Ep 185: North Korea, FED Minutes, Dodd-Frank & Stock Charts

May 24th, 2018

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In this episode we'll cover a couple of economic news:

  • What's going on in the last couple of days and
  • What's making the market move and
  • Then we'll take a look at some of the more popular charts

Some additional charts that are maybe less popular check https://tradersfly.com/

If we take a look at the SP, we're basically down about four or five points. On the SP, we were down about 20/23 points at the beginning. A lot of that has to do with Trump canceling his summit with North Korea's Kim.

The market panicked a little bit, so decided to take a little bit of a dip. In fact, I did a little bit of quick day trading there on the buying the fall and already out of most of those positions just because it was a holding the support level at this price level. This is what I was watching, and I noticed it was starting to reverse. So I went in and bought a little bit, and now already I'm peeling some off.

The reason I'm doing that is we do have some resistance here at 2740 that we're still playing. We're isolating sideways here in the market, and that's kind of what I see for the time being.

We're struggling at breaking through those resistance levels for now. The mark is still a little choppy. It's always a little weak, and a lot of this has to do with economic news, inflationary news, fed news, and overall, just the market stretched from the last couple of years or even the last 10-15 years there since we had those run-ups.

When you start looking at all this, and you start looking at and evaluating some of these charts, I'm looking at this run-up comparing it from the 80s, at a 45-degree angle would be a regular healthy kind of curvature. But then you can see we've had these large angles that have been very accelerated, and again we are accelerated over the last since 2009.

There's another news that happens that talking about 2009 was in 2010 the Dodd-Frank Act was enacted. It is to protect consumers from these Bank regulations and a lot of the disasters that happened in 2008-2009 there with the recession that occurred. And now Trump is rolling back some of those.

You know Dodd-Frank was not perfect. It was with Bernie Frank that was created. It wasn't an ideal kind of bill or regulation, but it did try to help minimize some of the risks that the banking system had on the regular consumers.

That happened here in 2010. Because of this significant issue, this collapse, they put out these regulations around that time frame.

Now it wasn't perfect and ideally what I think they should do is rework - how do we protect the consumer. The politicians don't want to think outside of the box of how to make things better. I'll give you an idea, medical costs here in the United States are skyrocketing and extremely high. We want a free enterprise where people can compete with one another but why does a knee replacement surgery cost $50000, $75000, or even a $100000? If you go to other countries, it might only be $2000-$3000.

If we were to put a cap by the government, you could charge whatever you want for a knee replacement surgery up to $45000 depends on of course the complexity and the type of surgery.

This is how you protect the consumer. In this way, you can't deal with the banking regulations, there are other things that they can do to protect the consumer, but apparently, they're not enacting it on it. I think we will get into further trouble with this because companies can do whatever they want, prices will inflate, the consumer will be less protected. For 5, 10 or maybe 20 years, it might be okay, but then eventually it does catch up.

Just keep that in mind, on the bigger picture scope, that's all I'm saying. If we also take a look at here on the Fed, this is kind of another big thing that affects you individually.

Federal Reserve minutes that came out here on Wednesday are saying the 2% inflation target that we're hitting. We were under to for a little while. It's okay if we go even 2.25 and 2.5%. But they didn't specify how much above 2% is okay.

Now, I see this quite a lot in my personal life; I don't know if you do. But looking at Amazon Prime, raising the rates about 20%, between Chipotle and McDonald's that we've talked about 7-13%, my accountant also raised their standards, and now we see it in gas prices, oil prices, and I see it in a lot of other sectors.

Overall, the cost of living has increased quite a bit. When you look at it, just on the dollar for dollar terms, I'm sure that you see it as well and it'll probably continue to be like that over the next year.

It would continue to inflate and raise prices, which also means that consumers later will have less money to spend on things.0

If you're already okay with your life, that's fine, but that also means you have less money to save, less money to invest, and other factors because you're spending more money to live your typical kind of life.

Looking at that concerns me a little bit because you don't want to run into an inflation problem where things accelerate. A big inflation problem, as they had in Venezuela, I don't think we're going to have that problem, but it just means people will have less money to spend or less money to invest which could slow down the economy or in other words the stock market.

Also, we're looking at GE; they also suffered some significant losses here on a one-day drop. If you take a look at GE, you had this big down day bar coming out and losing quite a bit of value. GE is struggling quite a bit, and they're saying they might not be able to pay their dividend.

Right now, you're getting these tax breaks for big corporations. Getting a lot of positive stimuli that are coming out from the Fed, from the government. But once things get rockier, companies like this would not be able to survive because for now things are good and they're struggling, imagine if things were terrible what would happen?

Anyways, think about that in a bigger picture scheme because all these things to catch up. It's just with big companies and the US economy; it's much slower simply because there's only so much money involved. It takes a lot of power and energy to move a ship around, just like it takes a lot of time and energy to get into a recession. Everybody gets on board; it's just like the housing thing you're getting on board. A lot of people are there and then all of a sudden it tanks because too many people are on one side. And that's never a good thing when a lot of people are on one side or one area.

Let me take a look at a couple of stocks for you and show you my take on a couple of companies. Just some other things I'm kind of also in watching. Then, you can go ahead and do some more due diligence and research on your own.

First thing, I do want to take a look at some semiconductor chips and chip makers and technology companies.

Looking at Intel Corp, actually I'm upgrading a couple of my computers, and a lot of the chips that we're going with is not Intel anymore. I've been with Intel probably for 10-15 years, for as long as I've been making computers even though the stock is breaking out quite a bit.

Recently, we moved to AMD. AMD the rise in processors and the thread Ripper processors. We moved on to these because the bang for the buck and the value and the return on investment is much better. Intel seems like they're just pushing out or trying to pump out products to compete with those chips. But here with AMD, if we get a little bit of a break out here, this could skyrocket.

I see this in the community there with a lot of the tech people, so just keep an eye on that.

Also looking at Nvidia, we're still holding up pretty well. There is some resistance here at 250/255/260 level, so a little bit of trouble. Overall, this looks a little messy here on the daily chart.

If you put it more on the weekly, you can see this kind of move is a little more cleaned up. But you can see right there we're struggling a little bit right there at around the 260 mark. But if we continue moving along this line, we should be okay. I would be a bit cautious about this because we are fairly accelerated there.

These are some of the things I wanted to take a look at.

Of course looking at some bigger companies like Amazon here, we've talked about this one coming into this 1600 ten level that this is resistance and this could be a little bit of trouble for that stock. I mentioned this in the past right here, and then it pulled back, and we're getting right into that it. We could reject it again.

If we break above it, you want to pay close attention to this bar and see if you're clearly above it with volumes. That'll be 1640. If you can get above 1645, give it $5 wiggle room, you might be able to see further higher prices.

But for now that 1620/1610/1640 range is some severe resistance for me that I'm watching. If you get a nice pullback, even if you can get it in 1350, it comes back, and it can bounce. That could be an excellent little buying opportunity potentially somewhere around maybe 1400 if you jump around 1350. Yes, it's 50 points above it, but these stocks whip around quite a lot.

Looking at Facebook here, this long-term trend line right here is really what the stock is doing and holding. This trend line is doing pretty well. We got accelerated around 2017 with it, and that's why we had that pullback.

If you take a look at what the weekly it is again coming into resistance., still, we're slightly accelerated which makes me wonder are we going to get another pullback on this coming back into the 160 level. It's possible it's a stable company, but 190 is a little bit of a concern especially when you're stretched that quickly.

Looking at that angle of elevation, see at square here also coming right at that brink, we're right at the verge of some of these companies.

You can see it with PayPal, as well, coming into these levels that are also level of kind of resistance. As well as Shopify.

You can see that these companies are right on the brink of either breaking out or potentially rejecting these higher prices.

Apple, the same thing, 190 could be a resistance level. Why is that it needs time to digest? Because we've accelerated quite a bit there with that stock, the price Run moved up very quickly. So you need to digest, and that's why you're moving sideways.

Tesla is struggling at the 300.

This is what happens if companies try to get into that resistance level.

They reject it; you get that pullback.

You'll notice that every time that this stock tried to get into, it still broke above it, that's known as confluence.

If you and your friend go to dinner and you say six o'clock. Somebody might show up at 5:53, another person might show up at 6:02. It's not perfect. So 300 is a range, but you got to give it that 5/10 tiny wiggle room, so that's the same thing $5/$ ten here in this one or a little bit of wiggle room, depending on the stock price.

If it's a $10 stock, maybe you give a 20 cent wiggle room, if it's a 300 dollar stock price, you got to give it maybe $5 or stock like Amazon may be at $20/$30/$50 wiggle room.

Anyways, we tried to get into this price range right here and rejected it. We decided to get above it, rejected it, trying to get above it, again dismissed it. So we're struggling that 275 seems to be kind of a support range. Still 278 it's a 270 kind of give it that range, but that seems to be kind of that support level.

Author: Jorge Diaz

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

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