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Welcome to another session of Let’s Talk Stocks! I’m Sasha Evdakov and this Episode Number 81. In this episode I'm going to do something a little bit differently, actually in part due to because I have to go to a doctor's appointment.
I'm going to go ahead and record little bits and pieces throughout the day of the market to do my recap because I'm not sure how long I'll be gone.
So as I comeback and go and do things and run around a little bit I'm going to share with you the trading, the intraday action, as well as the emotions, my thought process, what I’m looking at and just give you some insight to some of the charts, some of the support and resistance levels of the SPY and SPX.
We’re going to drill into that, I’m going to show you some things probably with emotions and how they play out and how people get really gets psyched up or excited but then also why you shouldn't really buy into those things.
Just enjoy the lesson enjoy, enjoy the time.
Looking over the intraday chart, again some of these concepts I share with you, really you want to also apply more so to the daily charts really the big picture I'm always looking at the daily the weekly and monthly charts so those are the key.
However, looking at the intraday if you're watching the intraday, how to spot things to start to roll over, this will give you some key signals because I noticed some things yesterday where stocks were acting a little bit weak and where stocks were actually looking like they may start to roll over today and that's what I'm going to share with you.
Enjoy the lesson, enjoy the episode and here it is.
I'm here taking a look at my Roth IRA accounts and if you want to still use a Roth IRA account basically I got this Roth IRA account when I was a lot younger.
Now when you make more than, I don’t member if its $75,000 but once you start making more money you won't be able to open up a Roth IRA account at least not from my understanding.
The way to really go up against this or to do it with a loophole, there's a tax loophole that you can talk to your account or even contact your trading panel which you do is you’ll deposit the funds into your standard IRA account and then you'll convert it over.
So there's a conversion method that you could do and that kind of helps on the tax planning in order to have a Roth IRA account. Anyways, you can contact your accountant to get some insight about that.
Just playing around in here and just do some insight to show you what I'm looking out when I'm watching these trades.
Normally I don't look at the one minute chart the one-minute chart it’s typically for day traders but sometimes you get some insight to these one minute charts and the insight that you get.
The way that I have this setup, here is when I look at the filter size of what's going on the sales if you look at what's greater than or equal to about 2,000 to 3,000 or maybe 5,000 shares that's being traded, what one to do is just the start looking at this time in sales.
Right now it is 9:41 here in the morning so the market is just being open but here what I'm seeing is when you look at this open right here typically, I don't like trading the first half hour just because of the reversals that can happen.
When you start seeing, here are the key signs that show me things are in a selloff mode. Typically if you look at the end of the day, we look at this entire end of the days and when you look at the end of the day pattern you can see this bowl shape of volume pattern that happens.
This is called the meta pattern or the meta volume pattern, you can call it whatever you want is just the basic standard pattern because there's more volume at trading at the beginning and there are more volume towards the end.
Typically what we've had is some strength coming into the closes or neutrality so when you look at the previous days and you start scrolling, you can see that we've had some neutrality maybe a little bit of day traders taking profit or a flat close.
Some of the days we have a power into the close and when you have a power into the close, you may get the next day to follow through which like you did here, you had a follow through a little bit, a little profit-taking and then again then a flat close.
What we had here the previous day was actually we had a power to the highs here at the 210s and then we had a major sell-off reversal that took it down within an hour.
Now when I start looking at this time and sales of about 5,000 shares or more, I don't look at the time and sales of let's say 200 shares because what's happening is there's a lot of basic day traders or retail traders.
Really we don't care about when people are taking some profits or are taking some profits in the strength, that really to me that doesn't matter.
Instead what I'm looking at is really somewhere about 3,000 share lot size. Now if it's a different kind of stock maybe a trade’s even heavier you might look at a 10,000 or 5,000 whatever. With the SPY’s 3000 or 5000 is pretty good.
If you go to the 5,000 range right here with the 5,000 range, you can see that there's a lot more red than there is really green and it doesn't take a rocket scientist to look at colors.
As you start looking at these time in sales there's a lot of selling pressure that's coming in, which to me that's one key sign, that tells me the market setting up for lower prices.
This is subtle signals of course the bigger picture is actually looking at the volume so here's another signal that you can see the volume right there.
The volume is weak as we do the pop and the volume that people are trading is also weak, when we look at the bullish signals here on the time in sales that's also weak. Then I'm also looking at the SPDRs volume and then here look at this volume right, what's going on here?
If I zoom out this pattern is easier to see, you can see that this pattern here is a little bit of a bowl shape pattern right there. This pattern, the average of that is more like a flat pattern.
You can see that here we move sideways, here we counted in a bowl shape pattern of course there's some other little signals in there because we did have some ups and downs, which you can see right there there's little drop-off little volume pattern there.
Really now as this move has been moving to the upside we've had this descending pattern and really if we do it even tighter, the higher spikes are the earlier bearish spikes.
As we get into this level and we look back at this range of these highs, the volume that we had that tried to take it out was when we look at these high some of these were 343 million and some of these were 500 million.
In here when we're trading only eighty million or a hundred million we don't have enough volume to take it out so that to me tells me that we’re set up for lower prices.
Now here this bounce right here when you look at this bounce you can see that right here we tried to take out those lows previously, 506 million shares with a volume but we didn't do it.
Then what happens? We retested it we tested it with two 286.4 million, didn't happen we tested at 191, didn't happen. We tested at 219, still didn't break the 500 and six million. So what happened? Well we pop a little bit more and now we're getting into again some of that resistance level at the top which could…
Sorry had a phone call there. So to me here when I'm watching this and I'm seeing it to get into these higher prices, that to me shows me if it's doing it on lighter volume and then I’m looking at all the other signals that shows me that there is weakness within this pop.
Now does that mean we can't hang out here for a couple more days? We could hang out here just like over here back here for a week or month. We could hang out there and then roll back over.
Those things can take time so you need to be patient but you can see that here as just waiting for the last couple of minutes, while I was here on the phone call, and just chatting on those charts that this market continues to roll a bit further.
Then as you watch this volume will start picking in, it slowly starts to create a snowball effect. So what is it that really happens?
Well what happens is first, a day trader start too short it potentially. This doesn't always happen in this way, it happens in a lot of other ways on multidimensional, in the way that all these things start to happen all at once.
Day traders will start to short it then as those day traders start to short it, these stocks start to head lower.
Then the people who went long, the retail investors, the ones who we're buying on these little dips or buying on this little dip now they start getting into this fearful mode that maybe there are starting to head lower.
This is typically the newer traders or people who are you know short-term still and then they start selling their positions. As you can see now we continue to kind of push down then you have some shorts.
What's going to happen is we get this little reversal that'll probably start to pop a little bit here within that first 10 20 30 minutes if you do get it. If you get it, what's going to happen is those day traders some of them may take some profits or half profits.
For that reason if you look at the two hundred share count, so what may start to happen is some of those day traders will start taking profits and that's what takes these stocks back higher.
Then as we start hitting new levels people start getting more and more fearful, that's really what happens and that's what happens on shorting these positions they’re not shorting but on these bearish sell-offs, is that these trigger start to hit the emotional triggers.
As we start hitting these emotional triggers within one person then the next person then that just slowly started to spiral it down and that's why emotional selling, stocks typically they crashed down they don't crash up.
So when are people more emotional? When they're fearful so as you start until there's a little bit of a pop. Now you're having potentially these are some of the day traders taking some profits, we'll see here they might take it up to 209 they could even take it up 210 and then comes back.
What happens is then they'll start taking some profits and then again you get the next wave down of people who missed this move start to come in and as they start coming in, this typically sends those stocks even further lower.
The way I look at it is that if this volume, again I don't look at the one minute chart, I'm just using this because it's an easy reference example to chat about it as we look at this chart moving.
What happens is that as you look at this volume, if the volume isn't picking up, on this pop or on these pops, then you'll see the next leg down. Now if you see volume coming in, then they can take it back, they meaning, the bulls in this scenario.
Sometimes, when we talked about the manipulation factor that happens, sometimes what happens is these hedge funds, as you've listened to that interview there and so forth, they will spike it to try to fake people in, that people say I hope it's another kind of bullish day so let me buy it on this dip
And that's where you get the I guess it's called the dumb money or the suckers, and you know I was one of those as well but basically what happens is that people get faked out, they try and start buying it right here or even let's just say they pop it to the 210 or the 211 wherever.
They pop it to a higher price a few points, they could do it for a couple days even, and then they rip out that rug from under you which is really what happened if you look at it on the five-minute over here.
Again use the daily charts, I’m just using this as an example because it's an easy teaching lesson, use the daily chart when looking at your charts, it happens on the daily as well.
Basically what's happening here is they’ll spike it higher for a while, for the whole day, they were holding up prices only to rip it out from under you. So that's what happens really is that they rip it out
And here it and if you're looking at an intraday the same thing happens they may get it to the 210 and then they rip it back and again what happens then is they’re trying to suck in more buyers more people that, hey the prices are going higher, hey the prices are going to continue going higher.
So buy more shares buy more shares and you can buy my shares and then they sell it right into you and then when they sell it into you buy those shares and they're still trying to get out.
Really that's what it comes down to that's what you're watching and that's kind of what happens on these moves. We’ll have to take a look at how the day continues to evolve, but you can see here already were starting to continue this reversal.
We'll take a look at this and then we'll get back to you.
Alright so we are now right around the 10 o'clock, so passed a half hour mark, and it is a light day for me so that's actually why I'm recording this, I have to go visit allergy testing doctor here so I'm doing a little video recording light trading for me but I was position a little more to the bear side.
Again I want to share with you some intraday action because I haven’t really shared that in the past so now we were down in this level here where stocks were selling off and then we had that pop and I told you that we could get those pop and then things could start to roll over.
What is it that happening or what is it that I'm watching? Again normally you don't really watch this on the one minute but if you want to watch the day trading action you look at how strong these are. So for me what I look at is okay.
If you break this down tick by tick we had some higher prices here. So we had some little bit higher prices of let’s say here we had .25 million, and then we had point .34 million, and .36 million on these two ticks.
Then we started to press down on it and again we press down, we open little higher, move down. Then we tried to pop it, again we tried to pop it, and we popped it again but then we continue to press so we’re opening and we’re closing lower, opening or closing lower.
Then we opened, we tried to get higher but we almost closed lower. We opened, we closed lower, we opened then we closed lower and now again we're trying to push it.
So, I'm watching how strong is that push, how strong is that push on the volume. Here if the volume, if the people are not buying enough you can see BOM, we went tried to go higher, didn't do it, and now we're trying to push it lower.
You can see that the momentum, the energy, is pressing it lower which slowly starts, let's say there are five hundred people in a room. So let's say one of these person people is now starting to roll over “I am getting really nervous”, then BOM he starts selling his positions.
Then the next guy as this continues to move lower, that guy number 499, he's now starting to get lower because these prices are getting into his range or his wiggle room, then he'll start to get lower.
Then you got the other room you've got the other room where it’s, these are pretty cheap, let me go ahead and buy some. Let me buy a few shares this is a good value because the stocks are going to pop higher all the way to two hundred and fifty dollars, it's going to pop there.
It's the guy, the dreamer or whatever. So anyways you got all these different people playing it, so what you're trying to do is assess the overall room. What room is more powerful? Is it the guys that are selling it? Whose trading more on the emotion?
So you can see that here we had this doji right there, coming back, so that means to me that still there's some fear, a little bit of fear. Now if these things kept tanking like solid lines down, down, down there’d be way more fear in there.
This to me shows it’s just moderate fear, it's not huge, and we could be settling trying to find the bounce point still to this 2210 level or somewhere higher it doesn't matter really where the level is, the goal is to try to explain to you the overall emotions that right now we're going through for these people, for these traders that are happening.
And you can see now though the buying sentiment is starting to pick up, you can see we have a couple of bullish ticks we have three bullish ticks on the one minute. Now this is the one minute, I mean these are typically day traders.
If we go to the five-minute, now you start to get a little bit of a better position, so on a five minute basis this is where the bullishness is starting to come in at this price level because we had bearishness for a few ticks, little bullish pop, more bearishness and now we're getting volume starting to come in so this could be a bounce point.
As I look at this let's take this time and sales off. As I look at this, if you take a look at the 15 minute, you start evaluating it, where are we going? Well you can see we're getting into, now this gap range, we're getting into this gap range because we have this gap right here.
Yes we did fill it here and you're probably thinking oh we filled it already but even though we filled it, there’s still a gap there which means there's less trading action that's there.
We also have support right here, we also have support right here, so it's going to take a little bit of time to break it, if right now we're on a 15 minute break, if right now we get how many shares were traded, 2.7 million.
If we get 2.7 million on this tick to the downside you will see this break and get into this support range into the 209.28, and you can see it kind of wiggling in that range right now. It's trying to go red and that is because we have to digest all those people that are in that room, 400 people or 300 people.
Really it's hundreds of thousands people, it’s really trading, it’s those shares, it’s not just people it's the share count that people need to turn over and say ok I'm scared the market’s probably going lower and the more that we keep hanging out at the lower levels.
The more people get worried and then slowly starts to head fake them. It dips a little below that and then they sell. Then the next guy starts to get worried, oh it's breaking this level. That’s really what ends up happening.
As you continue to draw this out, as you go further and further out, you’ll see here what's happening. As we go to the one hour, you probably won't be able to see it here because it's been awhile since we were at these levels.
All the way over to here, there's probably a range I'd have to take a look at 209, let’s take a look over here on the TC2000. So over here at this range, there's probably some range right there over here probably this level right here as well that are really minor support and resistance levels.
Now for me personally, I don’t really watch those levels but I'm just showing you that this is how it works, this is how all these things work together and play together.
You know as you start putting these things together, the inner intraday chart is very weak, it's not very strong. That's why for me I trade off the daily.
I will check this chart and let's say I look at a support and resistance and let's say that's the support and resistance line then what I’ll do is I’ll check the 30 minute and I'll see if break it's breaking that level, if it's not then I'm back into my daily chart.
That's the way I do it and for me the resistance bands and support bands are typically bands, not just lines. I'm looking here at this level and I'm watching like right here, let's go back and take a look.
As you go to your five-minute, again I don't watch the five-minute but you see right here what happens is they start breaking, as they start breaking it starts to fake these people out, it starts to get into their heads, get into their emotions.
And some people are going to try to buy on that dip and that's why you'll see these higher prices but really you're just watching more on a daily basis, on a daily basis to see that overall, exactly what we're doing right now.
You want to watch that on the daily. So forget what I just told you all about that intraday in the sense of just looking at the intraday, take what I just showed you and apply it to the daily, because now if I look at it right here on the daily, you look at this volume that we went back and started this lesson with.
The decrease in this volume right here, shows me some weakness, it shows me weakness. This stretches your timeline a bit but it shows you the bigger picture.
Now yes you can trade and trade within that intraday and be a day trader, and you can do a lot of trading within that and you can do fine, you can make good money but it's more of a focused trading, you can't really leave your chair, your computer screens.
Whereas if you’re trading more on a swing trade, if your trading more on a longer-term time frame you can leave your screen, you can go and do what you need to do for the day, come back and then re-evaluate that day that tick.
Because when you're doing little pullbacks like this in this consolidation pattern, you know and understand ok there is little consolidation pattern then they'll try to take it higher. Little consolidation will try to take it higher.
They can only take it higher for so long, eventually that air gets exhausted, and that air gets exhausted. The market is not going to go straight up forever it’s not going to happen it’s just no way. Human emotions are going to get in the way.
For you, you need to take those things and apply it to the daily because now once you get the daily action moving, the intraday is going to whip around with the day traders, with the with the shorter term traders and that's fine.
And you can do that, you can day trade, there is nothing wrong with that but it's faster paced, but if you want to day trade and you have the daily charts in your favor, that's when it's better.
Not to mention, ideally you know if you’re day trading, you’re not, you shouldn't be day trading with the VIX.
Looking at VIX
If we got the VIX right here at 12.13 the better time the day trade of VIX is 16.20, 16.24, 16.30, that’s the better time to day trade because if you're looking at the day trading opportunities it's going to be the whipsaw action like we have on these markets.
Like we did over here, these are a high volatility time when the market will bounce around and that’s the perfect time to day trade. This right here is a great time day trade. This right here is also a good time to day trade, after that, not as much.
This whole range is a good time to day trade, those are good day trading times. This part may be a little bit today trade and this part as well but you check the VIX, you look at how the volatility is, that as well could be good time to day trade.
Overall, you might have let's say on the volatility, you may have certain good opportunities to day trade but then others you know when you're just moving sideways, there’s no point to really day trade especially if the market keeps crawling up lightly there's no point today trade.
The thing is you're setting up your positions for the next move.
And here on this next move when I'm watching it, you know we're at the highs. Where is the risk? The risk is to fall back down, right? To go back higher, I mean you might get the higher highs over here.
I don't mean to be a pessimist but I'm trying to be a more of a realist rather than a pessimist. Realistically, with the stocks can go here and they can break out, that's fantastic, great news, people make money, yes.
The retirement continues to grow, sounds fantastic, but is it realistic? Is this move realistic? and you know if it's not realistic then prices will come back down, eventually things will unfold. You just want to pay close attention to those moves.
And when you're watching this, whether it's the intraday, like here, or the daily, you want to pay close attention to the volume and how prices are reacting because they do move these prices, they push them higher in trying to get them to bounce a bit but then they'll roll back over because now work under that two hundred and ten.
If you look at the S&P we’re under 2100, so now, what do stock prices normally do? They try to come back, retest this and then they typically roll back over. That's a key level, that's a key level of support and resistance.
We'll see if we get there. It’s not always the case, we might get into 2102 because you can see that level is right there.
Let's take a look at the fifteen-minute, again, you want to watch this on the daily but see look at this range right here, you have this range to this range and that's a very key resistance level, so anywhere in here, you might get up to this range and level somewhere and then pull back.
You'll see, I don't know what's going to happen at the end of the day, for the day, but you’ll have to take a look and see what happens.
Alright, so welcome back. It is 210 right around there eastern time, and I just got back from the doctor they did a couple of allergy tests and in fact here this last weekend with all the spring coming around we did a little bit of gardening and we’re getting ready to plant some cucumbers and onions and you know little things like that like basil.
And then there we’re also removing a few trees there and getting rid of a few trees and my whole face just swelled up.
Anyway, I decided okay well tis the season to go and get a few things checked up, normally I hate going to the doctors just because you got to go and spend a lot of time and then you got to go and go again and come back.
And there's a lot of back and forth which is really annoying because there's a lot of the doctors these days are really scared about these lawsuits and things like that that happens.
For me, if they ask can you release patient records, I just say everybody. Just whoever calls, just give them my patient records. Honestly, I don't really care but you know for a lot of times they want to do tests and more test to really just protect themselves.
The same thing happened when I was doing my appendix, they wanted to do a lot of tests, and later on basically my mom came in I was already out of it and she said are you going to cut him open anyway, and they’re like yes, we're going to cut him open to figure out what's wrong anyway because my stomach there was hurting.
They said way enough with all these tests because they were doing tests for about 10 hours. And she said, well just go ahead and do it we can sign a form that we’re not going to sue you and then they started to look at us and say okay well in that case let's move forward.
Get it straight to the point
Anyways, long story short, there's a lot of playing around that happens, and I guess you could say the same thing happens in the markets, there's a lot of playing around that happens and for me I just would rather get to the point, and we all want it to just kind of move in our favor but you got to do this back and forth dance.
This is what's going on here with this with this market, right here, if you look at this market right here, you got some things that we talked about were popping to the 2010.
If I draw out this little resistance line, you see that they played around with it and they wanted the spike it, it got a little bit over that level and then it continued to roll over and you'll see a lot of people that will pump it.
And you see that this right here is his confluence, for me, like I said you don't want to just watch the intraday but if you're looking at the intraday, it gives you clues and signs, so right now we're on the 15 minute and you can see that as we have these green bars the volume that we have there is less.
If you compare the last couple of 15 minutes, then you look at the green bar of the fifteen-minute, you see the pop, then you go to the next one, the red bar, it’s close to it but then we got a couple of green bars that pushed it back into the 2010 level.
That's exactly what I said right before I left, before I left for this appointment, in fact I now have four different appointments here that I scheduled between, dentist, and dermatologist and allergy guy, get it all done all in one swoop and see you later kind of thing.
The same thing here, when you push into these levels here and things just start rolling over. It’s just easier to get it done and get the flush and the sell-off going because the momentum is there.
I do the same thing with videos, when I create videos, most of the time the weekly Tuesday videos, I actually make about five of those in one session maybe seven of those in one session and I do it all at once, because it's a lot easier, because that's where the energy is that's where the momentum is.
If you're looking at this, think about it like energy, where is the energy going? So from here, we started the energy going down and this was here's your sign right here, this was your sign that the energy was pushing lower.
So what do you think's going to happen the next day? The next day what happens is the energy still comes from that previous day so we continue with that sell-off.
Now yes there are people in in the Twitter and stock tweets that will pump up this stocks and maybe we should do a video about that reading hype and reading what people say on the social media networks and how to really filter out through a lot of the junk.
You know they’ll pump it up or the hedge funds will pump it up, in either case they’ll pump it up or the shortfall be buying it, and then again we continue to move lower, and obviously you can see I didn't really fake this cause you could see the time ticking over here.
And this is actually you know the charts today on April 21st, so it is alive market, and it’s just the natural tendency. You get good after predicting things for a while and looking at things for a while.
I can't say I'm accurate a hundred percent of the time, there's no way I have tons of losses, tons of losses but it took a long time to be able to learn to read these things, and a lot of this what I'm reading here intraday really comes from these daily moves.
When I look at these daily moves, if we take a look at the S&P, it comes from these daily moves because I'm reading the daily action, the probabilities. I’m reading the daily potential.
Looking at QQQ
If I look at QQQ, I’m looking at this level getting into filling this gap, right there, which is a large gap and then we rejected it. Look at how much volume we rejected it.
I watch multiple indexes, I watch the QQQ, I watch the SPY, I look at the Nasdaq Composite, which in fact is usually what leads the market, not always.
I like the SPX and I like the SPY for the volume. And typically when I look at resistance levels, I look at the range but really you're looking at the highs on the bars for the day.
You look at where the biggest drop or the biggest pop is off the bottom and you check that price level, because that's where the most amount of money is either lost or made, that's where the price action is.
For example here, we have a light little bar, but it went above that little range so I got into this yellow zone because I marked it as a zone, rather than just a line. So now you're watching this zone.
Now I’m looking where is the biggest swing point, and the biggest swing point one of them is right here, the highs right here on this bar of 12/19/2014, this is the weekly was 212.97 to 13.
Another one right here was right around 5/22/2015 but the volume was weak so there wasn't a large reversal. I'm looking at the spread, the spread of that volume as well.
I’m looking right here Friday of June 19, 2015, we had a fairly large amount of volume 631.2 million, so there we had 213.34, so again 213, right around that level so you got to give it some wiggle room.
July 24th, 2015, not a lot of volume, so I'm still looking it still 213, give or take, but not as much value. We had follow-through swing high of 210-211, 210.68 on August 21st 2015. We tried to get back into that with 466.4 million at 211, couldn't do it, didn't even get 212.
So 211.66, we needed 466.4 million, and we didn't do it. So that means this week, if I look at it, we have 466.4 million we need 466.4 million and it is already Thursday and we're only at 300 million probably by the end of the day.
Will we do it? Considering the daily move is about 80 lately, will we do it? If you add 80 it will be 380 versus 466, probably not. Then we re-attempted this a couple days later, we re-attempted it, let’s just say the next week, we sold off on 549, we tried to go up on 466, we sold off on 549.
We re-attempted at 542 that was November 20th 2015. We re-attempted with 253 million, couldn't do it, that was the end of November 2015. The next week after that December 4th 2015, 677 million more volume but still couldn't do it.
And then we sold off with 694 million, look at that, 677 we attempted but we sold off both 694 think about that and now we're coming up on 300 million add 80 because for tomorrow. So that would be 380. Do you think we'll be able to do it? Possible, but unlikely, if it does then it's not really sustainable it's not as healthy.
That's why when I look at these things, the bigger picture, longer term I’m more bearish little unamerican I guess you could say, but longer-term I’m a little bearish because were overextended.
Shorter-term, this shorter-term move, you could say I'm still a little bullish because what we can do is pull back about 50% between the swing point, so from the lows to these highs over here fifty percent would put us right down around 196, and even a 200 range would be right at two thousand right at S&P500 to 2000 which would be that support and resistance line right there look at how that goes in perfectly.
So even if we traced to 38.2 that bring us right at the S&P 2000 level. If we look at this SPX chart just to show you a little bit cleaner right here. Even if we start this pullback right here can see how that comes in perfect at the 2000 level okay.
Looking at the intraday volume and the market still rolling over, you can see the energy is still to the downside.
Anyways this is what you do, if you watch the five-minute there's going to be a lot of noise on the five minute because of that meta pattern that we talked about, you got this meta pattern and it's hard to read it because of this five-minute.
Even on the one minute, I don't watch the one minute. I was using it earlier as a demonstration purposes. It's very tough to get a clear direction by just looking at all of this, because you'll see spikes like this and then you'll see sell-offs like that, you just get confused, especially if you’re new.
If you're new stick to the daily, stick to the daily, it's going to be much more beneficial for you. Trade lighter, learn and work off the daily. When you watch the intraday you going to get confused but for those of you that a little bit more experience, I wanted to share with you a little bit more of that intraday action here and how I look at intraday.
Here as this selloff starts right there, that selloff initiates, and then how it continues to follow through and I tweeted about this as well, I believe. Let me take a look here at my Twitter account, what I did was I tweeted about this I believe somewhere in here.
Let's see my tweets five hours ago right around 9:38 a.m. the market set up to move lower we've been moving up on lighter volume, so you want to be careful.
A day ago this was right before the close there on 420, right before the market closed I went ahead and send little tweet right there that said go ahead and the markets typically don't crash up, they crashed down, so always protect yourself.
And also 3:15 in the afternoon, I don't tweet that much that's not my main thing. All the tweets that I do with social media all that stuff it's sending out, you'll notice, I don't really follow people.
I send it out and for those of you following whether that's on StockTwits or on Twitter then by all means you get the information and notifications but I don't really do a lot of socializing on Twitter that much, unless, it's to my Twitter account because I'm able to manage it here in this panel and in this platform pretty quickly.
But you'll notice here even 3:15, don't be naive thinking stocks will go up forever, I went ahead and mentioned this one, this was a little chart, talked about it here, this is where they ripped out that rug from under.
You see this volume coming in, this was the one minute chart, you see this volume coming up, it's so light its light volume it was going up all day and you'll see probably in the social media. What happens is all these people will start to pump these stocks.
If we go to the daily here, we’ll just take a look at this range right here. People talking about buy the dip, this dip, that’s not a dip and they’ll pump it right here and takes it all day exhausted. Think about this after running a marathon you continue to run a little further.
It tries to run further and that in one hour it takes back just about all of those gains, just about everything.
And then you go ahead and now you re-attempted, you break lower, you try to go ahead and pop it a little higher to retest cause there's those people still in there thinking “oh this is just a buying opportunity”, and it maybe we could go back and retest the 2100.
Again there's nothing wrong with that, but how far extended are we?
Here we went up, we tried the retest this 2100, got a little above it which typically what happens is they spike it. Think about it, they spike it higher, let me see if there's anybody going to buy more calls buy more stock, or buy more shares they try to get it above that and then they take it back down, they rip it.
Then again you get that next pattern right there were some of the shorts maybe the day traders will take some profits. Then again from lower, this is how it goes.
And then what starts to happen, this is the initial beginning. Now not saying this is going to happen, I'm not saying we're going to have a massive selloff right now. I'm not saying that, but I'm saying, this is how they start to set up.
If you watch the Daily, and then you see this same thing that we're talking about on the daily, if you watch the daily and you see the exact same thing happening on the daily as I'm talking about right here on the intraday, then this is how they set up to really move markets.
So what's going to happen then is basically then it'll start to trigger people in this price range and in this price range at the 2090, 2080, as it gets closer they start to get worried, then they start executing sell orders.
Then you got people saying “oh well this is starting to do an ABC pattern, ABCD pattern, let's go short” Now we’ll start to go short and the market's turning around so now you get people on the short side.
All these things start kicking in and you got sell orders, and then you got people that are working that are at a day job that their order start kicking in as well. All those things start to happen but it doesn't happen all in one day.
It's very rare for it to happen in one day, there's only been a couple of a handful of crashes there like for example in 2010, like the flash crash here in 2011, we had some major crashes in here in 2014.
You know there's some crashes that happened in one day but it's very rare for it to happen, maybe once a year here and there, but in general things slowly start picking up and accelerating to the downside, they take a couple of days.
Here you'll notice when we had this downward action, we had a little exhaustion pop and look how light volume, very light volume. We didn't get that yet here, that's why I say we could still bounce here at 2070, and we could still bounce around that level.
Anyways what you may get is how these things start to go, is they start slow, right here, and you get either exhaustion, they start slow. Here in this bar start a little bit lighter on December 30th 2013 then we start to pick up more speed.
The next bar’s a little bigger, the price spread, the range of that spread is a little bigger. Then the third day it's even bigger, then we get a little pop.
Now this fakes a lot of people out, the people that went in on January 4th, 2016 they go short the retail traders but then you get a one- or two-day pop sometimes that happens because now you have the other people that were ahead or early taking some profits just half off a quarter off.
And then you get stopped out and you say oh I’m too large and you get pushed out of that position and then market continues to follow through. The market follows through and continues to move lower exactly what you expected it’s just you had that counter trend bounce.
Then again you get two days of Bounce, so here we had January 11th and January 12th, two-day bounce and again rip the rug out because you got the value buyers, you got the shorts that are buying back their shares.
You also have the buyers who are currently bullish, they'll buy it back right there and buy on the dip, markets going higher, and then again lower.
This is what happens and they typically start like this with a one day to day and they start rolling faster and faster. Here, getting back to overall the market, what am I seeing? Let's just simplify things.
Looking at the market we’re overextended. Can we go higher? Yes, Absolutely. Would it be healthier if we went sideways for a bit? Yes, Absolutely. If we go higher on lighter volume, I would expect this market to roll over.
If we start accelerating volume to the short side it's going to go lower. A healthy pullback would be right around to the 2000 level and then if we go sideways for a little bit and then if we bounce that would be healthier and then I could see this market going higher.
However, right now it's a little overextended, it's quite overextended and in my opinion for this short term until we still get major selling coming in, which right now it's still not major selling we got selling coming in but until we get major selling starting to come in right here on that next day, the second day, the follow-through day, when you start seeing a pickup on the second date that’s your confirmation.
A one day doesn't make a trend. So I always say one day doesn't make a trend so even though we're getting this little bearish retracement.
One Day doesn't make a trend
One day doesn't make a trend, but if you see a second day follow through on even bigger volume and let's just take the SPY, right now we got we got fifty million on volume but it's not the end of the day yet we still get a couple hours left in the trading day.
However, if the second day the next day we get more volume coming in then you could see the market starts to pick up speed and that's where you might see 2000, you might see 2072, you might see those kinds of things.
All in all the trend has been to the upside so the bulls are still in control, so you have to be mindful that you know you can start this bearish thing at any time, you can’t be naive that the markets are going to continue going higher.
You can't be constantly a bull, you need to trade the markets. Stop thinking of a bull or a bear, trade the markets based on the signals and what they're doing. And typically when most people are screaming for you to buy that's when you sell, when most people are screaming for you to sell, that's when you buy.
You have to be a contrarian. I know that's it's a weird feeling but that's the way you typically have to play these markets because there's a lot of psychology that goes with it because most people are late or too early.
Emotional Cycle in Stock Market
Let me see if I could find a little diagram for this. Here if you search for stock market cycles emotions there are a lot of different diagrams, really. The one I want to show you know you can look through these and just take a look at some of them.
Really what happens is, if we just take a look at this one here, what people do, is initially they start at “Ah, the price is going up, let's watch the market the trend is holding I’ll buy it the next consolidation” then it's like damn I miss the consolidation but if I wait any longer I want profit let's buy so they buy here at point three then it’s good thing I didn't wait then the market starts to sell off.
Here, it's starting to roll over then I’ll use this correction to increase my position but they're unaware that now the move is ended.
The extension was too far and then you know brilliant at this price let's double its so then they’re right at number six and then at number seven you're starting to hurt.
Number eight, you don't believe it and so forth you keep going through this crash and you go through this and becomes very emotional and by the time you hit this step eleven you’re enough, you're out, you're staying out or you're holding onto your position hoping and waiting for it to come back.
And then you start repeating this process. Really good thing I sold everything because the market keeps going down and then it starts to pop then you say it's going to tank anyway then it comes back and then it says I told you, yup, it did tank then it started to pop and then it starts continuing on this next cycle.
You're going through this, this part is really, the cycles that we're looking at really is this distribution part right here near the point three and four even point one two and three and four is kind of distribution and then you start to get that market selloff then again you get distribution between 12, 13 and 14 which is healthier and then again you get accumulation so it's a market pop. .
There’s four cycles to the markets, you basically have the accumulation phase which move sideways. Then you have the markup stage, which pops the market. then you have distribution which again go sideways but it's at the top of a cycle, the top of a buying pattern.
And then again you get the selloff; you get the markdown stage which sells off.
Here you can see all four of those cycles they’re not presented all perfectly but if I show you Tesla, right here, you can see all four of those cycles really clearly just because it's already really gone through.
So here we have the accumulation stage which lasted a few years of the markup stage right here which you could say goes through a couple of markup stages but let's say this is our mark-up stage. Then we have some distributions stage right here and then partly markdown.
And then again you'll get some of this again, accumulation, mark-up, then distribution and then mark down stage. So we go through these stages and sometimes if you're looking at a little bit more of a zoomed in versions let’s look at maybe a three-day chart.
Here you'll get your markup stage right here, you'll get your distribution stage, markdown stage, and then you get partly a little of accumulation but really this is just a partly retracement because here we have the A to B, B to C, and C to D pattern, so the pattern wasn't fully complete.
Anyways, as you start taking these things even bigger and deeper you want to look at all these patterns and all these time frames because now you could say that this technically is a distribution stage, so we had accumulation, it depends on the time frame your trading, if you're a short-term trader or longer term trader.
Then we had a mark-up stage, now we’re in the distribution stage and then could we have a major market down or sell-off stage which would be somewhere at 109 level, we could or we could power higher right here which could create A to B, B to C which would be sideways and then a C to D, could go to more of a to the upside.
We could do that, because B to C sometimes will do sideways but again it depends on the time frame you're looking at because look at the volume again coming in, we had a volume descending right here and now again we could see it on the next stage.
It’s a tough stock, tesla is a tough stock it has high short interest. It’s very difficult to trade and typically you got to be on your game when trading Tesla but anyways looking at the cycles that's really what you're watching, it doesn't matter which stock you're looking at, whether that's a Disney.
When you start looking at it you can always find those cycles, depending on what time frame you're looking at. Here is the Monthly time frame and again you'll see those things.
Look at this mark-up stage right there you had slight distribution right there. We didn’t have a markdown stage on that and that level right there yet but it happens.
Whole Foods, if you look at Whole Foods it goes through that as well you got the accumulation early on, mark-up, little distribution, marked down but then again little accumulation, mark-up then you got distribution that happens here and then marked down stage.
So they go through it. And then the next step what do you want? you want to see accumulation, you want to see accumulations sideways, a sideways pattern, that's why I always say sideways is healthier.
For me when I look at this market right here, if I look at it sideways, If I look at the market I want to see it sideways because that would be good accumulation but if we don't see that's why I say could roll over. If you look at these up there we go, you can see it’s starting to rollover even further, because my TC2000 is 15 minutes behind here.
You can see here continue to roll over and you'll probably see in Stocktwits or wherever right here there's probably going to be some bulls in here that’ll just pump it up by it, you know things like that, so if you look through this you'll probably see some people that are definitely pumping the stocks and this is what they do bullish is in line in the sand, there's a lot of people that do that.
And some people do, they buy on the dips but you know becomes painful if you don't have tight stops you know here is bearish, mostly of people for today will be bearish but in the morning you probably, if you'll probably see a lot of people that'll be pumping this.
Let's see here we're still at 226, I wonder if I can get down into the early morning tweets here that, you'll probably see a lot of people pumping it to go bullish and that's ok, there's nothing wrong you’ve got to have a market, you got to have bulls and bears to be able have a market.
Here you could see just bought the dip delicious at 2:05 p.m., 2:05 was right around here there was that dip, so bought the dip, I don’t know, you got to decide who to follow. Maybe we can do something regarding following people or learning from people or traders that might be a different lesson.
You'll see that in the early morning sessions, I mean we're still at right here 1:46 in the afternoon, you'll probably see more bulls right there. Don't let me down by the dip we’re almost at 2:11 yesterday. So you'll have some of those bulls there.
And you know I'm not saying the wrong specifically, I'm just saying that for the day, you know their time frame might be for 2 minutes, they might be holding that stock for two minutes right here they might have bought this dip, rode it up right here and gone now because are they going to tweet out every trade? No, they’re not.
Can I tweet out every trade? I don’t have the time to do that every single moment because for me once the position is on why do I want to do that, why do I want to have headaches to trade. I’ll day trade from time to time but why do I want headaches to by this tick or sell that tick.
Be patient with your trades
I make more money just sitting and being patient. If you can sell at that the tops, right here once you see you this, somewhere over here you don't have to get it perfect over here, you could even get it next day comes back to retest the 2010, sell it short and boom you ride it down.
Be patient, why go in and out and in and out. Same thing like I said with the doctors, I got to go second visit and a third visit and we're going to double check, do everything at once.
One of the funny things I did back when I was in college with these doctor visits when I had my wisdom teeth pulled out, I actually made two appointments not by mistake but we made two appointments just in case to go back a second time and because you have a 24 hour cancellation notice.
So I made one appointment at let's just say August 1st, that was going to be the check up and they told me they're going to say we're going to do a check-up August 1st and then they said probably within two-three weeks we’ll go ahead and pull your wisdom teeth and here my teeth are hurting, they're pushing on the side of my other teeth.
Then what I did was I went ahead and called in and made a second appointment and I needed to get these suckers pulled, and I made a second appointment for three days later. Again consultation so typically it's thirty minutes for the consultations whereas with procedures 45 minutes or an hour.
Anyways long story short, when I went in for the consultation the doctor said ok they need to come out why don't we schedule something and we go ahead and we say, well we have an appointment in two days and he checks into and he says it's a 30 minute appointment and procedure will probably take 45 minute and would you want us to cancel the appointment or would you want us to cancel and reschedule or do you want to just do it then and we'll come in a little early if you want.
And you know went in, got it done, took care of it and you don't got in on time but that is just trying to watch what's about to happen, predicting the future, predicting the outcome and it's not always going to work out in your favor but you do what you can in the most honest ethical way and get things done.
Get things done
Get things taken taking care of all-in-one swoop because otherwise between filling out paperwork, checking in, how are you, and all these things did take time. They take time energy and if you can just be patient and do it all in one swoop, ride the trend down.
Here you can see A to B, B to C and C to D, if you can do it all in one motion, you'll be much more successful, it will be much more rewarding if you can bulk things up, just like bulking up my video lessons, bulking up your tasks that you're doing, do it all in one day.
If you're doing gardening do all the gardening in one day rather than tomorrow I got to do more gardenening and then you have to change your clothes and then you have to get out the shovels, get this out, get the lawn mower out and all that stuff.
Anyways that's basically the review and session I wanted to share with you on the market today.
I mean you know you have to watch for a second day follow through and what's going to happen here and what's going to continue moving because we could get a counter trend bounce tomorrow and retest this 2100.
Because sometimes what they'll do is they'll come back to this level and then they’ll bounce and retest it and then they might roll over again or bounce or move sideways and then they’ll power higher.
So you have to be patient to spot these little signals and those little signals and things we talked about on the intraday, take those and apply them to the daily and the weekly chart because that's going to give you a more firm support and resistance line.
It'll just be more viable, it'll be more sustainable, more worthwhile.
Anyways hope this gives you some insight to the intraday, looking at the intraday just about the insight of how I look at things on the intraday. I really don't watch the intraday that much, if anything I'll watch it on the 15 minute, I'll look for some based levels but then really I'm looking at the daily right away.
I'm looking at the daily and that's it, I make my decisions on the daily. So if I can emphasize that to you focus on the daily and the weekly, the weekly will tell you more of a longer-term, that's where you make your decisions.
And then if you scan it, if I'm scanning just a fifteen minute, I'm scanning for how the price action is and I usually will check fifteen-minute maybe thirty minute because I'm watching to see this volume, where is that volume, is it light volume because if we’re popping on light volume I really don't care.
It's not important or relevant because it's important in a sense where I'm getting ready for something and you can see that be based on Twitter based on the feeds, the things I mention.
I'm not going to give you an exact entry or exit point but things to watch for and if you are ready and if you're patient, I want you to succeed in this business, I want you to get it because you need to really be patient that’s probably very tough for a lot of people, it’s probably one of the toughest things to learn but it’s going to pay out big, if you can learn to master your own internal self.
Do some studying maybe, watch this video second or third or fourth time maybe it'll help you review those charts, diagrams and start focusing on your trades your own trading and if you start following people, follow one or two or three people that you can relate to but then you need to understand why they're choosing what they're choosing, not just somebody that just says I'm bullish today, I'm bearish today.
Understand why they're making the picks that they're making and then you can apply it to yourself, why are you making the pick, or the check or why are you going bullish, why are you choosing to go bearish, you know you need to decide that for yourself and then that way you can see where you're making the mistakes where you can improve on.
Then you say well I won't do that again and then you continues saying, I won't do that, I won't do that and eventually you'll get to things that you do successful and continue creating a system out of that.
I hope this was helpful, it was a little bit different of a video, more intraday charts but you apply it to the daily and makes a lot more sense and you know hopefully this was insightful because I wasn't really sure what time I would get back so I pre-filmed few of these little segments early on in the day to make a nice little recap for you just because with these doctors’ visits and so forth.
Anyways enjoy the rest of the day. Thanks for joining me and thanks for sticking with me. Most importantly, remember there’s more to life than money go out, do what you love, contribute to other people and most importantly live life abundantly.
Trading them well! Take care and I'll see you next week