Technically Speaking: Breakout & Reversal Patterns | James Boyd | 10-7-19
I'm. Too technically, speaking on reversals, and bounce patterns, my name is James Boyd we. Welcome you here today today is October, 7th, I'm standing in the stead of John McNichol and he. Asked me to teach on this topic today and I'm I'm looking forward, to it you'll see that we have a lot of great things that, we can cover here today I also want to give you a quick reminder if we have any questions as we go through, do, not hesitate and asking those questions I'll, be actually using the big board behind me but also actually coming up and doing some trade examples, as well, in our paper money account we welcome you here today also hopefully you, had a good weekend hopefully whoever your team was any. Sport, hopefully. They want. It's. Always better when you look when your team wins right now, just real quick remember if we talk about options remember that options are not suitable, for all investors there's, special risk inherited trading options please. Make sure you, read the previously, provided copy, of the characteristics. And risk of standardized, options also, district real, quick to remember in order to demonstrate the function of the platform, we will be using actual, symbols, remember, that TV Ameritrade, does not make any recommendations, determine. Suitability of any security or strategy that is up to you to decide what you want to invest in and also. Understand. That all investing, involves risk including risk. Of loss and principal. Remember. The option Greeks Delta, Gamma theta Vega know how they apply to the strategy, and to, the terminology in general now just real quick as we're getting started here what. Are we gonna cover well first off you can also follow me on Twitter if you'd like to kind of some of the information I show today if you said hey James to your style of investing John, and I have taught many different, in-person, events, together over. The years we have a very similar style so I think you're gonna find a parallel there if. You like to also follow me on Twitter you can follow me at Jay Boyd, underscore. TDA. Now. We're going to take a quick look at the markets had a little push here in the markets just a couple of minutes ago we're. Gonna take a look at sectors. And industries we'll. Take a look at bounce setups, what we call Colts, and I. Have some watch lists set up that we can talk about in terms of that we're, gonna also talk about bullish, MACD, divergence --is, and diagonal, breakouts, question, mark and I'll, learn. Objective, here today is to identify those. Bullets bounces, and diagonal. Resistance. Breakouts, alright so, let's do this let's go actually go ahead and actually just take a quick look at the market now, what I get when I say the market I'm really saying in essence, the DSP. 500, okay we might talk about the Dow things like that but I'm gonna take a look at let's say the S&P. 500, first, let's. Go to the charts let's, actually bring this up and let's, go to let's go to the board so first off what we're gonna see that redline is your, 200, period moving average okay, and it's.
Going To tell us that right there. So, that's the third period moving average and, when we actually fell down to that 200, period moving average the, candle, that we actually saw on the Dow was, a ham or candle, and that hammer candle happened, near the support, level now if you take a look at this you're going to see that the diagonal, line from these highs what. You'll notice is really. If we kind of connect this that's, our diagonal, level. Resistance so as we've made these, little lower, highs lower. Highs lower, highs and lower highs. If we, connect, all those lower highs what you'll notice is that's, the diagonal, line that the market, needs to get above to, not make low another, lower high but, to make a higher. High, okay, so we actually take a look at that the market short-term, moving. Back up to that, resistance, level but that's on the Dow stocks okay but pretty strong actually on the Dow now. If we go back to the list just real quick something I want to bring up here is I. Do want to bring up, let's. Bring that up and I, do want to actually go ahead and take a look at the Nasdaq we. Are going to look at a number, of the stocks in the Nasdaq space here today and if, we take a look at the Nasdaq the Nasdaq, was actually underperforming. But, just, like the Dow just like you what you would expect is we are seeing that pullback. But, you'd. Actually when you look at this chart and you compare it to the Dow of the SP it is, actually, probably the Nasdaq, that has had it actually a little bit stronger move and if, you take actually you look at this diagonal line here, what, you'll really notice is that when you draw the diagonals, lamp it's. Probably, the Nasdaq, that is starting to get, that diagnose slant but, it's also something where we're starting to see it where it's getting above the, ten period, exponential. Moving average, again showing. Us momentum, okay, so, now. That by the way that's not a bad sign if the class is on bouncing, and reverse patterns, you'd, want to see that the index, that's leading is the. Nasdaq, and when you draw these lines it, does actually appear like the Nasdaq, is actually a little bit stronger by, not only being up near the line but, even getting above it and getting back above the ten period moving average now if. We take a look at this I'm going to bring up just real quick the these sectors, I'm going to go to market watch and this. Is actually something on a weekend, basis, especially when, I'm watching college. Football games NFL, whatever. If. We take a look at this what you're going to notice is it's gonna really show us the, sectors, that really had the strongest, returns and, this kind of surprised me a little bit but we're going to come to this first.
Off We see that healthcare was actually the strongest, healthcare ixv, and that, actually led with about a 1%, gain then you see technology, then. You see our staples. And then, you also see utilities, those. Are the four sectors, that, traded. Really above, the, benchmark, of the SP so. Let's repeat that healthcare. Which. We probably say biotech. Technology. Consumer. Staples, and utilities. These. Four, okay. Are actually. Above the SP, if we use them as a benchmark the, ones that are still, below would be really discretionary. Based, materials, financials, industrials. And, energy. So, those did. Not perform as well over the last week now let's take a look at this so. First off let's go, ahead and actually bring up a list and what I've done here is I've made, a list and what. I want to do is I want to really bring up a list and we're going to actually now start to talk about bounces. Okay, and hopefully, I just. Kind of put, this list in the. Paper money accounts so we can talk about it now first off when, you see a list of stocks let's kind of explain, what, are some of the stocks that are on this list and maybe, which ones might we look at maybe first first. So, first off when. We're looking at this list when we talk about bounces. Okay, when we talk about bounces, we. Might actually look at let's say something, that has the strongest. One, week percent, return because. That's actually saying it maybe went down and it's had a very strong. Move back to the upside it's, tracking. That move so, think about that one week percent, as a bull. Flagpole. That's. The price appreciation the. Stronger, that percentage. Is there's, stronger. The bounce. I think, that should be very clear now. If you take a look at let's say you al that, has a negative. 3.8, that's, probably. Not really gonna be the bounce does that make sense okay. Negative, almost four percent probably. Not as strong as the bounce there now, when we also take a look at for example these. Stocks what you will notice is these are stocks for the most part that, are above, their ten period, exponential, moving average, we. Could see that they're labeled s1, in green meaning yes they meet the criteria currently. And also. It's actually above the 30 period moving average again one. In green means it, meets. The criteria the. Stocks that actually have the X. Excuse. Me the stocks that actually have I'll label that as with X and what. You'll notice is if it says 0 in red it means no, it does not meet the criteria it's, below, that 10, or the 30 period moving average now. Let's do this let's go ahead and take a look at some of these stocks let's. Talk about what we really mean by bounces. Okay, and let's, kind of identify. The support. Levels and let's, look and see if we can't see what we call Co, holds now you might say well James why. Did you make this list well what I did is actually made this list it's labeled you're, going to see that one of the columns there's called close above, the high of the low day and. That actually means could, be bouncing, so. Again the rest the one week percent, is actually telling us something about the. Momentum, and the, co hold right there is actually telling us something about is it, bouncing, could, it be reversing, now, let's do this let's go back together and most kind, of working, on this list so first, off what I'm going to do is I'm.
Going To bring this up and the, stop they're going to bring up first is I'm going to bring up let's say in video now. If you take a look at the video I'm going to change, that, that off. Instead. Of it being a 200p, or moving average they're going to change that to a thirty period, that's, our standard, moving, average that we use there so, I'm going to keep that apply, and then and click on okay so, this is what you're gonna see okay, now, what I want you to notice when you take when we talk about support. Bounces. It's, gonna be very difficult, that it really sees supports. Or. Bounces. I would say if, we cannot, see support, levels. Now, first thing I want to kind of do is I want to kind of just draw, like, a low you. Actually have it like another low, you, had a low, right there and you had another, low, right there now. What I want you to recognize is, you're. Gonna see that it doesn't perfectly, touch, all of these lows and that's okay okay we're, not again, looking for something, perfect, okay, and my, line was a little crooked but now what you're going to see is as, we. Fell down to that diagonal, line the price. Really, fell down to the diagonal line and about. Two trading, days ago, or so we, saw that stock, makers strong, bounce, off. That support, level now let me give you some caution here when, stocks are falling. There's. More at that time there's more sellers, than buyers understand. Now. As they're falling you want to look and see well where are the trend lines where are the support, lines there. Can sometimes be way too many investors, that are just looking at what's happening in the short term but, they're not really seeing where could, that stock. Bounce. Okay. Now, let's take a look at this you're gonna see that the stock got above the diagonal. Level. Of resistance, and it, now went up to really the previous, high we could see that okay now, if that's stock now that's stock in the shorter term did make a higher, high okay. So. If the stock actually made a higher high. The. Highest, likelihood, not, absolute, the, is likelihood. Is the, stock maybe, could actually pull back and try to make a higher, low. Now. What I'm gonna do it right here is this is day one of what we call cold. When. We look at the most, recent. Days, that. Are down. And I'm, talking, about red, candles. I labeled it as day one day, to this. Day two right, there I'm gonna circle, that, high and what. You're going to notice is that was, the lowest day. In the. Most recent, pullback what do you mean by the most recent pullback we're looking at red candles, so. In the most recent red candles, there was two of them the. Second, day was the lowest day we. Saw on Thursday, where the price. On. Thursday. Popped. And we that's actually what's called and I'll arrow that that, is what we call close, above, the high of the low deck it did so. This was actually day one of cold, this. Was day two of. Called, a second, date where, it did another cold close, above the high the low day and this, is now the third day. Where. We're still closing. Above the high the low day so, Thursday and Friday, and then, today so far we're still closing above the high the low day now, if we take a look at this we might ask, ourselves maybe, are we a little too late okay. Well. Maybe could we try to maybe buy that stock in an, example, it, was some price fluctuation. Well. What I'm going to show in this case is, I'm gonna actually try to buy the stock, in our, paper money account maybe, on Fri in Friday's, trading, range now you gotta understand something if that stock actually comes down to where I'm right-clicking, that. Means the stock is down doesn't, mean it's down trending, but, it's trying to buy the stock, and a little bit, of a price, fluctuation. Okay so. What I'm going to do is the price where i right-clicked, and if you don't mind I'm gonna make it nice and simple to the nearest dollar. The. Number that I'm showing here is 182. So. We're saying hey look if that stock were to come back and maybe pullback we made it we broke out we, made a higher high and now, I want to see if that stock can maybe pull back down a little bit into Thursday. And Friday's, trade rings a little, bit closer to support, I'm.
Gonna Change that right there from day two, GTC. Good till cancelled, okay, now, do it, that means that the stock has to be at 182, or, less. Okay. John. I see your question I'll hit that in just a moment now we. Might even use, as this, example, maybe. The 30 day moving average, or the 10 period moving average as an. Area, of support let's say we kind of wanted to be a little bit more shorter. Term set. A stop, that's a little bit tighter, well. We might use that shorter, term moving average namely. The 10 that's. 178. 65, and if we set, a stop 2 to 3% below there you're, now gonna see is 170. 507. Now. What that's doing let me recap that taking. The 10 period moving average so, we could take, that number, on the right hand side times. 0.98. Or. 0.97. And that. Number, would actually be about 170, 507. For the stop and the day. Would really be GTC. Okay. There it is now. For the times sake I'm gonna leave it do a hundred chairs okay, and so. Now what I'm going to do is actually it's at 182, and that's a limit, of what we're willing to pay the price needs, to come down some. Second. Actually in this case there's. The stop we're saying if the stock is purchased and, the, stock were to fall down to that price, level or, less. We. Could actually get filled to be sold okay now, what you're going to see is it going to go confirm, and send. Now. Here's the nice thing, no. Transaction, fees and now, what you're going to see is there's the capital that's evolved 0 0. Now, the one thing you might be thinking about is could you maybe do a short put or short put vertical sure. But, in this case we're trying to be a little bit more directional. We know we are because. We're buying shares of stock which. Has a hundred. A hundred Delta, okay more, directional. Risk, now. What I'm going to do is I'm going to go ahead next he sent that order right there and now, we can see those orders, right, on the. Screen. Now. Real quick comment, Ricardo. Beat me to it thank you so, first off you, can go to if you like you, can go to Twitter. You're. Good search for or James Boyd okay, and you're, going to see my face and your a see if you scroll down you can see my family right there this my son's birthday party and so, if you scroll down a little bit you're.
Gonna See that any of the scripts that we actually use let's say in class I have. Posted, those right. On the, Twitter page okay so, like for example a script on relative, strength okay there's. The date and so, if you'd like to see other scripts that we actually use in class etc, you. Can scroll down and you're going to see also. One of the purposes, what. Is the purpose of the. Column, headings what. Is it that you're trying to get out of it so, uh text. Ricardo. Got that he gave, those scripts that are actually on that twitter page and also. Feel. Free to also. Take a look at the date of September 25th. And if. You want to kind of get an understanding of, what is the purpose, of the, column heading what, is it that you're trying to grab out of that I explained what, the purpose is any script that we use in class is on, that twitter feed okay, all right so, let's kind of go back just real quick just want to get that now, first up I'm going to go back to it a stock, Costco. Okay. Now this, is one of the stocks we talked about on Thursday I'm technically speaking I want to bring this up now, first thing what you'll notice is we've been hammering. Relative. Strengths lately I I, think something, maybe we, underestimate. I think we know it's important, but in terms of application we might be maybe dropping, the ball one. Of the things we talked about is looking at the relative strengths and what you're gonna see is in that relative strength one, of their strong it's not the strongest was. A small, company called Cass Co now, Costco, had a relative, strength score of about 91 the darker, the green okay. The stronger, historically. The. Relative, strength now let's take a look at this you're, gonna see that it's also something for the week that's been positive, okay, the, Ivy percentile. Is still, 35. The. Tenant. We're above the 10 above, the 30 and it is also showing a cold now, let's, kind of go back to this because one. Thing I actually said, right on that page as I, said look if you're looking, for let's, say something okay, the. One week is really to show us momentum. Okay. The, order has to show it to show us relative. Strength, but. When we actually see, something like a cold, close, above, the high of the load a that's, telling, me hey we could potentially be having, a bounce here let's. Go pull it up now. Let's let's take a look at this let's go to the chart and here's. What we got hey let's go back to the big board let's kind of work on this a little bit okay, so. First, off when. I take a look at this chart. Let's. Go to actually that lets let's kind of talk about this so, first when, we take a look at let's say Costco, we, just, had earnings, just a couple days ago right there, now, what you're going to notice is when we look at this when the stock is pulling back stock, is pulling back stock. Is pulling back I'll watch it. Identified. The candlesticks, now you're piecing the things together now the, tech the technical, pieces of information now, if we take a look at this let's kind of identify, this. Right here, okay, that's, not really any type of candle that's not a piercing, line you didn't go up high enough open, up lower but it didn't close up high enough when. We look at the lowest, most recent, red candle, it's really, the day that I circled, if. The, price, can get above that okay. And let's go back and see when did it well the day that it did it was, actually on Friday so I'll put F for, Friday, this. Right here is Monday, so, what I want you to notice is. The. Price on Friday did close about the high of the low day and then, today what we actually saw is that, stock is still, above and today this will be day one this. Would actually be day two. Okay. Now, what I want you to see is so we're on day two of. Cold. Right now now. We might ask ourselves with the question is are we too, late well.
It's Only been the second day what. I also want you to notice is when we actually look at this move to the downside I want. You to notice the diagonal. Line okay. The, diagonal, line again, is where the price drops down comes back up drops down comes back up and that, diagonally. Is to really created. From lower. Highs if, the, price can get above that that actually means we're shifting. We're. Reversing. The trend and, now, instead of making lower highs we're. Actually now making higher highs and, if we make actually higher highs it. Could be now starting to make if it pulls back it could be now starting to make higher, lows now, I'm going to go back to the chart I won't talk about the example that we put on last. Week but, let's bring this up so, first off we. Might look at this from a couple of different ways so number one we might say could we actually buy shares of stock sure, could, we actually look to maybe go into the options and say what are the options show well we saw the Ivy. Percentile. For those of you who are option. Traders. Well. The Ivy percentile, is still, 36, and that was after the earnings not can't, don't quote me on this but I think I think. It was 50. Okay maybe, the other day when we looked at this but it's still 36. Which is not bad for a staple, slash. Consumer, discretionary stock, that, has an implied volatility. Of mostly, 21s. Over to the right that's actually not bad now, that IV, low is 13, the IV, high is 35. Okay. Now, if you take a look at this what you're now gonna see is if we go let's say to the monthly, options. Let's. Change strikes, let's just maybe go for six or so and the, first thing we want to really see is liquidity five. Seventy five eighty five four. Oh five four twenty five to ninety one three remember. The tighter the bid-ask spread, the more liquid they are at when, right. Now okay. It's. Not not saying they're always gonna trade that tightly, okay. Now if we take a look at this if we went let's say something, like a thirty, to. Forty Delta if we, wanted, to show an example of. Selling. A put or cash secured, put well, if we left click right on that bit left. Click right on the bit and if. An investor, said look we're gonna sell.
Minus. One one, contract, representing, 100 shares selling. The to eighty five and if. The investor, said you know what I'm gonna push that right to 410, okay, trying. To get a little bit that's the premium. Okay. This. Is the obligation, of buy the stock at 285. From. Now until. Expiration. Now, this is a big news you don't, have assignment, fees you. Don't have exercise, fees, my. Goodness. Gracious okay, there's, no op on the option, there is a contract. Fee but, if this stock were to be assigned, to us we, don't have that assignment. Fee so when I say assignment fee that means someone. Puts those shares to this, paper money account and the paper money account buys, those. Shares. But you don't have the assignment fee anymore. Very, interesting, now, if we come back and say confirm, and send what. You'll notice is for, the one, contract. Sixty. Five cents for. That one contract, remember. The credit, that's for the that's the premium for the, to, buy the stock from now into expiration and the, buying power is just saying James we, want to make sure that you understand, you, could be put these shares even though, it's not expiration, we get it and now. What you're gonna see if we said okay let's, take, that trade for, our example, now. What you're gonna see is I'm gonna send that order okay. And if. We send that order there goes okay. Now, let's kind of bring up okay. Okay. Look good now, what I want to do is I want to go back to this list okay, so, these were some of the stocks that, we might look at and say you know what these. Might be more bounce, examples. Okay. Now. What I want to do is I want to kind of bring up a different, topic. Such. As a. Bullish. MACD. Divergence. Okay. And the, stock that I want to bring up okay and I'm gonna kind of do this a little, kind. Of something maybe kind of show you some differences, here so one of the stocks we, saw that it was healthcare, you remember that I, ixv. Healthcare, was, one of the stronger, names. Or, sectors, this week. Amgen. Was one of the stocks that we're gonna bring up here it, actually led as far as the weekly percent. What. You're gonna notice is the IV, percentile.
Is Not, that high and when, you look at the relative strength it's really in that gray color this is kind of saying look, it's kind, of more lukewarm, okay, it's not red but, it's not been something that's outperformed. Let's say the benchmark, now. What you also will, notice in this case is it. Is above the ten day moving average yes but. We're below, the 30 okay. So this is saying look we, have some momentum but, it hasn't gone up as much. Or so much that. Has gotten, back up above, that, thirty period, moving average key, word is yet. Now. What I really want to kind of hammer here, is really. What we call bullish. MACD. Divergence. Is. So let's kind of work on this one together, okay now. Let's what I'm going to do is I'm going to kind of zoom, on this okay, and, let's kind of go back to the big board and kind of work on it together so. First off when, the stock is actually pulling down let's kind of put some markers so this, is where we had a high. Very okay. It's, not down as far, as what. It was before, okay. Let me kind of change, this a little bit now. What you're going to notice is let me kind of change, that bring it over so when we take a look at this what I want you to see is what we had drawn, really. Far down and look at where the price is, now. Actually take a look at where the MACD, is now right. There look, at where the price is so. This at that time was, a lower low that. Was a lower low this. At this time was a lower. Low, as well and the, MACD, what you're gonna see is, shallower. Now. What does that actually mean does. It mean this stock has to, go up what. It's actually saying is look the selling. Pressure, okay. Is kind. Of starting to wing yes it does go down to a new low but. It could be saying that selling, pressure is, weakening. So. First, off when. An investor, sees a bullish MACD divergence and, this could happen typically. The. Bullish MACD divergence does, not happen in two days it, doesn't happen in three or four it's. Probably, going to be taking, two weeks or longer. To. Get a bullish. MACD, divergence it, look it takes time okay. Now, if we take a look at this if we start to identify that. Divergence, a technician. Is really watching, where. The diagonal, line is so, what I'm going to do is I'm going to go back to where was the recent highs and, one of the reason the highs we actually see was right there right there right there. And I'm gonna go maybe about right there we're, gonna play the game of going, look hi. - hi, - hi - hi now, if we connect, these lines so, gently. And if, we connect those lines what, you're now going to see is the price, getting. Back, above, that line now. If, the price gets back above that line what does that actually saying Oh higher high in the price if, there, are sellers.
Okay. They might be saying you know what James we're starting to see a reversal, in, the. Trend okay, and the other thing is that the price gets above that diagonal line this, could actually be meaning that that. Volatility. Is. Starting. To shrink, okay. So. If someone likes to sell options like short vertical putts, short, plots etc, they, might be looking on purpose, for bullish, MACD, divergence --is, and Jen being the first one and what. You're going to notice is that that price could then get above the diagonal line they, might even start be taking more type of directional, type plays like, long calls long synthetics, long stocks, as the. Stock, breaks. Resistance. So. Step one I would be thinking about right here is can. You see a bullish. MACD divergence. Let. Me listen, to what I'm about to say okay. Someone. Who is an option, seller, does. Not have to wait until the. Stock breaks the diagonal resistance, they. Might take a more, probability. Based trade when. The stock is still below the line when. The volatility, is higher that could, be an option but. Someone who wants to be more directional. Long stock excetera. They, might say look I want to see the stock break. Resistance. Before. They start taking a more directional, type of trade does. That make sense because. A directional, type of trade is not, necessarily. High probability, okay, you're, going directional, now. If, we take a look at this let's go back here, let's kind of work on this let's, go take a look at the engine. Now. What I'm going to do is I'm going to go to the Amgen take a look at this implied volatility, so the, one thing we said before it doesn't have the highest, current IV, percentile. It's, really showing about 24, okay, so it's not something super high and if. We take a look at let's say the options, if we stick with the monthly. Options. Here the monthlies, what. I want us to do is as we take a look at those you are gonna see that when you look at let's say those monthly, options, okay, those. Have an implied volatility, of about 27. That's the annualized. Number, and they're, saying that stock could go up or down, $14. Up, or down $14, from, now until, expiration. Okay. Now. If. We come back so I want to kind of speak to this if you think we're kind of more in a neutral. Sideways. Market. You. Might choose not to do as much in terms of direction. You. Might choose more time, type, of traits what, I'm going to show on this is I'm going to show the example of in this, case, selling. The. 190. Puts okay. Look, at that as a short port or the cash secured, put but, then also with that is buying, the put below, us so we don't have as much exposure, to, what. The volatility. Does we're selling, a book but. We're also buying. A, put, now. What you're going to see is when, an investor, does that it. Takes, away some of that premium, okay. Taking. Some of the credit, that we got from selling the 190, buying. The 185. And it, leaves us with really in this case a dollar, twenty four credit, per.
Contract. Okay. Now, historically, some investors said look to do verticals, or iron condors. Butterflies. Things. Like that straddle, strangles, it was. Kind of more, transaction. For intensive, kind of interesting here when we go to asha to confirm and send what you'll notice is for. The two contracts, okay, we're selling, the 190 buying. The 185, for, that it's, a dollar 30 okay, very, interesting times, here now, what you're going to notice is if we said well look let's. Assume that the portfolio can risk, okay, let's. Say $1,000. That's what this portfolio is willing to risk if that's. The case we. Could now kind of maybe get, maybe, about, two, of those or so and if, we do let's say two of those it's, kind of go back and look at this so, if I go edit, and. I'll change the two of those now, if we change this to two of those we're, now going to see what's the max profit. What's. The max loss and again, the short, put vertical is not, a big. Directional, trade it, doesn't, have to move the. Stock, just needs, to stay up above the, short, strike, which, is the 190. Come. Down some so. You're gonna see that if the stock doesn't have to move or it's a higher probability based, trade those, profits. Are not as big as if, you got the direction, right, okay, now what, I'm going to show in this case is there's the credit, less the transaction. Fee I'm. Gonna go over here and I'm gonna go now to where it says send that order okay, there, goes so, now it actually fills on the M Jim now, let's kind of go back and let's kind of take a look at a couple so first. Off couple. Stocks okay, that I think we should maybe least. Be somewhat, aware of when we're talking about bullish. MACD divergence is, let me change this list real quick and if. I change this list. There. No, there. We go so let me kind of just show a couple stocks so, first off when you take a look at let's say a stock like SIBO, this. Is another stock when you take a look at this you're seeing that oxy on the on this chart kind, of that same type of idea right.
Really. Far down and, then. Shallower, what. You will notice actually on the chart is when you're taking, a look at let's say SIBO is you. Are seeing kind of more that diagonal, slant, there whoops. And what. You're going to notice is higher. Lows, on the bottom so, this is where that stock is kind of getting into what we call the apex. Of the, triangle. Okay. Now, another stock, that we might be now when we say also SIBO couple. Other stocks I think we might be aware from the financial. Perspective okay. So, I'm gonna bring this up let, me bring up that list and I'm gonna bring up let's say the financials, there we go so, one of the other stocks in there that took a pretty good pop here today is a company called Moody's. Another. Stock, in that list we might think of as ice which, is inter not internet. I think, it's called international, continental exchange that's. Another one that's kind of taking a pretty good pop to the upside and it's also trying to get above the diagonal line as well you're. Also going to see that actually on that one that the MACD was really, deep now, it's. Shallower, and that, again means they. Could be trying to build momentum to. Break out of. Resistance. Lines. Gay. Or lying the. Other one we might mention there is when we pull up NDA queue this, is a little bit more sideways, but these are for stocks in the same. Areas, now, one, of the stocks that do want to bring up as we've seen Apple. Really. On a tear lately and it just lately, poked. To the upside matter of fact it, went down to your 30 period moving average, hammer. Right. Off that line and. You're not, a piercing, line close, though but, left a long tail okay, so, by sellers, let it drop all the way down buyers, came, in say look we'll buy some near. That support, area in other words bouncing. Gaps. To the upside okay, caps, again gaps are actually doesn't get kind, of trades mid-range, rallies, goes to a pray new high now what do you think about everything, that kind of supports Apple okay it's, not Apple just by itself right you, have stores, that sell their product now let me just kind of mention we, know that actually AT&T. Has also been, in a, rip, and AT&T, usually. Does not trend. Holy cow now. If we take a look at this why I should say it trans more sideways, but. When you take a look at 80 what. You're gonna notice is kind, of more like a potential. Intermediate. Flag. Okay. And, what you're going to notice is deeper. Okay, let me redraw that again deep a little. Shallower, a. Little. Lower but, then what you're seeing is trying to turn back up this is another stock that's, kind of getting into the apex. Of maybe. That. Ascending. Triangle okay. Actual excuse me in this case shorter. Term it'd be more like a bull flag set up and the. Shorter term it looks like a descending. Triangle, because, you're really in this case have lower. Highs. Okay. Now, the other one I might want to bring up here is a stock, called Verizon. This. Is a stock when, you take a look at let's say on the weekly. Chart you've. Had a lot of support, right here okay. Right around, 54. 55, what. You'll notice is if you take a look at this kind of dying, slant down, price. Has gotten above the diagonal, line and if. We zoom in, on this what you'll notice is we had a run to the upside. Price. Pulled back last week kind. Of fell slightly. Lower than the ten period moving average and, then. This week so far triggering, back to the upside guys. Gals let's let's not let's not forget here when. We look at these stocks of value, or grow stocks, it's. Been more the value, income. Stocks I should say that, have really been really, gathering, the attention, over months. Not, days not weeks months. And quarters almost, over a year this. Is a stock that might maybe from a bounce perspective. Might try to bounce back up if, that stock actually gets above 61 I know I'm looking at the weekly chart that's. Not gets above 61, in the shorter term that, would, be, a brand. New higher high now it just wouldn't be a brand new higher I and, being brand new higher I on the daily chart it would be a brand new higher high on the, weekly chart and, again, when these stocks are breaking or bouncing, out on the weekly chart that, could be showing a sign of is to, to, show, money. Moving. In okay, now let. Me kind of make mention just. Real quick when we take a look at let's say one, more stock I'm, going to bring up a stock SIBO now I want you to think of who, are the suppliers, of Apple, I mean Apple doesn't just make, all the products, themselves okay.
Now, One, of the stocks we might be thinking of is. Let's. Bring it up and the, one I want to bring up is, let. Me just grab that the. One I want to bring up. Let's. Verify oh yeah cucumber so. Cue come has actually been one that actually had a pretty big drop down but, this kind of an interesting same. Idea what we've been talking about is, you're gonna kind of see that on this chart there's really kind of been more like a squeeze, okay, and that's, stock, and I. Apologize, for my diagonal, line but, what you're going to notice is kind of a lower. Highs, higher. Lows, and, if, we take a look at that little, that, lines a little bit better you're, getting into the apex. Of triangle, now here's the deal, with. What happened, last week as far as no, transaction. Fee an, investor. Might say you know what James I'm. Gonna try to buy some. Of the stock and I'm gonna just show this as an example, let's. Say the investor said James I'm gonna supply I'm gonna kind of scale. In, I'm. Gonna right-click on the chart and. I'm now gonna go down to once I right-click on the chart right click okay. I'm gonna go to where it says buy and in. This case let's say let's kind of make the example, that we're scaling, in we could buy at most. Three. Hundred shares well. In this case what we're going to do is we're going to change the order type we're, gonna change it to where it says buy stop. GTC. And. What this is really saying and then I'm gonna kind of set this up at 78 this is saying if. The stock goes to $78. Or higher. Buy. 100. Shares of stock so. With last week's announcement I just want to make sure we're clear we. Can kind of do what we call scaling, in or pyramiding, okay, and it's, not transaction. Fee intensive, from a stock perspective. What. You're now gonna see is if I said look $78. Buy a hundred, shares if the price goes to that price or higher that's. The key I'm. Going to show that example, send it confirm, and send there's. The capital, the transaction, fee second. Is if we said look what might be the second, spot if we got above where well. Where's resistance. Well, the horizontal. Resistance, if it were to break up through that two, moving averages, get. Above the resistance let's kind of right click on the chart again let's. Go to where it says buy and now. What I'm going to show is we're going to go back and say look if we went to 80 and a half which. Is really slightly, past. Resistance. We're. Saying look buy the other hundred, shares of stock okay, so. I have. In this example I have a hundred shares we bought sooner. On a diagonal. Break, example.
Okay, Doesn't. Mean that the stock seemed to go up after we, actually show. That example of a potential entry second. If the stock were then, to get up at 80 and a half or higher. It's. Gonna buy more shares and again. When you come back to that and say there's the capital involved there's the transaction, fee so, we're actually building, a position, as it shows us the trend, we're. Adding. More logs. To. The fire of that, trend and so. Historically maybe, investors, team consider, that okay, because each time you got into a transaction, fee don't have that now I want, to just make sure on stock ETF set, cetera I want. To make sure you understand that so when we come back to this now what you're gonna see is on the, price graph, now. We show an example buying, the stock here, adding. This adding, another 100 shares here and then, we're adding to, that position, I want. You to think about that okay. In terms of with that the new update as far as no transaction, fee on stocks and ETFs, I, want, you to think about that how you might use that in maybe your entries. In terms. Of pyramiding. In or scaling. In now, the learning objective, what we wanted to do here today is identify, bullish bounces, we talked about cold using. The scripts we. Also heavily, talked, about bullish, MACD, divergence --is, and, diagonal. Breakouts. Lastly. We actually showed the example of using, buy. Stop, orders, which says that the price gets of that price are higher by, the stock, and we're. Trying to layer, in, or scale. Into a position in the, paper when it counts so I want you to go out and practice that, now okay. Identify. Bullish MACD divergence us, identify. Diagonal, resistance breakouts, practice. Putting in your orders not all at once spread. Them out okay, practice, doing that and now, you're gonna start to realize it's not all about one entry okay you're. Gonna see if the stock goes actually goes up higher and higher you, could even add to that position, I want you to practice, that okay. With, yeah so the comment from Texas is Texas. John is a lot of hammarstedt, yep a lot of hammers like those hammers near support okay but, yes still. Go out and practice that and I remember what we talked about here today we. Talked about, in order to use. The function of the platform, we need to use actual symbols, we, did we did a number of paper trades Costco. Amgen. Etc. We. Also talked about a number of examples from a watchlist, perspective, there are examples, they're not recommendation, understand. That TD Ameritrade does not make any recommendations. Or determine. Suitability of any security or strategy, make. Sure you're aware of that and also.
Coming, Up just right after me we will actually have John, excuse, me Ben Watson be, doing the class on covered, calls and cash, secured, puts stay. Tuned for Ben Watson he does a very good job on that topic thank, you so much for all your comments and your participation also, feel free to follow me on twitter at jaybo. Underscore. TD, a with, that said thank you so much take care bye bye.
2019-10-16 18:25
