we starting to see some some. Tops that's, where we want to start, to. Maybe. Worry and. Then we go we, go sideways, for. Literally. 39, 40, days you can see this these, two big down days panic, days in. The oscillator. Panic. Day is showing up in the oscillator. Were. 39, days apart, so that's one of the other things to think about you. Can have the start when you start to get these panic, days coming. Off of a top you. Know we start to get a couple of them in a row with. That's. Probably going to throw up a pretty big caution flag one, should make us caution, but, the, one thing - the, one thing, that. Was discovered way back when is that. Me. Zoom in over here now, one. Down day, at. Or below ten percent doesn't. Necessarily. Mean we're going into a bear market but, it is a cautionary, it could it could mean we're, about to. Have. Some kind of a correction and as just so happens, in, May of this year you can see here may 1st we started getting we started coming down but, as it. Drifted, lower it broke down from, the uptrend right, so trend is important, broke down from the uptrend but, not, until, this, day right here the. 13th, of May did we get any real panic selling and when that panic selling came in, right. Here, we're dipped below a dip, below 10 well. That told us that hey you know maybe there's maybe, there could be something more to come so we've, got the red we've got the caution flag up, and sure. Enough we get the bearish. Flag and we, roll. On out of there and we. Find some support and price, rallies, back up until, we, get the, recent, sell-off. At the beginning of August this.
Year So. One, down day, doesn't. Necessarily, you. Know after after a new high one, down day doesn't mean this, is it we're, you know we're we're in for it we look. For we, start to look for clusters, of these and so, when we look at what's going on right now we've. Got. This. Down day oops. Got. That wrong again we've. Got this, down day and now we have to panic. Days okay. To panic, days now. In this, whole timeframe, what we haven't, had is a. Strong. Huge, demand, now I'm going to get get into some. Nuances. About that later, on when. We get into guidelines, and and that. You can possibly use to say I'm going to start reaching. Back into in. To my, cash. And start buying things but, you might want to buy in, any event always buy just a little bit until we get see, what's really going on then. Also, remember. That. Price. Resistance. Price. Support, become. An important, thing and so, this broke out and now we're up against. All-time. Highs again and what. We saw yesterday as. It was moving into all-time, highs is, we. Had a strong. At. One point during the day about six, tenths of a percent higher but. The, conviction, indicator, was, dropping, off pretty, steadily. Okay, so when I say pretty steadily that. Means that, it. Just there, wasn't, any, any. Force, any. Force behind the upside as a matter of fact even volume, in, the early morning was stronger, in the first two, hours was stronger, than the previous days but it started to wane a little, bit and then, today of course what we're seeing here is just. A fractional, down, day doesn't mean we're going to pull back we, certainly could we want to make sure that we maintain. Our. Vigilance. On. Trend. That. To work there so always. Watch our uptrend lines always watch for the breakouts a lot, of people you, know looking for you. Know so, they can put on their all-time high hats. And. So watch those areas okay, so. Ten, percent down days means we've got a lot of panic in other words it is below. Ten on the, oscillator lots. Of panic, anything. Above 90 on the oscillator lots. Of demand. Okay so the. Long term implications again, of one down day not. Necessarily. Big. But it does tell us that people are willing to. Panic okay so, what. Happens, what has to happen. Is. It. Takes a. Few. Down days we. See, that people are willing to panic right well, one down day they're willing to panic. Down days hmm. They're really starting to is starting to pick up some. Of that panic, so we want to watch, for, that so two or more down days that that breached the 10% area. May. And. It's not always but maybe the forerunner, of a, sell-off with, additional, down. Days so let's take a look at at. That and how that works so let me pop over. To. Here. We are we all remember this maybe we don't want to remember this, is the, great, the beginning of the Great Recession now, I don't have I've. Just chopped this chart up so I don't have to go, out and refined, it again so. I've just. Taken, the time frame from. July. 2nd, 2007. To, August, 21st, 2009. So. Let's go over, some, of those things that I talked about when we're worrying, about. The. Topping process. So. Let me zoom in, so. Let's, let's read this first here down, trends, with two or more 10%. Down days maybe the start of a larger downtrend, with a series, of 10%, down, days someone. May consider at that point doing. Something hedging going to cash doing. Something, to. Be defensive, to put, on some kind of protection so, let's zoom in on this area right in here because, this is where we hear things like oh this is just a normal correction, you know we needed this correction, right but when we start, looking at what started, happening as, price. Started, to chop up and down, and. I've just highlighted a few we, here. We have higher, high or excuse me lower highs and lower lows right. Higher. Lower, highs and lower lows right, in here and we. Had some expansion, days to the downside what. Also occurred, is that, we had. I must. Have erased this one we. Had these, 10%. Down days I want you to notice that, we. Had. Several. Of those through. The. Oops, through. The. Series. Of this, topping process, and we, had several. Demand. Days where. We where we breached 90%. And. What. We're gonna learn about those is that after. A pretty. Good push of the downside, if we get some of those demand, days that might either, be the very bottom or it could just be a tradable, what we call a tradable. Trend. A tradable reaction. Back in the opposite direction meaning. It could last a, fair. Amount of time before, it rolls back over again but, when we start looking for these we, start noticing that we have clusters. Of. Of. These. 10%. Down days let me see if I can move this. Clusters. Of these 10%, down days also notice. Where they. Come, into play now here's classic, hammer, we. Had. A lot of panic. In that area, that day that. Was news driven, that was the day that. Everybody. Doubt. That oh my gosh bear, stearns everybody, is in trouble all the banks are in trouble and, then that's when the Fed came in and stepped, in.
That. Day and said hey guess what we're, gonna we're gonna help. You along we're gonna put a foot, underneath the market is what they say and so the Fed came in to open their window and then we had a big demand, day. So let me zoom in just a little bit closer on that. Ok, so, everybody, thinks oh it's all well and good but when we start noticing we. Start to get clusters, of these. Down days ok, now the data is way back when is pretty spotty I had, to actually, go out and hand. Hand-dipped. If you want or the, you know and make the data, for. My spreadsheets, to follow along on this and but. Here we have more data now we would think or swim so, we can we can piece some of this together the data we have now is a lot better and we don't have to really do that anymore but, we. Start getting these clusters, of these, down days so what do we say one, down day could, just be a normal short-term. Correction, off the high we, start getting several. Of these down days that's. People very. Likely. You. Know taking their, shares and selling them to somebody else who wants to buy them on these demand, days okay, so. And. Then. We, run up in here we get these lower lows and lower highs not, something it's not necessarily. Something, that we hadn't seen before back. Then right but. The the. Caution. Sign should. Be up because we're starting to see people, willing to panic. Quite. A bit right and when we get these again. You get these down. Days followed, by these up days and price. Can't move any higher just, use your normal technical, analysis, Wow how, come and then we hit resistance, on both, of these hit resistance, and we, see these big pushes to, the downside, and then, we get back down to support, well what's supposed to happen at support we're supposed to see price rally right but when we hit support here, again. Just. Looking, if you're just looking at this down I know we're looking at hindsight, but. This is how we learn, if. We look at support here. We. Get a. Big. Push to the downside one. More but. This time it. Doesn't hold right this, time it doesn't hold so classic.
Possibly. A classic, shakeout. In. The, market. And. I can't get the drawing toll to go away now. There. We go. All, right so. So. Let's follow this forward briefly, and again we're gonna repeat, I'm going to repeat a lot of this so, let's see what happens we we see people panic, and start to sell and then, what happens is we get, another. Series. Where. We're just drifting sideways right, and people, where do they buy they buy at support they, buy on breakouts, and the breakouts started to fail and again, once again. Series. Of down. Days. Are. A series, of panic, days as price. Pushes, continues, to push. Sideways. Until it breaks down again okay so now, what we have is a lot more than two two, or more, and, ultimately. What what occurred in here was price, finally. Sold. Off and left, the, in. Other words Elvis left the building and this, is where this. Becomes important. To understand, what, happens because what a lot of people. There's. A lot of people that are gonna look at this mess, we've got here remember I said this is going to be. This. Is raw data and that's, what, when, we look at this raw data if we look at these rectangles. A bottoming, process is, starting to take place because we're really seeing, panic. Almost, on and on, an every other day basis, people, selling, and people coming in so what happens in bottoms right when, people are fearful people, get greedy so we see a lot, of fear a lot of panic selling followed. By some buying right some demand some, panic selling followed, by some and we see this you. Know continue, to go forward until, everything. Is absorbed, right and you, can even see this on actual. Actual. Volume, bars. You'll see this. Initial, spike to the downside have fairly large volume, and the, second, spike to the downside oftentimes, will have really large volume, but usually a little bit less than. The other time so what's that telling us it's telling us that, people, are. Starting, to wash out the last of the weak positions. Are starting to wash out and if we notice suddenly. On this next, Valley on this. Next rally we're, starting, to see these down days and again we're missing some data in here we're starting to see these down days subside. So. At. First on the top what do we see we, see panic start, to come in it's, it's. Sparse. And it's not happening every other day when, does that panic really happen every other day when.
We See, prop when we when price finally, drops now remember, this doesn't look like much maybe here, but, you've got to remember that off of the highs here this, was sixty percent or so down, from, the highs right. And, if. Somebody, over here said, okay we finally you know this is it we finally flushed out we're, going back up and you, started getting in before. You started, seeing that major, panic come in then, you might put yourself at some, risk Ali. Says correct me if I'm wrong conviction. Factor. Indicator to us should, work, the same I've, never seen the conviction. Factor indicator. I'd. Have to go find that. Actually. Who. Knows I thought I made it I thought I made that name up oh, great. Well there. You go it. Seems that we, were it, seems there were a couple of small failures. October, peak December, down, 10 down, day amazingly, it corrected itself shortly after when. It counted the most right. And. Hello Pierre. Good. To see you. Seems. The indicator relies heavily on volume, it, it. Is volume and price absolutely. That. The quality. Of the, volume, right the quality, of the. Move so, I always say the buying was quality, buying today meaning, that it was it was an update it, didn't have to be enormous, amounts of volume but almost. Of the volume if, it was above 90% that's. A quality buying that means people were willing. To buy higher and higher and higher right, quality. Selling, is people are just. Selling. Selling selling bend, down bend it down just, take me out of it take me of it panic right so, we're just looking at panic. Okay. Let's take a look at. The. Next one and. Look. At this time frame make sure I've got the whole thing in here and, this. Time frame I don't know if you remember the. Big scare, of. The. The. Trip. Or our triple-a, credit rating being. Threatened by S&P, and Moody's and, those back, when there was a they, were worried about. Defaults. So. Let's, let's. Look at again I told, you we were gonna repeat ourselves so here we are it's 2011. The markets rallied, now. It's going into June. And July and, what, do we see. We. See. Starting. To see these panic, down days even, though price is drifting sideways, inside. Of those days when, we get down to a support, area we're starting to see panicked, so we're starting to see a cluster of these down days and, that should send up a, the. Radar, the the antenna that says okay, people, are willing to panic what's going on here and then we start hearing the news notice. Again and, let me reiterate this, and talk about this a little bit here. I'm. Gonna make that just a little bit larger. 25. Days in. Between. The. First down diverse, panic day and the, second panic day the first 10%, down day and the second 10 percent down day so.
They'll. Start out strong and. As price starts to sell-off as we, start, to see price heading down you, may continue, to see lots. Of these panic, down days with at, the in the beginning you, know they may they may fare be fairly wide. From, one day to the next until, they start clustering, right getting, closer and closer and then. If. We. Are paying attention and. Only. This got separated, if we, are paying attention. Then. What happens is it. Accelerates. We start to see those. Range, expansions, so if we're if if, you've been watching, me for a while we know that those big long-range days that, are down and if they're on panic days that, should that should make us watch, those support, areas start to watch those support areas and you can see here we accelerated, really, hard to the downside now this is August, we're going into August of 2011. At. This. Point down. Here. The. Bottoming, process, started. To begin. Right. Here the bottoming process started to begin what do I mean by that just. What we saw in. 2008. 2009. We, started to see. These. Down. Days. Panic. Panic and. They started coming every. Other day or so right maybe you know a couple, a week and we started seeing buyers come in when everybody's, greedy be fearful when everybody's, fearful, be, greedy, so, when everybody's fearful, money. Seems to be coming in after a pretty good push. To the downside as a matter of fact there's. The. Argument goes on on whether or not this was considered a bear market you, see this word shakeout right here and you've. Heard me talk about this before we, pierced, the, previous, low on that day and that. Was a. The. Beginning of the. Beginning. Of demand. Starting, to come back in supply, and demand that's all we're looking for, and so. We shook them out but, all along the way in, this, whole box we had lots, of, down. Days lots, of up days until if you'll, notice again this is where, we. Want to take heed, on what. We see when, we looked at this whole. Timeframe. In. Here. Let's do. A better one than that a bigger one than that I should say when, we looked at all of this notice the range of the, day is pretty wide right pretty wide and we, were seeing all of this panic, all. These panic, days. Coming. In and then suddenly what, happened is. They. Settled down right, and so, this took us this was in yeah, I do this chart in to January. Of. 2012. And. I believe that's what it was yeah January, 27th, 2012, but, things had, calmed down and if. Anybody's, been trading, 2012. Was an okay year then 2013. Was, one of those. Rocket. Ship years you know you know it's just an analogy but it was really. Strong positive. Bullish. Bullishness. That, year 2013. 2014 and. You know we were right in right. Back into the arms. Of the of, the bull market if, there's such a thing as bull market having arms.
Its. Tool yes so bob says is this tool for the market only yes I do have, something similar, for individual, stocks. It. Doesn't. Quite work as well. And. I'll present that at some point but. We have to really kind of use that on a weekly bars. And we have to use that in conjunction with, certain, price movement, it. Just, for, whatever reason, doesn't work very well and actually, this is. Works, best with the this. Is the this. Is taking information from the new york stock exchange, so, if we take information, from the Nasdaq even that doesn't work very well so I'll just caution you but usually, there things, go hand in hand if the S&P is going, into a bear market everything, else is going, into the bear market good pre, appreciate, that question. Failures. Happen due. To not. Lack of volume lack. Of. Participants. There's a you. Know a. Need. To. Get. Rid of their shares when, the market starts to fail. Okay. Now. Let's get into some, some. Guidelines, and. Learn. Now, that we know kind. Of the big picture, now, let's narrow this down into, how we. Can use this remember, the. 90%. Down days. Our. 10% down day sorry. Followed. By 90%, up days 10%. Down days followed, by 90% up days. And. What. Does that mean it, means like, I said earlier, that if we have panic, and we have selling, there's. You. You can't just the markets just not going to kind of waltz. Back in slowly but surely and change things necessarily. There, usually needs, to be some, shock buying, right, there needs to be some big demand, if, there's a lot of supply in the market it's, gonna you're gonna need some massive. Demand, which is kind of relative but massive demand and how do we gauge. That demand we gauge that demand, by. Looking, at. The. The. Up days those. Those, 90, percent up days and so. Let me I've got, these highlighted, here and we're. Gonna look at these in conjunction now. With. Supply, coming on so where do we want to see. Where. Do we want to see that, supply, come on we want to see that supply come on near bottoms, near support areas and. Again. This is going to take some practice you're gonna have to watch form and. Then. Learn. To use them though there's a couple of things on this one here. And that is. News. Driven, some.
Of This is news driven, we. See that this, was August of. 2015. In, Kay August at 2015. The market had been drifting sideways, we, weren't it. Was really, tightening, up a, lot, like what we see right here. Over. Here on the right-hand side really. Tightening up when you know and that's that's kind of where we are right now it's a little bit worrisome, you'll if you use this a lot look at it everyday you'll start to understand, it'll, start to become part of you. But. What we saw was this tightening, and then, well what do we see well, we see a couple of down days right a couple of panic days which means people are willing to panic something's. Up there were some discussions. You. Know and actually, in the, old days with myself and George Telus inand been on the. Show we if you knew we had a show called the morning huddle and, we discussed, there's. China, has to do one of three things they can't have their, cake and eat it too and they devalued, the, yuan and that's what occurred, is that this was a news item and, it, scared, the, market, and it, blasted. The market to the downside, and. When, that when. That occurred, the market sells off and we, get these down days now what, I want you to notice and let me let, me zoom in on this, right in here so, we can start, to understand, how, what. We can do with this other than you, know, covering. Our. Self. With defensive, nough sui also need to buy back in one, of the issues, right is. When, we started hey is this is this a bottom, well, I don't, know I'm too afraid to say as a matter of fact I've lost so much money now I can't, lose any more money I'm, going to take I'm gonna go ahead and close out my positions, and that's when we get that downdraft, right so, this, is where we, look for, okay. Is this downdraft, enough to bring in a lot of buyers right and so, in this case really, three, really hard down days this was a Sunday. Night right, here the, SP what, was the range of that day 98, points. On that day. Just. The range of the candlestick so, it was down at one point a hundred points for the day Apple. Was down everybody, was wanting, to sell their Apple. And and. So. A lot of panic coming in I were. At, a. Las. Vegas conference. And, at, the time that this was happening and there was a lot of people. That were really worried but what happened so. This is it this is the guidelines so, if we get. Panic. Days right if we're looking at a bottoming process panic. Days and, suddenly. We. Get within. 7. Days it. Could be the next day it could be 7 days, we. We get these 90%, up days then. That might be a signal that. We're starting to see buyers. Really, start to come back in why because, big demand, is coming in enough, demand that, it shoves the oscillator, above. 90%. You. Sometimes you'll see - 90 % days to the upside this. Was just one this happened on 8 27, so, we had a big update right that. Big update, came. In on the. 26th. 26th. But the but. The indicator, was 88 75 sounds. Like like I said in the. Video. Or the webcast I did two weeks ago on follow. Through days it sounds like I'm being picky but you'll, see it's, important, now, the. It. One, of the other caveats and, I said there's going to be caveats, if you have, a, 9. A 10%. Down day and and it just so happens that these two days that I have in these ovals up here were, both, of those below. 10%, so, we had we, had really, just a lot of two days worth of panic and then, two, days later. We. See buyers, come in right buyers come in and. Then. So, just know that when that occurs, there. Oftentimes. May, be a. Change. In what tradable, trend, a tradable reaction. To the other direction, and then, then it may sell off and come back down we may see short, sellers come back in and. Start to sell, and people start to. Look, for this. To be a better place to exit which, is what we saw a few days later on this down day right and then, it kind of just drifted. Higher we, had and on. This day right here was. 88. If we come over here on this, day that was 80 now this is one of the other this is the caveat. If. You. Have a. 10%. Down day a thrust, to the downside, and within. Seven days you. Get a, to. 80%. Days to. 80%, days in a row. That's gonna, be like a 90 percent day okay, so 90. Percent after, a after it thrust. To the downside that, breaks below 10%. And. Then. Or to, 80 percent days or better, to, the upside after, a, down. Day after a 10%, down day and. That. Oftentimes. Gets us gets us going if we look at this one so always remember as well. The. Markets have a tendency, to do similar, things over, and over and oftentimes. The market reach X and retest. The previous low right and so if you if we, look at this and say hey this is an opportunity, to maybe, start limping back in picking, up a few shares when they're down here know. That, there's a real big chance that it could retest this low there's, still a big chance that a total, new bull more our bear market could take place but, at least we know when.
We Start to see these things start to cluster up that there's some danger right and it just so happens here, that, we had the, 10%. Down day followed. Let's, see one two, three four, the. Fifth day a 90%, up day and then away we went until, when until the. Brexit came until. The brexit came so we have a news driven, item. Over here they're really shook the market. Wait, and get this - why not there we go and let's, zoom in on the brexit. As. A matter of fact on this day. Here's. This as a Friday and this, is the Monday following. And, so we had that 10%, down, day and followed through with you, know wasn't it eked. Out it got to. About almost, thirteen twelve point nine one on. But it was still down and then, we had a follow through a 90 percent day ninety. Point three three the next day was. Ninety point three one so to 90, percent days in a row to, the upside pretty, rare to see that but. Again this is news driven, and we have to understand, that sometimes these, news, things will will be an opportunity and, slam things down and then. People you know pretty this, caught everybody by surprise why, there's, a 95% chance, that they wouldn't vote vote to leave and guess, what they did vote to leave and so it shook the markets, but, then the markets came right back in on some, big buying, and. As. It broke above, the old resistance, more, demand came in and then, we. Were back in the, arms. Of the bull market so, to speak. So again news items, can flush, this out one. Down, 110. Percent down day coming, off the top is a, is a flag. Is, a caution, flag but, it doesn't mean that it's the beginning of a. Bear. Market in this case the. Tracks. In the sand so to speak were these. This. Demand, that came back in maybe signaling to some that it was okay to get back, in or to that. Stayed in then hey it's okay to a state and as a made in fact maybe some of them started, with. This next, day started. Adding to positions, you, know whatever, may. Be, so. Looks. Like as, we. Speak. The market is. Continuing. To just kind of grind sideways, to a little bit weak today, so, news, items, right. Will. Spike. The market down. How. Long how far nobody, knows. But we look for that, panic, people were willing to panic, but they were willing, to step right back in oh here's, another one I forgot skipped. Right past this one okay. So I want to talk about something. Here. So. This, is the. The. January/february, following. The August. Chinese. Yuan. Debacle. Over in here so the market rally back up to resistance, fell. Back down we had another, another. Double. Bottom again don't, forget, your. Price. Understanding. Of price and double, bottoms and your chart patterns and anything else that you're going to be using your. Momentum indicators, and so. When, we look at this. Price. Pops down and that's a pretty strong rally right that's a really, strong rally but, on that day, the.
Conviction, There wasn't a lot of conviction coming. Off those lows right we, had a shakeout, day here going, into it we had these, panic days and. Then another 90%, update, so that came in let's. Count the day so panic, 1, 2. 3. 4. 5. 6, 7, didn't, quite make, some. But some people's guidelines, but. We did get some demand, coming in but that demand came in very, near these old old, highs and it kept rolling a little bit higher but, we lost a lot of upside. OMPH and it rolled over. You. Just be, cautious now. We have panic. More panic, right and, then. We see, these, 90%. Up days 1 90%, of day so, but, it came well after that. Panic, day right well let's see 1 2, 3, 4. 5. 6. 7. So it was the 8th day again and if, you're gonna have some kind of a rule you, may do, your homework on this and say eight days is fine and then, we had some more demand coming in on a big long range day to the upside but, it checked, back in remember, often times. If you see this and say I'm going to go ahead and start adding to positions or I'm going to get back in the market you might want to do it slowly because there's a chance that it can pop back. Down to the downside. In the case in this, case it did whoops. And. It, undercut. The, previous, low and that's important, undercutting that previous low shaking out those, people but we really didn't get a lot of demand coming, back out of that right but, if you're noticing over in here we shook them out we shook them out again and then. Price took. Off until, we hit brexit. And then the price, then. After that took started. Making inroads. To, the upside. Okay. Let's go back and take a look at where we are right now today, whoops. And. Let's. See what's happening, okay, so again. And. Let's. Look. At you. Know some of the things we've we. See some of the things that if you look, at this and you go back and you test this and you're, looking at reasons. That the market might top well. What, we see here is. As. The markets going higher, well. We're starting to lose, some. Momentum, in, in. The buyers right so things are starting to drift lower so remember, back I was talking about the. Price. Moving. Higher or sideways. And we just we're not seeing any selling we're not seeing any buying we're starting to coil up things, are nobody, wants to make a decision we're starting to see that same thing again right now doesn't.
Mean It has to come back down but, you know there could be a check, back to, the uptrend, line and what, do we want to see well, ultimately we'd, like to see a little bit of panic but again if we see more panic that's going to put within a very short really. Time span. Going. From the beginning. Of October to where we are right now within a month that, would be three down. Downward. Thrust and I don't know that's, where we start to get a little bit more cautious well we what people, are looking for obviously is the breakout to the upside. Now. Another. Note. We've. The last time we had a down day so these were two panic, days we kind of washed everybody, out we, had some support come into play in here we had some resistance. So we could say we've flushed some people out now, we need to see some. Strength but, you, know if. We get a 90%, update, tomorrow, that might be somewhat, superficial, because we've already shaken, everybody out but remember, the the. 80%, up days so if we look at this, panic day here and this, was the follow-through, day on the. SAR, on from, IBD. Was. That the follow-through day. No. That. Was the follow-through day that. Was the follow-through day on IBD and and sold off and. Then we rallied, again and on this day here, we had a. Eighty. Eight point six seven so a pretty strong day we gapped up hit resistance came, back down but, we didn't panic out right we was it was nasty it was a long range day and we hit ten point six six and and. As we came out of this one, two. Three. The third day man. 77, fourth day, 78. We, just didn't get that eighty percent upside, using. Using. The data that that I use from the, New York Stock Exchange today. Interestingly. Enough, and this, is the other thing I want you to understand one of the other takeaways, is if we. Have a. Doji. Day. If. You. Have a day that opens and closes somewhere. Near the same spot, it. Should be. Somewhere. Around, 50. That. Means there was as many buyers as there was sellers it, opened and closed in the same spot it should be somewhere around 50, if we, have a 1% up day then. We should have a fairly. Strong push, to, the upside on, the, on, these on, this. Thrust it doesn't, have to do that that's why I said at the beginning that, this doesn't have to go up just because price went up if price, goes. Like I was saying yesterday where. We had a. Strong. Earlier. In the day we had a nice. Candlestick. That looked like, that. We'll make that green look. Like this, but. The. Indicator. Was. Down around 50 right. So six six, tenths of a percent up and we, were down around, 50 and ultimately, closed below 50, on the, indicator, that's, not breeding a lot of. Life. Into. Some. People's belief that, there is strong. Some. Underlying. The markets and strengths, and strong some, strong buying, so. Very. Important. That you start looking at these things. At. These things as well so we'll. Start we're. Going to we'll use this from time to time to, take a look at the market, we're. Going to look again if we start to see big. Long range days like, right here. Let's. Do a little calculation, in here, and. Over in here so. This day here. This. Day here so, we closed on. That. Day. It's. This 25th, of. July. Price. Closed. At three, thousand and three just about where we are now he, seems like we've been here many times oh we have three. Thousand, and three, the. Next day it closed at. 3025. So three thousand three -, three thousand twenty-five gives. Us 22, points 22 points divided, by three zero zero three, that. Gives us almost. Three quarters of a percent, to the upside but, we really, weren't seeing a lot, of, love. If, you will coming, into this, market so so, now we, can see that it's not a lot of love well that might be who. Cares. Nothing. Really, to worry, too much about until, we. Come up here and let's put on a. Three-year. Weekly. Chart and. That's. Remove. This text note here. Until. We start to really look back in time and. Say. Weak. Demand. As. Far as buyers go, price. Up. Pretty strong we should have been, a little bit higher on the, indication, and we. Were at resistance, okay, so that's what we're looking at and this is a weekly chart here so. But. We run into resistance. So. We look at where we are now. Rallying. Up into resistance. Weak. Demand, going up into that area. So. On the breakouts, expect, big moves we get up into here we don't want it you know on big long range days we, don't want to see that weak weak. Buyers coming in so we're. Still the the jury's still out here, if. We break the, upside we may not see a 90 percent day that's irrelevant.
In Here we know we've had a lot of flesh out over, in here we just want to see that trend continue. If it starts to sell off and we, see price. Start. To. Come. Down on. Bigger. And bigger volume I don't know if you can see those that zoom in and we see price start to come down on bigger, and bigger, excuse me on on. Bigger. Thrust. To the downside where, we're getting into the 15%, area 10% area then. We've got something, to worry about as a matter of fact let's. Do look at one more. Situation. Which. Was what some people are calling a bear market, and. This is last as September. Through December okay. So, we, saw this thrust to the downside. Weakness. People. Are willing to panic another one people are willing to panic we knew where support, was we knew where resistance was we. Saw price rally. Back. Up into his that was a pretty strong day we gapped up we closed about where we were open but on a big gap and pretty. Weak up in here we still hit about 77, that wasn't too bad but we're at resistance, and then we had a panic day to the downside then. We had the flush out while we with the all man that's a nice hammer there let's zoom in a little bit, that's. A nice hammer there that's a nice hammer there but. We're really not going anyplace and then we started to roll over and. We. Slammed, down, now you see, on the, way down we really didn't get a, a. Hard. 10%. Down day what we did get in these, last two days was. A below. 15, so if we get below 15, just, like above eighty two. Days in a row below 15 two days in a row on the downside, then. We've got a pretty good flush we also saw enormous, volume, coming in and then, BAM out we go that's, giving us a. An. Indication, that demand is coming in and then, demand came in again we remember the last time we saw this back. In. 2010. Was 2011 when we looked at but, demand came back I know it was 16. 2004. We 2016. Big, up demand and then BAM away, we, go again so. In. Summary. There. Is a. Lot. That we can do with this so please watch the archives, and, remember. That 90%. Up, days that follow 10%. Down days within a, period, of about seven days means that we have a strong. Demand coming in and that may be the beginning a lot, of down a lot of 10% down days 90%. Up days after like a real, bear market, strong bear market that's down 30 40 % we. You'll, start to see things really slam around. 20%. See. Things really slam around that's. Telling us that there's panic people and but there's buyers coming in, fearful, when. Everybody's fearful somebody's saying let's be let's be greedy and they're buying that up so, work. On this practice, this is, time. Goes on and. Watch. The recording, and remember. That everything we're doing here is for educational, purposes only and any. Investment, you make in your self-directed account, is solely your responsibility, thank. You and follow. Me on Twitter. You.
2019-09-17 21:52
