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Ep 44: Calculating a Stocks Projected Move

July 2nd, 2015

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Welcome to the Rapid Recap! I’m Sasha Evdakov and today we'll be talking about calculating the projected move. I'll give you some insight to calculating the projected move, the C to D leg and I’ll give you some insight about that. We won't go into detail about the ABCD Leg all the way because that’s something that I could probably spent three hours just talking about the ABCD.

In this video I want to share with you how a calculator, how the calculations work for the projected move for the C to D leg and those of you that have watched the technical analysis course know how to do this but for those who are just getting started, you may not know or be aware of this how to calculate a projected or an estimated move.

First let’s get into some stock charts and then we'll get into the calculations as we run across some of the stock charts, before we get into the stock charts I do want to let you know I did finish the computer part picking video and how to build and create your computer workstation, just how to purchase computer parts.

That actually came out to be more like a mini course so it's about three to four hours long and we get into the natty gritty of Apple computers versus Windows computers, versus the different parts that you could use to create your computer and all kinds of different things. It’s like a mini course and it's going to be absolutely free to those of you that are on the newsletter. if you're not on the newsletter and you want that video you have to be on the newsletter, I will launch that maybe not next week but the week after it depends on the video scheduling and what's in there right now, I'm not really sure. I’ll have to take a look and we’ll look and see.

That will be coming up probably in the next week or two but it is finished and then we’ll also have that shorting book, the book about shorting the 245 money-making strategies for shorting that will also be coming out probably towards the end of next week and maybe a few more days for Amazon to list the book. That is basically all getting wrapped up as well so we’ll go ahead launch that soon and I'll let you know when that comes out but the book is not in color, it's black and white but I think you'll get a lot out of it, even though it is black and white because the charts, the patterns, they really still apply whether they're black and white or in color.

Now, if we were to do the color version it would probably be about $40 per book and I think some people would rather have access to the knowledge rather than the color on the paper. So, take the knowledge that you get with it, right? In either case let's look at some of the stocks and break this down and in fact I’m actually recording this video second time because the software that I was using wasn't picking up the microphone very well so we're doing this the second time today so bravo for me and I will just go through some of the stocks again and talk about them and then we'll talk about C to D pattern as we go ahead through some of these stocks.

SONC-TRADERSFLY Stock Market

Looking at the first one we have SONC, Sonic Corp. Take a look at this one because we have this long chart pattern that's been extending for that support line and that support line really has been held up for quite a while. It's been held up right here at this level, this level, this level and finally it broke at that level. Now if you were waiting for that break, right now you would be up about a dollar, about a buck 20. Watching this gap and how the stock comes into the gap. Looking at the stock so far it’s moving a while to the downside. We talked about it last week and it's been in that critical charts. The volume is picking up you can definitely see that right here, nice heavy volume of the sell-off of the highs and when a stock is selling off of the highs with heavy volume like this, that means be careful trouble is on the way. You'll have to wait for it to hit your stop at this line or this level just get out right away and don't worry about it.

CMCM - Tradersfly

Next stock that we got CMCM we talked about this stock, the last couple weeks. Stock has been moving fairly well but we did run into some trouble, we had more volatility right around this level, in this region. Your initial entry point really would have been right here and then if you missed it you could have got in right here and took some profits in this area but the stock became more volatile and by volatile what do I mean by this. Well if you zoom in and get closer on it. You can see that the stock traded much tighter over here. On a price spread basis we’re moving just a dollar here or there may be 30 cents but once we started to break out the stock started trading three dollars here got 250 there and got another dollar 50 there on that move, four dollars on that move.

That's from the lows to the highs of that day. That stock has increased volatility and when that happens you want to be always a little more cautious and pay close attention. If you were in it long here you’re always taking profits as it comes to the high so if it came to these highs here and sold off then the stock is acting weak. How was it behaving? It was acting weak. In this case you would want to take profits. If you didn't you had another opportunity to take profits here at this level, that’s your second chance to take profits. If you didn't, you missed it, your stop should have been right there and in fact you probably could have went short at this level because the stock came back to re-test that price level, that support and resistance line right here and it rejected it and continued lower.

Here, at that level we basically have three dollar gain to the short side if you got in it somewhere around there so far looks pretty good for lower prices I would avoid it right now because I broke that support line. There's no need to hope, wait and pray and see if things come back.

SERV - Tradersfly Stock Market

Next one we have a SERV, this one, take a look at the weekly. Overall the weekly has been moving fairly well you can see that trend line and when you look at this one on this trend line the longer-term trend line, the angle is pretty good. When you have a stock that's exploding at this angle or even at this angle it's a little over accelerated all these angles are over accelerated. As you start getting to a more normal angle that's what creates a healthy trend line they're healthy line.

Now what you're doing is you're watching for these highs to break and you can see the volume, the cluster of volume all volume spikes coming in, you can see it's picking up some speed in volume. What you're doing is you're watching for that volume or that price level to break.

Now, sometimes this volume clusters are harder to seem so what you may want to do is extend it and now as you look at it you can see that volume was contracting and now its picking up. Now we do have a few bearish spikes there that do concern me and if you look at the daily you can see those bearish spikes so you're always mindful love this that when you're coming into that stock and looking at it and sometimes looking at this stock you want to look at how much fuel is being put into the stock.

Now, fuel is relatively similar to a car, a gas tank so if you look at all this fuel right here, think of it, if you had a broken gas gauge in your car and you go to a gas station, when you're at that gas station you go ahead and fill it up with your eyes closed for 25 seconds. How confident do you think you would be in order to drive that car 175 miles? You might be not very confident instead what if you went ahead and held down that gas throttled, that nozzle and filled your tank up for let's say five minutes. Would you be much more comfortable in driving back car for you know 175 miles? More likely you will be, because you're putting in more fuel and more energy.

You're always watching how much fuel and energy is coming into the stock, going out of the stock, what is it doing, and that's what you want see, that’s what you’re always looking at. If we take a look at our CNC, example here again, we're looking at the energy, we're looking at the volume, how much volume is coming in? Your gauge in the market, your gauges are right here. This is one of your gas gauges; this is another gas gauge so you have volume and price. You have volume as a gas gauge and price. That's really what it's about those are your gas gauges. It's pretty simple to look at when you know and understand how to read the gauges.

Here's our A; Here's our B; here’s our C and our D. How do I determine this? Let’s based on the swing point; what is a swing point? Something you'll have to discover here but in simple terms it’s the lows, where the stock changes direction. the stock was going lower and now it's popping higher so the stock has changed direction, right? That’s our A point.

Now we have our A to B. How do you know how far the A to B is going to travel? Well it's based on what has happened in the past, sometimes it's difficult to project and many times these A to B moves are missed. The money leg and most of your money should be made on the C to D leg. Why do I say this? Because it's easy to project, it’ s easy to read, it's easy to see. How do you know that you probably wonder how do I know the C to D, or how long it's going to run?

Well you take the measured move. You measure the distance between A to B and you apply that same distance with C to D. Think of it this way, you're on a road trip, you're driving, you're going and you got to your destination your B point. Now your car needs to take a break, you got to refuel so B to C. You weigh some time at the gas station filling it back up and then you continue moving further, in time and moving to your next destination.

That's what happens, that's part of energy, that's part of life, that's how it works so what you got to do is the same thing you measure A to B and you'll get the estimated distance of C to D. Let’s do that. Let's take a look at our example here, we take the lows we go to A to B, we get about thirteen dollars and now we go to the retracement amount. Here, let's remove this so we can calculate it better. We go from here to the highs of the D, we get 11. Now as we approaching $11, this one was $13, as we start approaching $11, $10 let's just say $9 as you start approaching $9 when you think you should be taking some of your profits off the table that is because you're reaching your projected move. You need to pull over and get some gas. Stocks won't run forever so that's what you need to do. You’ve got to pull over, something needs to change.

In this example stock reached its projected move - $11 and sold off at the highs. Now we won’t hit perfectly. Do you think that in the car you always get 200 miles per tank or four hundred miles per tank? No you don’t, sometimes you get more miles per tank and that is because you drive differently there's more energy, maybe the highway miles are different from the city miles but the energy you're looking at the energy how much energy did you consume and here we look at the energy consumption, 13 points we look at the energy consumption here 11-point scale.
It’s a little bit different, depends on the environment.

Sometimes you’re going over bumpy roads so always watch how that stock is moving so that's how we calculated the C to D leg on this stock. Let's go over a couple more stocks and then we'll do the ABCD pattern one more time with Apple.

CNW - Tradersfly Screenshot

CNW let’s take a look at the weekly. This one's a little bit harder to see on the daily so here's the daily. The weekly is a little easier to spot we had the stock coming back right here; second time, third time fourth time. Stock broke here there was your short, continues moving lower, nice high-volume on the Bearish side so if you got in the stock you would have been up about two to three dollars right there on that short. They could have also looked at the resistance line right there and short a bit. Those levels if you wanted to. Total preference is up to you whichever method works for you that's the one you could go with.

GRUB, this one again ABCD pattern you could take a look and see what the projection is. We got the A to B 9.85 points and here's our C to D, we’re moving 10-11 points almost on heavy volume. Now on this one we continue to move lower. Why? Because we have heavy energy, we have huge energy coming into that stock, so pay close attention how much fuel is coming into it.

GRUB Screenshot - Tradersfly Stock Market

If you look at the daily, you really have a lot of ABCD patterns here in this stock. Here’s a little retracement, here’s a little retracement. We really have the A point here, we got a B point here we’ve got a C point here, D point here, E point here but again these things repeat so this could be you’re a point then this could be your B point. Now this could be your C point now and then this could be your D point. You can break it down to little movements so if we did an ABCD pattern right here. Take a look at how that works out let's just zoom in so you can see it better so take a look let's just take that A to B, 4.4 points there again how much 4.81 points fairly close, fairly accurate, not exact but good enough in terms of the stock market. That's how that works case same concept same principle A to B, B to C and C to D pattern.

IMAX Stock Market - Tradersfly

Let’s take a look at IMAX selling off at the highs very well, here again our extended move extended move to the upside stock selling off at the high. So when the stock is selling off at the highs with heavy volume what does that mean? That means we have trouble so the stock continues to move lower right here for multiple days and if you got in at the appropriate time you’d be up three dollars to the short side. Now you could look at the stock as an ABCD pattern you kind of could. You could say that this is our A to B, B to C, and C to D kind of, too little overextended C to D leg but you could take a look at it that way. Everybody looks at charts a little bit differently but you could look at it and say that “Hey that was our A to B, B to C, and C to D pattern.

Next one I want to look at is RDUS this one's been moving in a while for higher prices over this last week we've been following it for sure it has been on our critical charts and radars been flying off. This one take look, volume declining and then a heavy break on heavy volume right here that was your entry point if you missed that you could got in the second day or the third day. Even if you got in it at the fourth day right here you would still be up six dollars, six dollars you would be up even if you were late if you had a thousand shares you would be up six thousand dollars. If you got in at the right time let's just say right here you would be up let's say 15 points. 15 points in just a matter of 13 to 14 days, if you had a thousand shares imagine fifteen thousand dollars in just two weeks.

Right stocks, right time and holding for the right amount of time taking profits in the strength watching these consolidation patterns doing the right things, right stocks, right time, right place, holding sitting tight waiting and patiently allows you to capture some great runs. Nice heavy volume good consolidation pattern good entry right here, stock went well and if you sold it even right now you'd be up fifteen thousand dollars with a thousand shares. Think about that it soak in for a little bit, be patient this business is about patience and then execution.

APPLE - Tradersfly Stock Market

Alright next one and last one Apple, alright so here we go Apple's been moving sideways and a lot of people look at this stock and they fall in love with their stock they love Apple, I love Apple because it's so much of a company that people get emotionally tied to it and for me personally I don't really care to get emotional to a stock it's not something that that really motivates me to buy a company. I really look at the fundamentals I look at the charts and before I even get the charts there's a lot of other underlying things that I look at on the fundamental level. Now looking at energy looking at behavior that's what our discussion is about today and too many people trade this stock and many other stocks out there such as Facebook on an emotional level this one trades heavy volume you know 16.7 million just today came down by the way right here to this level and now is bouncing but this was your support and resistance line up.

A lot of people trade the stocks on an emotional level because they are companies and people get emotionally attached to products we are very consumer-based oriented society. We want new products we want new things that's why people like to buy more in new clothes and new cars they want to show it off it's all about that brand recognition if you know me personally I don’t really care for a lot of brand related things. I don't really care for spending money on these luxurious things just for society to look at me differently or better. I’ll buy-in a couple t-shirts here there's some of them are the exact same thing as I had before and the same thing with my parent’s shoes they're usually the same but I don't really care to buy all these different things in order to showcase what I have. I don't like that type of attention, I don't like that type of feeling and if you don't know by the way one of the most polluted industries out there is actually the fashion industry.

You can go ahead and actually watch a movie called True Cost it really talks about some other things and the clutter with that industry so a lot of that clutter going on and people get attached to this to all the clothing, to the shoes to the products, for me I like to keep things simple and I do that also with my charts with my stocks and that's why I am able to be successful at what I do because I keep things simple. I do the things that work and things that just makes sense to me.

Now if it doesn't make sense to you then you need to find what makes sense to you but in this case let's look at it this stock let's break it down. Let's look at some of the other are stocks that we talked about before look and apply the same concepts that we just applied to the other stock so Apple, looking at it from a close view we’re moving sideways but as you start zooming out you want to start looking at the chart and sometimes it's hard to see but take a look at this retracement over here at this level and this is the weekly chart but if we go to the monthly. Now we start seeing some things so now things might look a little different for you. Here do you see the A to B, B to C and C to D pattern? Do you see it? Here let me draw it out for you in case you're struggling to see it which is okay there's nothing wrong we’re all learning together. A to B and B to C this is where the stock changes direction. Here's our C point and then D right here. What I want to do is I want to measure the A to B, I want to measure the B to C and the C to D.

I want look at what's the potential of that stock so if I take the A to B and I go here to these highs 82 points. Now I take the C to D, I take the Lows of the C and draw all the way up. What do I get? 80 points - 79 points so we're off by 4 to 5 points, nothing wrong with that but in terms of the move, in terms of the relative move are we getting close to what we did initially? The energy, yes we are. Now does this mean the stock can’t go higher? No it doesn't what can happen is we can pull back like this slightly or even to this level, the 100 level and power higher again for another C to D leg but for the time being the stock is hitting its projected moved and when it hits its projected move what do we know tends to happen? A stock pulls back or it consolidates or does something else.

Now if you look at the longer term picture what has been happening to the stock? On the long-term the stock has been selling and consolidating in terms of the volume. The volume has been contracting. Now what can happen is we can start increasing volume in picking up to the upside or we can increase volume and go actually to the downside and if that happens watch out you got some trouble, trouble coming but if you know if we consolidate sideways you know that would be healthy for the stock to move sideways like we are doing right now sideways. A little more sideways action would be healthy nothing wrong with that. Always pay close attention to how your stock is moving, how is it behaving and what is the projected move because these projected moves tell you how much energy and gas is left in in the gas tank and once you start running out of fuel you're going to have have to pull over or something's going to have to happen.

Always be careful and mindful of where you are. I hope you found this video helpful. Thank you so much for joining me this week. I know it's a shortened holiday week so hopefully you're going to make the most of it. Enjoying the fireworks or enjoying a little bit of time with the family or just taking a little bit of a break. Again within that next week and a half to two weeks, we will have that computer parts video or just about selecting the computer parts and then within also that next 10 days or so we will also have the shorting book that will be released here very soon.

Keep your eye out for all that stuff next week and the course is really a great course about the computer stuff. Definitely, if you're interested to building a great trading workstation and a great computer or at least selecting the right parts for trading computer then that'll be for free, multiple hours of a course for free to people who are on the newsletter list and just my way to say thank you for sticking around in still sticking with me because I know there's some people that have been with me, the veterans for multiple years now so definitely I hope you're learning a lot and you know trading well and doing well and if you're not and if you're new and you’re just getting started then feel free to send me an email just to touch base and let me know where you're at and maybe within a year or so things will progress and we’ll get to see how things are going with you just two move your game to that next level if you have any questions.

Thanks again and enjoy your weekend! Keep your eye out for summer those things coming out over that next 10 to 12 days and hope you have a great weekend ahead and I'll see you next week take care.

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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