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Welcome to this week's Rapid Recap and today we'll talk about How the Stock Market Plays Tricks on You. It’s July 9th 2015 and I’m Sasha Evdakov.
Now today I won't talk about every single trick that the market plays on you but we'll get into some basic psychology and how things work in terms of the mental tricks they get played on you when you’re trading when you're looking at the market when you're looking at the charts. I will touch base on that with just one or two a couple different stocks that will look at.
We're not going to do a ton of picks today we'll just talk about conceptual things and where the market is. With that in mind I do want to let you know that next week Tuesday we will have the launch of that computer course which is multiple hours.
It'll be absolutely free about selecting the right computer parts for your trading workstation and the only reason we didn't put on this week was because we had already a video in the queue on schedule to be launched and released automatically.
All that stuff really it gets released automatically. I uploaded I do it and once it's on there I don't really look at it that much more except with a few comments if somebody leaves a comment then I really appreciate the comments and I’ll write back to the comments but I don’t really check the videos anymore or anything like that and my assistant handles all the other things that go along with posting it on the website and so on.
Next week that one is scheduled so that'll be launched and that is basically like three courses, multiple hours about selecting the right stock market computer some of other parts I use and all that good stuff. We'll release that absolutely free for the newsletter members and if you're not on it you can get on the newsletter when the time comes if you're not on it already.
Also the book the book actually is out and available so the book that I’m talking about is I this one right here the 245 Money Making Stock Charts setups: Profiting from Short trading. I did have this earlier about 245 Money Making Stock Charts setups: Profiting from Swing Trading. All the positions in this book or the charts were to the upside and you know some people were wondering well you know there weren't any charts for swing trading to the downside and that’s actually because I've planned ahead.
I knew that I wanted to release couple of books in a series so we did this one for profiting for swing trading to be upside because again you'll make more money usually going to the upside than the downside. A stock can run much higher to the upside than it can to the downside but if you only know one way to trade then you still will have limits to your trading so that's why I planned for this release for this 245 Money Making Stock Charts setups: Profiting from Shorting. This book is actually active on my panel for the box and I hit the button to launch it.
The only thing is that takes a couple days for Amazon to release it so once this is public I'm going to have that get it now button right here under this book as well.
We’ll probably move it all the way to the top as well but what I’ll do is I’ll send you a newsletter once it’s out because I know a lot of people were looking for it, it is not in color, it's black and white but you can still see the charts just fine and we didn't make a Kindle addition at this point because from the last version and from what people have been telling me
Those Kindle versions for the charting related things are just very difficult to read and for a color book you know it costs on the printing about twenty-five to thirty-five dollars depending on the pages and this is 265-268 pages so it would be very expensive for that book.
Some people they said “Well I prefer just having the knowledge rather than doubling the cost of the book” this book, I'll let you know when it's out on Amazon you can keep an eye on it if you want and it should be on there very soon but we will last send it out to you in an email once it is available on Amazon with the link so keep your eye out for that email.
Final thing that I want to mention is if you're on the blog and if you're looking at some other things I did update the projects. This project is complete in my mind for the shorting the book is done. The next thing I have is the Penny Stocks book and then the Huge Option Mastery Course.
After that we'll probably go to the final course that I have on my list so I don't know if there will be much more training courses after that one so this one is going to be how I pick a stock enter the stock and manage that trade and exit the trade. That’ll be on 2016 because we have a few other projects ahead of that.
We may have other courses beyond that but right now that's what I had planned initially when I started this whole website. I decided to go really in-depth on few main subjects and that'll probably be one of the last courses and then we'll take a large a break from the educational materials. I’ll still continue doing the recaps of course the charts and everything else but as far as courses there’s a wealth of knowledge out there already from what I've created.
Let's get into some of the charts and if you are following me on the critical charts by the way what you can do is to subscribe to this, go to Twitter and you'll get notified automatically for all these posts. Just go to the Twitter Tradersfly and you’ll get notified when these are released but I did talk about Apple here on when it was a $122.57. Watch this shorting opportunity bearish volume was rising and if you take a look at it right now it’s at 1:20 so you had a nice $2 gain.
Thousand shares would've netted you are you know two thousand dollars with two dollar run thousand shares 2000 bucks. Something to keep your eye on is to watch those charts because I did release some early this morning and the lines apply for a while so today what I want to do is talk about the overall market, how it's doing and just some other stocks because it's important to understand that even if the charts are posted a week ago that doesn't mean the chart does not apply.
It doesn't mean you need the most recent charts and some people have that mistake that thinking that they need the most recent charts and that's not the case which you need to do is really more understand the chart. You need understand why that chart is in there and you can look at a chart many different ways you can look at it one way or another person may look at a different way up but the end result is still the same.
I can look at this stock couple different ways but the end result if the end result is still the same you know turning it upside down looking at it sideways you know drawing different run lines you'll get the same kinds of profits because people look at things differently.
What's important is that money management what's important is spotting those opportunities and if you don't have that trading plan if you don't have the risk management, money management for your trades then it's going to whip you around and this is what happens with stocks and will mention a couple different things.
Let's just talk about the Dow-Jones normally the S&P is good to look and the Composite, the composite typically leads the market but let's talk about, let's start here, let's start at the composite. We’ll just draw the first trend line right here and notice how this trend line really hits a couple a different points. We have the supporting points here so this creates the support line even this one it doesn't touch it but it comes close so it still creates that support line.
This right here also create a support line so if we can agree to that and this stock as we zoom in closer let's just break this down bar by bar, how this plays tricks on you this initial bar broke that long lasting support line and here was the volume bar initially and here was the second volume bar follow-through. Higher than the average volume the average volume is the 20 day volume I have right here with the white line. Notice that this line right here is also bigger so most other volume bars pretty level.
We had an increase in volume right here and a break right here so this stock what happened was it started to go back up and this is when a lot of people on TV on this and this will start saying, do we have a higher market, oh do we go higher from here, can we see higher prices will we make new highs up here and that's when you have to take a step back and look at that bigger picture.
When we're looking at here this is a tighter picture that's not a bigger picture but the bigger picture is we've been trending lower from here. The little pop here came back to this trend line right there re tested it and rejected. We rejected at this trend line this is called an internal trend line resistance you don’t have to write it down you just have to know that stocks comeback to retest things and if you continue to draw that line you'll notice it rejected so what happened?
We went up for two days stock rejected it, continued to selloff further, it continued to sell off more so here then we had a nice sell-off here then we had a bounce right here the stock went down popped and then again we had a huge down day here and now today we’re in the green but look at what happened in the day. I want you to pay close attention at not just the bars not just how the bars look but how the day actually was working how the day was actually moving.
So what happened today? Let's just look at what happened today for now so you understand what I’m talking about. We opened here, that was way higher much higher than previous so that's why we're positive it's a green bar. We closed higher we closed higher in terms of the previous close so we're still green that's why we're green but what happened to the stock what happened to the price of the market of that composite, it sold off from the highs here to the low.
What happened throughout the day? We sold off so the energy still continues lower. If we zoom in here on the daily it’s a lot easier to see so what happened on the day? What really happened? We started at the highs up here we popped higher and we continued lower just draw it to the closing, what was the trend? Pretty simple to spot, and you can draw other trend lines right here you can see the resistance once, hit it twice boom you have opportunities there.
Backing it up looking at the daily that's what's happening in that stock and if I draw it more on the four hour which is not something I like to use but what are the majority of the bars if I go to the two-hour the majority of the bars what are they what color are they? Majority of the hourly now you start getting into seeing a little bit more variation so then will back it up.
Let's go to the three-day or four-day what happen the last couple of bars. Wells we had a red bar green bar red bar. What happened the last week? The last week we had Red bar, Red bar and Red bar so what do you think the average for the week is going to be for the week. I'm not talking about day trading if you’re day trading right here and you're trading to the upside for the pop that's fine. Day traders will do that that’s what happens but then what's the longer term picture.
If you want to just sit and relax sit and relax and let your stocks run then you got to see the bigger picture. Look at the weekly here's the weekly what's been happening the last three weeks we've been red. Now volume is not huge it's not picking up but you can take this to the other indices.
Same concept release approaching so we'll draw this line out you can see you know things do happen sometime similar to what happened right here the stock or the trend line will break and then you get a little snapped back like this and then continue higher.
These things do happen so be prepared if we come back you know some time to this price level we can have a snap-back but really you got to think okay what's going to take this market higher and you start looking at other potentials, potentials to getting to this price level. Let’s say 198, this price level right here.
Looking at this level if we're on the spiders you know if we break this line right here that's where we snapback that level if that breaks you could easily see it at the 198 level. That's a very nice run to the short side five points there.
If you do in the S&P you know we're going from here this is ten times the Spyders s so it's a 10x ETF but here the sell-off going from here to here we're looking at about 53 points. Can you get that? Absolutely, why can't you and if this market corrects that just creates healthier trend lines, healthier chart patterns.
Allows you to have new opportunities I mean look at where we've been to where we are. Even if we get back down to 13.70 there would be nothing wrong with this market. That's just healthy pullback.
If your car gets flat tires is there anything wrong with the car? No it's healthy it was time to replace it that's normal. Things happen and the same thing here if you have a pull back to even this level right here and then you can bounce and there would be nothing wrong with the market.
Always watch for the pullback how it's coming into it and what it's doing you know will I like to see correction yeah absolutely I would love it I would welcome it and right now looking at the daily look at what happened to this stock to this ETF Spyders, popped little bit higher went up then sold off.
Let's take a look at the five minute. Popped, sold off, open pop sold off. Does that tell you that it's wrong? No. So what happens when it plays tricks? The trick that happens is that where we get sucked into this.
We get sucked into this part of the rally. We get sucked in by the news, we get sucked in by the noise, we get sucked in by other people tweeting, we get sucked in by other aspects of our own psychology that things are going higher and we're not willing to step back and say “Oh, that move’s not real” you guys say yeah that move is not real.
It's like someone trying to sell you an iPhone brand new iPhone brand new computer for 20 bucks you know that's not a real something's not right there. The same thing here, when you get good at spotting this you get good at spotting these moves you got to say something’s not right, that move is not real and then you can say “Okay, I’m going to step back for two days and then I’m going to re-short. I'm going to wait until the price action comes back and boom then you re-short 22 points.
Then posted this one at 122.57 I was watching it like a hawk right here this was my entry point right there break off there gave me two dollar profit right away sold some shares boom kind of come back to test those prices yeah it could, but imagine you got three thousand shares right there three thousand shares and the stock where is it now? The stock what did it do 120, three thousand shares two bucks, six thousand bucks.
You can do the math you can play with all the different calculators whatever works for you. if you’re doing 20 shares doesn't matter where can the stock come back? It can come back to 105 it can come back to this 119 level and bounce a little bit and then chances are it'll sell off again so you’re watching these levels that can come back to 95 and if things really accelerate, 100 you can really come back to 55 but if you draw these things out you wait patiently.
I talked about this one a handful of times in the Rapid Recaps watch the previous Rapid Recaps people believe in their stock people believe in things in these conditions because they're trained and we get we play in to that and that's bad for the market and for your profitability because what happens is that earnings came out here the stock sold off but so many people got in here at this level because they love Apple.
They love it like they love their children, they love the watch, they love the devices, they love the company they just like the way it functions.
Me I like trading the stock because of the liquidity, I like trading the stock because of the way it moves the way it handles I know it I know it well but it’s stock came back again rejected here but just because I like trading the stock doesn't mean I'm long the stock all the time.
Right here I'm short right there that's the level you go short. We talked about this, we talked about this level. If you were quicker on it you could go short right here and in fact right there was another shorting opportunity and we took most of the profits over here at that level.
Just for risk management so forth but right now you can get back into the short and allow it to run. Allow it to run to a certain level so you know you're looking at these trades and you're seeing what's happening, what's happening to the other companies how's the overall market.
What happened to MasterCard another leader here's the trend line. Trend lines has been doing well and then what happen well we had a sign right here. This was the initial stock ready to break we got people that sucked in to this because these stocks they play games on you, but what happened over here what happened over here. Look at this level how much volume we got we got 3.2 million we got 4.4 million but here to the upside we got 4.8 million but then 3.7 million ran out of steam.
4.8, 3.7 versus 4.4 versus 3.2.Stock started running out of steam and then what do we have? We got three million shares to the down, three million to the up? Then five million of 4.9 million down, 4.4 million down and then three million up.
Five million down three million up. 4.4 million Down three million up who's going to win? and today same thing happened stock came up to this trend line rejected it and sold off. That's what happened.
Same thing with let's just take a look at ADT, we talked about this one in the critical charts as well last week here's the trend line stock breaking Boom, K continues K tried to pop so what game was it playing with you.
Look at this game it popped it was green and that's when people get scared they get nervous because they don't know and understand how stocks move but they got nervous right there on this green bar today they probably exited their short if they were in short but what happened after that first 15-20 minutes stock continued to sell off. Look at it look at look at this right here stock gapped up.
Stock gapped up, went past that line and there's a lot of people I bet you a lot of people that got stopped out right here because they were tied on their stop but they didn't know how the stock moved and then stock rejected those prices and continued to do then natural thing for that stock.
Natural thing for that stock and the natural thing looking at the daily boom, red, down huge bearish volume it was there, if we take a look at the two-day what are the last few bars? If we take a look at the three-day what are the last few bars? If we take a look at the four-day what's happening? Let's look at the five-day weekly there we go still why was the bar what is the bar tell you on a five-day average that’s a five day average think of average probability.
What's the probability for this week as we're looking at the weekly that this stock is heading lower tomorrow probability so looking at the probability that ended up in the week it's going to chances are for the week it'll end up probably red just because we already started that week off all the way over there.
These tricks you can't get sucked into it. You got to watch them, so who so who. Same concept what happened today we had a pop we had a pop and it was due to probably a lot of this trading that got stopped the other day. I look at those things as just malfunctions its part in every industry it's going to happen.
I know we don't want it to happen with the financial industry because people hold dear to their money their one dollar bill and they love it more than they love their pet dogs for some people but in reality it's going to happen in every industry no matter how many things they put in place it may happen last but just like hard drives fail just like other things happen and it's really unfortunate and it does happen.
Even Twitter releasing its earnings prior before the bell, slip-up took the stock down and you know these things happen. Unfortunately these things happen and it's going to continue to happen that's just natural it's natural human things; human behavior that if something can go wrong it will go wrong.
Always be mindful be prepared that's why I always say take profits in the strength so here the trick so who played on you right here was Boom this pop but what happened in the day stock went higher sold off came back you know it's still up three bucks but for that day what happened was a continued to sell lower.
Can it come back higher a little bit and try and fill this gap? Of course it can because we had a lot of shorts over here. A lot of shorts are overhead so that means all these people up above that have traded it short at this level can take some profits and get it back to this level.
Always be mindful that there's other people that are ahead of you and they can take the stock up higher just like with Apple. There's people that are still short at this level and I was one of them at this level and some got out here and some didn't and those people can start taking profits and they would push the stock higher again.
In either case I wanted to share with you some of these charts and we'll get into Tesla as well the same concept, same things happening stock is breaking long-term trend line Boom, heavy volume coming in this week and it's not even Friday and we had some training issues.
Boom volume starting to pick up, we could see some trouble at least to the 225 level maybe it won't get that far maybe 2.3 but we'll see we'll see how things project at the moment I can say it broke this trend line and that's not a good sign. In either case watch your stocks closely see how they’re behaving how the market is behaving overall and how it's moving, how it's breathing and watch out for these mental tricks that happen right here that popped a sucky one.
They suck you in the go along and then they rip that rug or they rip it right from under your nose.
They just take it and pull it away so be careful be mindful what's happening on the bigger picture and stick tight to your stops and take your profits.
I hope you found this video helpful. Thanks for joining me I truly appreciate you, I truly appreciate you taking the time to spend with me in this video because I know that time is precious it’s something that we can't get back.
We can always make more money, we can always buy more things but we can't get back our time in and our energy so thank you for taking the time thank you for taking the energy to watch the videos. For me it's important to connect with you I enjoy the connection just today we had a chat with someone on the phone about their training how things were going.
I had some really lovely emails from people are you know over the last week as well they're sending me and how they're doing how they're progressing and of them is going to the military another one is staying at mom a homeschooling I believe. I had a lot of great emails coming in and sharing the progress that you guys are doing and the person you have to thank for that is you.
You have to look in the mirror just say that’s you doing it because you have to take the action steps. I can only guide you I can help you along the way but lot of people in this business they fail not because they don't know what's happening but because of the internal game, because of not being able to move forward in the process because you can learn everything there is to know about a sport but if you don't take the ball out if you don't dribble if you don't go skate.
You may have read a lot of the knowledge and concepts of how to do it but if you haven't done it yourself if you haven't took the action steps then it's very tough to move forward and proceed so thank yourself as well.
We'll have the book out I'll send you an email about that once it's released like I said I'm it is on, the button was submitted on Amazon on the create space system so it just takes I guess two to three days for it to be on the website but once it is on the website I'll let you know if it's on there sooner sometimes.
It's on there sooner and out the computer video for the 345 our training on trading workstations and multiple monitors and the things that I actually use for my training set up that'll be out next week on Tuesday so that'll be the trading less than and the next broker we’re reviewing is Trade King.
That'll also be up over the next month or so. Keep your eyes out for those things and just some of the other things that I'm working on.
Thanks again for joining me and if you have questions don't be shy to contact me or email me.
Alright take care and have a great weekend.