Hey it’s Sasha Evdakov, it is August 13th 2015 and welcome to the Rapid Recap. Now in this week's lesson we're going to take a look into keeping a great mental focus when stocks don't go in your favor and I’ll actually use a real-life example here because a lot of the things that I discuss are also based on real life.
I'll share with you a real-life example as well just based on our trip that’s happening over here in Canada and how this applies to daily life as well as the stock market.
This week we actually went to the war museum if you haven't looked at it it's fantastic museum in the Ottawa area so if you're planning a trip to Canada definitely take a look at the war museum if you're in the Ottawa area, it’s fantastic place to see some history see some coins, see some memorabilia and just a lot of different things that really allow you to reflect.
We did have the option to go to a few different museums but we chose that one because it was a little bit bigger and it really made me reflect the few things when in that museum and really can apply to stocks as well.
In the stock market we're constantly battling for leadership for a win and the same thing happens in war and when you're in war you know there's always someone trying to win or take advantage when you you're looking to make a trade when you’re trading on the stock market there’s always the Bulls and the Bears that fight.
Now difference is between war and you know the stock market is obviously you don't have fatalities when it comes to you know trading stocks but you still do end up having a winner and the loser. So it really is just something to reflect and think about that every time you're making a trade there's always a battle that's happening really amongst other traders.
Keep that in mind that there's always something you're kind of fighting against and whether it could be someone externally someone else that’s you know you're making the trades against or it could be even your own internal battles that you're going through.
For example if you were going through internal battles of man I'm not setting my stops in the right place or I'm just not being patient enough or you know just not being able to hold on to the stock as long as I'd like to or not getting into the positions at the right time. I'm not patient and I’m not disciplined.
There's a lot of things that can happen in terms of your mentality in focus and that's kind of today's lesson is we'll keep talking about the great mental focus when a stock doesn't go in your favor and something to think about and be aware of.
First let's go into covering some stocks and then I'll tell you a little story about what happened to us here on our trip here actually it's a little funny but it really does apply to the stock market. First off let's take a look at some of the stocks of how things are going and the first one I want to talk about is Advance Auto Parts.
We’ll get to this little more later but here you can see here's our trend line we had it at the 165 level stock popped higher broke out here on, we had 4.2 million shares. Initially the acceleration of volume was going at 18.7 million and then we went on 4.2 million shares and that's on the weekly chart.
Now we're accelerating at 9.2 million shares and if you take a look at the daily huge explosion of shares and movement of price to the upside, so that one looks good for higher prices just watch out for a slight little pullbacks it is extended.
Apple we've talked about this one for weeks and months check the previous rapid recaps and if you're not getting a recap just about every single week or about forty five weeks out of the year then make sure you’re subscribed to the newsletter because not every recap is actually posted on YouTube to be able to see it publicly so make sure you go ahead and take a look at that.
This one we definitely talked about it for months, we had this consolidation pattern building and we’re talking about shorting it right here, shorting it here so there's a lot of opportunities that you could have shorted it.
Then we talked about it coming back here and I said any bounce here is probably going to be sold off, so he was the entry point really was right around this 125 if you could have gotten in it but if you got in early this was the selloff right there at the earnings part because it was acting weak for all these different selloff points.
If you take a look at it, here was the initial swing point here was the second one you could have sold off here, shorted it there, shorted it here and of course you take profits in the strength and then you get back into the stock after earnings but even if you got in it here or even on the break here you would have been just fine just that the run would have been 7 to 8 points.
If you would have had eight points on a thousand shares at $8,000 in just a couple of days and now the stock bounced here I said let's prepare for that bounce and then chances are when we have that bounce we will reject that at this price level so because the stock is in love, lot of people love the stock that's what happens.
The stocks tried to come back up here, in fact that kind of got up to this level from that point and then it rejected it sold off further. Again it's bouncing now but any of these bounces really are typically short lived.
Be mindful don't fall in love yet and just take a look at the chart, what's going on what's happening and be careful right here at this level when you get to this level up to 105 that's a pretty solid support level so watch out for the bounce there and take some profits before we get there but otherwise right now this one's acting weak even if we do get a little bounce to the 121 level, still in my opinion it's a little weak.
If it gets above that 121 on volume then things might look a little different but for the time being it's definitely not on my radar for a long we’re actually short the stock.
Next one I want to take a look at is LDRH this one's coming into again another few swing point areas and these swing point areas you can see these ones here and then another one right here and we have one here.
We tried to get it right here but it didn't make it so it sold off at that level so we have a few swing points here and we're potentially coming into this support level right here. If it breaks that level right around that 39.25 level it could be creating another short opportunity.
LXFT, a nice break out, here was our consolidation pattern you can see stock consolidated then broke out if we take a look at it right here on the weekly. It’s a little tougher to see but you can see there's slight consolidation you can see how the stock has been moving, a little pattern, breakout, little pattern then breakout.
The daily chart just shows you that consolidation pattern moving well powering to the up side. We're not in the position right here, we're treading lightly actually for the time being just because we’re on vacation but we do have some positions on.
Netflix Stair-step pattern, notice how the stocks stair steps and when we talked about this stock before you can see that this stock pulled back and then powered higher, it's pulling back again and it's potentially could power higher so watch this support level of 116.64 - 116 if you're looking for an even number you know something around 116 or 115.6567 watch that level or areas of support.
However, right now look at this descending little trend line it's starting to break out of there so it could potentially pop and bounce at that level so keep your eye on it.
Panera, here’s the weekly chart again watch these swing point and these stocks typically will bounce here so always be mindful, here’s a swing point here's another swing point, here’s the swing point and then we’re coming back.
So we broke out and if you were able to catch it and fortunate enough, got in it right here this was your long entry point then take some profits and now watch this level carefully because this is where things could spell trouble.
If it sells off here then look out below but for the time being typically these kinds of stocks they’ll hold their support and they’ll comeback to retest it to hold the support, no position on this one obviously but if you're looking for it wait for that bounce to take it higher and I’ll show you examples of those here in a bit.
POST looking at the weekly again there's the swing point breaking out heavy volume there’s your volume bars right over here so you can see those and taking that stock it looks good for higher prices.
Sabre, we talked about this with one of the members, one of the students and you know he talked to look at some of the charts. We talked about it last week I think or in the critical charts. Again stock popped broke out came back slightly and now bouncing a little bit so it didn't fully come back to retest this level.
It’s something you want to watch but that's what stocks do is when they break out they come back to retest levels to retry them retest them time and time again. If you look at it here how this stock worked out right there was the breakout point came back to retest it and BOM, powered higher so here was our trend lines as you can see that's how things work in the markets.
It’s just being prepared for the movement knowing how stocks move and how they behave. This one’s kind of interesting I like seeing these kinds of things here we have an A to B, B to C and potentially C to D so it's building cost, a nice short entry opportunity.
Here's the next short entry point would be right here when it clears 48.26 or 47.93 if you want to be on the safer side on volume but this one's picking up speed. If you're in a stock right now you want to watch that 75 level but otherwise this one’s creating that A to B, B to C and C to D pattern for those of you that have been with me and studied the ABCD pattern structures.
Here they are again let me point them out A to B, B to C and D should be down here. Same distance of A to B as we have C to D or very close to it at least.
The last one is W, Wayfair so take a look at this one building a nice consolidation pattern powering higher looking good watch for a pullback. It's a little over extended right here so watch this level right here overextended could pull back to this gap but right now its powering higher so if you want you could, if you normally trade let's say a thousand shares you would trade 200 shares.
If you normally trade a hundred shares you would trade maybe 20 shares so if you normally trade 50 shares let's just say you'd trade 15 shares you know and you could nibble some and see how that plays out but you want that’s top-level to be right there at that 39.75 to be on the safe side.
Those are some of the stocks that I wanted to cover today. I do want to let you know a little story here in keeping a great mental focus when stocks don’t go in your favor. This week's lesson is not everything is going to go in your favor in the market, similar to how in life.
In fact actually we're driving back just this week so from the war museum and so you know for us it was about a 45 minute drive or an hour drive to get back to where we were staying from the war museum because we're over here by the lake and you know on our way back what happened was I guess because they're doing a lot of road construction and things like that and debris picks up.
We have a car and vehicle and so forth so you know we get home fine no problem, wake up and then you see a tire that's half empty on the car. First things first you know you go ahead and you normally what you do, you put the spare on you drive it you get the tire patched or plugged or whatever or get a new tire depending on where the nail or where the debris is.
I couldn't look at it and didn't see it so obviously I just started to jack up the car and just popped the tire on the new one the spare tired and we have a full size spare them back. So really wouldn't have been a problem but as we start loosening or as I start loosening these lug nuts over here they start breaking and we just had the car tires rotated everything and I guess they either over tighten the lug nuts or they didn't properly tightened them.
In either case of one of the lug nuts started to snap off, the second one started to strip so things are not going in my favor and you can definitely say that I was quite a bit frustrated but in reality the long story of it is you got to know how you’re reacting to the situations because things don't always work out in your favor.
For a job that I thought would be very simple for ten to fifteen minute job you know to change that tire five-minute job even you know you go ahead put the jack on, put the handbrake on you know loosen up a few lug nuts then you know jack up the car and loosen it up further and no problem.
Put the other one back on and tighten it up and you're good to go but in this situation things just kept not going in my favor and the thing is eventually you get to a point where you're just not in a clear state of mind, things are just not working out for you.
In this case you know after snapping one of the lug nuts and then also having, since the closest repair shop here is about 25 to 35 minutes we actually got a tow truck and you know we’ll send it out and we’ll have to put couple new lug nuts because one is stripped and one is broken and we’ll have to send the car off to a shop so.
That's what I ended up doing but you got to realize that at certain points when you get to this level you get to this point, there becomes a point where you're not as clear minded, you're not as clear focus and it's just not worth the time.
Now I could have probably done it myself and you know take the brake calipers off and do it for me you know I've done little things like that in the past but I'm not a mechanic and when you get to this point where you're frustrated when it's not something that you're specifically great at and when it's not something that you have experienced that day in and day out because me personally I'm not a mechanic then you want to go ahead and move on and just say next.
The same thing goes in the market when there are stocks that are not moving in your favor not acting not behaving the right way that you believe they should be behaving you have to say next because not everything is going to go your way.
Let's say you're looking at Panera here and you have this trend line right here the stock broke out and you expected it to continue moving, you expected it to continue moving this way but it starts to pull back that's not exactly what you expected the stock to do.
When you start seeing this stock pulling back and it's not what you expect and things are not moving in your favor and you got a bigger position than you should have then you should sell that position, get out of that position and look for another stock.
Now as you gain experience you’ll know how things behave and what to do in situations similar to my situation if you know if I was more savvy with you know popping out the brake calipers, popping out the lug nuts changing them and so forth and so on if I was more savvy about it I probably could have done it.
the same thing in the market, if you're more savvy if you're more advanced you probably can see what's going on and what's happening you'll be able to see what's happening underneath that stock whether it's coming back to pull and bounce.
Similar to how with Apple here we talked about which is one of our largest positions right here you know when you see that stock right here bouncing off of this level and then selling off, when you see it bouncing a lot of people would have gotten into this on a long position thinking it was going to go higher.
Especially if you're a beginner, if you don't have the experience but if you have the experience and you're more advanced trader or you just have some background experience of knowing and reading how stocks move and especially how this company specifically moves then you know that probably that bounced right around this level is a fake out.
In this case you would still go short even though that stock was popping higher and the same thing in this situation, right here we had multiple sell-off so this was our first swing point, second swing point and third swing by the time you get to the third swing point you have some of these beginners that would go into this stock right here and think it would go long and continue to going long.
However, what happens is the professional's right at this level start shorting that stock and that stock starts getting sold off and that's why it continues moving lower. Now again it’ll bounce at this level because you have value buyers but then again over here what happens?
we had IT happen four times, even if you got caught it the third or fourth time we'd still be in a winning position because patterns typically repeat sometimes they happen 5 to 10 times so that's why you're watching this level and again you have that short opportunity.
Even if you missed that one you wait for the break here and when you waited for that break your opportunity for the safe side could have been even right here and then you still would’ve captured the 4 to 5 dollar run to the short side.
However, this comes with experience and if you were lacking the experience, something that you have to be honest with yourself about. If you're new to the market and you don't have the experience then you're going to have to learn or trade slowly or develop those things but if you're new it's going to take some time.
It takes time to build that mental focus to keep that calm when you're not that experienced and the more experienced that you get in certain situations such as trauma units, nurses or doctors that deal with situations where there's a lot of blood or life-saving that has to happen you know they can really keep a very calm mindset because they've done it before.
They have experience with saving lives you know when someone's bleeding and they're about to die they have experience to stay calm during those moments.
Now in your case when you're trading a stock if you're new to trading which you have to be honest with yourself and be emotionally intelligent about it, being aware at how good you are and understanding and evaluating your mental focus.
If you notice and realize that you know you're lacking that experience then you may want to trade lighter or you may want to watch your positions a little more closely that if the stock hits your stop you're out but as you get experience you get more comfortable in these situations.
The long story short or the lesson or the moral of the story is that always maintain a clear mental focus when trading and how do you really ultimately do that? You ultimately do that by trading smaller. If you trade very small the risk is less and when the risk is less you're able to keep a calmer mind and if you can keep a comer mind and then larger movements or volatility within the stocks do not affect you as much.
However if you're getting frustrated you getting stressed out, chances are you're probably trading too big and just the same thing with like a tire a car breakdown if you've never had experience doing it, then it could be a frustrating thing especially if things don't go in your favor.
Same thing if you have to save somebody's life from choking you know all kinds of different things. So always watch how your mental focus is, be aware of how your mental focus is and once you start noticing and realizing those frustrations are in you move on, go to the next stock or try something different but always trade lighter until you build that experience.
I hope this recap was helpful, I hope you enjoyed the lesson it is 3:50 over here on the East Coast right now so I'll be posting this recap in the next 30 minutes right after the market closes.
In either case thanks again for sticking with me another great week and especially wonderful to hear from all of you on the emails and again if you're not getting all the recaps every single week or at least 45 weeks out of the 52 then make sure you just signed up on those email list and that way you'll get those rapid recaps and get some insider lessons with some of the stock picks and so forth of what's happening.
Now I do plan to post some critical charts here in the next day or two so we have another handful of charts to post even more so than what I went over here.
Other than that enjoy the rest of your week, make it a great one, stay safe, spend some time with the family and keep a smile on and I will see you next week.
Thanks again and take care!