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105-ICT Mentorship Core Content - Month 10 - Stock Trading - Building Sell Watchlists

Last modified by Drunk Monkey on 2022-10-26 08:54
1 00:00:11,190 --> 00:00:20,790 ICT: Welcome back, folks. Lesson three on the ICT stock trading June 2017 content. This lesson is building sell watch lists
2 00:00:27,450 --> 00:00:37,050 Okay, as we disclosed in the building, buy watch lists, we're gonna be using the Dow Jones Industrial composite stock list here. And you quickly see here not all
3 00:00:37,050 --> 00:00:49,770 stocks go up when there's a bullish or bearish idea. There's a disparity amongst all the index stocks generally, unless it's a very strong bullish day, even then
4 00:00:49,800 --> 00:00:58,740 you might get one or two laggards, it doesn't go up. Or if it's a strong down day, not all stocks will go down to and will go up. But we're gonna be focusing
5 00:00:58,740 --> 00:01:11,670 on when conditions are ideal for bearishness, so you can build sell watch lists or shorting stocks. Okay, again, as a reminder, the Dow Jones Industrial
6 00:01:11,670 --> 00:01:23,730 seasonals in this list here, we're gonna be focusing on the bearish months and any consolidation within between okay, you can see that here and we're gonna be
7 00:01:23,730 --> 00:01:42,360 looking at the first portion of the Year from May through July. That's the primary area of which we're gonna be focusing on. So building cell watch lists,
8 00:01:42,600 --> 00:01:51,570 filter number one is obviously the stock market must be poised to decline and filter number two during bearish months really looking for stocks that make a
9 00:01:51,570 --> 00:02:04,830 lower high during the months of January, and May through July are ideal short swing setups. Majority of index stocks will decline with the major market
10 00:02:04,830 --> 00:02:17,790 decline. stocks that are trending lower on a weekly prior to this setup are ideal. We're going to be avoiding safe stocks like Verizon GE and Coca Cola.
11 00:02:19,650 --> 00:02:31,560 Weak stocks will have obvious bearish market structure. The premium arrays with index SMT will highlight companies that are under heavy distribution during
12 00:02:31,560 --> 00:02:42,240 seasonally bearish months. We'll be trying to narrow the selection down to two to four companies during the stock selection process. And leadership stocks that
13 00:02:42,240 --> 00:02:51,270 are aggressively sold by institutions will be found to fail to rally higher during bearish months when the three major indices rally until one of those
14 00:02:51,270 --> 00:03:03,810 indices failed to post a higher high comparably. Okay, you can see here January generally is a bearish month. But we're going to focus primarily on the
15 00:03:03,810 --> 00:03:21,720 condition from May high through the month of July, so we're looking at the entire encapsulation of the beginning of May to the first of August. Okay, and
16 00:03:21,720 --> 00:03:38,340 again, we're gonna be focusing primarily on the index SMT divergence Same here. This is the 2015 May, June July time period, and indices failed to make
17 00:03:38,370 --> 00:03:49,680 comparable higher highs NASDAQ at the top made a higher high, but the Dow in the s&p and the bottom failed to make a higher high. So we have classic fingerprint
18 00:03:49,680 --> 00:03:58,860 for distribution in the stock market. Okay, in our first stock we're gonna be looking at this is a weekly chart. So we're gonna we're gonna jump right to the
19 00:03:58,860 --> 00:04:09,090 weekly and skip a step that we did in our previous lesson. But you can see how that was done. Just using it with greater detail using a daily chart for all the
20 00:04:09,120 --> 00:04:17,610 stocks we've used here. Now I've already done all the legwork for you. I went through and found all the markets that were in bearish institutional order flow
21 00:04:17,610 --> 00:04:28,710 for the weekly. And again, every chart was shown here is a weekly chart. And the first in our list is asp or American Express. And we're focusing again on the
22 00:04:28,710 --> 00:04:38,670 2015 time period. But first we're gonna look at the effects of what the main July time period looks like when the markets bullish. And you can see here while
23 00:04:38,670 --> 00:04:50,640 it did call a high in the marketplace, the green Kamath line. That's the Dow Jones and it failed to make a lower high now there's one candle in here I could
24 00:04:50,640 --> 00:04:58,050 have made an argument about but I'm not going to do that. We're just going to say there was no divergence because the rules are if it's not obvious, there is
25 00:04:58,050 --> 00:05:07,920 no divergence on the SMT So, while the markets were bullish there, there was no gravitational pull for stocks to pull lower or fail to make a higher high, at
26 00:05:07,920 --> 00:05:20,580 least on this specific stock. But in 2015, between May in the first of August, we can see here that the Dow Jones leading up into May, the Dow was making
27 00:05:20,580 --> 00:05:22,920 higher highs and that green commute communicated line
28 00:05:24,240 --> 00:05:36,210 while the American Express stock shares were seeing failure to rally comparably, so, American Express was in heavy distribution. And you can see how the May,
29 00:05:36,660 --> 00:05:46,050 June July time period caused a seasonal high in price traded off rather aggressive from around $8 A share all the way down to almost $50 A share that's
30 00:05:46,050 --> 00:05:47,130 $30 a share.
31 00:05:52,500 --> 00:06:02,580 Okay, next one we have here is caterpillar. Again, we're focusing on when the market was bullish, even though we're expecting bearishness when the markets
32 00:06:02,580 --> 00:06:13,200 strong, it can create a high, but we're looking for a divergence with the indices. And it didn't give us a failure swing to go with a lower high during
33 00:06:13,200 --> 00:06:24,810 those months. So we can't do anything with it. Even though we can expect bears prices overall. It didn't fit the mold there. Here we have the May to August in
34 00:06:24,810 --> 00:06:36,930 2015. And you can see the Dow Jones was making higher high at the same time, Caterpillar was failing to make a higher high and again, institutional order
35 00:06:36,930 --> 00:06:48,750 flow on the weekly chart was bearish. And you can see how prices moved almost $90 A share all the way down to almost $55 a share. So about $45 a share on just
36 00:06:48,750 --> 00:07:00,270 about $45 a share in terms of price move. Major index stocks, folks do not grow stocks or high flying stocks or their stocks, they just simply traded on the big
37 00:07:00,270 --> 00:07:15,510 board. The next stock in our list, see the x or Chevron Corp. And again, when the stock markets bullish, we can see how it did cause a high the form in
38 00:07:16,050 --> 00:07:28,830 Chevron Corp in 2014. But we're looking for one institutional order flow is bearish. We see that's the case in May, to August of 2015. Dow Jones was making
39 00:07:28,830 --> 00:07:38,670 higher highs. At the same time. Chevron shares were making lower highs so we were in heavy distribution. And notice the ramp up and acceleration on the
40 00:07:38,670 --> 00:07:53,850 selling during that seasonal decline between May and August. Huge, huge decline from $110 share all the way down to $70. A share massive Okay, the next one here
41 00:07:53,850 --> 00:08:06,270 is X o m or Exxon Mobil. Again, just for comparison sake, when the markets bullish Yes, the seasonal influence of made August gives us a high in the
42 00:08:06,270 --> 00:08:16,530 shares. But again, we're looking for heavy distribution when institutional order flow is already bearish. And that seen here in May to August of 2015 Dow Jones
43 00:08:16,530 --> 00:08:28,260 again posting higher highs, the same time ExxonMobil shares were failing to make higher highs and look at the acceleration in the selling from $90 A share all
44 00:08:28,260 --> 00:08:44,880 the way down to almost $66 a share. Really, really nice move. Okay, and our last one in our list is Walmart, W Mt. And again, during market conditions when we're
45 00:08:44,880 --> 00:08:55,380 bullish. While we expect bearish between May and August 1. We see a little bit of the client here. But it has to be a bearish market tune in on a weekly basis.
46 00:08:55,710 --> 00:09:04,650 And that's seen here on the weekly with institutional order flow being bearish. And the Dow Jones making higher highs at the same time. Walmart was failing to
47 00:09:04,650 --> 00:09:14,610 make higher highs and from $80 A share all the way down to 50. Almost $56 a share. Really nice move there too.
48 00:09:15,570 --> 00:09:27,870 So out of this list, I think Walmart was the one that would have been thrown to the side simply because there was a consolidation all through the fall of 2013.
49 00:09:27,900 --> 00:09:38,850 And through 2014 it rallied up but then there was really no attempt to rally. It was just a steady drift lower. And while that may be in the indicative of
50 00:09:38,880 --> 00:09:48,120 overall weakness in the 2015 calendar year, you really want to find an area where price wants to rally away kind of like a Judas swing or market protraction
51 00:09:48,120 --> 00:09:59,820 a state where we sell the rally in terms of technicals while it was impressive to see Walmart decline in here, the previous stock selections they would have
52 00:09:59,820 --> 00:10:09,360 been He wants to choose from in terms of looking for put options. So we've gone through a rather simplistic approach to looking at how the stock market can be
53 00:10:09,360 --> 00:10:17,700 timed, and how it's consistent. It's very consistent in terms of what we're looking for. And the reason why it's like that is because institutions are by
54 00:10:17,700 --> 00:10:24,330 far and large aren't doing the same thing all the time, or at least making an attempt to do the same thing all the time because they have to have consistency.
55 00:10:24,510 --> 00:10:33,090 So if their consistency is seen in elements, like we're teaching in the last two teachings here, this one in the previous in terms of watch lists, building, buy
56 00:10:33,090 --> 00:10:42,810 and sell watch lists, if we understand that we can see them for these generic traits that reoccur in the conditions in the marketplace. That means that they
57 00:10:42,810 --> 00:10:51,330 have a simple rule based idea that they keep falling. So if we can see it, we know that they're trying to follow a program and the program, they're following
58 00:10:51,330 --> 00:11:00,630 these these types of footprints every year, then we know that we're onto something so we can track smart money, because of the volume, the sheer volume
59 00:11:00,630 --> 00:11:11,490 at which they trade. And they accumulate or distribute these shares. So if we have these generic characteristics, seen in price action, and we know that they
60 00:11:11,490 --> 00:11:20,370 have a rule based idea and a program that they follow all the time, that means that consistency should hold up years to come. So it's a method that you can
61 00:11:20,370 --> 00:11:29,340 pass on to your children, to help them build their own individual retirement accounts or add an additional income or secondary income without actually having
62 00:11:29,340 --> 00:11:41,670 to have a another job. So we're going to be using these ideas to also work into why it's important to know even if you've never had an interest in trading
63 00:11:41,670 --> 00:11:47,970 stocks, or if you never have an interest in trading stocks, even despite seeing this information, because I'm sure there's some of you in our group that's going
64 00:11:47,970 --> 00:11:57,780 to feel that way. It's important to know what these telltale signs are when we're expecting to see them because it's going to give us insight. So regardless
65 00:11:57,780 --> 00:12:06,990 of whether we're a stock trader or bond trader or commodity trader, or an SMP trader, these four asset class studies that we've done this month are paramount
66 00:12:06,990 --> 00:12:18,420 to understanding the general market. So I'm going to counseling you to go through the NASDAQ 100 as a homework assignment for this week. And I would like
67 00:12:18,420 --> 00:12:26,670 for you to all contribute, or at least in your own private study, you don't have to do it on the forums. I know some of you just don't want to do it, you're just
68 00:12:26,670 --> 00:12:35,970 nervous or, or shy or bashful or whatever. You just want to watch everybody else do the work. But do the NASDAQ 100 stocks and simply go on Google do a search of
69 00:12:36,210 --> 00:12:46,830 NASDAQ 100. Index stocks, it'll give you all the symbols for the for those 100 companies. Now, yes, it's a little more than three times the amount of Dow Jones
70 00:12:46,830 --> 00:12:56,790 stocks that we've looked at here. But it's for your benefit to do it, and use the same parameters that are outlined for the bimodal in the sell model. Okay,
71 00:12:56,790 --> 00:13:06,270 so we have watch lists for both buying and selling specific criteria. It's not hard, it's not a lot of acrobatics. To figure out what's going on, you're
72 00:13:06,270 --> 00:13:14,310 looking at specific time of year, and a condition based on institutional or flow, you're looking for institutional airflow on a weekly chart to be bearish
73 00:13:14,310 --> 00:13:23,460 or bullish. And you're lining that up with the seasonal tendencies as we described it in both the building buy watch lists and building sell watch list
74 00:13:23,520 --> 00:13:36,780 tutorial. Until we get to our end of our content for this month. We're going to talk a little bit more about valuation for selections on stocks, and then we're
75 00:13:36,780 --> 00:13:44,370 gonna be incorporating options. And then it's gonna be a bonus lesson for this month, and how we use all this information in terms of the asset classes and why
76 00:13:44,370 --> 00:13:48,330 it's beneficial. And until next lesson, I wish you good luck and good trading