Listen to the Podcast
Hey it’s Sasha Evdakov it is July 30th 2015 and welcome to the Rapid Recap. This week in the Rapid Recap we're going to be covering the lesson of extreme Stock Market Trading at the END & BEGINNING of the Month.
That’s the key point for the lesson for this week and if you haven’t joined us before on the Rapid Recap we usually do a discussion about some stocks, some common stocks and then we'll go in detail with a little bit of a lessons.
I apologize for not being available last week. We were down in Florida just enjoying the water and then where I was at actually at the time we were visiting a friend and by the time things were said and done. The internet wasn't working as great as I had hoped so we didn’t do the Rapid Recap but usually I try to do about 43 Recaps per year out of the 52 weeks in a year.
I really try and strive to do them almost every single week and now there's a few with the vacation days that I try and take that I don't do them. This week just be prepared we’re going to have a great recap. I'll do a few stocks and then do a lesson about trading at the end of the month something that I haven’t covered much in the past. Be prepared let's get started and let's get going
First things first I do want to let you know that I did pose some critical charts for those of you that are members today as well there's thirteen charts and one the first ones the free chart by the way if even if you're not a member you can always get a free chart.
The free chart is cake and now you can see here I even put the previous chart here so that way you can see what we were talking about in the previous critical chart. We talked about the stock potentially coming back to 55 and bouncing and the stock did exactly what we projected, exactly what we were looking at.
Notice that stock currently pulling back and then bounced so take a look at those critical charts if you're a member just go ahead and sign in and they're posted. Some more charts in there for you and if you want to get notified automatically when they are posted just connect with me on Twitter and the website automatically feeds to Twitter.
Alright with that being said let's start out right there actually let's take a look at CAKE so I took a look at this stock for quite a while. I've been watching it for some time just because the energy it's been building. I noticed that it was hitting a few are critical areas on the stock and one of those was this resistance point right here.
Now your next entry point really would have been right here but unfortunately the downside behind that was if you notice it gapped up a little bit when stocks gap up sometimes I don't like to chase. I may nibble by nibble I'm talking about. I may put on a very light position here at the top once they kind of get a moving so I may put a light position here because they have a tendency to pull back.
If it's strong enough they’ll retest this and bounce okay so that's where you enter your full position and once you start seeing the bounce and that's exactly what we discussed in the critical charts so you had a play by play on that on that the stock really was showing you its hand right here building energy exploding there to the upside.
Let's see, was it that day that we had volume? No, the next day so we had volume right here on the next day but you can see that even the day before we had a very powerful volume bar right here where most of it was just at this level and then we hit that bar and right here the stock started to push it didn't break it yet it just started to push on this level and then finally broke out and we broke out on massive volume and when you do that you always just be prepared for a slight pullback especially if you gap up.
This happens on Amazon it happens on Google and we'll talk about but then just be patient waiting for that set up right there bomb stock powered higher looks good for higher prices and if you got in it right there where we talked about it then now you know just continue to peel some of in the strength especially as we hit this 58 dollar level. So just take a few shares of for-profit but you can see it nice clean line nice break, solid.
Let's just take a look at Dow Jones and the S&P and you can see here we had a little sell-off and then we’re popping again I'm not buying into this little pop, it’s light. I don't see the strength at this point.
If you look at the S&P here we're still moving sideways when you really look at it in you really boil it down we're not really powering higher because of still from January we're still kind of moving sideways. So it's a stock pickers market and you can see what's been happening is that the last three times we’ve reached these levels basically 1, 2, and 3 we pull back.
Now the times that it bounce was coming back to this level so you can see came back here and bounce this time as a little bit different we bounce here off of that 200-day moving average but really I mean I'm not seeing the full strength yet and I'm not getting in til I see it clearing this line and I’m patient I'm waiting for the opportunities.
That's what I do same thing with stocks like Apple. Looking at this stock and looking at Apple right here you can see that the stock we've covered it handful of times many times that right here this was the initial sell-off point. The next point right here was earnings this one as well sold off.
Now we have another one down again that's why I am waiting for this line to clear if I’m looking long but now it's looking actually more of a setup for a short. Really if you're looking at the bounces where's it holding up its holding up right here holding up break here and now we're pushing down on it. Now we did come back right here and the stock bounced but usually these bounces are short-lived it’s oftentimes these shorts taking profits because they knew it was going to do this.
Stock came back up right here rejected it couldn't even fill that gap fully came back down and now it's pushing lower so when you look at the stocks it doesn't matter what it is don't fall in love with them it's pushing down its pushing down. Now you want to be extra careful on this stock specially the stocks that people love they love them and when they love them what happens is they drop but then they snap back they snap back because people love them and they want to get in a matter cheaper price.
Be very careful that if you're watching this you have a tight stop a safer bet would be a 118 with a couple dollars of wiggle room four to five bucks wiggle room. If you want nibble once it breaks right here with nice volume picking up you know it the 120 125 level right around there that might be a good area for short but you're always watching this because why what happens what happens over here we draw that line across look how that worked out perfectly so some of these things that I don't always show you guys and I don't want to over complicate the chart but look at how this swing point right here comes into this swing point.
You're always watching different levels that the stock can come in to and how it's going to be. The same thing that we talked about before on Apple that we have an A to B point, B to C and C to D point those of you that studied the green stock trading foundation course or even the blue course technical analysis course know about these ABCD pattern so I’m still on the same camp with this one with Apple I'm watching the swing lows its pressing on it and definitely if it breaks lower definitely going to be going short.
Next stock I want to cover is Twitter same thing on this one. I've been looking at this one for a while we have this line right here that it broke or I mean really we're looking at this short way back here. Ideally we are watching this for months on the short so here was the upper trend line little triangle pattern resistant rejection right there in April. So when we rejected here there was a huge sell-off then you create another support line right here that stock was basing so if we zoom back in that stock was basing right here here and building cost for pushing lower kept pushing.
Now it broke lower again can we snapped back and you know re attempt the 34 dollar level absolutely but you still have this are critical swing point and line up at thirty dollar level but it is stock if the stock breaks this thirty dollar level then y'all better off. You can see it going much lower you can see lower prices and I can share with you a handful stocks when I use to trade I used to love to trade this one back when I was a teenager back in the day when you look at the monthly.
Over here we traded thirty dollars and forty dollars and so forth you know and this stock has been at the dollar level since 2009 so just because it's Twitter doesn't mean it can't be cheap stock. Always be mindful.
Look at Groupon you know how popular that website is the Groupon website all the other people posting all the stuff on the Groupons and the discounts and everything and sharing it on. Huge web, huge company massive traffic but the stock look at the stock its it since 2013 it's been a 3-4 dollars three four dollars. Can it happen to Twitter? Absolutely, will it happen? I don't know time will tell but which you can do is manage your risk manage your money manage your portfolio manage what's happening in the marketplace and trade it accordingly.
This stock would be a very nice short if you're not short on it already be a nice short to get into right around the 20s, 29 and 52 cents 55 cent, cents right on their twenty nine dollars. Obviously on volume, volume’s picking up you know you can even nibble some now. Just be prepared for a light little bounce maybe potentially to test the 34 because if it gets above this thirty four dollar level you can see it go back higher and play around in that region and level because again it's another favorite those managers they love pushing the stocks they love holding the stocks and again we'll talk about that here in a second.
They love holding these big boy companies because it makes them look good makes them look spiffy nice suit nice good-looking stock to show the investors what we got.
Let’s take a look at Amazon this one gapped up okay gapped up and then again pool in back just like so many other ones we talked about the one they gap up they pull back just like the cake just like some of the other stocks they’ll pull back and retest level sometimes they don't go back and fill the gap all the way depends how much strength but this one if we take it out to the weekly you can see that the stock’s been building a nice stair step pattern.
Right now to overextend it I wouldn't chase it but if we have pullback and the stock fills the gap and then bounces just like we had with cake you know stock gaps up even though this one's a cheaper stock the principle is the same stock gaps up pulls back and then bounce you watch the same exact thing with Amazon stock-gaps up pulls back you know wait for bigger pullback this is a light pullback or you can nibble wait for larger pullback and then if you see a bouncing you can enter the stock okay but right now we're still trying to consolidate from that on that huge gap up.
Always be mindful where you're at stocks built power higher build up power higher you know it takes time it takes energy to build these patterns and momentum because they just don't go straight up you know they don't go for Up For Ever because then nobody would be selling it they just be holding on the stocks and nobody would be profiting we just be holding on the stocks buying stocks and not doing anything with them because that's the active trading.
Let's take a look at Google, same concept look at this consolidation pattern just like an apple consolidating pattern there it is it’s consolidating pattern we gap up we pull back watch this level for that pullback and if it starts bouncing right now it's not ready it got a few green bars but it's not ready, we gapped up extremely large that's why you always don't chase those gap up. You know most people sell-in and go earnings wait for the pullback and you can start to nibble if you get start nibbling here you got to give it a 35 dollar stopper so because that stock can pull back to 607 and nothing be wrong with the stock.
It can still pull back 30-40 points and that stock would still be healthy. Alright in the last 1 I want to cover we're just covering the big companies right now. The last one I want to cover is Netflix same kind of pattern same kind of things happening we got stair-step, action stair-step patterns you can see that the stock what it's been doing slowly stair stepping, long-term picture that's what's happening if you look into the more intermediate of trading look at what happened gapped up, pull back powering higher again. We’re retesting these highs right there stocks holding up, volume now coming in.
The days not over yet actually 3:42 p.m. here on the East Coast and we already are pushing out what is it 12 point 7 million shares whereas the previous day was 6.7 and some of the sell off days were 8.3 million so we’re nearly doing double. Almost double we'll see how the end of the day turns out but really holding up pretty well here as well.
Always watching how stocks move and the better you understand how they move the better the advantage you have. So I want to cover this little lesson in terms of talking about the end of the day trading beginning of the month end of the month and so forth. We talked about some of the big companies today on and that's the reason why I wanted to cover the big companies today was because it implements within this lesson now for those of you that are in the critical charts.
You know we have some other companies in the critical charts right here that aren’t as big of companies. There some other companies listed in there so make sure you check those out if want to see some of the other stocks that are in there because they’ll give you a variety of the stocks for this week.
In terms of looking at who moves the markets it is these big companies it's the Apple’s the Twitter’s the Amazon's the Google's the Netflix and I wanted to cover them to kind of tell you a little story some insight behind why these big companies are popular or why the hedge fund managers like trading them really it in the long scheme of things you have to remember that most of the market most of the other things that are being created moving that changes the market directions is these hedge fund is these money managers.
It’s all these brokers that really move these markets because they have a lot of capital the play with they have are some of them hundreds of thousands of people some of them a lot more and they play with other people's money and when they do the reports at the end of the month they're going to show something like this. So the money that Mister Smith has for June let's just to keep things simple.
Let's just say a one thousand dollars. In July he may have let's say 1200 dollars now along with each one of these months there's also usually a breakdown so what happens is there's a breakdown of let's say they owned Apple they owned Google day own Netflix they own Twitter maybe they owned Amazon and his one thousand dollars. He has a slight little piece in each one of these companies.
Now in July it's going to look maybe something exactly the same it might be again you might have maybe one stock that might change or one or two maybe you have Exxon Mobil or something like that but its popular companies, companies that the person can relate to and that is because they need to print out a statement of what's happening what's going on.
Now the thing that they don't have to do is disclose what's going on and what's happening mid-month so if we backtracked this and we say okay this is July 31st, what's happening in July 1st and July 15th, what goes on between these time frames is slightly something different so what may happen then let's just add another date so July 25th, what may happen is on July 1st these investors up may get into these hedge fund managers they rotate positions because that's kind of what happens on June 30th on 2015 to July first and so forth they do a lot to rotations so what's going on is on July 1st they get into some positions that maybe you don't even know about.
Let's just say JEC, AMD let's just talk about some are companies that maybe aren't even listed let’s just put a few tickers on there that just make no sense. We may have some positions on these risky place and then maybe we'll have like an Apple and Amazon and one or two other ones but most of the portfolio might be more risky plays.
That’s July 1st by the time we get to July 15th you still may have somewhat of a similar portfolio. You might have a similar portfolio and they start evaluating what is it that's losing money and making money so if things are making money they’ll keep it obviously to show their investors if things are losing money they may let's just say they’ll eliminate one, we’ll eliminate one.
Now if things are really bad let's just say things aren't working out really well in their favor or they want to show a little bit of strength the investor may not know who AMD is or who 000 or PPP is, they know Amazon they know Apple but they don't know who these other companies are but they can relate to Amazon they can relate to Apple they have an emotional connection to them so what happens in July 25th is they start rotating the position they may get rid of these positions and they may put in Google.
They may get rid of this position and then they may put in something else like let's say Twitter or whatever. So they start dressing things up that way by the time we hit you know June, July the end of the month by the time we hit it everything looks very pretty, very nice. It looks dressed up and it's called window-dressing and that's really what happens so even if for that month this guy Mr. Smith lost let's say three hundred dollars.
It doesn't look very bad because you know I mean he owns let's say by the end of the month some of the best companies out there, some of the best companies that you can own. That's really what they're doing at the end of the month and that's why markets towards the last few days of the month behave the way that they do and what happens there on those first few days of the month again August 1st or the first trading day I'm not saying August 1st would be the trading day becayse years change but let's say in the first few days of August what happens is again they may buy something the more speculative , they may buy something a little more risky or whatever it is and then after that you know they may put in or hold some of their other positions just to make things look good but they rotating out and they adjust their positions.
Now, really the whole point of it is because people are giving them money they need to send reports what's going on with their money every single month, how was it doing and what are the positions are they in. You know different um brokerage firms company, investor, people that manage your capital if you give it to them armed they send you different types of reports but really this is what it comes down to and they have to show their investors or the people they're dealing business with somebody that just gave them five hundred thousand dollars or a million dollars they want that portfolio they want it to just looked good at least look good even if it's not making money.
It's got a look at least good on paper regardless of how much it’s making now it’s going to look even better if they're making money but if they're not they just want to dress it up and again this is called window dressing and that usually happens the last few days of the month.
Now there's this study there done as well here it is actually by Fidelity and I just stumbled across this on monthly trading patterns and you know you can read the article for yourself but it's called monthly trading patterns human behavior shapes market activity and I'm not promoting the article I just want you to see this chart just as a reference point.
What happens on the performance of each day of the month based on the number of times closed higher on the previous day? So take a look between January 1953 and December 1981 so the mid-month is right there at that arrow but the beginning of the month and the end of the month look at that look at how much trading volume is going on and what's happening and you can take a look again and this is another chart here that's a little bit difference with the S&P I'm and they talk about different studies for the Dow Jones and some other studies and these are things that are interesting in terms of just looking at it in behavior of psychology or market behavior.
Now if you understand this concept you're looking at it and your stepping back and saying whoa okay things maybe are not going to be as good as they really seem because it's the end of the month so take a chill pill take a step back be patient relax for a moment.
You have to a look at the market as a whole but then also look at your individual positions but understanding this the way that markets moving behave is just something that allows you to see things in it in a better form in a better picture it's kind of like if you're colorblind you know you're only able to see a picture one-way with black and white but if you can see colors and you can see the different shades it allows you to really digest many more forms of color so think about that way if that helps but really when it comes down to it looking at the end of that month remember that it’s mostly window dressing and buy that a lot if it is fake it's a façade.
They want to show you positions that they are going to have for their customers. That's not to say that you can't trade the stock so if you're wondering okay can I trade Netflix because it's the end of the month? of course you can of course you can just be mindful that it's the end of the month and you may want to sell some shares in into strength and be mindful that things may pull back or things may idle or consolidate sideways and then and you know mid-month and things like that but otherwise take a look at the stocks and start applying these monthly trading patterns and what did they tell you what does it say about the stock how is it moving and it's the same thing when you apply it to earnings when big events come earnings trade with a lot of volume.
Take a look at this bar right there, this bar right here these earnings move those stocks and the end of the month the same thing the hedge funds move the stocks because they need to show their clients their investors a nice result or a nice portfolio or what they're doing.
Keep that in mind when trading look at stocks the way that they're behaving take a look at the end of the month how things are moving and just keep an eye out for all those different trade how they're moving how they “hey okay I'm not going to buy into this because I know the move may not be real” or hey this move looks great but I'm going to be more cautious about it”.
There you go thanks for joining me in this lesson and I hope you got a lot out of it in terms of window-dressing about how stocks move towards the end of the month and the beginning of the month because they do trade a little bit differently and those are some of the reasons behind it so be mindful but there's not much you can do about it.
You want to be a little more cautious about the stocks that you're in or the stocks that your trading or the risk that's involved within your trade or the things that you’re involved in and that is because you know if you're in the right trade and it's you know the end of the month then maybe your stocks will pop on the other hand if you're in the a right trade at the beginning of the month again your stocks may pop if you're in the right trade and vice versa if you're in the wrong trade at the end or the beginning of the month again they may move in the opposite direction but then may reverse.
Be mindful of what type of trades you’re putting on because towards that end of the month a lot of it is just simply window-dressing. I do want to again thank you so much for joining me week after week especially for those of you that continue to watch every single recap that I put out you know I get some great emails from all of you saying “Hey, I watch every single recap” and again I just want to truly thank all of you for joining me sticking with me because to me that's really great benefit especially if something that I discuss mention or teach you if you go ahead and use that in the future to prosper to become more successful then I feel that a piece of me continues to live on almost indefinitely because it moves on with you through time.
Thank you for joining me member do what you love contribute to others but most importantly live life abundantly and for us we’ll be in Canada the next couple weeks and will actually be in Belgium so that's what we'll be doing on our vacation time and we’ll still continue to output the critical charts the rapid recaps all during that time but keep you updated as things move along on so the schedule or anything else really want change.
Thanks again and I'll see you next time.