Lets Talk Stocks
December 6th, 2018
November 29th, 2018
November 22nd, 2018
November 15th, 2018
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Hey, this is Sasha and thanks for joining me here for another episode of "Let's Talk Stocks."
Today, we're going to go back into some basics of technical analysis. I'm going to take a look at the triple bottom reversal pattern.
Keep in mind patterns can be a continuation of where they continue the trend or reverse the trend from where they're coming from.
We're going to look at six main things:
- What does it look like;
- Previous trend;
- Some projections;
- Entry points; and
- Some tips beyond the pattern.
The Triple Bottom
The triple bottom it stems from hitting three bottoms similar to the double bottom. So if you know about the double bottom, this is going to be very similar.
If we look at our supporting point, it's going to hit a couple of points here.
It starts with a downward trend -- so this is our previous trend.
It moves here when we have this downward trend, and this is our first bottom that we hit.
As we move here in the downward pattern, there's a lot of selling pressure that goes into the stock.
Now eventually, you get to a point where there are buyers that want to step in. They say, 'Hey, it's a good value on the stock.' It may go ahead and do a little bit of a bounce here.
Then other people say, 'Hey oh I'm glad to get it to get out of this stock, so it bounced. I'm ready to get out because it'll probably continue moving lower.' It goes ahead and hits another bottom point.
This is our second bottom.
Keep in mind -- this is our support point or support level here that's being created.
Now, this also starts to create a little bit of resistance up top -- so this is our resistance number one.
And then again, we could go ahead and try and get up to those upper prices because people are again buying it on value. But maybe it doesn't make it that far, so we go and create a triple bottom there -- so this will be our third bottom.
Eventually, this stock what it tends to do with this pattern is it ultimately goes in and breaks out past this resistance level.
Sometimes, this will come in and hit a double top here. So this is one thing to watch out for that we'll talk about here in a minute.
But in general, you got three bottoms here that are created and then eventually the pattern reverses because it's a reversal pattern. And it continues moving into those higher prices.
That's the pattern and the way that it looks.
Now, if we're looking at volume
When you look at the volume of this chart, you typically will want this volume to slow down as the stock is moving lower.
Initially, it's going to be high, especially if you're starting from really high prices. But with time, you want that to decrease because you want those prices to slow down and change direction.
To change direction -- let's say you're driving 50 miles an hour. How do you change course? Well, you got to slow down and make a turn, or you know you got to have a curve.
That's really what we're doing -- we have some time here to make that turn and that curve. So, to change that direction, we want to slow things down as we're coming in to bounce.
Then, when you bounce, you'll probably want a little more volume on the bullish side. Anytime you get these bounces, and you'll want more volume and especially on this later bounce on the breakout. That volume should be excellent or huge on that break out especially breaking out of that resistance level.
That's what you want the volume to be.
As we decline on these depreciating levels, as we pull back from resistance, you want those to be lighter because now you got more buyers that are coming in. More buyers are stepping into the stock and that's why the volume should be picking up to the buy side because we're going to reverse.
You're looking for it's a little difficult to project these movements because this stock could have been selling off from really high prices.
When you get into a triple bottom like the double bottom, a primary projection might be well, let's say I take this first or second supporting level and go up to the resistance.
When I do that, here's my level or range. Then, what I would do is take that consolidation range and put it kind of from the break of the resistance to right there, and that could be my target or projection.
But the reality is the stocks usually appreciate with time and with inflation. They continue to go into the moon. That's just the essential nature of stocks.
Until you get the crash, of course, and then again they keep inflating. That's inflation for you.
We could get back into those upper higher prices where the stock initially started the sell-off. You might even go into even further higher rates into the future over the next five or ten years, depending on how long you're looking to be in the stock or watching the stock.
As far as entry points go
What you could do is you could get in on these bounces, but you don't know if these bounces will continue further to roll over into the next leg or the next down leg because this could be a double top.
It could even create a triple top right.
You see how these patterns could look like something else.
So instead, the better approach is to wait for that breakout right there, and this could be your entry point.
Sometimes these patterns will come back and let's say they come back and retest. They're testing that support level because before it was resistance now it supports and when that bounces that could be an entry point right there.
If you missed entry point one, your second entry point could be right there on the next bounce as you come back to retest that level.
That could be another entry point.
So, to leave off with a few final tips
Remember that this pattern is a reversal pattern. So as you're coming down the trend, you're going to reverse. Eventually, you want that to slow down, and that you-you see it slowing down by watching the volume.
As you get bounces, you want that volume to pick up.
Let's say this peak to start to pick up a little more volume. This peak puts possibly to be a little bigger than the last peak. It doesn't always happen. Then again, as you break out past that resistance, you want even more volume.
So that's a tip.
But remember that this could also look like a double top or a triple top pattern, where this thing could actually continue and roll over even further.
That's why you're waiting for that entry point on those brakes to confirm which direction this stock is moving. Otherwise, you might get a movement in an unexpected direction because remember the pattern won't be called that pattern until this kind of completes itself.
But for you to do the trade, you have to do it almost early enough to get in on it. To capitalize and profit from it.
November 8th, 2018
November 1st, 2018
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Hey, this is Sasha and welcome to another episode of Let's Talk Stocks.
In this episode, we're going to take a look at the descending triangle pattern -- which is a continuation pattern.
I want to take a look at:
- What it looks like;
- The previous trend;
- The volume;
- Entry point; and
- A few final tips.
First off, let's start with what it looks like
Here, the descending triangle pattern looks like a flat support line.
So here, we have our support level.
And then the upper part of the triangle descends or declines.
Our previous trend starts from the upside. So, we're going from the upper left, going down -- to the stock price is declining.
As it declines, we come in, and we hit a little peak or where we start bouncing.
Then, we move up, and we hit a resistance level.
We'll call this R1 -- so that's our first resistance.
This is our support one over on the lower level.
As we play around in this level, we may get a second support point. We may get a resistance level 2 over here.
This is what the stock does for a little bit of time.
Up to the point where we start rolling over and start moving into lower prices.
Now sometimes, this pattern can -- you might start trying to think or create this pattern at these upper peaks or before the trend began.
Really, by the time you evolve and see this pattern, you'll probably be in the second or third or fourth resistance level.
Sometimes, this could be resistance 3, resistance 4 -- where you start noticing it and discovering it.
That's what the pattern looks like.
The Previous Trend
Of course, starts at the upper left. Moves then, to the lower right and we're continuing on that pattern.
This is just a pausing pattern where some buyers are thinking of coming in.
They may think that this is maybe a double bottom something to that effect, but the pattern as it continues to evolve and you don't know that this is a descending triangle till the pattern completes.
Once the pattern moves, it's moving the lower level and into lower prices.
When You're Looking at the Volume
The volume, typically on this pattern, will be stronger as we decline.
So, as you're moving here on the decline, you have relatively strong volume.
Then typically here, as you're moving through the triangle, you might get lighter volume. The volume starts to dry out.
As you look at individual bars day to day or maybe moment to moment, typically, you'll want to see stronger volume on the declines because it's a continuation pattern, it's a bearish pattern.
You're looking at it being a little more strong as we decline and even stronger as you start breaking that support level.
You're looking for the level of this fatter part of the triangle, as we start from the resistance to the support. You take this, and you move it from that breakout point, and that's your target.
So, your target will be that same range or distance.
Again, that is just a guideline. Doesn't mean it's going to hit it every time. Doesn't say it will even get there but that's the typical goal.
That's because you've had so much energy up here moving and now you're bouncing and playing around in this triangle area. You'll probably have about the same amount of power there.
The amount of energy you push a ball would probably be the same amount of energy that it expels that energy is moving forward.
Here, you're looking at that same amount from that fatter range of the triangle.
As far as entry points go,
Your typical entry point will be when it breaks the support level.
That'll be an entry point there and this, of course, is shorting the stock.
At times you may get a potential bounce here where it retests the support and then it rolls over.
A second entry point could be again when it bounces.
When it bounces and then rejects those levels, that could be kind of entry.
So you're looking at those levels.
Of course, you could enter at these rejection levels because it is a shorting pattern.
But you don't know that at times this thing could play a few tricks on you, where it could start breaking and moving to the upside -- which is what some people have trouble with.
And Here are a Few Tips for You
Sometimes, people will think and see that this is a descending triangle pattern, but it could be maybe a double bottom, perhaps a triple bottom.
You can see how you have two supporting points here that are hit where it creates kind of a double bottom or a triple bottom.
In that case, it may fake you out. We're okay now; we're moving to the upside, where it's a reversal pattern.
When you see this declining on the trend on resistance 1, 2 & 3, it does more or less confirm that it is a triangle pattern. But that doesn't mean that you can't digest for an extended period and then kind of move to the upside.
Stock can do anything they want, or you may get a surge of good news, and it changes this whole pattern completely.
The whole pattern is just a way for us to discuss chart trends and how they perform and behave in a particular segment.
For you, what you're looking for the safer approach for entry points is really when it breaks support that would be the shorting opportunity.
If you're looking for a bullish opportunity, sometimes these things could break out right here. This could be a bullish trend here, and you're trying to buy on value.
That's another way of doing things and getting into the stock at you know lower prices because the trend was moving lower.
Just be aware that at times that may play a little bit of a trick on you.
Volume, of course, is beautiful to see as you're declining and then moving. Depreciating in volume or decreasing in volume reduction and volume as we move through this triangle pattern and then again an increase depending on where you're breaking out.
Sometimes, that doesn't happen. Sometimes that happens after you make the break, and then you roll back over a second time. The volume will pick up even more so there because it's confirming the rejection of support which would then be resistance.
But overall, that's what the triangle pattern looks like.
It's a bearish pattern.
Starts from the upper left or higher prices move lower, consolidates because now you see some value buyers stepping in. But there are not enough value buyers.
And because there are not enough value buyers, the stock continues to roll over and goes even further.
That's really what happens within the pattern is that -- there are not enough buyers, and there are even short sellers that could be coming in.
So, in the end, the Bears end up winning.
Just keep in mind that sometimes you do get that bullish break out as this pattern could look into a double bottom, triple bottom or maybe just a distribution consolidation pattern.
Those are usually more horizontal or sideways, but still, it could play a little bit of a trick on you.
October 25th, 2018
October 18th, 2018
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Hey, this is Sasha and welcome to another episode of Let's Talk Stocks.
Today, we're going back to some technical analysis basics, and we're going to take a look at the head and shoulders reversal pattern.
We'll take a look at:
- what it looks like,
- the previous trend,
- volume projections,
- the entry point, and
- a few tips.
When we look at this pattern, typically I've seen this pattern be a little more bearish than really bullish. But there is an Inverse Head and Shoulders pattern which would be more of the bullish way or the bullish pattern where it goes to the upside. But I've seen it more in the bearish context.
Let me show you what the bearish pattern looks like because this one's a little more common
This is a reversal pattern. We're going to roll it over. It goes up like this.
We create a little bit of one single peak here then what ends up happening is the stock pulls back and then it will create another more prominent peak. Finally, a third peak
Over here, this creates a little bit of a neckline.
This stock then breaks through, comes back, often retest, and then it'll go lower.
This is what the head and shoulders pattern looks like.
This is one shoulder over here. This is another shoulder. Here is your head right there.
That's why it's called a head and shoulders pattern.
Typically, this first peak compared to the second peak is a little bit higher. That's just because this shoulder can slouch a little. Meaning, buyers are not stepping in as much into this second peak.
What is happening is -
You have this influx of buyers coming in initially.
They say hey well price is getting a little too high so they go ahead and you know they start selling, and then other people get in due to the value and that creates another influx or wave but is there's not enough of them.
When there's not enough of them, that stock again continues to pull back and they recognize that hey this could be a topping out point, so on that next bounce it may not reach those high peaks anymore.
That's why it then rolls over.
We break that supporting neckline, which your support level. We may come back and retest this and then further roll back over.
That's your Head & Shoulders Reversal Pattern.
If we take a look at the volume, often, you'll get the right amount of volume initially as you start to head higher.
Then, as you start doing these pullbacks, the volume will slowly shift from being more strong during the upward movements, or the bullish parts to it'll shift more into being stronger.
As you start selling off, especially here as you get into this breaking area, it's going to be stronger volume as you break that support.
Watch for that strength on that break right there as well could be a little bit strong on the volume and anytime you get these pullbacks and that should also continue to increase.
Otherwise, the volume could be a little flatter. You could also see things dry out a little bit because this is distribution.
But the key points are -
You'll get high peak volume as you're going up but then to change direction. You need that volume to shift more to the bearish side slowly.
That's why as you start these sell-offs and pullbacks, that volume should start to pick up.
Your projection and the goal of this pattern is as far as the distance goes.
If you take from the head here draw a line down to that neckline, so looking at it this way, you're going to do about the same on that from the neckline all the way down to this level.
Your target will be about the same distance from the top of the head to the neckline.
If we're looking for entry points potentially to get in, this, of course, is a shorting pattern, so you're going to short. You have a couple of opportunities here, but this will be entry point number one when it breaks kind of that neckline.
If you miss that, you could take a look at entry number two - where you break and retest this resistance level now. In the past that was support, but then it becomes resistance where it rejects, and it follows through.
But again, this is for shorting the stock.
It's not for a bullish movement.
That's the thing with these patterns.
A little quick tip about this is -
Just watch this second shoulder, whether you're doing a bullish or a bearish pattern.
Watch the second shoulder that sometimes it slouches a bit simply because you don't have enough movement on that second bounce. There's not enough volume maybe coming in or not enough buyer so that it may be a little bit smaller.
Sometimes, that neckline can also be a little bit angled. You might see it a little bit sloped a little this way. These bounces where they come in could be a little bit in a diagonal fashion as well.
If we take a look at the bullish side.
It looks very similar except it's coming down from the higher prices.
What typically happens is -
Again, you'll get your one peak or bounce, and you'll get another one there's your head okay, and then still there's your shoulder. Your neckline will be right about here.
As that stock breaks out, you might see it retest. They'll move something like that.
Your head will be right here, and these are your neck areas and again the distance, if we're looking at distance, you're just drawing kind of the distance between the head to the neck, and then again you're looking for kind of your target right there.
If you're looking for entry opportunities on the bullish side, of course when it breaks, this is the more usual one people trade because this is looking for an extended opportunity. This could be your entry point.
Another one is if it comes back and bounces, that could be your second entry point right there.
Anyways, that's the head and shoulders pattern.
The bearish one is a lot more common. The bullish one, you're going down and having a very strong pullback and then it kind of reverses.
In a way, sometimes this could also be a consolidation pattern if you start looking at it a double bottom, triple bottom. In a way, it starts to disguise itself.
What you call it, is up to you.
It is just really the pattern.
If the head is further down below a consolidation area, then it'll be a Head & Shoulders pattern.
If they're more in alignment, it'll be a triple bottom.
That's just a name that we give it to reference and discuss these patterns quickly, but overall it's only a consolidation period where it provides the stock with time and room to digest the sell-off to be able to shift direction and reverse.
Same thing in the bearish pattern.
Here, you're moving to the upside. You're digesting. Give it time and room and then it sells off further.
Anyways, watch these patterns.
You're just looking for areas of support/resistance.
Sometimes, if they breakout above things and you'll notice hey well the stock broke out, and you let's say tried to get in over here.
But then, it rolled back over, and you lost out on that trade. It may start to become a head and shoulders pattern because you tried to get in on it but it went a little higher, and it's real instead of a horizontal resistance area it went above it because of that headline.
Then again, you'll see how it evolves
It's just a little clue and tip for you.
If you're getting into a trade and it just rolls over a little bit after that, it could turn into a Head and Shoulders pattern.
I want to take a look at a couple of Head and Shoulders patterns here.
This one we have is ATI, and I want you to put your attention towards the center of the chart here around March to July.
We have one shoulder that's being created here on the left area right around March.
Then around May, you have the head that's being created, and then you also have the other shoulder that's around July timeframe right there.
If you combine the two shoulders, you get a little bit of a descending trendline there between the two shoulders, your neckline or kind of the support line would be right under those armpits. You can almost say that that's a triangle pattern, but it's not a triangle pattern because you have that head above there.
Your entry opportunity will be just under or below that neckline. Going right under around the 56 levels in July, that'll be the shorting point.
You can notice the volume also starting to build as we increase the selling pressure.
Anyways, that's a head and shoulders pattern on ATI.
Here's another head and shoulders pattern on Caterpillar but it's inverted.
If we take a look at this one right here, the stock trend is going down. Again, this is a reversal pattern if we change direction. That's what the head and shoulders are going to do.
There's our head in 2009 around February, and then we have the other shoulder around June/July.
This neckline is a little different. Again, it could also look like a triangle pattern, but because we have that head, it's not going to look that way.
So, the descending trendline is what you're watching for, which is that neckline. You're looking for it to break and when that breaks, that would be your entry point right around that time frame.
You'll also notice the volume slowly starting to build as we do the breakout. When we are in the head and shoulders pattern, the volume is declining a little bit.
Anyways, that's a little bit of a head and shoulders pattern for you that you can also take a look at.
October 11th, 2018
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My Thailand Trip
We got ourselves a guide, and in a way, a guide is a kind of like a mentor because they guide you through things.
We had some specific things that we wanted to see. We went around, and we said the things we'd love to see and they took us around.
There was one point when we were on our Thailand trip there was a weird little road that we wanted to get to. There's a little bit of a bank area, hotel, where there were some sightseeings about a six-hour drive in this weird and funky road.
We started over in Bangkok, and then we went, and we drove. I think about the two to three-hour mark of getting into this up a mountain trip, and we had a breakdown. The axle of the wheel broke because the roads are weird and funky. We hit a bump - the axle broke, the tire fell off. We sat there on the road for a couple of hours while the guide went back to go ahead get himself another vehicle and then come back to pick us up. That way we could get back to our area where we wanted to go and see.
We were stranded for a time, but it allowed us to be at peace to go ahead and keep moving forward in our journey even though there were some delays. The guide took care of this whole problem - an issue that we had.
What is a mentor?
A mentor is a guide. They help you navigate the waters of trading.
If you're looking for someone that's just a little bit more experienced in the area, that's really what a mentor is. That's really what a coach is. They have some vision, some perspective - they know the land, they know the area, they know the region.
We wouldn't have known how do we get a car to pick us up, what road to take. There's a bunch of different routes that you could have taken. With no street signs, it's tough to navigate a country in that way.
The same thing in the stock market world. It's difficult to navigate if you don't have the full perspective.
How do they help?
- They show you the path;
- They show you the risks;
- How to pronounce things right, if you're learning to read;
- How do you do things;
- What should you look at; and
- What are the things that you need to focus on
That's how mentors help you. They show you all of these different things.
Do I need one?
Do I need a mentor and guide? Do I need to spend money, spend the time, if I'm already getting these books and maybe courses? Do I need one?
The answer is NO.
You don't need one.
We didn't need a guide on our Thailand trip, but it would have been much more difficult. Say, for example, and someone would have to go back and figure out how to do the logistics of getting another vehicle. How to navigate the road and you get sidetracked. They help you stay away from getting into trouble.
There are some disadvantages to this because you then don't get to explore things or randomly bump into things and see things for the beauty that they are as you're taking a trip or as you're learning the stock market. But you get a direct path.
It allows you to compress your time to get what you need out of it, rather than drifting away into other areas.
That's the whole point of the guide.
Do you need one? No, you don't need one.
But does it help compress your time, your education that learning curve? Yes, absolutely because they allow you to stay focused on the things that you need and the things that you want to see. The things that you want to learn, rather than drifting into other areas. They simplify things a little bit more.
When it comes to the stock market, mentors help compress your time that you need to spend on learning the market.
October 4th, 2018
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Take a look at the Cup and Handle Pattern
It is a reversal pattern and also a continuation pattern.
When you look at the bars, in a way create this rounding movement in a stock. Then what you'll do is it'll pull back slightly and eventually go out and break out into higher prices.
If you're looking at this on a tick basis, you'll get this movement that's a little bit up-and-down, but it's rounding the bottom.
When you're looking at the resistance level of this stock, you're taking these swing points of where this goes. You're making a look also of where the end of the cup goes and then what you have here is this little pullback of the handle.
That's what creates this cup and handle pattern.
Initially, the trend could be from the lower prices, and it could come up. Then you'll pause, and then you move higher, but it could also come from higher prices. Eventually, to change direction and go into higher prices, it starts and it becomes a reversal pattern.
If you're starting from higher prices and then you pull back, you round out, you pause. It's a digestion pattern, and then it moves higher, that would be a reversal pattern. A continuation pattern is you're starting at lower prices, and you're moving higher then the stock needs to pause. You pause a bit, you create this rounding cup and handle pattern, and then you move higher again.
That's what it looks like as far as just the basic cup and handle pattern is concerned.
When we look at the volume
Typically, you have the right amount of volume. Initially, right so this is high or strong volume, whether you're moving in an upward or downward. You have a reasonably strong volume because that's what creates kind of the move.
Eventually, that volume slowly starts to decline here in this cup and handle area. But, as you start moving in the next direction, sometimes you'll see a little bit of increase in volume picking up because you're just going to start to move to that next breakout point. When you look at this pullback of that handle, you'll see probably light or weak volume as well. And then again, as you move into higher prices and breakout, you'll probably see some more strong volume.
Sometimes, that strong volume can be more accelerated and just slowly gets there. Other times, it can just pick up very quickly because you're breaking above this resistance level.
Your entry points would usually be here. The standard is right above that resistance level. So that's the entry point. You could go ahead and get it as if you draw a descending trendline on this handle part. You could create an entry point here, but that's an early entry point in that area just because you don't know if it's going to continue moving lower.
If you're going to look at a projection
The projection is from that resistance level or that swing point all the way down to that base of the cup. You could take that and go from that next level of resistance all the way up to the top, and this could be your target of where that stock could move.
That's a projection.
You can see the pattern is not too complicated. All it does is slowly digest in a way it's like a sideways pattern. You're just moving sideways to digest the move.
The difference is you sometimes have some buyers coming in from looking at value. Then, other sellers are slowly selling, so there's not a lot of intense action in any direction. That's why it's just a soft cushiony found an area rather than booms like a quick bounce or an immediate rejection. Instead, it was much smoother and cushioned because there's not a lot of enormous action or news that happens.
If we look at it the opposite approach, an inverse cup and handle or an upside-down version
You also have the same thing that can happen right here as you have this upside down bowl, you have that movement there and then a further lower in prices sell-off.
This one is also very similar to the to the previous one. You have your support point here. Your entry point would be a break in this support so that would be your entry area, your target and projection are also from that tip or the bottom. Let's say this is our base and you go there you move that over. You're looking at a target in this range for the stock.
Volume, also very similar. Strong on the brakes. Breakdowns when there are massive movements. This one could even come from higher prices or lower prices.
Typically, it'll move this one when you see that cup and handle upside down.
You see that rounding top, and then it rolls over a reversal pattern.
I've seen it more of a reversal pattern than a continuation pattern. It can be both.