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104-ICT Mentorship Core Content - Month 10 - Stock Trading - Building Buy Watchlists

Last modified by Drunk Monkey on 2022-10-26 08:54
1 00:00:07,319 --> 00:00:17,579 ICT: Okay folks, welcome back, listen to the SD mentorship. June 2017 content. This is ICT stock trading building by watch lists.
2 00:00:24,420 --> 00:00:34,500 Okay, so what we have in front of us is the list of the Dow Jones Industrial composite stock list. This is all 30 stocks that presently make up the Dow Jones
3 00:00:34,500 --> 00:00:47,190 Industrial Average. And this discussion is going to be highlighting just a focus on DS dow 30 stocks. The same application is obviously done on the s&p 500 and
4 00:00:47,190 --> 00:01:02,040 NASDAQ 100. But it's not necessary, you could make all the stock trades you'd need just from the Dow Jones 30 stock list. As we already disclosed, in the
5 00:01:02,040 --> 00:01:10,680 first lesson, I gave you the seasonal influences per calendar month, we're gonna be focusing on buy watch lists. So that's going to be a focus primarily on the
6 00:01:10,680 --> 00:01:23,310 bullish months. We have a few months in here that are bullish. But the primary focus I want you to have is not that we're looking for individual monthly
7 00:01:23,790 --> 00:01:34,290 trades, but we're gonna be looking for areas in which the market will be wanting to trade higher. So we're gonna be focusing primarily on two segments of the
8 00:01:34,290 --> 00:01:43,440 market terms of the calendar year. What are we looking for bullishness? It's gonna be seen in the first half of the year and on the second half of the year.
9 00:01:49,230 --> 00:01:58,410 Is it building by watch lists? Okay, so the filter number one we have to know, is the stock market poised to rally? In other words, is it technically sound? Do
10 00:01:58,410 --> 00:02:08,490 you anticipate the stock market to rally higher and filter number two is during bullish months, we want to be selecting higher low stocks and board stocks that
11 00:02:08,490 --> 00:02:19,890 have made a higher low the February to May months are ideal long swing setups, and the October to January months are ideal long swing setups as well. Now in my
12 00:02:19,980 --> 00:02:33,270 first discussion about stock trading, it was on the free tutorials, how to pick stocks template. It focuses primarily on the fall. What we're going to talk
13 00:02:33,270 --> 00:02:43,650 about is the spring session here. And we're also add some things to it to build in some additional insights. Now the majority of index stocks generally a rise
14 00:02:43,650 --> 00:02:53,970 when the market itself or major market rallies or moves higher in high tide all boats rise, basically analogy there. So stocks that are trending higher on the
15 00:02:53,970 --> 00:03:06,600 weekly prior to our condition looking to be a buyer, they're going to be ideal scenarios. We want to avoid safe stocks like Verizon, GE or General Electric or
16 00:03:06,600 --> 00:03:19,140 Coca Cola. Strong stocks will have an obvious bullish structure. The discount arrays with index SMT will highlight companies that are under heavy accumulation
17 00:03:19,470 --> 00:03:29,670 during seasonally bullish months. Try to narrow the selection to two to four companies during your stock selection process. And leadership stocks that are
18 00:03:29,670 --> 00:03:38,040 aggressively bought by institutions will be found to fail to drop lower during bullish months when the three major stock indices decline until one of those
19 00:03:38,040 --> 00:03:49,140 indices fails to post a lower low comparably. So what am I saying here? During periods of seasonal tendencies for stocks to move higher as we outlined in the
20 00:03:49,140 --> 00:03:57,840 previous slide in the previous lesson, those months that are bullish, we're gonna be focusing primarily on when the three averages are making lower lows
21 00:03:58,170 --> 00:04:08,430 when the NASDAQ, the s&p and the Dow one of those averages are going to fail to make a lower low. So that signals the overall market trend change to
22 00:04:08,430 --> 00:04:17,850 bullishness. At that same time, we're gonna be looking for stocks to make higher highs at that same juncture. If it doesn't occur for that particular stock then
23 00:04:17,850 --> 00:04:29,190 obviously that stock is going to be discarded and not concerned with so we're focusing primarily on the February to May portion of the year.
24 00:04:34,410 --> 00:04:44,100 Okay, and I've already gone through the Dow 30 stocks to save time because it's less than could easily been three hours long if I allow that to. So I went
25 00:04:44,100 --> 00:04:56,460 through and I filtered out all the stocks that met the criteria of going from January into February where the Dow Jones which is the solid line, green line
26 00:04:57,690 --> 00:05:14,820 it's trading Lower going in from January 2017, right towards the midpoint of January 2017. It made a lower low, while the apple incorporated AAPL stock
27 00:05:15,420 --> 00:05:26,190 failed to go lower at that same time. So, the month of January, Apple was unwilling to go lower when the Dow Jones Industrial Average went lower. So Apple
28 00:05:26,190 --> 00:05:36,570 was showing relative strength here. And that only occurs when large institutions come in and they sponsor buy programs. So lots of accumulation, lots of buying
29 00:05:36,570 --> 00:05:52,260 took place around that 181 20 per share. And from February, all the way up into May, there was a nice appreciation, the share of apple and subsequently went
30 00:05:52,260 --> 00:06:03,870 higher into May, and just this month, we've seen it decline at the time of this recording in June. But with see a bullishness on stock market between February
31 00:06:03,870 --> 00:06:14,940 and May, we've seen the telltale Hallmark sign of accumulation by institutions where they failed to make a lower low against the Dow Jones Industrial and you
32 00:06:14,940 --> 00:06:31,950 can see the subsequent price move with this stock. So between February and May, you can see a very nice rally up and appreciation in the share price. The next
33 00:06:31,950 --> 00:06:44,700 stock that was filtered from going through the all 30 stocks and again removing Verizon, GE and Coca Cola was Boeing. And same scenario here we see in the month
34 00:06:44,700 --> 00:06:53,490 of January leading into the month of February where begins the bullishness again, the context is we're going to see them buying early. So if they expect
35 00:06:53,520 --> 00:07:03,120 seasonally that February into may generally sees bullishness the Dow Jones created a lower low in the month of January but the share price of selling was
36 00:07:03,120 --> 00:07:14,790 unwilling to go lower in January. So it diverged bullishly. Note, notice that it gapped up in January and then that gap was closed in the second trading day of
37 00:07:14,820 --> 00:07:28,620 February discount array. So we had that fair value gap traded down closed into it and then rallied away. price rally up into May May had our typical decline
38 00:07:29,220 --> 00:07:43,620 into the third week of May then started its movement higher from there and has since traded even higher from February's low but look at the bulk of that
39 00:07:43,620 --> 00:07:52,890 bullishness that seen between February and may disregard anything happened in May. We're just looking for the seasonal tendencies that gives us a play for a
40 00:07:52,890 --> 00:08:05,880 stock trade during the first portion of the year, beginning in February. The next stock that met the criteria of a higher low and bucked the trend that was
41 00:08:05,880 --> 00:08:17,430 seen with the lower low in the Dow Jones Industrial Average in January. It see between February and May. Nice little appreciation in the share price. But then
42 00:08:17,430 --> 00:08:27,810 notice in May when seasonal tendencies changed from bullishness. It made the high end spin trading off rather precipitously on the downside.
43 00:08:33,510 --> 00:08:45,420 Another company is Home Depot that met the criteria in January the Dow Jones you can see what that solid line in the background made a lower low while the Home
44 00:08:45,420 --> 00:09:01,440 Depot shares were failing to make that lower low and diverged around that $135 The one arm $36 share price in January. Then ultimately, that large up day in
45 00:09:01,440 --> 00:09:13,110 January, it was creating a liquidity void and it traded down into it in February closing that range, fair value gap discount array. And then you can see
46 00:09:13,110 --> 00:09:29,160 obviously, the price movement between the February anticipated bullishness beginning and to me pretty very nice. Movement higher. Okay, our next one is
47 00:09:29,160 --> 00:09:43,410 McDonald's. It's the killer of arteries. The Dow Jones again we can see that same lower low being formed here. It's basically the same overlay that's being
48 00:09:43,410 --> 00:09:57,060 applied. You can do this from bar chart.com. Just add a comparison and do a left axis display on dollar sign dow I will give you the Dow Jones Industrial overlay
49 00:09:57,630 --> 00:10:10,470 against any share or accompany price of a stock. And I have here, the lower lows showing on the Dow Jones that was seen in January 2017. And the shares of
50 00:10:10,470 --> 00:10:21,420 McDonald's were diverging bullish ly that didn't make a lower low in January and rallied higher up. And you can see the really nice movement between February's
51 00:10:21,540 --> 00:10:37,200 inception of the bush seasonal tendency up into a share price of $142 that subsequently kept trading and moved as high as $153 a share. Okay, our last
52 00:10:37,200 --> 00:10:50,070 example here, that was filtered out of the process. We have the Dow Jones again making that lower low in January, but the share price of visa was unwilling to
53 00:10:50,070 --> 00:11:01,560 make that lower low. And between February and May, we've seen a nice little appreciation between February's beginning and the month of May start.
54 00:11:08,940 --> 00:11:17,310 So I have 30 stocks, we've already filtered out a few of them that are just something that can be followed. And again, there, Verizon, Coca Cola, General
55 00:11:17,310 --> 00:11:27,330 Electric, and in my opinion, even Microsoft and Intel would be on that list as well, because they're just companies in my opinion, they they're just not
56 00:11:27,330 --> 00:11:35,340 exciting anymore. Nowadays, those things may change in the future. But at the time of this recording, I'm not real excited about this particular company. So
57 00:11:37,260 --> 00:11:49,650 we feel we ferreted out basically six stocks out of that 30 Dow list. And the first is apple. The second is belling the third is Disney. The fourth is Home
58 00:11:49,650 --> 00:12:00,300 Depot, McDonald's. And the final one and six is visa. So selecting two to four from this list would be accomplished by selecting call options that were
59 00:12:00,660 --> 00:12:11,400 affordable, as well as where each were trading in historical terms. Now a stock from this list that was too extended from a weekly or daily market structure was
60 00:12:11,400 --> 00:12:19,350 eliminated from the list. And what I mean by that, when we do low resistance liquidity runs, what we're doing is we're anticipating a run through an old high
61 00:12:19,350 --> 00:12:28,860 or run through an old low a break in market structure that's already qualified. And therefore, if we're looking for stocks to be moving higher, institutions
62 00:12:28,860 --> 00:12:37,230 like to see big breakouts big movements higher especially on a weekly chart, if everything fundamentally is suggesting it should begin going higher in the major
63 00:12:37,230 --> 00:12:47,790 markets suggesting is going to go higher. And we couple that with a seasonal tendency for the market to go higher, you have Blue Ribbon recipe for wonderful
64 00:12:47,790 --> 00:12:59,280 results. If you have a market structure hide it's really higher than where you're going to be entering at. Generally, you're going to see some lethargic
65 00:12:59,280 --> 00:13:09,060 price action, it might move a little bit, but then eventually it'll peter out and either go sideways or actually all together reverse. Now, quarterly
66 00:13:09,060 --> 00:13:17,610 increases in sales and profits would also be a strong factor in keeping a stock on this list. And blending a simple seasonal, fundamental and ultimately
67 00:13:17,610 --> 00:13:27,930 technical training process for selecting possible winning stocks is the outcome. So we have 30 stocks to begin with we whittled it down to six stocks. So now
68 00:13:27,930 --> 00:13:41,880 let's take a closer look at these individual six stocks. Okay, the first in the list is Apple Incorporated. As you can see here, we had an old high back in the
69 00:13:42,390 --> 00:13:56,580 2015. And at the time of the seasonal tendency for 2007 teens, February month, price was trading in a position where it was poised to break out. And as a low
70 00:13:56,580 --> 00:14:06,150 resistance liquidity round above 135. We can anticipate institutions to step in to that very thing and see a breakout. So this stock was actually very strong
71 00:14:06,330 --> 00:14:15,000 from a weekly standpoint, because each one of these bars are weekly representation of the share price movement for Apple Incorporated. You can see
72 00:14:15,000 --> 00:14:25,320 the overall movement higher. Every down close candle was supporting new buying from April 2016, all the way leading up into February, where they finally made
73 00:14:25,320 --> 00:14:40,320 an expansion and ran right through to 135 and ultimately always all the way up to 155 per share. Next one is billing. Again very similar. We had an old high
74 00:14:40,350 --> 00:14:50,550 back in 2015. Mark was consolidating. We saw a price run down below the 120 level clearing out sell stops. And then we started seeing institutional order
75 00:14:50,550 --> 00:15:01,350 flow supporting down close candles up close candles were being broken. We have very clean levels at 150 and the old high around that 160s I will. Ultimately,
76 00:15:01,740 --> 00:15:11,610 as we moved into our Borst, seasonal tendency in February 2017, the market was sitting right at old highs, perfectly ripe for a breakout institutions love this
77 00:15:11,610 --> 00:15:22,980 setup, they will buy, buy a lot of it if it's fundamentally sound as a company, obviously billing is and from 160 hours a share all the way up to ultimately
78 00:15:23,070 --> 00:15:34,710 join an office here it looks like so long and short is very, very good price movement. The weekly scenario here again, fits the bill. So Apple and Boeing so
79 00:15:34,710 --> 00:15:42,360 far are really strong candidates for would have been strong candidates, let's say like like that, Michael, keep it in proper perspective, because everything
80 00:15:42,360 --> 00:15:43,350 we're teaching is hindsight.
81 00:15:47,220 --> 00:16:00,780 Okay, our next one is Disney. And I want you to look at this one here. Okay, we have the 2015 highs around the summer. And then we have a November high around
82 00:16:00,780 --> 00:16:14,610 that 120s. It looks like they're having difficulty at 120. And then price made a short term low in April 2016 May time period. And we were right at that point of
83 00:16:14,610 --> 00:16:24,450 breaking out above that. But we had a really weak market structure because we have already blown through a short term high. And while we did have equal highs
84 00:16:24,450 --> 00:16:34,890 around 120, it was far less likely to see it appreciate based on comparing what we saw on Apple and Boeing where it was very clean highs and there was already
85 00:16:34,890 --> 00:16:47,760 near the highs. This, we had to have it rally about $15 before it even gets to the old high seen in 2015. So it has to have a lot more movement to get to a new
86 00:16:47,760 --> 00:16:55,320 breakout institutions won't be that aggressive about buying this type of stock because it's not poised technically, regardless of what the fundamentals may be.
87 00:16:55,800 --> 00:17:05,010 It has to they have to wait until it gets to a technical level like that 120. Incidentally, the first part of this year in 2017, all the talking heads were
88 00:17:05,010 --> 00:17:17,100 calling for 121 25. And that was a built in sentiment idea as a contrarian idea. It went as a little bit over 116. And then it's been trading software since. So
89 00:17:17,790 --> 00:17:28,680 as contrast, look at what this weekly chart was showing you versus what was shown in Apple and Boeing. If you have to go back and rewind the video, to the
90 00:17:28,680 --> 00:17:39,420 portion where it showed the apple and Boeing individual charts, you'll see there's a glaring difference between what we see as the old highs here 128 would
91 00:17:39,420 --> 00:17:55,650 have to gain a lot more ground versus where Apple and Boeing were at the time of February 2017 boyishness. Home Depot, again, very similar to Boeing in apple at
92 00:17:55,650 --> 00:18:07,200 a time of the February 2017 bullishness seasonal tendency. And when the Dow was making a lower low Home Depot was not willing to do that. And we were real close
93 00:18:07,200 --> 00:18:22,800 to the old high you know what's gonna happen is he's gonna step in, buy it surged through nice breakout $20 A share appreciation. Okay, next one here,
94 00:18:23,370 --> 00:18:37,320 McDonald's. And we can see at the time of our bullishness in 2017, we had price trading just inside of a larger consolidation. And we can see price had already
95 00:18:37,320 --> 00:18:49,260 respected a bullish order block around that 120 and anticipating a low resistance liquidity run to around that $132 Share. Price and finally broke out
96 00:18:50,370 --> 00:19:05,940 a few months later, and had a very aggressive run above 130 to trading as high as $155 a share. Really nice. So this one couple with Apple and belling Home
97 00:19:05,940 --> 00:19:20,040 Depot as well. Very strong. So there's four candidates right there. In the final and here's visa. Very similar what you're looking at at the time of 2017 is
98 00:19:20,040 --> 00:19:31,620 February Thorpeness anticipated. Visa was trading really close to its height. And ultimately they searched price through and ultimately seen it appreciate
99 00:19:31,620 --> 00:19:40,860 about $10 A share to the wall. This one was a little lethargic. Nonetheless, it's still met the criteria as far as looking for higher moves on the weekly
100 00:19:40,860 --> 00:19:53,160 chart. The structure was sound. And while it didn't deliver as high as a share return, appreciation that the other for McDonald's home depot building an Apple
101 00:19:53,160 --> 00:20:03,270 did, it still was very favorable in terms of the ferreting out process that we're outlining here. So, when we go through the process of going through the
102 00:20:03,270 --> 00:20:06,570 February to spring highs in the stock market,
103 00:20:07,799 --> 00:20:18,569 you'll begin with the Dow 30. You can do the NASDAQ 100, same way and an s&p 500. Now that one's going to take a little bit more work to go through, but
104 00:20:18,869 --> 00:20:27,479 you'll have a lot more stock selections to choose from. Now once we get through the process of picking out which ones have a potential weekly breakout, and yes,
105 00:20:27,479 --> 00:20:35,789 I'm saying breakout because stocks are predisposed to trade higher. And if you have a fundamental basis to expect prices to go higher as a whole in the stock
106 00:20:35,789 --> 00:20:44,819 market, and you're looking at seasoning to go higher, and you're looking at relative strings idea supporting with SMT divergence between the indices. And
107 00:20:44,819 --> 00:20:54,809 that stock is showing an unwillingness to go lower, you have every portion of a winning recipe for that stock to go higher, doesn't mean you're gonna be right.
108 00:20:54,839 --> 00:21:03,899 This means that statistically speaking, and historically speaking, these elements are there all the time for winning stocks. Until next time, I wish good
109 00:21:03,899 --> 00:21:05,369 luck and good trading