Technically Speaking: Trading the Trend | James Boyd | 11-14-19
Okay. J, Boyd underscore. TD a we. Had a quick audio issue but I fixed it and looks. Like we're good now thank you so, I just real quick as we're getting started this topic about trend is really, really important, so I want to make sure that we really give you some good. Exaggeration. It's not making any recommendations. Determine. Suitability of any security or strategy, remember. That also any investment, decision you making there sub direct account solely, your responsibility and. Also remember that transaction. Costs very important, and also, if we talk about options, if we do remember, the the option, terminology. Of the option, Greeks now, what are we to cover, here today well we're gonna take a look at just real quick the indexes, number, one number, two we're gonna go into trend, analysis, and, then going to something I don't normally, look at okay. But, we're gonna talk about a certain moving average in, comparison. To what we typically. Look at we're gonna talk about that bring that up and we're, gonna also look at potential. Entry, and and. Exit. Examples. So, we talked about volatility, for the first time in 26 trading days finally. Got above the 10 day moving average volatility, potentially. Expanding, I think. This, what. This technical, indicator or moving average that we'll talk about I think it could be helpful in terms of identifying trend. Change. Or pull. Backs from highs I have. A number of examples four, or five that we'll look at on a weekly, or a daily chart okay. We're. Gonna look at some examples. Going forward. With that idea and then, also we're gonna talk about current positions, as we now. Will. Learn about the. Certain, moving average and the, learning outcome, is to identify potential, entries. And exits and, I'm gonna be focusing, on weekly, charts, but. Also daily. Charts, okay, now, let's kick it off here, so. First off if we take a look at let's say the Dow. Jones down. So down yesterday was actually on bullish, engulfing and I'm, gonna choose the Dow here because someone asked me to say could you look at the Dow okay, I'm gonna and this, gonna be very similar, to the Espeon almost identical chart bowls and golfing chart yesterday, on the Dow today. Kind of fading back a little bit at the mid at the midsection, okay. And. Let's. Double check on the sound I think we're good on the sound just. Let me know. Test. Yep yeah we're good yeah, so some, of those comments, might be old but I just want to make sure. Now. If we take a look what I want you to recognize is, the. Price action hasn't. Broken, down below, the shorter term moving average line namely. The 10 day moving average it hasn't, ok the, price, has done a good job or, the, sentiment, in the market is still quite bullish and you not really been seeing a breakdown, if we. Take o for example a look at let's say the the. Nd X you're. Going to notice that if did fall down to Jerry, let me know if we're good on sound you're, gonna see that it did fall down to the 10 day moving average, thank you for that but, what you're gonna notice is it hasn't broken, down, the key word is yet now. Again and you know I'm gonna call it the Lisa. Bullish. MACD. Divergence on. The VIX okay, now. If you take a look at this this is what investors, have been talking about that. If that if the price actually gets above that blue, line the, concern. Is, that. The. Vault hood expanse and that there's risk, to the downside we, spent, the last two weeks, really. Talking, about that. So. This should not be a surprise oh, my gosh I had no clue so, we've kind of talked about protective, puts callers not. Gonna talk about that at length today unless, you have a question, on that what. I am gonna talk about though is trend, change. Now. So when you look at this the volatility, yesterday, did close above the 10 day moving average the blue line today. We actually saw the volatility, open up a little higher sell. Down to the 10 day moving average use the 10 day moving average as a potential, support level which, is not necessarily, the greatest thing you want to see, ok, and. As we. Do as we look at one extra line on the chart let's introduce this, so let me introduce the. Technical, indicator we're gonna look at so, the technical indicator, that we're gonna look at is what's called the whole moving average, and some.
Of You that actually follow ken rose you're gonna see that he's talked about this I think actually this is a great visual, gauge, and I want to use this in, context. So, first off what you're going to notice is it it, has a green, and, red, line the. Green Line is just showing that buyers are more in control the. Red line right there is when it pivots, where buyers, lose control, and now. Where the sellers, are in control, and if that line, turns, goes from green to red, sellers. Are in control, now lately over. The last couple of days what you're going to notice is it went green about a week ago went. Green about, two days ago so. Again that's saying, that maybe buyers, are. Buying. Volatility. Or, expecting. The volatility. In the market to expand now, we're gonna bring this so first off how do we get that on your chart okay so let's bring it up so, what I'm gonna do is going to go to the test tube right. On that test tube right there. Okay. Click. On the test tube simply. Put we're just going to go over to the left hand side and we're, just going to type in whole, moving. Average okay, H ul. L now. If you take a look at this if we go down to the whole moving average that, defaults. To a. 20-period. Moving average, that's, what it defaults to okay, now, I'm going to put that right there, okay. And I'm going to keep the moving averages, that, we have so you can kind of compare and contrast okay. So, simply put we just click on that and moves it over to here and the. One thing I want to make make, sure that you can do is the, color coding, if you, go over to the right click on that gear right there we're going to click on that gear, okay, and now. What you're going to notice is it will say well what color do you want well first off let's, change the width on your side you're going to have width of one we're. Going to change it to where the down is. Red and where. The up is screen so just simple you can click on the width click, on the color change, it to however you want red. Is down green. Us up okay, now if we, go to where, it says okay and then. Okay again or apply, and okay here's, the chart now let's bring up a chart just real quick okay. What. I'm gonna do now is let's bring up a stock, like, Nike, and, I'm going to take any of these any, of these off so we can discuss this and first. Off what I want to do this class is really labeled as trading. The trend weeks. To months so. What I want to do here is I'm going to start with a chart, like Nike, and what, I'm going to do is I'm going to really. Maximize, it. But, what I'm going to do is I'm just going to kind of zoom in a little bit so. First off I want your eyes to pay attention, to, some of these things that I'm going to point on I've looked to this chart and there's some things that I really want you to latch. On to so. First off what I want you to recognize is, member. When, the, red line, tick. That off when, we actually have the red, line okay. When when, there is a red line sellers. Are in control I'm going to mark, this right there now. When. The line goes from red, to green we're seeing a shift, from. Sellers. To, buyers. Now. Let's go forward over here just slightly to the right what, you're now going to notice as we go it goes green. For. A long period of time then. All of a sudden it kind of that initial, peek what, you're going to notice is the, line goes from green. To. Red now. Right, at that spot you might be thinking well a could.
I Just, exit, the position that's, an option number, two could, that be the time where you might consider. Protecting. Ding. Ding ding ding ding ding. Lightbulbs, go on right now, what, you're going to notice this is a weekly chart right, there weekly, so. What, you're going to notice is for a couple weeks the, line was red did the stock crater, to the downside not necessarily. But, it definitely had some consolidation. Now notice at the end of, that pullback, where the line went from red to green what. You're going to notice is I want. You to look at where that low is this, low and this. Low notice. That at the bottom of the, pullbacks, there's, a red and green at the, bottom of the pullbacks, there's. A red, and green. Now. What. You're going to notice is at the bottom, of the pullback there's. A red, and green my goodness, gracious and at, the top there's going to be a green, and a red at. The top there's a green and a red you. Could pretty much just call this higher, highs, higher lows. Okay. Now if you take a look at this chart what I want you to look at is when, that chart is actually going up line. Is green it's, telling, us that the dominant. Trend, is. Mmm. Bullish. Sorry, been in Oklahoma saw, a lot of cattle saw. Deer, - they hit my car I won't talk about that now what you're going to notice is we're, going to see that, speaking. Of protection. Now. Notice. That the light actually went green there, it is there was one fake, out on this chart really about right there okay. But, what you're going to notice is right here right here. You're. Going to notice that predominantly there is still an upward, trend overall, and Nike still, there. Was one fake out where it really showed in it it had a reason to fake out the stock did go to a brand new high did, not last and, the, price pullback, but predominantly. The. Trend, overall is still, up okay. Now, I'm going to ask you a question, do. You think if you simplified. And if. You said James I'd have. More confidence to stay with the trend if I could use something more simple to read the trend it doesn't have to be complicated, right, if the, line is green more. Buyers than sellers at that time if the line is red more sellers, than buyers and, you, might consider exiting. And/or protection, now if you look at one of these charts I'm gonna switch this to the daily chart we, put the daily chart now. I'm, going to look at is now, with what we know you're. Going to see that there was that let's, go back to where there was the last potential, entry red to green was, really about right there where. Was the last potential, exit, well we had one that was maybe right there a little, bit and you, had another one really about right, there. So, I'll just circle that now. What you're going to notice is it's sold off from about 90 foot 95-96, when, all the way down to about let's say 88. And a half okay, and then, now what you're going to notice is that line went from red to green. Now. If you take a look at this chart what you're going to notice is stop.
Kinda Has a flat, or level of support, and what. You're going to notice is the line went from red to green and now, the price, action getting. Back up above, the ten period moving average and, trying. To get back above the thirty period, moving average so. Well so first off can. We use a whole moving average to identify. Trend, yes, how, do we identify higher, lows you identify, the higher lows by just just. Kind of marking, where. We get the red to the green red. To the green, red. To the green if we actually see that those are actually higher than the previous one higher. Lows the. Highs are, green. To, red green. To red green. To. Red. So. Trend analysis, which we need to note because we want to see when we have. Trend. Change. Ii. Can, an investor maybe, use this as potential, entries and exits it. Could be a way now. What you're going to take a look at let's look at some examples. Here okay, so first off. Now. At least lisa, has, always talked about red and green candles, right this, is just a way to smooth, it out and see the dominant. Trend. Not. Candles, per se but. The overall, general, trend, okay now, what I'm going to do here is I'm going to bring up an example that we're going to talk about in terms of maybe, doing, I'm going to talk about this first. On the weekly, chart pull. It up, and so. When we look at the weekly chart let's take a look I'll zoom, in quite aggressively, if you don't mind, let. Me delete everything off let's, take a good look so. First off what I want to look at is here is just kind of I'm gonna put the markers, right. Green. To red red. To. Green right, then, all of a sudden it went from that one that move right there was about. $97. I'm. Gonna bring up a point in just one moment there you're, gonna notice that when we get the turn from the lows to the highs some. Of these have longer-term, trends. Than others that's normal okay now. If you take a look at this what I want you to see is the stock actually pulled back and. It's. Gone from red, to, green. Now. As it, went from red to green the price got above the ten period moving average. Got. Above the thirty period moving average and now, here. It is now. If we take a look at this on the daily chart okay. And we're gonna look at this as our first example if we. Look at this as our first example remember, how do we identify lower. Highs well. We said before let's kind of just recapture, this before we put on a trade lower. Highs is this green, the red the. Green signifying the peak the. Red signifying. The shift down okay. Green. The red, green. To, red green. To red and what, you're going to notice is if we just kind of connected. These dots or, these carrots, what. You're going to notice is there's our diagonal, level, resistance now that's not bad oh, that was, spoke. Too soon. There's. Our diagonally over resistance, if. The, price action were to get above that diagonal, level. Resistance, what's. Happening. With the, trend. It's. Changing, right. So, first off we actually see yeah it goes green to red but the problem is that's below, excuse, me goes red to green problem. Is that still below resistance, well. Where does the trend, change. Well. What you're going to notice is the last lower high, the, last lower high it's, really right there to get a trend chains we, don't want an equal high don't, want a lower high we, want a higher, high so. Now if we go over to the right what we're now going to see is go over to the right and if, we go over to the right we look at that look, at that keep, going keep calm and keep coming and what, you're gonna notice is this right, here represents, a higher. High higher. High now, if you break out a resistance, you make a higher height, what. Could come after that well it could be actually a higher low so, now the price, is above resistance. Made. A higher high now, the stock, is actually pulled back now. The stock is still above that old resistance, new potential, support and the. Line is green okay, interesting so, now what you're gonna see is maybe this is trying to get a bounce off, where, we had some lower high, areas, and those. Lower high areas, could actually turn, into potentially. Higher. Lows. Interesting. Now let's go back to this so. American, Express is gonna be one we're going to be looking at if we looked at American, Express gonna go on trade page and, what. I'm gonna look at here is I'm gonna go look at let's say I'm. Gonna left click on the ask price now, based upon where volatility. Is, based. When, I say volatility, based on where the VIX is, which. If that's low that probably means a lot of individual. Stocks have low implied volatility, too we're. Not going to go into the deep discussion, on this like we did yesterday but the one thing we're going to do instead of setting, a stop we're.
Gonna Buy, the put. Ok we're, gonna buy the put so. We're gonna go down to where it says single order first. Triggers executing I remember when an investor buys a put doesn't. Cap the upside okay you could still set that upside target now. First. Trigger is sdq, okay. Come, back down if, we. Go let's say to let's, say something like 30 to 40 days like. We were looking at yesterday you're. Gonna see that the once and I'll kind of isolate. Both of these the, 13, December's. Okay. And also, the 20 December's, and if. We were trying maybe get something in that wheelhouse of, 30, to 40 Delta the, only one I really see that matches, that, criteria. Is really. The 13, December, that's. The one 19, strike, and has, an RR thereof really, 1.10. Now I know you thought about that last night because I had a number of comments on that what I loved okay now, what you're going to notice is to buy the put, left, click, on that, ass price, if. We left click on the ass price now what you're going to see this step, 1 buying the shares of the stock step. 2 buying. The put the, put is protecting, the stock so, what you're now going to notice is buying the stock at about 120. And 3/4. Have. A right to sell the stock at 119. From now until the expiration that the. Right is not free its 1.3, $4. 34, now. Total. Risk okay, from now to expiration, it's, a dollar 75 risk on the stock a, dollar. 34. For. The put we're making a negative assumption, here we're imagining that. We're going to lose all of. It well. If we look at the stock loss and imagining. That we lose all the value of the put grand, total, survey, says. 309. Well, if we lost 309, on a stock. That. Is. A hundred. And twenty, dollars and 73. Cents I don't know what percentage that is but. That's less than a four percent loss on the. Stock that's not a big loss so. If the stock were to go up we need to start to go up by the dollar 34 to, pay for the put anything, above. That dollar 34, could, be beneficial. To the, position, now. If we come back and, say confirm, incent, now. What you're going to notice is here it is five, plus 100 by, the put notice. That the stock does not have a transaction fee us-based, stock dang, course that, transaction. Free, there, but. The put has, 65, cents for the one contract. Now, if you wanted to say look James I want to set a target, on this you can, the. Putt again doesn't cap the upside and here's. What I want to kind of challenge, us, on. Because. When you see this I think the natural thing would, be, cheese. James. Wouldn't. It be nice to find. Some stocks. That. Have now gone from, red. To, green. Isn't. That what you're thinking, aren't. You thinking cheese it'd be so nice if someone just showed. Me a weekly, list of going. From red, to green or a daily, list of going from red. To green, that are above support I mean I think that's the natural thought now. If we. Take that Lisa, says it's 2.5 5, so. Again when you really kind of look it let's say the risk. Stop. The, risk of the stock plus. The value of the put assuming we lose all of it that.
Loss Would be 2.5 5%, I'll just, make this quick comment, because. Of, the current market condition, we're. Using cheap. And cheap, implied. Volatility. Which. Cheapens. The puts and that. Is a way we're defining. The. Risk not theoretically. Defining. It and. To. Risk 2.5 5% on the stock that's. Really $120. You, just. Don't see that all the time okay, now if. We take a look at this I'm gonna go back so one of the comments are. Yeah. On that one Pat let's see I. Have. Pat, let me actually take a look at that I see the comment, I like. Where you're going with that I'd have to look at that to kind of see the variation, so, I'm not dodging, that I just need to kind of test that before. I really kind of give more, of that in-depth, answer, there okay. Now what I'm gonna do, he's. Let's actually also pull up let's say a stock if, you don't mind I'm gonna pull up a stock like. Boeing, okay, and I know there's. There's. Different reactions, on this. Now. If you take a look at this what you're going to see is on. The chart, just kind of want to show you something, that's kind of interesting so. What you're going to notice is right up top here there. Is kind of green, to red and it flashed, twice. Okay, twice, then. What you're going to notice is it went down down down and only. For a day, it, went green for a day but, you do have to remember that. That was at a time where it went green but. It's still below a resistance. And if, someone would've bought that they're, buying it three days into earnings which I think you, might think or we might agree that that, might be pretty aggressive okay now. What you're going to notice us on the right hand side it goes this, is post the earnings okay here to, here and what, you're going to notice is bullish. And golfing notice. We had the big move up move the, middle, of the candle, we haven't, really tested not, quite got. Close okay. And what. You're going to notice is today's candle, maybe, even, trying to get above the high of that, lowest. Most. Recent, red candle, now, here's, the deal, anytime. We actually use this as a trend, analysis. Tool does. It have to be like a longer-term, stock, trait can, we maybe you just consider to, use it maybe, for just selling, options if we wanted to well, let's look at this so, if we're going to go back into the trade page let's kind of show the example, of a little reversal.
Potential. On, Bali. Now. Notice on that line whether it's great or green it doesn't. Care what people think. Doesn't. Care it's. Just showing what's. The dominant trend right, what, their thought is what their thought is it's, just saying saying. Overall, just, showing overall, what's. The majority. Green. Line more buyers red, line more sellers, okay, just, kind of taking. All that other data noise. Nullifying. It okay, what's the majority, at. That time now, what you're gonna see is if we went down and let's kind of look at this we. Said on Monday, that if the volatility was potentially, expanding, an investor. Might consider doing, circles more than short puts so. In this case if we went to this example, and this, has also been a stock that hasn't really been correlated. To the market, there's been some external things, going on there and now, what you're going to notice is if we went down and looked at let's say the monthly, options, gonna, look at the monthly as compared, to those thirteen December's, because. The monthlies, are more liquid, in terms of the bid-ask. Spread. Now. What you're going to notice is if we went to the three fifty, fives, which. Has a delta of thirty-two. And if. We widen. The. Strikes out not five dollars wide but maybe ten dollars wide to, do less contracts, right click sell. And then. Gonna go right to where it says vertical, if we, did that going to look to sell the higher strike, the, 355. Buying. Not. The 350. And no. Looking. At the example, of the, 345. Now if we do that of course what it does is it, increases the credit, and, makes it where the investor might not have to do as many, contracts. Right now. In this, example what we're going to show is if $10 spread, to. 50 credit, we know where this goes. The, max loss here is really going to be 750. Buying. Power, fact this is one of the benefits okay, not, tying this up as much of capital. To, do the trade and now. What you can see there is a built, in loss this. Is also something where we're not subject, to as much. Of what. That volatility. Does, okay. Some. Yes but, not as much as short puts okay. Now, if we go back and say send that order there, we go now, let's kind of bring up for example some stocks and what I'm going to do is I'm going to test you a little bit you didn't think you're going to have a test today but, you are now. Let's do it let's do it together okay so, what I want to do is let's kind of imagine, here I'm gonna pull up a stock and let's. Just say we choose something like UNH. Now. If. There, is, lower implied. Volatility, that might be expanding, some. Of the utilities, some. Of the staples, maybe health. Care maybe, Reese okay, telecom. Those. Stocks. Might. Come. Back. Some. Of those areas they were. Recently. Maybe not, as they didn't do as well as those. Growth, areas, as investors. Were chasing, growth, now. Let's kind of go back and what I'm going to do is I'm just going to zoom in on this so you can see this where. You are so. First off let's imagine, let's talk about the trend analysis, before the trade so.
First Off what you're going to notice is red. To green okay. Red the green is. The. High or. A lower, high, red. To green okay. Right there now let's. Just look at where that chart is there's only two spots on the turn that's it okay, two, spots now, if we take a look at this if I were to just draw a line just over, to the right okay. Cut about right there what, you'll notice is where I'm circling. Right. There, that's. The higher high area, so. The price gets above that lower a high area. Right. Here okay. Right. There. If. It gets above that area what it's really saying as, James were seeing a change, in terms. Of the, trend. Okay. Now. What I want us to look at is look at what's happening still with the stock higher low higher, low high, or low high. Or, low, now. What I want you to look at here is how come the stock isn't really pulling back, well, investors, when there are sell, down days that doesn't tend to go down for very long well, you're gonna notice it's just a couple days ago I'll circle, this so we can see this it did, go red but not for, very long and, then. We're seeing that stock kind of back up again and almost trying to push back up into it and it's. Green, now. It, is a tour of $55, stock now James why, the example. Here of UNH. Well, the ideas. Maybe picking, a stock that maybe. Is in a sector. That, might be viewed. As. Safer. In terms of the revenue their earnings per share and also, maybe something, that maybe recently. The, area. Hasn't. Been as aggressively, purchase, as, discretionary. Technology. Etc just, go look at some of the staples, utilities. Healthcare, etc now. If we look at this what I'm going to do is I'm going to show this example so, when, we look at this I'm, gonna just right. Click on the chart drop. Down to where it says buy custom, and I'm, gonna go right, to where, it says with. Stop. Now. I know some. Of you I and. Everyone. Here might, be a little different I'm aware, of that I get, people have different investing styles if you, say James I'm not gonna buy the puts even if they gave me for free ok, ok, but. If we looked at this if we said ok we would, consider. In, setting a, stop if that's how an investor likes to invest well, where's the support level or where's a. Support. Level well number one is it's kind of sitting on one about to 52, the, second, area is really right about 249, ish ok, and that third area is probably right around 244. Yes, ok. So, if we take maybe that second, area maybe something, in the, middle. Probably. Right about, 249. Less. Let's. Say 2 to 3 percent in our example, that, would really be let's say 2, 4402. Ok. So. The entry what it's showing here, is 255. 53, that's a limit order saying that price or less the, stop here is actually saying this, price, or lower. And. The. Stop we could change that to GT see ok now. If we, did this so, notice, what the examples, that we're looking at think. About what we just did we, chose that we look, at an example Boeing. Boeing, done, something different than the overall market second. Example I'm actually pulling up here, is. Unh-unh. S healthcare it's, lower beta, when. Do investors, consider, lower, beta they might consider those when volatility is lower than expecting you to expand the third one we actually chosen American Express, we, actually bought the stock bought the put total. Risk 2.5 5%, so. In. Other words we're not risking a whole lot for, these trades we're just looking to see maybe what are some stocks that have some, reversals. Of, those. Trends. Okay. For, our examples, now, if we go to confirm, and send now. What you're going to see is transaction. Fee, just. Zeros, us-based, listed, stock okay. Transaction. Free now. What you're gonna see is remember the stop is saying if they get to that price or less.
Sell. The stock okay, doesn't, it's, not like the put we. Don't know exactly where we could get filled at now. In this, case I'm, gonna go back and say send the order there. It is now, let, me show for example just real quick an example. Here gonna. Pull up a stock like Coke so. Now, if, we, look at a stock like Coke are. We seeing, anything, here, that is showing a trend. Change. Yes. Or no trend. Change. Do. We see anything here that's showing trend. Change. Wait. For those answers. Now. What you're going to notice is I'll mark the chart I might lead the witness a little, bit but. What you're now going to notice is don't. See any. Trend. Change. Lower. Highs, our price. Is still lower than those lower highs we. See the price getting above let's say that the line is, still. Red signifying. Sellers. Are still in control you, know that's the hardest thing to probably do is, to tell yourself the truth, that. Sometimes. When the stock is going down you hope that it's not it, doesn't keep going right. It's. Important to tell yourself the truth and say who's. Control, this if that line is red. Someone. Can hope but. The sellers, in control where's, the stock likely going to go to to. A lower support, level until. Where we could see are there, buyers willing to come in and start, to push, the stock back above that, blue line the 10 day moving average and regain. The momentum ok. But, Uncle coca-cola we don't see anything right now not, in terms of a trend, change if. We look at a stock let's say fizz V, now. If you look at a stock like fizz V ok. First off let's kind of go back let's, take a look at this on a weekly chart I think. If if when, we go back if, I were to go back to 1996. Bowling Green Kentucky when, I first got started investing ok the guy that got me started was a guy, named bill spent. Last week a couple days with Bill and his wife and, my mother-in-law all in law's house, so. Fun to be with them we talked about when I got started investing, now, what you're gonna notice is this, chart, so I said when you're looking at this chart you, may be thinking jeez it'd be nice to find some that are going from red to green oh. Geez. This kind of looks like you just went recently red to green so. If we take a look at this remember when we're looking at higher lows red. To green. Red. To green and red. To green now if you. Said James I can't see red and greens very well feel, free you can change the colors okay absolutely. Now, what you're gonna notice is about two weeks ago it, went red. It went red to green and the, price, got back up above, the, green line so. I want you to think about this in terms of a routine. Okay. On. It, on a weekly routine you, might be looking for some stocks where the line is going from red to green. On, a. Weekly. Chart and, also.
Maybe Something, where that line is going from red to green. And, maybe. Even getting it back above a level of resistance. And. Or. Bouncing. Off support etc right. Now, if you take a look at that so that's on the weekly chart let's go to the daily chart now pull, it up one year day at one year one day know. What. You're gonna see is that. Horizontal. Resistance. Yes. Always, doing so well until the very end, so, I'm, drawing with the mouse here so there we go I think that's. Better okay. Now what you're gonna see is this is more like a continuation. Pattern you. Had an upward. Trend, upward. Okay. You, really had like more of a bass low. Equal. Lowish, equal. Lowish and then, this over here it's kind of like you're higher lowers kind of maybe, in the same area of support and now, the stock, really got above here's the high had. One day down and then buyers came back in and bought it right. Back, so, why. Didn't it pull back more well. Those, who are in the stock if. There, were sellers, that we're selling wasn't. A whole lot and if there weren't a lot of sellers that were selling there, was a lot of people that were saying I will, buy that stock, and. You'll see that it never even dropped down below, that, moving, average. Now. If you take a look at this what you're gonna notice is look at where today's low is it's right on that line now that line the whole moving average, so it's a 20-day. Moving average. Okay, now, that line where, the line started. It, started, here, but. If you said James sell why don't you use that moving average line but I want to use it in context. Of. Resistance. I get, it I get it that's why I made the comment okay so, if we look at this chart now we're gonna right-click on, the price graph, drop. Down to where it says buy custom, and then. We're going to show the example of with stop now. If we look at this if we, said with stop, where. Was. That. Old Airy resistance, well it's about 107. 35. Where's. Maybe a shorter. Term level, support well shorter. Term level support is probably, right around 109. 69. Now. What I think would be interesting, is why don't you compared the. Risk you're taking with setting a stop and then. The risk you're taking with, buying a protective, put okay, that'd. Be interesting, so if we take a look at this if we just set a stop because not everyone's gonna buy puts okay. If we. Come back and, say look last, two to three percent that, stop is really going to show the stop. Loss for our example. 107. Forty-nine, okay, stop. Day. GTC. Okay. Now. Look. At that risk, and that, risk is, about six dollars and that's assuming, that, we get stomped, out right, at. 107. Forty-nine. Six. Dollars of risk on about. A. 113. Dollar stock so six. $113. Stock that's. About, five, point, three percent if you were to lose a six dollars, on a, hundred. And thirteen dollar stock, that's. About five point, three percent now. I'm, not going to go into it but if you take a look at let's say well what is the implied volatility the, implied volatility, is a little higher but. What you're going to notice is it's twenty four and if. We just took a quick. Gander at let's say what's the imply what's the implied. Volatility in the our our it's, really, at one, point five five percent, so you might compare let's say just setting a stop and then. Just. Buying let's say the put as protection. For, a certain, period. Of time. Now. The. One thing I'd like you to kind of think about here, okay, so. I want to kind of ask this question, with, what we talked about today what. Are some things you could do from a routine, standpoint. To. Use this, because. Look the, tool is only, good if you know how to use the tool the. Tool is only good if you actually continue, use a tool which, is increases. That potential, value, of the tool, does. That make sense, so. How. Would you consider, and using this. Lets, get your thoughts now. What I'm going to do right here you're, going to see the action, since it's a stock no transaction, fee okay, remember, the stop is saying that price are less sell. The stock if it goes to that 107, 49 or less. Now. What you're going to notice is if we click on send that order there. It is now UNH, just filled on the fizz. Be what you're going to notice is it's pretty close the, stock as we are getting, ready to put the order in it, did move up a little bit we'll see if that one can kind of fill a little bit so. The. I think the takeaway here would. Be number, one okay. I think. The number one thing we could actually say is. Trend. Analysis, so I'm going to write these down I think these are pretty important points number one is trend analysis, okay really. Identifying. Okay, who. Is in, control. Okay, in other words are we making higher highs h/h higher highs or, and. I, should say and higher, lows, remember. We talked about green. To red that's, the high okay. Or the lower high and if, we go red, to, green, that's.
The Lower low or, the. Higher, low, if it's in an upward trend number. Two is that we might be thinking as investors, is maybe looking at weekly, charts, and, looking. For stocks maybe. Recently. Broke resistance, above. Support where. The line has gone from red to green. Now, here if you, are a perfectionist. Which I'm not making fun of I'm just saying there's some people that like to be very detailed, you. Don't have to maybe say I missed it it happened last week I completely. Missed it I don't. Really think that's that's, really what we're talking about you, might say hey the last one two three weeks it turned green or, it's. Been green for let's say four weeks and it's, showing the bounce okay. Now. Wouldn't. That be interesting if we could identify it a little earlier I think that's the point right the, other thing is seeing if there, is a weekly. Trend. That we're seeing what. Stocks in terms of the daily. Charts, are we, going red to green or maybe, let's say a bo, for a breakout, or a. Bounce okay. The. Other thing I think this goes back to and, I don't know if you've ever struggled with it but is are. You holding. On the, stocks, that. Are trending. In other, words are you selling. Too. Soon. Could. This actually help, you. Be. Stronger. In terms, of staying, in the. Trend, and, just, because it goes down for a day or two doesn't. Mean that the trend. Changed. In, other words have you left some potential. Profits, on the table on realized. Because. You. Thought the trend changed and can this help, you and assist you and staying. With, the dominant. Trend not the emotions, the, dominant. Trend I think that's something pretty valuable now. I'm out of my time here today well what I want you to do is I want you to take a look at your charts look, at some of them on the weekly look, them on daily I want. You to look at some of the stocks you're in and kind. Of see what type of trends, that they actually have in how you could, use this with, your own investing, now, coming up just shortly Ken Rose will be doing a class, really. On advanced, options, strategies, coming up right at the top of the hour after, ken I will come back and do the growth and value strategies. This, topic, of trend analysis, is so important, if you, talk to anyone who maybe is not getting the returns they want it, mainly, typically. Might come back to you they don't know how to read trance I think, this does a very good job as far simple. Of fine, how. To read trance okay, how, do you retrenched, simplifies. It whether it's a stock whether it's even ETF, whatever. It is a currency for crying out loud okay it, can help us assist us read the trend and stay long the. Trend, okay. Now with that said remember, that a couple. Things to point out just real quick you can also follow us on, YouTube. Smash, that like button you can actually get some notifications. When we have some new videos, that actually a pic are. Released I also, want to give you a quick reminder that in order to demonstrate the function of the platform, we, did, use actual symbols remember, that TV Ameritrade, does not make any recommendation. Determine. Suitability of any securities, or strategies it's, up to you to decide what type of stocks you want to invest in and what type of strategies it's up to you so, with that said thank you so much for your comments and your participation. Stay, tuned for ken rose coming. Up next. Thank. You so much have a great day bye-bye.
2019-11-19 03:47
