Technically Speaking: Trading the Trend | James Boyd | 9-12-19
Hello. And welcome to technically technically. Technically. Speaking trading the trend weeks to months my, name is James Boyd great to be with you here today hello, Lisa, Chicago's. Cubs, fans, CW. Bethany from NYC our Oh Fred, Edward, and many others we welcome you here today my, name is James Boyd today's date September, 12th, also. You can follow me on twitter at jade underscore. TBA and we'll talk about that just real quick now, this class is slated for 45, minutes we're gonna talk about trading the trend we said yesterday that the train the trend is very important, how, many millionaires, do you know became. Millionaires, from, putting their money in a savings account. Tough. Right. Probably. Need some more growth, than that. Interest, rate now, when we talk about options. Here today remember that options, are not suitable, for all investors special. Risk inherit of trading options please, make sure you read the previously, provided copy of the characteristics, and risk of standardized. Options, also, want to give you a quick reminder that when we show examples, here today remember, that TV Ameritrade does not make any recommendations, or determine, suitability of any security strategy, that, is up for you to decide what you want to invest in on what type of strategy also, the terms Delta. Gamma theta Vega know. How those apply in options, in general but, also to the strategy today. What we're going to really be covering is number one we'll talk about. Just. Some Twitter updates I did this morning we're going to follow through on those we're going to talk about those here today in this class stocks. And options and examples number, two we're going to take a look at the indexes. In the sector update we'll, talk about basing, patterns and continuation, and, then. We'll talk about maybe some protection. That might be up near. The resistance. Area so. I like I still really have two learning outcomes here today number one how. To identify basing. Pattern breakouts or continuation. That's. One number. Two if we. Have a portfolio, of stocks which. Ones would we consider, in, potentially. Protecting. Now, I'm going to bring this up so what you'll notice is when I bring this up to. Slide. That over let. Me go right there and now. What, you'll notice that you just want to give you quick heads up I said this yesterday that if you go to twitter.com. You, can search for James Boyd you can just type, in my name or J Boyd underscore, TVA made. Some comments, here and we're gonna talk about these this, morning I did actually oppose on the SPX and the, reason why we're gonna talk really about, continuation. Patterns is you're, gonna see on this chart the SPX, chart, you'll notice we actually drop down we actually based and, then. What you'll actually notice, there, is we've. Come, backed up to this old resistance, and that S&P, right there has about a hundred and fifty points, now either, the resistance, holds, or doesn't. Hold we're gonna talk about that and what that might mean for, individual. Stocks, another. Example that I actually looked at today is. Looking, at the example, of when I scroll down if, a. Lot, of questions have been asked, to me James, can we get for example. There. We go how. Do we actually put those scripts on okay, so, for example, the question was how do we put the scripts on you, posted them on Twitter etc I actually. About three hours ago put script, input, examples, and you're gonna see that right there and it, really goes over five simple, steps of, how, to actually put them on and I even put a picture of where. Do you start okay, I also, did a follow through it what we talked about yesterday, which, is where we talked about for example, well. Last week we talked about breakouts, and then, also I showed the example of Lulu. And I, gave the example remember we talked about yesterday s1. S2. Old. Resistance. Becoming, new support, and as, a follow, through I post an example, of maybe. An example that might be doing what we talked about for. A teaching. Purpose, alright so those are some of the things actually posted, this morning let's take a look at the this charts live again. You can actually follow that right on Twitter, now. If we, got you bring up the SP I'm. Gonna bring up this is just the SPX, and let's just take a look at what we have here now if, you look at where the resistance, is and let's kind of mark this so, we might say the horizontal resistance.
Is Right at three thousand, twenty, now. When, you look at the market, back up near resistance. What. Your thoughts here what. Type of strategies. Would, you consider would. You just say that's it I'm finally. Getting in the market, and I'm gonna buy a. Whole. Portfolio, worth right. Up near resistance, you could would. You be maybe looking at maybe more value, stocks, more. Growth, stocks. Would. You maybe be altering. The type of strategies. That you're doing in. Other words now that we're up near resistance, might, you look to buy. Protective, putts or use. Collars, or cover, calls as we're. Up near resistance. Area and I think that's important to kind of point out we're up near that area where, some of the stocks we look at they might kind of be in that area if we own them already or we might consider protecting. Them okay now, when we actually look at the let's say the nd X what. You also notice is when we take a look at that you're gonna see when i zoom in it is, also up near the resistance, horizontal. Resistance, on the, Nasdaq, is right around about 79, okay. 79. 71. Okay, so, all these indexes, and if you bring up the djx same thing Dow, Jones had a very strong run here today horizont. On that one about 270. 342. And we're. Within a point, okay. Of actually, hitting that now, when, we look at the charts of Dow Nasdaq. Or the SP they, all look like the same meaning. Okay. We, had a prior high we, actually had a base and we're, right back up to the prior high the, fact of how quickly, we move back to the upside, okay. What, kind of make us potentially, maybe perhaps, speculate. Could, this. Could the resistance, break okay. And that's what we're actually gonna be looking at here today are there, some stocks that may perhaps, could. Some of these stocks break, resistance. Now, also on that front when we take a look at the sectors here you're, gonna take a look at let's say the weekly performance let's, bring it up the strongest, weekly performance is really. The financials. Financials. Okay, energy.
But The thing about energy it's not an upward trend so. We might say. It's. Not an upward trend in das, große we said aerospace and defense industrials. And. Then, also you got base materials, but again when you look at base of materials that's, kind of maybe questionable. In terms of the trend, there's. Your two consumer discretionary and there. Is your technology, now not what do you notice at the bottom of the list what, do you see, so. When I look at the bottom of the list what, is it that you notice, that's at the bottom list so when the market rallies to the upside. The. Areas. The sectors. That are what we call lower. Beta. What. You're going to notice on those sectors is those sectors, healthcare. Utilities. And staples, they're near the bottom and when you look at the percentage, change, over. The last let's say one week or so they. Needn't hardly do anything so. When when the market routes to the upside those areas, tend to underperform. Shorter. Term, longer. Term they perform well but, shorter, term underperformed. This, is normal, we see this, probably. More than not okay, so, now, the one thing I would actually point out here is it if the, market, is up near resistance. Might. You consider some, of these areas such, as healthcare. Such. As utilities, such. As staples I'm. Going to point out two stocks here today that are in you to healthcare. Heather's, gonna be so happy with me at least, I think she is but. You're gonna see that some of these healthcare stocks might be getting, where they might be setting, up for, a bounce or a breakout itself now number, two so, we talked about the indexes, we would say major here up, near resistance, we, might kind of get into a flag, or consolidation. Okay. Maybe. Up near this resistance, there, is a potential. Risk you. Might call it or a potential, reward of the. Index breaking out if the. Bulk investors, don't think, the resistance, can resist. Inspring I could happen the, market, will tend to, do. What most people don't think could happen okay, it there, is a probability, of that Index breaking, out we have to be aware of that okay and I think that's actually, building now, when we actually take a look at these basing. Continuation. Examples, here let's take a look at this now, the example, that I posted on Twitter earlier today was a stock Amazon, and if, we take a look at a stock like Amazon, what you'll notice is let me take these lines off you're. Gonna see that this was a stock and we're gonna look at doing this as an option, example. Now, when we actually look at a basing. Pattern, we, might actually look for something, where it has a horizontal. Support. And we can see that horizontal support, 17:53. Horizontal. Resistance. Okay. Probably. Being in the ballpark, right about, there. Now. The drawing, that I gave actually today is what you'll notice is we actually, had a crossover, right. There notice the crossover. Happened, before. The horizontal, break you'll. Notice that we had a touch there on touch there at the 20-day high touch, there, of the 20-day, high again and then, today really being four times in a row now have, you ever had an entry setup where, it said, it. Met your criteria. Four. Times in a row but, you didn't get in once now. I've. Never done that I'm joking, with you I'm just making sure you're listening but, the biggest actually, thing is sometimes. Technicians. Get setups. Per their criteria, but. They might have not necessarily taken. The action, the, my point in saying that is not, everyone, gets in at the same time okay. Now, if you take a look at this I'm going to go back to let's say the trade tab and the. One thing is about these bigger dollar stocks. Bigger. Premiums, greater. Price fluctuation. Now, I want to verify just real quick when those earnings, are just want to see out in time one. Of those earnings, let me just double check I don't see, it okay, so their earnings, are gonna be after the October. Expiration. Okay. So that's a after. Okay. So if we go look at let's say the monthly, options, if we do and we're. On those I'm gonna go look at the election, us go to the 18 October's, those. Are going to be prior. To the expiration and if. We go take a little look at this, do an example of a short putt.
Spread, On. Amazon. Why. The short, putt versus, let's say in this case just. Selling the put the, main reason, is capital, okay, or the. Buying power tie up so, if we go look at something you know I'm gonna choose something a little bit more try, to be a little bit more conservative, how, do we know that well. If we're choosing something, that has a delta, of let's say thirty. One, that's. Less. Probability. Of, the stock I said, less not no, probability. Okay now, what you're gonna see in this case is if we sell that one that's. This that's the price in which we want the stock to stay. Up above that strike, from. Now all the way to expiration, now. If we sell that put what we can do in this case is we can open, up the strike we, could do the 1790. 1790. 1785. Or, we could do the, 1792. 1780. The purpose, of opening, up the strike is to, make it what we're not doing as many contracts. Thus. Less. Transaction. Fees okay. Now, in this case if I did the example of 1790. Right click now, by the way that bid-ask spread right there, that's. Not a bad, bit a spread, and we were looking at 1790s. For. A bigger dollar sock that is not bad. 30, cents. Okay now, if we take a look at this I'm gonna right click on that line right click we're. Gonna go to where it says sell, and then, we're gonna go over to where it says vertical. Okay, now, if we do sell vertical, then this is agenda. And number three we're. Talking about basing. Patterns. Breakouts. When. That stock at she breaks out no one says you have to buy the stock you. Could sell the put you, could do a short plot spread you, might buy some shares and look to add if it were to bounce and try to look like scale. Into the position, but. If we dad said hey we're gonna sell, vertical. Now. What you're going to notice on this when we do this is we're going to change that 1785. No to. 1780. Now, 17, 890, 1780. 257. Credit. Now. The position sizing, is based on. What. Are you willing, to risk, now this is not an uncommon question, okay you, go to the bank you. Don't typically, say I'll borrow as much as you're willing to give you.
Might Have a certain, need. $10,000. To buy a car, maybe. $200,000. To buy a house you're, typically, gonna say look I want a certain amount I'm willing to take that if. You're willing to give me more it doesn't matter this is what I'm willing to do so, it's not unusual question, asked how, much are you willing to risk. And there is risk, here so. We want to understand that if we look at the max profit if, the stock closed above both of those strikes. 2:57. Maximum. Loss. 743. So. If the visit paper money account could risk or, it's willing, to risk. $1,000. By. The way that question is also important to answer what, are you willing to risk because. If you never answer that question, you're probably going to have very very big, losses which, means you're going to need many many many many wins, to. Offset, that one loss that's, why it's important to answer that now, if you take over this if we said the paper money portfolio, is willing to risk. $1,000. Which represents. A percentage. Whatever. Of the account in this, case we could do about one contract, so, in this case I'm going to change this back to the, short. Verticals. Okay, so, the short verticals, put, it back. There. We go short, verticals, right there now remember the buying powers, not really taking a lot of buying power and it's, because we're doing this from a spread, perspective. Or a strategy, okay. Now. If we take a look at this, Ricardo. Actually says you, know if you do a wider spread the. Theta decay is greater, feel. Free to actually bring that up on the risk profile, graph. Take, a look at that change, that see how the Greeks, are changing. If you. Change the strikes okay. Now, what I'm going to do in this case. Remember we actually have there's the credit, okay. Less the transaction. Fee and we, call it the net credit, that's after, we subtract, the. Transaction. Fee now, in this case what I'm gonna do is then I'm just gonna send that right there that, order actually fills. 1790. 1780. Put, spread, again. It's bullish I'm not gonna bring, it up well, I'm not gonna do a trade on it but, the example, where we're kind of seeing also a little poke, poke. Is, also. On the stock Google, so. These larger. Cap stocks, like in Amazon, like. A Google, they're, getting a little bit of a pop which kind of leads us to maybe. Ask. The question, are some. Of these institutional, investors getting in and if, those institutional, investors can even what do they get in well. They they don't mind to get in these bigger dollar stocks typically, because they have bigger account, sizes, so, when people see actually Amazon, going up or Google, going up that's, a pretty good idea that, maybe. There's institutional, money, flowing, in, to, these bigger, dollar stocks in or the market, now, the other, example, I'm going to bring up when we brought this up right on the Twitter who was right on it was, the example, of. Lulu. Okay now. What I kind of did is I I drew, on the picture as well and what, you'll notice is this was really a break out of the 192. Area now. Last week we sold, a put on it prior. To the earnings okay. Prior, to the earnings the, stock gapped, up and, if. You don't mind let's kind of take a look at what really happened to that trade in the paper money account we're, gonna go to the monitor tab let's. Go to an account statement now this is something you probably are on every day okay, if. We go to monitor, and we go to knock the account, statement I'm right there so I'm monitor. Account. Statement, now, if we go to the account statement what is it that we're looking for well I want to take a look at that last trade we did from last week now. The reason why I bring this up is it didn't last very long let, me tell you what I mean by that if we, go down to the this is going back you. Can click on this right there and, could say well how far do you want it to go back well. We're saying in the last 30 days I want to see every, trade that's been done underneath. The symbol, of Lulu, how. Many well, there was four, traits. There. Was four orders, and there's, four fills now, if we take a look at the trade history the one that was done last week and we can see it it, was right here nine. Six, and what, you'll know that's. Actually not true it's this one let's. Get that off, yeah, it's that one you'll, notice that it was done last, week during. This class and what. You'll notice is it was at twelve thirty two mounts theater time the, plot was really sold for and I'm bringing this up for a purpose, was, sold for 645, now. In this example, what. We did is we said look if we could capture, 50%, of the premium.
50%. Of 645, is. Three. Something. Three. Twenty, three twenty. Two now. What do you guys and, gals notice, about the fill and I'm, talking, about that, right there that X what do you notice about the fill. So. We said hey if we can get for example three twenty if we could buy it back for three twenty or less, what. Happened, why did it fill at a lower, price. Now. Is that bad or good, sold, it for six and change bought, it back for a dollar fifty four you're making the difference between where, you selling where do you buy it back less the transaction, fee. The. Reason, why that put was less is the. Stock, popped, up so, much, where. The puts were even worth less, that. Benefited. The account so, I just want to give you a quick follow through of that and also to show you that. It actually did get a better fill than what we thought last, week now the, example, that we're going to bring up right now regarding. Lulu. Now, when you take a look at some of these retail, names okay, so, when we actually look at let's say Lulu what you're gonna see is here's. That horizontal area. Here. Is where we actually have the hammer candle, just. Like I've talked, about on Twitter there's your bullish and golfing and then, this morning, you're. Gonna see that there's a gap, up in, the price, that. Means that there was more net buyers than, sellers that. Pumped, up the price on the gap now does. That imply that the stock is gonna go up after it gaps up in the morning, absolutely. Not okay. Just, because it opens on earth that doesn't mean that's gonna carry that momentum throughout. The day we would meet need, more, buyers, than sellers they're, willing to push up the price now. What I'm going to do is when we go back and let's say a stock like let's say Lulu. If. We go look out let's say in this case let's go back down let me look at these just real quick - I'm. Going to look at the the 18, October, again and what. You're going to notice is that implied, volatility, is about 28, it's. Saying that stock could go up or, down, 14%. Now. I need, you to imagine, that there's probably, a pretty good chance that if investors, bought stock, they. Probably, bought those stocks already, okay. They, might be running, out of capital. In their account and I know you've never had that problem but. You might know a friend, who has okay. So, when the market is going up up up right, you. Sometimes, run out of money pretty quickly, come. On I've never had that problem but you might know somebody now. If we take a look at this the, 195. Strike the 38 Delta the, 190. Strike the, 28. Delta, now, in this case example, what I'm going to show is kind of being perhaps a, little. Bit more conservative. So. When the market is actually high the volatility. Is low and, if, the volatility is low what's the risk there maybe, some of these stocks maybe consolidate. And/or pull back some and, then show the example, of being a little bit more conservative. By. Going, further out of the money meaning, below and then, also in this case picking, something where that Delta, is lower. Now. What, happens is when the markets been going up up up up up what, happens, is sometimes investors. Fear, all. Invincible. I haven't. Lost in forever I don't. Even know what it feels like to lose and so. All of a sudden they start becoming more, bullish. Becoming. More aggressive and, that. Last one or two traits. Slaps. Him on the hand and it's. Because they felt invincible because recently they've. Been winning, and when. You've been winning you, want to take more, risk because. You like to make, money. And then, what happens, is you start getting, a little bit more aggressive, with the strategies, election, and the. Strikes, election, notice. We're doing in this case the. Opposite, now again you might know a friend that does that tell, them be careful on that now, if we right-click right, on that or we can left-click I'm. Going to go down to where it says sell, custom, I'm gonna change this right back to where it says with, stop. Now. Donald. Lee he's, actually doing what, did we call it traitors anonymous, okay where. He's saying I'd, like to introduce myself first, and say that was me. All. Right thank you for being the first volunteer now. What, you're gonna see is, 3:15. That's the prima that's the ALP that's the OP that, premium, is for, the obligation, buy the stock from now into expiration at the, 190, okay, forget, about the premium up front what. Is the right of the obligation, since we're selling us the obligation, is the 190, buying. The 190, back and then we could designate, well. What do we want to try it back try, to buy it back for, now. In that previous Lulu example, we did 50%, I'm, going to show the example wonder, if we want to maybe try to get a little bit more than that 65%.
Okay. So 50%, the first time let's. Try to potentially. Get a little bit more so, if we take 315. On a calculator, now, if I ain't 65%. Of the pumpkin pack how. Much is left of the pack well. It's 35%. Okay. So, if that, total pie or premium, is 315. Times. 0.35. They're. Going to see that there would be left of that, pack. 110. Now. If we take a look at this I'm, gonna change that stop to a limit, de. To. A GTC. Ah. Now. What you're going to notice right there selling, the put on Lulu, 3:15. Buying. It back if the, stock, okay. Or if the option premium would. Drop down to 110, we can see that there, and you'll. Also notice, that if the option, price were to. Decline. In value it's. Really saying the stock would need to go from about 198. 80, and it. Would need to probably go up, theoretically. And it says, expected. It. Doesn't say absolute, for. Sure now. Expected. That's. Just using the the option, Greeks and it's just doing the math for you saying if, Lulu, went to about 206 45. Or in. Other words the stock went up about seven, point six five that. Option, price could be potentially. Pretty close, to there so, you're, seeing both what. Is that shocking to be it potentially, and then, where could that option, be okay. Now, if you fast forward 30 days and the, stock never moves you. Do not need the stock to go up to 206 because. Then you're getting the second part of this which. Is not direction, it's the. Time decay so. In the short term if that stock went to up to 206 and change probably. Have that option being right or near. The, 110, now. If we take a look at this remember we're it's 315, that's the premium. Okay. Got, to remember though there's that transaction. Fee less. 295 there's. The net credit, after, the transaction. Fee now, the. Buying power effect, what, you'll notice is it's just saying James since you have that obligation okay. Or to any investor, themselves any puts the. Investor, there sells a puts is gonna, have some buying power held up because there's that pending, obligation. Now. Our tour oh man, there's a lot of people, wanting. To look. A lot of people today kind of saying. James you were talking, to me there brother okay, okay, I appreciate. That honesty. Fantastic. Now, what I'm gonna do in this case is we're gonna put it right there. And. Now. What you're going to see is we're gonna put it right there and short putts, okay. By, the way I like that ownership okay, and so. If you take a look at that, put. It right there short puts we're gonna send that now that's, going to talk about something just real quick so one of the agenda items we want to bring up so the, examples, we talked about so far let's take a quick look at just, real quick I know some of you were thinking it.
Myself. Included, where's, the market, okay James you talked for a little bit here where's the market well when we take a look at the market, the market, is. The. High was 320. Or. Excuse me 30, 20, and the, SPX, is at about 30, 16. And 3/4, so we're about three points off the high, if. You take over the one area that is a little softer. Today it's, the Russell, kind. Of showing more of a hanging, man Candlestick, as it's. Up near resistance, area what's not completely, unusual and you, would think after the monstrous. Run it has maybe. It might be able to take a day or two off and try to catch its breath and it has been Wow. What a move, okay now, so. We talked about the indexes. Sectors. Basing. We, showed the example of an Amazon, put spread second. We actually talked about the example of Lulu. Which, was really more in that case an example of continuation, now. I'd like to take about five minutes and, talk, really about protection. As we're. Up near a resistance. Area now. I want, to go back to the monitor, page and I'm, going to look at the activity, in positions, now. How many of you have ever thought to yourself cheese, or. You've had this situation. The. Stuff you the in market, or the stocks went. Up to their resistance, levels you. Fell in love with the profits, and, then. All of a sudden you. Jet you like being. So right, and let's, just omit, it here who, doesn't, like to be right, III think if we said who likes to make money okay, yeah who, likes actually be right I think, that kind of fits a lot of people and I think it makes sense the. Thing that I think investors, need to be careful, of here is when, we look at some of the stocks, when. The market, has been going up what tends to happen though, is you. Tend to have a, high. Inventory. Of stocks. Does that make sense. You. Get it now what's the risk of that now. What you'll notice is over the last let's say two three weeks this. List, of stocks, and, I think you could say this has. Gone from a smaller, amount to. A bigger amount what's. The risk. Well. The risk is if we actually put more and more and more more positions, on we.
Have A lot of directional. Delta, risk okay, now, do you think out of some of these positions, do you think, we might be able to maybe protect. Some. Of them now. I like to kind of you tell me, what. Would make you maybe consider. Protecting. How. Would we maybe know which one's an investor might pick type. That in now or forever. Hold your peace okay, so, when you look at the list you might say well I don't know which one to protect so. I would just say the first thing which is, well. Hey you rule, out the ones you can't protect if there's no options, and that's why you might consider not, buying. The stock potentially, I'm just throwing this out there you. Might say James and going forward if, I'm going to buy a stock etc, I want to make sure that it does have options on it but if it doesn't have options on it that. Might be one you might try to be a little careful with the. Second, thing you actually might pick is something, that actually Fred actually says which is high beta you. Might pick stocks, that have a higher beta that means greater. Fluctuation. Relative. To the SP so number one or number. Two high, beta I think, you could also say there is high. Implied, volatility. I think. You could also say stocks, that are up near. Resistance. I think you could also say stocks that are have a high. AR s. I. So. For example, when I'm looking at this list and, you're. Gonna see that there's a stock that's Apple, done that just broke up through a resistance, now. The example, what I'm going to do is I'm not going to talk about Boeing yet because that was just filled today we'll talk about that I'm, gonna look at a stock let's say BAC now. When we bring this up and I'm. Going to show, something, down below. Okay. Now, I'm not talk when I say the relative when I say they are when. I say the RSI. We're. Talking about the our side we're not talking, about the relative, strength think. Of the RSI, like, a stochastic. Gauge, when. I click on that it's. Gonna look like a stochastics. And you. Might actually go, look for stocks, that are, maybe getting in an over. Bought. Condition. Now let me just kind of show you just real quick, right.
There And then. Right here, right. Here and what. You'll notice is right, there when. It got actually Oh in that overbought, condition, we'll talk about the number just a sec it, was right there what, you're gonna see on the last three, times and I ain't making this up okay we, just took Apple. Just broke out so that doesn't fit the criteria, Boeing. Was just purchase date that doesn't fit the criteria but. When we actually go look at this and say well, Bank. Of America, when, it got what past what number when, it got past, 70. The, last three times okay. What, you're gonna see is it kind of at least, pulled, back or consist I was consolidation. This. Was a steeper, pullback and this, was a steeper pullback. Takeaway. Number one you. Should go out on actually your stocks and look, and see are any of your socks up near resistance and then practice a, cover, call practice. A protective, put practice. A collar. If, those stocks are near resistance, because that's where investors, put, on protection tend to you, might look and see does that stock that you actually have is it may be going into earnings, where, there is high implied volatility, which means bigger premiums, if you. Can sell, a call, that. Has a bigger, premium, that, means you get higher, above, the strike price but. If the stock were to go down you. Also have greater protection. To the downside, because. Of the premium, so. The takeaway here is on your individual, stocks go, look and see do. You have any stocks that are in that overbought. Area, and, might. Consider. Maybe. Selling. A call against it if you want to practice that or the buying of the put or, together, sandwich. The. Caller strategy let me give you a sense of what I mean by this so. When you go look at a stock let's say like, okay. Home, Depot. With. Some of these runs we've had on this on these stocks what, you'll notice is some of these stocks are now just starting to get in that little overbought, area what. Number, is this actually saying well that line is right at the seventy, number now, you might be thinking of why why is this so interesting well well, you'll notice is when the last time we got to that area and I. Need you to understand something it wasn't on that day it immediately. Went down that's. Not how it works what, you're going to see is it kind of started to kind of pull back a little bit and then. Over time it did drop, what. You'll notice is right here when it got overbought, I need you to understand something it was overbought, for days. Plural. And what, you'll notice is it kind of consolidated. A little bit did. Keep going up so does every. Time does it work no but, if you had sold a call right here and, that. Stock went up is that horrible, no that. Just means you might have got called out of the potential, max gain if you, did something shorter, term so that's not necessarily bad so. What I want you to really be focusing, on here is bring, up the RSI, standard, settings then change any settings and look, and see if any of your stocks are getting in that overbought, area, over. Overbought, on that seventy number and then, look and see maybe if also some of those stocks are up, near resistance. Areas can. You do that for, yourself. Give, me some feedback can, you do that can. You bring up just right here right on that little test tube right there can, you click on that and just bring up RSI, bring. Up your stocks and look and see where they are if, they're, in that over body area those, are the ones in the portfolio you might practice, on in terms, of applying, protection, if they're not overbought, they, might still have a way to potentially, move all. Right now, number, two number. Three stock here we're going to talk about is Boeing, now, yesterday we talked about s1, we. Talked it now can anyone tell me again what s1 was.
Now. The point I'm going to bring up here is continuation. Talk. About basing with Amazon with. Lula those continuation. Boeing. We're also going to bring up continuation. We, said. Vocabulary. Such as s 1 which. Is the midsection, of the large. Candle. Now. What you'll notice is where. Did today go, to well, what you'll notice is today. If I kind of put my cursor right, in the middle of that, green candle, the, intraday. Low was right in the midsection now yesterday when the stock was up I don't know $9, whatever it was we, thought very a no way that stocks ever coming down what we said trends are not just highs, there's, also higher lows and to, go from higher highs and higher lows there's, pullbacks, now. What you'll see is today. The. Stock, did, Phil let's. Just give a quick update it, did. Phil at the midsection, of, that. Candle. So the purchase, price was. 3 night whoops 3 nights 3. 75-67. That's, what we call the average price. Ok and you're, going to see the mark value, right now he's at 378, now some, investors might say well geez that's kind of scary because when, that stock was down it was it might have been down. $6, for the day. But. If it went down $6, that does not mean that it broke support. That. Might be how that stock moves on a daily. Basis, ok. Check the, technical. Setting. Of ATR. Average True Range so. Now what you're going to notice in this case is. So. That did get filled that was the trip one of the trades from yesterday, now, what I'm gonna do is I'm gonna bring up another example here so I just want to give us a quick update I'm, going to bring up the example, here of two, healthcare stocks one. Of the healthcare, stocks I'm gonna really bring up is a stock. Celgene. And if, you don't mind you're, gonna see that the stock and I, will bring this up on a weekly chart in just a moment, but, what you'll notice is the stock did, head, up. Through, the 20-day, high it. Did also touch. In the, last two days the. 20-day. High and, the. 55, day high so if someone asked me right here where. Do I get these lines if, you go to twitter.com type, in James Boyd in the search field follow. Me on, that. Feed of things. That I posted in the last two weeks I think Oh September, 7th, check me I gave. Those little codes now if you said to me James. I don't know how to put those codes on on Twitter. Search, for James Boyd follow. What. You'll notice is I actually posted, how, you could actually put those on in five. Baby, steps okay I even, could do it it was amazing, having. A little fun with you now, what you're gonna see in this case is Celgene, when we take a look at this this, is really what we mean by continuation. Okay, whoops. Continuation. Is where you had a high the. Stock actually pulls back and then. The stock, reworks. Itself, back up over time now, this pattern since we're talking about treating the trend weeks to months this. Is called that classic. Cup and handle, pattern you, had a prior, high a pullback. And I think if you really look at the base a lot. Of the base or the support. Was right about probably, about 92. We. Have to imagine that there is a lot of investors, that probably. Right where that X is they, got stomped, out, now. When investors, get stomped out they might. Use, to. Play the break-even, game or the get eating game I should say if they, get stomped down in that stock goes, down some. Of those investors, might try to chase. Okay. Now, if you don't know what we're talking about ask somebody. Because you'll probably know where I'm going with this but. Over time if that stock keeps going up some, investors, will try to chase that, stock back up and maybe, try to get some of their money back that they gave back and/or lost, okay. Now. The stock, is up near a high and if that stock can get above that high now. Instead of the stock having double, tops now. We're actually making a higher, high. Now. If we go back to the chart what I'm going to do is bring up that three-year weekly, please and if. We take a look at that three-year weekly what you'll notice is on a longer. Turn on a daily, chart it really showed as a continuation. But. When you really look at that longer-term chart, it really looks more like a basing. Pattern, okay, as well. Depends, on what timeframe you look at so, if I take a look at this the idea, when we take a look at Celgene, is maybe. Looking, for some of these stocks that. Could be in the healthcare area and listen, to what I'm about to say. Sometimes. Investors, now what you'll notice is today I'm wearing, a long sleeve shirt you notice that so.
This. Morning, it was 48 degrees I woke. Up walked. Outside. Quickly. Realize today. It's not short sleeve shirt day today. Is bundle. Up okay, now. The biggest, thing is when. The VIX, or the volatility, in the market declines. Near. Lows let's say 10, 11. 12 is etc, think. Of that as maybe an at time where an investor, might choose. Different. Types of stocks in other. Words such as utilities. Are healthcare staples. Where, they're saying look some of these potential, growth stocks might. Pull back and, you, might choose to bundle, up with something, that's a little bit more. Dividend. Paying less. Volatility. Etc. Does that make sense so in other words just like with your wardrobe you don't wear shorts and flip-flops all, the time, and I'm not talking about about, you people that live in Florida but the seasons. Affect. What you wear and the. Same thing goes in the stock market typically if you're, saying hey volatility, is low it might, cause you to actually consider lower, beta stocks if the, volatility, is high, you. Might consider higher. Beta, stocks, or areas, okay. Tech, financials. Discretionary. Etc. You picking up what I'm laying down now. The biggest sexy thing is when you take a look at this we're gonna right click on this chart we're. Gonna go down to where it says buy custom, and we're. Now gonna go down to where it says Wis stop now. If you take over this now the, other stock that I would take a look at here with Celgene is, Medtronic's. M for. Mary D, for David T, for Tom these would be two stocks we might look at it in the healthcare space now. If we go and change this 98. Excuse. Me 98, 91, that's, pretty much where the current price is right now. Horizontal. Support, is, really, it probably, right about, 95. 62. And if. We set a stop underneath, there, that probably. Would, actually get us in the ballpark of. Let's say, ninety. Three. Seventy. So, if we change that that's a stop we, have dated, GTC, there. We go right there so. This is a buy limit saying that price or less if the, order fills then. This, now becomes, the, stop, okay. And it's. Saying if the stock goes to that price or less sell. The, stock if we. Own it the key is the stock has to fill first the. Buy order does now. In this case what you'll notice is I'm going to go confirm and send we. Have capital. Involved clearly, to buy the stock the. Transaction. Fee if we. Then have, the stock the, stop, becomes, valid it can fill that price, or less, and if, it fills hence. A transaction, fee every time we buy or sell now, in this case now as we go forward if that's what we want to do I'm going to put that right in that section so notice, I want you to what we're doing we're, trying to choose maybe some stocks if I had a little bit more time I like to look at Medtronic's. M D. T. But. We're gonna start maybe looking at some of those utility, staples, again if, the, volatility, stays, low. We. Might try to maybe look for some higher lows, in those. Areas and we can also include reach there as well now. If we go stocks JB put it right there ascend, now. We're gonna see if that order fills, okay, now, coming up just shortly we, have ten rows be doing a class on advanced option, strategies, okay. That be coming, up just shortly ten, rows also. I want to give you quick heads up as far as what we did by here, today for, the paper money counts so number one we did Amazon, check. By. The way dark tree did fill at the target today and so did WDC. Okay. Aim, at all excuse, me Boeing, also film, so. The ones that filled during the class were Amazon. That, was a put spread Lulu. Was actually a short put and then Celgene, was. A long. Stock. Position. Now, again if you like to get information regarding, some, of the charts we use here in the class or scripts, check. Out Twitter search. For James Boyd J Boyd underscore. TDA you'll, see on that feed I posted. All the ones we actually use in the class okay, if you need a little help actually putting those on.
Shouldn't, Be too hard look, at the posted, a quick. Five steps of how to put those on now. Remember, that also in today. When, we talk about examples. They. Weren't recommendations, their examples, are used for illustrative, purposes we, also remember that TD Ameritrade, does, not make any recommendations. In terms of picking. A stock or security, that is up to you decide what you want invest in today, our learning objective, was really, understanding. Basing, patterns understanding. Breakouts, and continuation. And. We're seeing quite a few, of that quite. A few examples here today and that, might become more if the, index, word to breakout stay, tuned for ken rose he'll be coming up just shortly thank. You so much for your comments in your anticipation make, sure you go out and practice looking, for those basing. Patterns and those, breakout. Or continuation. Examples. Thank you so much take, care bye-bye.
2019-09-17 06:24
